MasTec exceeds guidance with 22% revenue growth, $2.48 EPS, and robust backlog of $16.8 billion amid positive market conditions.

OPERATOR - (00:01:09)

Hello and thank you for standing by. Welcome to MassTech third quarter 2025 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised to withdraw your question. Please press star 11 again. I would now like to hand the conference over to Chris McCrae. You may begin.

Chris McCrae - Moderator - (00:01:43)

Good morning and thank you for joining us for MasTec's third quarter 2025 financial results conference call. Joining me today are Jose Mas, Chief Executive officer and Paul DiMarco, chief financial officer. We've prepared slides to supplement our remarks which are posted on MasTec's website under the Investors tab and through the webcast link. There's also a companion document with information and analytics on the quarter and a guidance summary to assist in financial modeling. Please read the forward looking statement disclaimer contained in the slides accompanying this call. During this call we'll make forward looking statements regarding our plans and expectations about the future as of the date of this call. Because these statements are based on current assumptions and factors that involve risks and and uncertainties, our actual performance and results may differ materially from our forward looking statements. Our Form 10K, as updated by current and periodic reports, includes a detailed discussion of risks and uncertainties that may cause such differences. In today's remarks, we'll be discussing adjusted financial metrics reconciled in yesterday's press release and supporting schedules. We may also 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 measures can be found in our earnings press release slides or companion documents. I'll now turn the call over to Jose. Thanks Chris. Good morning and welcome to Mastec's 2025 third quarter call. First, some third quarter highlights. Revenue for the quarter was just shy of 4 billion, a 22% year over year increase. Adjusted EBITDA was 374 million, a 20% year over year increase and this growth performance was the highest level since the first quarter of 2024. Adjusted earnings per share was $2.48, ahead of consensus by nearly 20 cents and despite a revenue record, quarter backlog at quarter end was 16.8 billion, a roughly 325 million sequential increase with every segment delivering backlog growth. In summary, we exceeded guidance across each of our revenue, EBITDA and EPS metrics representing a strong period of execution for Mastec. This strong result is in part a testament to the scale and diversification we have achieved for Mastec over time, and we are excited about our outlook for the balance of the year and beyond, given clearly positive market conditions across all end markets we serve. I'd like to point out some further highlights about our quarter. Our communication segment grew revenues 33% year over year and EBITDA increased 38%. All organic and EBITDA margins for the segment improved 40 basis points compared to last year's third quarter. Our clean energy and infrastructure segment grew revenue by 20% year over year and EBITDA improved 36%. Virtually all organic EBITDA margins for the segment improved 100 basis points compared to last year. Our power delivery segment grew revenues 17% year over year and EBITDA increased 21%. All organic EBITDA margins for the segment improved 30 basis points compared to last year. Despite a difficult year over year storm emergency response comparison that tends to be very profitable. These three segments make up our non pipeline segments which grew revenues by 22% for the third quarter compared to last year, EBITDA by 31% and achieved a 60 basis point improvement in EBITDA margins, again virtually all organic. We highlight this because of the significant investments we've made to diversify our business and position us to participate and benefit from the changing landscape of both power generation and delivery. Our solid execution across these segments, coupled with the expectations of significantly improved pipeline market as natural gas plays a much larger role in future energy generation position MASTIC for continued growth and strong financial performance. MasTec's total backlog remained very healthy in the third quarter, reaching another record level despite significantly increased volumes burn experienced during the period. Third quarter backlog increased 21% year over year and was up slightly sequentially with a book to bill ratio of 1.1 times. While the sequential backlog included a solid 8% increase from our pipeline segment, our visibility in that segment is considerably better than backlog suggests. We continue to expect further backlog growth in the current quarter and to end the year at another record level. Turning to some segment highlights, in our communications segment, the telecom infrastructure market remains dynamic. Our customers are making significant and growing capital investments to support broadband delivery across the country, to replace older cable delivery systems and more recently to enable enhanced artificial intelligence applications. Third quarter revenue easily exceeded our planned contribution from nearly all of our top 10 customers, with higher capital spend seen in multiple regions across wireless and wireline construction resulting in an impressive 33% growth rate versus prior year. In the quarter as expected, margins reached double digits and increased 140 basis points sequentially as well as 40 basis points versus the prior year. Still, the 11.3% EBITDA margin leaves room for improvement as investment requirements for growth moderate. We believe we continue to have significant margin opportunities looking forward. MasTec's wireless business continues to see solid growth from both geographic expansion and providing new and broader services to existing customers. On the wireline side, demand strength continues to be supported by substantial broadband infrastructure buildout by legacy telecom players, cable operators as well as newer entrant fiber overbuilders. This race to connect consumers to broadband fiber continues and we are well positioned to execute deployment nationally. Further middle mile broadband buildouts have emerged as an additional growth driver for years to come and hyperscaler capex associated with the data center buildout is contributing to this additional growth for fiber deployment. Our contract with Lumen, which has began to ramp up in recent months, is anticipated to drive solid and visible growth for our business in 2026. Turning to power delivery, while third quarter financials were solid, profit and margin year over year comparisons were impacted in the period by a lack of storm related restoration services against a more normal comparison in the prior year as well as lower than planned volume from our Greenlink project due to permitting related delays. As has been reported in the press in recent weeks, we have factored both changes into our full year outlook as well as despite these challenges, we expect our power delivery segment to achieve double digit growth in both revenues and EBITDA for full year 2025. Further, our bullish stance on overall grid investment demand remains undiminished and feedback around load growth and capital spend projections by our power delivery customer remains very positive. Implied requirements for grid investments in the coming years are substantial. We see ongoing growth of anticipated power demand set against an aging infrastructure that does not meet either the capacity or the physical location of the sources of incremental supply and demand. We continue to expect large CAPEX commitments across transmission substation distribution as well as new generation capacity. Third quarter backlog for power delivery increased 11% versus the prior year quarter and increased slightly from second quarter despite an increased burn rate post quarter ends. I'm pleased to announce that our transmission and substation group within our power delivery segment was awarded its second largest project ever, trailing only Greenlink project in size. We expect the project to start in mid-2026 and to be added to backlog by year end. We will discuss this project in more detail on our year end call. Turning to our clean energy and infrastructure segment while adjusted EBITDA increased 36% year over year. I'd also like to highlight that we have more than doubled our EBITDA from the segment versus the first quarter, demonstrating the considerable progress we've made during 2025. Renewables demand remained very healthy in the period and we were pleased with execution for the business which saw significant growth both year over year and sequentially while meeting our margin target of high single digit consistent with the prior quarter and improved from the prior year. As we continue to benefit from enhanced focus on execution and working closely with our trusted partners, our industrial and infrastructure business continue to show collective growth with execution on key projects showing results and reflected in strong margin outcomes. We are excited about future growth here from both ongoing transportation and other infrastructure opportunities and from substantial growth potential related to center data center buildouts including both civil work as well as behind the meter power infrastructure. Overall backlog for clean energy and infrastructure of 5 billion increased 21% from the prior year and 2% sequentially with a book to bill of 1.1 times. This included a nine straight sequential increase in renewables backlog. It's important to note that reported backlog is only estimated 18 month backlog. A number of our recent wins have been for projects with late 2026 starts where only a portion of the estimated revenue is included in backlog. While our renewable growth will be driven mostly by solar, we've been very successful in securing wind projects for 2026 and beyond. We believe we are well positioned at current backlog levels for strong continued growth in this segment. Turning to our pipeline infrastructure segment, we saw revenues increase 20% year over year as we returned to growth after lapping the challenging comparisons of the wind down of the MVVP project. The third quarter represented the best margin performance for the year for our pipeline segment while still down from the previous year. We expect continued margin improvements and expect our fourth quarter to be the highest margin quarter of the year in this segment, setting us up very well as we enter 2026. This margin improvement coupled with expected revenue growth creates significant opportunities for earnings growth in 2026 and beyond. Total pipeline backlog increased 8% sequentially to 1.6 billion and more than doubled from the same period a year ago. We added more than 600 million of new bookings in the period and saw a book to bill ratio of 1.2 times despite the higher level of burn. Third quarter backlog saw the inclusion of our activity on the Hugh Brinson project which actually started in the third quarter. We don't normally call out specific projects on our calls, but this project is a good example of how pipeline work is being awarded today. While rumors of our involvement in this project started in the first quarter, we received final signed contract documents just this quarter and physically started work shortly thereafter. I say all this to highlight that while backlog is an important metric in this segment, our visibility into future work is far greater than just backlog. There are a number of projects that we will build starting in 2026 where final contract documents may not be completed and thus not reported in our backlog until close to project kickoff as all variables get included in final contractual documents, we remain optimistic and confident in both the short and long term growth outlook for our pipeline segment Gas fired generation will be a critical source of incremental baseload power generation for decades to come and our customers are getting ahead of the process to supply this important demand source while also meeting the needs of near term LNG export demand growth and continued demand at the consumer level to replace fuel, oil and other sources. In summary, we are pleased with our third quarter results and maintain strong confidence in expected growth based on drivers and powerful demand drivers across each of our businesses. In addition, we are continuously looking for ways to optimize our operating model to generate the best possible margin outcome and we see multiple levers to achieve better margins as we look ahead. We remain very excited about the opportunity for Mastec and our investors over the coming years. As always, our enthusiasm for the outlook is grounded in execution and in the hard work of every person on the mostech team. I'd like to thank all of our people for their continued commitment to our corporate values of safety, environmental stewardship, integrity and honesty, all while serving our customers diligently and ensuring the delivery of a great work product. Thank you all. I will now turn the call over to Paul for our financial review. Paul thank you Jose and good morning. As Jose mentioned, we are pleased with our strong third quarter results driven by continued sequential volume improvement and solid execution across our operating segments. Looking ahead, our customers continue to highlight a growing need for mostech's broad service offerings to meet their infrastructure development goals, giving us high confidence in the growth trajectory of our business across all four operating segments. Infrastructure investment needs across communications, energy and power sectors as well as civil and commercial infrastructure remain in the strongest position we can recall and reinforces our positive outlook for years to come. Now, looking at our third quarter segment performance, our communications segment continues to produce substantial and robust growth with revenue of 915 million topping our forecast notably in the third quarter generating 33% year over year growth. The business remains well positioned to leverage strong demand for both our wireless and wireline service offerings, including an increasingly diverse customer set seeking to deliver broadband telecom infrastructure to both residential and commercial end users. Third quarter EBITDA margin was 11.3%, an increase of 40 basis points versus 10.9% in the prior year and a notable 140 basis point increase from the second quarter. We've reduced our full year margin guidance slightly to reflect the investments made to support our strong organic growth rates. The overall telecommunications end market and our visibility remains strong with third quarter backlog totaling $5.1 billion, a small increase sequentially despite the record quarterly revenue in the period. MasTec's power delivery segment also continues to post significant growth with a 17% increase in third quarter following a similar year on year growth rate than Q2. We continue to see strong growth opportunities across the country through our diverse service offerings that enable our customers to invest in upgrades and new capacity across the US Power grid. Our updated guidance does reflect a lower level of activity than previously expected on GreenLink in the fourth quarter as our customer works through isolated delays due to permitting. We are actively constructing other components of the project and we expect that to continue. EBITDA margin of 9.4% for the third quarter increased 30 basis points from the prior year and 70 basis points sequentially but fell below our low double digit forecast for the period. While an encouraging result in most respects, the outcome was impacted by Project Mix versus our forecast, we continue to expect improvement in the margin performance of our base business over time through continued strong execution, operating leverage and Project mix. In our clean energy and infrastructure segment, total revenue for Q3 of 1.4 billion represented a strong 20% increase from the prior year and similar 21% increase sequentially as our renewables business ramp continued as planned. Overall segment revenue was about in line with our third quarter target with renewables meeting forecast while growing almost 50% year over year. On record demand for new renewable power installations. Third quarter CENI EBITDA increased 36% year over year, significantly outpacing the revenue increase as margins in the segment increased 100 basis points to 8.5% as well as 110 basis points sequentially. Renewables margin was stable sequentially as expected at solid single digit levels, high single digit levels while we captured anticipated operating leverage across industrial and infrastructure from higher volume and strong operating execution. CE&I backlog which totaled just over 5 billion, benefited from solid new bookings across all business verticals contributing to 21% increase from the prior year third quarter and a 2% sequential increase. We have substantial renewables backlog in place now to support a strong 2026 outlook which we expect to show solid growth versus 2025. Our industrial and infrastructure business are also well positioned to continue to win work in the balance of the year to support a higher backlog at year end and ongoing volume growth into 2026. Turning to pipeline infrastructure, third quarter revenue of 598 million was an impressive growth rate of 20% from prior year and an 11% increase sequentially as the business ramps from volume lows seen in the first quarter. The pickup is inclusive of a broad based increase in gas pipeline work nationally though the beat versus plan of over $20 million was led by new work ramping in the southern regions. EBITDA for the quarter of $92 million with a 15.4% margin met guidance of mid teens for the segment. The comparison to the prior year on a margin basis remains challenged by the current ramp of new work versus the prior year outcome positively impacted by project closeouts. Pipeline backlog of approximately 1.6 billion increased 8% sequentially and 124% from the PR with new awards totaling over 600 million in the quarter offset in part by increased burn rates. We again saw diverse project awards including the large job Jose mentioned as well as a number of smaller midstream project wins in the period. As Jose noted, we're pleased with the overall strength, Strong Demand set and Opportunity pipeline and other sorry pipeline and have received significant verbal awards that we expect to convert to backlog in coming periods as we get closer to construction start dates, usually within 30 days of mobilization. As a result, the impact of new awards to our pipeline backlog may be less pronounced than in other segments. Our excitement for this oncoming investment cycle continues to accelerate and we foresee solid growth in our pipeline segment for 2026 and beyond. Regarding our overall progress of margin expansion, we are pleased with a consolidated result of 9.4% in the third quarter which was a really strong 160 basis point improvement from 7.8% in the second quarter and a fairly dramatic lift from the starting point of 5.7% in Q1. The margin progression we have now recorded comes from our continued focus on operating productivity and cost management as well as solid operating leverage as our volume has increased. We have noted an expectation of full year double digit margins as our midterm objective, so we still have some work to get there. Our third quarter results, while improved, were generated by project mix and productivity that is as of yet still not fully optimized. The bottom line is we continue to expect annual positive margin progression which will continue to be a primary focus for mastec. Regarding our updated Consolidated Guidance, our supplemental guidance document for segment and other financial guidance details is now posted to the IR website. We are increasing 2025 full year revenue guidance to $14,075,000,000 with adjusted EBITDA of $1,135,000,000, slightly above the low end of our previous guidance. Our revised outlook reflects higher than previously anticipated levels of communications and pipeline activity offset by lower power delivery revenue than previously expected due in part to timing of activity on Greenlink in Q4 as our customer works through the isolated permit delays. Adjusted EPS is forecasted to be $6.4 up 62% versus 2024. We generated cash flow from operations of $89 million in the third quarter and free cash flow of $36 million, slightly below our expectations. Our strong sequential revenue growth and associated higher working capital investment as well as higher capital expenditures to accelerate growth is impacted these results. We continue to expect $700 to $750 million of cash flow from operations for 2025 assuming DSOs average around the mid-60s for the year. We ended the quarter with total liquidity of approximately $2 billion and net leverage of 1.95 times and we expect further leverage improvement by year end given earnings and cash flow expectations. As I noted last quarter, our strong balance sheet provides us significant financial flexibility to pursue a disciplined return focused capital allocation strategy. Our top priority remains supporting our robust organic growth opportunities through investments in equipment and capacity expansion where we see compelling returns. We will also continue to evaluate opportunistic accretive acquisitions that complement our existing service lines consistent with our long standing approach. In addition, we maintain a share repurchase authorization and will deploy capital to buybacks opportunistically. This concludes our prepared remarks. I'll now turn the call over to the operator for Q and A.

OPERATOR - (00:24:42)

Thank you ladies and gentlemen. As a reminder to ask a question, please press star 11 on your telephone then wait for your name to be announced. To withdraw your question, please press Star one one again. Please stand by while we compile the Q and A queue. Our first question comes from the line of ATM ODAC with Goldman Sachs. Your line is open.

Heidi - (00:25:10)

Hey guys, thank you for taking my question. I guess Jose Mas on the pipeline backlog. Thank you for all the color. Curious if you're able to directionally guide to the level of revenue that these projects and ongoing conversations could lead to for 2026 and M&Aybe even give us a sense of what that backlog growth looks like in the near term, given all these conversations. Good morning, Heidi. One of the reasons we really tried to highlight a specific project on today's call was to kind of talk about the change that we're seeing and how pipeline work is being awarded. I remember years ago when we would have these calls, we would talk a lot about book and burn. And the reality is that the business the way it is today, it's almost returning to that level. We've got commitments from customers on specific jobs. They want to leave the books open to kind of get all the details of the project done. By the time they sign a contract, we're quite frankly ready to start construction, which is very favorable from a risk profile perspective. Where it doesn't work is it doesn't give the street great visibility into our backlog. But conversely, we do have that visibility. Right. So when we've talked about the strength of our pipeline M&Arket, we're more optimistic today than we've been. On our last call we talked about reaching or exceeding historical high levels of revenue. I can tell you today we're more confident about our ability to achieve that now than we were then. It's not for 2026. This is not a 2026 story. I think we'll grow the business double digits in 2026, but really the growth is going to be substantial in 27 and beyond from what we're seeing from the projects that have been committed to us. And it's extremely exciting. Again, from a M&Argin perspective, it's a business that we struggled with on a year over year comparison. This year because of the closeout of MVP and the lower revenue levels, we're going to see that business get back to a strong M&Argin profile. In Q4, it obviously had significant improvements. In Q3 at 15.4%. We expect to do a lot better than that in the fourth quarter and that bodes really well entering 2026 and beyond. So we're excited about our M&Argin potential in the business and we're more excited about the revenue opportunities for beyond 2026 and into 2026. So exciting times. Thank you for that. And then I know you gave the color on the capital allocation strategy. So I guess on the organic growth side, can you remind us what the CAPEX level should be on a run rate basis as we consider the opportunities out there? And then also on M&A, I mean, I know you've spoken about third transmission line capability down the road and need for MA around that but curious if, given what's going on in the M&Arket, you would look at something on gas power generation as well. This is Paul. I'll start with the Capex question. So in the near term, with the outlook we have for pipeline, which is our most capital intensive end M&Arket, you can expect Capex to run in front of depreciation a little bit. Right. So depreciation is running about 300 million right now. You should expect it to be north of that, probably around 350 going into 2026. But it depends where the growth comes from. Obviously we have other segments that are much less capital intensive, so. So that's kind of a near term, M&Aybe 2026, 27 view on M& A strategy. I'd say a couple things. I'd say our focus hasn't changed. We will be more active in the M and A space going forward as it relates to power generation. I think we've historically had an industrial business that we've done some projects we haven't really done combined cycle. I don't know that that's an area that we would get into. At the same time, one of the fascinating things about our business today is I think everybody's being asked by customers to really look at different things and different opportunities, which creates new opportunity revenue streams for all of us in the space. And I think you'll see MasTec pick up its share of that as well. Thank you so much. Appreciate it. Thank you.

Jamie Cook - (00:29:08)

Our next question comes from the line of Jamie Cook with Trua Security. Ilan is open. Hi, good morning and congrats on a nice quarter. I guess my first question, Jose Mas, can you just talk about the permitting issues with Greenlink and how that impacted your guidance? Should I just assume that's a change in your power delivery revenues and then the potential risk that you see on GreenLink in 2026 and the potential to offset that. So that's my first question. My second question, obviously a lot of large work out there across multiple segments. You're on Greenlink. Hugh Brinson project, you want another pipeline job? Just wondering. I guess across each segment or across the company? Given your number of employees you have today and the size of your company, how many large projects do you feel comfortable taking? Do you know what you mean, at one time, just given the risk profile of larger projects, just from an operational execution standpoint, just how you're thinking about that.

Jose Mas - (00:30:13)

Thank you, Jamie. I think you got a lot of questions into that one question, but let me try to start from the top. Okay, look, our fourth quarter change is primarily Greenlink. That's what it is, right? We're at the lower end of the range that we had originally put out for Q4. The difference between the low end of our range and the high end of our range for Q4 was about $30 million of EBITDA. That's all coming out of our power delivery business for the most part. And that's the big change as it relates to Greenlink. We've said a lot historically. It was an incredible win for our company. We're really excited to be working with the customer. Obviously they're facing some challenges on permits, quite frankly that were originally issued and are not being reviewed. We've said that we expected the run rate on that project to be 3 to 500 million a year over a number of years. We gave more clear guidance over time on 25 of 375 to 425. The truth is that for 25 we're going to end up. It's more like somewhere in the $250 million range. So it's a significant difference from what our expectations were of ramp in the second half of the year. With all that said, that project will be built. It's an exciting project. We will build it. We're hoping that the time schedule doesn't really change from a, from a completion perspective, which is just going to increase the load on that project over the coming years. We announced today another transmission substation job within that business which is the second largest award we've ever gotten within that group. That will help obviously in 2026. We're hoping that that's additive to what we would have done with Greenlink, but at a minimum it will significantly help offset it. If that becomes the case, we expect Greenlink activity to increase in 26 versus 25 from current levels. So the story in our mind is really solid. It's intact. When you talk about large projects, I think it's almost important to really. I'm switching subjects now to the large project part of your question. I think it's important to kind of think about different businesses. Right? We don't really have large projects in communications, you know, in pipeline, you know, for the most part it's a project oriented business. We don't have projects like MVP anymore. The projects will be smaller in scale, which were a lot more like the projects we've historically built. So I think we have an enormous amount of comfort, as should our investors relative to that. When you think about our clean energy and infrastructure business, you know, it's. We've Got a nice maintenance business there, our infrastructure business. But at the same time, there are more projects there. You should feel comfortable the level of performance in that business. Again, we've doubled profitability since the first first quarter. So I think people should have comfort around that. You know, when we talk about power delivery, you know, it's a $4 billion segment of that business. You know, 80 to 90% of that business is maintenance driven. It's MSAs, it's working for utilities every day. It's working on distribution lines, it's working on substations. So it's very recurring, predictable business. We've highlighted the project end of that business because it's where we were the smallest. Right. Greenlink was really the first of many projects that we felt could grow our project orientation around that market. So let's take a step back. 17% revenue growth in the quarter from a revenue perspective in power delivery, 21% EBITDA growth for the year, we're expecting 13% growth in power delivery, 13% EBITDA growth. That's important because that's despite Greenlink not having the activity that we expected. Had Greenlink had the activity, obviously those numbers would be a lot bigger. The project portion of our power delivery business is one of the biggest growth potentials that MASTEC has. It's one that we need to cultivate and build again. It doesn't risk the portfolio because it's such a small percentage of MasTec's overall business, but it is important to the growth of our power delivery business. So I'd say all this to say we're very excited about Greenlink. We're very excited about what the opportunity means. We're very comfortable with our ability to execute on that project at a high level. We're super excited about our next win that we'll talk about more on our next call and what that means to MasTec and quite frankly, potentially future wins that exist. So I think our investors should have tremendous comfort around how we've grown the business, how we've thought about the projects, how we thought about the risk profiles and the opportunities that they bring to Maastic.

Jamie Cook - (00:34:30)

Thank you. Appreciate the color and congrats. Thank you. Our next question comes from the line of Philip Shing with Ross Capital Partners. Your line is open.

Philip Shing - (00:34:43)

Hey, guys, thanks for taking the questions. Just wanted to check in with you guys on next year. Do you think $8 of EPS is still on the table for next year or can we assume that this has potentially moved higher after your recent wins? Thanks. Thanks for the question. A Couple things, right. When you look at consensus out there, we haven't given guidance. Consensus today, 10% revenue growth on a year over year basis. 20% EBITDA growth on a year over year basis. We've said that consensus relates to north of $8 a share, which is 25% EPS growth from 25 to 26. I tell you, today we're really comfortable with where consensus sits. We're working really hard to obviously continue to grow and build our business. But I think you know just where consensus stands, right? 10% revenue growth, more than 20% EBITDA growth. Those are fantastic statistics, right. In a company that's done most of its growth on an organic level, that's nothing it sneezed at. We're proud of that. We hope to do better. But yes, we're comfortable with where the numbers sit today. Great, thanks Jose Mas. That's a very helpful color. And then shifting to margins, it sounds like next year the margin expansion narrative is very much on the table. I just wanted to touch on Q4 specifically. Can you help us understand the basis point impact from OPEX investments versus gross margin percentage? Is the gross margin percentage holding up in Q4. Thanks. The way we think about it, right, is again, we've had really high levels of growth and unfortunately with really high levels of growth, you have certain investments that are made to execute on that growth. And not all of our growth is same store sales. And we've kind of used that example historically where same stores is a lot easier to grow with because you already have an office, you have people, and you're just incrementally growing revenues, which is what you want to do to increase margins over time. But we've expanded in a lot of new geographies, we've opened a lot of new offices, we're working for new customers and those require more investments. And I think that when you look at the margin profiles that we've laid out from the beginning of the year, you know, we've got some puts and takes, some businesses are doing better, some are doing slightly worse. I think it's all driven by that. Right. So we've made significant investments to the growth profile. Those investments will pay off. I can tell you that as a company, one of our major focuses is definitely on margin improvement. We think we've got room, quite frankly, across all of our businesses. You know, again, when we think about fourth quarter, we think the major change is really what's happening in power delivery. If you look at, we've had some questions overnight around communications and their margins the reality is, if you look at EBITDA dollars on where we guided versus where consensus was, it's no different. We just have a little higher revenue. And again, that talks to the impacts of investment in growth. So we're really comfortable where we're at. We know we can do better, which I think is a positive. We've got to execute on that. But we feel really good about where our business stands and the opportunities ahead of us. Great. Thanks for all the detail, Jose Mas. Thank you.

Stephen Fisher - (00:37:50)

Our next question comes from the line of Stephen Fisher with ubs. Your line is open.

Jose Mas - (00:37:57)

Thanks. Good morning and congrats. Just to follow up on that last question, but maybe more specifically to the communications segment. It seems like there really is a broadening set of opportunities there and you did call out some of the investments that you're making. Can you just talk about the shape of those investments kind of, is there a lot more that you need to go or are you sort of at the peak point of that and just how the margins can evolve there over the next year or two? Thank you, Steve. I'd highlight a couple of things. First, margins improve 40 basis points year over year to 11.3, which is one of the highest levels that we've had in a long time. When we think about fourth quarter, we're showing almost 100 basis point improvement on a year over year basis for the quarter also, we think really solid. So I think we're headed in the right direction. At the end of the day, that business is going to grow almost 30% on a year over year basis, which is just a staggering number again, organically. And a lot of that has to do with investments in new geographies. And those investments are harder because. Because you're opening new offices, you're either moving people or hiring new people. And it takes longer for those investments to translate into earnings. Right. So I think we've been doing that for a long time. We're seeing the results of those earlier investments already in our numbers or we wouldn't be able to hit these. So it's a lot of the stuff that has been done more recently that's having the negative impacts or really the drag. And again, we're working our way through that. We have opportunities for further growth in 2026. The market is really hot. I think that with all of the changes that we've seen in the government and I know we've talked about beads for a really long time, but I actually now believe that beads is going to have a pretty significant impact on our business. And our customers because of how it's changed in the profile of customers that's going after it. So I feel really comfortable that that's going to be a further growth driver as we think in 26. But you know, everything that's happening with data centers and AI and the need for fiber and the middle mile fiber growth that we're seeing is just providing tremendous opportunity for us across the country. As we obviously increase in size, the growth requirements moderate because we're in a lot more places, a lot more geographies. So again we feel really good about the progress that we made this year in the growth of that business and really what it's going to translate over time. Thanks. And if I could ask a follow up on the power delivery side, you talked about not having as much revenue on Greenlink this year and that's taking some of the profits down. But I guess on the bigger picture about the project itself, does this delay impact the overall expected profitability for the whole project or is it just a push out in timing? And then the bigger picture question is, as this translates to sort of a thought on risk for overall transmission projects that you're going to be taking on over the next couple of years, how should we think about the risk approach that you're taking? There is this sort of like a reminder that you should be kind of very prudent in the risks you're taking on in these transmission projects. Thank you, Steve. I think we've got to be prudent in all risks that we take in all jobs in all of our businesses. And I think that's where I think we've been great stewards of Mosttech and really understanding the risk profiles that we're committing to and contractually protecting ourselves against those as it relates to Greenlink. Again, we're working with our customer. We have a high level of confidence in both our and our customer's ability to get that project done and to get it done safely and timely. We do not expect any impact or profitability whatsoever on that project over the period other than obviously it being in different periods than what we originally expected. So our again our confidence and our excitement around Greenlink is unchanged. We expect it to be a very successful project for both our customer and Mastec. And again we'll provide more updates as they come, but we don't expect any negative impacts in 26 other than from a revenue perspective what it could be to what it ultimately is. And it's just going to compress the timeline. Thank you very much.

OPERATOR - (00:42:23)

Please stand by for Our next question. Our next question comes from the line of Andy Koplowitz with Citi. Your line is open.

Andy Koplowitz - (00:42:32)

Good morning, everyone. Good morning, Andy. Jose Mas Quanta yesterday talked about a total solutions opportunity for hyperscalers. We know you don't have the same exact portfolio as them and you talked about not being particularly excited to combine cycle, but you do have significant capability to help data center customers. So what's the probability that we'll see something like that, like a total solution set of projects for mastec starting in 2026? Could you update us on the journey to a billion dollars that you originally discussed you could do with data center customers? So I'd answer the first part of your question just by saying very high. And I'd answer the second part of your question by saying I think that obviously data centers offer an incredible opportunity. Companies like Mastec in our industry, we're involved in a number of different things already. When you think about what's happening on power, what you think about what's happening on fiber directly for data center builders. Right. We're looking at, you know, we've been working on the civil side for a long time. We've talked about it, we're working on the infrastructure side. But I think our ability to take a larger role and a more important role as we think about those projects on a future basis and really capture a higher performance percentage of that revenue again is extremely high. Great.

Jose Mas - (00:43:48)

And then could you give a little more color into what's going on in clean energy? I think 8.5% you would die. Margin is a high watermark for mastec. I understand Q3 is a seasonally good time of year, but do you think margin on an annual basis can continue to push higher in that segment? And you did lower your revenue outlook slightly in the segment, you're still going to do double digit growth. So how are you thinking about growth across clean energy going into 26? Again, great quarter. 20% revenue growth, you know, more importantly, 36% EBITDA growth for the quarter. We pretty much beat our margins every quarter there relative to what we've guided. I think, you know, we're somewhat conservatively guided for Q4. Hopefully we can do that again. Business is doing really well again. Our clean energy and infrastructure business is a combination of renewables and infrastructure. I think if you think about the infrastructure business, it's obviously a slower grower. That's a business that, you know, if we're growing at 10% a year is really solid. So our renewable business is obviously growing much faster than that we're sitting on the highest level of backlog we've ever had in the business. We expect backlog to Again increase in Q4. Incredible opportunities in front of us. A lot of backlog post the 18 month period where we don't even report. So we're feeling really comfortable about where that business is headed. I think it's going to continue to help drive significant growth in our clean energy business. And you know, our margins have improved. You know, we're hopeful we can sustain that and over time improve on that. So all around, you know, we're feeling really, really comfortable where we stand there and the opportunities for 26 and beyond. Thanks, Jose Mas. Thanks, Hans.

OPERATOR - (00:45:30)

Our next question comes from, from the line. Justin with Bayer. Your line is open. Great.

Justin - (00:45:38)

I guess I've got two. One's just a really quick one. I just wanted to confirm just on that Hugh Brinson project is the full value of that project in backlog? It looks like, I guess it's supposed to complete at the end of 26. So I just wanted to ask that. And then my second question is just on the cash flow. Obviously last year was a huge cash flow year. You've got pretty big guidance here for the fourth quarter ramp. Just curious, what are the contributors to that moving pieces that drive the 4Q cash flow number? Thank you. So I'll cover the first part of the answer. The answer is on the main line. The answer is yes, there's pieces of that project that are potentially not in backlog yet. And then cash flow is just a function of the revenue cadence. Right. So we're forecasting revenue to contract sequentially in the fourth quarter. You know, I think expect a little bit of DSO improvement. You know, got a little bit of degradation up to 69 days in Q3 that we expect to come back down to the mid-60s. So the combination of those two is really what drives the release of the working capital investment in Q4. Thank you. Thanks, Justin.

OPERATOR - (00:46:53)

Please stand by for our next question. Our next question comes from the line of Julian Demoulian Smith with Jeffries. Your line is open.

Julian Demoulian Smith - (00:47:06)

Hey, good morning team. Thank you very much. Just want to follow up from my friend Steve Fisher's question here a moment ago. Can we go back to the comms business? Can we talk about the bifurcation? What's the growth in the wireline versus wireless and what's being implied for 4Q25 here? Just what's the cadence? We expect that to continue here. When you think about that 33% or how are you thinking about that persisting, I hear a little bit of mixed commentary. Would love to hear how you break it out, especially in light of this Lumen contract. Sure. I mean, there's no question that today our wireline business is bigger than our wireless business. It's been the case for some time. Our wireline business is growing faster than our wireless business. Our wireless business is predominantly our biggest account there is AT&T. So so obviously their project with their Nokia Ericsson swap out was a big driver of that. That project started for all intents and purposes in the fourth quarter of 2024. So that has been a driver, a helpful driver in our 225 growth comparisons. There get a little bit harder in Q4. So we've moderated our revenue growth in Q4 versus what we've been achieving for the first three quarters. With that said, our wireline business is growing very rapidly. So I think I don't have the exact number, but I believe our revenue growth in the fourth quarter is estimated to be in the mid single digits and again, something that we're hoping to beat, but again, feel really good about where the business is and where it's headed. Got it. All right. So fingers crossed I'm beating that number there perhaps handily. And then maybe just on backlog real quickly, just to talk about this real quickly, I mean, it almost seems like there's a shadow backlog emerging here, if you want to call it that, for pipelines. Can you speak to a little bit of how to size that up relative to the billion and a half ish of backlog you have in the pipeline business? Any kind of order of magnitude, Any way to think about it, Obviously ET has got other projects like DSW coming up here. I mean, anything that you can kind of point to that you'd flag. And maybe in a similar fashion, transmission project awards seem to be heating up here as well. Do you have you kind of alluded to sort of shadow backlog or opportunities there as well, if you can speak to it. So I think the best way we've been able to do that. Right. Is to talk about future revenue potential and pipeline. And what we said is, which is something that we would never have said a year ago or even probably six months ago, is we now see the ability to exceed historical high revenue levels in that business. To kind of remind everybody, historically our high years in that business were about 3.5 billion in revenue. We're guiding in two two this year. And we now have a path to meet or exceed historical levels. I think that's the best way to kind of frame where we see the opportunity again, not for 26, but for beyond. So I think, and I feel better about the opportunity to do that today than I did last quarter as it relates to transmission. To be clear, today we announced another win within that segment of our business which will be substantial, which is important and is something that will kick off in the middle of 2026. We'll give more details on that project on our next call. But we think a really important fact we said a long time ago we expected to win something else in late 25, early 26. I think it's something else that we're now able to deliver on. And again, we'll talk about that more on our next call. Excellent, guys. Good luck. Thank you.

OPERATOR - (00:50:33)

Our next question comes from the line of Mark Bianchi with td. Your line is open.

Mark Bianchi - (00:50:40)

Hey, thanks. I wanted to ask about the backlog. It may be similar to or along the lines of what Julian's first question was there. But if we look at maybe rewind 18 months and look at where kind of backlog was at that time and the ultimate revenue that you delivered, you had sort of like 64% coverage of that revenue over the following 18 months here. And as I look forward from today and you look at the composition of backlog, is there any reason that we shouldn't think about that ratio of conversion or backlog coverage being a whole lot different? You mentioned the pipeline where maybe that's turning to a bit more of a book and burn type of aspect. So just carry if there's any comments around that comparison, Mark, it's a good analysis. I mean, I think, you know, as we think about it, obviously, I think historically in our history there's been few periods where we've continually beat backlog quarter over quarter over quarter. You know, backlog at times tends to be lumpy as you win awards. You know, the fact that we've been able to deliver continued growth in backlog, to me is as meaningful as any of the percentage statistics you can come up with. I think it definitely shows where the business is headed. So again, we feel really good about where we stand. We think that with all that said, I think there's a lot of opportunity to further increase backlog and further help that. So I do think that backlog is a reflection over time of where your business is headed. And I think over time we've delivered great backlog results which will translate into further revenue growth. So whether I can pin down the specifics on whether the historical percentages are going to play out exactly the way they did. To be honest, I haven't done that math. It might be interesting to do offline, but I haven't done it. But I can just generally tell you that we see momentum in our business. It's supported by our backlog growth and more importantly, supported by the opportunities that we see coming. Okay, great. Thanks for that, Jose Mas. And I guess just the other one back on communication. So the 24 was a down year, 25 was a recovery year. What do you think as a placeholder for 26 growth, do you think this business could do double digit growth, top line growth in 26? Yes. Thank you very much. Thank you, Mark.

OPERATOR - (00:53:21)

Our next question comes from the line of Brian Brophy with Stifel. Your line is open.

Brian Brophy - (00:53:27)

Thanks. Good morning everybody. Appreciate you taking the question. Just following up on some prior discussion. In the past you've talked about having the capacity for two large transmission projects at once. Obviously it sounds like we're going to hit that here next year. But you've also made a lot of investments on the headcount side. Curious if you're still thinking two projects is kind of the limit or how you're thinking about potentially adding capacity on the transmission side to take on more. Thanks. There's no question in our minds that we're going to continue to build that business to take on more projects and to have the ability to take on more projects simultaneously. You start with one, you build the two, you eventually get the three. Right. So you can't get ahead of yourself. Again, we're excited about where we stand and the potential that we have in that business. There are other opportunities out there that we're also interested and we're evaluating. So we expect over time to definitely win more. Okay, thanks. And then also following up on some of the prior discussion, it sounds like combined cycle is a little bit less interesting, but how do you guys think about potential opportunities on the single cycle side in gas? Thanks, Brian. It's a huge opportunity. Obviously there's a lot going on. We do play in that space today, albeit at a smaller level. It's a question that we've constantly got to answer. How much are we willing to invest? How much? Look, it's a very different business than what we've historically done. Risk mitigation in that business is the entire business because there are risks associated with that business that we don't typically see in other parts of our business. So understanding that and really managing towards that, in my mind is the difference between a great project and A bad project. So we're looking at opportunities, definitely an area that we will engage in, but we will be cautious in our engagement around that. Thanks. I'll pass it on. Thank you.

OPERATOR - (00:55:34)

Our next question comes from the line of Brent Thielman with D.A. davison. Your line is open.

Brent Thielman - (00:55:41)

Hey, great, thanks. Just one more for me, really. Just on the pipeline side, Jose Mas, you mentioned this change and how some of these things are being awarded. Can you just talk a little bit about maybe relative to past cycles, the competitive environment, is it different? Are the potential economics on these projects different than past cycles? Especially as you seem to be pretty close to the customers talking about these long term engagements. So, Brian, I think that there is no difference in the earnings opportunity historically. Right. I think we've really performed at a really high level historically. I don't think we're sitting here saying that we've got tremendous opportunity to improve on that, but we definitely have opportunities to get to that and that's a significant difference from where we've been over the course of the last really two years. So, you know, again, not just because of the revenue opportunities, but because of our ability to execute at a high margin level in those businesses, probably what excites us the most. And there's no reason that we shouldn't be able to deliver at historical levels. I also think, you know, we're working with our customers. We've got a lot of long term relationships. You know, we're not here to take advantage of our customers or try to make all our money on one job. We're going to work with our customers to hopefully get a significant size of their plans and their capital that they spend. And in that we want to make a fair margin, we want to make a historical margin, but I don't know that we're necessarily looking at elevated margins. Okay, I'll leave it there. Thank you. Thanks.

OPERATOR - (00:57:24)

Our next question comes from Milan of the Liam Burke with B Rally Securities. Your line is open.

Liam Burke - (00:57:30)

Thank you. Good morning, Jose Mas. Morning, Liam. Jose Mas, you talk about specifically telecom, but I guess it could go across your businesses that you're moving into new geographies and opening new offices. Is that your existing customer pulling you into that market saying, hey, we need you, or are you just identifying the market and that's where you decide to invest? I think it's both new and existing customers. Right. Obviously I think we've done a good job at increasing our share of business with existing customers, especially as we look at a holistic approach across all of the businesses that we offer. The truth is that in today's world, a lot of our customers can use a lot of different Mastec services. I think we've done a good job at cross selling those services and putting us in a position to build for those customers differently than we have in the past. On top of that, again, I think we are, especially as you think about power delivery, we are newer in the space. We've really made a huge push in that business post 2021. So I think our brand recognition has significantly increased in that business and we're getting a lot more opportunities from new customers because of it, and we will help deliver for those new customers. So I think it's a combination of both, whether it's for an existing or a new customer. If you're opening a total new geography, it's really not that much different in terms of the investment in the payback, but the decisions that we've had to make, do we do this organically or do we do this through ma? And I think that for the time being, we've decided to do most of that organically, which I think over time has higher return profile and I think we've executed to that and I think going forward, you'll see a mix of that. Great, thank you. Just quickly, on renewables, you said that it was heavily weighted towards solar this year, but your order flow is looking towards wind in 2026. Is that new build or is it just upgrades and maintenance? Yeah. So, Liam, to be exact, what we said was we expect our renewable growth to be driven by solar because that's what's growing faster. So the bulk of our business today and in the future will continue to be solar. I think we highlighted wind because there's been a lot of questions about how the wind business is doing and where the future of the wind business is. And I can tell you that it's an important part of our portfolio between what we put in backlog and what we expect to put in backlog here for the fourth quarter, we're going to end up with three of the four largest jobs in MasTec's history on the wind side, which is just a, in today's world, somewhat of a staggering statistic. I think it bodes really well to the longevity and really the strength of the wind business, in addition to what we're doing on the solar side. So we just wanted to highlight it because I think so much gets talked about solar, but I actually think there's a pretty healthy wind business out there that we've done a good job at cultivating and Growing. And that was really the only purpose for the comments. Great, thank you, Jose Mas. Thanks, Liam.

OPERATOR - (01:00:34)

Thank you. Due to the interest of time, we have time for a final question. That question will come from Mohit with Mizuhu. Your line is open.

Mohit - (01:00:47)

Hi, thanks for squeezing us in. This is Mahiv from Mizuho. Just want to follow up on the previous question. Could you talk about like the battery storage business? Talk about wind and solar, but any thoughts on the growth in that segment for you? And separately, just on the pipeline side, any thoughts on labor constraints if any part of the business for you? Yeah, so the first part of the question, I mean, battery storage is becoming a much larger part of our entire portfolio. The majority of our projects today have some sort of battery opportunity related to them. And I think that business has grown really nicely for us in 2025 and definitely been a growth driver for the business this year and one that we expect for next year. I think the second part of the question I missed the end, but I think it was around pipeline constraints. I think when we think about the business, it's obviously been a very radical change on what the expectation of the pipeline market was going to be in 25 versus at this point last year. And I think that our customers obviously have decided to make significant investments. Those investments take a little bit of time. So, you know, one of the reasons that I think that we talk so heavily about back end of 26 is because I think it's taken that amount of time to get engineering, permitting and materials in line to be able to execute on those projects. So while I think that there were some constraints early on in this year to get that cycle going at the level that it wants to be as an industry, I think we're getting through that and we'll see that I think start to really pop. Second half of 26. Thank you. Thank you.

OPERATOR - (01:02:29)

Thank you. I would now like to turn the call back over to Chris for closing remarks.

Chris McCrae - Moderator - (01:02:35)

Thank you. That concludes today's call. Thank you for participating. And as a reminder, please visit our website for a replay and transcript of the call, which will be posted when available.

OPERATOR - (01:02:45)

Thank you. Thank you for your participation. You may now disconnect.