MasTec Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andy Kaplowitz - Citigroup - Analyst : Good morning, everyone. Nice quarter.

Question: Andy Kaplowitz - Citigroup - Analyst : Well, obviously strong margin performance across the company, but it seems like rarely do you have essentially all of your segments operating better than you expected together. So could you give us a little more color into what's going on? Are you running the company at all differently this year after the year, last year? Or is this just a function of improved price versus cost given labor and equipment supply chains are better as well as obviously good blocking and tackling from the team.

Question: Andy Kaplowitz - Citigroup - Analyst : Okay. And then I know it's a bit early to talk too much about '25 but you did mention the confidence going into '25 given your sequential backlog growth, you've got that Lumen Award which curious if how big that is? But like I think the street is forecasting close to mid-teens EBITDA growth for MasTech in '25. So maybe any puts and takes you see across the businesses and your confidence level in meeting or beating that forecast. Are you comfortable with it?

Question: Andy Kaplowitz - Citigroup - Analyst : And just Lumen is it seems like a very large job any more color on that?

Question: Andy Kaplowitz - Citigroup - Analyst : Appreciate the color.

Question: Steven Fisher - UBS - Analyst : Thanks, good morning and congratulations on the nice margin trajectory here. Just to start off on the slower clean energy revenue ramp. Was that specifically solar project? It sounded like maybe there's some material delivery delays and weather can you talk about how many projects that was driven by? And what's the path to improvement there? Is there any risk to that in Q4 and into 2025?

Question: Steven Fisher - UBS - Analyst : Sounds good. And then just a follow up on the good cash flow and as it relates to capital allocation, I mean, can you just talk about some of the underlying cash flow drivers there that are maybe kind of separate from the non-recourse financing? I'm just kind of curious if there's any connection to sort of the increase in those receivable sales this year to M&A strategy. I'm wondering if the market that you're seeing for M&A is perhaps active enough that it makes you want to have sort of lower leverage sooner to be able to kind of pursue some of those deals that you might be seeing out there. Thank you.

Question: Steven Fisher - UBS - Analyst : Sounds great. Thank you very much.

Question: Neil Mehta - Goldman Sachs & Company, Inc - Analyst : Hey, good morning team. Jose, you, I think you mentioned a few verbally awarded contracts in the oil and gas business. So wondering if you can provide any color there and then for the gas gen business in general or the exposure in general is what does that opportunity set look like for you? Any color you can provide?

Question: Neil Mehta - Goldman Sachs & Company, Inc - Analyst : That's great. Thank you for all that. And then on the clean energy side, your backlog increase was pretty strong this quarter. Can you give us any color on the nature of projects, maybe size customer type if you want to and then anything you can provide on what the impact on margins should be next year?

Question: Neil Mehta - Goldman Sachs & Company, Inc - Analyst : I just wanted to understand what the impact on margins could be given the backlog strength this quarter.

Question: Neil Mehta - Goldman Sachs & Company, Inc - Analyst : Got it. Appreciate that. Thank you.

Question: Brian Brophy - Stifel, Nicolaus & Company, Inc. - Analyst : Thanks. Good morning, everybody. Congrats on the nice quarter. I just wanted to follow up on that large Lumen Award. Can you give us a sense on when that project is supposed to start? And how many years do you guys expect that bill to be?

Question: Brian Brophy - Stifel, Nicolaus & Company, Inc. - Analyst : Okay, that's helpful. And then just one on power delivery. Can you give us a sense for the emergency restoration contribution from some of the recent storm activity, you guys are expecting in the back half of this year.

Question: Brian Brophy - Stifel, Nicolaus & Company, Inc. - Analyst : Appreciate it. Thanks. I'll pass it on.

Question: Sangita Jain - KeyBanc Capital Markets Inc. - Analyst : Hi, good morning. Appreciate you taking my question. So I had one on power delivery since this year, distribution spending has been more muted. Should we expect some type of a catch up in 2025 along with the more normalized spending? I'm trying to figure out if there'll be less of the normal seasonality starting 2025.

Question: Sangita Jain - KeyBanc Capital Markets Inc. - Analyst : Got it. That's great. And my follow up is as your backlog and revenue base grows. Where do you think the biggest pinch point could be in 2025? Is it skilled labor availability or is it equipment availability for coms or clean energy? Can you talk about how you're thinking about this for next year?

Question: Sangita Jain - KeyBanc Capital Markets Inc. - Analyst : Appreciate that. Thank you.

Question: Brent Thielman - D.A. Davidson & Co. - Analyst : Hey, great, thanks. Good morning. Jose or Paul, I mean, really healthy year of cash flow. And I'm wondering how do we think about cash conversion on a go forward basis for MasTech? I understand in this conversion may not be sustainable far into the future. But what is something we can think about is sustainable after five quarters of really big cash flow here.

Question: Brent Thielman - D.A. Davidson & Co. - Analyst : Okay, I appreciate that Paul. And then Jose in communications, I think a few quarters ago, you talked about something in the future where we could see more balance in terms of wireless versus wireline exposure. I guess, I'm wondering if this Lumen and win is a precursor to that. And then also, I mean, obviously the wireless business seems to be picking up for you. So is that, still something you see in the future in terms of -- kind of more of a balanced communications business between those two areas. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 1:00PM, MTZ.N - Q3 2024 MasTec Inc Earnings Call

Question: Brent Thielman - D.A. Davidson & Co. - Analyst : Very good. Thank you.

Question: Jamie Cook - Truist Securities - Analyst : Congratulations ,Jose and Paul on the nice quarter and Mark. I guess two questions, Jose back to the M&A discussion. I've always said you've been very good at identifying adjacent growth opportunities early and successful in acquisitions, but as you think about acquisitions going forward, how much of it is about getting into adjacent market versus, the other thing you mentioned in your prepared remarks that scale is going to be important. So I'm wondering if given the growth that you see ahead of you, whether we need bodies, so we need to acquire more for scale versus getting into an adjacent market. And then my second question, obviously congrats on the margin performance in the businesses outside of oil and gas. But still your oil and gas margins have probably been better than what most of us, would have thought. So just trying to understand with MVP going away, how to think about the profitability of that segment. And is the risk what I mean, that is as the other oil and gas goes down more so before the other businesses can ramp, thank you. The profits in those businesses can ramp at the same time. Thanks.

Question: Jamie Cook - Truist Securities - Analyst : Thank you. And congrats.

Question: Justin Hauke - Robert W. Baird & Co. Inc. - Analyst : Great. Good morning, guys. I just -- I wanted to go back to the large transmission project and just to clarify, is that fully booked and backlog yet or does that come in when you're kind of fully mobilized at the beginning of next year? I know you've got, 18 month backlog. And just, I guess there's been some speculation about what that project are you able to comment any more on the specific scope of the work and your risk terms and on it.

Question: Justin Hauke - Robert W. Baird & Co. Inc. - Analyst : Okay, great. Then that's helpful. And then my second question is just on the clean energy margin. I mean, obviously they've been moving higher and they were really good this quarter. You're guiding for kind of back to mid-single digit for 4Q, which was kind of guiding the (inaudible). Were there any kind of favorable close outs or anything else in the quarter that, we should know just for thinking about modeling it for next year. It looked like the 10-Q talked about maybe some margin increases on a couple of projects in there that maybe benefited.

Question: Justin Hauke - Robert W. Baird & Co. Inc. - Analyst : Okay. Thank you very much for all that. Appreciate the time, guys. Thank you.

Question: Drew Chamberlain - J.P. Morgan Securities LLC - Analyst : Yeah, good morning. Thank you for taking the questions. First, just on the large transmission side, I think you said in some recent quarters that there are a series of large transmission projects out there that you're actively pursuing and chasing. And just any update there, I mean, what's the competitive landscape look like? And when can we expect to possibly hear an announcement of anything?

Question: Drew Chamberlain - J.P. Morgan Securities LLC - Analyst : Okay, great. And then just more generally, I think you said in the prepared remarks, Jose is that, the thing that's got you most excited is that you feel like you have room for significant improvement across each segment right now. And I just wonder if you kind of rank order or elaborate on some of the most prevalent areas where you think improvements coming.

Question: Drew Chamberlain - J.P. Morgan Securities LLC - Analyst : Great. Thank you.

Question: Adam Thalhimer - Thompson, Davis & Company - Analyst : Hey, good morning guys, Greg quarter. Can you talk at all about seasonality in 2025? I'm curious if you could actually have a stronger start to the year. Particularly in segments like clean energy based on project timing. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 1:00PM, MTZ.N - Q3 2024 MasTec Inc Earnings Call

Question: Adam Thalhimer - Thompson, Davis & Company - Analyst : Great. And then can you update us on direct work you're doing for data centers and any discussions you might be having with potential future clients?

Question: Adam Thalhimer - Thompson, Davis & Company - Analyst : Thanks (inaudible)