MasTec, Inc. (NYSE:MTZ) Q1 2023 Earnings Call Transcript

Brent Thielman: Okay. I appreciate that. And then I guess on the Clean Energy business obviously just the momentum in renewables overshadow some of the other things you do in that business. You do have a fairly large infrastructure business now with the combination of IEA. Just be curious, what the contribution of that business has been the bookings, where you see it headed? Obviously, you have an Infrastructure Act I think would be helpful. And Jose, is that a business core to the company long term or could be monetized?

Jose Mas: It’s a good question. I think that our performance in civil so far has been better than the overall group’s performance. So we’re actually very pleased with the direction of that business. Our backlog growth there has been extremely strong. We have tremendous prospects in that business going forward. I think what we’ve said all along we still feel like we’ve just got our toe in the water there. It’s a sizable business today, but it’s one that we still feel that we’re learning. I think the — my initial reaction today would be I think the business is performing dramatically better than we expected. I think it’s got dramatic more upside than we expected. Now whether how much investment we’re going to be willing to put behind that and where that ultimately goes? I think the jury is still out. But to date that business is performing really well and we actually expect it to have a very solid 2023.

Brent Thielman: Thank you.

Operator: Our next question will come from Andy Kaplowitz with Citigroup. Please go ahead.

Andy Kaplowitz: Hey, good morning.

Jose Mas: Good Morning Andy.

Andy Kaplowitz: Jose one of the questions you answered last quarter you mentioned the variability of MasTec’s performance should diminish considerably really by next year’s first quarter. And I think the variability is still a separator between you and your significant E&C peers. So, can you talk about your conviction level that you can mitigate that variability with the understanding that you do have a seasonal business. So what are you doing to mitigate it?

Jose Mas: Well, I think it’s also where each business is at a point in time. So, if we go back to the first quarter of 2021, which was just two years ago, our Oil and Gas business did almost $750 million versus $200 million today, right? So, the comps have been very difficult for us, especially early in the year over the last few years because of the strength that Oil and Gas had early in the year. When we look forward one of the challenges that we had coming into 2023 that we knew about was the fact that renewable projects were still pushed out renewable projects were going to start in a meaningful way starting in the second quarter going into the third quarter. But when we look at 2024 right when that renewable supply chain is kind of fixed project activity in the first half of the year is going to be really strong in 2024 versus where it was this year making next year’s first quarter comp actually we think quite easy.

And I think the same thing is happening in the pipeline business, right? We’re off historical lows. This is — last year’s first quarter and this year’s first quarter are historical lows for us in the pipeline business. I think that with the projects that we’ve got in queue and coming on next year’s first quarter is going to be considerably better than this year’s. So, I think when you look at those two businesses in particular with the significant revenue appreciation in next year’s first quarter versus this year, it’s going to take away a significant amount of that seasonality. So, for the last two years we posted losses in Q1 that historically we hadn’t done that. I think it has a lot to do with those two businesses and the variability of those businesses and I think that goes away in 2024.