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

Good afternoon, everyone, and thank you for being here. Today, I'm very pleased to have MasTec with us. We have Jose Mas, who's the Chief Executive Officer; as well as George Pita, who's the Chief Financial Officer. From my perspective, I've been covering MasTec a long time and the story continues to get more interesting. I remember when Jose and I first started talking, he was -- MasTec was a DIRECTV story. You look at where the portfolio was then versus today, diversifying into Communications, Oil and Gas. And now with the 2 most recent acquisitions of Henkels & McCoy and IEA, they're one of the biggest players in electric transmission as well as renewables. So congratulations on that front.

I guess I'll just start off big picture. One of the themes that you've seen throughout the year -- and actually, before I go there, if anyone does have a question, please raise your hand and we will get a mic to you. So this should be very interactive. I won't dominate the whole day. But anyway, so one of the themes that people talked about and it's impacted your business is just labor constraints and inflationary pressures. And I know that was -- impacted your 2022 earnings. So can you talk about what you're seeing on that front? And any precautionary measures you're taking on inflation or labor as you think about 2023?

Sure. So first of all, Jamie, thank you for having us. Thank you for being here today. We've got an investor slide presentation on our website. There's also a forward-looking statement there that I'd like to refer everybody to. So as Jamie said, we've known each other for a long time. The business has really transitioned a couple of times over. And maybe before we talk about labor -- I think the last point where we really transitioned was during the pandemic. So if you think about 2020, MasTec came into that year. Oil and Gas was a huge piece of our business. It was almost 60% of our earnings in that year. We were coming off of a good '19. We had great prospects going forward. We were really excited about what the future of LNG was going to hold and all of the opportunities we saw. The pandemic hits, obviously, significantly impacts commodity pricing. And the question becomes is there ever going to be another pipeline built in the U.S. again. And we have to kind of reposition and rethink about our business, which we did. We were in the electric side of the power side of the business. We felt that the market dynamics in that business were excellent. So we really began to reposition ourselves. And we started with an acquisition at the beginning of '21 of a company called INTREN. We acquired Henkels at the beginning of '22, and we've recently acquired IEA. So fast forward to kind of what we've been saying about 2013, we expect to do roughly $13 billion in revenue versus 2020, where we did $6.5 billion and were dominated by Oil and Gas. So I think the transition in the company over the course of the last 2 years has been remarkable. I think that the end markets that we're going to talk about, I'm sure, in detail have tremendous upside and potential for our business. So we're super excited about the position where MasTec is today. Because we're growing, because we're in these what we think are really interesting fields, labor is a challenge, right? So labor is probably our single biggest cost item. We talk a lot about it on our calls. We're constantly training and building our resources to get ahead of what we think is going to be the growth curve. And we've seen significant labor increases starting all the way back in the pandemic. I mean people kind of forget it, but to get people to come off of the government subsidies at the end of 2020, back to work required us to do a lot. And it started the wage pressure for us then. You know '21 had it, subsided and then with the inflation pressure that started at the end of '21 into '22, we saw a significant further advancement of wage pressures going into -- going through 2022. I think we've done a great job this year of really level setting the company as we think about new business for '23, whether it was renegotiating with clients as we saw the inflationary pressure and it played out during '22 or more importantly, the jobs we were bidding for 2023. So I think we're in a great position today as a company. With that said, we need to keep hiring people our growth opportunities outstrip our current workforce. So really the retention of talent and more importantly, the acquisition of talent is really important for us. It's something that we focus on and something we do a lot of investing in.

Okay. So why don't we just go through each of the big end markets that you serve, and we'll start with communications because I think that's a business that people really -- when they think about wireless and wireline spend, they think of you guys, they think of DiaCom as the leaders in the space. So when you're talking to your customers, how -- what are they saying to you about CapEx spend in 2023 over the next couple of years? And can you help the investment community better understand some of the federal spending or stimulus initiatives that are out there to fund wireline and wireless spend and how you're positioned?

Yes. So we've been in the communications business since the beginning of the company's history. It was the biggest piece of our business for a long time. Obviously, we're more diversified today I've never seen a cycle like the one we're in or about to enter in, right? It's -- we've had periods in this country where we've had significant fiber build-outs. We had the whole Internet expansion in the late '90s, early 2000s, which was a big driver to telecom spend. But we've never seen the kind of federal dollars that are really being pushed into the industry today. For all intents and purposes, the only dollars that are in the market today are the original RDOF awards, which happened almost 2 years ago. If you think about it, RDOF was a $20 billion program. Of that $10 billion got awarded. Of those $10 billion, there was a couple of billion from people that haven't really rolled out. So there's probably only been around $7 billion or $8 billion that have actually made it into the system. And it's had the impact that it's having today in our industry. When you layer on all of the other available dollars and you include the Infrastructure Act and the Inflation Reduction, we're talking $50 billion, $60 billion of additional federal dollars that are going to make it into broadband deployment. It's a staggering number. And quite frankly, our customers see it, our customers are trying to figure out ways to apply for those dollars, use those dollars to help offset some of the plans that they have. But every one of our major customers in that business today has significant fiber build plans. On the wireless side, I think we're in very early innings of what we're seeing for 5G. A lot of it is fiber dependent. So I think that part of the wireless spend happens post a lot of fiber deployment. So we think we're very early on in the wireless cycle. But the strength of the wireline and the wireless market is tremendous. It's an area where back to the earlier point, we've invested a lot in people. very excited about what's happening in that market. From a margin perspective, we've been able to build margins while we've grown. We expect further margin appreciation in that business in 2023. And not anywhere near optimal margin levels because, again, we're still investing in the business, but I think the trends in the business are fantastic.

Okay. And can you also -- I mean, one of the things I think you've also been very successful is -- in particular, we go back, AT&T was your biggest customer, and I think you've had some success within the communications business, diversifying your customer stream. So can you talk about what the mix is today, where you see the incremental opportunity is to grow share with the customers outside of AT&T?

Yes, it's a great point. If you look at our growth in 2022 -- we started a relationship with T-Mobile a few years ago. It was relatively an insignificant account for us. This year, it was the -- one of the biggest drivers of our growth. They're almost approaching 10% of our -- 5% to 10% of our telecommunications revenue, which is great. We've done a great job of starting a business with Verizon, they started on One Fiber and converting it into a wireless opportunity with Verizon as well, which traditionally hasn't been a big account for us. Our Comcast business has grown substantially since we entered with them in the market a couple of years ago. We're doing a lot of work today with Charter and with some of the RDOF recipients. So we've done a really good job of rounding out the customer base. Historically, we were AT&T dominated for periods of time, it was probably our 60% to 70% of our communications spend today, it's a much broader base and I think a much healthier base of business for us.

Okay. And then just because of the spend that's out there and there aren't a lot of players with, let's say, national scale within communications, understanding you can improve your margins from today. But when you think about the communication story over the next 5 years, do you think it's more an operating profit growth story or is -- your margins historically ranged maybe 10% to 13%, I think, has been a peaky number for you guys. Are there opportunities to expand those margins further?

Yes. So a couple of things, right? If you think about the business, we kind of bucketize it in 2 areas. One is your business as usual. So it's your everyday work that you do for a telecom carrier that's in market. That's a little bit more competitive because there's usually multiple players in a market that's competing on that. Then you think about national programs. And a lot of these national programs are the rollouts they're doing. So as they get federal spending or as they're deploying fiber across the country, they kind of contract that differently. Those are where there's much fewer competition. There's -- where the bigger guys have a much greater opportunity to get -- work at scale. We do think that the margins on both sides of the business have the potential to increase. We've set our prior high of 13% as a goal that we think that not only we can achieve, but over time, with the continued growth of the market, we think we could potentially beat. So tremendous opportunity. We're far away from that today, and we understand that. But definitely, that's the goal that we're working towards.

Okay. And does anyone in the audience have a question? No? Okay. So Jose, why don't we switch to the Henkels & McCoy acquisition. Why -- how did the acquisition come about? Where does it position you competitively now? And understanding the Henkels & McCoy margins right now are probably mid-single digit, what is the pathway to sort of improve that margin profile?

Henkels has an incredible brand. It's got a great history, it's a 100-year-old company. My first real job out of school -- I was actually still in school at the time is when Hurricane Andrew hit in 1992, it hit South Florida, devastated the southern part of our community. We were a private business at the time, and one of -- we needed help to help us rebuild for the contract work that we had. And one of the contractors that we brought in was Henkels & McCoy. And my job in college was actually managing the Henkels & McCoy crews. So I've had experience back with them all the way into the early '90s throughout my progression at MasTec and the growth in MasTec. I followed them. I knew them well, I knew the family. And we had a good relationship when the opportunity came, I thought we were an incredible fit for them. They were looking -- they were a family-owned business. They really care about the fit for their employees and the history of their legacy. So I thought the MasTec-Henkels combination made an enormous amount of sense, as did they. And I think we got not only a great company, but I actually think we got it at a good value. When we bought Henkels, to your point, we announced it as about $1.5 billion in revenue at 5% EBITDA margins, which is what they had attained in the previous 12 months. Lots of challenges, lots of things that could be approved on at Henkels, which they know. If you think about our business this year, we're going to exit the year roughly at $2.5 billion of revenue in our Power Delivery segment, just under $1.5 billion of that was Henkels. We're finishing this year at north of 9% in that segment. So the Henkels margin since we owned it have outperformed our expectations. We're a lot closer to high single digits than we thought we would be at this moment in time. We think that the margin opportunity in the business is in the double digits, right? That segment generated 12% margins for us in the third quarter. It's a good quarter. It's the peak of the year for us. Our third quarter is usually good. But it does demonstrate the ability of that business to generate higher margins than the 10% that we've set, right, as a goal. So we do think over time that, that will beat, right -- our goal is to get to double digits and then ultimately get to the highest margin potential we think we can do it. We're still in early stages. We've only owned Henkels for 10 months, 11 months, right? We closed on that deal at the beginning of the year. We think we've done a wonderful job with integration and really trying to mine the best all the combined businesses to provide our customers with the best product possible, but there's still a lot of work to do. There's still tremendous opportunities to improve margins, to be more efficient, to have higher utilization rates, and we're going to get there. So it's a very exciting opportunity for us. Our legacy transmission business is one that has slowed down in the last couple of years. We've won some good contracts. We expect that business to significantly ramp starting in 2023. It will impact margins a little bit, and we can talk about that, but it's a very exciting field, tremendous opportunity. The spends of the -- on the utility side is there -- seems to be an appetite that never ends, right?

Okay. So I want to get into that in what you're going to say about margins. But just within Henkels & McCoy and the good margins you put up this quarter, I think when you originally announced the acquisition, you said there were some opportunities on the SG&A side for Henkels & McCoy. I think they were like 12% of sales relative to you guys or 5% of sales. Like, where are we on that journey? Has that largely been attacked already? And is that part of the reason why the margins have improved? Or is it just volume of work?

I wouldn't say it's volume. I'd say it's more efficiency based. I still think -- I think we've done a great job on that in the SG&A profile of the business. We still have work to do, we're not done, right? But the fact that we're able to be 9% margins for the year as a segment, inclusive of Henkels & McCoy and where we are in that cycle, I think, is a great sign. And when we think about '23, we've guided at about double digits. So the argument could be made why isn't your margins higher going into '23 with all of the advancements that we've made and I think that's where we get into transmission, right? We do expect a significant bump up in transmission spend. We're going to invest in that because it's a business that we've been smaller in. So I think you're going to see a lot of investment from us in '23 to grow the transmission business, which will -- it's probably slightly negatively impact the margins as to why they're not more consistent with Q3 versus where we expected for the full year. So we still expect margin appreciation in the business in '23.

But the first quarter margin sounds like it will be more challenged as we're ramping and then improve throughout the year?

Yes.

That's the way to think about it, okay. And then -- can -- just everyone's very excited about spend around transmission and distribution in Henkels & McCoy, I get you there. But can you help us understand -- I know there probably the second biggest player in this space next to Quanta, like which utilities are they aligned with as we try to think about where your business grow? And can you talk about -- there's a lot of spend that people are talking about out on the West Coast, right? And I'm just trying to understand like how Henkels & McCoy or now MasTec would be positioned for that.

Yes. So I think the -- again, another fascinating story, right? What Henkels and INTREN brought us was significant union presence, right? So historically, we were nonunion. We had a presence in the Southeastern United States in distribution. Still important, if you think about Florida. Florida Power & Light, which is owned by NextEra is the utility in the state. They have significant hardening plans relative to hurricanes. If you think about the whole East Coast of the United States, it's impacted by hurricanes. There's tremendous opportunities there, even in the Gulf states. If you think about Henkels and INTREN together, they had a significant presence on the Northeast, the Midwest and the West, right? It really opened up those markets for us, which were markets that MasTec hadn't participated in. The West Coast has become a huge portion of our Power Delivery business. It's probably the biggest single geographic area within our power delivery business today. We work for all of the major customers in the West Coast today. And I think we're probably the second largest contractor on the West Coast systems as a whole with tremendous opportunities for growth.

Okay. And we've been talking a lot about the spend on the West Coast. Like, are you seeing that materialize? Is that a bigger 2023 opportunity?

I mean, we're definitely beginning to see the underground component of that, which is a big driver of spend begin -- it's really just starting today.

Okay. All right. And so Jose, I'll give you a break for a second and I'll make George answer a questions So George, as we're thinking about 2023, 2022 wasn't a typical year for MasTec in terms of the headwinds that probably we'll see a lot of those that aren't repeatable. So is there any way you can help us think about normalized EPS or EBITDA or base of earnings to just level set us on how we think about 2023? And given some of the guidance cuts in 2022, will we be more conservative as we think about our 2023? And then just because Jose talked about the first quarter in power delivery, I'm just wondering if there's anything we should think about as we think about the cadence of earnings for 2023?

Sure. I mean...

Sorry, there was a lot in there.

That's fine. When we look through and kind of reevaluate 2022, we've taken a lot of pride over the years of being conservative in our guidance. And I think the processes that we do, when we reforecast our business every month and go through challenges with our people, that continues. And I don't think that really failed us in a meaningful way in 2022. Having said that, obviously, we're not comfortable or happy with the 2022 performance, right? But I would say that when you look at the impacts to our guide in 2022, they're more external and they are internal in terms of what's happened with the MVP project, which we initially thought was going to be done in 2022. And obviously, it moved out of right now, as we've discussed some preliminary views of 2023, we think Oil and Gas will grow pretty sizably in 2023. We're not assuming MVP construction will be a part of that. And when you talk about cadence, that will be a second half of the year phenomenon. And the first half of the year where that will be a more challenged view, it will also be some start-up costs. So we'll have a more difficult compare in the first half of the year on more costs associated with the ramp-up, if you will, of Oil and Gas that we're expecting in the second half of the year. As we go forward, we've talked to folks -- the exciting thing about MasTec today is that while we've had a difficult '22, we really have, in the last 2 years, positioned the company, we think, for extraordinary growth opportunities from both a revenue perspective and a margin perspective. And third quarter, I think we started to exhibit some of that. And we anticipate that will continue now with the acquisition of IEA. We've really changed the end market portfolio of the company to be front and center in the midst of all energy in the United States from power generation to power delivery to transmission. We really have a geographic reach now and a customer and an end market opportunity to provide services of both union and nonunion didn't exist before. So consequently, with the timing of the IEA acquisition, we kind of gave some directional views. We haven't given official guidance for 2023. But -- we did talk directionally about views that we thought were top line and EBITDA would go. And within that, we've talked about our top line that we think we'll approach $13 billion next year compared to this year's $9 billion and change. And that EBITDA should be approaching 9%, and we're very comfortable with that view. What becomes a little bit more challenging sometimes is then getting the cadence, right? And when you look at the cadence, I think the first quarter for a couple of different reasons, right? One, which I think Oil and Gas will be incurring some startup costs for activity that's going to happen late in the second quarter into the third. And the fact that when you look at the cadence of how our business is going to transition with the addition of IEA, we're going to add a pretty sizable amount of revenue in the first quarter at a low single-digit margin profile. So consequently, I look at the first quarter and think we're going to have a good sizable top line growth. I think our EBITDA margin profile will be relatively similar first quarter of '23 compared to first quarter of '22. That said, I think second quarter is much better, and I'll have a first half that's improved. But I do think more of my EBITDA improvement year-over-year is going to come in the second half in the first half. Other thing I'd say from a modeling perspective for folks just to consider because there's been so much transition in our portfolio and the acquisitions is you need to consider the level of interest costs, which are obviously going to be much higher as we've added debt here for the IEA acquisition. Over the course of '23, we will delever and pay down debt, but that will be a process. So there'll be more interest starting in the early part of the year. There is more depreciation costs. We need to factor in the share count that we issued. I think some folks are doing that in their modeling, but those are all worthwhile items to consider when you think about the year as in addition to the timing, which because of the transition of the business, will be a little bit different and it will be more second half loaded than, I think, first half loaded.

Okay. And just a follow-up on that, and then I'll open it up to the audience. Because of the acquisitions, you're sitting with a little more leverage than typical for MasTec. So given the addition of Henkels & McCoy and IEA and maybe Oil and Gas, at this point smaller, we'll talk about why it might not be a year or 2 from now. But how do we think about the free cash flow conversion of your business and how quickly you can delever and do these acquisitions change, I guess, the longer term cash flow opportunities at MasTec?

Yes. We're very comfortable we will delever in 2023, sizable move and move our balance sheet more towards a level of debt and a leverage metric that we believe is appropriate for the [indiscernible] rating. You're correct. I mean we've talked over the years -- I think if you think about the transition of our business, which has been incredible over the last 24 months, the working capital profile is probably the same, maybe a little bit better because there's more utility services spend in our mix. And consequently, I think that ends up being maybe a slightly better capital profile in terms of DSOs and DPOs. But not all that different than what we've historically had because we've historically had a pretty good working capital profile. But as our business transitions and you look business becomes a smaller percentage. And that is the case regardless of how much they grow, just we've grown everything else so much more. That has historically been our most capital-intensive business. So by definition, over time, we become more free cash flow positive in the new MasTec or the new end market MasTec than I think we have been historically. And that's something that I think is fair -- it's an important point for folks to notice. It is something we've been very strong in managing our balance sheet over the years. We take a lot of pride in that. And we will continue to do so in terms of that component. But certainly, when we look at the free cash flow profile, I think we're going to be, net-net, a stronger view going forward in the changed end market portfolio that is MasTec today.

Okay. And does anyone in the audience have a question? All right. So I'll keep going. So Jose, why don't we transition into renewables and IEA? So can you talk to us about the history behind IEA, how you actually got the deal done and why they were a willing seller? And then talk about the outlook for renewables in 2023, like what you're seeing wind versus solar with some of the tariffs and all those issues in 2022 behind us?

Look, for us, IEA made an enormous amount of sense. IEA was a really strong renewable contractor that we've known since we got into the business. We got into the business early 2010s through the acquisition of Wanzek, the predecessor -- really the original company within IEA was a competitor of Wanzek. We knew them well back then. So we followed their growth. One of the things that we really liked about IEA was the union presence and the fact that it would give us the ability to do both union and nonunion jobs within the renewable sector, which historically as MasTec alone, we only did non-Union jobs. It's really important as we cross-sell to customers, customers that have multiple types of projects where you really need to offer both types of services. So it was an important -- it was a really important add for us. I think IEA was a small public company that was really challenged with just the size that they were at and being public in that environment. They've had a significant equity ownership of private equity, even as a publicly traded company. Those companies were, I think, ultimately looking to get out. So it presented a great opportunity. For us, we negotiated the deal for a while at the -- early on in the negotiation when the build-back-better plan was in play. We thought that would have a significant impact on the business, it failed. Once it failed, we renegotiated our pricing, took that into account, got to a level where both companies would transact. And then a couple of days later, the IRA was announced out of nowhere, right? And I think that, that was pure sheer luck, quite frankly, but it's going to have a massive impact on ultimately the return on that investment. So I think we bought it really, really well relative to valuation. I think they bring an enormous amount of industry leadership to us. They've got a great renewables platform. I think on a combined basis, we're going to be most likely the largest renewable contractor in the country. Wind has been really the base of where both businesses started and grew from. They did a better job in the solar market, getting in it earlier. So their solar business has traditionally been bigger than ours. We built a ton of solar work for next year in the future. So solar will end up being bigger than wind, probably as early as -- for sure, as early as '23. The market today, there's more projects than you can perform. It's an issue, right, today. It's all about supply chain. So to the extent that you can make sure that the project that you're working on has their materials at least allocated for and bought, the business is incredibly healthy, going to continue to grow. We're working like crazy to increase our capabilities to be able to meet the demand that we're seeing.

Okay. And so then why don't we shift over to Oil and Gas because that's obviously a business that was a huge -- 60 or-whatever-percent of your earnings, which is much smaller today. But it seems like there could be a resurgence and opportunity going forward and not just traditional gas pipeline type stuff. So can we talk about what you're seeing in terms of hydrogen or carbon sequestration, the ability to grow backlog in 2023? And then like the margins already come down from the 20s to low teens type of margins or the -- what would be the drivers behind margin improvement of that business going forward?

It's been a remarkable transition, right? We -- in 2020, we were concerned about the long-term impact of that business. We talked about having a base business that we thought we could execute at in the $1.5 billion to $2 billion range over time. We felt that would be the right target. Here we are, over the course of last year, we've seen what's happened around the world with commodity prices. It's changed the environment in North America. Our customers are beginning to be a lot more active. There's takeaway capacity issues all over the place now, which is going to require a new pipeline infrastructure starting in '23. And then on top of that, you throw in the alternative fuel. So you talk about carbon capture, you talk about hydrogen, which is really -- over the long term, that's going to be the future of the business. So when we can mix that with our traditional business in the gas side, it's a wonderful combination. We're more bullish today about revenues for '23. We've kind of given a guidance that kind of talks about that -- George talked about [ $1.7 billion ] earlier. That's a number without MVP. So if MVP goes, it's a much larger number. So it's, quite frankly, a very conservative number. And I think from a margin profile, with the reductions in revenue that we've had over the last few years to be able to maintain our margin in the mid-teens has been fantastic. So I think it's a matter of volume. As soon as the volume gets back to a back into the ranges we're talking about, I think the margin profile is going to increase. I do think that the longer-term margin profile in that business and the potential will end up being in the high teens again. And we'll see, right? We're excited about it. We've really built the business to kind of deemphasize what was happening in our pipeline segment, but the opportunities in our pipeline segment today are, again, pretty tremendous.

Okay. And one of the themes also across the conference is just macro concerns. Understanding you're very bullish because I think your portfolio is geared more towards markets that offer secular versus cyclical growth. But in event, we are in a recession or we go into a recession, how do you think MasTec's earnings are impacted? Or is there anything different as you think about funding or spending for -- assuming a recession like this time relative to history?

Yes. So look, obviously, we do think interest rates and the interest rate environment has an impact. We're seeing it in our business. Obviously, our interest costs are up. We're seeing a number of our competitors that went public over the course of the last few years with the higher level of debt, facing their challenges relative to the interest rate environment. But when we break out our business by site, so if we look at telecom and we look at the market trends in telecom, telecom will be impacted by a slowdown in housing, right? So there'll be some portion of that spend that declines because of housing. But the reality is that the push in telecom today is either expanding for 5G or it's on the fiber side. And the fiber side is driven predominantly by federal funding and the support of federal funding. So we think the impact to recession -- we actually think it's a very defensive business today, more so than it's ever been in its history because it's never had the federal dollars that are flowing into the market today. When you look at our Power Delivery business, it's the same dynamics. The utility companies have gotten to their public service commissions. They've gotten their hardening programs approved. Those are all incremental spend dollars that we're seeing. They've got significant issues on the generation side, where they're converting to renewables. We've got new transmission lines being built. So where power is being generated today is different than where power was historically generated, which requires a new transmission system to feed that electricity from where it's being generated to where it needs to be. So those trends aren't impacted necessarily by our recession, at least not in the short to midterm. When you look at what's happening on renewables, right, it's being driven by the federal spending and the Inflation Reduction Act. So we think we've done a really good job of having a very resilient business relative to any recessionary pressures. We actually think that some level of recession helps because the labor pressure has been one of the biggest pressures on our business, we need the labor issue to kind of subside, right, to make it a little bit easier for us to allow our growth and continue to add the acquisition of talent, which is so important to us. But are there areas of our business that will be impacted? Of course, there are, right? And when you think about new housing construction, those are markets that we feed, right? So we build telephone lines to new subdivisions and power lines and gas distribution. And that work will be impacted, but it's such a small percentage of the overall pie that's happening today that I think it will have a very minimal impact on our ability to grow revenues.

And then you've done a lot of M&A for MasTec in a short period of time. But also what sits within your business as well is you do have more of a traditional infrastructure transportation business that's smaller but in understanding we need to delever, but strategically or longer term is out of business. At some point you would want to grow big enough to make its own segment. And how do we think about getting there, would it be more continued organic investment or inorganic investment in particular, with how much M&A you've done so far?

Yes. So I mean, to be clear, as we look at '23 -- we just closed on the IEA deal, right, less than 2 months ago. So we'll take our time. We've got tons of organic growth opportunity that we need to focus on that we need to fund. We need to generate cash. We want to get our debt metrics a little bit lower than where they are today. With that said, we think the infrastructure side is a tremendous business. We've been in it for a couple of years as MasTec's legacy business, it's performed really well. IEA adds to that. We're still learning. So part of this is an exercise and really trying to get a good understanding of where the margin profile can be in that business. We're going to work hard on that. If we're successful there, obviously, the infrastructure dollars are going to have a huge impact to that business. I think it's a very interesting space. It's not one where I think we've made a decision that we're going to invest a lot of capital there, but it's definitely potentially one where we could -- where it could have a meaningful impact, and it's all going to be dependent on where we think the margin profile of the business goes over time.

Okay. And then last question because we have a minute left is -- does anyone have a question? All right. So I'll ask the loaded stock question. So I look at -- your stock has worked more recently, but I look at the multiple of your stock relative to some of your peers and where the portfolio sits today, like what do you think the market is missing and where do you think the opportunity is for your stock to rerate over the medium term?

Look, I'm not surprised we were a show-me story. I think first half of this year, it was about prove to us so you can deliver the margin growth in the businesses that historically were smaller, right? So we were driven by Oil and Gas. Now we're dependent on telecom, we're depending on power delivery, we're dependent on clean energy. Prove to us that you can hit the margin profile that you've laid out. I think in the third quarter, we began to demonstrate that. It's one quarter. We think we're just touching the tip of what we could ultimately achieve. We've got to show further progress in the fourth quarter and beyond. We think as we do that, we'll get -- we think it will come, right? We definitely don't think that they're -- we deserve such a valuation gap from our peers. Quite frankly, we think we're more diversified and better positioned than most, if not all of our peers. So I think the market will figure that out over time and we'll get rewarded. But our focus, the only way we can effectuate that is by executing. So we're going to execute. We're going to deliver. We're going to post the numbers, and then hopefully, the market takes care of everything else.

Okay. Great. Well, we are officially out of time. So thank you, Jose and George, for your continued support of the Credit Suisse Industrials Conference. Great Stuff, great story ahead.

Thanks all for joining us. Thank you.

Thank you.