MasTec, Inc. ($MTZ)

Thank you for standing by, and welcome to MasTec's First Quarter 2026 Financial Results Conference Call. I want to remind participants that today's call is being recorded. I'd now like to turn the call over to Mark Lewis for some opening comments.

Thank you, Lisa, and good morning, everyone, and thanks for joining us for MasTec's first quarter conference call. Joining me today are Jose Mas, Chief Executive Officer; and Paul Dimarco, our CFO. We have prepared slides to supplement our remarks today, which are posted on MasTec's website under the Investors tab and through the webcast link this morning. There is also a companion document with information analytics on the quarter and a guide summary to assist in financial modeling. Please read the forward-looking statement disclaimer contained in the slides accompanying this call. During this call will make certain forward-looking statements regarding our plans and expectations about the future as of the date of this call. [indiscernible] statements are based on current assumptions and factors that involve risks and uncertainties, our actual performance and results may differ materially from our forward-looking statements. Our Form 10-K, as updated by our current and periodic reports and filings includes a detailed discussion of risks and uncertainties that may cause such differences. Additionally, 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 on this call. A reconciliation of any non-GAAP financial measures not reconciled in these comments to the most comparable GAAP financial measure can be found in our earnings press release, slides or companion documents. We had another great quarter to start the year, and let's get into it. I will now turn the call over to Jose. Jose?

Thanks, Mark. Good morning, and welcome to MasTec's 2026 First Quarter Call. Today, I'll be reviewing our first quarter results as well as providing my outlook for the markets we serve. First, some first quarter highlights. Revenue for the quarter was $3.829 million up 34% year-over-year. Adjusted EBITDA was $284 million, a 73% year-over-year increase. Adjusted earnings per share was $1.39, a 174% year-over-year increase and backlog at quarter end was $20.3 billion a $1.4 billion sequential increase and a new record level. In summary, we delivered a great quarter. In fact, the strongest first quarter in our history setting new highs across virtually every key metric. Revenue, EBITDA and EPS were all above guidance, with strong year-over-year double-digit growth. EBITDA margins improved 170 basis points versus last year first quarter and total company book-to-bill was 1.4x, setting yet another backlog record. 2026 should be a great year, and I'm excited about the momentum we are building as we look ahead to 2027 and beyond. Maybe more importantly, when you step back from the quarter, what we're seeing across our end markets continues to reinforce our confidence in the longer-term opportunity in front of us. The amount of investment going into critical infrastructure right now is significant and is being driven by some very durable trends, whether that's AI and data centers, grid reliability, energy demands, critical infrastructure or connectivity. And the way we're positioned at MasTec we're right in the middle of all of that. On the telecom side, we feel really good about where we are. The fundamentals continue to improve driven by strong growth in total data usage. Aggregate U.S. data consumption is estimated to almost double by 2030. This growth is fueled by increasing demand for streaming video, cloud computing, gaming and connected devices. The rapid expansion in total network traffic underscores durable demand and significant long-term growth potential. At the same time, you've got the next wave of investment coming from bead funding, which will support rural broadband and middle mile builds over the next several years. But the biggest shift we're seeing is around data center interconnectivity. AI is driving a level of demand for fiber capacity, redundancy and low latency that we haven't seen before. connecting data centers both long haul and metro is becoming a major driver of spend, and we think that creates a multiyear opportunity measured in the tens of billions of dollars. In power delivery, the visibility remains strong. We're in the middle of a multiyear investment cycle in the grid. Utilities are spending heavily on transmission, system hardening, and reliability, and that's being driven by both aging infrastructure and increasing demand. A big part of that demand is coming from AI and data centers, which could drive up to 12% of total U.S. electricity consumption by the end of the decade. That kind of growth requires significant expansion of the grid, new transmission lines substations and upgrades across the system. So when you combine load growth, resilience and energy transition, it creates a long duration, highly visible opportunity set and we think we're really well positioned there. Power delivery revenue for the quarter was up 16% and EBITDA was up 40% and book-to-bill was 1.6x, and with backlog increasing over $600 million sequentially. In Clean Energy and Infrastructure, what's really making a difference is the platform we've built across renewables, civil industrial and general building. Our renewable revenue was up over 60% year-over-year and margins improved 70 basis points. In our industrial and infrastructure markets, we're seeing significant opportunities tied to critical infrastructure, including gas-fired generation, civil construction and general building permission-critical projects Data center development is a big part of that. Each one of those projects require significant site work, power infrastructure and ongoing expansion, and that plays directly into our capabilities. Our recent turnkey data center award is progressing very well. The demand for both the skill set that MasTec has developed in construction management, coupled with the capabilities we have in civil power, telecom and maintenance provides us the opportunity to exponentially grow this part of our business. As the opportunity for full turnkey services matures, we continue to look for ways to increase our self-perform capabilities and improve margins. Clean Energy & Infrastructure segment revenues increased 45% year-over-year EBITDA was up 56% and segment backlog increased sequentially by over $770 million, representing a book-to-bill of 1.6x. On the pipeline side, the fundamentals are also very solid. For the quarter, pipeline segment revenue was up 92% year-over-year and EBITDA more than tripled. There's a growing need for natural gas infrastructure particularly to support gas-fired generation, which remains critical for reliability as power demand increases. And at the same time, global LNG demand continues to grow, driving investment in export infrastructure and related pipelines, both domestically and internationally. So we see this as a business with good visibility and steady demand going forward. Our reported backlog is not fully representative of the potential as it only includes signed contracts. Based on current negotiations and verbal awards, our visibility in this segment is as strong as it's ever been, and we expect strong long-term growth. In closing, we delivered an exceptional start to 2026 and with record performance across revenue, profitability and backlog. These results reflect strong execution across the business and the strength of our diversified platform. More importantly, the long-term fundamentals across all of our end markets remain highly compelling from AI-driven data center growth and telecom demand to grid modernization, energy infrastructure and pipeline opportunities, the scale and durability of investment continue to grow. We believe MasTec is uniquely positioned at the center of these critical infrastructure trends with the capabilities, customer relationships and backlog to drive sustained growth. Given our strong performance and momentum, we are increasing our full year guidance. We now expect revenue of $17.5 billion, adjusted EBITDA of $1.5 billion and earnings per share of $8.79, representing year-over-year growth of 22%, 30% and 34%, respectively. With strong visibility, accelerating demand and meaningful momentum across our segments, we are confident in our outlook for 2026 and and increasingly optimistic about the opportunities ahead in 2027 and beyond. I'd like to take a moment to thank the men and women at MasTec, it is both an honor and a privilege to lead such an outstanding team. Our people are deeply committed to the values that define us, safety, environmental stewardship, integrity and honesty while consistently delivering high-quality projects at the best possible value for our customers. These principles have not been unnoticed. Our customers recognize and appreciate the dedication and excellence our team brings to every project. It is through the hard work and commitment of our people that we have positioned ourselves for continued growth and long-term success. I'd like to thank you for your continued support. And I'll now turn the call over to Paul for our financial review. Paul?

Thank you, Jose, and good morning. We are pleased with the momentum built by our first quarter results and the continued trend of improved first quarter performance. This has been a focused effort in recent years and 2026 marks the best first quarter in MasTec history. Off of our strong start, we now expect to generate almost 45% of our full year EBITDA in the first half of 2026, implying markedly lower seasonality than our business has experienced historically. Our Q1 results represent record levels of first quarter revenue, adjusted EBITDA, EPS and backlog. Year-over-year, we drove meaningful growth with revenue up 34%, adjusted EBITDA up 73% and 174% and backlog by 28%. We continue to see strong customer demand for MasTec's broad service offerings and expertise to meet their infrastructure development goals. Our customers continue to show high confidence in MasTec seeking deeper integration and partnership through alliance agreements, sole-sourced contracts and a desire for MasTec to provide turnkey services on strategic infrastructure builds. This is particularly apparent when speed and execution certainty are critical. Our scale, expertise and focus on mutually beneficial outcomes are key components driving this confidence. Now I'll share some further details on our first quarter segment performance and our outlook. Our Communications segment had a good start to the year, generating revenue of $802 million, growing 18% year-over-year and 7% ahead of expectations. EBITDA margins were about 100 basis points below last year's first quarter, negatively impacted by cost to exit certain markets in our [indiscernible] fulfillment business. Communications backlog in the first quarter was up slightly from year-end and 12% year-over-year to another record level. We continue to see strong broad-based demand for wireline services with customers engaging for multiyear turnkey opportunities. Our second quarter communications outlook calls for $875 million of revenue, with EBITDA margins slightly higher than 2025 in the low double digits. We also expect to achieve double-digit EBITDA margins for the remainder of the year. resulting in approximately 70 basis points of margin expansion versus 2025. First quarter power delivery results exceeded our guidance by 10% of revenue and 21% in EBITDA with solid execution to start the year, resulting in 12 basis points of EBITDA margin expansion year-over-year. Most notable in the quarter was the continued backlog strength with a 1.6x book-to-bill driving backlog to a new record of $6.2 billion. We saw a number of new contracts executed in Q1 and as well as expanded scope on some existing projects. Regarding Greenlink, our client resolved the transmission permitting review earlier than anticipated, and we are now operating across the full contractual scope. This is one of the factors driving our revenue guidance higher to approximately $4.8 billion or 14% year-over-year growth. Full year EBITDA margins remain on track to approach double digits and are trending higher than our prior guidance. We continue to expect year-over-year margin expansion in each quarter for power delivery with 60 to 70 basis points of margin expansion for Q2 specifically. Our Pipeline segment had a terrific first quarter, generating $682 million of revenue, almost doubling year-over-year with EBITDA margins of 21%. Margins exceeded our guidance by 165 basis points and increased 270 basis points sequentially. It is important to note that broader pipeline construction demand is still developing, and we are generating these margin results in a competitive environment. Unquestionably, we are executing at a high level. delivering high-quality projects ahead of schedule for our clients. These positive outcomes further illustrate MasTec's position as the leader in this space and will continue to be a differentiating factor as the cycle develops. For the second quarter, we expect revenue of $600 million with EBITDA margins in the high teens, slightly below the first quarter result. Full year margins are still forecasted in the mid-teens, but trending higher with the first half performance. We are currently taking a conservative view around second half project timing and productivity while we firm up specific resource allocations. Longer term, we continue to see an unprecedented level of project activity and remain very bullish on the opportunity set for this segment in the years ahead. Clean Energy and Infrastructure also started the year off strong, delivering over $1.3 billion of revenue, up 45% year-over-year almost 10% ahead of our guidance. EBITDA margins of 6.7% expanded 50 basis points from Q1 of 2025, and we generated 56% EBITDA growth. Renewables and general buildings both contributed to the revenue beat with year-over-year growth of 63% and 166%, respectively. While our recent acquisitions were solid contributors to the quarter, organically, we still generated over 30% year-over-year growth. Backlog continued to develop nicely, reaching another record level of $7.3 billion. This represents a total book-to-bill of 1.6x, inclusive of 1.3x organically. Infrastructure led to backlog development, but renewables also extended its streak to 11 consecutive quarters of lag growth. Demand continues to be robust across the business verticals, leading us to increase our full year revenue guidance to approximately $6.7 billion, up $325 million or 5% higher than previous forecasts. EBITDA margins are still forecasted in the high single digits, comparable year-over-year, largely due to the higher mix of General building activity in 2026. Q2 revenue is expected to increase almost 50% year-over-year to $1.7 billion, with EBITDA margins also comparable to 20,25 second quarter. We generated cash flow from operations of $99 million in the first quarter with higher revenue levels versus guidance, driving additional working capital investment. We also saw DSOs increased to 72 days versus 65 days at year-end resulting in lower cash conversion than anticipated. We expect DSOs to trend back to the mid-60s over the course of the year. Our liquidity stands at approximately $1.8 billion and net leverage of 1.8x is well within the terms of our financial policy and criteria to maintain our investment-grade ratings. Our improved Q1 performance, coupled with continued capital efficiency led to further growth of return on invested capital, expanding almost 100 basis points from year-end to over 10%. We expect this trend to continue, and we'll share more thoughts regarding ROIC targets at our upcoming Investor Day. Moving to our consolidated 2026 guidance. We are raising our full year guidance to reflect the first quarter beat and our improving outlook for the remainder of 2026. We now expect revenue of $17.5 billion or 22% growth year-over-year and 3% higher than our prior forecast. For adjusted EBITDA, we are now forecasting $1.5 billion or an 8.6% margin with a $50 million increase, representing a 10% margin flow-through on the increased revenue outlook. Adjusted EPS is forecast to be $8.79, an increase of almost 35% year-over-year and 5% ahead of our prior guidance. Our cash flow from operations outlook remains unchanged, expecting to exceed $1 billion for 2026. We are increasing our net cash capital expenditure forecast to about $220 million to support the additional revenue growth. Our second quarter outlook reflects another strong quarter of year-over-year growth across all of our major financial metrics, with revenue, adjusted EBITDA and EPS growing 21%, 38% and 47%, respectively. Adjusted EBITDA margins are expected to expand by over 100 basis points compared to the second quarter of 2025. Lastly, I want to remind you that MasTec will be hosting Investor Day on May 12, which will also be webcast live via a link at MasTec Investor site. We are excited to introduce additional members of our operational management team to the investment community and provide a medium-term financial outlook. This concludes our prepared remarks. I'll now turn the call over to the operator for Q&A.

[Operator Instructions] And our first question today will be coming from the line of Alex Rygiel of [indiscernible] Capital Securities.

Jose, congratulations to you and your team on another outstanding quarter. In the context of profit margins, growth at MasTec has been very impressive. And now with backlog up 28% year-over-year. Can you talk about how pricing and/or contract terms are changing? And is there a point where price and contract terms become more important to the company rather than volume?

So Alex, I think it's a great question. I think we've been talking about the momentum of the business over the course of the last year. We've obviously seen it in our backlog growth, right? If you -- I think backlog in '25 was up about $4.5 billion. We're up another $1.4 billion this quarter. I think in the last 2 quarters alone, we're up around $3.5 billion. So I would argue that a lot of the improvements that we've seen in the business from a pricing perspective, obviously, from a growth perspective, haven't really even started hitting our financials yet, right? I think we're just at the beginning of seeing some of the improvements that we saw in '25 relative to backlog and repricing, and I think that will play through the balance of '26 and into '27. So I definitely think it's something to pay attention to. We feel really good about what we have in backlog. We feel really good about ability to not just grow our revenue, but I think we've talked about margins a lot, and our intention is to improve them on a segment by segment level. We know we have a lot of opportunity there, and we're looking forward to delivering on that.

Excellent. And then as it relates to the pipeline market, which appears poised for kind of notable upside. Can you comment on the competitive environment there and how you're positioned? It sounds like it's a little bit more of a 2027 opportunity from a P&L standpoint, but maybe talk about the time line here over the next few years.

Sure. So nothing's changed. I think going into this year, we said we'd expect it to do about $2.5 billion we knew we would be somewhat constrained because a lot of projects were going to be pending materials that we're going to take a long time to come online. So we've always said we thought '27 was a significant growth year for us. We're really happy with the way we started '26. And we do think there's some potential at the back end of 26 to maybe bring in some projects and hopefully be a little bit different than what we've been saying. But right now, -- we're very bullish on '27 and beyond. We've talked about getting to historical highs in revenue. So I mean we feel great about all of that. I think to the beginning of the question, which was the competitive landscape in the business, there's no question that post pandemic, we saw companies -- we saw some companies fail. We saw some companies disappear completely. We saw others deemphasize the pipeline business. So I think the competitive landscape today really benefits MasTec. We never -- we continue to invest in the business. We kept our strongest people. I think we've rebuilt. So I think we're in a great position to not just win the market share in the past, but to actually increase our market share throughout the cycle.

And our next question will be coming from the line of Andy Kaplowitz of Citigroup.

I'd be curious about your thoughts on this cycle versus others. Your backlog, as you know, is almost -- is up almost 30% year-over-year, and that's what pipeline backlog being down. We know you think pipeline earnings will be stronger going forward. So I think you expect to grow EPS now mid-30s this year. You're starting to think about that kind of growth being sustainable in '27? And do you think it will be pipeline leading earnings growth or actually one of your other segments such as Clean Energy?

Yes. So lots of questions in there, Andy. I'd start by saying, look, the momentum of our business is incredible. I think that comparing it to past cycles. I've been CEO since 2007. I can't remember a time where every business was just humming right, where everything just -- everything just had great opportunities in front of it, where we see backlog growing across the board where we see momentum actually increasing. So I think from a total business perspective, it's just as good as I've ever seen. And quite frankly, I would only expect it to get better. We're going to have a great year across the board on every financial metric. I think we've got our Investor Day on May 12, where we're going to lay out some longer-term targets we're really bullish about what we think we can accomplish in the mid- to long term. And we're excited. We spent so much time, whether it's on these conference calls or at investor conferences talking about either the previous quarter or the next quarter or the current year. And we're looking forward to having a day where we can lay out a little bit of a longer-term vision and really give you some long-term targets that I think everybody is going to really feel good about.

Okay. So then I'll ask you a quick follow-up. So just you positively surprised pretty much every quarter in communications over the last few quarters. But I think you raised '26 communications revenue guidance by even less than you beat in Q1. So is it just conservatism? Or do you continue to see the momentum moving forward across most of your communication businesses?

Yes, I'd say a couple of things. I think Paul laid out in his script, we took some onetime charges there that impacted margins by about 100 basis points, if not it kind of would have been flat with last year. When we look at the balance of the year, I mean, we're guided to $17.5 billion number. It was an ice round figure. I don't think you should take anything into the back end -- back half communications guidance. We have plenty of opportunity there. And hopefully, we'll continue with our goal of at least meeting, but if not beating expectations on a quarter-by-quarter basis.

And our next question is coming from the line of Steven Fisher of UBS.

Congratulations, Jose, you mentioned that you're seeing potential for exponential growth. And I think it was the -- essentially the data center piece of clean energy and infrastructure. To what extent do you think this is going to be the main narrative for the Clean Energy segment going forward? And how much will natural gas plants be part of that?

So I'd say a couple of things. When we look at -- we kind of look at our Clean Energy and Infrastructure business and break it out in roughly 4 buckets, right? So we've got renewables. We've got our industrial business, which would include any new power generation, conventional power generation. We've got our infrastructure business, which is a lot of what we're doing on the Civil side. And then we've got our general Buildings Group, which is what has really been focused on both critical infrastructure and the data center subset. So I would say, if you look at backlog, every one of those had a backlog increase in the first quarter relative to sequential backlog growth. So we're feeling good about all 4 of them. Obviously, the data center opportunity subset is massive, and it's 1 that I think will play a big role in MasTec's future. What we found, we're on 1 job currently. What we found is it's an incredible opportunity for us. We bring a really unique skill set that I think many are interested in. We have an incredible number of opportunities that we're going through right now that I think will develop. So we feel good about that part, but we -- quite frankly, we feel good about the whole business. I think we've been really adamant about what our position is on power generation on the conventional side. historically done a lot of simple cycle where haven't done a lot of CCGT work. And we feel good about that. There's a tremendous amount of opportunity of demand. It will be a part of our growth story. It won't be the leading part of our growth story, but it will definitely be a part of our growth story, and I think we're well exposed to all of it.

That's great. And then on the power delivery side, I wonder if you could just talk about transmission opportunities for bookings. I'm curious to what extent are customers coming to you looking for skill sets and capacity sort of versus putting out a more competitive process? And sort of what's the timing of sort of next major bookings for you?

We're really excited about the growth in backlog in our power delivery this quarter, right? Book-to-bill, over a $600 million backlog increase broad-based, no major projects kind of pushed that way. From a major project perspective, we're seeing more activity than we ever have. I think we're in a great position. I think the fact that we're working Greenlink and our success on Greenlink has really positioned us differently across the industry. So couldn't be more excited about the opportunities that are on the way and I think we're really well positioned. So that will be a big part of our story on a go-forward basis.

Our next question will be coming from the line of Brian Brophy of Stifel.

Congrats on the nice quarter. Just wanted to ask on CE&I. Obviously, awards there were pretty healthy. Just any color on where the source of strength is coming from when I think across your clean energy, civil, street highway businesses? Or were there any additional GC awards in the quarter? And then you talked about having about $4 billion of projects under LNTP in that segment. Did that come down with the backlog build here? Or does that remain elevated still?

Yes. So just to reiterate on the last question, because it was similar, right? On our Clean Energy and Infrastructure business, right, in all 4 buckets backlog increased, I think, maybe in general buildings we were flat. So to the point of it being data center driven, it was not. It was really made up from the other 3 parts of the business. I would say that our LNTP work is either at the same number or it's actually increased. So I think we feel really good about our potential to continue building backlog in renewables through the balance of the year. and for sure for the segment. So I would expect Clean Energy and Infrastructure backlog to be a lot higher by the end of the year than it is today. It may not be every single quarter, but we feel really good about what we'll end the year. And again, momentum is just really, really strong today.

Yes, that's great. I appreciate the color there. And then just a big picture question on the GC business. When you think about the opportunity in terms of size and scale, how are you thinking about it in terms of number of projects you can take on and kind of size of project ranges you're looking at?

It's a great question. And by the way, it's the beauty of the business that we're in. And I think we'll elaborate a lot on this on our Investor Day. But the beauty of a turnkey data center site is the number of people that it actually takes on the construction management side is relatively limited. So we can stand up groups relatively quickly to meet our customers' needs, right? On the self-perform side, it's a little different because you need a lot of craft. And in some cases, we're really well positioned. And then maybe in some geographies, we're not. But from a pure construction management perspective, with a relatively small group of people, you can actually do some incredible work on behalf of the customer. And that's really what we've been working on. We've been working about building our resources there. I think we're super well positioned. I think we can take a significant number of projects on concurrently. We're working towards that. And I think, again, I think at our Investor Day, we'll get into a lot more details on that.

The next question is coming from the line of [indiscernible] Goldman Sachs.

Can you talk about what you're seeing on the long-haul transmission line opportunities through the next few years? You've previously talked about M&A to add capability for a third simultaneous line there. I'm curious how that thought process is progressing? What are you seeing in the market? And what should we expect?

I think that a couple of things. I think we've done a great job of organically growing that side of the business. We've really focused on it in the last 4 or 5 years. Obviously, Greenlink was a solid culmination of that to kind of really prove to ourselves into the industry that we had made significant inroads in that market. Again, the opportunity subset there is incredible right now. I think the industry is going to substantially grow. And again, I think we're super well positioned there. We are not -- we do not feel that we need to make an M&A transaction in that market to kind of reach the goals that we have internally. But it's definitely an area where if the right opportunity arose, we would definitely pay attention and consider it. But right now, we feel good about where we are, how we're positioned and our ability to win.

And then maybe one for Paul. You mentioned lower seasonality than previous years. Can you give us more color on the structural element that's driving that going forward? Obviously, Q1 performance was great, but I would love to know how you're thinking about the structural elements here

A lot of it is just around project timing and working with our customers to promote higher productivity and access the projects that are executing through the end of the year. That was a big focus. The weather helped out a little bit, weather it was a little bit mild in most of the parts most areas we operate. But overall, it's just being proactive and really working with our clients to try to promote opportunities for us to keep our crews and our equipment productive. It balances out. It makes the peak to the summer months, more efficient, and we're excited about how it will benefit the business in this year and the years ahead.

And our next question is coming from the line of Jamie Cook of Truist Securities.

Congrats on the next quarter and excited about May 12. I guess, Jose, a couple of questions. one, as we're thinking about the opportunity that you're going to lay out, how much do you want to differentiate, i.e., MasTec is largely an organic growth story versus relying on M&A or joint venture, maybe you need to do that to manage risk or get into markets -- adjacent markets in a proper way. I guess my second question on that is just sort of you have so much growth in front of you. To what degree are you prioritizing the type of growth that you want in that for MasTec, it's not growth for the sake of growth, but it's more growth for the sake of where you can generate the best margin or return.

Sure. Thanks, Jamie. I'd say a couple of things. First, let's talk about organic growth versus M&A. I think MasTec was in a unique position post pandemic, where we really tried to focus on certain core diversification into the energy markets. I think we did that in 2022, '23. I obviously, those were big acquisitions for us at the time. We said very vocally that we were going to focus on organic growth. We were going to focus on really making our balance sheet a lot healthier and being in a position to put ourselves in a position to do whatever we wanted. And I think we've accomplished that. So I think that was [indiscernible] our goal. We had levered up a little bit on those acquisitions. We wanted to bring leverage back down. We wanted to fully integrate those acquisitions. We wanted to make sure they were performing at a high level. And I think today, we sit here and it's -- we can check the box. We've done that. We're excited about that. I think you're seeing the beginning of those results, I don't even think we've seen all of those results flow through our financials yet. So we're excited about that. We're also excited about what M&A has meant to our business over a really long period of time. We've had a lot of growth via M&A since -- at least in my term as CEO since 2007, we bought some incredible companies. And I think you saw us be more active at the end of '25, right? We bought what we thought [indiscernible] 2 incredible companies in 2 market segments that we think have tremendous long-term potential and growth opportunities. They're both here just over a quarter. We're excited to have them. They've been fantastic additions to MasTec. But the truth is there's a lot more. And we've said we're going to focus more on M&A. There are a ton of opportunities out there, a lot of which we really like. and they're very strategic, right? We're looking at our business in a way of which to figure out where are the areas that we want to grow as a business, where are the internal opportunities that we have relative to the workforce that we have and then where do we need to go outside and try to find some help to either bolster whether it's a geographic area or an area of work. So I do think you're going to see us be a lot more active in M&A for sure than we've been in the last couple of years. I think we started that in the fourth quarter of '25 and I think you'll see that continue throughout '26. With all that said, I mean, today, we feel good about the segments that we're in. We think all of the segments offer us solid growth potential. And more importantly, I think we've got the management teams within each of those businesses to handle the level of growth. So where I would be concerned on growth isn't necessarily on capital allocation. because I think some of these, quite frankly, aren't even that capital intensive, some or more. I think we feel good about the return profile of each, but where it becomes really important for us is to understand that we have the leadership strength to be able to deliver on that growth and deliver the optimal margins on that growth. And today, I think we're more than equipped to take on multiple areas of growth, multiple businesses of growth. And I think we're just really starting to enjoy that. I think we've worked really hard over a really long period to put ourselves in the position that we are today. And I think it's time to kind of enjoy the fruits of our labor and to take advantage of those growth opportunities and execute on them. So I don't really see us jumping into a lot of new businesses, but quite frankly, I see us really trying to expand the ones that we're in and take advantage of the opportunities within those.

And the next question is coming from the line of Sangita Jain of KeyBanc.

Can I ask one question given Jose, how you said demand is inflecting so strongly in all your segments. Last year, you were resourcing in pipelines and communications as the demand emerges, how do you feel right now about the ability to keep resourcing upwards to meet the demand, whether it's labor or other facilities that you need? Is that getting harder?

So Sangita. So a couple of things I'd say. I'd say we're -- at the end of the day, we're a people business, right? It's what differentiates us. It's what makes us who we are. I think it's a critical element. It's an irreplaceable asset. Nobody can replicate the workforce that we've built, right, especially trying to come in. So it's one of our big moats. It's important to us. It's something that we keep building on -- when we look at just pure numbers, right, I think we're up about 6,000 people year-over-year. We're up just under 2,000 sequentially. So it's -- quite frankly, it's a machine, right? We're constantly adding people. We're constantly adding resources. We're constantly manning to the opportunities that are in front of us. It's part of what makes us good at where we're at. It's critical to our success in the long term. And it's something that we're not just investing in, but we think we're good at. So we'll continue to do that. I think that there's been periods where obviously the hiring impacts margins because you're going from a slower period to a period where you're a lot busier. I think the business is much more consistent today. I just think it's part of the business. We'll continue to grow. We'll continue to grow into the demand. and then hopefully benefit from the margin opportunities that are associated with that.

Great. That's helpful. And then just a quick follow-up on your communications revenue guide. You guys referred to be maybe emerging over time and being conservative in your second half outlook? Can you tell us if there is any bad factored into your back half? Or is there still an optionality in the second half?

I think we've got some design built in, but I don't think we have a lot of construction built in, so there's some revenues, but I think it has a really meaningful impact to '27.

Our next question will be coming from the line of Liam Burke of B. Riley Securities.

Jose, you talked in your prepared comments about the step-up in demand for telecom on data center interconnectivity. Are you seeing more of that activity on the long haul or on the local loop of the network?

I think both, right? I think you've got different types of dissenters. I think you've got a lot of our customers chasing that business. So I think it will make some customers more competitive than other is the vastness of their infrastructure. So depending on the client, it will be more specific to one or the other, but I think both will have substantial growth over time, and we're seeing opportunities across both of those.

Great. And on [indiscernible], a nice step up in margin. Is that just better terms of the negotiations? Or are you just seeing the advantages of your scale?

Well, I think it starts with better execution, and then it gets into obviously, all of the opportunities that the business has the relative to the size and the growth. But at the end of the day, it's -- a lot of it is our execution. Again, we made significant investments in '21, '22 to really grow that business. And I think now a lot of the fruits of those efforts over many years of hard work are starting to pay off.

And our next question is coming from the line of Maheep Mandloi of Mizuho.

Maybe just a quick one on the gas pipeline and [indiscernible] just talked about a little bit demand over there. But when are you expecting the orders to kind of flow in on those for next year or after that?

Yes. So it hasn't really changed. I think that we've got an enormous amount of confidence relative to the conversations we're having with our customers, whether they're verbal awards that we have or the expectations from our customers have laid out to us on what we're going to build. So for us, right, when we look at '27, we think we've got our plate is pretty full as it is. When those turn into contracts and 1 thing we can report on the backlog is a different story. So it's -- and that's why we keep talking about backlog isn't really representative in that market today. It will be at some point, it's coming. It's close. It will probably be towards the latter half of 2026. But I can tell you that our visibility today in the '27 and beyond is fantastic.

Our next question is coming from the line of Justin Hauke of Baird.

Great. So I guess I just wanted to get a little more clarity on the guidance. I mean, clearly, the first quarter came in much better than what you were expecting revenue by 10% and earnings by like 40%. But in the full year, flowing through a lot less than that. And I know 1Q is seasonally the lines, but you're also having a lot less seasonality than you had historically. So just trying to understand kind of what's underpinning the conservatism as you look at the balance of the year versus what you did in the first quarter?

Well, Justin, I think that a couple of things I'd say is that's what we did. We kind of pushed the beat in Q1 through guide through the year. didn't necessarily reforecast the balance of the year. I think that's -- there's a lot of concerts built into that. Obviously, we haven't taken into account that, that acceleration in the business is going to continue throughout the 3 quarters. And hopefully, we can deliver on that, and that will be the source of our beats throughout the balance of the year. But I think that's how we looked at it, right? So not a lot more science than that. I think we've got our Investor Day coming up on May 12, where we're going to lay out, I think, a much longer-term vision, and we're excited about how the rest of the year can play out for us. So I wouldn't read too much into it. I think we're pretty excited. I don't I think we took each of the areas where we beat and we kind of pushed it through the year. And obviously, if the opportunities continue to exist across all those segments, then we will do better than what we're seeing.

All right. I kind of figured that's what you would say and looking forward to the Analyst Day, too. I guess the second question, just understanding on the communications side, the exiting from the install-to-the-home market, was that something you guys were expecting? And then I guess the corollary to it is that all done? So the cost that you took that's all contained in the quarter? Or is that something that's going to kind of continue throughout the year?

We don't expect any more to continue throughout the year. I'd say we're still in that business, so we're not out of the business. So let me be maybe a little more clear on what that is. we've had a relationship with DIRECTV as far back as I can remember. And I actually think this is a remarkable story at MasTec. I became CEO in 2007. At the time, DIRECTV was almost 50% of revenues. Last year, DIRECTV was less than 1%. So I think that the fact that what we've been able to do the business -- to the business over the course of the last 19 years, has been phenomenal. It was a business that at its peak, reached almost $700 million in revenue. And again, it was less than 1% of revenues last year. We see challenges in our business at times, right? We had a customer that was -- it was all pay television service, satellite driven. Obviously, the Internet took off streaming video took off the business changed. And I actually think that's part of the beauty of MasTec, right? We took a business that was such a major part of our financial performance a long time ago. We were able to adapt in the business. We were actually able to help our customers with other technologies like everything that happened relative to fiber and Internet and we were able to offset that decline over a period of time. I think what gets lost in our story a lot is the fact that we've done an amazing job growing our telecom business over many years, especially over the last few years in an environment where that business massively declined from $700 million to a negligible number. So I think this year, we kind of exited a number of markets. It's a small business. And we took some charges in Q1 that represented about 100 basis points. Quite frankly, we probably could have redeem. We decided not to and it is what it is. So we're thankful for that relationship. We're still going to work for them in any way that we can. We're still going to support them and help them in any way that we can. But I think it's a great reflection of the way that MasTec has matured in the business that we've come and the fact that we've been able to overcome something like that over such a long period and done it with a ton of success.

And our next question is coming from the line of Manish Somaiya of Cantor.

Jose, can you remind us what is the mix between maintenance and new projects for your pipeline business? And what I'm trying to figure out is how I should think about the incremental upside to backlog. I mean, obviously, the backlog right now is about $1.3 billion out of the $20.3 billion. So I'm just trying to get a sense for that as well.

Yes, I don't have an exact number, but I would tell you is a few years back when the business looked doom and gloom post-pandemic, we said that we thought the bottom run rate would be $1.5 billion to $1.8 billion. did that based on predominantly a maintenance-driven business, so I'd still argue that that's kind of the range and the balance is project driven. So I don't have an exact breakout today, but I would argue that that's pretty close. So I think that -- as you think about future projects, it will be the growth off of that base.

Right. And obviously, Q1, the business did exceptionally well, favorable outlook for '26. How should I think about '27 in terms of reaching or exceeding your prior peak margins in that business?

Yes. I think the opportunity is there. I mean, if I was sitting here today and I was having to guide for '27, I would say we'll do $2.5 billion this year. I would feel super comfortable that we're going to do 3 or better, and I think we have an outside chance to get to historical levels, which are 3.5% as early as '27. And I think that's what we've been saying over the last couple of quarters.

Right. And then just on capital allocation with leverage approaching low ones how are you thinking between deleveraging even further bolt-on acquisitions, repurchases? If you could just shed some light on that.

I think based on the growth opportunities that we have in front of us, I do think you're going to see us be more active in M&A. And I think that's where you'll see deployment of capital.

Our next question is coming from the line of Brian Russo of Jefferies.

Just assuming Greenlink North commences construction also next year, combined with the smaller project that I believe is supposed to commence mid-year this year. Do you have the capacity to handle more than those 2 projects combined in 2027, just to tie into your comments that you don't need to grow that side of the business organically to competitively bid on new projects?

Absolutely.

Okay. Okay. Great. And then just a follow-up on the M&A question. Could you be any more specific on target markets, assuming nothing in power delivery target markets, that you see the most opportunity for MasTec in particular? And would you be interested in MEP at all to kind of round out that turnkey solution for the data centers.

Yes. Look, I don't want to get ahead of myself again. I think that at our Investor Day, we're going to walk through strategy a lot more than what we normally do. I think from that, you'll be able to attain the types of things that we're looking at. again, it's broad-based. I think at the end of the day, we're still opportunistic driven, right? I don't think -- somebody asked the question earlier, I think it was Jamie are we chasing revenue. We're not. So for us, it's strategic. I think that we've got some really good opportunities in front of us. I don't really want to kind of tip my hand on that, but I feel like we're in a good spot. I felt like the 2 acquisitions that we made at the end of last year have been really beneficiary to MasTec. And I think we have a number more that we can make that would really help our company.

Our next question is coming from the line of Mark Bianchi of TD Cowen.

I guess, first on the communications progression from here. you're quite precise on what the margin improvement is going to be for the year. But I don't know if you want to put any precision on second quarter, but the way it looks to me like the margin improvement year-over-year may need to accelerate in the back half. That's right. Could you just maybe walk us through that? Is that just sort of getting to absorbing some of those earlier costs that you have? Or is there spinouts going on there?

I think that's exactly right. So in '25, again, we had phenomenal organic growth in '25. I think it was 34% on a year-over-year basis. We entered a lot of new markets. We opened a lot of new offices. I think those offices are beginning to mature. I think we'll see the significant impact of that maturity in the second half of the year. That's why we're so comfortable of really calling for a higher profile margin in the second half of the year, and that's exactly how we expect it to play out. I think considering if you would normalize Q1 for for our charges and we kind of look at what's happening in Q2, we feel really good that the progression of that is taking shape and are very confident in being able to say that.

Okay. Great. And the last one is for Paul. This isn't a big increase, but the CapEx number ticked up just a little bit. Could you talk about what's going on there? And maybe more broadly, how we should be thinking about kind of capital intensity for the business going forward?

And I said in the comments, it's truly just about the additional growth we see not just in 2016 but in the years ahead. So I mean, that's our primary objective around capital allocation is supporting organic growth and fixed assets is a big piece of that. So still relatively low, particularly where we've been historically. So we're still very comfortable with that level of capital intensity, but really just just focusing on supporting the demand that we see and the needs of our customers.

And our next question is coming from the line of Philip Shen of ROTH Capital Partners.

Congrats on the great quarter. Wanted to check in on the renewables comments you made visibility you said is a strongest it's ever been. Momentum is strong. You said as well. And so I wanted to check in with you also on this tax equity pause by 4 major banks were what, 4 months into the year. And this has kind of become a bit of a topic. And I know '26 is not impacted because it's a Section 48 year. But for 2027, I think more projects might depend on 48. So I was wondering if you could give us a little bit more color on that really strong outlook vis-a-vis this tax equity pause and to what degree have you guys kind of gone through your portfolio and check in with customers to make sure that the exposure here is modest, if any, at all?

Look, I think that's the big change in our business over the longer period. I think we've done a great job at aligning ourselves with key customers, understanding their business understanding what their risks are, right? So I think we've managed that really well. We feel really comfortable about our book of business for '27. And as we generally think about it for the market, I would also add the following because I do think it's important, right? We are in the middle of an unbelievable opportunity of growth as a country relative to so much of this critical infrastructure. Power is the cog in the wheel. Everybody knows it. Everybody is talking about it. The administration knows, the President knows that everybody knows it. So while obviously, we're going to get a lot of noise at the end of the day, issues like this have to be fixed because if not, it has much, much greater implications. And I have a high level of confidence that the things that need to be done to fix issues like this will happen irrespective of that, that was a general comment for the industry. I feel good about our portfolio. But just seeing what's happening in Washington, seeing how they're reacting to certain things. I promise you that renewables are an incredibly important part of the story in the near to midterm, and they understand that, and they will do what they have to do to make sure that, that doesn't delay meaningful investment in this country.

and then as a follow-up on that topic, one thing I've been trying to track is this LNTP to NTP time frame when it comes to solar and in renewables. And so for you guys, what is that typical time line with customers. When they sign LNTP, is it typically 6 to 7 months before you guys go [indiscernible] or is it maybe 9 months? Just every EPC has a different kind of average based on geographic mix and so forth. So I was curious kind of where you guys sit.

Yes. I think it depends on the customer, right? Some customers you have alliance agreement with other you're just doing specific projects. So I think that's fairly different between the two. We don't go to backlog until financial close on the project. A lot of times is late in the cycle of that project. So some could be open longer than others. But again, it's an important metric for us because it gives us visibility into what we're going to book into new work over time. But I don't think -- I would say the majority of it, if not all of it, is by less than a year.

Our next question is coming from the line of Adam Thalhimer of Thompson.

Data center connectivity, you said that was tens of billions of dollars. Is that the labor component and therefore, the opportunity for MasTec? And has that started? Or is that more 2027?

I think it started, right? I mean we've announced and back, I want to say maybe even at the end of '24, our first award relative to a customer that had gone after that work and specifically won a project around it. I think this is a really long cycle. I think there's going to be an enormous amount of work that happens across the country. Obviously, data center construction is really a cycle that's just starting. So we feel good about it. We think that is a MasTec TAM number. So it's just a massive opportunity.

And then quickly on pipeline. Are you seeing book and burn projects that could come in for the back half of '26, but just not putting that into guidance until you have them in hand.

I mean we have a portion of our business, it's all book and burn. So we would expect to have -- I mean there is some book and burn built into our guidance. Thus, our backlog levels don't fully support the full year anyway, right? So we need some book and burn, but that's a normal part of the business, and we will -- we definitely feel good about that. And so to the question, right, to the, I guess, broader question, which is there are opportunities for more book and burn to improve even what we're saying. I think the short answer to that is yes.

And our next question is from the line of [indiscernible] of Wolfe Research.

I just wanted to ask, with President Trump approving [indiscernible] pipeline yesterday, like beyond a specific project, do you see this approval approving project activity or just more derisking project pipeline that's already in your funnel?

I think this President has been very vocal about his desire to see infrastructure built, specialty pipelines. So I think that if any project is brought to him that he has the potential to influence he will. And I think that's a good thing for the industry.

Okay. And as a follow-up, can you just provide any color on the type of pipeline work that's been driving the margins? Like is it pricing, execution, project mix? And how does that evolve as you return to peak pipeline revenues?

Yes. Look, I don't think there was anything abnormal about our margin execution in Q1, right? We've had plenty of quarters where we've done as well. So I think that's just a moment in time where you had good utilization, you had a lot of work, and you were able to perform it at a high level. So we're obviously not guiding to that for the balance of the year, but we would hope that -- we can continue to deliver on that. Again, utilization is a key driver there, but we had a good quarter, and hopefully, that will continue.

This concludes today's Q&A session. I would like to turn the call back over to Jose for closing remarks. Please go ahead.

Thank you. I'd just like to thank everybody for participating today. in to remind everybody we've got our Investor Day on May 12 in New York. We hope you can make it. And we look forward to updating you on our second quarter call in a few months. Thank you.

Thank you all for participating in today's program. You may now disconnect.