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MasTec is an infrastructure construction company operating primarily in the U.S. and Canada. The company builds infrastructure for wireless and wireline/fiber communications, clean energy, pipeline infrastructure, power delivery services such as electrical and gas transmission, industrial and heavy civil infrastructure, and water infrastructure. MasTec’s customers are in utilities, communications, and government.

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MasTec (MTZ): Company Profile, Stock Price, News, Rankings

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MasTec

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Thank you for standing by, and welcome to MasTec's Second Quarter twenty twenty five Financial Results Conference Call. Today's call is being recorded. I'd like to turn the call over to Chris McCray, Vice President of Investor Relations.

Good morning, everybody, and thank you for joining us for MasTec's second quarter twenty twenty five financial results conference call. Joining me today are Jose Mas, Chief Executive Officer and Paul DiMarco, Chief Financial Officer. We've 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 guidance summary to assist in financial modeling. Please read the forward looking statement disclaimer contained in the slides accompanying this call.

During this call, we will 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 ks, as updated by our current and periodic reports, 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 in 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.

Thank you. Good morning, welcome to MasTec's twenty twenty five second quarter call. Today, I will be reviewing our second quarter results as well as providing my outlook for the markets we serve. I am pleased to report that we exceeded guidance in revenue, met our EBITDA expectation and beat our EPS guidance for the second quarter. We're happy to have delivered significant year over year growth in revenue despite the difficult comparison from the Mountain Valley pipeline completion in the first half of last year.

The remaining segments, our non pipeline business improved EBITDA from $181,000,000 to $257,000,000 in this year's second quarter, a 42% year over year increase. Revenue for our non pipeline business was up 26% with power delivery and clean energy and infrastructure both up 20% and communications up 40% year over year. We expect revenues to sequentially increase again by double digits in the third quarter. Margins for our non pipeline segments also improved 100 basis points year over year and posted a strong two thirty basis points sequential improvement. Both our Communications segment and Power Delivery segment improved EBITDA margins 300 basis points sequentially and Clean Energy improved 120 basis points.

We expect further sequential improvements in the third quarter in both our Communications and Power Delivery segments with margins in our Clean Energy segment expected to be about even with the second quarter. Total company backlog in the quarter also remained healthy, posting a 23% year over year growth, including a 4% sequential increase, resulting in a book to bill ratio in the second quarter of 1.2 times. The sequential growth from first quarter included an 11% increase from Clean Energy and Infrastructure inclusive of solid growth for both Renewables and Infrastructure. And by ongoing growth of 2% from Communications, offset partly by flatter performance in Pipeline and power delivery inclusive of stronger burn rates in the period. We expect further backlog growth in the second half of this year and expect to end 2025 at record levels of backlog.

We are increasing revenue guidance to a range of $13,900,000,000 to $14,000,000,000 for full year 2025, a roughly $300,000,000 increase over previous guidance. We are slightly increasing the range of our EBITDA guidance to $1,130,000,000 to $1,160,000,000 and we are increasing the range of EPS guidance to a midpoint of $6.34 per share. Our midpoint EPS guide implies a 60% increase year over year. I'd like to highlight that we are seeing clear acceleration across our business. Revenue is stronger than our initial guidance and demand is incredibly strong.

During the second quarter, we added nearly 4,000 new team members and over 10% increase in our workforce. This compares to an increase of a couple 100 in last year's second quarter. These additions are a direct result of the demand we are enjoying today, but more importantly, for the need we see to scale up for what we are expecting in 2026 and beyond. Every segment added team members in the quarter, including our pipeline segment. I'd like to remind everyone that entering 2025, we expected to rightsize resources in our pipeline segment and set some assets as we initially expected revenues in the $1,800,000,000 range versus last year's $2,100,000,000 We now expect revenues to be approximately $2,000,000,000 in pipeline this year, but more importantly, the investment we are making in increasing headcount and equipment in our pipeline segment is being driven by the incredible demand we are seeing for 2026 and beyond.

These increases in headcount will position us to take advantage of the growing opportunities ahead. However, this investment is slightly impacting margins in 2025. While these additions should allow us to further increase our margin potential, we expect any impact to be short term, particularly in our pipeline segment. We expect pipeline segment margins to improve sequentially in the third quarter and achieve its best margin performance in the fourth quarter, setting us up for strong performance going into 2026. Turning to some segment highlights.

In our Communications segment, revenue in the second quarter was up 42% year over year, while adjusted EBITDA grew 55% with a 90 basis point improvement in margin. Backlog increased sequentially to a record $5,000,000,000 and increased 13% from the prior year. The market backdrop for telecom infrastructure remains very healthy and dynamic, given robust capital investments being made by our customers to support broadband delivery and enable enhanced artificial intelligence applications. We saw continued year over year revenue growth in the second quarter from nearly all of our top 10 customers and our list of significant customers has increased meaningfully in recent years. MasTec's wireless business continues to see strong growth from expanded geography served and from continued broadening of services.

In wireline, overall strong demand continues to be supported by broadband infrastructure build outs and by federal investment. Middle mile broadband build outs and the recent surge in hyperscaler CapEx associated with data centers is also driving substantial fiber deployment demand. Over the last few months, a number of our customers have laid out very specific goals. AT and T recently announced a milestone of passing over 30,000,000 fiber locations and reaffirmed their goal of achieving 60,000,000 by 02/1930, basically doubling over the next five years. Verizon publicly stated their goal to also double fiber passings by 02/1928, and T Mobile is looking to add 12 to 15,000,000 fiber passings by 02/1930.

These ambitious plans in conjunction with both increased demand from the traditional cable broadband carriers and a number of new entrant overbuilders create significant growth opportunities for MasTec. Turning to Power Delivery, second quarter revenues increased 20% year over year and slightly beat our forecast with profit and margins as expected. We believe we are on track to meet our full year targets and continue to expect margin improvement in the second half of the year from a combination of volume growth, mix improvement and solid execution. We still expect mid teens revenue growth and high single digit margins for the year. Our optimism and bullishness on overall grid investment remains unchanged.

The need for substantial utility customer capital expenditures in the coming years is pressing as power demand drives the need to upgrade and add to an aging infrastructure. This demand requires large CapEx commitments across transmission, substations, distribution, as well as new generation capacity. Backlog this quarter for the segment was up about 14% versus the 2024. We continue to target a broad set of projects of varying scope, and we still expect several larger projects to be awarded in the coming periods. In our Clean Energy and Infrastructure segment, second quarter revenue grew 20% year over year and adjusted EBITDA nearly doubled from 47,300,000 to $83,300,000 with a margin of 7.4%, an increase of two forty basis points from the prior year.

New awards accelerated in the second quarter and totaled $1,600,000,000 for the segment compared to 1,100,000,000 in the first quarter. Backlog was up 11% to a new record level of $4,900,000,000 and book to bill was 1.4 times. We remain in great shape to deliver our 2025 goals and are already progressing well in building backlog for 2026. Within this segment, both Renewables and Infrastructure had double digit growth and solid margin performance. We see significant opportunities for new bookings for the second half in these areas as well as opportunities for behind the meter power infrastructure giving substantial experience in this area.

We are fully covered for our 2025 revenue guidance and recent bookings continue to fill in the 2026 year. An important development during the quarter was the passage of the One Big Beautiful bill. The legislation leaves intact tax credits associated with renewables through 2027 and created a clear path for safe harboring projects, which would allow construction through 02/1930. A subsequent executive order was signed, and we expect more clarity in the coming months. As it relates to MasTec and as demonstrated in our backlog, we are very confident that our customer mix, which is heavily skewed to the top tier developers, will have a high level of success in their ability to safe harbor projects.

We are also confident in the ability for renewables to compete over time even without federal subsidies. As electricity demand continues to expand, driven by artificial intelligence and data center construction, the cost of competitive power becomes increasingly more important in a global marketplace. For example, in The Middle East, renewable power is being sold at approximately $15 a megawatt hour compared to 50 in The US in an unsubsidized and free market. I have no doubt that renewables will continue to play an important role in the domestic energy generation along with other sources, including natural gas. Turning to our pipeline infrastructure segment, we saw revenue decline 6% and EBITDA dropped to $62,000,000 from $135,000,000 the year before.

We've noted the primary driver here being the challenging comparisons from the MVP project wind down last year. Pipeline revenue of $540,000,000 was well higher than our guidance of about $475,000,000 and a substantial acceleration from the first quarter with a 52% sequential increase as overall activity picks up. Profits in the quarter met our plan on slightly weaker margins and forecasted as we invested to prepare for future demand. While backlog for the segment was down about 5% sequentially, our second quarter backlog does not include a number of verbally awarded project whose contracts we expect to sign shortly. As I previously covered, we expect backlog growth through the balance of the year.

Gas fired generation is clearly going to play a much more significant role in future years than we were expecting and we fully expect to benefit from a multiyear investment curve in this important baseload generation source. I'm very bullish and excited about both the short and long term outlook for our pipeline segment. In summary, 2025 is shaping up very well and the momentum we are building across every segment is very encouraging. I've mentioned previously that we are working more closely with key customers across multiple segments at MasTec on framework agreements that benefit both parties while strengthening our position in diversified end markets. We saw continued progress in the second quarter with such agreements, which have been particularly helpful in securing visibility in all segments.

We are very excited about our market position and the ability to leverage close customer relationships to improve visibility and outcomes for our business as we execute on growth with scaled businesses across our enterprise. Of course, the outcomes are dictated and determined in large part by our execution against this significant volume opportunity. Our efforts on operational execution and evolving our business processes to ensure both consistency of outcomes and strong structural profitability is a primary focus. Our margin improvement opportunity is real, and we are taking many steps to realize it. I'm particularly pleased with the progress we showed in the second quarter and expect to have a lot more to show in this regard across our segments in the second half as we continue to develop volumes across the business and refine our operational execution in key areas.

As we talk about execution, I'd also like to thank all of our people at MasTec for their continued commitment to our corporate values of safety, environmental stewardship, and integrity, and honesty, all while serving our customers with the diligence and ensuring the delivery of a great work work product. Thank you all. I will now turn the call over to Paul for our financial review. Paul?

As Jose mentioned, we're very pleased that our second quarter results exceeded guidance, coming in large part from strong sequential volume development and continued solid execution. We remain highly confident in our business positioning today and into the years ahead, and this is true across all of our end markets given solid demand drivers that will require significant investment in infrastructure for years to come. This is the case regardless of which technologies are favored and whether financing mechanisms include government incentives. Our customers are clear. They need us to fulfill plans that include major projects across the spectrum of markets we serve.

Let me start with some quarterly highlights. Second quarter revenue was well above expectations at $3,540,000,000 a new quarterly record, with 20% growth year over year and 25% growth sequentially from the first quarter. Adjusted EBITDA of $275,000,000 met our forecast. Three of our four segments beat volume expectations in the period, while the standout performance in profit and margins came from Clean Energy and Infrastructure. Eighteen month backlog at quarter end totaled $16,450,000,000 an increase of 4% from the first quarter and 23% year over year.

This represents another record level of total backlog for MasTec, with the growth led by an 11% increase recorded at CE and I that included continued strong bookings in the renewables portfolio, which is fully booked for the current year and continues to build momentum for 2026 and beyond. We generated cash flow from operations of $6,000,000 in the second quarter and $84,000,000 year to date, with DSOs at sixty five days, a one day improvement from the first quarter, both in line with our expectations. Our strong second quarter revenue growth with consistent DSOs drove higher working capital investment in the quarter. Free cash flow for Q2 was a use of $45,000,000 versus the source of $253,000,000 in the prior year quarter. The variance was driven mainly by higher working capital investment versus last year, as well as somewhat higher capital expenditures as we accelerated certain capital investments for growth.

You may recall in 2024, we saw DSOs decrease from seventy nine days in Q1 to sixty nine days for Q2, allowing us to reduce working capital last year, whereas this year did not have the same benefit with DSOs remaining consistent in the mid-60s. We completed $40,000,000 of share repurchases in the second quarter and extinguished our prior remaining authorization, bringing the year to date total to $77,000,000 at an average price of $110 per share. Also in the second quarter, our Board authorized an additional $250,000,000 repurchase program. Regarding some highlights from the second quarter segment performance, our Communications segment produced quite significant top end bottom line growth with revenue easily exceeding our forecast for the period and benefiting from continued strong demand in both wireless and wireline businesses from a diverse set of customers across the telecom and tech landscape. The adjusted EBITDA margin of 90 basis points year over year was generally in line with guidance inclusive of certain program expenditures ahead of expected growth that held back margin performance.

Second quarter adjusted EBITDA margin was 9.9% compared with 9% in the prior year and increased significantly from 6.9% in the first quarter as volumes ramped positively. Overall, end market strength remained strong and second quarter backlog increased 2% or $102,000,000 despite the record segment revenue in the quarter. Power Delivery continues to see substantial growth across the country, and we exceeded our quarterly revenue forecast by close to $50,000,000 producing 20% growth year over year. Adjusted EBITDA was generally in line with our forecast. Power Delivery backlog increased slightly as solid bookings were partially offset by the record quarterly revenue earned in Q2.

We continue to see significant new bookings opportunities as we look forward for the balance of the year and anticipate structural growth for this business for years to come, given the anticipated electricity demand and system upgrade requirements for our utility clients. In Clean Energy and Infrastructure, we saw continued improvement in Q2 adjusted EBITDA margin, which increased two thirty basis points year over year. Our Renewables business was a strong contributor to the CE and I margin performance with the benefit of some impacts from project closeouts in the quarter. We continue to see strong performance in the second half from operating leverage with higher volume and continued focus on strong execution. Our guidance assumes margins hold at similar levels to Q2 in the second half of the year.

On CE and I backlog, we saw solid bookings from all three business verticals contributing to the 11% sequential increase. This included almost $200,000,000 of Renewables backlog growth despite the noise in the period from the Big Beautiful Bill legislation. These new project additions continue to build our book for future years and reinforce the sentiment among our among our customers that their projects are essential, driven by strong offtake demand. We remain highly optimistic about the sector, driven by the fundamental cost competitiveness of renewable energy and the limited availability of near term alternatives for new power generation. Regarding pipeline infrastructure, our revenue result in the quarter beat our expectations by nearly $65,000,000 on strong product development, driven by a host of smaller and medium sized projects.

Adjusted EBITDA margin for the quarter was in line with expectations with an 11.5% margin versus guidance of low double digits, but we did see less flow through from the incremental revenue due to the investments made to support future growth. The year over year comparison remained challenged by the MVP project completion in the first half of last year, and we now expect that we will revert to growth beginning in the third quarter to complement ongoing sequential growth after the lower first quarter volume result. Pipeline backlog development was more muted versus the large increase reported in the first quarter, but we continue to see solid new awards totaling over $450,000,000 in the period, and the backlog did not include certain project verbal awards as Jose mentioned. We continue to expect to bid on a number of larger projects in the second half of this year with a robust bid schedule that reflects strong sources of demand across multiple geographies and related to numerous major gas basins domestically. The continued diversity of demand drivers related to LNG export, domestic, residential and commercial demand is leading to a clear resurgence of pipeline construction activity that we are seeing play out over multiple years to come.

Last quarter, I highlighted our focus on margin enhancement over time, particularly in our non pipeline segments, communications, power delivery and clean energy and infrastructure. Collectively, these segments delivered an 8.5% adjusted EBITDA margin in the second quarter, a 100 basis point improvement year over year. We remain optimistic about continued progress in the 2025 for these operations, including a solid increase sequentially in the third quarter with margins approaching double digits for the first time. This expected improvement is driven by operating leverage on higher volume and our continued focus on execution, productivity and disciplined cost management. Shifting to our updated consolidated guidance, I'd like to remind you that we posted supplemental guidance document on our IR website encourage you to review that for segment and other financial guidance details.

We are now raising 2025 annual revenue guidance to range between $13,900,000,000 and $14,000,000,000 with adjusted EBITDA ranging from $1,130,000,000 to 1,160,000,000.00 Adjusted EBITDA performance driven by almost 30% expected growth in our non pipeline segments year over year. Adjusted EPS is forecasted to be $6.23 to $6.44 with the midpoint up 60% versus 2024. We expect Q3 revenue of $3,900,000,000 adjusted EBITDA of $370,000,000 and adjusted EPS of $2.28 We are increasing 2025 revenue estimates to account for the second quarter beat and the continued strong demand visibility with significant year over year improvements in most segments, partially offset by the lower pipeline revenue recorded in the first half due to MVP project runoff. On adjusted EBITDA margins, we expect second half year over year margin expansion for Communications and Power Delivery, offset by slightly lower second half margins year over year for pipeline and clean energy due to the investments we are making to support anticipated future growth. Similarly, we are raising our net cash capital expenditure guidance to 140,000,000 as we procure additional equipment to support this growth.

Also notable, we still do not see material impact from either tariffs or federal tax incentive changes from the recent Big Beautiful Bill legislation in our 2025 outlook, though we have considered a measure of general macro uncertainty from the current policy and geopolitical environment as we discount risk in our forecast planning. Regarding cash flow and the balance sheet, we are increasing our expectation to 700,000,000 to $750,000,000 of cash flow from operations for 2025, assuming DSOs average around the mid-60s for the balance of the year. We ended the quarter with total liquidity of approximately $2,000,000,000 and net leverage of two point zero times, which we expect to decrease in the back half of the year. In June, we successfully refinanced our credit facilities, resulting in extension of maturities and favorable adjustments to certain terms, covenants and pricing. Our strong balance sheet and well structured debt profile provide a significant financial flexibility to pursue a disciplined return focused capital allocation strategy.

Our top priority remains supporting our robust organic growth opportunities through investments in equipment and capacity expansion where we see compelling returns. We will also continue to evaluate opportunistic accretive acquisitions that complement our existing service lines, consistent with our long standing approach. In addition, we maintain a share repurchase authorization and will deploy capital to buybacks opportunistically. This completes our prepared remarks, and I'll now turn the call over to the operator for Q and A.

Thank We will now take our first question from Steven Fisher from UBS.

Just to follow-up on the clean energy comments you made. Just curious about kind of what you experienced in terms of customer feedback and activity during the quarter. As all the policy uncertainty played out, I know you're sounds like you're pretty well set on '25, but did that kinda change things around with any specific projects or what you might have already had booked for 2026? And and how much actually do you have in your '26 plan booked at the moment?

Good morning, Steve. So I would say a couple things. I'd say, you know, our customers so far have been unaffected. Right? I I think what everybody's plans were for '25 are ongoing.

Quite frankly, what everybody's plans were for '26 are ongoing. The work that we booked, the success that we've had in bookings in both the first and the second quarter, you know, have nothing to do with with the federal legislative process as it's played out. I think it's completely solidified our plan for '25. It's put us in an incredible position for '26 where where we would expect to further grow that piece of the business. And, you know, at the end of the day, we're, you know, we're really excited about what came out of the legislation.

We think the one big beautiful bill is a good bill for MASTEC. Obviously, we've got an executive order that we're paying attention to. But we work for top tier developers and we think that they're in the best position to really maintain their business over a really long cycle.

Okay. That's helpful. And then in power delivery, just curious how you're thinking about the timing of bookings here. I think, Jose, you said the the coming periods. Could that mean still the second half of this year?

And, what are are you thinking your your focus projects here? Is it is it more on the the very high voltage lines or it would be substations or or anything else or all the above?

Well, I'm more focused on all of the above. I think we've made great progress in the business. If you look at, you know, our guidance, we're we're guiding to to grow just under 20% for the year. That's that's, you know, virtually all organic. So I think we've done a great job in that business of building off of what already was a good 02/2024.

I think margin progression is happening in that business as we expected. We're really excited about what the second half is gonna bring for us in power delivery. We think our positioning in the market is fantastic. We expect to be a player on big projects as we go forward, but also on the day to day business. Right?

The day to day business is really important for us. It's the bulk of what we do. We're constantly winning projects. We're constantly getting more competitive. We're talking a lot about, you know, margin expansion opportunities and what we've done to build margins.

And if you think about where we've come in that business from, you know, just a few years ago in 2223 as we were very acquisitive in that business, I think we've made tremendous inroads in margin expansion and then really positioning in the market and we're really excited about what's going come in that market for us.

We will take our next question from Philip Shen from ROTH Capital Partners. Please go ahead.

Hey, guys. Thanks for taking the questions. First one is a follow-up, Jose, on the expectations for how that could play out and maybe the different outcomes and how are the tier one customers positioned for those different outcomes? Thanks.

Sure. So I I look, I think a number of our customers today have have a lot of have a very large portfolio of safe harbor projects. The way that the legislation is written is, you know, through '27, everybody keeps their credits. Beyond '27, it's what you have safe harbor. There's a lot of opportunities for people to further safe harbor projects all the way into the middle of '26.

There will be some changes in the in the executive order relative to that. We think they'll be manageable. And more importantly, we think they'll be manageable by the top tier developers. I think the work that we've done post CIA acquisition in terms of, you know, really focusing ourselves on the customers that we were working for, the relationships that we're creating. When you look at our customer base today in that industry, we think it's it's best in class.

It's tier one. And we think those are the ones that are best positioned to take advantage of the opportunities that will exist to safe harbor. It it literally puts your projects in play all the way to 2030. Obviously, there's another election in 02/2028. So we'll see what happens, but, you know, we're we're excited about, again, not just '26.

We're you know, I have no doubt in my mind that this business is gonna grow for us in 02/1926. I think it'll grow beyond that. And over time, and we said it in our prepared remarks, I actually think the the market's becoming a lot more competitive when you look at, you know, the sources of power that exist. Right? You've got nuclear, which is a ways out.

You've got gas that will see, you know, significant increases in three to five years. But when you look at the price of that, renewables start getting really competitive even without subsidies. When you look at the rest of the world and what they're able to build renewables at in a in a free market, it's a low cost. So it is a formidable form of power generation at a low cost, especially when you consider storage. And we think the market's gonna be strong for a really, really long time with or without federal incentives.

Great. Thank you. And then you talked about also how bookings have accelerated, I think, for clean energy. And I think in the back half, that might continue. And so I was wondering if you could just kind of give a little bit more color post OVB, what the conversations were like with customers?

Did you see really an aggressive kind of amount of activity in July? And then, you know, do you expect that acceleration to sustain through q three and '4? Or do you think that kind of slows down as we get through the year? Thanks.

So I would say not yet. So the the bookings that we enjoyed in q one and q two had nothing to do with one the the bill. Right? So in q one, we booked over a billion dollars in new projects, which we were really excited about it. You know, I think we had a I don't remember 1.4 times book to bill in that market in q one.

We we booked 1,600,000,000.0 in q two. And I think that acceleration is critically important. I think we're gonna have a really strong second half of the year. I think we're gonna have a really good third quarter yet again. And I would argue that none of that has to do with the bill.

You know, depending on what happens with the executive order, there is a possibility in place that people work really hard to safe harbor and pull in a lot of work. We have not taken any of that into account in in any of our thought process. That would we don't know. Obviously, that would be upside to Mastic and others in the industry. But we'll keep working with our customers to see if that's gonna be required or not.

Hopefully, it won't be. And people will work off their current safe harboring, you know, over the course of the next five or so years.

Great. Thank you. One more if I may, as it relates to margin. In terms of EBITDA margin, what are your latest thoughts on the overall trajectory in '26 and '7? Are double digit margins still on the table in the near to medium term? Thanks.

Yeah. So the the question is, from a I'm not sure if the question is from a total company perspective or specific clean energy.

Yeah. So from a total company perspective, look, we're really bullish on every segment that we operate in. We're seeing significant acceleration. As we said, obviously, the big driver to margins in our business is our pipeline segment. It's historically been our highest margin business.

We're really bullish about what's gonna come there. I think, you know, when you look at our guidance for this year, you know, we're in that, you know, low 8% range. I don't know that, you know, we're not gonna we're not gonna sit here today and and talk about getting to double digits in 02/1926. But over the long term, that is our goal. That's we think we can achieve that.

Obviously, it has a lot to do with the mix of our business. But, you know, we think today when we look at our outlook over the next few years, the mix potential of our business has never been better.

Great. Thanks for the questions, and I'll pass it on.

We will now move to Andy Kaplowitz from Citigroup. Please go ahead.

Okay. So you you did raise your pipeline revenue forecast a bit, but as you said, backlog was down slightly sequentially. So could you give us some more color on what you're seeing? You mentioned, I think, some projects you expect to book shortly. Is it possible to quantify that?

And then I know you've talked about revenue at least as big as '20 as in '24 and '26. So maybe you could update us on the potential of this cycle. Could it be comparable to pre COVID levels?

Sure. Thanks for the question, Andy. So a couple of things I'd say, you know, our pipeline business isn't about this year, and quite frankly, it isn't even about next year. We stand firm with with what we said before, which is we think that our 2,026 pipeline business will will look a lot more like our '24 pipeline business, which is a sizable increase from where we'll be in 02/2025. Historically, obviously, you know, it's been our best performing business.

It's been our highest margin business. It peaked at about 3 and a half billion of revenues. I think on our last call, we said, you know, if the if the market plays out the way that that we're seeing, there's potential to ultimately get there over time. We still feel that way. We it's somewhat remarkable that we're even saying that based on where the business has been in the last couple years.

But the level of activity that we're seeing today is, you know, in my mind somewhat unprecedented. Again, not not necessarily for '26, but even beyond '26. And we're we're making significant investments today. Right? We're we're investing in people, we're investing in equipment, and we're preparing for what we think is gonna be a really large cycle, which we'll see the beginning of in '26.

Helpful, Jose. And maybe a similar question in communication. There seems to be, you know, a ton of drivers there, you know, whether it's fiber to the home, but now fiber to the data center. I think the big beautiful bill helps with, you know, 100% bonus depreciation. So maybe you can talk about for the durability and duration of the cycle as you see it today, both in wireline and wireless?

So again, Andy, it's been something that has somewhat caught us by surprise, the strength of the market. You know, our revenue guidance this year is, you know, north of 20%, again, all organic. When you look at the first two quarters, we outpaced that. We're bullish about, you know, not just, you know, this year, but what's gonna quite frankly happen in '26 and beyond. We've got a number of new customers that keep coming to us with with different plans, with different opportunities.

We're pricing a lot of things in that market. You know, there's no reason that we don't think that next year is gonna be another really strong growth year. And quite frankly, we think we're at the beginning of the cycle there as well. You know, there's been a lot of talk about beads and, you know, beads hasn't even shown up yet. So we'll see, you know, how that also impacts the market.

But today, you know, the drivers of the business that that that middle fiber expansion, which is, you know, being built to not only focus on data centers, but but really all of the growth that we're seeing across different industries, is really driving that business, and we don't expect that to end anytime soon.

We will take our next question from Sangeetha Jain from KeyBanc Capital Markets. Go ahead.

Hi, good morning. Thanks for taking my questions. Jose, if I can follow-up with one more on the Communications segment. Can you talk specifically about Maastricht, like, wireline versus wireless as you lap the Ericsson order and as we talked about all the fiber opportunities come up?

Sure. So again, historically, wireless business for a long time was the biggest piece of the of the of the business. It's not anymore. Our wireless business is probably roughly 40% of what we do. The balance is wireline.

Wireline has a lot of growth. Our wireless business though, we're still really bullish on. You know, the Ericsson project is really less than a year old. It really started in the second half of last year. So we're in the first year of what's gonna be a a long multi year cycle on on on that specific opportunity.

We see tons of opportunities with other carriers on the wireless side based on what they've got planned in the coming years. We actually think that that business will see, again, significant growth opportunities within within the entire communication sector. And the wireline market is is is really there's as much demand as we've seen. So that's gonna continue to grow for us. So we think both both sectors are strong.

Both sectors have tremendous growth opportunities over the coming years. And, you know, while wireline is just bigger in total scope, we really like our position in both.

And thank you for that, Jose. And if I can follow-up on that itself, would you need to make investments in on that wireline side similar to what you are doing in pipelines if the cycle does materialize the way it's looking today?

I think we've done it. We talked a little bit about that on our first quarter call. We also added people in that business in a sizable way in the second quarter. I think, you know, we've we've talked about ramping up for the demand. I think we've we've been in that circumstance now for multiple quarters.

So I actually think we're pretty well positioned there. I don't think that the level of investment on a go forward basis is gonna be different than what it's been in the in the last couple quarters. So I think we'll continue to build off that.

We will take our next question from Julien Dumoulin Smith from Jefferies. Please go ahead.

Hey. Good morning, team. Good morning, Jose. Thanks for the time. I appreciate it.

Just maybe to to kick it off a little bit, let's talk about margins here a little bit. I mean, obviously, you're talking about investing and reinvesting in the business in anticipation. What's the timeline and cadence here of of seeing that inflect in certain segments here? I mean, obviously, as you said yourself, some of those may not necessarily fully, you know, translate in in in bookings or at least, you know, meaning revenue increases in '26. How do you think about the cadence of that margin improvement through the cycle here?

And then secondly, to follow-up on the pipeline commentary earlier, there's some pretty mega projects contemplated here for the back half of the year. I mean, obviously, given your market position, can we make presumptions about some of those large ones and your position therein? I mean, just being aligned with those partners?

Yeah. So I'd say a couple things. I'd say, you know, when we think about investments relative to margin, our backlog's way up, like, I mean, considerably up since the beginning of the year. It's been across virtually all of our segments. We see what's coming.

We see what's not in backlog, but we feel confident we're gonna win. And thus the reason for the investment decisions that we've made. So we're really trying to get ahead of that. We're really trying to be in a position so that when that work comes in, we can hit it and and execute on the highest margin that we can relative to that. So we think that a lot of our investment will be captured in '25 relative to what we're gonna need to take advantage of some of these growing markets.

Obviously, there's always a need for investment, but we think we're doing a lot of that as we speak. As it relates to pipeline, look, we're the largest pipeline builder in North America. We think we're the best pipeline builder in North America, bar none. We've got the largest fleet. We've got great people.

MasTec (MTZ) Q2 2025 Earnings Call Transcript

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