MasTec, Inc. (MTZ) Earnings Call Transcript & Summary

Okay. Good afternoon, everyone. I'm Steve Fisher, UBS Machinery and Engineering Construction Analyst. We are very pleased to have with us the management of MasTec. They've done a great job building businesses across end markets that have strong growth potential. We have Jose Mas, Chairman and Chief Executive; George Pita, Executive Vice President and Chief Financial Officer; and Marc Lewis, Vice President of Investor Relations. If anyone has any questions during this fireside chat format, please e-mail me directly, [email protected]. Just before we get started as a research analyst, I am required to provide certain disclosures related to the nature of my own relationship and that of UBS with any company, on which I express a view on this call today. These disclosures are available at www.ubs.com/disclosures. Alternatively, please reach out to me, and I can provide them to you after the call. With that, I will turn it over to MasTec for some comments as well.

So good afternoon, Steve, thank you for having us. My name is José Mas. I'm the CEO of MasTec. And before we get started, I'd just like to highlight the fact that we've got slides on our website, along with our forward-looking statement, that if you can please note. I guess to start, we're happy to be here. I know this is a technology meeting and telecommunications conference. So I'm happy to be doing this, the roots and the history of MasTec go all the way back to my late father who started the predecessor company to MasTec. And as we started, we were truly a telecom-based company. We really spent the first 30 or 40 years of the company's history building our plant for the telecom carriers. I had the opportunity of becoming CEO of the business in 2007. And at the time we were doing about $900 million in revenue and almost solely focused on telecom. Since then, we've done a good job of diversifying our business today. We think we're a very well-rounded infrastructure construction company. Telecom is still a very important and key part of our overall business. We do about $2.7 billion a year in telecom. We've got a clean energy and infrastructure division that really focuses on renewables and infrastructure projects. That's a business that's grown very rapidly for us in the last few years. We did about $300 million in that business in '17, and we'll do over $1.5 billion this year with significant growth expected, both in the next year and the future. We've got a high-voltage transmission group that works for electric utilities and developers, building out the high-voltage lines for both regular utilities as well as renewable-specific projects. And then we've got a pipeline business that really focuses on oil and gas pipelines, a business that's done very well for us and obviously, a little bit more challenging in this environment. But we think we've got a good, solid book of business there that we can have a really strong recurring business as well. So very excited about where we are. We've seen tremendous growth of the company from roughly the $900 million in '07. We did just over $7 billion in revenues last year. More importantly, as our earnings have grown faster than our revenues, so we're excited to be here. We think we've got some great years ahead of us. We think the markets really afford us the ability to continue to grow and excel. So again, Steve, thank you for having us and look forward to having this chat with you.

Great. Jose. So it seems like the goals that you guys have in clean energy are the most different versus consensus, and we look forward to chatting about that in a little bit. But since we are at the UBS Tech and Telecom Conference, I thought we'd start with the communications business. And since our last tech or telecom event, we've clearly seen some movement in capital spending plans from the various carriers. I wonder if you could just talk about what you're seeing there in terms of the ramp-up in their various cycles, where they are, what's coming ahead? And if you could maybe add on to that, maybe in the near term, the latest that you're seeing on permitting and COVID-related impacts?

Yes. Look, so it's been a challenging year. Obviously, 2020 was a year in which the pandemic first arose. I don't think many of us knew what was going to happen in the short term. I think from a telecom perspective, little did we know the importance that, that would have on our daily lives and the impact that broadband connectivity would have on so many people. So we think about how we've lived this year and even doing these conferences virtually and the amount of broadband that's been required to allow people to either work from home or to get about as normal as they can under the circumstances. So our business shifted as the year went on, right, and we really started to work with the different carriers in terms of helping them achieve what they were trying to achieve at that particular time. We know that from a long-term growth perspective, one of the things that everybody is very excited about is 5G and what that means for all industries and to us in particular, both from a wireline perspective and a wireless perspective. But I also think that the carriers realize the importance of broadband, the importance of being able to provide their customers with the highest speeds possible. I think there's going to be a recommitment to fiber expansion into homes and high-speed Internet expansion into homes. So I think we're going to see, as the years progress here in the near term, a lot of our customers go back to significant spends on their wireline side of the business as they make sure they're competing and trying to win that piece of the business from a customer perspective. And then on the wireless side, look, I think there's been some concern as to -- like all technologies, how quickly it gets deployed. I think we're in very early innings of what 5G is about. I think we've seen some macro work related to 5G, but I think we're going to see a significant amount of activity from all the carriers, including fixed wireless. As we think about the next few years, I think the level of activity is going to dramatically increase, which I think puts companies like MasTec in a really good spot. From a permitting perspective, obviously, the first few months of COVID were very challenging and that a lot of cities had moved to a remote nature. Cities had to figure out how are they going to do their permitting remotely versus how they've always done it. For the most part, I think there's a sense of normalcy that exists out there across the country. We still have some cities that have more challenges and may have more areas that are shut down or areas where either permitting is tough or just work conditions is tough. You get states that are still going back into some lockdown scenarios. For the most part, we're considered an essential service. So we're out there working, but there are certain challenges to that as well as time goes on. So I think we've done a good job managing through it. I think one of the things that we did early on in this pandemic was we realized where we were from a personnel perspective. We had been hiring aggressively to meet the wireless demands of our customers. I think we slowed that down a little bit as COVID hit. I think you've seen it in our numbers. We had really good margins in our telecom business in both the second and third quarter. I think for the year, we're going to be up about 250 basis points from last year from a margin perspective. I think we've talked about margins further increasing in 2021. And there's -- and I think that's going to ultimately depend -- the level of increase is going to ultimately depend on how much we grow and how much resources we start training and adding again, which we expect some of it but I expect '21 to be a really good year And I would expect that leaving the end of '21 going into '22, we're going to be at a significantly higher run rate than we are today.

And you mentioned some of the places going into lockdown. Is there any lessons that you have learned from the first wave of stay-at-home that can be applied to this? Or is this really just something that you kind of have to just ride out?

Well, I think it's totally different now, right? I think at first, nobody knew what it meant or how you respond. I think today, for the most part, people are working remotely and doing a good job at it. Obviously, there's pockets where that's more challenging than not. Again, I mean -- I think the most challenging thing has been keeping our workforce safe, which is obviously the most important thing to us. Making sure that everybody's got the right protective equipment, that they understand the things that they need to be doing to protect themselves. Luckily, we've -- I think we've under-indexed cases as a company. But I think those are the important things, right? Obviously, people are scared, and we want to understand the challenges that our people are having on a daily basis and then create the best circumstance for them to be able to be successful and safe.

Okay. Now beyond your typical work with some of the traditional carriers, you've talked about some of the rural investment opportunities. Can you talk about how much of that work you're doing now and how you see that ramping up? And what has to happen to see that ramp up?

Look, I think there's 2 areas of the business that we think, from a federal perspective, are going to really be impacted. The first are the options that are going on now on the wireless side, which we think both Verizon and AT&T will be significant players in. We think that's going to lead to a significant amount of work, especially in the second half of '21. And then you have the rural funds that are going to be awarded to a multitude of companies as time progresses. And I think our business, we've -- back from the days of the fiber expansion days, we've had a good presence in the rural market. We work for a number of small municipal and telecom carriers. And I think those are the -- partly the beneficiaries of what we'll see with the rural fund. I also think we're going to see some of the big carriers obviously apply and roll out services, both from a traditional fiber perspective and some fixed wireless as well. So again, I think we're very well positioned. We've worked hard at trying to understand who the bidders are, what their opportunities are and really trying to get in front of them as early as we can to ultimately have the most success that we can as a business.

Now one of the things you've talked about recently is some off-balance-sheet structures that you might support. Can you just talk a little bit more about those opportunities, how that fits into your business model and how we could think about that as driving business opportunities over the next couple of years?

Look, a couple of things, right? I mean, I think we learned a lot from watching what happened on the tower side of the business and the success that tower companies have had building a portfolio that ultimately supports the carriers. So if you think about the carriers, they've sold off a lot of their tower assets to third parties and some great businesses have been formed doing that. So as we think about it, we think about a couple of different things, right? When you think about the rural funds, a lot of these companies that are applying from rural dollars have to provide letters of credits and things like that. So we've obviously -- we think one of the real differentiators for MasTec is the strength of our balance sheet and our ability to support companies, whether it be through financial instruments or not. And then as we think about the carriers and their future plans and the things that they're trying to do, we think there's going to be a lot of off-balance sheet opportunities. So I don't think that towers are going to be the only thing that carriers ultimately outsource and try to view it differently. So I think there's a lot of opportunities created in the market that, by having a strong balance sheet and potentially investing in trying to own assets, we could significantly improve our positioning in the market and the amount of work that we ultimately get to perform and do. So it's definitely something that we've been looking at. We made an investment in a gas pipeline a few years ago that's turned out to be a fantastic investment for MasTec. We own a significant piece of what they call the Waha pipeline and the Waha header, which are extremely important assets from the gas side. And I think learning what we learned there and really taking that and applying it to what some of the opportunities we're seeing in telecom today are going to be important for our business on a go-forward basis.

Great. Now, maybe shifting over to margins a little bit in this business. You've reached a nice double-digit level here in the last couple of quarters within Communications. How volatile should we expect the margins to be here? And what's the chances that we see kind of single-digit quarters here and there? Or can you sustain this double-digit range?

Yes. Look, I think we're going to end 2020 at double digits. Again, it's about a 250 basis point improvement from where it was last year. We would expect a further, probably, 100 basis point improvement in '21. So I think overall, for full year '21, we expect margins to be better than they were in '20. Obviously, our strongest quarters are usually our second and third quarter, followed by the fourth and then the first, and a lot of that is weather-dependent and where the work is actually being performed at any given point in time. Could we have a quarter that were in the 9s and other quarters where we're at 12 or 13? I think the answer is yes. Obviously, we're trying to level load our work as best as we can. But I think we finished last year at 8% on a full year basis, so I think margins are going to be significantly better on a go-forward basis than they've been in the last couple of years. So I would expect continued growth off of our double-digit base today. We've set a goal, I think, externally, where we've talked about ultimately getting to 13 points or better, which is a goal that we used to have a long time ago. I think that's going to be very attainable in this cycle. So I still think we have a lot of room to improve from where we currently are. And I think we'll be able to do that consistently.

And this might be for George. But given just how unusual this year has been from a cost perspective, were there any temporary costs that have been reduced this year that might be coming back next year? Or is that all embedded within your ability to kind of get that margin improvement next year?

Well, during this year, we improved our margins. I'm trying to -- I assume you guys can hear me. During the year, this year, we improved the margins on Communications, as Jose mentioned. Some of that improvement came as a result of not having to -- we slowed the investment. We've been making and growing our crew count, right? That's something that, over time, we will expand the count again as the growth in the segment expands. But I think, generally speaking, if you think about the COVID impacts in 2020, they were slightly negative to us, right? I mean, certainly, in the Communications segment, I think there are certain top line amounts we were unable to perform given some of the permitting challenges, as Jose mentioned at the beginning. There's a little -- there's always a little bit ins and outs. But historically, you put all together, net-net, I'd say COVID had more of a negative impact in 2020 on the Communications segment than any other positives or any cost reductions, if you will.

Great. So now let's move on to the Clean Energy and Infrastructure segment. And it seems like, as I said before, really big area of difference between consensus and your outlook view, so a real opportunity for upside here as you execute on that. And I was talking with George earlier this morning about it, but for the folks on the call here, just curious about how you think the pipeline of activity books there particularly as it's expressed in backlog. The backlog in the segment being less than $900 million, but you're talking about $2 billion-plus of revenues in 2021. How should investors think about the backlog needing to inflect higher to hit that $2 billion-plus of revenues off of a $900 million base of backlog today?

Yes. So look, one of the things that's probably different about MasTec than your traditional E&C company would be that the work that we perform is generally very short-term in nature, right? We don't have a lot of projects that are out multiple years. So our backlog turns over rather quickly. So we're very confident that when we talk about revenue targets for '21, we know the particular projects we're going to be working on. We've identified them. There's a lot of backlog that projects where you have been verbally awarded or were told we're the winner on, that for whatever reason didn't get signed in time to make a backlog schedule. So for our backlog, we only include 18 months of backlog and we only include backlog that's actually been signed and awarded. So a lot of times, we could be sitting on hundreds of millions of dollars of projects that have been awarded, but they don't hit our backlog. So I think it's -- while it's an important reflection and one that over time makes some sense, I think we're very comfortable that the backlog is going to be there for us to attain what we want to attain in that business. Again, we've grown that business from about $300 million in '17 to $1.5 billion this year. We've talked about targets of exceeding $2 billion next year and we're very comfortable saying that. The amount of activity and -- that we're seeing from both the negotiation and the bid side is far beyond anything we could ever execute. So I don't think winning work is going to be an issue for us in this business. It's all going to be about our ability to execute and ultimately drive the highest margins that we possibly can on the work. So I'd say this is a business we've been very bullish about now for multiple quarters, talking about it. Carbon neutrality has become a big word out there. And a lot of our electric customers were talking about how they can lower their emissions and being more carbon neutral. That's really been one of the big drivers of the business. A lot of the state renewable portfolio standards and utilities need to ultimately achieve them. But in the last few months, I think we've also seen a dramatic shift in the oil and gas industry. As of today, not just the majors like Shell, Chevron and Occidental but now we're seeing a lot of the pipeline companies, the TransCanadas and the Enbridges, even the energy transfers of the world talk about moving some to renewables as well, which I think opens up a whole other subset of available work, and one in which with the amount of work that we've done in oil and gas, we think we're fairly uniquely positioned to really help them achieve a lot of their goals and targets. So I think we're seeing a huge shift of sentiment in the industry. I think that -- obviously, there's a change in the administration, one that highly regards clean energy and a lot of these types of projects. But even without any federal funding or any federal action, just the momentum that we're seeing on the ground with what people are trying to do is quite unbelievable. And I think the opportunity for us to continue to grow this business and achieve the targets that we've set out, we're really comfortable with.

Is there anything in particular that is restraining the release of those projects to you? And if not, how should we think about the cadence of how you ramp up to hit that $2 billion? Is it more back-end loaded within '21? Or will it be kind of evenly spread throughout the year?

Yes. No, I don't -- it's not a second. I mean, again, I think if you look at the run rate that we've been running in the last few quarters, that business has grown substantially for us. So I think it's going to be a very stable business over the year. I don't -- again, I know you probably asked that in the context of backlog, but we're really not concerned with backlog. We've got a really good view on projects we know are coming our way that didn't make third backlog. So as we're able to report future backlog numbers, I think it will be pretty evident that we'll be able to attain the goals on a pretty consistent level.

That's great. Could you talk a little bit about some of the key components of that business and how they're going to ramp up and what the profile of these projects will look like? And then traditionally, wind has been the biggest piece of this business, but it sounds like going forward, that you're going to have more of a driver in terms of solar and biomass and maybe some other things. What's the typical project going to look like on the solar side and the biomass side, that we should expect to see you guys pursue out there?

Yes. So I mean, this year, wind is still the biggest part of what we're doing. We've been a wind contractor for a long time. I think we really -- that's where we got our experience in renewable. We started a solar business internally about a year ago. It's had a relatively good year, albeit small, one that we're growing rapidly into. I think solar soon going to be bigger than wind for us. So I think the opportunity on solar is pretty impressive. And over the course of the last few years, I think we've really focused on biofuels as well, right? So we're working on a number of different biofuel jobs. We've probably completed about a half a dozen in the last couple of years. The profile of those jobs is that $50 million to $100 million range, usually somewhere around a year-end time frame. So I think we've done enough of those to really understand that market to understand where our niche is and we see a significant amount of demand related to those projects. So I think that's the typical project for us. Again, most of these projects are all under a year. And I think we've done a good job of being fairly diversified within that space, and I would expect it to continue.

Great. And I know you've talked about battery storage. Can you talk a little bit about -- is that a separate category of projects you see out there? And can you talk about the customer base and kind of how those projects could look?

Yes. Look, what we're seeing today is on a lot of our projects, there's a battery storage component to it. So a lot of these renewable projects are coming with a storage component. We obviously don't make batteries. But we're teaming with different battery companies, really trying to understand the different technologies and try to pick some people that we think are going to do really well in the market to team with. So we see those opportunities. We're starting to see some opportunities from a stand-alone basis. So it's an interesting and exciting market for us, one that I think is going to continue to grow, one that I think we can play a pretty good role in and one that obviously plays with everything that we're doing, right? Again, I think every one of our projects will ultimately have some storage component. I think for the most part, a lot of our projects will be bid with that storage component built into it. At times, they may be separate. But I think the more experience we can get, then I think our customers will feel better about allowing us to do that portion of the projects as well.

Great. There are -- we know, out in the marketplace, some larger projects in the biofuels area. And there could be many hundreds of millions of dollars of size. Would these be of interest to you? Are these types of projects you would pursue or keep them on the smaller range?

On the storage side?

No, just going back to biofuels, like clean fuels type projects.

Look, obviously, look, at the end of the day, every project is different. I think one of the things that has really helped make us successful is our risk appetite. We've done a good job of being able to mitigate risk with growth. I think you see it today in oil and gas business, with the contract structures that we've been able to develop to really help us derisk some of these projects with some of the difficulties that they've had. So I think for the right risk profile and a project that we understand in a market that we understand, I think those are the things that we're always measuring against. We're not here solely for the sake of trying to grow revenue. So it's truly about doing projects that we think we can accomplish, do well on and do so with an appropriate level of risk. And if it meets those criterias, then those are projects that we would be interested in.

And we know your traditional utility customer base has a lot of opportunities that they are in the process of working through and releasing now. But since you talked about the whole other side of the opportunity with the oil and gas customers, how should we think about where they are in their process of actually rolling out work to you? And then do you have any of that assumed into your growth numbers for next year, or could that be upside? Or is that going to be sort of beyond '21?

Yes. I mean, so the good thing is that really, they're just starting, right? And I think that what we've seen a lot is the statements that they've put out, and we've known with discussions that we've had with them, we understand what it is that they ultimately want to do and accomplish. I think that's not built into our numbers. It's not part of what we've been talking about for quarters here. I think it's fairly new. I think it's upside to what we're doing. And obviously, we're excited about it because it's a customer base that we know and understand and one that we think can help. I don't think they have projects that are imminent. So I do think it's a later '21 into '22 story. But again, I think it reemphasizes the thought process that we've had around being able to grow the business and the different touch points around the business. So I think it just strengthens our view of where the business is headed and the strength of that business and it gives us a whole other customer profile that I think we know fairly well to be able to go and try to win.

Great. And just maybe touching upon the competitive angle on the clean energy business. Certainly, in communications and in oil and gas, you've had a fairly concentrated type market. How do you see the competition shaping up within clean energy infrastructure? Where is the balance of power within contract negotiations? How do we think about the competitive landscape and how it plays out in contract terms and conditions?

It's a big market, right? So you've got a lot of individual developers that are out there that, obviously, you have all different levels of sophistication of. And then you have the bigger utilities that are obviously doing a lot of work. And if you look at MasTec's portfolio, we've traditionally done work for the bigger utilities. So we haven't been as keen on working for the developers. We found the developers to be much more tax equity driven, which is somewhat cyclical depending on where the tax laws are, where we think the utilities is more of a consistent spend. So I think the bulk of our work has really been tailored towards the utilities. I think you'll probably continue to see that. I think there might be some larger developers that come into play as they think about what they want to do. But today, the bulk of our business is on the utility side, which is very similar in contract structure to the other types of projects that we'll do for them, right? So normally, these aren't new customers for us. These are customers that we do other business for as well, be it transmission, distribution, in some cases, gas, right? So we -- so they're a little bit different than having to go in and negotiate from scratch.

Got it. Maybe shifting gears again over to Electric Transmission. You've talked about winning some large projects that are just sort of waiting in the wings. Can you just give us a sense of how many projects you've won? And what's holding them back at this point?

So we've won a couple of fairly large projects that we're really excited about that we think are going to meaningfully change both the revenue and margin outlook for the business. There are projects that should have started in 2020. In some cases, one of the projects, in particular, had significant issues from a procurement basis because a lot of their procurement was coming from somewhere else that had significant COVID impacts. In other cases, it's been more permitting issues as they continue to work through permitting and some of the challenges that COVID created. We feel good about where both of those projects stand. So we think we'll -- we're hopeful that we'll start seeing activity in '21.

Okay. I guess maybe just a follow-up on the permitting side there. One of the things that's been a positive for some of the larger projects in oil and gas when you've had permitting challenges is the ability to maintain those on a cost reimbursable basis. Would that be the same case here in the electric transmission side?

Yes. I think the issues are completely different, right? So I think today, on the oil and gas side, you've got, obviously, an environmental community that's going after these projects post-construction. So they wait for construction to start and then they go and try to file suits in different jurisdictions to try to get favorable rulings to stop the projects. I don't think you see that level of interest on transmission jobs. I think the environmental issues with transmission jobs aren't anywhere near what they are on the gas pipelines, nor is the fight the same. So we don't expect that. I mean, I think what we're seeing is particular permitting issues that are just taking longer than normally would, and they're more state versus FERC rights. But once those projects get started, we don't really see a lot of environmental issues or challenges to those projects as they progress. So I think it's more of the carbon issues with oil and gas, where that fight is more typical. So I don't -- the contract structures will be different. But again, we feel good that we've taken -- we've mitigated the risk as best as we can even in those projects.

Got it. And it seems like to some extent, there should be some relationship between electric transmission opportunities and the clean energy and infrastructure opportunities. To what extent is that true? And what synergies do you think there are with the clean energy business and your electric transmission business?

Look, at the end of the day, every clean energy project requires some form of transmission, right? So it's either a tie-in or a new line. And I think that one of the benefits that we have that we've really started working at is a lot of this is for the same customers, right? So the customers of today, for us, are customers that we can cross-sell everything from distribution to transmission to clean energy to, quite frankly, gas, right? So the best customer for us is one that we can develop a really good relationship with. They trust us. That gives us a chance to work throughout a number of their different segments within their business. And then if we can execute on that, obviously, we try to try to grow our business as best as we can with each of them. And I think that's a relatively new approach for us, right? But I think we're we've realized that aside from your normal procurement cycle or the normal local relationships that as our spend significantly increases with some of these -- with these clients, and we become a much bigger part of their spend, that it gives us an opportunity to really talk at a C-level and truly understand what their needs are and then try to build something around specific for them, how we can help them and ultimately how to make their life a little bit easier. So I think that's been a real positive for MasTec, right? I think it distinguishes us. It puts us in a different light vis-à-vis a lot of smaller companies. And I think it's something that will pay dividends for us in the future.

That's great. So clearly, just to some extent, if your clean energy business is growing, that should bring electric transmission along with it. How should we think about the human resources required in the electric transmission business? Is that an area of particular labor constraint? I know it tends to take a while to train people in this area. Can you take people from your oil and gas segment or redeploy it? How should we think about the labor element of the electric transmission business?

Look, I think one of the things -- one of the things you'll see with our margins in transmission, while they've improved, they still lagged the rest of the company. Part of that is we're positioned today to be a much bigger company than we are, right? So we're doing roughly $500 million. I think that when some of these larger projects will start, you'll see a significant increase to our revenue line and associated margins. I don't think we have to do a lot to really get there. From a human perspective, we might have some trades that we need to hire but the reality is that we have a lot of that infrastructure in place already in anticipation of where we're going to be in '20. We decided to kind of hang that on. And obviously, that's been a detriment to margins, but we think by having that consistency and having those people that have been here for a while, those projects will go a lot better, a lot smoother. So I think, overall, as a business, the people perspective is probably the most important part of our business, right? We generate business and revenues because we've got great people and it's those people that make the difference in our company. It's a challenge, right, across the entity. It's a challenge. But quite frankly, I think it's probably a bigger challenge in the communication and the clean energy side than it is on the transmission side.

Great. And shifting gears again, thinking about your cash flow and capital deployment here. Obviously, you've had really strong cash flow this year, somewhat a function of a slower pace in oil and gas. But there is likely to be a structural change in your cash flow improving over the next few years with the growth of more cash-stable businesses. As you think about deploying that to M&A, just curious what the cadence of M&A momentum has been this year. It seemed like back in the spring, maybe there were a pickup of opportunities as the market was a bit lower than perhaps moderated. Are things picking up again at this point in terms of momentum on M&A?

Yes. Look, first to your first point, I think we're sitting in a great spot from a cash flow perspective. I think the cash flow profile of our company has really improved. As George says all the time publicly, our most capital-intensive business, which was our oil and gas business, is the business that's getting smaller, right? So as you model out a decreasing oil and gas environment, we're going to -- our cash flow should improve because it's, again, our most capital-intensive business. Which gives us a lot of options, right? So it's a nice spot to be in. We've been pretty vocal about M&A as the years progressed. Obviously, we are seeing a lot more targets from an M&A perspective than we've traditionally seen. We've got a number of deals that we really like, a number of conversations that have been ongoing for most of 2020. And we think, we think we'll see -- we've said you can expect us to be more acquisitive over the course of the next few months than we've been. We're hopeful, we'll get some things done here relatively quickly. But there's a lot out there with that said, right? I mean, we are value driven. And at the end of the day, I think patience is important in making sure we find the right assets that allow us to accomplish what it is that we want to accomplish. So we're not out there just for the sake of buying companies or the sake of buying revenue. Again, there's some things out there that we like, that we think we'll ultimately execute on. And we think it will help us ultimately reach our goals. In the second -- in our third quarter release, we kind of laid out and outlined for how we think we can achieve $10 billion in revenue as a company in a declining oil and gas environment. We talked about doing that organically. We're still of the opinion that we can accomplish that organically. Obviously, any M&A that we would do would only expedite our ability to do that. And again, we think there's some interesting opportunities out there that we'll continue to work on. And again, we're in somewhat of an advantageous position with the cash flow we've been able to generate.

Great. Maybe just to round it out with one question about the oil and gas business, because it's a question I've been getting over the last couple of weeks. In terms of your mix of the $1.5 billion to $2 billion, I know there's some integrity work in there. There's some distribution. There's some discrete small pipelines. Can you talk about how actively you're trying to grow the integrity business and the distribution side, everything that's not sort of discrete pipeline projects? Are you making an active effort to try and increase that? Or is that sort of just where it is today? Doesn't get any particular effort if you want to kind of sustain that $1.5 billion to $2 billion range?

Look, I mean, it's an area of the business that we focused on in the last 2 years. I think it's -- I think it's growing nicely for us. I think the opportunity for continued growth is dramatic. We also have our Canadian business that, once upon a time, was an $800 million business, which was significantly impacted. But it's starting to grow again, which is a good place to be. So again, we think that, that $1.5 billion to $2 billion is a very realistic target on a year in, year out basis with all of those different things that you mentioned. I don't think gas projects are going away for any stretch of the imagination. I think they'll look different, but they're not going away. So we feel really good about hitting that consistently over a long period of time. And by the way, we also think that there's going to be periods of times and this is what we don't know, right, because I can't read into the future, but oil prices have improved, we are seeing some more activity out there. So to the extent that there's more projects that pop in -- timing there, I mean, those numbers should be even better. So we feel good about that outlook on a long-term basis.

Terrific. Well, exciting times. Thank you very much for your insights and for being with us today, and we look forward to chatting with you again soon. Thanks very much.

All right. Thank you, Steve. Thanks for having us. Thanks, everybody, for participating.

Thank you.