MasTec Inc (MTZ) 2025 Q4 法說會逐字稿

Good day and thank you for standing by. Welcome to the Q4 2025 MasTec, Inc. earnings conference call. (Operator Instructions). Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Chris Mecray, Vice President of Investor Relations.

Good morning and thank you for joining us from MasTec's fourth quarter and full year 2025 financial results conference call. Joining me today are Jose Mas, Chief Executive Officer, and Paul DeMarco, Chief Financial Officer.

We have prepared slides to supplement our remarks, which are posted on MasTec's website under the investors tab and through the webcast link. There's also a companion document with information and analytics on the quarter and a guide summary to assist in financial modelling.

Please read the forward-looking disclaimer contained in the slides accompanying this call. During this call, we'll make forward-looking statements regarding our plans and expectations about the future as of the date of this call.

Because these statements are based on current assumptions and factors that involve risks and uncertainties, our actual performance and results may differ materially from our forward-looking statements. Our Form 10-K includes a detailed discussion of risks and uncertainties that may cause such differences.

In today's remarks, we'll be discussing adjusted financial metrics reconciled in yesterday's press release and supporting schedules.

We may also use certain non-GAAP financial measures in this conference call. A reconciliation of any non-GAAP financial measures not reconciled with these comments to the most comparable GAAP financial measures can be found in our earnings press release, slides, or companion documents.

I'll now turn the call over to Jose.

Thanks, Chris. Good morning, and welcome to MasTec's Fourth Quarter Earnings Call. First, some quarterly and full year highlights. Revenue for the quarter was just shy of $4 billion, a 16% year-over-year increase, bringing the full year to $14.3 billion, also a 16% increase for 2025 and a new record high.

Adjusted EBITDA was $338 million in the fourth quarter, a 25% year-over-year increase, which was an acceleration from the 20% growth in the third quarter.

We exceeded guidance with strong operating execution across the segments. Full year EBITDA of $1.15 billion was an increase of 14% from the prior year.

Adjusted earnings per share was $2.07, a 44% increase versus $1.44 in the prior year quarter. In summary, we exceeded guidance again in revenue, EBITDA and EPS, highlighting another strong execution quarter and year for MasTec.

This strong result is in part a testament to the scale and diversification MasTec has achieved over time, and we are excited about our outlook for 2026 and beyond given the clear long-term positive market conditions across all of the end markets we serve.

While I'm proud of our financial results, I'd like to highlight a few positive developments both in the fourth quarter and in early 2026.

First, it's important to highlight our significant backlog growth. On a full year basis, backlog was up over $4.5 billion, a 33% annual increase. Sequentially, backlog was up over $2 billion, representing a 1.6times book-to-bill. More importantly, we see our business and the opportunities in front of us accelerating.

As impressive as the total number is to me, I'm more excited about the backlog mix. While every segment was up considerably year-over-year, our Pipeline segment saw backlog slightly dropped sequentially. Yet I would argue that our visibility in that segment is as good as it's ever been.

While we expect double-digit growth in 2026 in our Pipeline segment, we have been very vocal about our expected growth acceleration of that business in 2027 and beyond. Reaching and hopefully surpassing historical high revenues in that segment.

That potential, coupled with the continued backlog growth across all of our non-pipeline segments, position MasTec for considerable long-term multiyear growth.

Our long-term visibility is better than it's ever been. And coupled with the margin opportunities we have, MasTec is in a great position to deliver consistent long-term earnings growth.

I'm also pleased to report that included in our fourth quarter backlog growth, there is nearly $1 billion of data centre-related work. These awards include the type of work we've been doing over recent years and also include our first construction management agreement of a turnkey site.

While most of the work on that project, which started in the fourth quarter, will be subcontracted, the opportunity for MasTec will be our ability to self-perform a greater scope of work on future jobs.

Demand for both the skill set that MasTec has developed in construction management, coupled with the capabilities we have in civil, power, telecom and maintenance provides us the opportunity to exponentially grow this part of our business.

We believe these opportunities are a result of our customer solution approach where we can provide a range of services from full-scale EPC to a specific function on any project. In addition to our backlog growth, while we have focused heavily on organic growth over the last couple of years, our strong cash flow generation gives us the ability to allocate capital to further enhance our growth profile.

Accordingly, I'd like to welcome the NV2A family to MasTec, which we acquired during the fourth quarter.

NV2A is a construction management services firm whose principles we have known for decades. With the preeminent reputation for construction management of complex commercial projects and well known for its work on aviation and seaport projects.

Prior to the acquisition, NV2A was our joint venture partner on our $600 million Miami airport expansion project, which is the first phase of an estimated $9 billion construction program. NV2A deepens our expertise in construction management capabilities as we grow this sector, including data centres and other mission-critical facilities.

During the first quarter of 2026, MasTec also acquired McKee Utility Contractors, a third-generation family business and leading water infrastructure service provider.

We believe water infrastructure is another structurally growing theme and are very excited about both McKee's near- and long-term prospects. I'd like to welcome the McKee family to MasTec.

These deals complement and enhance our existing infrastructure capabilities and represent exactly the type of transactions that we target over time.

Firms led by strong management teams who see the value in joining MasTec to scale their platform and enhance the solutions they can offer customers. We are excited to welcome our new partners to the MasTec family and expect them to hit the ground running and contribute to MasTec's near-term success.

Turning to some segment highlights. In our Communications segment, fourth quarter revenue increased 23% year-over-year and EBITDA increased 16%, all organic, bringing our full year growth rates for revenue and EBITDA to 32% and 41%.

The telecommunications infrastructure market continues to evolve. With MasTec's customers pivoting rapidly with significant investments to support broadband delivery to enable enhanced artificial applications while still working actively to support residential and commercial customer demand for broadband access via wired fibre optic and wireless mobility delivery notes.

Fourth quarter revenue was solidly above plan, including contributions from multiple top customers with robust funding for infrastructure deployment nationally, including upside in both wireless and wireline construction.

The margin rate for the quarter was moderately below our expectations due largely to ongoing start-up costs on certain programs. We are confident that the trajectory of profit rates will be positive in 2026, in part due to the maturity in new programs and initiatives during the coming year.

Turning to Power Delivery.

Fourth quarter segment revenues increased 13% year-over-year and EBITDA grew by 9%, all organic. EBITDA margins were moderately below prior year at 8.2% versus 8.5% in the fourth quarter of 2024, which included mix headwinds from lack of storm-related revenue in '25 and lower-than-planned Green link project volumes due to permitting-related delays that persisted through year-end.

Regardless, we are pleased with overall Power Delivery results for the full year of 2025, where we saw 16% top line growth and solid 12% EBITDA growth despite those headwinds. We have strong confidence in the Power Delivery market outlook and for our ability to deliver strong growth in 2026.

Fourth quarter backlog for Power Delivery increased an impressive 17% versus the prior year and 9% from the third quarter, ending the year at $5.6 billion, which is a new MasTec record and continues a positive trend of unbroken backlog increases in Power Delivery since the third quarter of 2023.

Additionally, and probably most importantly, during the first quarter, we received the go-ahead to restart the portion of the Green link project that had been stalled by permitting delays.

This restart is happening earlier than we anticipated and coupled with last quarter's announcement that our transmission and substation group was awarded its second largest project ever, it provides us great visibility and confidence in achieving strong double-digit organic growth in this segment.

Turning to our Clean Energy and Infrastructure segment. Fourth quarter revenue and EBITDA were slightly ahead of our expectations in the quarter. For the full year, revenue growth was a strong 15% and EBITDA margins grew by 110 basis points to 7.4% versus 6.3% in the prior year.

Total Clean Energy and Infrastructure backlog at year-end increased 30% sequentially to $6.5 billion, which is also a step change of 53% higher than the prior year and book-to-bill was 2.1times. For the Renewables group, we saw a 10th straight sequential increase in backlog, which increased by double digits in the fourth quarter.

Turning to our Pipeline Infrastructure segment.

We saw revenue increase 50% year-over-year for the quarter as business volumes continued to ramp sequentially since the first quarter of 2025, including an uptick from third quarter's typically seasonally strong period.

Also as expected, fourth quarter saw continued sequential margin improvement with an 18.5% margin, representing a 310 basis points lift from the third quarter on strong operating execution and overall positive business mix.

Finishing the year strong, we have confidence that 2026 will see further increases in both volume and profit dollars, and we are really excited about the market opportunity in pipeline for years to come. I said last quarter that I expect 2026 to be a solid growth year versus 2025, and our guidance includes this assumption.

I remain even more excited, however, about the volume opportunities developing for 2027 based on current capacity planning discussions with our customers.

With that, I'll reiterate that we are very pleased with both our fourth quarter and full year results, and we're excited about the outlook for this year given the breadth of demand drivers for MasTec's businesses.

While last year was successful overall, we remain committed to margin optimization on our existing business base, and our 2026 guidance reflects this.

We assume double-digit margins in Communications this year, around 100 basis point improvement in both Power Delivery and Pipeline and fairly stable margins in Clean Energy and Infrastructure even with the inclusion of significant construction management volume in that segment this year. So further improvement in the core margins there as well.

We're excited about the opportunity for MasTec and our investors over the coming years and thank you for your continued interest and participation.

As always, our success as a company depends first on the commitment and dedication of our team. And I'd like to thank the entire MasTec team for their continued embrace to our corporate values of safety, environmental stewardship, integrity and honesty, and for their focus on serving our customers with integrity and diligence to ensure great results. We win together.

I will now turn the call over to Paul for our financial review.

Thank you, Jose, and good morning. As Jose mentioned, we are pleased with our strong fourth quarter results, driven by continued organic revenue strength and solid execution across our operating segments.

Looking ahead, our customers are increasingly relying on MasTec's broad service offerings to meet their rapidly expanding infrastructure development goals, giving us high confidence in the growth trajectory that we are outlining today in guidance for 2026.

What's really compelling for us now is that our customer growth and investment plans intersects across virtually all of MasTec's businesses, and this reinforces our positive outlook. Now a few more notes on the fourth quarter and 2025 segment performance.

Our Communications segment continued its trajectory of strong revenue growth in the fourth quarter, exceeding guidance by $139 million, with 23% year-over-year growth for Q4 and 32% for the full year.

This was driven by broad-based strength across both wireless and wireline and included some contribution from middle-mile work that we expect to further develop positively into 2026 and beyond.

Fourth quarter EBITDA margin was 8.5%, a slight pullback from last year's 9% result, reflecting our prior comments on the short-term impact of ramping new business volume.

We are confident that these investments mature they will translate to positive margin outcomes as reflected in our initial 2026 guidance with double-digit Communications margins. Despite ongoing growth this year, we are beginning to mature some of these new businesses that came on stream in 2025.

Fourth quarter Communications backlog totalled $5.5 billion, which is an 8% sequential increase and a notable 20% year-over-year increase.

Clearly, growth visibility is strong and continues to improve. The telecommunications end market broadly has numerous demand drivers and our focus is on being selective with the opportunities we pursue to optimize returns.

Success for MasTec is no longer a function of just volume sourcing, but increasingly a focus on growth management. In that regard, as we grow our Communications service offerings, we are careful to nurture our legacy customer relationships while creating the space to serve new customers and new opportunities.

This includes both residential and commercial end-user markets and making sure we are allocating resources efficiently. Jose provided a good overview of our Power Delivery performance that I won't repeat, but I would add a couple of points.

First, we see a clear path to margin expansion in 2026 and currently expect year-over-year margin expansion in each quarter.

Our base utility and distribution business continues to perform well providing a solid foundation on which we can build operating leverage as volume grows. Second, our Power Delivery segment is contributing meaningfully to our support of data centre infrastructure, working for utility clients, data centre developers and hyperscale’s on this front.

We also expect Power Delivery to be a key beneficiary of our new role leading turnkey data centre construction. In the Clean Energy and Infrastructure segment, total Q4 revenue of $1.3 billion represented a 2% increase from the prior year, inclusive of solid double-digit growth in the Renewables business and slightly exceeded our segment guidance.

Infrastructure and Industrial revenue was also in line with expectations, and we saw significant new business development for this group during the quarter to provide a very notable volume pivot for 2026.

On a full year basis, revenue for CE&I was $4.7 billion or a 15% year-over-year growth rate, including even stronger Renewables growth for the year. Fourth quarter CE&I EBITDA margin was in line with our expectations at 7.2% and but somewhat lower than 8.3% in the prior year, which benefited from favourable project closeouts in our Industrial business that were not repeated in 2025.

Renewables margin was stable sequentially and up slightly year-over-year as expected at the high single-digit levels, while Industrial and Infrastructure also saw solid overall performance.

As Jose noted, CE&I saw a step function increase in backlog during the fourth quarter, reflecting significant contract signings across the segment. Infrastructure drove the 2.1times book-to-bill achieved in the quarter with multiple large project wins including the data centre general contractor award discussed by Jose.

These projects are expected to deliver substantial revenue contribution in 2026, also now factored into our guidance. The data centre projects will be executed under our general buildings vertical, still within the CE&I segment, but we may refer to this group's results more specifically in the future.

Renewables also continued its impressive streak of backlog growth which now stands at over $3 billion for the 18-month period.

Our visibility for Renewables project activity extends much further with projects under contract for work beyond the next 18 months or under limited notice to proceed totalling over $4 billion incremental to our backlog. Although acquired backlog contributed approximately $300 million to the year-end CE&I totals, organic book-to-bill was still an impressive 1.9times.

Regarding the Pipeline Infrastructure segment, fourth quarter revenue of $644 million represented our highest quarter in the past two years. We finished the year with $2.1 billion in total revenue for the segment, which was notably stronger than our initial guide of $1.8 billion as the business inflected positively earlier in the year.

EBITDA for the quarter of $119 million was driven by strong overall execution and project mix.

Fourth quarter EBITDA margin of 18.5% is indicative of the steady-state margins this segment is able to generate in an expansion cycle. Regarding our overall progress with margins, we are pleased to have finished at a consolidated margin of 8% for 2025 with our non-pipeline segment generating margins of 8.2% versus 7.6% in 2024.

As a reminder, full year 2025 margins reflected a slower start to the year, particularly in Pipeline as well as certain headwinds we noted in the back half, particularly with Power Delivery. We still accomplished a strong outcome last year and met our guidance objectives which we regard as a testament to our focus on execution and the strategic diversification and scale of MasTec.

Everything doesn't have to go right in every period to deliver on our overall goals. We have highlighted a midterm goal of double-digit consolidated EBITDA margins, and we are pleased that 2025 sets us up positively for further margin performance in 2026.

As a side note, we are adding meaningful volumes from construction management contracts, including the new data centre business we won in the fourth quarter.

This business mix represents lower margin, but a high return on capital opportunity that we are very proud to execute. We also expect to subcontract many of the construction activities internally at margins comparable to work perform with external clients.

We will work to provide some level of visibility into the margin progression of the base business from 2025 to the extent that our mix evolves materially going forward. In addition to the margin expansion efforts over the past few years, we've highlighted our increased focus on return on invested capital and we are proud to see this metric meet our weighted average cost of capital hurdle for the first time since 2021.

We believe the growth and margin expansion opportunities presented by our portfolio of service offerings, coupled with disciplined capital allocation, will continue to drive returns higher in the years ahead. We generated cash flow from operations of $373 million in the fourth quarter and free cash flow of $306 million in the period, bringing the full year total to $546 million and $342 million, respectively.

This was somewhat below guidance due primarily to our revenue beat for the quarter and associated working capital investment as well as higher capital expenditures also to support accelerated growth.

We ended the year with total liquidity of approximately $2.1 billion and net leverage of 1.7times, well within the terms of our financial policy and criteria to maintain our investment-grade credit ratings. We are pleased that our strong balance sheet provides us ample flexibility to pursue a disciplined return-focused capital allocation strategy.

We plan to support our best-in-class organic growth opportunities, execute opportunistic and accretive acquisitions that complement our existing service lines, and deploy capital to share repurchases opportunistically as it has been our long-standing practice. We believe the recent M&A transactions are consistent with this approach and our multi-decade track record of solid M&A execution. Moving to our 2026 guidance.

Our supplemental guidance document for segment and other financial details is now posted to our IR website. For 2026 full year, we expect revenue of $17 billion or about 19% growth this year on top of the 16% growth produced in 2025.

Notably, organic growth is still expected in the mid-teens. Our 2026 revenue profile includes strong results from all segments with meaningful growth in CE&I of around 35%, driven in part by the expansion of our data centre work.

Pipeline Infrastructure is expected to grow revenue by 17%, Power Delivery about 11%, and Communications just under double digits, coming off the approximately 30% organic growth achieved in 2025.

For adjusted EBITDA, we are forecasting $1.45 billion or an 8.5% margin, representing 26% year-over-year profit growth and 50 basis points of margin expansion on a consolidated basis.

This reflects margins of low double digits for Communications, mid-teens for Pipeline Infrastructure, approaching double digits for Power Delivery and fairly steady margin in the high single digits for CE&I, with improving Renewables margin performance, offset by the higher percentage of construction management services.

Adjusted EPS is forecast to be $8.40, an increase of almost 30% versus the $6.55 in 2025. Our guidance assumes acquisitions contribute approximately $500 million of revenue at high single-digit EBITDA margins for 2026.

Cash flow from operations is anticipated to exceed $1 billion for 2026, consistent with our stated target of 70% EBITDA conversion.

We expect about $200 million of net cash capital expenditures for 2026 as we continue to procure additional equipment to support planned growth.

Our 2026 first quarter outlook reflects the concerted efforts we've made to continue to improve Q1 performance, with revenue expected to grow by 22% and adjusted EBITDA margin of just over 7%, 130 basis points higher year-over-year.

We currently expect sequential revenue growth from Q2 and Q3, followed by the typical seasonal revenue decline in the fourth quarter. Q2 and Q3 should be our highest adjusted EBITDA margin quarters for the year. This concludes our prepared remarks.

I'll now turn the call over to the operator for Q&A.

(Operator Instructions) Julien Dumoulin-Smith, Jefferies.

Yeah, hi, good morning. It's Brian Russo on for Julien. I was just wondering if you could elaborate on the new language on Power Delivery segment approaching double-digit margins. What initiatives are ongoing to get there? Is it enhanced MSA or project work? Or is it just a contribution of these higher-margin transmission projects?

We'd be consistent that we think the goal for our Power Delivery segment is double-digit margins. So this is just a continued progress towards that. There's been a lot of focus on execution of the base business, which, as I mentioned, is performing well. And then we had some starts and stops last year that obviously caused some efficiency and erode some of the margin appreciation that's achievable. So we're not foreseeing those this year.

We think the base business has continues to perform well. We think we'll get operating leverage as some of the larger projects begin to materialize in a more meaningful way. And we think it's the natural step towards our stated goal of consistent double-digit margins for the segment.

Okay. Great. And then just second on CE&I and the turnkey data centre project. Could you elaborate? You mentioned $1 billion, but over what time frame and who's kind of the -- who is the customer? And is this kind of the first of many to come?

Yeah, sure. So a couple of things. The $1 billion was not all the turnkey job. So we've been doing a lot of other data centre work, right? So we've really focused on our civil power infrastructure businesses that have been doing data centre work for years.

So hundreds of millions of the $1 billion were related to that. Obviously, the turnkey site helped move that. We're not in a position to be able to disclose many details around the project or the customer. We expect that job to be concluded in 2027. So between '26 and '27, those revenues will be earned.

And we do think it will -- as the job progresses, we think there's tremendous opportunity for us to continue to grow on that type of business, and we think the market for that right now is incredibly strong.

Okay, great, thank you very much.

Andy Kaplowitz, Citi.

Good morning, everyone.

Good morning, Andy.

Jose, so it seems like you're still as or more confident regarding your Pipeline business, but Obviously, as you said, it's going to be more book and burn moving forward. So just did you see any delays in terms of project timing versus what you've been thinking? And then on the margin side given the second half '25 performance in Pipeline and the higher estimated revenue in '26, isn't mid-teens margins for '26 conservative, if the market kind of develops as you think?

Yes, I'll start with the second part of the question, right? I think we've always guided mid-teens in our Pipeline business. I think that's the appropriate level to come out with the guide. I think we've our objective is to beat that. I think historically, we've outperformed that.

And hopefully, the opportunity is there to do it again. As it relates to revenue with Pipeline, I'd argue that our visibility is actually improving. So to me, the number of opportunities the number of verbal awards, a number of negotiations that we're in the middle of, I think every quarter that passes, our confidence just grows in our ability to continue to grow that business and see a really much longer term of elevated levels than we probably initially expected.

That's helpful, Jose. And obviously, you're still putting up strong growth in Communications and expected to do so in '26. When you think about breaking down that growth between sort of traditional fibre-to-the-home, do you have anything in BEADs for '26? And how should we be thinking about that fibre to the data centre opportunity or middle-mile broadband? Is that also getting to be bigger than you expected?

And is that in '26 at all?

Short answer is yes, right? I think breaking it down, we don't have tons of BEADs built into '26. I think BEADs -- I think what we're seeing there is we're becoming more bullish on BEADs. I think BEADs is going to be much larger than we had originally anticipated, and the opportunity is going to be larger for us, but I think that will predominantly be '27. One of the opportunities that we have is that some of that stuff does push into '26.

That could be very constructive to the business. But look, we're seeing every one of our customers pursue multiple business strategies.

Obviously, everything that's happening around data centres and connectivity to data centres is an important driver for that. We're getting our share of that, and we think that the market is growing substantially for that as well. So very broad-based, the opportunities.

We had an incredible year of growth in 2025. We're assuming a more moderate growth profile in '26. But if -- we were surprised in Q4 with the level of activity, I think we significant-- I think revenues were about 20% higher than what we guided for Q4. So got a lot of good opportunity to outperform in '26.

Thanks, Jose.

Thanks, Andy.

Jamie Cook, Truist Securities.

Hi, good morning, and Congratulations on multiple fronts. I guess two questions for you, Jose. The first question is just the visibility that you have beyond the 18-month backlog that you report. I'm just trying to understand how great that is and which segments do you have above-average visibility? And then I guess my second question, I think on the call, you mentioned that you saw the Pipeline business being able to achieve or exceed prior peak, which I think was $3.5 billion. Under what time frame do you think that would be reasonable? Thank you.

Sure. Thank you, Jamie, a couple of things. I'd say, maybe with the last part of the question first, we've talked about hitting historical highs in Pipeline revenue as early as 2027.

So in the near term, again, we see that business shaping up incredibly well. When we think about backlog in general, right, I think Paul alluded in his prepared remarks about the $4 billion of notice to proceeds that we have in Renewables that aren't in backlog, right?

So we actually have more in LNTPs than we do in actual backlog, which is a remarkable statistic. And I think that visibility is amazing, right? I think even within stated backlog, we have projects. I think we won our largest project ever in the Renewables business at the end of last year. Only a portion of that project is in backlog, only the 18-month portion of it.

When we think about Comms and what we're currently seeing in BEADs and the potential there, I think it's going to lead to significant backlog expansion as we think about '26 in Power Delivery, the level of transmission jobs that we're seeing and the demand for transmission is just off the charts, which I think is going to also lead to some pretty sizable increases in backlog as the year progresses. So overall, when we look at all the segments, we're just really optimistic, again, not just about '26, but what the future holds.

Thank you.

Philip Shen, Roth Capital Partners.

Hey guys, Congrats on the great results here. I wanted to talk about Green link and to get a little bit more color there. Jose, could you share like the relief that you got, was that all that you're looking for, meaning this project is a full go now? Or are there other milestones that we should be thinking about in terms of permitting relief or milestones in general? Thanks.

Sure. So on Green link, in 2025, obviously, the first portion that we really started on ended up being delayed with permitting. Those permits have been fully cleared. So the beauty of that is we get to go back to work on that initial phase that we were supposed to start. It's a long-term job.

So not all permits are in. So there are some permits for the lighter part of the jobs that still have to come in. I think the level of confidence around those, especially with clearing this issue has increased significantly. So we feel really good about the progress on that job, what we think needs to happen for us to ultimately complete that on time. And I think this is just -- again, it happened a little bit earlier than we thought in the year.

So we're excited about it. And I think it bodes really well for, again, not just '26, but how that job is going to set up for the next few years.

Great. Jose, and then back on the data centre job. Of the $1 billion, how much do you think you guys self-perform versus outsource?

And then just as a follow-up, how much more is there behind this? I know you may have touched upon this a little bit earlier, but do you think we could see more of these $1 billion general contractor jobs later this year? Or do you think we have to wait until next year?

Yes. So a couple of things. I'd say that, again, you take the $1 billion, you break it out between what we've historically done, which is a couple of hundred million. I would say all of that is self-perform, which is the work that we've been doing. When you look at the balance of that on this particular project, we were brought in kind of late where a lot of the -- the actual work functions had been selected with different contractors, so we kind of took them over.

So our ability to self-perform on this first project was somewhat limited. Again, we think one of the beauties of this is we think we've got a huge competitive advantage. And we're one of the very few contractors in the US that has significant experience in construction management and civil and power and telecom and maintenance and all of the attributes that you need to make up a data centre job. So I think that customers are beginning to see that.

We're getting a lot of opportunities related to full turnkey work with the ability to self-perform, which really changes the margin profile of those jobs on a go-forward basis. I think we're going to responsibly grow into it. This is hopefully the first of many, and we do expect further wins in 2026.

Great, thanks, Jose.

Thanks Phil.

Sangita Jain of KeyBanc Capital Markets.

Okay, thank you so much. Good morning. Can I ask a question on the large transmission project that you booked in the fourth quarter? Can you help us with some details on how long you think that project will take to burn? I know for Green link, the target was four years. I'm just trying to see if this is a similar duration or shorter?

Sangita, so it's a smaller project. It will be a shorter duration. It starts probably the second part of the summer in this year, and it will probably go for about 2 years.

Got it. Helpful. And then on a broader level, can I just ask about margins? Your revenue growth has obviously been very strong. I know margins are expanding, but they are kind of lagging your expectations.

So I'm wondering if there's a structural barrier that prevents operating leverage from coming through? Is this labour productivity? Or I don't want to prejudge, I want -- but I would love some color from you.

Yes. Look, we've talked a lot about it during the year. I think one of the challenges, which I think is one of the positives as well, right, is that most of our growth in 2025 was organic.

And when you grow organically, it takes a lot to open new offices to build, to grow your workforce base to invest in not just working capital, but in the equipment necessary to grow.

So we think we've put up a mid-teens growth rate, both for '25 and even on an organic basis, what we expect in '26, even if you back out the acquisitions in '26, we're expecting mid-teens organic growth in our business those create challenges.

They create challenges to optimize margins in a particular period. I think as we get bigger, and we see some of those initial businesses start to mature, which we're already seeing, margins kind of take care of themselves.

So we're very bullish about our ability to improve our margins in things like telecom, which quite frankly, again, we beat fourth quarter revenue by 20% versus our guidance, which is just again another remarkable number, but that slightly impacted margins negatively, right?

When we look at what happened in Power Delivery this year with some of the things that we were expecting to happen on Greenlink and didn't come through, and slightly impacted the margin capabilities we had in that business.

But when you look at '26 guidance for both of those strong growth years from a margin perspective in both of those. Our Clean Energy and Infrastructure business, right?

I think, is progressing incredibly well. We were up 110 basis points on a year-over-year basis from '24 to '25. If you take the base business, we're expecting further margin gains in '26, but it's offset by some of the construction management and data centres.

And then when you look at Pipeline, right, it's all a function of size and how we're going to build up to where we think we can get to. If you take just Pipeline growth, if we get back to historical highs in revenues, quite frankly, it almost -- because of the mix, it almost takes us to double digits as a total company.

Now total company margins on the longer term are going to be somewhat dependent on mix, are going to be somewhat dependent on how much we grow certain portions of our business and where they land and we're paying a lot of attention to that, right? And we're really trying to maximize the returns on our investment and our ability to execute at a high level.

But look, we're -- as happy and as excited we are about the revenue growth story, we are super focused on the margin improvements across the company. And I think we've got real potential. I think we've got real potential to significantly impact those. And I think that creates as much, if not more value than the revenue growth that we're going to have.

Perfect. Thank you, Jose.

Thank you.

Steven Fisher, UBS.

Oh, thanks. Good morning and congrats on a successful 2025. And just a follow-up on Sangita's question there but keep it more specifically focused to the Communications segment. Could you just give a little bit more detail on the better margin expectations you have there? I know you mentioned about certain elements of the business that are maturing. Can you talk about which aspects of the Comms opportunities are seeing that maturing?

Is that overpull work? Or is it the BEAD work? Or I guess you say, you don't have a lot in there. But what are the key initiatives that you're talking about that could really help margins? And what are you doing with the hiring in the Comms business? Because it seems like maybe some of the absorption there is maybe a bit of a drag.

Yes, Steve, I would push back a little bit, right? Because I would say if we looked at Comms in 2025, the business was up on a full year basis, we were up 32% in revenue organically. The most mature business in MasTec, the longest business in MasTec was up 32% organically in revenue in 2025, and margins improved 60 basis points year-over-year, on 32% growth. Now yes, we would have liked to have seen margins improve more. There's no question about it, but we still saw improvement.

When you look at '26 guidance versus where we ended up in '25, we've got just shy of 100 basis point improvement in that business yet again on what will be strong growth. So I'd argue that we've done a really good job of managing the growth and improving margins along the way. But this is where we've made significant investment, opened new offices, and it takes time for some of those businesses to mature. We're starting to see the maturity of those businesses. We're starting to see the improvement of those margins, which is why on a year-over-year basis, margins improved 60 basis points.

Yes, fourth quarter was a little lighter than we expected. But again, we beat revenue expectations there by 20% versus what we guided. So I think we're well on our way. I think the business mix is perfect. I think we've got, again, tremendous opportunities for -- I think -- and by the way, we talked about BEADs being a huge opportunity going forward.

I think we see that in '27. I think we have yet another really, really strong growth year in '27, probably much stronger than '26 because of what's going to happen in BEADs. But we're super focused on margin appreciation there. I think we delivered some of that in '25, and we'll deliver more of that in '26.

Okay. That's fair. And then just in terms of the overall 2026 plan and how it's covered in backlog, obviously, you had some really good backlog growth here. Just curious how well covered do you think on your 2026 plan. You are covered at the moment.

Where do you think you still need to see more bookings? I know we've talked about in the Pipeline business, it's sort of closer to the burn when you book it. But just kind of what still has to happen to kind of deliver the plan?

I mean when we look back for the last as far back as I can remember, I don't think we've ever been in a better position going into a year based on revenue guidance versus where we stand with backlog. So I would argue that this is -- I'm not going to use the word conservative, but I think this is one of the best big plans that we've got relative to what our revenue expectations are with what we currently have in hand.

Justin Hauke of Baird.

Great. I've got one more on the margin questions. I guess, just to add to the mix. But overall, you're calling for 50 basis points of margin expansion. I guess I was just curious, I mean, you're going to tell me all your segments are going to see expansion this year.

But is there anything in particular, mix-wise, I would say, some higher and some lower, given the moving pieces, maybe the construction management stuff on the data centre work that you said is lower margin. Just anything to kind of help think about the trajectory in '26 at the segments?

Yes. So again, I mean, we expect Comms and Power Delivery to be up on a year-over-year basis. From a margin, I think we've been very specific as to what the opportunities are in '25 versus -- or '26 versus what it was in '25. The Pipeline business is obviously growing. Again, we have a step change function there in '27 from a revenue perspective.

So while margins will be good in '25, they won't be optimal because we're making a lot of investments -- or I'm sorry, in '26 as we'll be making a lot of investments into what's coming in '27. So that's kind of why we've guided to where we've guided.

And then when we think about Clean Energy and Infrastructure, I mean we're not -- that's probably the one business where we're not calling out margin appreciation on a year-over-year basis, it's more flattish. While the base business is improving, the construction management business will be a drag on that relative to the total margins of the segment.

So I think keeping margins there flattish is a good story with the opportunity of further growing our self-perform opportunities around that new business and then enhancing margins through that. So I think that's how '26 is going to shake out.

Perfect. No, that's helpful. My second one is a pretty easy one here, but I just want to clarify, in the guidance, there's a big uptick in the non-controlling interest. I assume that's the water, wastewater acquisition you did post quarter, but I just wanted to clarify that there wasn't anything else that was driving that?

That's the change for '26, yes.

Perfect, thanks.

Thank you, Justin.

Ati Modak, Goldman Sachs.

Hey, good morning. Jose, can you talk about the vision you have with these acquisitions, the NV2A, how that integrates into the data centre market? And then the decision to step into water infrastructure, what's your vision with that with -- how big is it today? How big could it get? And should we expect you to remain acquisitive in these areas?

Yes. So let's start with NV2A. Obviously, well known to us. They were our partner on a big project we currently have. It was an opportunity that presented itself where one of the partners was interested in selling and that started a dialogue where we ended up deciding to acquire the entire business.

Tremendous opportunities on the current projects we have with the relative size of what those projects will be in the future. That in and of itself made an enormous amount of sense for us to pursue those acquisitions. And then I think as that develops, obviously, some of these other construction management opportunities presented themselves, and we think they have incredible depth and strength and bring a lot to the table that are going to help us there as well. So we think fundamentally, just based on their base and historical business, it was a great deal. And when you look at all the compliments that we get in addition to that, we think it's going to be a fantastic deal for MasTec.

On the water side, look, we think water is a theme that's going to grow like crazy. I think we're going to have all kinds of issues this year with some of the snow patterns and where they fell and where there's going to be a lot of markets that are going to have water issues. A lot of what we're seeing around data centres across the country are demanding more water use, which is forcing municipalities to rethink about how they're providing water and the revenue opportunity for them to provide water into new projects. When we look at their business, they've had tremendous growth. But quite frankly, when you look at their outlook and the opportunities that they're chasing, it's just their growth potential is probably as good or better than anything else we have in all of MasTec.

And we're going to support them and help them achieve that, and we're super excited. We think that it's a great management team that's built a great company, and we're really looking forward to supporting them. I think that as, again, we think it's a great theme as the theme develops, as we get a better understanding of that market, I think there's going to be a lot more opportunities there to grow off of.

Very helpful, Jose. And then what would you highlight in terms of the expectations we should have with the Investor Day in May?

Look, we're excited to do it. We haven't done one in a really long time. I think we're going to talk a lot more about longer-term outlooks, maybe longer-term targets relative to what we do on these calls. So we're excited to do that. You're going to get an opportunity to meet a significant portion of our management team and really understand how we're thinking about the mid and long term as a business.

Manish Somaiya, Cantor Fitzgerald.

Thank you. Good morning. Jose, first question for you. You gave us your margin outlook for '26. And I was wondering when you look at your daily, weekly dashboard, what are some of the things that you're looking at by segment to ensure that everything is on track?

Yes. Look, at the end of the day, our business isn't that complicated, right? Everything starts at a field level. It starts with the widget that's getting installed. And our ability to enhance the productivity of those widgets is what really changes profitability as an entity.

So how we measure and how we incant at that level is the most important thing that we do as a company. I think Paul has talked a lot about a lot of the technological advancements that we're trying to make to further provide better information, more real-time information, which I think makes a big difference. But that's our team's focus every single day. And I think that, again, we've got a lot of balls in the air. We're growing very rapidly from a top line perspective, but we can't take our eye off what makes us money each and every single day.

And I think our team is doing a great job of being focused on that and are really trying to improve that on a day-to-day basis.

Second question for you and Paul. Paul, maybe if you can just help us bridge the operating cash flow from '25 to '26. And then Jose, obviously, you're guiding to leverage in the low 1s. How should we think about capital allocation between obviously, tuck-in acquisitions as well as share buybacks and other sort of initiatives you might have?

Yes. So on the operating cash flow question, Manish, it's really just going to follow the cadence of revenue growth. And we expect to have, as I mentioned, sequential growth in Q2 and Q3, followed by a falloff in Q4. We're not assuming any major change in DSO from year-end at 65 days for '25.

And so it's just the expectation around working capital investment relative to the revenue generation and the year-over-year impact really from Q4 '25 to Q4 '26 is a big piece of that.

So there's not a major change in our expectations from where we finished the year. It's just about timing of current expectations of revenue timing that drives the $1 billion of cash flow from operations.

And again, it's consistent with what we stated that for a long time is that we think we can do 70% EBITDA conversion to operating cash flow consistently. This year, the growth and the timing of the growth, put a little bit of headwind on that, and we think it normalizes in '26.

Yes. And maybe to the second part of the question, I'd say, look, first and foremost, we're focused on taking advantage of the organic growth opportunities in front of us and investing in those. I think that when we think about really adding to the platform of MasTec and bringing in partners, there's tremendous opportunity, right?

I think there's so much demand in our industry today that our ability to meet it enhances with looking at M&A, and I think we're going to continue to do that. I think we took a period of a couple of years post some very large acquisitions for us in INTREN, Henkels & McCoy and IEA, where a lot of our focus was consumed on the integration of those acquisitions.

I think that's well past us. I think we've demonstrated that. And I think that we're in a position today where we can take that on and really make that additive to MasTec.

So if anything, I think you'll see us be more acquisitive rather than less and for sure, more than the last couple of years, it's been part of our story since inception and something that you'll probably see us do more regularly than you have in the last couple of years.

Any specific segment, Jose, as far as tuck-ins?

Yes. Look, there's -- again, I think there's areas of every segment that we're in that we think makes sense for us. So it's measuring the opportunity, quite frankly, versus being opportunistic in those. So the values are also high, right? People's expectations of values have increased significantly.

So finding the right balance between those two is what we're going to try to achieve at MasTec.

Okay. Thank you.

Thank you.

Joseph Osha of Goldman Sachs -- I'm sorry, Guggenheim Partners.

Hello, can you hear me?

Yeah, hey, good morning. Thanks. Two questions. Following a little bit on some previous one, looking at the data centre opportunity in particular. I'm wondering if there are any particular skill sets or capabilities you feel like you might want to fill in. And then looking at Communications, there's been some wireless infrastructure rip and replace in that segment in the past. I'm wondering how much of that is there going forward or whether we're mostly looking at FTTH and obviously BEAD in '27?

Yes. So a couple of things. On the data centre side, obviously, we don't have the functions today to self-perform everything. But I think that we have the ability to self-perform a lot more than most, which I think, again, gives us a tremendous advantage. To the extent that the opportunity is there to consider doing more there we would.

On the wireless side, I think we're in the midst of that rip and replace for our large customer. I think we're going to see a lot more deployment starting in '27 relative to new spectrum, which is going to help that industry considerably. So we're still as excited about wireless as we've always been.

Okay, thank you.

Thank you, Joe.

Brian Brophy, Stifel.

I guess I'll just go with a quick one. CapEx is notably lower than a year ago. Can you talk about the drivers there? The '26 expectation, excuse me, is notably lower than a year ago.

Yes. I mean I think it's just a function of where the growth is coming from. We talked about investing a lot in pipeline ahead of the cycle. A lot of the jobs we're working on right now kicked off in the back half of '25, and we're procuring equipment related to those. Our Clean Energy segment, where we're seeing the highest growth in 2026 is the least capital intensive.

So some of it is just a function of that. We're obviously prepared to continue to invest. That's our view today. And to the extent that project needs or demand opportunities that require more CapEx, we've got the flexibility to do it.

Appreciate it. I'll pass it on.

Thank you, Brian.

Mark Strouse, JPMorgan.

Yes, good morning. Maybe just on that last point on Renewables. Clearly, you're seeing very strong growth. Just curious, can you talk about your market share, your win rates? Is this a function of kind of just the number of opportunities increasing? Or do you think kind of a function of projects getting bigger and more complex that you're taking share as well?

I think it's a little bit all of the above. Again, coming off of the IEA acquisition, we took a lot of time to really focus our efforts around going after customers that we thought we could build meaningful relationships with that would matter over time.

And I think we've done that. We've got alliance agreements now with what we think are some of the best developers in the business that have long-term plans that are very solid, and our ability to have integrated within their systems and really build an expectation of both our labour and their work over a long period of time gives us tremendous visibility. So I think that's helped us, right?

I think today, we're a top-tier contractor for both wind and solar. And we're very bullish about the long term of that business.

Obviously, at times, it becomes very political. We think there's tremendous visibility through 2030. And we think that when we're -- as we see the prices and what some of the new generation is pricing out, we actually think that Renewables are going to be competitive on a price basis long after 2030.

So we think it's a great market. We think it's a market that's got tremendous potential. And again, as Paul alluded to earlier, we've got a ton of what we would call shadow backlog, which is backlog, we know we're going to convert. So we actually think backlog in that business could increase in '26.

Liam Burke, B. Riley Securities.

Thank you. Good morning, Jose. Your projects have become larger and more complex. Are you seeing less competition and better more favourable terms as you renegotiate or enter into some project agreements?

Well, I think the whole industry is, right?

I think customers understand the challenges that they face relative to labour. I think, obviously, we've always said we think terms improve before pricing does, and I think we've seen terms improve considerably over the last few years. And I expect that to continue. And as we're all dealing with the demand, I think pricing is also getting better. So I think we're in a good place as an industry.

Great. And really quickly, you highlighted middle-mile activity in the telecom segment. Is that data centre driven? Or is that -- what is driving that activity?

Yes. Look, I think our customers are looking to grow. Our customers are looking for all the opportunities in front of them. So some of it is data centre driven, some of it is onshoring driven. There's lots of demand for connectivity.

And to the extent that our customers win that demand, it requires large infrastructure build-outs for them, and that's kind of what we're talking about.

Great, thank you, Jose.

Thank you.

Maheep Mandloi, Mizuho.

Hey, thanks for giving me and congratulations on the quarter here. Maybe just two quick ones. First, just on Communications, is there any way to kind of dissect how much of that would be exposed to office buildings or commercial customers? And secondly, on M&A, you kind of laid out pretty well on previous questions here, but just curious if you have any thoughts on building some of the equipment yourself, which might be in tight supply in the market again?

Yes. So relative to office buildings and commercial buildings, obviously, those are customers of our customers. So I think we're not -- I don't think that's been a key driver of the business. I don't think there's been large expansions of either of those in the country over the last couple of years. But obviously, connectivity is important for everybody.

And to the extent that anybody needs connectivity, it's a potential customer for our customers. From an M&A perspective, look, we haven't looked at getting into manufacturing. We think our business has been strong. We have really strong demand and really good partners that can support us in that. So we haven't seen the need to do that.

Appreciate it. Thank you.

Thank you.

And I would now like to turn the conference back to Chris Mecray for closing remarks.

All right. Thank you, everybody. That concludes today's call. Thanks for participating. And as a reminder, please visit our Investor Relations website for a replay and transcript which will be posted when available. Have a great day.

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