Morning, everyone. Thank you for joining us. My name is Justin Hauke. I am the senior analyst covering specialty contractors and facility and industrial services. We are pleased to have, once again, MasTec presenting today. We have the company CEO, Jose Mas, and the company CFO, Paul DiMarco. I think what we will do here is, I guess, turn it over to Jose to kind of give a little bit of the lay of the land and what you guys are seeing right now. We got a lot of questions, a lot of things that are going on that are topical, but a lot of things that are important with your company. You guys hosted your first analyst day earlier this year, so we have a lot of things to talk about. If anyone has questions, they can go ahead and email session2@rwbaird.com, and we will try to accommodate those.
There is a breakout too. I will turn it over to Jose to go ahead and get us started.
All right, Justin. Thank you. First, thank you for having us here today. Very pleased to be here. Thank you for joining us. For those of you that are not as familiar with MasTec, we are an infrastructure construction company, really specializing in a couple of key areas, primarily in communications and in power. We operate under four segments today. Our first is communications, where we do both wireless and wireline work. On the wireless side, we are one of the largest builders of wireless facilities in the country, working for AT&T-Mobile, Verizon, other carriers. On the wireline side, we build predominantly fiber extensions and plant for the carriers. On the energy side, we do everything from distribution to substations and transmission. We will talk about that, I am sure, at length in our questioning. It has been an unbelievable market for us.
Obviously, we are in the midst of an incredible growth cycle in all things power generation, and Power Delivery is an important part of connecting that together. We have a segment called Clean Energy and Infrastructure, where we do everything from renewables construction, which again, I am sure we will get into. We do gas-fired generation, especially as it relates to simple cycle and RICE engines. Then we do civil work, some roads, highway, bridges type work. Then we have got a large general buildings group that does everything from airports, seaports, and most recently has been involved in the data center build-out. Finally, we have a pipeline group where we build natural gas, predominantly natural gas pipelines. Have built oil pipelines in the past.
We're very bullish about what's happening in that industry and the amount of pipelines that are being developed across the U.S. in the coming years. We think diversity of our business across the different segments is one of our key strengths. Again, I'm sure that's a topic we'll talk a lot about.
Yeah.
Thank you for being here. Very excited. We're having a great year. We did about $1.15 billion in EBITDA in 2025. We'll do, our latest guidance is right around $1.6 billion, so we feel like we're having really nice growth from 2025, 2026. Top line's been really strong. Again, across our segments, maybe with the exception of comms, we're seeing a lot of strength across our businesses. Very excited about what we're seeing in 2027 and expect a really solid growth based on the significant backlog growth that we've experienced during 2026.
No, that's great overview. It really speaks to the evolution of the company that, I mean, you guys have, over the years we've covered you, it's really changed. I think probably that starts the first question, which is, as far as I know, the first ever analyst day you guys have hosted was this year in May. You laid out 2028 targets for $15 a EPS, really solid revenue growth and margin expansion. I think there's been some moving pieces since then. You did The Superior Group acquisition, which has made the data center be a bigger part of the portfolio. Then you talked about some puts and takes on some of the legacy businesses.
Maybe you could just talk about, within those puts and takes, your confidence on the 2028 targets, and what could go right or wrong to be able to get there that's changed since the May analyst day?
Yeah, sure. So in May, we put out 2028 targets that were basically $22 billion, $2.2 billion in EBITDA, $15 in EPS. Those were organic targets, so without acquisitions. If you add in The Superior Group acquisition, it is going to be a sizable increase to that number. We are highly confident in our ability to reach those targets today as we sit, again, on an organic basis, those targets. We think we are going to make great strides to that in 2027. If I think about 2028, and I break it out by segment, because we also did that during our analyst day, we think we are ahead of target on all businesses with the exception of communications. We think our Power Delivery, our pipeline, and our Clean Energy and Infrastructure segments all have the opportunity to beat the guidance levels that we laid out for 2028.
We are seeing some short-term resistance in our communications business, predominantly around overbuild at-home fiber installations. RDOF was a huge program that drove a significant investment in fiber installations across rural neighborhoods. BEAD was a government program that was kind of approved to offset RDOF, which is actually bigger than the RDOF program. But we are seeing a gap between RDOF finishing and BEAD starting. We have a lot of customers that we think are reassessing their installation priorities, and that is causing a little bit of some headwinds for us in 2027. We will see what happens by 2028, but at this point, we have kind of talked about that business being flattish for us in 2027 versus where our expectations were. At the same time, we are taking a lot of initiatives within that business to improve profitability.
We are highly comfortable that even though our revenue levels will be flat, our margins will be at least in double digits, which should lead to nice EBITDA growth in 2027 versus where we will end up in 2026.
So I guess maybe to just stay on the telecom side before we move on to the other pieces of business, that is your legacy. It was not that long ago, it was 35%. I think it is like 15% of your revenue, just as a testament to how the other parts of the businesses are growing. Could you maybe talk a little bit about- You talked about the overbuild on some of the RDOF, but there has also been some announced restructuring at some of the cable companies and maybe doing some vendor consolidation there.
Opportunity that might present itself to you from being able to pick up scope there, and then maybe positively on some of the long haul fiber stuff, you guys talked about this 2,100-mile build-out that you have that I do not think is in backlog yet, but it is something you are expecting to come into 2027.
Maybe just kind of those moving pieces too.
Yeah. So, maybe let me take a step back on communications. We have two primary businesses in communication. Again, wireless and wireline. Wireless side of our business, it is relatively a maintenance-driven business. If you think about wireless carriers, an incredible amount of demand comes through our devices. That demand grows every year. They have to meet that demand growth. They do that by adding capacity to their network, and that is the primary function that we operate for wireless carriers today, adding capacity on sites. We view that as a very stable business. We view it is a very good business for us. We do well in the margins in that business, and then that business gets accelerated by changes in technology.
As we went from 4G to LTE or 5G, or eventually we will go to 6G, those are periods and times where there is a significant rebuild of the network, where antennas get changed, wires get changed, and that adds to cycles within that business that are very good. We do not really foresee any cyclical movements within that business in the next couple years, so we view the wireless business as marginally growing through capacity constraints and capacity growth, and that is our driver there. Then we have the wireline business. The wireline business is composed of a handful of different opportunities. The first we would call BAU or business as usual, which is a system that is servicing millions of homes, and they have got to keep their network up intact.
They are changing out old equipment, they are putting up a telephone pole when it falls, they are doing moderate expansions of their networks to service their communities. Business as usual, again, very stable business. Then you get into the components of new construction, and today I think there are three primary ones. The first is middle mile, so middle mile fiber. Middle mile fiber today is growing in a big way to support the wireless carriers. T-Mobile does not really have a wireline network. They have been aggressively building a wireline network because it offsets their costs. That is also a very stable piece of the business. Then we have the last two pieces. One we just talked about, which is hyperscaler activity. This is where fiber is going to be built out to data centers to interconnect data centers.
The reality is that where most data centers have been built, they have been in search of power. So they are built in areas that do not have a lot of infrastructure built. It is also the tail of a project. You do not need to have fiber in a data center until the data center is about to be operational, so it tends to be the last portion of the projects that get built. We are in the very early cycles of seeing a significant expansion of hyperscaler fiber activity. We have been very fortunate that we have won a number of those projects. We announced one on our last call, which was 2,100 miles out of a 5,000-mile build. There is a lot more of those coming. A very small piece of that is in backlog.
Initial phases of that we did include in our third quarter backlog, but the majority of that award was not included in our third quarter backlog. Then we have the traditional overbuild fiber, where it is where people are taking fiber to the home and they are building out, whether it is a rural neighborhood or a non-rural neighborhood, but where you have copper or coax feeding your house, and they are trying to bring you a fiber to your house where it significantly increases your speed. That was the predominant nature of RDOF. That is what BEAD is supposed to fund.
Again, we have a lot of customers that have been very vocal about their own processes and what they are doing internally, especially on the old cable operator side, we have got the Comcasts and Charters of the world that are in the middle of doing vendor consolidations, they are in the middle of restructuring their own businesses. We view that as a really good long-term positive sign for companies like MasTec because they will outsource a lot of the services that they may be doing in-house today. There will be a lot less people in those organizations. They will be able to manage a lot less vendors. Those are positives, right? As we win, we win market share, we expand geographies with those. It gives us opportunities to significantly grow our revenue base with both of those.
In the short term, it is a negative because it delays their expansion plans, potentially delays the decisions around where they are going to be investing, potentially you have short-term reductions in CapEx. That is what we are modeling into our base plan for 2027. Yes, the truth is that we do have a lot of opportunities around turning that rather quickly with market share gains, but in the short term, we are expecting it to be relatively flat until we know the outcomes of some of those. There has been a lot of talk in the industry about a fourth wireless carrier, particularly SpaceX.
Yeah
and what they are trying to do in the industry. Again, absolutely incredible opportunity for our industry, for companies like MasTec. We are the largest builder of wireless services in the U.S. If they decided to deploy 80,000 sites, it would be absolutely incredible for MasTec. But again, we have no idea how real that is and the timeframe around that, so none of that is included as we think about the guidance that we have put out for 2027.
J ust before we move off of telecom, but the 2,100 miles that is in the second half of 2027, is that assumed that that does start to go to get to that flat revenue? Also, just how do we think about the profitability of that? Because I would think that that is kind of higher margin, more like your pipeline business.
That is our expectation of the growth part of our business that will offset some of the shrinking parts of our business.
Got it.
That is built into our second half model in 2027. We are already in design on that. It is a full turnkey project, so we are actually doing the full engineering. We will do the permitting, and we will do the execution of that. We feel really good about the assumptions that we have made relative to our 2027 expectations.
Okay.
Anything you want to add?
No. I mean, the margins are healthier than the pipe, than the communications segment in general. I am not going to sign up for pipeline margins yet on that job, but it should be accretive.
Yeah. Higher than your business as usual margins.
Yes.
Yeah. Okay. All right. Maybe the other part, and this is more of a timing thing, but on the pipeline side of the business, this is not the challenges that you are talking about with telecom. This is a growth market, but 3Q, there was some timing that kind of shifted, and that is, I do not know, it is a segment where, like, you get really good productivity, and so it really matters when you start something. But just, as we think about the opportunity there and the ability to get back to the peak of where you were, I think you were like $3.7 billion was your revenue peak in the past, and you have had margins be in the mid-20s there, versus kind of the mid-teens-ish that you have right now.
So maybe just talk about, what are the risks and puts and takes on thinking about the pipeline build over the next couple years?
It is incredible what a year does, right? So if you think about early 2025, there really were not any pipelines planned. The natural gas industry was not expected to significantly grow. All of that changed, right? There is now a big expectation that natural gas is going to be a big driver of power generation. Pipelines are going to be required to both feed that as well as some LNG exports that we are looking at across the country.
So over the course of the last year and a half, we have seen a pipeline of projects that is far greater than anything we have seen in the history of MasTec. The challenge with 2026, and we said it all along, was, there was no supply chain mid-2025. There was no projects planned mid-2025. So all of that had to be restarted. We are seeing the benefits of that in 2026.
Our revenue growth in 2026 is actually quite strong in our pipeline business, but we had a lot of projects that were starting in condensed periods of time. So, for example, in the third and fourth quarter, we had more projects starting in that timeframe than we would historically have. A number of those projects had permit delays, not long permit delays, but permit delays of 60, 90 days, which generally is not an issue, generally does not really move the needle. But since we had so many projects starting at the same time and a few of them were delayed, they impacted our third and fourth quarter of 2026. This is not a pipeline industry issue, right? So we are confident that this is a two-quarter issue of projects slipping here or there. Again, not materially. We do not view a 60-day delay in permits as a material delay.
We just had too many projects starting at the same time. When you look at our 2027 plan, we have more dispersion of when projects are supposed to start, which we think that gives us a lot more visibility into the plan, a lot more security into the plan. The way we work our business is we lay out all the pipelines that we expect are going to be built in the country over the course of the next few years. We lay them all out, and the level of activity that we see for 2028, 2029, and 2030 is greater than at any other level that we've seen historically at MasTec. There are less players in this space today than there were in the last cycle, which only exacerbates that issue.
We're very confident that as we look at 2028, 2029, 2030, we will have the best years in the history of our pipeline business.
I guess maybe the other thing on that, just before we move on, but it seems like one of the And we'll get to the election stuff, but one of the positives, it seems like in this lame duck session that there's this permitting bill that's maybe going to go through. I guess I would say, maybe there was historically a view that the pipelines were kind of a partisan issue, and maybe that's not the case as much anymore at this point, it seems like.
The beauty about the permitting bill is it's bipartisan.
Yeah.
There's very few things today that are bipartisan, so to have both sides agree on anything is quite remarkable, and the fact that we're actually potentially going to have a permitting bill, at least it's being discussed, which was the vote yesterday, that's a huge step in the right direction. Even if it doesn't pass in the lame duck Congress, we think there's a high likelihood that in the next Congress, we would get a permitting bill because, again, we think it's one of the few issues that is bipartisan. I think there's been a realization that gas is going to be a part of the power curve, right. If you go to the previous administration, everything was focused on renewables. We kind of had the pendulum swings pretty rapidly here.
We had a huge focus on natural gas, and I think there's a realization today we need it all, right. We need renewables to be healthy because it's the fastest form to power that exists today in the country. We need gas because it helps with baseload and it helps with cost. I think both of those, because they're the right business decisions to make, will both do very well. I think we will see less politics involved in that than we've historically had, or at least that's our hope. I think both Clean Energy and Infrastructure and renewables, along with gas, is going to have a really good run rate over the course of the next few years.
Yeah.
Because as a country, we need power, and we have no other alternatives.
Yeah. I mean, I think it's a really different dynamic than if we were having the same conversation four years ago when you did the IEA acquisition. It was natural gas is out of the picture, and now it seems like both. Maybe staying on that theme of power generation, one of the other things that was new on this last quarter that you guys talked about was the natural gas opportunity, and I think you said a billion dollars of limited notice to proceed gas plant work. I guess I just would be curious on that, because that's something I hadn't historically thought of you guys as building, and they've been high margin in the past. There's also been challenges on building some of those.
Just maybe just talk about the risk terms on those projects, what capacity you have to be able to build that, and just your confidence on that being a healthy market for you.
Yeah. We've been in this business for a long time. We've said for a long time there's two areas of the business we want to focus on, which is simple cycle gas plants and RICE engines, right? Reciprocating engines. That business is at the lower risk end of what happens with gas generation. We've been very vocal about our concern around combined cycle and the risk associated with the combined cycle, so it's not something that we've done. It's not something that we've pursued. We've been very vocal about it.
We were going to kind of stay in our lane, simple cycle, RICE engines, and we felt, we said at investor day, we thought there was going to be a lot of demand for that. We thought that over time, we could build a billion-dollar business around those two technologies. The truth is that the order flows have come in much faster than we anticipated. We think we're going to get to that level faster than we historically did. It is, again, if you think about that industry, it's the fastest way to get to power immediately, right? Everybody's in a race for time. They're not uncomplex projects, but they're not super complex projects, so you string a number of engines together or turbines together, and you can create power.
There's still projects that require a couple of years of timeframe from design through construction, but you've seen all these orders of turbines that people have been making for the last two years. They're committing power. They're committing behind-the-meter power, which is something a couple years we didn't even talk about, and this is going to be a huge way to fill that gap. I think that there's historically not been this level of installations that have happened. There are not a significant number of contractors that build this. We're one of them, and we're really benefiting from the growth of the industry.
Is that all going to be in the Power Delivery business, or is this also in the general buildings? I do not know how integrated it is.
Yeah, historically, this has been part of our Clean Energy and Infrastructure business.
Okay.
We have got what we call an industrial group that lies in there, which is where that will fall.
Okay. All right, got it. Maybe turning to, I do not know, the elephant in the room, but The Superior Group brought you kind of inside the fence data center exposure. It still is a relatively small piece of your business. I am going to guess 10%-15% of your revenue, maybe pro forma, is data center direct work.
Yeah, for 2026, for sure.
Okay. But it is obviously growing really well. I think one of the strategies with The Superior Group is, they had a couple of states that they were in, but with merging with you, it was the opportunity to expand to more. Maybe if you could just talk about the growth profile of that business, the outlook for data centers, your relative exposure, especially, I think, obviously, everyone has gotten the question about what you think of the election and the sequencing of projects, but maybe just talk about the data center work.
Yeah, look, I think one of the differences between us and a lot of our peers is we are not as exposed to data centers today, right?
Yeah.
We historically have not been. So if you look at 2026 revenues, even with Superior's contributions for two quarters, it is just right at about 10%, probably just over 10%. I think that it is a great market today. It is a market where you can drive outsized margins, and it is an important market to be in. We have been positioning ourselves over the course of the last year to be a bigger player in the data center space.
Our data center business in 2027 will grow substantially from where it was in 2026. That is part of the excitement that we have. That is part of why we think we can do so well from a revenue growth and a margin expansion perspective. We are very pleased with Superior. We believe that the biggest bottlenecks to data center construction, quite frankly, are not permitting, it is not financing, it is labor.
If we're going to get to the levels of construction that people expect, the cog in the wheel is labor. It's the highest forms of labor required on the project, which are generally electrical and mechanical. The Superior Group brought us into the electrical world. They have a great customer base. We work for a number of the largest GCs in the country, and we've really positioned ourselves well. I think we've brought a lot of credibility to The Superior Group because we brought them a much bigger balance sheet, which has given a lot of comfort to their customers, and it's given them the opportunity to significantly grow. We think they're in an incredible geography, so they kind of operate in roughly a five-state region.
We think that their regions politically did very well in the election cycle, and we can talk about that later, but we're very comfortable with the progress that we expect from their customer base. I think there's another piece that kind of gets lost is, even if you talk about a lack of permitting for new projects or for new campuses, there is so much work to do on existing campuses that the tail of this is super long, right? When you get awarded a project, you're getting awarded the first phase of what's a campus environment, so you have multiple years of work that's kind of built into these awards that gets lost in backlog or doesn't really get talked about.
We feel really good about where we're at, where we're doing data center work, what the political environment is in those states, and the longevity of that and the customer's commitment to what they're going to continue to build over time.
I mean, since you mentioned, what states, what is the five footprints that you're saying did well politically?
I mean, even if you look at Ohio, right? If you look at the governor that won, I mean, her policies around data centers were actually more moderate than Vivek's policies around data centers. So the Republican candidate actually had stricter rules around what he wanted to do with data centers in Ohio than she did. And I think it's been evident by what she said or hasn't said since election. I think Ohio is a state that, with the exception of a couple municipalities and counties, has been very favorable to data centers. There's a lot of communities that have embraced them, and they've done very well in. So we're actually bullish about what's happening in Ohio. We're bullish about what's happening in Indiana. We're bullish about what's happening, quite frankly, in Florida.
That's a state that didn't have any data centers, whose previous governor was anti-data centers, whose new governor is really going to be embracing data centers. So we see some states where we expect a ton of growth, some states where we don't really think it impacts them, and some states where it's probably too early to tell.
Okay. Fair enough. On that, maybe the other thing, because I know at least in Texas, part of the, I don't know, desire, I guess, with the new governor is to push that to be more union work, which traditionally would have been more non-union work. You guys are double-breasted, but I mean, just the ability to kind of cross-pollinate and do both union, non-union on the data center side.
I mean, it's the beauty of our model, right? Superior is all union. Historically, the MasTec legacy business has been less union, but we've got our Power Delivery business has a huge portion of the business that's union. Our pipeline business is both union and non-union. So we've got presence in both and the capabilities of doing both.
Okay. Fair enough. I guess next one I wanted to turn to just because it's topical, with the press release that you guys put out last week. 4Q, Paul, I mean, you guys generate a lot of cash in the fourth quarter. I think your guidance is for something like $600 million that comes in. You had a press release saying that you're kind of suspending, I guess, what was late-stage due diligence on an acquisition in favor of buybacks. You got a $250 million buyback program. To what extent do you want to comment on that in terms of what you were looking at and why the buyback makes more sense? I don't know. I mean, you guys press released it. It feels like it's topical to talk about it.
Yeah, look, I think our stock went from about $200 to $150 over the course of the two days post-election.
Yeah.
We've been very vocal about, and historically, we've been very opportunistic around buying stock. We normally don't have buyback programs in place that are methodical. We do it fully based on the value of the business and where we feel there's a great opportunity. At that moment in time, we felt that it was too good of an opportunity to pass up. The reality is that we were prohibited from buying MasTec stock because we had non-public information, material information about an acquisition that was pending. The only way to allow us to buy stock at that point in time was to basically clean ourselves. So it was to publicly announce it so that we could go into the open market and buy shares, which was our intent. We actually really like the deal.
We think it's a great acquisition, and we think it fits a lot of the things that we've been talking about here today. So our press release was the suspension of the acquisition. We're obviously buying shares. There may be a point in time where we restart those negotiations on that same deal. It takes two sides, right? So it's not only our decision, but we have the ability to do both, right? We have the financial strength. We're generating the cash flow where we think we can do both. We just didn't want to miss that opportunity in time, which is why we went public with it.
Yeah. It makes sense, and especially given the timing of the cash flow dynamic, I think that was clear. Maybe just the last question since we do have a breakout session, but to close it would just be, there's a lot going really well in the company. The backlog speaks to itself. What is the risk? If you were to say, what's the exogenous factor that comes up that would change your story over the next couple of years versus what you're seeing? What is that? Is it an execution issue on your side? Is it something that changes with the data center investment demand? What do you think?
Yeah, I think the risk in all is in our business is about execution.
Yeah.
Which is what we control. To the extent that we execute at a high level, we feel really good about our prospects. Our business is about repeat customers. It's about doing good work for customers and having them come back to you with future projects. That's what we want. We want those to be the risk factors, right? We prefer those risk factors over the macro risk factors. Obviously, the data center story will play itself out over the course of the next months as the new Congress takes shape. We feel like the reaction over the course of the last two weeks has been, or last week has been overblown relative to the impact that that could have on the market. Time will tell. But generally, we feel really good about our end markets. If we execute, we're going to do well.
The reality is we don't have the resources today to do all of the work that's demanded of us. The most important thing that we do as a company is select our clients and projects. It's very important to understand the risk profile associated with every job that we're on. Where are they in permitting? What are the risk factors that could ultimately impede that project's ability to move forward or not? That is the most important information we have as an entity. We feel like we've done a really good job at that. We've risk mitigated those projects. We feel like we're on really high-quality accounts with projects that have a really, really high likelihood of moving forward, and that's where we want to be.
This market affords us the ability to be picky and choosy, and I think that's as important as, quite frankly, trying to generate margins, right? Because you can't generate margins if you're not on the work. It's important that these projects move forward, and it all ties in together. I think that's a very important part of what we've been working on over the course of the last few years.
Okay.
I would just add-
Yeah
Diversification that we've built is intentional. We're not overexposed to data centers or any one industry macro trend, and that's by design. I mean, this year is a great example. We had some things that worked against us. We're still ahead of our initial guidance. We did raise guidance throughout the year, and we're coming a little bit short of that potentially in the range we have now. But the business is still very much intact despite headwinds in certain parts of our end market mix. And that's a very deliberate and resilient aspect of our portfolio that we think will continue to benefit us in the years to come.
Great. I think it's a good place to start with. There's a lot of specifics we can get into. It's great for a breakout to do all those. But thank you guys very much for presenting, telling the story. Thank you, everyone for joining us.
Thank you for joining us.
It's Salon A will be the breakout, which is right around the corner.