8-K
MASTEC INC (MTZ)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 31, 2023
MASTEC, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Florida | 001-08106 | 65-0829355 |
|---|---|---|
| (State or Other Jurisdiction<br> <br>of Incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification No.) |
800 S. Douglas Road, 12th Floor
Coral Gables, Florida 33134
(Address of Principal Executive Office)
Registrant’s telephone number, including area code (305) 599-1800
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common Stock, $0.10 Par Value | MTZ | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| ITEM 2.02 | Results of Operations and Financial Condition. |
|---|
The information contained in Item 7.01 of this Current Report on Form 8-K is incorporated by reference in this Item 2.02.
| ITEM 7.01 | Regulation FD Disclosure. |
|---|
On October 31, 2023, MasTec, Inc., a Florida corporation (the “Company”), announced its financial results for the quarter and nine months ended September 30, 2023. In addition, the Company issued guidance for the quarter and year ending December 31, 2023, in each case as set forth in the earnings press release. A copy of the Company’s earnings press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference in this Item 7.01. The information contained in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.
| ITEM 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Exhibit<br> <br>Number | Description |
|---|---|
| 99.1 | Press Release, October 31, 2023 |
| 104 | The cover page of MasTec, Inc.’s Current Report on Form 8-K, formatted in Inline XBRL (included with the Exhibit 101 attachments). |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MASTEC, INC. | ||
|---|---|---|
| Date: October 31, 2023 | By: | /s/ Alberto de Cardenas |
| Alberto de Cardenas | ||
| Executive Vice President, General Counsel and Secretary |
3
EX-99.1
Exhibit 99.1
| Contact:<br> <br>J. Marc Lewis, Vice<br>President-Investor Relations<br> <br>305-406-1815<br><br><br>marc.lewis@mastec.com | 800 S. Douglas Road, 12^th^ Floor<br><br><br>Coral Gables, Florida 33134<br> <br>Tel: 305-599-1800<br> <br>www.mastec.com |
|---|
For Immediate Release
MasTec Announces Third Quarter 2023 Financial Results and Updates Guidance for the Year
Coral Gables , FL **** (October 31, 2023) — MasTec, Inc. (NYSE: MTZ) today announced 2023 third quarter financial results and updated its full year 2023 guidance expectations. Management has elected to accelerate the timing of its third quarter earnings call now scheduled for Wednesday, November 1^st^, 2023 at 8:00 AM Eastern Time.
Third Quarter 2023 results are as follows:
| • | Record Revenue of $3.26 billion |
|---|---|
| • | GAAP Net Income of $15 million |
| --- | --- |
| • | Adjusted Net Income of $76 million |
| --- | --- |
| • | Adjusted EBITDA of $271 million |
| --- | --- |
| • | GAAP Diluted earnings per share of $0.18 |
| --- | --- |
| • | Adjusted diluted earnings per share of $0.95 |
| --- | --- |
| • | Cash flow provided by operating activities of $294 million |
| --- | --- |
| • | Net debt reduction of $213 million |
| --- | --- |
| • | Liquidity of ~$1.16 billion as of September 30, 2023 |
| --- | --- |
MasTec’s third quarter 2023 results were impacted by continued delays on certain Clean Energy and Infrastructure segment project start dates. Margins in this segment remain pressured by the costs to maintain resources for the anticipated ramp in activity. MasTec also expects a lower level of this segment’s activity in the fourth quarter of 2023, further impacted by the recent announcement by Li-Cycle Holdings Corp., indicating a pause in construction on their Rochester Hub project for which MasTec was providing construction management services on a cost-plus basis. Over the course of 2023 clean energy projects have been delayed due to various factors, including interconnect agreement lead times, supply chain issues, permitting delays and tax equity funding uncertainty. The market and MasTec’s visibility on project timing are improving, as evidenced by approximately $500 million of new contract awards in the segment since the end of the third quarter. MasTec expects significant backlog growth by yearend as projects continue to move towards full notice to proceed.
MasTec’s Oil and Gas segment had a slower than anticipated ramp in construction of the Mountain Valley Pipeline project, as hiring the approximately 3,700 crew members took longer than initial estimates while the project faced ongoing legal challenges in the third quarter. All project activity planned for the fourth quarter is now progressing as scheduled and the Company’s full year $2 billion segment revenue outlook remains intact. MasTec now expects to complete the project in the first half of 2024.
Lastly, the Company experienced lower than anticipated revenue in its Communications and Power Delivery segments due to certain customers’ deferral of previously planned activity. These delays were driven by higher financing costs and annual budgetary limitations. MasTec expects the reduced activity to continue through the fourth quarter until annual budget cycles are replenished. Both segments have seen significant awards in the fourth quarter, over $300 million dollars respectively, comprised of territory expansion, new services or new customers, that will flow into backlog at yearend.
In light of these developments, MasTec is also updating its full year guidance. The Company now expects:
| • | Revenue of approximately $12 billion |
|---|---|
| • | GAAP Net Loss of approximately $61 million |
| --- | --- |
| • | Adjusted Net Income of approximately $140 million |
| --- | --- |
| • | Adjusted EBITDA of approximately $850 million |
| --- | --- |
| • | GAAP Diluted loss per share of approximately $0.83 |
| --- | --- |
| • | Adjusted diluted earnings per share of approximately $1.75 |
| --- | --- |
| • | Cash flow provided by operating activities of approximately $500 million for the second half of 2023 and<br>$400 million for the full year |
| --- | --- |
Jose Mas, MasTec’s Chief Executive Officer, commented, “While we are disappointed in our anticipated performance for the second half of 2023, we believe our revised full year guidance fully captures the remaining near-term risks in our business, including the operational challenges IEA has experienced this year. We are keenly focused on providing a clear picture to investors, both near and longer term.”
Mr. Mas continued, “Despite our challenges and the headwinds we’ve faced in 2023, we continue to expect strong, although delayed, demand for our services. Our stated awards post third quarter and expected contract signings through yearend position us to confidently expect mid to high single digit revenue growth in 2024 with modest EBITDA margin expansion. This expectation assumes some continuation of the current economic environment challenges. Our long-term outlook for our business is unchanged and we will work hard to regain the confidence of our stakeholders.”
Paul DiMarco, MasTec’s Executive Vice President and Chief Financial Officer, noted, “Despite the underperformance in our third quarter, we did make progress in cash flow generation, with $294 million dollars of cash flow from operations in the quarter, resulting in net debt reduction of $213 million. We expect this trend to continue in the fourth quarter with net debt reduction slightly lower than the third quarter. While the revised earnings outlook will prevent us from reaching our 2.5x net debt leverage goal by the end of this year, we believe the path to that level is achievable in 2024 with the reasonably obtained 2024 outlook laid out by Jose. We remain very confident in the long-term outlook for our end markets and remain committed to operate the business below 2.5x net debt leverage in support of our investment grade rating.”
Adjusted net income, adjusted diluted earnings per share, adjusted EBITDA and net debt, which are all non-GAAP measures, exclude certain items which are detailed and reconciled to the most comparable GAAP-reported measures in the attached Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures.
Management plans to provide more information on its third quarter earnings call, scheduled for Wednesday, November 1, 2023 at 8:00 AM Eastern Time. The call-in number for the live conference call is (856) 344-9221 or (888) 394-8218, with a confirmation code of 2698200. Additionally, the call will be broadcast live over the Internet and can be accessed, along with any presentation materials, and replayed for 30 days through the Investors section of the Company’s website at www.mastec.com.
The following tables set forth the financial results for the periods ended September 30, 2023 and 2022:
Consolidated Statements of Operations
(unaudited - in thousands, except per share information)
| For the Three Months Ended<br>September 30, | For the Nine Months Ended<br>September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Revenue | $ | 3,257,077 | $ | 2,513,484 | $ | 8,715,851 | $ | 6,769,677 | ||||
| Costs of revenue, excluding depreciation and amortization | 2,857,118 | 2,187,835 | 7,701,392 | 5,949,262 | ||||||||
| Depreciation | 115,033 | 91,291 | 325,318 | 263,487 | ||||||||
| Amortization of intangible assets | 42,266 | 27,979 | 126,252 | 81,242 | ||||||||
| General and administrative expenses | 180,640 | 125,068 | 520,709 | 404,243 | ||||||||
| Interest expense, net | 62,556 | 26,885 | 174,664 | 62,313 | ||||||||
| Equity in earnings of unconsolidated affiliates, net | (6,787 | ) | (6,059 | ) | (23,434 | ) | (19,423 | ) | ||||
| Other (income) expense, net | (16,623 | ) | 174 | (26,332 | ) | (1,897 | ) | |||||
| Income (loss) before income taxes | $ | 22,874 | $ | 60,311 | $ | (82,718 | ) | $ | 30,450 | |||
| (Provision for) benefit from income taxes | (7,569 | ) | (11,089 | ) | 34,231 | 68 | ||||||
| Net income (loss) | $ | 15,305 | **** | $ | 49,222 | **** | $ | (48,487 | ) | $ | 30,518 | **** |
| Net income attributable to non-controlling<br>interests | 1,009 | 326 | 2,215 | 388 | ||||||||
| Net income (loss) attributable to MasTec, Inc. | $ | 14,296 | **** | $ | 48,896 | **** | $ | (50,702 | ) | $ | 30,130 | **** |
| Earnings (loss) per share: | ||||||||||||
| Basic earnings (loss) per share | $ | 0.18 | $ | 0.66 | $ | (0.65 | ) | $ | 0.41 | |||
| Basic weighted average common shares outstanding | 77,640 | 73,936 | 77,418 | 74,386 | ||||||||
| Diluted earnings (loss) per share | $ | 0.18 | $ | 0.65 | $ | (0.65 | ) | $ | 0.38 | |||
| Diluted weighted average common shares outstanding | 78,455 | 75,073 | 77,418 | 75,576 |
Consolidated Balance Sheets
(unaudited - in thousands)
| September 30,2023 | December 31,2022 | |||
|---|---|---|---|---|
| Assets | ||||
| Current assets | $ | 4,038,533 | $ | 3,859,127 |
| Property and equipment, net | 1,729,840 | 1,754,101 | ||
| Operating lease<br>right-of-use assets | 403,070 | 279,534 | ||
| Goodwill, net | 2,118,866 | 2,045,041 | ||
| Other intangible assets, net | 821,329 | 946,299 | ||
| Other long-term assets | 418,089 | 409,157 | ||
| Total assets | $ | 9,529,727 | $ | 9,293,259 |
| Liabilities and Equity | ||||
| Current liabilities | $ | 2,811,293 | $ | 2,496,037 |
| Long-term debt, including finance leases | 3,029,939 | 3,052,193 | ||
| Long-term operating lease liabilities | 279,302 | 194,050 | ||
| Deferred income taxes | 455,009 | 571,401 | ||
| Other long-term liabilities | 240,463 | 238,391 | ||
| Total equity | 2,713,721 | 2,741,187 | ||
| Total liabilities and equity | $ | 9,529,727 | $ | 9,293,259 |
Consolidated Statements of Cash Flows
(unaudited - in thousands**)**
| For the Nine MonthsEnded September 30, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| Net cash provided by operating activities | $ | 196,572 | $ | 118,671 | ||
| Net cash used in investing activities | (171,683 | ) | (241,694 | ) | ||
| Net cash used in financing activities | (181,587 | ) | (139,478 | ) | ||
| Effect of currency translation on cash | 280 | (2,559 | ) | |||
| Net decrease in cash and cash equivalents | (156,418 | ) | (265,060 | ) | ||
| Cash and cash equivalents - beginning of period | $ | 370,592 | $ | 360,736 | ||
| Cash and cash equivalents - end of period | $ | 214,174 | **** | $ | 95,676 | **** |
| Backlog by Reportable Segment (unaudited - in millions) | September 30,2023 | June 30,2023 | September 30,2022 | |||
| --- | --- | --- | --- | --- | --- | --- |
| Communications | $ | 5,299 | $ | 5,420 | $ | 5,024 |
| Clean Energy and Infrastructure | 3,073 | 3,324 | 1,933 | |||
| Oil and Gas | 1,681 | 2,042 | 1,513 | |||
| Power Delivery | 2,437 | 2,656 | 2,757 | |||
| Other | — | — | — | |||
| Estimated 18-month backlog | $ | 12,490 | $ | 13,442 | $ | 11,227 |
Backlog is a common measurement used in our industry. Our methodology for determining backlog may not, however, be comparable to the methodologies used by others. Estimated backlog represents the amount of revenue we expect to realize over the next 18 months from future work on uncompleted construction contracts, including new contracts under which work has not begun, as well as revenue from change orders and renewal options. Our estimated backlog also includes amounts under master service and other service agreements and our proportionate share of estimated revenue from proportionately consolidated non-controlled contractual joint ventures. Estimated backlog for work under master service and other service agreements is determined based on historical trends, anticipated seasonal impacts, experience from similar projects and estimates of customer demand based on communications with our customers.
Supplemental Disclosures and Reconciliation ofNon-GAAP Disclosures
(unaudited - in millions, except for percentages and per share information)
| For the Three Months EndedSeptember 30, | For the Nine Months EndedSeptember 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Segment Information | 2023 | 2022 | 2023 | 2022 | ||||||||
| Revenue by Reportable Segment | ||||||||||||
| Communications | $ | 824.4 | $ | 888.9 | $ | 2,499.6 | $ | 2,375.1 | ||||
| Clean Energy and Infrastructure | 1,099.9 | 563.2 | 2,894.5 | 1,493.5 | ||||||||
| Oil and Gas | 672.3 | 375.8 | 1,270.6 | 927.9 | ||||||||
| Power Delivery | 665.0 | 688.4 | 2,077.1 | 1,985.4 | ||||||||
| Other | — | — | — | — | ||||||||
| Eliminations | (4.5 | ) | (2.8 | ) | (25.9 | ) | (12.2 | ) | ||||
| Consolidated revenue | $ | 3,257.1 | **** | $ | 2,513.5 | **** | $ | 8,715.9 | **** | $ | 6,769.7 | **** |
| For the Three Months EndedSeptember 30, | For the Nine Months EndedSeptember 30, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Adjusted EBITDA by Segment | ||||||||||||
| EBITDA | $ | 242.7 | **** | $ | 206.5 | **** | $ | 543.5 | **** | $ | 437.5 | **** |
| Non-cash stock-based compensation expense ^(a)^ | 7.2 | 5.7 | 24.3 | 18.9 | ||||||||
| Acquisition and integration costs<br>^(b)^ | 21.1 | 33.3 | 60.9 | 59.4 | ||||||||
| Losses on fair value of investment^(a)^ | — | 0.1 | 0.2 | 7.2 | ||||||||
| Bargain purchase gain ^(a)^ | — | — | — | (0.2 | ) | |||||||
| Adjusted EBITDA | $ | 271.1 | **** | $ | 245.6 | **** | $ | 629.0 | **** | $ | 522.8 | **** |
| Segment: | ||||||||||||
| Communications | $ | 78.2 | $ | 110.4 | $ | 234.0 | $ | 236.9 | ||||
| Clean Energy and Infrastructure | 57.6 | 24.6 | 117.8 | 30.2 | ||||||||
| Oil and Gas | 97.3 | 50.3 | 188.9 | 137.9 | ||||||||
| Power Delivery | 57.0 | 83.5 | 163.5 | 185.1 | ||||||||
| Other | 4.4 | 5.6 | 18.2 | 20.0 | ||||||||
| Segment Total | 294.5 | 274.4 | 722.4 | 610.1 | ||||||||
| Corporate | (23.4 | ) | (28.8 | ) | (93.4 | ) | (87.3 | ) | ||||
| Adjusted EBITDA | $ | 271.1 | **** | $ | 245.6 | **** | $ | 629.0 | **** | $ | 522.8 | **** |
| (a) | Non-cash stock-based compensation expense, losses on the fair value of<br>our investment in American Virtual Cloud Technologies, Inc. (“AVCT”) and the bargain purchase gain from a fourth quarter 2021 acquisition are included within Corporate results. | |||||||||||
| --- | --- | |||||||||||
| (b) | For the three month period ended September 30, 2023, Communications, Clean Energy and Infrastructure and<br>Power Delivery EBITDA included $4.8 million, $15.3 million and $0.5 million, respectively, of acquisition and integration costs related to our recent acquisitions, and Corporate EBITDA included $0.5 million of such costs, and for<br>the nine month period ended September 30, 2023, $18.3 million, $36.9 million, $2.5 million and $3.2 million of such costs were included in EBITDA of the segments and Corporate, respectively. For the three month period ended<br>September 30, 2022, Communications, Oil and Gas, Power Delivery and Corporate EBITDA included $0.5 million, $1.1 million, $20.4 million and $11.2 million of such acquisition and integration costs, respectively, and for the<br>nine month period ended September 30, 2022, $2.4 million, $4.5 million, $34.5 million, and $18.0 million of such costs were included in EBITDA of the segments and Corporate, respectively. | |||||||||||
| --- | --- |
Supplemental Disclosures and Reconciliation ofNon-GAAP Disclosures
(unaudited - in millions, except for percentages and per share information)
| For the Three Months EndedSeptember 30, | For the Nine Months EndedSeptember 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Adjusted EBITDA Margin by Segment | ||||||||||||
| EBITDA Margin | **** | 7.5 | % | **** | 8.2 | % | **** | 6.2 | % | **** | 6.5 | % |
| Non-cash stock-based compensation expense ^(a)^ | 0.2 | % | 0.2 | % | 0.3 | % | 0.3 | % | ||||
| Acquisition and integration costs<br>^(b)^ | 0.6 | % | 1.3 | % | 0.7 | % | 0.9 | % | ||||
| Losses on fair value of investment^(a)^ | — | % | 0.0 | % | 0.0 | % | 0.1 | % | ||||
| Bargain purchase gain ^(a)^ | — | % | — | % | — | % | (0.0 | )% | ||||
| Adjusted EBITDA margin | **** | 8.3 | % | **** | 9.8 | % | **** | 7.2 | % | **** | 7.7 | % |
| Segment: | ||||||||||||
| Communications | 9.5 | % | 12.4 | % | 9.4 | % | 10.0 | % | ||||
| Clean Energy and Infrastructure | 5.2 | % | 4.4 | % | 4.1 | % | 2.0 | % | ||||
| Oil and Gas | 14.5 | % | 13.4 | % | 14.9 | % | 14.9 | % | ||||
| Power Delivery | 8.6 | % | 12.1 | % | 7.9 | % | 9.3 | % | ||||
| Other | NM | NM | NM | NM | ||||||||
| Segment Total | 9.0 | % | 10.9 | % | 8.3 | % | 9.0 | % | ||||
| Corporate | — | — | — | — | ||||||||
| Adjusted EBITDA margin | **** | 8.3 | % | **** | 9.8 | % | **** | 7.2 | % | **** | 7.7 | % |
NM - Percentage is not meaningful
| (a) | Non-cash stock-based compensation expense, losses on the fair value of<br>our investment in AVCT and the bargain purchase gain from a fourth quarter 2021 acquisition are included within Corporate results. |
|---|---|
| (b) | For the three month period ended September 30, 2023, Communications, Clean Energy and Infrastructure and<br>Power Delivery EBITDA included $4.8 million, $15.3 million and $0.5 million, respectively, of acquisition and integration costs related to our recent acquisitions, and Corporate EBITDA included $0.5 million of such costs, and for<br>the nine month period ended September 30, 2023, $18.3 million, $36.9 million, $2.5 million and $3.2 million of such costs were included in EBITDA of the segments and Corporate, respectively. For the three month period ended<br>September 30, 2022, Communications, Oil and Gas, Power Delivery and Corporate EBITDA included $0.5 million, $1.1 million, $20.4 million and $11.2 million of such acquisition and integration costs, respectively, and for the<br>nine month period ended September 30, 2022, $2.4 million, $4.5 million, $34.5 million, and $18.0 million of such costs were included in EBITDA of the segments and Corporate, respectively. |
| --- | --- |
Supplemental Disclosures and Reconciliation ofNon-GAAP Disclosures
(unaudited - in millions, except for percentages and per share information)
| For the Three Months EndedSeptember 30, | For the Nine Months EndedSeptember 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||||||
| EBITDA and Adjusted EBITDA Reconciliation | **** | |||||||||||
| Net income (loss) | $ | 15.3 | **** | $ | 49.2 | **** | $ | (48.5 | ) | $ | 30.5 | **** |
| Interest expense, net | 62.6 | 26.9 | 174.7 | 62.3 | ||||||||
| Provision for (benefit from) income taxes | 7.6 | 11.1 | (34.2 | ) | (0.1 | ) | ||||||
| Depreciation | 115.0 | 91.3 | 325.3 | 263.5 | ||||||||
| Amortization of intangible assets | 42.3 | 28.0 | 126.3 | 81.2 | ||||||||
| EBITDA | $ | 242.7 | **** | $ | 206.5 | **** | $ | 543.5 | **** | $ | 437.5 | **** |
| Non-cash stock-based compensation expense | 7.2 | 5.7 | 24.3 | 18.9 | ||||||||
| Acquisition and integration costs | 21.1 | 33.3 | 60.9 | 59.4 | ||||||||
| Losses on fair value of investment | — | 0.1 | 0.2 | 7.2 | ||||||||
| Bargain purchase gain | — | — | — | (0.2 | ) | |||||||
| Adjusted EBITDA | $ | 271.1 | **** | $ | 245.6 | **** | $ | 629.0 | **** | $ | 522.8 | **** |
| For the Three Months EndedSeptember 30, | For the Nine Months EndedSeptember 30, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| EBITDA and Adjusted EBITDA Margin Reconciliation | **** | |||||||||||
| Net income (loss) | **** | 0.5 | % | **** | 2.0 | % | **** | (0.6 | )% | **** | 0.5 | % |
| Interest expense, net | 1.9 | % | 1.1 | % | 2.0 | % | 0.9 | % | ||||
| Provision for (benefit from) income taxes | 0.2 | % | 0.4 | % | (0.4 | )% | (0.0 | )% | ||||
| Depreciation | 3.5 | % | 3.6 | % | 3.7 | % | 3.9 | % | ||||
| Amortization of intangible assets | 1.3 | % | 1.1 | % | 1.4 | % | 1.2 | % | ||||
| EBITDA margin | **** | 7.5 | % | **** | 8.2 | % | **** | 6.2 | % | **** | 6.5 | % |
| Non-cash stock-based compensation expense | 0.2 | % | 0.2 | % | 0.3 | % | 0.3 | % | ||||
| Acquisition and integration costs | 0.6 | % | 1.3 | % | 0.7 | % | 0.9 | % | ||||
| Losses on fair value of investment | — | % | 0.0 | % | 0.0 | % | 0.1 | % | ||||
| Bargain purchase gain | — | % | — | % | — | % | (0.0 | )% | ||||
| Adjusted EBITDA margin | **** | 8.3 | % | **** | 9.8 | % | **** | 7.2 | % | **** | 7.7 | % |
Supplemental Disclosures and Reconciliation ofNon-GAAP Disclosures
(unaudited - in millions, except for percentages and per share information)
| For the Three Months EndedSeptember 30, | For the Nine Months EndedSeptember 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Adjusted Net Income Reconciliation | ||||||||||||
| Net income (loss) | $ | 15.3 | **** | $ | 49.2 | **** | $ | (48.5 | ) | $ | 30.5 | **** |
| Non-cash stock-based compensation expense | 7.2 | 5.7 | 24.3 | 18.9 | ||||||||
| Amortization of intangible assets | 42.3 | 28.0 | 126.3 | 81.2 | ||||||||
| Acquisition and integration costs | 21.1 | 33.3 | 60.9 | 59.4 | ||||||||
| Losses on fair value of investment | — | 0.1 | 0.2 | 7.2 | ||||||||
| Bargain purchase gain | — | — | — | (0.2 | ) | |||||||
| Income tax effect of adjustments^(a)^ | (10.0 | ) | (15.5 | ) | (58.6 | ) | (42.2 | ) | ||||
| Adjusted net income | $ | 75.9 | **** | $ | 100.8 | **** | $ | 104.7 | **** | $ | 154.8 | **** |
| For the Three Months EndedSeptember 30, | For the Nine Months EndedSeptember 30, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Adjusted Diluted Earnings per Share Reconciliation | ||||||||||||
| Diluted earnings (loss) per share | $ | 0.18 | **** | $ | 0.65 | **** | $ | (0.65 | ) | $ | 0.38 | **** |
| Non-cash stock-based compensation expense | 0.09 | 0.08 | 0.31 | 0.25 | ||||||||
| Amortization of intangible assets | 0.54 | 0.37 | 1.61 | 1.07 | ||||||||
| Acquisition and integration costs | 0.27 | 0.44 | 0.78 | 0.79 | ||||||||
| Losses on fair value of investment | — | 0.00 | 0.00 | 0.10 | ||||||||
| Bargain purchase gain | — | — | — | (0.00 | ) | |||||||
| Income tax effect of adjustments^(a)^ | (0.13 | ) | (0.21 | ) | (0.75 | ) | (0.56 | ) | ||||
| Adjusted diluted earnings per share | $ | 0.95 | **** | $ | 1.34 | **** | $ | 1.31 | **** | $ | 2.02 | **** |
| (a) | Represents the tax effects of the adjusted items that are subject to tax, including the tax effects of non-cash stock-based compensation expense, including from share-based payment awards. Tax effects are determined based on the tax treatment of the related item, the incremental statutory tax rate of the<br>jurisdictions pertaining to the adjustment, and their effects on pre-tax income. | |||||||||||
| --- | --- | |||||||||||
| Calculation of Net Debt | September 30,2023 | June 30,<br>2023 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||
| Current portion of long-term debt, including finance leases | $ | 175.3 | $ | 169.3 | ||||||||
| Long-term debt, including finance leases | 3,029.9 | 3,154.6 | ||||||||||
| Total Debt | $ | 3,205.2 | **** | $ | 3,323.9 | **** | ||||||
| Less: cash and cash equivalents | (214.2 | ) | (119.9 | ) | ||||||||
| Net Debt | $ | 2,991.0 | **** | $ | 3,204.0 | **** |
Supplemental Disclosures and Reconciliation ofNon-GAAP Disclosures
(unaudited - in millions, except for percentages and per share information)
| Guidance for theThree MonthsEnded<br>December 31,2023 Est. | For the ThreeMonths EndedDecember 31,2022 | |||||
|---|---|---|---|---|---|---|
| EBITDA and Adjusted EBITDA Reconciliation | ||||||
| Net (loss) income | $ | (13 | ) | $ | 3.4 | **** |
| Interest expense, net | 61 | 49.9 | ||||
| (Benefit from) provision for income taxes | (4 | ) | 9.2 | |||
| Depreciation | 117 | 107.8 | ||||
| Amortization of intangible assets | 42 | 54.7 | ||||
| EBITDA | $ | 203 | **** | $ | 225.0 | **** |
| Non-cash stock-based compensation expense | 8 | 8.6 | ||||
| Acquisition and integration costs | 10 | 26.6 | ||||
| Losses on fair value of investment | — | 0.4 | ||||
| Project results from non-controlled joint venture | — | (2.8 | ) | |||
| Adjusted EBITDA | $ | 221 | **** | $ | 257.9 | **** |
| Guidance for theThree MonthsEnded<br>December 31,2023 Est. | For the ThreeMonths EndedDecember 31,2022 | |||||
| EBITDA and Adjusted EBITDA Margin Reconciliation | ||||||
| Net (loss) income | **** | (0.4 | )% | **** | 0.1 | % |
| Interest expense, net | 1.8 | % | 1.7 | % | ||
| (Benefit from) provision for income taxes | (0.1 | )% | 0.3 | % | ||
| Depreciation | 3.6 | % | 3.6 | % | ||
| Amortization of intangible assets | 1.3 | % | 1.8 | % | ||
| EBITDA margin | **** | 6.2 | % | **** | 7.5 | % |
| Non-cash stock-based compensation expense | 0.2 | % | 0.3 | % | ||
| Acquisition and integration costs | 0.3 | % | 0.9 | % | ||
| Losses on fair value of investment | — | % | 0.0 | % | ||
| Project results from non-controlled joint venture | — | % | (0.1 | )% | ||
| Adjusted EBITDA margin | **** | 6.7 | % | **** | 8.6 | % |
Supplemental Disclosures and Reconciliation ofNon-GAAP Disclosures
(unaudited - in millions, except for percentages and per share information)
| Guidance for theThree MonthsEnded<br>December 31,2023 Est. | For the ThreeMonths EndedDecember 31,2022 | |||||
|---|---|---|---|---|---|---|
| Adjusted Net Income Reconciliation | ||||||
| Net (loss) income | $ | (13 | ) | $ | 3.4 | **** |
| Non-cash stock-based compensation expense | 8 | 8.6 | ||||
| Amortization of intangible assets | 42 | 54.7 | ||||
| Acquisition and integration costs | 10 | 26.6 | ||||
| Losses on fair value of investment | — | 0.4 | ||||
| Project results from non-controlled joint venture | — | (2.8 | ) | |||
| Income tax effect of adjustments^(a)^ | (12 | ) | (16.4 | ) | ||
| Statutory tax rate effects ^(b)^ | — | 5.5 | ||||
| Adjusted net income | $ | 35 | **** | $ | 80.0 | **** |
| Guidance for theThree MonthsEnded<br>December 31,2023 Est. | For the ThreeMonths EndedDecember 31,2022 | |||||
| Adjusted Diluted Earnings per Share Reconciliation | ||||||
| Diluted (loss) earnings per share | $ | (0.17 | ) | $ | 0.04 | **** |
| Non-cash stock-based compensation expense | 0.10 | 0.11 | ||||
| Amortization of intangible assets | 0.54 | 0.70 | ||||
| Acquisition and integration costs | 0.13 | 0.34 | ||||
| Losses on fair value of investment | — | 0.01 | ||||
| Project results from non-controlled joint venture | — | (0.04 | ) | |||
| Income tax effect of adjustments^(a)^ | (0.16 | ) | (0.21 | ) | ||
| Statutory tax rate effects ^(b)^ | — | 0.07 | ||||
| Adjusted diluted earnings per share | $ | 0.44 | **** | $ | 1.03 | **** |
| (a) | Represents the tax effects of the adjusted items that are subject to tax, including the tax effects of non-cash stock-based compensation expense, including from share-based payment awards. Tax effects are determined based on the tax treatment of the related item, the incremental statutory tax rate of the<br>jurisdictions pertaining to the adjustment, and their effects on pre-tax income. | |||||
| --- | --- | |||||
| (b) | For the quarter ended December 31, 2022, includes the effect of changes in state tax rates. | |||||
| --- | --- |
Supplemental Disclosures and Reconciliation ofNon-GAAP Disclosures
(unaudited - in millions, except for percentages and per share information)
| Guidance for theYear EndedDecember 31,2023 Est. | For the YearEndedDecember 31,2022 | For the YearEndedDecember 31,2021 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| EBITDA and Adjusted EBITDA Reconciliation | |||||||||
| Net (loss) income | $ | (61 | ) | $ | 33.9 | **** | $ | 330.7 | **** |
| Interest expense, net | 235 | 112.3 | 53.4 | ||||||
| (Benefit from) provision for income taxes | (38 | ) | 9.2 | 99.3 | |||||
| Depreciation | 442 | 371.2 | 345.6 | ||||||
| Amortization of intangible assets | 169 | 135.9 | 77.2 | ||||||
| EBITDA | $ | 747 | **** | $ | 662.5 | **** | $ | 906.3 | **** |
| Non-cash stock-based compensation expense | 32 | 27.4 | 24.8 | ||||||
| Acquisition and integration costs | 71 | 86.0 | 3.6 | ||||||
| Losses on fair value of investment | 0 | 7.7 | 7.8 | ||||||
| Bargain purchase gain | — | (0.2 | ) | (3.5 | ) | ||||
| Project results from non-controlled joint venture | — | (2.8 | ) | — | |||||
| Adjusted EBITDA | $ | 850 | **** | $ | 780.6 | **** | $ | 939.1 | **** |
| Guidance for theYear EndedDecember 31,2023 Est. | For the YearEndedDecember 31,2022 | For the YearEndedDecember 31,2021 | |||||||
| EBITDA and Adjusted EBITDA Margin Reconciliation | |||||||||
| Net (loss) income | **** | (0.5 | )% | **** | 0.3 | % | **** | 4.2 | % |
| Interest expense, net | 2.0 | % | 1.1 | % | 0.7 | % | |||
| (Benefit from) provision for income taxes | (0.3 | )% | 0.1 | % | 1.2 | % | |||
| Depreciation | 3.7 | % | 3.8 | % | 4.3 | % | |||
| Amortization of intangible assets | 1.4 | % | 1.4 | % | 1.0 | % | |||
| EBITDA margin | **** | 6.2 | % | **** | 6.8 | % | **** | 11.4 | % |
| Non-cash stock-based compensation expense | 0.3 | % | 0.3 | % | 0.3 | % | |||
| Acquisition and integration costs | 0.6 | % | 0.9 | % | 0.0 | % | |||
| Losses on fair value of investment | 0.0 | % | 0.1 | % | 0.1 | % | |||
| Bargain purchase gain | — | % | (0.0 | )% | (0.0 | )% | |||
| Project results from non-controlled joint venture | — | % | (0.0 | )% | — | % | |||
| Adjusted EBITDA margin | **** | 7.1 | % | **** | 8.0 | % | **** | 11.8 | % |
Supplemental Disclosures and Reconciliation ofNon-GAAP Disclosures
(unaudited - in millions, except for percentages and per share information)
| Guidance for theYear EndedDecember 31,2023 Est. | For the YearEndedDecember 31,2022 | For the YearEndedDecember 31,2021 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Adjusted Net Income Reconciliation | |||||||||
| Net (loss) income | $ | (61 | ) | $ | 33.9 | **** | $ | 330.7 | **** |
| Non-cash stock-based compensation expense | 32 | 27.4 | 24.8 | ||||||
| Amortization of intangible assets | 169 | 135.9 | 77.2 | ||||||
| Acquisition and integration costs | 71 | 86.0 | 3.6 | ||||||
| Losses on fair value of investment | 0 | 7.7 | 7.8 | ||||||
| Bargain purchase gain | — | (0.2 | ) | (3.5 | ) | ||||
| Project results from non-controlled joint venture | — | (2.8 | ) | — | |||||
| Income tax effect of adjustments^(a)^ | (71 | ) | (58.6 | ) | (27.4 | ) | |||
| Statutory tax rate effects ^(b)^ | — | 5.5 | 6.7 | ||||||
| Adjusted net income | $ | 140 | **** | $ | 234.8 | **** | $ | 420.0 | **** |
| Guidance for theYear EndedDecember 31,2023 Est. | For the YearEndedDecember 31,2022 | For the YearEndedDecember 31,2021 | |||||||
| Adjusted Diluted Earnings per Share Reconciliation | |||||||||
| Diluted (loss) earnings per share | $ | (0.83 | ) | $ | 0.42 | **** | $ | 4.45 | **** |
| Non-cash stock-based compensation expense | 0.41 | 0.36 | 0.34 | ||||||
| Amortization of intangible assets | 2.15 | 1.78 | 1.04 | ||||||
| Acquisition and integration costs | 0.90 | 1.13 | 0.05 | ||||||
| Losses on fair value of investment | 0.00 | 0.10 | 0.11 | ||||||
| Bargain purchase gain | — | (0.00 | ) | (0.05 | ) | ||||
| Project results from non-controlled joint venture | — | (0.04 | ) | — | |||||
| Income tax effect of adjustments^(a)^ | (0.90 | ) | (0.77 | ) | (0.37 | ) | |||
| Statutory tax rate effects ^(b)^ | — | 0.07 | 0.09 | ||||||
| Adjusted diluted earnings per share | $ | 1.75 | **** | $ | 3.05 | **** | $ | 5.65 | **** |
| (a) | Represents the tax effects of the adjusted items that are subject to tax, including the tax effects of non-cash stock-based compensation expense, including from share-based payment awards. Tax effects are determined based on the tax treatment of the related item, the incremental statutory tax rate of the<br>jurisdictions pertaining to the adjustment, and their effects on pre-tax income. | ||||||||
| --- | --- | ||||||||
| (b) | For the years ended December 31, 2022 and 2021, includes the effect of changes in state tax rates.<br> | ||||||||
| --- | --- |
The tables may contain slight summation differences due to rounding.
MasTec uses EBITDA and Adjusted EBITDA, as well as Adjusted Net Income, Adjusted Diluted Earnings Per Share and net debt, to evaluate our performance, both internally and as compared with its peers, because these measures exclude certain items that may not be indicative of its core operating results, as well as items that can vary widely across different industries or among companies within the same industry. MasTec believes that these adjusted measures provide a baseline for analyzing trends in its underlying business. MasTec believes that these non-U.S. GAAP financial measures provide meaningful information and help investors understand its financial results and assess its prospects for future performance. Because non-U.S. GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-U.S. GAAP financial measures having the same or similar names. These financial measures should not be considered in isolation from, as substitutes for, or alternative measures of, reported net income or diluted earnings per share or total debt, and should be viewed in conjunction with the most comparable U.S. GAAP financial measures and the provided reconciliations thereto. MasTec believes these non-U.S. GAAP financial measures, when viewed together with its U.S. GAAP results and related reconciliations, provide a more complete understanding of its business. Investors are strongly encouraged to review the company’s consolidated financial statements and publicly filed reports in their entirety and not rely on any single financial measure.
MasTec, Inc. is a leading infrastructure construction company operating mainly throughout North America across a range of industries. The Company’s primary activities include the engineering, building, installation, maintenance and upgrade of communications, energy, utility and other infrastructure, such as: power delivery services, including transmission, distribution, environmental planning and compliance, wireless, wireline/fiber and customer fulfillment activities; power generation, primarily from clean energy and renewable sources; pipeline infrastructure, including natural gas, carbon capture sequestration, water and pipeline integrity services, heavy civil, industrial infrastructure, including roads, bridges and rail, and environmental remediation services. MasTec’s customers are primarily in these industries. The Company’s corporate website is located at www.mastec.com. The Company’s website should be considered as a recognized channel of distribution, and the Company may periodically post important, or supplemental, information regarding contracts, awards or other related news and webcasts on the Events & Presentations page in the Investors section therein.
This presentationcontains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements include, but are not limited to, statements relating to expectations regarding the future financial and operationalperformance of MasTec; expectations regarding MasTec’s business or financial outlook; expectations regarding MasTec’s plans, strategies and opportunities; expectations regarding opportunities, technological developments, competitivepositioning, future economic conditions and other trends in particular markets or industries; the impact of inflation on MasTec’s costs and the ability to recover increased costs, as well as other statements reflecting expectations, intentions,assumptions or beliefs about future events and other statements that do not relate strictly to historical or current facts. These statements are based on currently available operating, financial, economic and other information, and are subject to anumber of significant risks and uncertainties. A variety of factors in addition to those mentioned above, many of which are beyond our control, could cause actual future results to differ materially from those projected in the forward-lookingstatements. Other factors that might cause such a difference include, but are not limited to: market conditions, including levels of inflation, rising interest rates or supply chain issues, technological developments, regulatory or policy changes,including permitting processes and tax incentives that affect us or our customers’ industries and the effects on markets, energy prices and our customers resulting from geo-political events such as themilitary conflicts in Ukraine and Israel; the effect of federal, local, state, foreign or tax legislation and other regulations affecting the industries we serve and related projects and expenditures; the effect on demand for our services of changesin the amount of capital expenditures by our customers due to, among other things, economic conditions, including the potential adverse effects of potential recessionary concerns, inflationary issues, supply chain disruptions and higher interestrates, the availability and cost of financing, climate-related matters, customer consolidation in the industries we serve and/or the effects of public health matters; activity in the industries we serve and the impact on our customers’expenditure levels caused by fluctuations in commodity prices, including for fuel and energy sources, and/or fluctuations in materials, labor, supplies, equipment and other costs, or supply-related issues that affect availability or cause delays forsuch items; our ability to manage projects effectively and in accordance with our estimates, as well as our ability to accurately estimate the costs associated with our fixed price and other contracts, including any material changes in estimates forcompletion of projects and estimates of the recoverability of change orders; risks related to completed or potential acquisitions, such as IEA, including our ability to integrate acquired businesses within expected timeframes, including theirbusiness operations, internal controls and/or systems, which may be found to have material weaknesses, and our ability to achieve the revenue, cost savings and earnings levels from such acquisitions at or above the levels projected, as well as therisk of potential asset impairment charges and write-downs of goodwill; our ability to attract and retain qualified personnel, key management and skilled employees, including from acquired businesses, our ability to enforce any noncompetitionagreements, and our ability to maintain a workforce based upon current and anticipated workloads; any material changes in estimates for legal costs or case settlements or adverse determinations on any claim, lawsuit or proceeding; the adequacy ofour insurance, legal and other reserves; the timing and extent of fluctuations in operational, geographic and weather factors affecting our customers, projects and the industries in which we operate; the highly competitive nature of our industry andthe ability of our customers, including our largest customers, to terminate or reduce the amount of work, or in some cases, the prices paid for services, on short or no notice under our contracts, and/or customer disputes related to our performanceof services and the resolution of unapproved change orders; requirements of and restrictions imposed by our credit facility, term loans, senior notes and any future loans or securities; the effect of state and federal regulatory initiatives,including risks related to the costs of compliance with existing and potential future environmental, social and governance requirements, including with respect to climate-related matters; our dependence on a limited number of customers and ourability to replace non-recurring projects with new projects; risks associated with potential environmental issues and other hazards from our operations; disputes with, or failures of, our subcontractors todeliver agreed-upon supplies or services in a timely fashion, and the risk of being required to pay our subcontractors even if our customers do not pay us; any exposure resulting from system or information technology interruptions or data securitybreaches; the outcome of our plans for future operations, growth and services, including business development efforts, backlog, acquisitions and dispositions; risks related to our strategic arrangements, including our equity investments; risksassociated with volatility of our stock price or any dilution or stock price volatility that shareholders may experience in connection with shares we may issue as purchase consideration in connection with past or future acquisitions, or asconsideration for earn-out obligations or as a result of other stock issuances; our ability to obtain performance and surety bonds; risks related to our operations that employ a unionized workforce, includinglabor availability, productivity and relations, as well as risks associated with multiemployer union pension plans, including underfunding and withdrawal liabilities; risks associated with operating in or expanding into additional internationalmarkets, including risks from fluctuations in foreign currencies, foreign labor and general business conditions and risks from failure to comply with laws applicable to our foreign activities and/or governmental policy
uncertainty; risks associated with material weaknesses in our internal control over financial reporting and our ability to remediate such weaknesses; a small number of our existing shareholdershave the ability to influence major corporate decisions, as well as other risks detailed in our filings with the Securities and Exchange Commission. We believe these forward-looking statements are reasonable; however, you should not place unduereliance on any forward-looking statements, which are based on current expectations. Furthermore, forward-looking statements speak only as of the date they are made. If any of these risks or uncertainties materialize, or if any of our underlyingassumptions are incorrect, our actual results may differ significantly from the results that we express in, or imply by, any of our forward-looking statements. These and other risks are detailed in our filings with the Securities and ExchangeCommission. We do not undertake any obligation to publicly update or revise these forward-looking statements after the date of this press release to reflect future events or circumstances, except as required by applicable law. We qualify any and allof our forward-looking statements by these cautionary factors.