Welcome to MasTec's Fourth Quarter 2023 Earnings Conference Call. Initially, broadcast on Friday, March 1st, 2024. 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?

Thanks, Maddie, and good morning, everyone. Welcome to MasTec's Fourth 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. In 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 industries where we operate. These forward-looking statements are the company's expectations on the day of initial broadcast of the call and the company does not undertake to update these expectations based on subsequent events or knowledge. Various risks, uncertainties, 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 today. 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 in this conference call. A reconciliation of any non-GAAP financial measures not reconciled in these comments to the most comparable GAAP financial measure can be found in our earnings press release. Please note that today we have two documents associated with the webcast on the Events and Presentations page of our website at www.mastec.com. There is a companion document with information and analytics about the quarter and year just ended and a guidance summary for 2024 to assist you in developing your financial models going forward. Both PDF files are available for download. With us today, we have Jose Mas, our Chief Executive Officer, and Paul DiMarco, EVP and Chief Financial Officer. The format of the call will be opening remarks analysis by Jose, followed by a financial review from Paul. These discussions will be followed by a Q&A period. We expect the call to last about 60 minutes. We had a nice quarter and a lot of important things to talk about today. So I am going ahead and turn it over to Jose. Jose?

Thanks, Marc. Good morning, and welcome to MasTec's 2023 fourth quarter and year-end call. Today, I'll be reviewing our fourth quarter and full year results as well as providing my outlook for 2024 and the markets we serve. First, some fourth quarter highlights. Revenue was $3.3 billion, a 9% year-over-year increase. Fourth quarter adjusted EBITDA was $231 million and fourth quarter adjusted EPS was $0.66. For the full year, 2023 revenue was $12 billion, a 23% year-over-year increase. 2023 adjusted EBITDA was $860 million, a 10% year-over-year increase. 2023 full year adjusted earnings per share was $1.97, and full year cash flow from operations was $687 million and net debt was reduced by $535 million since the first quarter. In summary, our fourth quarter performance was slightly better than our guidance with strong performance in our pipeline business and strong cash collections across the entire business. While we enjoyed year-over-year growth in both revenue and EBITDA, our performance was significantly below our original expectations. As we discussed in detail on our last call, we had a number of challenges related to the acquisition of IEA coupled with moderated spending by customers in the second half of the year. While we expect some continued pressure in the early part of 2024, I'd like to walk through a number of positive developments that I believe will have a significant impact on our ability to grow both revenue and earnings and get back to our long-term targeted revenue goals. During the fourth quarter, in our Communications segment, we significantly expanded our relationship with our biggest wireless customer AT&T. In addition to the maintenance contract we announced on our third quarter call, AT&T expanded both our scope and geographic territory on our core wireless work. This expansion, coupled with their recent announcement of a complete swap out of Nokia equipment to Ericsson equipment over a five-year period is expected to significantly increase our wireless business over the next few years. While we won't see the impact of this new award until the second half of 2024, this award alone should increase our 2025 segment revenues by double digits. This coupled with the continued demand for our wireline services, where we saw double-digit growth in 2023 and the expected impact of BEAD's funding gives us great visibility for future years. We've invested heavily in our Communications segment, and we believe starting in the second half of 2024 and beyond, the benefit of these investments will be materialized with solid revenue growth and more importantly, improved margins. Our Oil and Gas pipeline segment overperformed as revenue and EBITDA both came in higher than estimates. On our third quarter call, we guided pipeline revenues down with the same EBITDA dollars for 2024, resulting in higher-margin expectations. This is due to the expected completion of the MVP project during the second quarter of 2024. While we're holding that guidance, we are very encouraged about the strength in this market. While backlog is down, demand is actually up considerably. We expect this segment to return to a more book-and-burn cadence as it relies less on larger projects. We're also really encouraged about 2025 and beyond. Based on verbal awards and project timings, we expect this business to grow in 2025. We had previously talked about a longer-term expectation of annual revenues in the range of $1.5 billion to $2 billion. We now expect long-term annual revenue to consistently be at or above the higher end of the range. Our Power Delivery business performed slightly above our expectations in the fourth quarter and secured long-term extensions and expansions during the quarter, with current key customers. Post-quarter end, a negative rate-case ruling in Illinois has impacted our customers in the state. Having a large presence in the area, we've moderated 2024 revenue expectations to be roughly flat to 2023. We're hopeful that this will be conservative, but feel it's prudent as we think about 2024 segment revenues. Exelon, who owns one of the utilities in the state, has significantly cut capital expenditures for distribution spend in Illinois, but has also announced increases in transmission spending in the state and increased CapEx outside of Illinois. We believe we are well-positioned to participate in that growth, but again, have taken a conservative view until we have better clarity. While we've experienced some fluctuation in capital spending by different utilities in different geographic areas in the second half of 2023, some of which we continue to expect in early '24, there is no question about the need and commitment for significant capital spending on our nation's electrical infrastructure. Expectations for load growth are increasing across the country and a number of utilities this quarter announced increases to their expected capital spending. It's important to remember that in 2021, just two short years ago, MasTec's Power Delivery business generated $1 billion of revenue for the year. We closed out 2023, generating over $2.7 billion or nearly a three-fold increase in revenue in just two years. With the integration efforts of the acquisitions and Power Delivery behind us, we believe we are better positioned than ever. While the majority of our business is recurring MSA-driven, our project business has the greatest opportunity for growth. We are currently bidding on a number of very large projects, any one of which individually could grow this segment by double digits annually. After spending the last few years building out our platform geographically, we are really excited about this segment's future revenue. Finally, in our Clean Energy and Infrastructure segment, margins were in line with our expectations for the fourth quarter. We spent a lot of time on our last call talking about the issues and challenges we faced in 2023. I'd like to spend time today on 2024 and beyond and what we're seeing in the market. Today, we've guided segment revenues of $4.4 billion for 2024. This compares to about $4 billion in 2023. To add some color, our renewable revenue was budgeted by performing a bottoms-up project review. For example, we've built an estimate of every project we've won or believe we will win and estimated a cadence of quarterly revenue. We took into account potential challenges and risks projects may face and took a conservative view. All this to say that our process for 2024 is significantly different and more conservative than last year. While short-term challenges still exist, we strongly believe in the long-term fundamentals of this segment. The undeniable shift towards renewables and the cost competitiveness they offer create significant opportunities for the market. We continue to believe that we have significant opportunities to grow revenue and 2024 does not reflect the growth potential we expect to achieve. For example, between what we've been awarded and expect to be awarded over the next two quarters, not only does it solidify 2024 revenue, but actually carries over a similar amount of revenue into 2025. With continued strong demand, our growth potential in 2025 and beyond should help us achieve our original annual revenue goals for this segment. In summary, while we know we've had our challenges, we are incredibly bullish about our ability to grow our business and build scale to deliver to our customers safe and cost-competitive solutions to help them meet their infrastructure needs. I strongly believe that the investments we've made in the last few years to build scale along our vertical offerings and position ourselves as a leader in the businesses we operate in will translate to not only strong levels of revenue growth, but the ability to meaningfully improve margins. I want to make sure I emphasize that part. I truly believe that the most successful companies in our space are those that have the scale to meet our customers' demand. Our customers' projects have significantly increased in size and scope and there is no question that our customers want to simplify and work with fewer partners. I believe that over the last few years, our biggest accomplishment has been to position ourselves as one of only a few partners that is viewed throughout our industry as a partner whose size and scale affords it the capabilities to take on any project. While I'm proud of that accomplishment, I also understand the need for this advantageous positioning to be reflected in our financial results. I'm optimistic that our results will show continued improvement throughout 2024. As we expect revenue to be more predictable and consistent, we are working and focusing on improving margins. While incremental revenue has a very positive impact on margins, as we reach our desired scale across our segments, it allows us to focus on maximizing efficiency. Again, I'm looking forward to the opportunities that 2024 and beyond bring and providing our stakeholders with better consistency in our performance. I'd like to take this opportunity to thank the men and women of MasTec. 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. I also know how competitive our people are and the desire they have to perform at a very high level. I know they're up for the task. I'll now turn the call over to Paul for our financial review. Paul?

Thanks, Jose, and good morning, everyone. Before I turn to the financial review, I wanted to provide color on some key developments for 2023 and financial initiatives going forward. Despite the disappointing financial performance and visibility we provided last year, we made significant progress in key areas of our integration in Power Delivery and Clean Energy. In Power Delivery, we are deploying our regional operating model, consolidating leadership over various companies in common geographies to drive efficiency and enhanced customer support. In Clean Energy, we are organizing this segment in the market sectors, namely renewables, infrastructure, and industrial. With the various components of our legacy business and IEA integrated to effectively deliver the full breadth of our operating capabilities to our customers. We are now focused on fully deploying consistent tools and processes across each segment to put all our teams in a position to excel. We are confident these strategic changes will enable us to capitalize on the robust long-term demand afforded by our end markets. From a financial perspective, we are keenly focused on capital allocation to ensure we are generating appropriate returns on the capital we deploy. As we look at investments for organic growth, we have enhanced our evaluation of capital expenditure allocations to drive higher utilization of owned equipment and operating profit. Coupled with our ongoing working capital initiatives, we expect to drive higher returns on invested capital and improve our strategic flexibility. Now, I will turn to our 2023 financial review. Fourth quarter revenue was $3.3 billion, in line with our guidance and adjusted EBITDA was $231 million or 7.1%, exceeding guidance by approximately $10 million. Adjusted earnings per share was $0.66, exceeding guidance by $0.22, driven primarily by the adjusted EBITDA beat. Accordingly, annual 2023 results followed suit. Revenue of $12 billion was in line with our guidance. While adjusted EBITDA of $860 million and adjusted earnings per share of $1.97, both exceeded our annual guidance expectations. We generated almost $500 million of cash flow from operations in the fourth quarter, bringing the total for 2023 to $687 million. This exceeded guidance by almost $300 million, driven by a significant improvement in DSO, which had 74 days, down 11 days sequentially from the third quarter. Our liquidity remains very strong at $1.6 billion. Cash flow generation has been a key area of focus for MasTec and we are very pleased with the efforts displayed across the company to achieve these results. Our strong cash-flow performance resulted in net debt at year-end of $2.5 billion, a $350 million reduction year-over-year and puts net leverage at 2.9 times. 18-month backlog at year-end totaled $12.4 billion, with sequential growth in each segment except for the oil and gas pipeline due to the significant work performed on MVP in Q4. I'll cover more details on the individual segments shortly. Turning now to the segment performance and expectations. Fourth quarter communications revenue was $760 million, with an adjusted EBITDA margin of 7.6%, both in line with guidance. Annual 2023 communications segment revenue was $3.26 billion, flat year-over-year, with adjusted EBITDA margins declining 140 basis points to 8.9%. As we discussed last quarter, the reduction in second half volume had a negative impact on operating leverage and margins. Our outlook for this segment continues to improve, particularly on the wireless front where AT&T has revised its long-term build plan and is consolidating its vendor base to drive efficiency. We expect to begin realizing the benefits of these consolidations in the second half of 2024 and be fully ramped in 2025. Based on preliminary estimates, these developments should drive 10% plus revenue growth in this segment. You can see these benefits begin to come through in the segment backlog, which grew by approximately $325 million versus Q3. We anticipate that communications segment annual 2024 revenue will approximate $3.5 billion with adjusted EBITDA margin improving 50 to 60 basis points year-over-year. Q1 revenue is expected to be $700 million, with adjusted EBITDA margins in the mid-single-digit range. Q1 guidance reflects historical trends of a modest decline in volumes sequentially from the fourth quarter as well as potential short-term disruption from the realignment in our wireless business. We expect year-over-year growth in this segment for each subsequent quarter of 2024. Fourth quarter Clean Energy and Infrastructure segment revenue was $1.1 billion, slightly below our guidance, with adjusted EBITDA margin of 4.8%. Full year segment revenue was approximately $4 billion with adjusted EBITDA margin of 4.3%. Backlog for the segment was up slightly from Q3 to $3.1 billion. Of note, the year-end backlog includes a reduction in our industrial sector of $200 million due to the previously discussed indefinite pause of construction on the Rochester Hub project. For 2024, we expect Clean Energy segment revenue to approximate $4.4 billion, representing low double-digit growth. Adjusted EBITDA margins are expected to be in the mid-single-digits with at least 100 basis point improvement versus 2023. Q1 revenue is expected to be $775 million, showing a slight contraction versus 2023 due to timing of project burn. We currently expect adjusted EBITDA margins to remain in the low-single digits with modest margin expansion versus last year. Fourth quarter pipeline segment revenue was $800 million, with adjusted EBITDA margins of 11.9%. We had good production on a number of fronts, leading to higher adjusted EBITDA margins than anticipated. Annual segment revenue was just shy of $2.1 billion with adjusted EBITDA margins of 13.7%. We anticipate 2024 pipeline segment revenue will decline to $1.9 billion. We expect adjusted EBITDA to be flat year-over-year at $285 million with the anticipated margin expansion due to a lower contribution of cost-plus work. First quarter revenue will be approximately $600 million, with adjusted EBITDA margin in the low double-digits. Q1 will likely be the highest revenue quarter for this segment in 2024. Fourth quarter Power Delivery segment revenue was $658 million and adjusted EBITDA margin was 8%, both in line with our expectations. Annual 2023 Power Delivery segment revenue was approximately $2.7 billion with annual adjusted EBITDA margin of 7.9%. 2024 began with some challenges in parts of our Power Delivery segment as certain customers in Illinois received unfavorable rate case decisions. We are optimistic this will be resolved in the coming months, but feel it is prudent to factor in a prolonged appeal process in our outlook. Accordingly, 2024 annual revenue is expected to approximate $2.8 billion with annual adjusted EBITDA margins similar to 2023. First quarter revenue is forecasted at $550 million, seeing the biggest quarterly impact from this deferred spending and lower levels of transmission activity versus '23 as we transition from certain completed projects to new work expected to start in Q2. The reduced operating leverage will weigh on earnings in Q1 with adjusted EBITDA margins in the mid-single digits. Annual 2024 Corporate segment costs are expected to approximate 125 basis points of consolidated revenue and investments reported in our other segment are expected to generate approximately $30 million of adjusted EBITDA. Turning to our consolidated guidance announced yesterday, we are projecting 2024 annual revenue of approximately $12.5 billion with adjusted EBITDA approximating $955 million. Adjusted earnings per share is expected to approximate $2.69, representing double-digit adjusted EBITDA growth and approximately 30% adjusted EPS growth versus 2023. We expect Q1 revenue of $2.625 billion, adjusted EBITDA of $130 million or 5%, and an adjusted diluted loss of $0.48 per share. This expectation includes the combination of a normal seasonally slow first quarter and the Q1 impact we noted earlier in our communications and Power Delivery segments. In terms of the cadence for 2024, we expect the majority of our revenue growth to come in the second and third quarters with Q4 roughly flat to last year without any contribution from MVP. Our guidance indicates a 50 basis point improvement in full-year adjusted EBITDA margins and we expect the majority of this expansion to also come during Q2 and Q3. We expect to generate approximately $550 million of cash flow from operations in 2024, assuming DSOs are in the high 70s over the course of the year. Coupled with the anticipated growth and adjusted EBITDA, we expect to reduce leverage to the low 2s by the end of 2024. We remain committed to maintaining our investment-grade rating and have proactively communicated our outlook to the various rating agencies. In closing, I've enjoyed the first year of engagement with our analysts and our investor community. I look forward to continuing to build relationships with you and improve our communication and your confidence in our performance and outlook. That concludes our prepared remarks, I'll now turn the call over to the operator for Q&A.

Thank you. We will take our first question from Sangita Jain with KeyBanc.

Hi. Thanks so much for taking my question. Jose and Paul, if I can ask you on your Power Delivery booking, you expressed a lot of optimism on the bookings momentum. Can you share with us how close we may be to some of those translating into backlog? Is it like a first half event or later? And also given that you're working through these large projects, what gives you the confidence in the high-single-digit margins in this segment? Thanks.

We've been very excited about the project side of our Power Delivery business for some time now. We believe we're close to winning several projects that we've pursued over the last couple of years. We've integrated all our acquisitions, and our position in the market today is significantly improved compared to a year or two ago. Customers see this and are eager to give us a chance to work on substantial projects, which we believe will lead to success this year. Over the next few quarters, we hope to announce new projects that could positively impact our backlog as soon as 2024. Regarding margins for the year, we are guiding for relatively flat margins compared to last year, meaning we don't expect a significant change in our margin profile from 2023 to 2024.

Great, and if I can follow up with one on communications, you talked about the AT&T Ericsson contract, can you help us understand what your scope may be on the AT&T's FirstNet program maybe?

So. Our contract with AT&T is what they call a turf contract, right. So in certain geographic areas we have exclusivity on specific types of work and that isn't really changing. So, whatever initiatives they'll be doing in the geographies that we've been awarded, we're going to be the ones that perform those services.

Great, thank you so much.

Thank you.

Thank you.

We will take our next question from Brian Brophy with Stifel.

Yeah, good morning. Thanks for taking my question. Been hearing a lot about the ramp and the tax credit transferability market on the Clean Energy side in recent months. Curious what you guys are seeing here. How impactful it is for your customer base and how important is it to the Clean Energy outlook overall. Thanks.

There's no question that the sentiment has been improving, transferability is having significant impact. But I think more importantly, what we've done as a company is we really went through every project that we see potential on in terms of stuff that we expect to happen in 2024. I think we significantly de-risked our expectations relative to understanding where every project stands from a financing perspective, from an interconnect perspective, and I think that while we talked a lot about this last year is something that, quite frankly, we don't have to hope to talk a lot about this year. There are a number of other projects that could hit quite frankly that we probably underestimated their ability to be performed in '24, but anything that has significant risk to it, we've kind of moved it aside and not counted it for '24. But there's no question that the sentiment is improving, the opportunity to use different methods to finance projects has improved considerably since the latter part of last year, and I think as a total industry, we're going to see a significant increase in what comes out in the second half of 2024.

Okay, that's great. And then another one on Power Delivery. Obviously, low single-digit guidance on the top line, probably a little bit lower than some expected. It sounds like some of it kind of a customer mix issue in Illinois, but just curious what you guys are embedding on the emergency restoration side in 2024 relative to 2023 given the easier comp there. Thanks.

So, we didn't assume that it's going to be any better than 2023. 2023 was a really low storm year; it's very difficult to model that. So we have a very baseline budget that you have to include something for. So, it's not much different than what '23 was, so I think there's opportunity there. To be clear on the previous part, I mean, Exelon did announce a significant reduction, right. They've announced a $1.25 billion reduction over three years in distribution spend. It is a big area for us, so that is what's having the impact where we slightly moderated our revenue target for 2024 in our Power Delivery business.

That's really helpful. Thanks, I'll pass it on.

Thank you.

Thanks, Brian.

We will take our next question from Andy Kaplowitz with Citigroup.

Hey, good morning, everyone.

Good morning, Andy.

Good morning, Andy.

Jose, I just wanted to go back to your comments on Communications for a second. You did see a significant uptick in sequential bookings, as you guys mentioned, you already talked about the higher scope of work with AT&T and Nokia, there's Ericsson also transition later this year, but could you breakdown what you're thinking in terms of core wireless and wireline for 2024? Could you tell us how much larger your contract is with AT&T now maybe versus what it was and did you actually see a positive inflection in your core markets, excluding this new work that you have?

When we look at 2023, our wireless business declined compared to 2022, while our wireline business saw double-digit growth. We maintained strong performance in wireline throughout the year. Looking ahead to 2024, we anticipate further growth in our wireline segment due to robust market conditions. Although we observed a slowdown in the second half of 2023 compared to the first half, demand remains exceptionally high in that sector. Additionally, with the BEAD funding starting to affect the business from 2025, we see a very positive outlook. On the wireless side, the recent contract award, along with AT&T's network changes, is expected to significantly impact MasTec. Previously, we were predominantly wireless, but now we have shifted to a 60-40 split in favor of wireline. This new contract is expected to bring that closer to a 50-50 balance in the next few years, which will significantly enhance our wireless segment. We see the potential for our wireless business to grow by 30% to 50% compared to its 2023 levels, making this contract a substantial boost to total revenues for that segment.

Very helpful, Jose, and then kind of a similar question for Clean Energy side. Could you tell us what you're assuming for IEA in '24? Maybe differences between wind, solar, and Infrastructure. Obviously, you've seen there is still a fair amount of noise in the developer world. I think you said you're only assuming sort of what you can tell was already going forward. So how did you sort of discount the noise that's out there in the developer world, especially in the IEA side for '24?

The first thing to focus on is that as we look ahead to 2024, even from late 2023, we are not seeing it as a competition between MasTec legacy and IEA; we are presenting ourselves as one unified business. We have a MasTec renewables branch, and while there are various operating groups executing the work, we present ourselves in the market as MasTec Renewables with a single leadership team. In terms of the whole industry, our attention is directed towards customers, acknowledging that each has unique circumstances and challenges. It’s crucial to understand where each customer stands on a specific project, regardless of the broader market context. Some have more difficulties than others, but we anticipate improvements for everyone as the year progresses. We are concentrating on developers and projects that are well-positioned for construction in 2024 and are likely to encounter fewer obstacles, which informs our business model. Interestingly, as we approach 2024, we have seen balanced growth in both wind and solar, with notable strength in the wind sector, particularly regarding repowering, where we have secured many bookings. We appreciate the predictability of these projects, which present fewer potential construction issues during the year. Last year, our project mix was approximately 60% solar and 40% wind, which we expect to remain similar this year. We are confident in our planning approach, recognizing that while there will be opportunities, challenges may arise in certain projects. We have accounted for some overall contingencies and are optimistic that conditions will improve throughout the year, allowing for the potential addition of projects in the latter half of 2024.

I appreciate all the color, Jose.

Thanks, Andy. Thank you.

We will take our next question from Steven Fisher with UBS.

Thanks. Good morning. Wanted to just follow up on that last question, wondering if you can maybe bridge for us the $4.4 billion of expected revenues in Clean Energy versus the $3.1 billion of year-end backlog; how much of that incremental $1.3 billion is discrete renewable projects that maybe in like limited notice to proceed, that you expect to put into backlog and then burn versus how much is maintenance or small capital projects, just kind of flow work or maybe there is something specific in civil infrastructure or industrial that you have expected to bridge that backlog versus revenue gap.

When considering the industrial and civil sectors, our backlog is largely established, and we believe it reflects most of the work needed for 2024. While there will be some new projects to book and complete, we feel confident about our backlog compared to revenue expectations. On the renewable side, we believe the business outlook is stronger than current backlog figures suggest. We anticipate significant backlog growth in the first quarter and again in the second quarter, which should reassure those not regularly reviewing our numbers that our outlook for 2024 is strong. We mentioned in our prepared comments that this backlog growth will have a positive effect on 2025, as these projects typically involve similar or even increased volume activity in 2025. This positions us well for strong growth that year. Importantly, we have already identified these projects, even if they are not yet reflected in backlog. We are aware of when they are expected to be signed, mostly under Limited Notice to Proceed agreements, and the key will be moving to signed contracts so we can start work. We aim to achieve this in the first and second quarters from a backlog standpoint.

Okay. That's helpful. And then just a little bit of near-term cadencing. I guess in terms of your Q1 numbers, we're already starting March here. So two-thirds of the quarter is done. I guess to what extent are there still any notable things that have to happen in order to hit your Q1 numbers. I've seen you factor in all of the January and February weather and timing of solar projects. And then do you have an overall kind of first-half versus second-half EBITDA mix, just to kind of get an early framing of what you're thinking about Q2? Thank you.

Yes, so look, on the first quarter, obviously, we're cheap in the first quarter. So, I think we've taken into account everything that we know as of today. Whether it was a little bit of an issue in certain geographic parts that are impacting our first quarter, but it's really not much different than quite frankly what our expectation was coming out of our third quarter call. Maybe with the exception of the Illinois rate case and the impact that that's had on our Power Delivery business in Q1. Outside of that, I think everything is pretty consistent with our expectations. When we think about the second quarter and third quarter, and we do year-over-year comps, we have a pretty similar ramp to what we had last year from an earnings perspective, right. We expect earnings in the second, third, and fourth quarters to be above where they were in '23, but we don't expect any particular quarter to be dramatically above. So, I think margin profiles are going to be consistent with where they were generally last year and it's going to really be driven by the revenue expectations. Paul stated the second and third quarter are going to be our two biggest quarters, and I think that we'll be able to show and it has moderate growth, right. So we're going to have nice growth between the second and third quarters, very similar to last year. So, if you take last year's cadence, I think we're going to have a similar cadence in 2024.

Thanks, Jose.

Thank you.

We will take our next question from Marc Bianchi with TD Cowen.

Hey, thanks. Jose, I think I heard you express some optimism about the oil and gas business in 2025 and beyond since the roll-off of this MVP creates a challenging comparison for that year. Can you discuss where those opportunities might be and when we could expect some clarity on that as external observers?

I believe there are several factors at play. First, the gas segment of the pipeline business is very active, particularly in specific regions. As the year progresses, I expect this to become more apparent, with some projects being booked and completed. I anticipate a robust year beyond MVP. Looking toward 2025, we expect this trend to continue based on our discussions with customers. Importantly, we are beginning to see genuine projects related to alternative pipeline developments, such as carbon capture and hydrogen, which we believe will become significant in 2025 and will likely transform the business, providing consistency over a longer time frame. We see our business evolving more into a pipeline-oriented model, resulting in greater diversity, which will contribute to the growth we mentioned. This isn’t strictly about our traditional operations but rather a blend of what we foresee in the future.

And the margin composition of that opportunity, would it be similar to sort of what's implied here in the back half of the year?

It is.

Great. Thank you. I'll turn it back.

Thank you.

We will take our next question from Neil Mehta with Goldman Sachs.

Yeah, thank you. It's Neil Mehta here. I guess, Jose, I had some industry questions on the utility side which is, there's been a lot of talk about this load growth transition from a market that has flattened power demand inflecting for a variety of reasons including datacenters and electric vehicles and onshoring. Just would love your perspective as you talk to your utility customers about what that means for the CapEx profile of the industry and what does the industry need to do in order to meet growing load.

I think we're seeing it, right. If you look at, not to plug you, Neil, but you actually put out a note yesterday that listed a number of different utilities that had raised their CapEx here in the first quarter. I thought it was a thoughtful note; I thought it was important and reflective of what's really happening in the industry. And that's what we're seeing, right. Our customers are talking about it, our customers aren't just talking about it, but they're raising their CapEx dollars to deal with it. We don't think this is a short-term initiative; we think this is going to last for a really long time and we think we're just starting to see the beginning of it. So this is an incredibly exciting market to be in. Again, there have been some issues with the cadence of that spend over the course of the last year, but there's no question in my mind where the direction of that is going. From our perspective, we think we sit in a really good place. We've added an enormous amount of scale in that business and we think that's really going to start to pay off for us here in the next year or so. So we're really excited about what's happening in the industry and I think that generally, I think, people underestimate the capital requirements to meet the growing demand for energy use that we're going to have over the coming years.

Yeah, thanks, Jose. There is a related question which is, there's been a lot of talk about the impacts of wildfires across the utility system and certainly, unfortunately, we've seen a lot of incidents here over the last year or two. Just, again, your perspective on this; does this represent a challenge that you see yourself as well-positioned to help utilities mitigate and as you think about specifically in the utility system, what are different things that they can do as they think about trying to head off this problem?

I believe there are two key factors at play: wildfires and storms. The West Coast has faced more wildfire damage, while the East Coast has been hit harder by storms. The solutions for both challenges are quite similar. Therefore, investing in underground and hardened systems across the country becomes increasingly vital as we confront climate change. The main issue is determining who will fund these initiatives, the stance of the states on financing, the cost of power in each state, and the willingness of their Public Service Commissions to allocate funds to utilities for these projects. In Florida, for instance, there has been a significant initiative where the Public Service Commission approved a 30-year program with billions of dollars allocated for utilities to implement these changes. I believe we'll see more efforts like this in the future, as they are essential. These investments will also help us manage the challenges associated with load growth, which, while distinct, also require attention. Overall, these factors present positive trends and catalysts for growth in the industry for the foreseeable future.

Yeah, important issue. Thank you, Jose.

Thanks, Neil.

We will take our next question from Adam Thalhimer with Thompson Davis.

Hey, good morning, guys. Congrats on the strong Q4 cash flow.

Thanks, Adam.

Jose, your comment about double-digit communications revenue growth next year was interesting; what's the driver of that again?

Just that wireless win, right. That contract by itself should allow us to grow double digits for the full segment next year.

Given that dynamic, what kind of margins do you think you could achieve with that level of revenue growth?

Improving margins, right. So if we go back a few years, at scale our business has been declining or when you think about our wireline business over the course of last year, it declined; that's challenging for margins. There's obviously a start-up phase where we invest in the business, which is kind of baked into the margin profile that we're expecting for '24, but with scale, right, the incremental revenue comes at a higher margin. And that's going to drive margins up. So, that's a really important part of our '25 and beyond story as well.

Great. Thank you.

Thanks, Adam.

We will take our next question from Brett Castelli with Morningstar.

Thank you. Just on Power Delivery, can you talk about your capabilities today on the transmission side of that business, maybe relative to history?

We started our transmission business around 10 to 12 years ago, focusing on large projects initially. Over time, we shifted our attention to distribution to create a more predictable business rhythm. Our acquisitions in 2021 and 2022 aimed to broaden our geographic reach, predominantly emphasizing distribution, while also enhancing our transmission resources. Since these acquisitions, we have successfully grown our transmission capabilities in terms of both talent and resources. In the past two years, we have undertaken significant projects and positioned ourselves as a key player in this market. As mentioned earlier, we are currently bidding on several projects that we are confident will positively impact our business. This area is expected to be the primary growth driver for our Power Delivery segment in the upcoming years, as there is substantial demand nationwide and more opportunities on the horizon.

Thanks, Jose. And then I think you mentioned consolidation of contractors by your customer base in your prepared remarks. Is that maybe more pronounced in certain segments or segments or just kind of curious how you're seeing that across the business?

I think it's actually part of the same comments with scale. So, I think we're actually seeing it in all of our businesses, right. We see it in the award of our biggest customer in wireless and communications. We're seeing it with some of the utilities. We did talk about nice awards in our utility business of markets where we feel some of our customers consolidated their vendors. We're seeing it in the Clean Energy space where developers and large utilities are using fewer vendors for the renewable projects portfolios on a go-forward basis. So, we think as projects get bigger, as consolidation happens across our customers as well, people tend to want to work with fewer partners, and we think that's a really important part of the story. We think scale matters, we think we've built great scale, and our customers believe in the scale capabilities that we have and we do think that's a really important part of what's going to make companies successful in the future. And that's really what we've been building towards.

Thank you. I'll leave it there.

Thank you.

We will take our next question from Justin Hauke with Robert W. Baird.

Great. Thanks for taking my questions here. I guess the first one, just truly kind of a numeric one that I wanted to clarify; in terms of the backlog and what's in it and what's not. So I think you said AT&T scope addition was booked in the fourth quarter, but Nokia and Ericsson equipment scope that you're talking about in the second half, that's not in backlog yet. That'll be when you go into the second half. And then the other numeric on that aspect will be in the Clean Energy, I think you said that you de-booked the Rochester job that was $200 million. I'm just curious if there were any other significant de-bookings in the quarter in that segment as you kind of scrub the backlog.

There were no other de-bookings. We announced the issues with that project in the third quarter, and the lifecycle project is on hold, so we've removed it from the backlog. It was a project we had been working on. Once a project is in backlog, we typically build it, and there are very few instances where we have had to remove anything from backlog; the lifecycle project had its own issues. When we consider comparisons, a portion of it is in backlog. We are not expecting significant impact from that until the latter part of the year, and that’s based on an 18-month outlook. While there is a component for that, we believe it is a much smaller component compared to what the actual award signifies in the long term.

Okay, my second question is about quantifying the impact of Illinois and Exelon on the Power Delivery business. I wasn't aware that it was such a significant area for you. Could you provide context on how the 2024 guidance, which assumes around 2% growth for that segment, is affected by the Illinois rate case in terms of revenue growth outlook?

I have a few points to share. Exelon ranks as our fourth largest customer at MasTec. While their business isn't solely in Illinois, a significant portion is concentrated there. They are implementing a substantial reduction for 2024. Initially, we projected mid-single-digit revenue growth in this area for 2024, but our current outlook has shifted due to this reduction. If we estimate the impact to be between $100 million and $150 million for 2024, that reflects our assumption that we won't be able to redeploy those resources elsewhere, although I believe there will be opportunities to do so. Therefore, we're approaching this with a somewhat conservative perspective, and we have completely removed the anticipated impact for 2024 from our guidance.

Got it. Okay. Thank you. Appreciate it.

Thanks, Justin.

We will take our next question from Brent Thielman with D.A. Davidson.

Pretty close. Hey, Jose, Paul, just on the $550 million cash from operations bogey, could you talk about the puts and takes that could get you potentially above that this year just given you had a pretty strong finish to 2023?

Yeah, this is Paul. I think the biggest driver is just around the DSO. So I said, we're assuming we kind of spend the year in the high 70s versus the '74 we ended the year at. So, I think there's some opportunity for us to continue to perform better from a DSO perspective, and the revenue levels we're generating each day is north of $30 million of cash flow. So, that's a pretty meaningful opportunity.

Yeah, great, and then back to Clean Energy, Jose, could you just speak to the margin profile, the structure of the contracts, anything else to the new business that you're adding into the backlog at this point and maybe how that all informs your view around higher levels of profitability for that business group kind of over the medium term. I know you've got your expectation for this year but kind of looking out beyond that.

That's a great question. As we moved through 2023 and into early 2024, we are still managing contracts that were secured some time ago. Everyone is aware of the supply chain challenges we've faced, which can negatively affect margins on older projects. Historically, and based on our 2023 performance, our wind margins have greatly surpassed our solar margins. This disparity is mainly due to our longer experience in wind compared to solar. We see a significant opportunity to enhance our solar margins, which is essential for us to achieve. I believe this will be a key factor driving margin growth in the future. However, our wind margins remain consistent with our historical performance. As the wind market rebounds and becomes a larger source of revenue, we expect the margin profile to improve significantly from our performance perspective. In the past, there were years when this sector generated double-digit margins, largely influenced by wind. We are observing similar margin potential in some upcoming solar projects. Achieving these levels in our solar business is a priority for us as we progress. The solar sector is expected to grow at a faster pace. While 2023 was challenging, we anticipate fluctuations in 2024, which we've integrated into our planning. Our current focus is on executing these projects effectively and enhancing margins, with the ultimate goal of increasing those margins over time.

Okay. Thank you.

Thanks.

We will take our next question from Min Cho with B. Riley Securities.

Hi. Good morning.

Hi, Min.

Couple of quick questions. Hey there. In terms of, Paul, you mentioned that you're breaking out the Clean Energy section into several market sectors. Can you provide a general revenue breakout right now like the renewables versus Infrastructure Industrial stand?

Yeah, our renewables business is just over 60% of the total segment.

Okay. That's obviously where all the growth potential is going forward.

The business has a significant presence, with both our legacy operations and IEA performing well in various regions. The Infrastructure bill presents several opportunities. We have temporarily reduced our focus on industrial projects due to challenges experienced in 2021 and the latter part of 2023. I believe renewables will certainly drive growth, but there are also promising opportunities in infrastructure.

Excellent. That's very helpful. And then just finally, obviously, Jose, you've been scaling up kind of with expectations for growth for the next couple of years and it sounds like there is so much more growth to come. We're just at the very beginning and across all of your end markets and labor, it's always an issue, continues to be an issue, but when do you think the industry gets to kind of a full capacity where you start to see elongation of the cycles where it really benefits margins?

I think each segment is different. I think in some segments, quite frankly, we're almost there. I think one of the really important things is customers recognize it right; they talk about it. They don't necessarily feel it yet because they know they're still flex in the system, but everybody knows we're going to get to that point. I think coming out of '24 into '25 across all of our segments, we're going to fuel some of that. Some more than others and, I do think that at that point, it does start impacting what we do with customers, how we talk about it, and how we price things.

Excellent. All right. Well, good luck to you in 2024. Thank you.

Thanks, Min.

We currently do not have any further questions. I will turn it back to Mr. Mas for closing remarks.

Just want to thank everybody for participating today and we look forward to updating you on our first quarter call here in a short period of time. Thank you.

This concludes today's call. Thank you for your participation. You may now disconnect.