Q4 2024 MasTec Inc Earnings Call
Please standby.
Speaker Change: Welcome to mass tax fourth quarter 'twenty 'twenty four earnings conference call. Initially broadcast on Friday February 28 2025.
Speaker Change: Remind participants that today's call is being recorded.
Marc Lewis: At this time I'd like to turn the call over to our host Marc Lewis <unk>, Vice President of Investor Relations Mark <unk>.
Speaker Change: Thanks, Jennifer and good morning, everyone welcome to <unk> fourth quarter call.
Speaker Change: Statements made pursuant to the safe Harbor for forward looking statements described in the private Securities Litigation Reform Act of 1995.
Speaker Change: Communications, we may make certain statements that are forward looking statements regarding <unk> future results plans and anticipated grants in the industries, where we operate these forward looking statements are the company's expectations only thing as initial broadcast of this conference call and the company does not undertake to update these expectations based on subsequent events or knowledge.
Speaker Change: Such risks uncertainties and assumptions are detailed in our press releases and filings with the SEC.
Speaker Change: One or more of these risks or uncertainties materialize or should any of our underlying assumptions prove incorrect actual results may differ significantly from results expressed or implied in this communication to that.
Speaker Change: In today's remarks by management, we'll be discussing adjusted financial metrics are reconciled in yesterday's press release Whats 40 schedules.
Speaker Change: It will be making certain non-GAAP financial measures in this conference call a reconciliation of any non-GAAP financial measures not reconciled in these Thomas is most comparable GAAP financial measure can be found in our earnings press release. Please note that we had two documents I should say with todays webcast on the investor.
Speaker Change: And presentations page of our website at <unk> Dot com.
Speaker Change: As a companion dogs with information and analytics on the quarter just ended and our guidance summary for 2025.
Speaker Change: Thank you your financial models going forward.
Jose Mas: PDF files are available for download with US today, we have Jose Mas, our CEO and Paul <unk>, our EVP and Chief Financial Officer. The format of the call will be opening remarks and analysis by Jose followed by financial review from Paul. These discussions will be followed by Q&A period, and we expect to call to last about 60 minutes. We had another great quarter ahead of expectations of volume.
Speaker Change: Thanks to talk about today, so I'll turn the call over Jose.
Jose Mas: Thanks Mark.
Jose Mas: Good morning, and welcome to <unk> 2020 for fourth quarter and year end call.
Jose Mas: Today, I'll be reviewing our fourth quarter and full year results as well as providing my outlook for 2025 and the markets we serve.
Jose Mas: First some fourth quarter highlights Rev.
Jose Mas: Revenue was $3 4 billion.
Jose Mas: Fourth quarter, adjusted EBITDA was 271, million% to 20% year over year increase in <unk>.
Jose Mas: Fourth quarter, adjusted EPS was $1 44 more than double last year's fourth quarter.
Jose Mas: For the full year 2024 revenue was $12 3 billion.
Jose Mas: 2024, adjusted EBITDA was $1 6 million and almost 20% year over year increase 2020 for full year adjusted earnings per share was $3 95.
Jose Mas: And full year cash flow from operations was $1 1 billion and net debt was reduced by over $700 million for the year.
Jose Mas: In summary.
Jose Mas: Fourth quarter performance was strong.
For the quarter revenue EBITDA and EPS were all above guidance and backlog grew sequentially in every segment.
Jose Mas: I'd like to highlight that fourth quarter non pipeline revenue increased 21% year over year and fourth quarter non pipeline EBITDA improved 57% year over year.
Jose Mas: Combined with solid third quarter results, we entered 2025 with great momentum.
Jose Mas: For full year 2025, we expect about 9% revenue and EBITDA growth.
Jose Mas: But taking into account that we expect our pipeline infrastructure business to decline versus 2024 because of the completion of the mountain Valley pipeline, we expect our non pipeline businesses to grow revenues, 14% and EBITDA by over 25%.
Jose Mas: I'd like to repeat that for 2025, we expect our non pipeline revenues to increased 14% and non pipeline EBITDA to grow over 25%.
Jose Mas: That growth is supported by our backlog and strong customer demand.
Jose Mas: All of that with an improving landscape and our gas pipeline business and I believe <unk> has never been better positioned.
Jose Mas: Let me elaborate.
Jose Mas: I've had the privilege and honor of being Mostek CEO now for just over 17 years.
Jose Mas: I've never seen the demand momentum and the number of opportunities for our collective business.
Jose Mas: I wanted to emphasize this today because over the last month, we've seen investor uncertainty related to announcements like D C or the concerns of political shifts related to our business.
Jose Mas: While we definitely need to understand potential disruptions to our business and how any action may affect us.
The overarching theme is the unprecedented level of demand on our communication power delivery generation civil and pipeline infrastructure customers.
In every segment, we operate our customers are facing increased demand for their services.
Jose Mas: More importantly, this isn't a bubble of short term demand, but a fundamental need to support our country's fastest growing industries.
Jose Mas: While our backlog today is at record levels opportunities with our customers are accelerating.
Jose Mas: Customers are talking about multiyear and decade long plans.
Jose Mas: As a result, <unk> has invested in continually cultivating the industry's best talent.
Jose Mas: With over 30 dedicated trading facilities throughout the country, we are preparing the workforce of tomorrow.
Jose Mas: Now I'd like to cover some segment highlights.
Jose Mas: In our communications segment.
Jose Mas: Fourth quarter revenues were up 28% over last year's fourth quarter and also up sequentially, even though the third quarter is usually our strongest.
Jose Mas: EBITDA for this segment was up 67% versus last year's fourth quarter.
Jose Mas: Backlog was up sequentially and year over year backlog increased by nearly $400 million.
Jose Mas: We continue to enjoy strong demand and virtually every aspect of telecom infrastructure.
Jose Mas: Our wireless business successfully started on this new contracts in the second half of the year with both growth and geography and services.
Jose Mas: Funding and build outs of broadband infrastructure is growing supported by federal investment.
Jose Mas: Middle mile activity and the demand created by Hyperscale is creating a new wave of long haul build out and we're seeing great optimism from our customers as there is a race to build fiber throughout the country.
Jose Mas: And our power delivery segment.
Jose Mas: Fourth quarter revenues were up about 16% over last year's fourth quarter.
Jose Mas: That was the highest level of growth for any quarter compared to last year.
Jose Mas: We expect double digit revenue growth for this segment in 2025 with revenues for this segment increasing by over $500 million.
Jose Mas: While our customers have been planning for significant investments to the grid for years. There has been a lot of political focus on grid reliability.
Jose Mas: Terms like unleashing American energy and National Energy Emergency are top of mind in Washington.
Jose Mas: But more importantly, what is driving the need for investment is in politics, but rather demands.
Jose Mas: Our customers are focused on meeting this increased demand and we expect significant opportunities related to the transmission grid.
Jose Mas: Substations distribution, a new generation.
Jose Mas: Backlog was up about $150 million sequentially.
Jose Mas: And up about $900 million year over year for the segment.
Jose Mas: We're excited about our opportunities for 2025 and beyond.
Jose Mas: And our pipeline segment.
Jose Mas: Fourth quarter revenue as expected was down both year over year and sequentially.
Jose Mas: Today, we provided revenue guidance of $1 8 billion for the segment versus the just over $2 1 billion. We achieved this year.
Jose Mas: As we previously discussed the completion of the Mountain Valley pipeline is impacting 2025 revenues as large project activity had slowed.
Jose Mas: With that said today, there is significant optimism for the future on behalf of our customers.
Jose Mas: As gas fired generation enjoys a sort of Renaissance. The pipeline is built to support that will have a meaningful impact on our business.
Jose Mas: We are increasingly bullish not only in potentially outperforming our guidance for 2025.
Jose Mas: But more importantly, we now expect revenues in 2026 and beyond to exceed 2024 levels.
Jose Mas: Finally in our clean energy and infrastructure segment.
Jose Mas: Fourth quarter revenue was the highest revenue quarter in this segment's history and EBITDA was also a record levels.
Jose Mas: Revenue was up 18% and EBITDA was up over 100% year over year for the quarter.
Jose Mas: Backlog was up sequentially by over $100 million.
Jose Mas: And book to Bill was about $1 one.
Considering this was the highest revenue quarter in segment history. We're both proud of this backlog growth, but also bullish about what it means for 2025.
Jose Mas: Backlog is up over $1 1 billion versus last year's fourth quarter.
Jose Mas: Our business is enjoying really strong demand.
Jose Mas: And despite concern around the political landscape. We expect continued backlog growth for this segment in 2025.
Jose Mas: Our efforts around customer and project selection and the effort we've put around truly understanding project timing starts and risks has really started to pay off.
Jose Mas: We've significantly grown the scale of our execution teams and we are beginning to see the financial improvements of our collective efforts.
Jose Mas: In summary, we had an excellent fourth quarter.
Jose Mas: While the financial metrics exceeded guidance, our biggest success both for the quarter and the year is how we positioned master.
Jose Mas: We are on the front lines, helping.
Jose Mas: Helping our customers modernize and rebuild America's infrastructure.
The diversity of our business is our strength.
Jose Mas: For example.
Jose Mas: Today.
Jose Mas: <unk> Tec is connecting people and technologies through our communication business.
Speaker Change: We are helping our country reach energy independence.
Jose Mas: We're modernizing the electrical grid.
Jose Mas: We're generating energy through renewable sources and building the associated energy storage.
We're building the pipelines that will allow us to use our nation's significant supply of natural gas.
Jose Mas: We're on the front end of providing civil resources to data center developers and helping them meet their power and communication needs.
Jose Mas: We're building the roads and bridges that connect our communities.
Jose Mas: These skill sets and expertise provide mass tech with endless opportunities for future growth.
Jose Mas: We are pleased with our market position our.
Jose Mas: Our diversified business model and our ability to offer our customers integrated solutions at scale.
Jose Mas: I believe that the most successful companies in our space are those that have the scale to meet our customers' demands.
Jose Mas: Our customers' projects have significantly increased in size scope and complexity and there is no question that our customers need strong partners.
Jose Mas: There is a lot to be excited about.
Jose Mas: With that said, we also need to keep improving.
Jose Mas: All our financial metrics in 2024 were much improved we also have the ability to meaningfully improve margins.
Jose Mas: That opportunity for improvement is actually what I'm most excited about.
Jose Mas: Our margin improvement opportunity, coupled with strong revenue growth should lead to significant value creation for our stakeholders.
Jose Mas: I am confident at the Master team will deliver.
Speaker Change: I'd like to take this opportunity to thank the men and women of Mastec.
Jose Mas: I'm honored and privileged to lead such a great group.
Speaker Change: The men and women of Mostek are committed to the values of safety environmental stewardship integrity honesty and in providing our customers a great quality project at the best value.
Speaker Change: These traits have been recognized by our customers and it's because of our People's great work that we've been able to position ourselves for continued growth and success.
Paul: I'll now turn the call over to Paul for our financial review fall.
Paul: Thank you Jose and good morning, everyone.
Speaker Change: As we reflect on 2024, we're proud of the meaningful progress made across several key initiatives that are critical to our long term success.
Speaker Change: Over the past year, we have successfully advanced our acquisition integration efforts strengthened our balance sheet through debt reduction and capital structure improvements and enhance the accuracy of our forecasting and guidance.
Speaker Change: Most importantly, we have delivered improved operational and financial performance.
Speaker Change: While our 2024 results Mark an important step in the right direction. We firmly believe there is still significant room to build on this momentum and generate even stronger results in the years ahead.
Speaker Change: We remain focused on executing our strategic priorities with discipline and look forward to sharing more details with you today.
Speaker Change: I'll start with some 2024 highlights.
Fourth quarter revenue was above expectations at $3 4 billion and adjusted EBITDA was $271 million exceeding guidance by approximately $12 million.
Speaker Change: Clean energy and infrastructure drove the fourth quarter results with $104 million EBITDA or eight 3% of revenue.
Exceeding guidance by 140 basis points.
Speaker Change: Adjusted earnings per share was $1 44 more than doubling year over year.
Speaker Change: 2020 for full year revenue was $12 3 billion, while adjusted EBITDA of $1 $6 million and adjusted earnings per share of $3 95.
Speaker Change: Both exceeded our annual guidance expectations with annual adjusted EPS also doubling year over year.
Speaker Change: Our fourth quarter cash flow from operations performance remained very strong at approximately $470 million.
Speaker Change: The total for 2024 to $1 1 billion amongst track record.
Speaker Change: DSO continued its positive trend ending at 60 days for the quarter down from 68 days at the third quarter and 74 days for the prior year net.
Net debt at year end is $1 8 billion down over $700 million for the year net.
Speaker Change: Net leverage now stands at one eight times in line with our financial policy.
We are proactively engaged with the rating agencies and expect their outlooks to be reevaluated in the near future to account for Mastec strong performance.
Speaker Change: 18 month backlog at year end totaled $14 3 billion, an increase of over 400 million sequentially and almost $2 billion year over year.
Speaker Change: This represents a record level for Mastec and all three non pipeline segments.
Speaker Change: The growth in backlog is even more impressive when you consider it came despite a record quarterly revenue level for master collectively.
Speaker Change: And for our communications power delivery and clean energy segment individually.
Speaker Change: We have very good visibility to support our 2025 outlook and dialogue with customers across all of our end markets continue to indicate strong demand into 2026 and beyond.
Speaker Change: Turning now to our segment performance and outlook.
Speaker Change: Fourth quarter Communications revenue was $975 million ahead of our estimates and up 20% year over year <unk>.
Speaker Change: Adjusted EBITDA margin was nine 9% expanding 230 basis points year over year.
Speaker Change: We continued the efficient transition into our expanded wireless territories and the pace of activity on wireline projects remains strong.
Speaker Change: Annual 2020 for Communications segment revenue was $3 46 billion up 6% year over year with adjusted EBITDA margins, expanding 70 basis points to nine 6%.
Speaker Change: As disclosed in yesterday's press release, beginning in 2025 results related to certain utility operations previously reported our communications segment will be reported in power delivery to better align with how we manage the business.
Speaker Change: Our communications segment guidance, reflecting this realignment cost for annual revenue of $2 8 billion, 11% growth year over year with adjusted EBITDA margins in the low double digits compared to eight 7% for 2024.
Speaker Change: Revenue for the first quarter of 2025 is expected to be $600 million, representing 19% growth year over year.
With adjusted EBITDA margins of six 5% to 7% increasing over 150 basis points from last year's first quarter.
Speaker Change: We have provided recast quarterly and full year 2024 results, reflecting the realign segments in our guidance summary.
Speaker Change: Fourth quarter clean energy and infrastructure segment revenue was $1 6 billion, 18% growth year over year with adjusted EBITDA margins of eight 3%, increasing 80 basis points from our strong third quarter and over 340 basis points year over year.
Speaker Change: Once again, we had strong performance across all three segments verticals with renewables infrastructure and industrial all posted their highest margins of the year.
Speaker Change: Full year segment revenue was approximately $4 1 billion with adjusted EBITDA margins of six 3% up 200 basis points from 2023.
Speaker Change: Backlog for the segment now stands at $4 2 billion.
Speaker Change: Up 36% year over year our.
Speaker Change: Our revenue visibility continues to improve for this segment.
Speaker Change: For 2025, we expect clean energy segment revenue to approximate $4 $75 billion approximately 16% growth adjusted.
Speaker Change: Adjusted EBITDA margins are expected to approximate to be approximately 7%.
Speaker Change: Q1 revenue is expected to be $950 million, representing 26% growth year over year with adjusted EBITDA margins in the mid single digits 250 to 300 basis points higher versus last year.
Speaker Change: Fourth quarter pipeline infrastructure revenue was $430 million with adjusted EBITDA margins of 13, 6%.
Speaker Change: For the full year revenue was $2 1 billion and adjusted EBITDA margins were 18, 3%.
Speaker Change: Please note that we formally renamed this segment to better reflect the nature of our activity in the space, but there were no changes in the segment composition or historical results.
Speaker Change: We.
Speaker Change: <unk> 2025 pipeline infrastructure revenue to be approximately $1 8 billion with adjusted EBITDA margins in the mid teens.
Speaker Change: The revenue reduction versus 2024 is driven by last year's completion of MVP and timing of upcoming projects.
Speaker Change: Which we expect to start in the latter half of the year.
Speaker Change: First quarter revenue is forecasted at $325 million with mid teens adjusted EBITDA margins. Most if not all of the year over year revenue contraction should occur in the first half.
Speaker Change: Our customers' planned project activity continues to improve both in terms of the number of new projects and timing of previously announced awards.
Speaker Change: We expect a multiyear expansion cycle for this segment that we are uniquely positioned to capitalize on.
Speaker Change: Fourth quarter power delivery segment revenue was $762 million and adjusted EBITDA margin was seven 1% both in line with our expectations.
Speaker Change: Annual 2020 for power delivery segment revenue was approximately $2 $7 billion with annual adjusted EBITDA margin of 7%.
Speaker Change: Two important developments occurred in the fourth quarter first we began construction of the Greenland transmission line, which is moving along well.
Speaker Change: Two Midwest utility clients resolve the rate case appeals and have indicated a path to increased capital expenditures in 2025.
Speaker Change: Our 2025 outlook incorporating the realign utility operations previously reported in communications calls for revenue of $4 $1 5 billion.
Speaker Change: 15% growth year over year and high single digit adjusted EBITDA margins 50 to 100 basis points higher than last year's eight 3%.
Speaker Change: First quarter revenue is expected to be $850 million with adjusted EBITDA margin in the mid single digits.
Speaker Change: The year is starting off at a slower production rate than previously anticipated due to severe winter weather in a number of markets pushing project activity in the subsequent quarters.
Speaker Change: Q1 should be the lowest margin quarter of the year.
Ken: Ken recast 2024 results for the revised segment can be found in the guidance summary.
Ken: From a consolidated perspective, we are projecting 2025 annual revenue of $13 45 billion with adjusted EBITDA, ranging from $1 billion $100 million to $1 billion $150 million.
Ken: Adjusted earnings per share is expected to range between $5 35, and $5 84.
Ken: We expect Q1 revenue of $2 $700 million adjusted EBITDA of $160 million and adjusted earnings per share of <unk> 34.
Ken: Our 2025 expectations include the significant year over year improvements laid out for our non pipeline segments, partially offset by the reduced outlook for pipeline activity.
Ken: We expect to generate approximately $700 million of cash flow from operations in 2025, assuming DSO is average in the mid <unk> over the course of the year.
Ken: At our current leverage we have full flexibility around capital allocation and we will continue to drive our decisions based on maximizing return on investment.
Ken: Supporting organic growth will be a priority complemented by acquisitions and strategic investments share repurchases will remain opportunistic.
Speaker Change: And now I'll turn the call over to the operator for Q&A.
Speaker Change: Thank you if you are dialed in via the telephone I would like to ask a question. Please signal by pressing star one on your telephone keypad. We request that you ask one question with one follow up once again that is star one for questions, we'll pause for just a moment.
Speaker Change: While the roster.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: We'll go first to Jamie Cook with <unk>.
Jamie Cook: Good morning, and congratulations on a nice quarter and particular the cash flow.
Speaker Change: I guess my first question Jose I feel like I heard you say for the pipeline business that revenues in 2026 and beyond can exceed 2020 for revenue levels. So can you just.
Speaker Change: Confirm that and I guess, what gives you that confidence I thought that was interesting just because thats not in the consensus estimates that are out there. So just why so confident if that's true in any color around that and then I guess my second question just given the strong free cash flow and where your net leverage is Jose power.
Speaker Change: Or are we thinking about M&A.
Speaker Change: Just given the organic growth opportunity you have out there. Thank you.
Jose Mas: Sure Good morning, Jamie Thank you for the questions.
Speaker Change: There's no question that we've seen a significant shift in the mindset of our pipeline customers. There is more optimism today than there has been in years.
Jose Mas: <unk>.
Jose Mas: That's going to translate into a lot of projects coming in line that we didn't expect and that will create a lot of growth in our pipeline business. So you are correct. We expect 2026 revenues to exceed 2024 revenues in our pipeline segment and we think that trend is going to continue for a number of years. The market is incredibly active right now in <unk>.
Jose Mas: We're in an incredible position based on our history, there and the fact that we've kind of stayed with it for a long time. So we feel great about our positioning there on the M&A question look we've never we've never stopped looking obviously, we were in a very difficult position relative to be able to do anything that was meaningful today the organic growth opportunities in front of us are awesome that is where we will focus first.
Jose Mas: We will look at potentially some tuck ins across the country to help us meet some of our goals and objectives quicker so thats.
Jose Mas: It's there it's potentially there, but we are focused on organic growth first.
Speaker Change: We'll go next to Sam <unk>.
Jose Mas: Jane with Keybanc capital markets.
Jane: Good morning, Thank you for taking my question.
So I was looking at your clean energy margins for the quarter and big surprise us to the upside I know you can be tricky with weather. So wondering what we have seen during the quarter, whether there were a pure cloud.
Jane: Since inception of improvement that you guys have been working right.
Jane: So thank you.
Jane: The margins were driven by execution, I think going into the quarter, our internal projections were higher than what we put out in guidance. Obviously, the third quarter was a strong quarter, we hadn't had a quarter like that.
Jane: In a long time, so we didn't want to get ahead of ourselves in Q4. So I think we build Q4 with a lot of conservatism. The team delivered what it said it was going to deliver and thus the margins were driven by execution in the business I think that as we look at 2026 I'm sorry, as we look at 2025.
Jane: We've modeled.
Jane: Somewhat conservatively as well right. We think we've got a lot of potential to be both in topline and bottom line I think that's probably one of the areas that if we exceed our guidance. It's one of the areas, where we probably have the most opportunity to do so.
Speaker Change: Great and then if I can ask one more on the clean energy segment I know you've been talking about.
Speaker Change: Rfps Alpha datacenter type work. So can you give us an update on how that may have looked and if theres any backlog that you ended up booking in the fourth Q because your book to Bill was again pretty strong.
Speaker Change: Sure.
Speaker Change: We've got a significant number of opportunities out.
Speaker Change: I would say, we probably did somewhere in the $200 million plus range and datacenter activities for 2024, we expect that number to increase significantly in 'twenty, five, but but but still not to the levels of what we ultimately think we can achieve we're probably shooting for about a $300 million number in 'twenty five.
Speaker Change: The opportunity there is multiples of that and I think the bidding for that.
Speaker Change: Supports it.
Speaker Change: Not a big driver of the backlog growth in the fourth quarter.
Speaker Change: Great. Thank you so much.
Speaker Change: Thank you.
Speaker Change: We will take our next question from Andy Kaplowitz with Citigroup.
Andy Kaplowitz: Good morning, everyone nice quarter Bryan.
Brian: Brian Good morning, Andy.
Andy Kaplowitz: So is that you grew backlog sequentially as you said in all segments in Q4, which is good to see and you obviously sound extremely confident in the environment moving forward, but do you think master can continue to grow backlog in all segments and 25 I know you said youll grow in clean energy have you seen any change in the project environment markets, such as renewables or any delays did you incorporate.
Brian: A period of award Lumpiness in your guidance at all.
Brian: And it's a good question and we've talked about Lumpiness in backlog for a long time, we actually went back the last time that we had every segment in the company grow backlog was in the first quarter of 2018.
Brian: And.
Brian: Subsequent to that we had two amazing years of growth in earnings So I feel really.
Brian: Really good about where we sit I know theres a lot of concern out there relative to especially renewables.
Brian: What is potentially could happen in the administration, we talked to our customers a lot about that and we are unbelievably optimistic so as I think about the end of 'twenty five I would expect every segment to have higher backlog than it has today.
Brian: I would love to be able to say that for every quarter, but again backlog is lumpy and you don't necessarily know when awards are coming in but generally we expect backlog growth in every segment during 2025.
Speaker Change: Helpful. And then could you give more color into the growth profile communications, you've got communications up low double digits in 'twenty five how much of that growth is call. It your own self help with the new contracts loom in new wireless versus what the overall wireline and wireless market is growing at and is there any beads mind that youre counting on in 'twenty five at all.
Speaker Change: <unk> makes up a very very small.
Speaker Change: Negligible piece of what we're thinking about for 'twenty five we do think that it will have significant impact in 2006 and beyond.
Speaker Change: Obviously the contract with AT&T that we discussed at the end of 'twenty, three which kind of took effect in the second half of 'twenty four we saw that come through our numbers in the second half of 'twenty. Four is part of what drove our revenue and earnings.
Speaker Change: With that said, we've been awarded a number of new contracts. Obviously, we spoke about the aluminum won in the last quarter.
Speaker Change: There's a lot of other customers.
Speaker Change: That were either.
Speaker Change: <unk>.
Late negotiations with or projects that have actually been awarded a lot of that work quite frankly, we won't even start until the second half of 2005. So I think what we're talking about 25 is a lot about what we've already announced I think what's yet to come as the buildup into 26, I expect 26 to be a really good year. Another further year of growth.
Speaker Change: So we're really bullish about where we stand today with the opportunities in that business are just this week. There is there's a show called Metro connect it's one of the largest.
Speaker Change: U S digital infrastructure telecom.
Speaker Change: Conferences in the country and the level of optimism. There was this incredible the there was a number of new entrants to the market all of our existing customers were there and just the how upbeat and what theyre seeing from fiber builds and the requirement of demands that their customers are placing on them that will ultimately make it to us its just a system.
Speaker Change: Fantastic market.
Speaker Change: Sounds great.
Speaker Change: Thanks, Andy.
Speaker Change: We'll go next to Justin Hockey with Robert W. Baird.
Speaker Change: Great.
Speaker Change: A lot of my questions, but.
Speaker Change: And then he answered it in your prepared remarks, you people have already asked about it I just had one.
Speaker Change: Yes, obviously, the cash flow was with excellent here.
Speaker Change: As you guys have already talked about.
Speaker Change: Yeah.
Speaker Change: The factoring in the quarter or the selling of receivables. It looks like you sold about $350 million quarter over quarter and I guess I was just curious as we think about 2025 and just maybe the economics on that decision.
Speaker Change: Relative to your $700 million.
Speaker Change: <unk> for the year it looks like that was that was kind of the factor here in <unk>.
Speaker Change: So just remember with the with our programs you have to look at the amount that's outstanding.
Speaker Change: In the period, so in the quarter and the year had about $20 million impact so it's really negligible.
Speaker Change: So it's not a factor in the in the capital generation of the cash flow generation was driven by.
Speaker Change: The reduction in web.
Speaker Change: As a as a day of sale outstanding and an increase in mobilization payments associated with with renewable and projects those are really the drivers.
Speaker Change: The air programs negative negligible.
Speaker Change: Okay, great. Thank you.
Speaker Change: I guess my other question was just now.
Speaker Change: Now that you guys are.
Speaker Change: Naming the large transmission contracted the greenway contract can you give the amount of backlog.
Speaker Change: <unk> backlog attributed that that contract specifically.
Well there wouldn't have been a change in the fourth quarter because that was booked prior to.
Speaker Change: So it didn't really have a significant impact in the fourth quarter backlog.
Speaker Change: No I know I was just curious about the amount of it.
Speaker Change: How much did it about the annual revenue contribution. So I think you said $3 $500 million annually.
Speaker Change: A year and a half of it so I think thats a reasonable estimate.
Speaker Change: Okay Alright. Thank you very much that makes up that does make up a significant portion of the $900 million growth that we had from beginning of year to end the year. So of the 900, you could assume about half of that came from that one project.
Speaker Change: Thank you.
Speaker Change: We'll go next to Adam timer with Thomas Davis.
Adam timer: Hey, good morning, guys nice quarter nice outlook.
Speaker Change: Hey.
Speaker Change: I wanted to zero in on your margin improvement commentary I was curious what gives you the confidence there is it tight resources and industry pricing or is it more about process improvement that you can do internally.
Speaker Change: I think it's everything right. If you look at the third quarter of 24.
Margin dollars improved 28% year over year, and our non pipeline businesses I think I.
Speaker Change: I think the way that we're trying to really play out the story is.
Speaker Change: Obviously, our pipeline business has performed great. When the work is there we performed grid I think everybody knows that we've demonstrated that over a lot of years I think the story about mostek has always been.
Speaker Change: The non pipeline business is going to do how are they going to grow both from a top line perspective, and how are they going ultimately execute the margin profiles that we've laid out over the years.
Speaker Change: And that's been a theme for a long time and I think in the third quarter of 'twenty four we started to demonstrate that.
Speaker Change: EBITDA grew and our non pipeline businesses by 28% in the third quarter.
Speaker Change: That was a call a tall order to try to beat in the fourth quarter and yet it grew again by 57% in the fourth quarter.
Speaker Change: Which we're really proud of and if you fast forward to Q1 is supposed to grow 47% year over year in the first quarter. So I think that the trends that were showing financially are supporting that and that's a combination of everything right. It's a combination of improved performance. It's a combination of growth in revenues.
Speaker Change: And we're.
Speaker Change: With that said with all that said because I think its great improvement, we still have a ton of opportunity and we know we've got the ability to continue to increase margins in all three of our non pipeline segments and hopefully throughout 'twenty five we can execute on that and demonstrate that a long time ago, we laid out a path to get the $15 billion in revenue with double digit margins thats.
Speaker Change: Our goal, we feel a lot more confident about our goal today and our ability to do that over the next couple of years based on the performance that we've been able to deliver in the second half of 'twenty four and we hope we can keep demonstrating that throughout 'twenty five.
Speaker Change: Okay, and then had one more on the communications segment.
Speaker Change: I was curious what's the rough mix now between wireless and wireline and maybe you can just expand on the outlook for for both.
Speaker Change: Yes, I would say our wireless business is just over $1 billion.
Speaker Change: <unk>.
Speaker Change: And with the with the new restated kind of numbers, our comms business will be $2 8 billion in 2025, So it's about 40% of our business and we've done a great job of growing the wireline side of that business over the last few years, it's obviously, where a lot of the existing opportunity base.
Speaker Change: Based on the fiber demand.
Speaker Change: With that said I think there is a there's going to be a strong wireless cycle that's coming.
Speaker Change: Won't be in 25, but we're really bullish about that in future years.
Speaker Change: Especially with increased investments by T mobile and Verizon.
Speaker Change: So we think that the mix is probably permanently different than what it historically had been at for a period of time, our wireline or wireless business was bigger with the demand in wireline, we expect it to be a bigger business for the foreseeable future.
Speaker Change: Thanks Jose.
Jose: Thanks, Adam.
Jose: We'll go next to <unk> <unk> with Goldman Sachs.
Speaker Change: Hi, good morning team.
Speaker Change: You talked about the growth in the pipeline business I was just curious if you can talk about the mix as well it sounds like.
Speaker Change: You are talking about the base business opportunity growing it on gathering lines and maintenance, maybe but are you also baking in large pipeline projects that.
It could potentially be incremental from the Permian.
Speaker Change: Yes, that's what will drive our revenue up right I think if you think about our 2025 year a lot of it is base business that's kind of.
Speaker Change: Kind of the level that we've been talking about for a long time, we set a $1 billion five to two <unk>.
Speaker Change: Obviously, you did better in 2024, because we had the one big project in Mountain Valley I think we're back to a base level. There's no question that activity of larger lines is dramatically increasing.
Speaker Change: <unk>.
Speaker Change: Even for even for our pipeline business.
Speaker Change: We've had five quarters of shrinking backlog quarter over quarter and this was the first quarter, where we actually had an uptick in backlog and again in five quarters. So we're excited about that.
Speaker Change: We think that throughout 'twenty five backlog will increase significantly in the business to support growth in 2006.
Speaker Change: And beyond and again, we're seeing a ton of activity.
Speaker Change: And our commentary is more towards larger projects than it is just growth in the base business.
Speaker Change: That's super helpful. Thanks, and then.
Speaker Change: On the power delivery side I mean, there has been some recent announcements for our 765 kv lines in the beach PJM market under our joint venture seems like it's a significant projects I was just curious if you have any thoughts around <unk>.
Speaker Change: <unk> exposure to that project with those customers on the market there in general.
I would say is an overarching theme one of the things that I think that has been difficult to communicate or to get people to truly understand is the sheer size of what's going to happen in that market.
Speaker Change: Our transmission grid in this country is severely under invested in we're going to see a dramatic growth in transmission lines across the country out of every region.
Speaker Change: Our customers are talking about it a lot obviously there is.
Speaker Change: These projects take a long time to plan I think that if there is anything that the administration the new administration can do.
Speaker Change: In terms of infrastructure, it's actually improving the timelines around transmission lines and I think there is hyper focused on it.
Speaker Change: I think that will end up being one of the biggest opportunities for mastec and quite frankly, its peers over the course of the next decade.
Speaker Change: If theres a project out there.
Speaker Change: Jason that we're involved in we think we're capable of doing any project in America, and we plan to compete for them.
Jose: Thank you Jose.
Brian Brophy: We'll go next to Brian Brophy with Stifel.
Brian Brophy: Yes. Thanks, good morning, everybody be taking the question I guess, just piggybacking off that last one can you guys talk about how much capacity you guys have to take on more work on the large transmission side outside of Greenland here. Thanks.
Brian Brophy: What we've said over the last few quarters as we are ready to take on a second project the second major project.
Brian Brophy: We've been building towards that for a long time, we're hopeful that during 2025 will be awarded another project, where we can be working to large projects simultaneously in 'twenty six.
Brian Brophy: And once we get that under our belt, we're going to start working on trying to get our third large project.
Brian Brophy: That's helpful and then.
Speaker Change: Wanted to ask on pipeline margins, they were a little bit lower than we were expecting in the quarter. I guess is there anything to call out there and then your pipeline guidance for 25 assumes a little bit of a decline from 24, I guess with MVP behind US now I guess why wouldn't we expect margins to be a little bit better.
Brian Brophy: In that segment and 25.
Brian Brophy: Sure. So I'll start with the last part of the question I mean, we're growing from $2 one to $1 8 billion in revenue. Obviously, there is a fixed cost component of that that gets absorbed.
Brian Brophy: Think delivering we're guiding mid teen margins I think thats, a strong guide relative to the revenue drop.
Brian Brophy: With that said I can't remember the last year, we didn't outperform guidance relative to our pipeline business. So hopefully we get to do that again in 'twenty five.
Brian Brophy: When you look at the fourth quarter of 'twenty four there was actually a lot of weather impacts and a lot of the areas, where we were active on the pipeline side I think that business had a lot of revenue that pushed out of 24.
Brian Brophy: And some increased costs of finished some of the projects that we had to finish in 'twenty four or so.
Brian Brophy: We're not worried about our margin capabilities and pipeline is the work's there we're going to do really well in the works coming so again, we're really bullish about what we will deliver on that market.
Speaker Change: Very helpful. I appreciate it I'll pass it on.
Brian Brophy: Thank you.
Brian Brophy: Yes.
Speaker Change: We will go next to Brent Thielman with D. A davidson.
Brent Thielman: Hey, Thanks, good morning, Congrats great quarter, great year.
Speaker Change: How is it done yet on the 2025.
Brent Thielman: Growth outlook.
Brent Thielman: Wanted to pick your brain on where where else you might see kind of the most opportunity to outperform just given the strength of the businesses I know you sound optimistic around pipeline, but if you could talk about the other segments at the stars align in terms of schedules no external noise et cetera, and just be curious there.
Brent Thielman: Sure Brian.
Brent Thielman: We really tried to highlight with 25 looks like in a little bit of details because.
When we sit there and we say 9% revenue growth for the full year, 9% margin growth for the full year, it's those arent.
Brent Thielman: Those are decent numbers, but we're not jumping up and down about those numbers right, but if you. If you dissect the year, we're having we are having contraction in our pipeline business I think it'll be it will be short lived but it's what we're facing in 25. So when we focus on the non pipeline businesses. Our guidance is 14% revenue growth, 26% EBITDA growth I mean those.
Brent Thielman: Really impressive numbers right.
Brent Thielman: Thats organic rate, that's not M&A inorganic growth, that's organic growth of 14% and 26% growth in earnings.
Brent Thielman: Can we do better than that the answer is yes right.
Brent Thielman: We talked about earlier that I actually think we've got a good opportunity if things play out obviously there is some uncertainty in the market today and we've got to be cognizant of that.
But I think that the.
Brent Thielman: On the pipeline side I think this year it can be better than what we're saying there's been a lot of activity here in the last four or five months since the administration changed there are a lot of projects trying to be pulled into 'twenty, four but theres challenges with that right and I think we've been really conservative as we've guided to that when we look at the non pipeline businesses.
Brent Thielman: We took a very conservative view of what we see in renewables I think we've got a really good opportunity.
Brent Thielman: To do better than what we're saying.
Brent Thielman: When we look at our <unk> business and the acceleration of what we're seeing from our customers we've taken I.
Brent Thielman: I would say a realistic view, but it could be perceived as conservative relative to what's going to happen in the second half there with a lot of the new accounts that we've won.
Brent Thielman: And even in power delivery right I think we've taken a moderate view of Green link of what we can accomplish in year. One so I feel really good about where we stand.
Brent Thielman: We were in a difficult position in 'twenty three where.
Brent Thielman: We were used to hitting and beating guidance for many years and in 'twenty. Three we had some challenges and we can assure we didn't want to be there again, so as I look at our 25 plan again im not 14% revenue growth, 26% earnings growth in our non pipeline businesses solid, but I do think we can do better and that's hopefully what we'll do.
Brent Thielman: Liver in 'twenty five.
Brent Thielman: Got it.
Brent Thielman: Thanks, Jose and then.
Speaker Change: Location, and then you get some really nice momentum here.
Speaker Change: <unk> wireless and wireline and it seems like wire.
Speaker Change: Wireline for years to come but could you talk about maybe the wireless side beyond 2020 by the visibility you have the confidence you have that that has some sustained strength it beyond this year.
Speaker Change: Sure I think when you look at the industry as a whole right.
Speaker Change: We've done really well with AT&T, obviously theyre going through there.
Speaker Change: Nokia Ericsson swap out I mean for all intents and purposes that just started right. So that is not a 25.
Speaker Change: The opportunity that is a multiyear opportunity thats going to be bigger in 2006 and it is in 'twenty five.
Speaker Change: When you look at the other carriers, whether it's Verizon or T. Mobile I mean, everybody is so focused on fiber that the wireless market is relatively slow down investments right. That's going to come back. There is no question because capacity is going to drive it and when that happens we're going to be there. We're actually really pleased with the fact that we've kind of been able to.
Speaker Change: Build.
Speaker Change: The growth within the AT&T markets that we're supporting in an environment, where everything else isn't going crazy because it makes it more challenging so we feel good about the increase in labor that we have the growth across the different markets in terms of of our labor availability and the crews that we put together and that's going to position us really well as Verizon and T mobile start to spend again.
Speaker Change: Thank you.
Speaker Change: Thanks Brent.
Speaker Change: We'll go next to Avi Xeros Lewis from Mastec.
Okay.
Speaker Change: Hey, good morning from UBS, but.
Speaker Change: On the outlook for the pipeline segment, so I know you've spoken about building momentum there.
Speaker Change: Like you have a line of sight to when we could see that business inflect to growth could that be.
Speaker Change: Sometime this year, maybe early 'twenty six or.
Speaker Change: Even later than that.
Speaker Change: So the commentary around potentially beating is obviously driven by timing right. I think that you will see awards throughout 'twenty five those awards will primarily impact 'twenty six but could impact 25, so I think thats kind of where.
Speaker Change: We've guided to the 108 to the to the.
Speaker Change: If we have success in some of those projects started a little bit earlier, we feel really good about our ability to beat that if not through backlog growth of about 25, youre going to get a really good sense of what we're going to achieve in 2006 and beyond again, we fully expect 2026 to be at least as to 2024 levels.
Speaker Change: Okay got it.
Speaker Change: And then within the renewables business.
Speaker Change: How far out are you book there and.
Speaker Change: Are you hearing anything new from the customer base in terms of timing.
Speaker Change: It sounds like Youre, not really seeing any.
Speaker Change: Related delays or timing shifts either the policy uncertainty.
Speaker Change: Just want to confirm that and also within.
Speaker Change: That segment, what are you still need to book to hit the guide.
Speaker Change: So the reality is that we are in an incredible position relative to backlog.
Speaker Change: And revenue targets for 25.
Speaker Change: For clarity sake, and I know, we've said it in the past, but when the only renewable business. We have in backlog is projects that have actually fully committed so we're not waiting on things for those projects to start with.
Speaker Change: Have another category that we term that it's not backlog, we can track those projects, but it's not in backlog.
Speaker Change: So we feel really good about our 'twenty five targets and where we sit on backlog relative to those.
Speaker Change: We have we're in the middle of a very active.
Cycle of negotiations with customers, we're feeling really optimistic about 2006 currently obviously, there's a lot of noise out there you had the the executive order on wins that <unk> got a lot of talk about what's going to potentially happen with IRI or not irrespective of those conversations and what might come out of that we're still incredibly bullish about too.
Speaker Change: 26.
Speaker Change: If those things end up resolving in a more positive way than.
Speaker Change: And then I think that optimism only grows.
Speaker Change: So we feel great. We think 25 is going to be a great year. We've got a lot of bookings currently for 2006, we've got a lot of projects that will convert to backlog that are for 26 here in the near future. So our multiyear outlook in that business is really really strong.
Speaker Change: Okay great.
Speaker Change: Thank you thank.
Speaker Change: Thank you.
Speaker Change: We will go next to drew Chamberlain with J P. Morgan.
Drew Chamberlain: Yes, good morning, and thanks for taking my questions.
Drew Chamberlain: A follow up on that last one are you hearing any.
Drew Chamberlain: Pull forward from your customers as they kind of mall potential IRR changes or any other sort of policy changes so maybe that.
Drew Chamberlain: Some projects that were once maybe frame it a little bit later in the decade or pulling forward to 'twenty five 'twenty six timeframe.
Drew Chamberlain: Okay.
Drew Chamberlain: While not 25 or 26, I don't think that Thats really feasible right. There is there is talk about if you shorten the period of the IRI right that projects that were slated for the early 2000 <unk> would move into the late 2000, Twenty's. So could we see a significant increase in activity in 2007.
Drew Chamberlain: $28 29 for people trying to get what would ultimately be a shorter timeframe than the <unk> two.
Drew Chamberlain: Finished their projects potentially.
Drew Chamberlain: I don't know that we're not we're not seeing that in 'twenty five for sure I don't know that well see that in 'twenty six but depending on what happens with the legislation is there an opportunity for 27, 28, and 29 to be significantly bigger because of some pull forward of the RA.
Drew Chamberlain: There is potential for that theres conversations around that.
Drew Chamberlain: But at this point.
Drew Chamberlain: Through the end of the decade, we see an unbelievably active environment.
Speaker Change: Okay, great. Thank you and then just a quick one on the on the data center opportunity.
Drew Chamberlain: Are you seeing any.
Drew Chamberlain: Bookings or any of that $300 million and 25 is going to be.
Drew Chamberlain: In power delivery or generation or fiber.
Drew Chamberlain: Okay I'll now Phil on the on the more of a heavy civil and more of the land preparation work.
Yes, so it's both right because I mean, we obviously announced the large award with lumen last quarter, which is data center driven we're not we're not necessarily calling that out when we talk about data center revenue. So our datacenter revenue was more focused on.
Drew Chamberlain: Data center sites that could be it could be power work it could be civil work, but.
Drew Chamberlain: We're not we're not trying to take dollars associated with a third party customer.
Drew Chamberlain: For example, a big fiber network and fully attributed to data centers.
Drew Chamberlain: Really not doing that as we as we speak about the commentary so.
Drew Chamberlain: But it's impacting all of our businesses right. The reality is that data centers and they are going to consume an enormous amount of both power and.
Drew Chamberlain: Fiber bandwidth that will have a very significant impact on our business irrespective of whatever we might do for a hyperscale or a data center developer and I think Thats I think thats important.
Drew Chamberlain: I know there is again, we know theres concerns out there and we know there's power concerns when you look at every single <unk>.
Drew Chamberlain: Projection of what the incremental power usage is going to be.
Drew Chamberlain: It varies greatly right from.
Drew Chamberlain: Low single digits to mid to high single digits on a yearly basis.
Drew Chamberlain: The real the reality of any of those numbers right is that the amount of power that's going to be generated to help. These industries over the next 10 years is absolutely incredible and whether youre at the low end of that spectrum or the high end of that spectrum. It for us it really doesn't matter because it's so much incremental growth.
Drew Chamberlain: That we should benefit from it and again I say that related to multiple businesses that we have right, it's going to impact our civil business is going to impact our telecom business is going to impact our power business is going to impact our clean energy generation business. So we're just.
Drew Chamberlain: Again, we just feel like we're in a great spot right now.
Drew Chamberlain: Okay.
Drew Chamberlain: Makes sense thanks Jose.
Drew Chamberlain: Thank you appreciate it.
Speaker Change: At this time there are no further questions I will turn the call back over to Jose for closing remarks.
Jose: Just wanted to thank everybody for participating today, and we look forward to.
Jose: Our first quarter call in a few months. So thank you for joining us.
Jose: This does conclude today's conference we thank you for your participation.
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