UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2020
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __ to __
Commission File Number 001-08106
MasTec, Inc.
(Exact Namename of Registrantregistrant as Specifiedspecified in Its Charter)its charter)
| Florida | 65-0829355 | |
| (State or | (I.R.S. Employer | |
| Identification No.) | ||
| 800 S. Douglas Road, 12th Floor | ||
| Coral Gables, | Florida | 33134 |
| (Address of | (Zip Code) | |
(Registrant’s Telephone Number, Including Area Code)telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
| Common Stock, $0.10 Par Value | MTZ | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ☑ No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ☑ No ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | Accelerated filer | |||
| Non-accelerated filer | ||||
| ☐ | Smaller reporting company | |||
| Emerging growth company | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ¨☐ No þ☑
As of October 30, 2017,April 27, 2020, MasTec, Inc. had 82,760,62473,752,319 shares of common stock $0.10 par value, outstanding.
MASTEC, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2017MARCH 31, 2020
TABLE OF CONTENTS
| Page | ||
PART I. FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
MASTEC, INC.
(unaudited - in thousands, except per share amounts)
| For the Three Months Ended September 30 | For the Nine Months Ended September 30 | For the Three Months Ended March 31, | ||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2020 | 2019 | |||||||||||||||||
| Revenue | $ | 1,955,752 | $ | 1,586,181 | $ | 5,004,116 | $ | 3,792,811 | $ | 1,416,604 | $ | 1,518,340 | ||||||||||
| Costs of revenue, excluding depreciation and amortization | 1,726,173 | 1,368,988 | 4,323,642 | 3,321,571 | 1,226,297 | 1,312,048 | ||||||||||||||||
| Depreciation and amortization | 50,101 | 42,584 | 138,384 | 122,249 | ||||||||||||||||||
| Depreciation | 53,089 | 54,226 | ||||||||||||||||||||
| Amortization of intangible assets | 7,391 | 4,805 | ||||||||||||||||||||
| General and administrative expenses | 66,397 | 67,131 | 202,001 | 195,031 | 85,514 | 72,616 | ||||||||||||||||
| Interest expense, net | 17,578 | 13,097 | 44,966 | 37,895 | 17,004 | 22,258 | ||||||||||||||||
| Equity in (earnings) losses of unconsolidated affiliates | (7,399 | ) | 6 | (15,105 | ) | (3,549 | ) | |||||||||||||||
| Other income, net | (4,677 | ) | (971 | ) | (4,102 | ) | (12,803 | ) | ||||||||||||||
| Equity in earnings of unconsolidated affiliates | (7,834 | ) | (6,260 | ) | ||||||||||||||||||
| Other (income) expense, net | (1,342 | ) | 3,507 | |||||||||||||||||||
| Income before income taxes | $ | 107,579 | $ | 95,346 | $ | 314,330 | $ | 132,417 | $ | 36,485 | $ | 55,140 | ||||||||||
| Provision for income taxes | (43,378 | ) | (38,816 | ) | (126,170 | ) | (54,331 | ) | (423 | ) | (12,033 | ) | ||||||||||
| Net income | $ | 64,201 | $ | 56,530 | $ | 188,160 | $ | 78,086 | $ | 36,062 | $ | 43,107 | ||||||||||
| Net income attributable to non-controlling interests | 449 | 253 | 1,770 | 414 | ||||||||||||||||||
| Net loss attributable to non-controlling interests | (168 | ) | (5 | ) | ||||||||||||||||||
| Net income attributable to MasTec, Inc. | $ | 63,752 | $ | 56,277 | $ | 186,390 | $ | 77,672 | $ | 36,230 | $ | 43,112 | ||||||||||
| Earnings per share (Note 2): | ||||||||||||||||||||||
| Basic earnings per share | $ | 0.79 | $ | 0.70 | $ | 2.31 | $ | 0.97 | $ | 0.48 | $ | 0.57 | ||||||||||
| Basic weighted average common shares outstanding | 80,953 | 80,462 | 80,859 | 80,323 | 74,738 | 74,991 | ||||||||||||||||
| Diluted earnings per share | $ | 0.77 | $ | 0.69 | $ | 2.27 | $ | 0.96 | $ | 0.48 | $ | 0.57 | ||||||||||
| Diluted weighted average common shares outstanding | 82,386 | 81,545 | 82,281 | 81,241 | 75,413 | 75,578 | ||||||||||||||||
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
MASTEC, INC.
(unaudited - in thousands)
| For the Three Months Ended September 30 | For the Nine Months Ended September 30 | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net income | $ | 64,201 | $ | 56,530 | $ | 188,160 | $ | 78,086 | |||||||
| Other comprehensive income: | |||||||||||||||
| Foreign currency translation gains (losses), net of tax | 641 | (1,454 | ) | 2,415 | 4,417 | ||||||||||
| Unrealized gains (losses) on equity investee activity, net of tax | 808 | (345 | ) | (1,287 | ) | (12,932 | ) | ||||||||
| Comprehensive income | $ | 65,650 | $ | 54,731 | $ | 189,288 | $ | 69,571 | |||||||
| Comprehensive income attributable to non-controlling interests | 449 | 253 | 1,770 | 414 | |||||||||||
| Comprehensive income attributable to MasTec, Inc. | $ | 65,201 | $ | 54,478 | $ | 187,518 | $ | 69,157 | |||||||
| For the Three Months Ended March 31, | |||||||
| 2020 | 2019 | ||||||
| Net income | $ | 36,062 | $ | 43,107 | |||
| Other comprehensive loss: | |||||||
| Foreign currency translation losses, net of tax | (296 | ) | (100 | ) | |||
| Unrealized losses on equity investee activity, net of tax | (22,961 | ) | (5,462 | ) | |||
| Comprehensive income | $ | 12,805 | $ | 37,545 | |||
| Comprehensive loss attributable to non-controlling interests | (168 | ) | (5 | ) | |||
| Comprehensive income attributable to MasTec, Inc. | $ | 12,973 | $ | 37,550 | |||
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
MASTEC, INC.
(unaudited - in thousands, except shares and per share amounts)
information)
| September 30, 2017 | December 31, 2016 | March 31, 2020 | December 31, 2019 | |||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 43,822 | $ | 38,767 | $ | 71,663 | $ | 71,427 | ||||||
| Accounts receivable, net | 1,534,790 | 1,156,031 | ||||||||||||
| Accounts receivable, net of allowance | 796,120 | 850,326 | ||||||||||||
| Contract assets | 997,901 | 1,024,568 | ||||||||||||
| Inventories, net | 84,460 | 111,031 | 106,586 | 100,069 | ||||||||||
| Prepaid expenses | 53,832 | 41,548 | 46,207 | 52,000 | ||||||||||
| Other current assets | 30,843 | 55,109 | 61,302 | 75,169 | ||||||||||
| Total current assets | $ | 1,747,747 | $ | 1,402,486 | $ | 2,079,779 | $ | 2,173,559 | ||||||
| Property and equipment, net | 691,430 | 549,084 | 937,309 | 905,835 | ||||||||||
| Operating lease assets | 210,637 | 229,903 | ||||||||||||
| Goodwill, net | 1,135,450 | 995,874 | 1,221,147 | 1,221,440 | ||||||||||
| Other intangible assets, net | 195,454 | 179,711 | 200,788 | 211,528 | ||||||||||
| Other long-term assets | 172,094 | 55,977 | 243,888 | 254,741 | ||||||||||
| Total assets | $ | 3,942,175 | $ | 3,183,132 | $ | 4,893,548 | $ | 4,997,006 | ||||||
| Liabilities and equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Current portion of long-term debt | $ | 86,547 | $ | 64,600 | ||||||||||
| Current portion of long-term debt, including finance leases | $ | 121,848 | $ | 118,429 | ||||||||||
| Current portion of operating lease liabilities | 80,076 | 81,561 | ||||||||||||
| Accounts payable | 457,213 | 363,668 | 533,509 | 535,029 | ||||||||||
| Accrued salaries and wages | 119,553 | 67,126 | 123,080 | 87,562 | ||||||||||
| Other accrued expenses | 128,769 | 112,291 | 125,770 | 115,581 | ||||||||||
| Billings in excess of costs and earnings | 111,898 | 161,459 | ||||||||||||
| Contract liabilities | 204,284 | 206,180 | ||||||||||||
| Other current liabilities | 98,171 | 70,846 | 71,466 | 74,784 | ||||||||||
| Total current liabilities | $ | 1,002,151 | $ | 839,990 | $ | 1,260,033 | $ | 1,219,126 | ||||||
| Long-term debt | 1,192,311 | 961,379 | ||||||||||||
| Long-term debt, including finance leases | 1,297,342 | 1,314,030 | ||||||||||||
| Long-term operating lease liabilities | 143,441 | 154,553 | ||||||||||||
| Deferred income taxes | 274,465 | 178,355 | 276,060 | 296,326 | ||||||||||
| Other long-term liabilities | 170,203 | 99,774 | 226,859 | 221,280 | ||||||||||
| Total liabilities | $ | 2,639,130 | $ | 2,079,498 | $ | 3,203,735 | $ | 3,205,315 | ||||||
Commitments and contingencies (Note 14) | ||||||||||||||
| Equity | ||||||||||||||
| Preferred stock, $1.00 par value: authorized shares - 5,000,000; issued and outstanding shares – none | $ | — | $ | — | $ | — | $ | — | ||||||
| Common stock, $0.10 par value: authorized shares - 145,000,000; issued shares - 90,843,339 and 90,634,771 (including 1,790,632 and 1,927,286 of unvested restricted shares) as of September 30, 2017 and December 31, 2016, respectively | 9,084 | 9,063 | ||||||||||||
| Common stock, $0.10 par value: authorized shares - 145,000,000; issued shares - 92,618,032 and 91,909,430 (including 1,759,870 and 1,221,593 of unvested stock awards) as of March 31, 2020 and December 31, 2019, respectively | 9,262 | 9,191 | ||||||||||||
| Capital surplus | 800,297 | 788,914 | 814,425 | 809,753 | ||||||||||
| Retained earnings | 696,331 | 509,941 | 1,546,939 | 1,510,709 | ||||||||||
| Accumulated other comprehensive loss | (64,686 | ) | (65,814 | ) | (98,963 | ) | (75,706 | ) | ||||||
| Treasury stock, at cost: 8,094,004 shares as of both September 30, 2017 and December 31, 2016 | (145,573 | ) | (145,573 | ) | ||||||||||
| Treasury stock, at cost: 18,914,841 shares and 15,344,917 shares as of March 31, 2020 and December 31, 2019, respectively | (586,153 | ) | (466,727 | ) | ||||||||||
| Total MasTec, Inc. shareholders’ equity | $ | 1,295,453 | $ | 1,096,531 | $ | 1,685,510 | $ | 1,787,220 | ||||||
| Non-controlling interests | $ | 7,592 | $ | 7,103 | $ | 4,303 | $ | 4,471 | ||||||
| Total equity | $ | 1,303,045 | $ | 1,103,634 | $ | 1,689,813 | $ | 1,791,691 | ||||||
| Total liabilities and equity | $ | 3,942,175 | $ | 3,183,132 | $ | 4,893,548 | $ | 4,997,006 | ||||||
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
MASTEC, INC.
(unaudited - in thousands)thousands, except shares)
| For the Nine Months Ended September 30 | |||||||
| 2017 | 2016 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 188,160 | $ | 78,086 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 138,384 | 122,249 | |||||
| Non-cash interest expense, net | 2,375 | 2,209 | |||||
| Non-cash stock-based compensation expense | 10,551 | 11,291 | |||||
| Provision for (benefit from) deferred income taxes | 92,188 | (1,339 | ) | ||||
| Equity in earnings of unconsolidated affiliates | (15,105 | ) | (3,549 | ) | |||
| (Gains) losses on sales of assets, net, including fixed assets held-for-sale | (3,335 | ) | 378 | ||||
| Other non-cash items, net | 14,920 | 1,951 | |||||
| Changes in assets and liabilities, net of acquisitions: | |||||||
| Accounts receivable | (334,383 | ) | (302,590 | ) | |||
| Inventories | 33,579 | (18,900 | ) | ||||
| Other assets, current and long-term portion | (61,900 | ) | 48,032 | ||||
| Accounts payable and accrued expenses | 132,963 | 172,731 | |||||
| Billings in excess of costs and earnings | (54,199 | ) | 16,581 | ||||
| Book overdrafts | (4,603 | ) | 8,883 | ||||
| Other liabilities, current and long-term portion | 39,030 | (8,872 | ) | ||||
| Net cash provided by operating activities | $ | 178,625 | $ | 127,141 | |||
| Cash flows from investing activities: | |||||||
| Cash paid for acquisitions, net of cash acquired | (115,995 | ) | (4,102 | ) | |||
| Capital expenditures | (83,330 | ) | (89,050 | ) | |||
| Proceeds from sale of property and equipment | 13,585 | 6,824 | |||||
| Payments for other investments | (77,105 | ) | (8,858 | ) | |||
| Proceeds from other investments | 13,416 | 1,125 | |||||
| Net cash used in investing activities | $ | (249,429 | ) | $ | (94,061 | ) | |
| Cash flows from financing activities: | |||||||
| Proceeds from credit facilities | 2,002,430 | 1,186,816 | |||||
| Repayments of credit facilities | (1,840,409 | ) | (1,149,930 | ) | |||
| Repayments of other borrowings | (12,080 | ) | (8,188 | ) | |||
| Payments of capital lease obligations | (48,748 | ) | (41,828 | ) | |||
| Payments of acquisition-related contingent consideration | (18,843 | ) | (19,822 | ) | |||
| Distributions to non-controlling interests | (1,280 | ) | — | ||||
| Proceeds from stock-based awards, net | 853 | 3,938 | |||||
| Other financing activities, net | (6,301 | ) | 1,385 | ||||
| Net cash provided by (used in) financing activities | $ | 75,622 | $ | (27,629 | ) | ||
| Effect of currency translation on cash | 237 | (1,008 | ) | ||||
| Net increase in cash and cash equivalents | $ | 5,055 | $ | 4,443 | |||
| Cash and cash equivalents - beginning of period | $ | 38,767 | $ | 4,984 | |||
| Cash and cash equivalents - end of period | $ | 43,822 | $ | 9,427 | |||
| Supplemental cash flow information: | |||||||
| Interest paid | $ | 47,163 | $ | 40,433 | |||
| Income taxes paid, net of refunds | $ | 77,533 | $ | 15,141 | |||
| Supplemental disclosure of non-cash information: | |||||||
Acquisition-related contingent consideration, new business combinations | $ | 89,614 | $ | — | |||
| Equipment acquired under capital lease and financing arrangements | $ | 129,567 | $ | 13,015 | |||
| Accrued capital expenditures | $ | 1,345 | $ | 4,119 | |||
| Common Stock | Treasury Stock | Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Loss | Total MasTec, Inc. Shareholders’ Equity | Non-Controlling Interests | Total Equity | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||
| For the Three Months Ended March 31, 2020 | |||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2019 | 91,909,430 | $ | 9,191 | (15,344,917 | ) | $ | (466,727 | ) | $ | 809,753 | $ | 1,510,709 | $ | (75,706 | ) | $ | 1,787,220 | $ | 4,471 | $ | 1,791,691 | ||||||||||||||||
| Net income (loss) | 36,230 | 36,230 | (168 | ) | 36,062 | ||||||||||||||||||||||||||||||||
| Other comprehensive loss | (23,257 | ) | (23,257 | ) | (23,257 | ) | |||||||||||||||||||||||||||||||
| Non-cash stock-based compensation | 4,049 | 4,049 | 4,049 | ||||||||||||||||||||||||||||||||||
| Issuance of restricted shares, net | 694,779 | 69 | (69 | ) | — | — | |||||||||||||||||||||||||||||||
| Other stock issuances, net of shares withheld for taxes | 13,823 | 2 | 692 | 694 | 694 | ||||||||||||||||||||||||||||||||
| Acquisition of treasury stock, at cost | (3,569,924 | ) | (119,426 | ) | (119,426 | ) | (119,426 | ) | |||||||||||||||||||||||||||||
| Balance as of March 31, 2020 | 92,618,032 | $ | 9,262 | (18,914,841 | ) | $ | (586,153 | ) | $ | 814,425 | $ | 1,546,939 | $ | (98,963 | ) | $ | 1,685,510 | $ | 4,303 | $ | 1,689,813 | ||||||||||||||||
| For the Three Months Ended March 31, 2019 | |||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2018 | 91,327,009 | $ | 9,133 | (15,329,817 | ) | $ | (466,125 | ) | $ | 789,009 | $ | 1,118,375 | $ | (60,494 | ) | $ | 1,389,898 | $ | 2,126 | $ | 1,392,024 | ||||||||||||||||
| Net income (loss) | 43,112 | 43,112 | (5 | ) | 43,107 | ||||||||||||||||||||||||||||||||
| Other comprehensive loss | (5,562 | ) | (5,562 | ) | (5,562 | ) | |||||||||||||||||||||||||||||||
| Non-cash stock-based compensation | 3,720 | 3,720 | 3,720 | ||||||||||||||||||||||||||||||||||
| Issuance of restricted shares, net | 233,362 | 23 | (23 | ) | — | — | |||||||||||||||||||||||||||||||
| Other stock issuances, net of shares withheld for taxes | 31,027 | 3 | 1,042 | 1,045 | 1,045 | ||||||||||||||||||||||||||||||||
| Acquisition of treasury stock, at cost | (15,100 | ) | (602 | ) | (602 | ) | (602 | ) | |||||||||||||||||||||||||||||
| Balance as of March 31, 2019 | 91,591,398 | $ | 9,159 | (15,344,917 | ) | $ | (466,727 | ) | $ | 793,748 | $ | 1,161,487 | $ | (66,056 | ) | $ | 1,431,611 | $ | 2,121 | $ | 1,433,732 | ||||||||||||||||
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
MASTEC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited - in thousands)
| For the Three Months Ended March 31, | |||||||
| 2020 | 2019 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 36,062 | $ | 43,107 | |||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
| Depreciation | 53,089 | 54,226 | |||||
| Amortization of intangible assets | 7,391 | 4,805 | |||||
| Non-cash interest expense, net | 725 | 453 | |||||
| Non-cash stock-based compensation expense | 4,049 | 3,720 | |||||
| (Benefit from) provision for deferred income taxes | (12,614 | ) | 899 | ||||
| Equity in earnings of unconsolidated affiliates | (7,834 | ) | (6,260 | ) | |||
| Gains on sales of assets, net | (2,407 | ) | (2,052 | ) | |||
| Other non-cash items, net | 734 | (3,043 | ) | ||||
| Changes in assets and liabilities, net of acquisitions: | |||||||
| Accounts receivable, net of allowance | 48,337 | (37,831 | ) | ||||
| Contract assets | 26,311 | 6,376 | |||||
| Inventories | 5,932 | 9,690 | |||||
| Other assets, current and long-term portion | 17,906 | 2,398 | |||||
| Accounts payable and accrued expenses | 34,058 | (134,491 | ) | ||||
| Contract liabilities | 2,603 | 3,821 | |||||
| Other liabilities, current and long-term portion | (11,076 | ) | 7,375 | ||||
| Net cash provided by (used in) operating activities | $ | 203,266 | $ | (46,807 | ) | ||
| Cash flows from investing activities: | |||||||
| Cash paid for acquisitions, net of cash acquired | — | (93,684 | ) | ||||
| Capital expenditures | (60,594 | ) | (34,396 | ) | |||
| Proceeds from sale of property and equipment | 8,363 | 8,654 | |||||
| Payments for other investments | (12,000 | ) | (2,190 | ) | |||
| Proceeds from other investments | 648 | 10,413 | |||||
| Other investing activities, net | 4,843 | — | |||||
| Net cash used in investing activities | $ | (58,740 | ) | $ | (111,203 | ) | |
| Cash flows from financing activities: | |||||||
| Proceeds from credit facilities | 675,935 | 866,397 | |||||
| Repayments of credit facilities | (671,780 | ) | (670,794 | ) | |||
| Repayments of other borrowings, net | — | (6 | ) | ||||
| Payments of finance lease obligations | (30,856 | ) | (17,239 | ) | |||
| Proceeds from stock-based awards | 1,476 | 1,079 | |||||
| Payments for stock-based awards | (572 | ) | (12 | ) | |||
| Repurchases of common stock | (119,427 | ) | (5,652 | ) | |||
| Net cash (used in) provided by financing activities | $ | (145,224 | ) | $ | 173,773 | ||
| Effect of currency translation on cash | 934 | 9 | |||||
| Net increase in cash and cash equivalents | $ | 236 | $ | 15,772 | |||
| Cash and cash equivalents - beginning of period | $ | 71,427 | $ | 27,422 | |||
| Cash and cash equivalents - end of period | $ | 71,663 | $ | 43,194 | |||
| Supplemental cash flow information: | |||||||
| Interest paid | $ | 21,479 | $ | 26,220 | |||
| Income tax (refunds) payments, net | $ | (287 | ) | $ | 2,837 | ||
| Supplemental disclosure of non-cash information: | |||||||
| Additions to property and equipment from finance leases | $ | 26,932 | $ | 40,258 | |||
The accompanying notes are an integral part of these consolidated financial statements.
MASTEC, INC.
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Business, Basis of Presentation and Significant Accounting Policies
Nature of the Business
MasTec, Inc. (collectively with its subsidiaries, “MasTec” or the “Company”) is a leading infrastructure construction company operating mainly throughout North America across a range of industries. The Company’s primary activities include the engineering, building, installation, maintenance and upgrade of communications, energy, utility and utilityother infrastructure, such as: wireless, wireline/fiber install-to-the-home and customer fulfillment activities; petroleum and natural gas pipeline infrastructure; electrical utility transmission and distribution; power generation;generation, including from renewable sources; heavy civil; and industrial infrastructure. MasTec’s customers are primarily in these industries. MasTec reports its results under five5 reportable segments: (1) Communications; (2) Oil and Gas; (3) Electrical Transmission; (4) Power Generation and Industrial; and (5) Other.
Basis of Presentation
The accompanying condensed unaudited consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in the annual audited consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying condensed consolidated balance sheet as of December 31, 20162019 is derived from the Company’s audited financial statements as of that date. Because certain information and footnote disclosures have been condensed or omitted, these condensed unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 20162019 contained in the Company’s 20162019 Annual Report on Form 10-K (the “2016“2019 Form 10-K”). In management’s opinion, all normal and recurring adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been included. CertainWhen necessary, certain prior year amounts have been reclassified to conform to the current period presentation. Interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. The Company believes that the disclosures made in these condensed unaudited consolidated financial statements are adequate to make the information not misleading.
Principles of Consolidation
The accompanying condensed unaudited consolidated financial statements include MasTec, Inc. and its subsidiaries and include the accounts of all majority owned subsidiaries over which the Company exercises control and, when applicable, entities in which the Company has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. Other parties’ interests in entities that MasTec consolidates are reported as non-controlling interests within equity.equity, except for mandatorily redeemable non-controlling interests, which are recorded within liabilities. Net income or loss attributable to non-controlling interests is reported as a separate line item below net income or loss. The Company’s investments in entities for which the Company does not have a controlling interest, but forover which it has the ability to exert significant influence, are accounted for using the equity method of accounting. Equity method investments are recorded as other long-term assets, or, for investments in a net liability position, within other long-term liabilities. Income or loss from these investments is recorded as a separate line item in the statements of operations. Intercompany profits or losses associated with the Company’s equity method investments are eliminated until realized by the investee in transactions with third parties. For equity investees in which the Company has an undivided interest in the assets, liabilities and profits or losses of an unincorporated entity, but the Company does not exercise control over the entity, the Company consolidates its proportional interest in the accounts of the entity. The cost method is used for investments in entities for which the Company does not have the ability to exert significant influence.
Translation of Foreign Currencies
The assets and liabilities of foreign subsidiaries with a functional currency other than the U.S. dollar are translated into U.S. dollars at period-end exchange rates, with resulting translation gains or losses accumulatedincluded within other comprehensive income or loss. Revenue and expenses are translated into U.S. dollars at average rates of exchange during the applicable period. Substantially all of the Company’s foreign operations use their local currency as their functional currency. Currency gains or losses resulting from transactions executed in currencies other than the functional currency are included in other income or expense, net. In these condensed unaudited consolidated financial statements, “$” means U.S. dollars unless otherwise noted.
Management Estimates
The preparation of consolidated financial statements in conformityaccordance with U.S. GAAP requires the use of estimates and assumptions that affect
the amounts reported in the consolidated financial statements and accompanying notes. These estimates are based on historical experience and various other assumptions, the results of which form the basis of making judgments about the Company’s operating results and the carrying values of assets and liabilities that are not readily apparent from other sources. Key estimates include: the recognition of revenue and project profit or loss, (whichwhich the Company defines as project revenue, less project costs of revenue, including project-related depreciation),depreciation, in particular, on construction contracts accounted for under the percentage-of-completioncost-to-cost method, for which the recorded amounts require estimates of costs to complete and the amount and probability of probablevariable consideration included in the contract price adjustments; allowances for doubtful accounts; estimatedtransaction price; fair valuesvalue estimates, including those related to acquisitions, valuations of goodwill and intangible assets;assets, acquisition-related contingent consideration and investments in equity investees;investments; allowances for credit losses; asset lives used in computing depreciation and amortization; fair values of financial instruments; accrued self-insured claims; share-based compensation;self-insurance liabilities; other accruals and allowances; accounting for income taxes; and the estimated impacteffects of litigation and other contingencies. While management believes that such estimates are reasonable when considered in conjunction with the Company’s consolidated financial position and results of operations taken as a whole, actual results could differ materially from those estimates.
Significant Accounting Policies
Revenue Recognition
The Company recognizes revenue from contracts with customers under Accounting Standards Codification (“ASC”) Topic 606 (“Topic 606”). Under Topic 606, revenue is recognized when, or as, control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which an entity expects to be entitled in exchange for the goods and services transferred. Revenue is derivedprimarily
recognized by the Company over time utilizing the cost-to-cost measure of progress, which best depicts the continuous transfer of control of goods or services to the customer, and correspondingly, when performance obligations are satisfied for the related contracts.
Contracts. The Company derives revenue primarily from construction projects performed underunder: (i) master and other service agreements, as well as fromwhich provide a menu of available services in a specific geographic territory that are utilized on an as-needed basis, and are typically priced using either a time and materials, or a fixed price per unit basis; and (ii) contracts for specific projects or jobs requiring the construction and installation of an entire infrastructure system, or specified units within an entire infrastructure system. The Company frequently provides services undersystem, which are subject to multiple pricing options, including fixed price, unit price, or fixed price master service or other service agreements. Revenue and related costs for master and other service agreements billed on a time and materials, basis are recognized as the services are rendered.or cost plus a markup. Revenue derived from projects performed under master service and other service agreements totaled 32%42% and 38%41% of consolidated revenue for the three month periods ended September 30, 2017March 31, 2020 and 2016, respectively, and totaled 35% and 43% for the nine month periods ended September 30, 2017 and 2016,2019, respectively. The Company also performs services under
For certain master service and other service agreements on a fixed fee basis, under which MasTec furnishes specified units ofthe Company performs installation and maintenance services, primarily for install-to-the-home service for a fixed price per unit of service andproviders in its Communications segment, revenue is recognized asat a point in time. This is generally when the services are rendered. Revenue from fixed price contracts provideswork order has been fulfilled, which is typically the same day the work is initiated. Point in time revenue accounted for a fixed amountapproximately 6% of consolidated revenue for both the entire project, subject to certain additions for changed scope or specifications. Revenue from these contracts, as well as for certain projects pursuant to masterthree month periods ended March 31, 2020 and 2019. Substantially all of the Company’s other service agreements,revenue is recognized using the percentage-of-completion method, under which the percentage of revenue to be recognized for a given project is measured by the percentage of costs incurred to date on the contract to the total estimated costs for the contract. Such contracts provide that the customer accept completion of progress to date and compensate the Company for services rendered, which may be measured in terms of costs incurred, units installed, hours expended or some other measure of progress. Contract costs include all direct materials, labor and subcontracted costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and the operational costs of capital equipment. Much of the materials associated with the Company’s work are customer-furnished and are therefore not included in contract revenue and costs.over time.
The total contract transaction price and cost estimation processprocesses used for recognizing revenue recognizedover time under the percentage-of-completioncost-to-cost method is based on the professional knowledge and experience of the Company’s project managers, engineers and financial professionals. Management reviews estimates of total contract revenuetransaction price and total project costs on an ongoing basis. Changes in job performance, job conditions and management’s assessment of expected contract settlementsvariable consideration are factors that influence estimates of the total contract value andtransaction price, total costs to complete those contracts and therefore, the Company’s profit recognition. Changes in these factors maycould result in revisions to costs and income and their effects are recognizedrevenue in the period in which the revisions are determined, which could materially affect the Company’s consolidated results of operations for that period. Provisions for losses on uncompleted contracts are recorded in the period in which such changeslosses are recognized.determined. For both the ninethree month periods ended September 30, 2017March 31, 2020 and 2016,2019, project profit was affected by less than 5% as a result of changes in contract estimates included in projects that were in process as of December 31, 20162019 and 2015. Provisions2018. Revenue recognized for losses on uncompleted contracts are madethe three month periods ended March 31, 2020 and 2019 as a result of changes in the periodtotal contract transaction price estimates, including from variable consideration, from performance obligations satisfied or partially satisfied in which such losses are determined to be probableprior periods totaled approximately $17.8 million and the amount$12.5 million, respectively.
The Company may incur certain costs that can be reasonably estimated.capitalized, such as initial set-up or mobilization costs. Such costs, which are amortized over the life of the respective projects, were not material in either of the three month periods ended March 31, 2020 or 2019.
Performance Obligations.A performance obligation is a contractual promise to transfer a distinct good or service to a customer, and is the unit of account under Topic 606. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the performance obligation is satisfied. The vast majority of fixed price contractsthe Company’s performance obligations are completed within one year.
Variable Consideration. Transaction prices for the Company’s contracts may incur costs subject toinclude variable consideration, which comprises items such as change orders, whether approved or unapproved byclaims and incentives. Management estimates variable consideration for a performance obligation utilizing estimation methods that it believes best predict the customer, and/or claims relatedamount of consideration to certain contracts. Management determineswhich the probability that such costsCompany will be recoveredentitled. Management’s estimates of variable consideration and the determination of whether to include estimated amounts in transaction prices are based uponlargely on engineering studies and legal opinions, past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer. The Company treats such costs as a costcustomer and all other relevant information that is reasonably available at the time of contract performancethe estimate. To the extent unapproved change orders, claims and other variable consideration reflected in transaction prices are not resolved in the period incurred if it is not probable that the costs will be recovered, and defers costsCompany’s favor, or recognizes revenue up to the amountextent incentives reflected in transaction prices are not earned, there could be reductions in, or reversals of, the related cost if it is probable that the contract price will be adjusted and can be reliably estimated. previously recognized revenue.
As of September 30, 2017March 31, 2020 and December 31, 2016,2019, the Company hadincluded approximately $77$35 million and $17$27 million, respectively, of change orders and/or claims that had been included as contract price adjustments onin transaction prices for certain contracts that were in the process of being resolved in the normalordinary course of business, including through negotiation, arbitration and other proceedings. These contracttransaction price adjustments, whichwhen earned, are included within costs and earnings in excess of billingscontract assets or billed accounts receivable, net of allowance, as appropriate, represent management’s best estimate of contract revenue that has been earned and that management believes is probable of collection.appropriate. As of both September 30, 2017March 31, 2020 and December 31, 2016,2019, these change orders and/or claims were primarily related to contractscertain projects in the Company’s Oil and Gas segment. The Company actively engages in substantive meetings with its customers to complete the final approval process, and generally expects these processes to be completed within one year. The amountsAmounts ultimately realized upon final acceptanceagreement by its customers could be higher or lower than such estimated amounts.
Recently Issued Accounting Pronouncements
Accounting Pronouncements Not Yet Adopted in 2020
In August 2017,2018, the Financial Accounting Standards Board (“FASB”) issued Accounting StandardsStandard Update (“ASU”)2017-12, Derivatives 2018-15, Intangibles-Goodwill and Hedging (Topic 815): Targeted Improvements toOther-Internal-Use Software (Subtopic 350-40)Customer’s Accounting for Hedging ActivitiesImplementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2017-12”2018-15”). to reduce diversity in practice in accounting for the costs of implementing cloud computing arrangements that are service contracts. ASU 2017-12 amends2018-15 aligns the hedge accounting modelrequirements for capitalizing implementation costs incurred in Topic 815a cloud computing arrangement that is a service contract with the requirements for internal-use software. Accounting for the service element of the cloud computing arrangement is not affected by the new guidance. Under ASU 2018-15, amortization expense, payments for and asset balances related to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrumentsuch capitalized implementation costs are to be presented inwithin the same income statement line items of the entity’s statements of operations, cash flows and balance sheets, respectively,
as the hedged item. The guidance also simplifies certain documentationrelated service fee activity and assessment requirements.balances would be presented. ASU 2017-12 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. All transition requirements and elections should be applied to hedging relationships existing on2018-15, which the date of adoption and their effects should be reflected as of the beginning of the fiscal year of adoption. The presentation and disclosure requirements are effective on a prospective basis. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13, which is intended to improve the effectiveness of fair value measurement disclosures, modifies the disclosure requirements for certain estimates and assumptions used in determining the fair value of assets and liabilities. ASU 2018-13, which the Company adopted during the first quarter of 2020, did not have a material effect on the Company’s consolidated financial statements. See Note 24 - Earnings Per Share,Fair Value of Financial Instruments for certain disclosure updates pertaining to the Company’s Level 3 financial instruments as a result of the adoption of ASU 2018-13.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This ASU, together with its related clarifying ASUs (collectively, “ASU 2016-13”), introduced an expected credit loss methodology for the measurement and recognition of credit losses on most financial assets, including financial assets arising from revenue transactions, such as accounts receivable and contract assets. The current expected credit loss methodology, which is based on historical experience, current conditions and reasonable and supportable forecasts, replaced the probable/incurred loss model for measuring and recognizing expected credit losses. The Company adopted this ASU in the first quarter of 2020 and incorporated this guidance into its methodology for estimating its accounts receivable allowances. The adoption of ASU 2016-13 did not have a material effect on the Company’s consolidated financial statements as credit losses are not expected to be significant based on historical trends, the financial condition of our customers and external factors. Management actively monitors the economic environment, including any potential effects from the COVID-19 pandemic, on the Company’s customers and/or its financial assets. For additional information about the Company’s accounts receivable and related allowances, see Note 95 - Stock-Based CompensationAccounts Receivable, Net of Allowance, and Other Employee Benefit PlansContract Assets and Note 12 - Income Taxes for additional information.Liabilities.
In March 2020, the FASB issued ASU 2020-04, Reference Reform Rate (Topic 848):Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) to provide temporary optional expedients and exceptions to the contract modifications, hedge relationships and other transactions affected by reference rate reform if certain criteria are met. This ASU, which was effective upon issuance and may be applied through December 31, 2022, is applicable to all contracts and hedging relationships that reference the London Interbank Offered Rate or any other reference rate expected to be discontinued. The Company is currently evaluating the impact of reference rate reform and the potential application of this guidance.
Note 2 – Earnings Per Share
Basic earnings or loss per share is computed by dividing net income or loss attributable to MasTec by the weighted average number of common shares outstanding for the period, which excludes non-participating unvested restricted share awards. Diluted earnings per share is computed by dividing net income attributable to MasTec by the weighted average number of fully diluted shares, as calculated under the treasury stock method, which includes the potential effect of dilutive common stock equivalents, such as issued but unvested restricted shares and/or outstanding but unexercised stock options. The Company has no remaining outstanding stock options; all options under the Company’s stock option grants were exercised in 2016.shares. If the Company reports a loss, rather than income, the computation of diluted loss per share excludes the effect of dilutive common stock equivalents, as their effect would be anti-dilutive.
The following table provides details underlying the Company’s earnings per share calculations for the periods indicated (in thousands):
| For the Three Months Ended March 31, | |||||||
| 2020 | 2019 | ||||||
| Net income attributable to MasTec: | |||||||
Net income - basic and diluted (a) | $ | 36,230 | $ | 43,112 | |||
| Weighted average shares outstanding: | |||||||
| Weighted average shares outstanding - basic | 74,738 | 74,991 | |||||
| Dilutive common stock equivalents | 675 | 587 | |||||
| Weighted average shares outstanding - diluted | 75,413 | 75,578 | |||||
| For the Three Months Ended September 30 | For the Nine Months Ended September 30 | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net income attributable to MasTec: | |||||||||||||||
Net income - basic and diluted (a) | $ | 63,752 | $ | 56,277 | $ | 186,390 | $ | 77,672 | |||||||
| Weighted average shares outstanding: | |||||||||||||||
| Weighted average shares outstanding - basic | 80,953 | 80,462 | 80,859 | 80,323 | |||||||||||
| Dilutive common stock equivalents | 1,433 | 1,083 | 1,422 | 918 | |||||||||||
| Weighted average shares outstanding - diluted | 82,386 | 81,545 | 82,281 | 81,241 | |||||||||||
| Additional information: | |||||||||||||||
Weighted average anti-dilutive common stock equivalents (b) | — | 1 | 12 | — | |||||||||||
| (a) | Calculated as total net income less amounts attributable to non-controlling interests. |
The Company repurchased approximately 3.6 million shares of its common stock during the three month period ended March 31, 2020, as discussed in Note 11 - Equity. The effect of these repurchases on the Company’s first quarter 2020 weighted average shares outstanding was not significant due to the timing of the repurchases, which occurred in the latter part of the quarter. In future quarters, these share repurchases will be fully reflected in the total number of weighted average shares outstanding for the respective quarter to date periods.
Note 3 -– Goodwill and Other Intangible Assets
The following table provides details ofbalances for goodwill by reportable segment as of September 30, 2017March 31, 2020 (in millions):
| Communications | Oil and Gas | Electrical Transmission | Power Generation and Industrial | Total Goodwill | |||||||||||||||
| Goodwill, gross | $ | 541.8 | $ | 489.3 | $ | 149.9 | $ | 152.8 | $ | 1,333.8 | |||||||||
| Accumulated impairment loss | — | (112.7 | ) | — | — | (112.7 | ) | ||||||||||||
| Goodwill, net | $ | 541.8 | $ | 376.6 | $ | 149.9 | $ | 152.8 | $ | 1,221.1 | |||||||||
| Communications | Oil and Gas | Electrical Transmission | Power Generation and Industrial | Total Goodwill | |||||||||||||||
| Goodwill, gross | $ | 462.4 | $ | 461.6 | $ | 149.9 | $ | 137.0 | $ | 1,210.9 | |||||||||
| Accumulated impairment losses | — | (75.4 | ) | — | — | (75.4 | ) | ||||||||||||
| Goodwill, net | $ | 462.4 | $ | 386.2 | $ | 149.9 | $ | 137.0 | $ | 1,135.5 | |||||||||
For the ninethree month period ended September 30, 2017, additions toMarch 31, 2020, goodwill included a net increase of $0.8 million from new business combinations totaled $135.3 million.measurement period adjustments. Currency translation effects related to goodwill and accumulated impairment losses for the three month period ended March 31, 2020 totaled approximately $9.8$9.9 million of losses and $8.8 million of gains, and $5.4 million of losses, respectively, for the nine month period ended September 30, 2017. For the nine month period ended September 30, 2016, additions to goodwill from accruals of acquisition-related contingent consideration totaled $5.8 million, and currency translation effects related to goodwill and accumulated impairment losses totaled $6.0 million of gains and $3.1 million of losses, respectively.
The following table provides a reconciliation of changes in other intangible assets, net, for the period indicated (in millions):
| Other Intangible Assets | |||||||||||||||||||
| Non-Amortizing | Amortizing | ||||||||||||||||||
| Trade Names | Pre-Qualifications | Customer Relationships and Backlog | Other (a) | Total | |||||||||||||||
| Other intangible assets, gross, as of December 31, 2016 | $ | 34.5 | $ | 74.6 | $ | 195.1 | $ | 19.1 | $ | 323.3 | |||||||||
| Accumulated amortization | (131.9 | ) | (11.7 | ) | (143.6 | ) | |||||||||||||
| Other intangible assets, net, as of December 31, 2016 | $ | 34.5 | $ | 74.6 | $ | 63.2 | $ | 7.4 | $ | 179.7 | |||||||||
| Additions from new business combinations | — | — | 24.4 | 2.4 | 26.8 | ||||||||||||||
| Amortization expense | (13.9 | ) | (1.1 | ) | (15.0 | ) | |||||||||||||
| Currency translation adjustments | — | 3.4 | 0.5 | 0.1 | 4.0 | ||||||||||||||
| Other intangible assets, net, as of September 30, 2017 | $ | 34.5 | $ | 78.0 | $ | 74.2 | $ | 8.8 | $ | 195.5 | |||||||||
| Other Intangible Assets | |||||||||||||||||||||||
| Non-Amortizing | Amortizing | ||||||||||||||||||||||
| Trade Names | Pre-Qualifications | Customer Relationships and Backlog | Pre-Qualifications | Other (a) | Total | ||||||||||||||||||
| Other intangible assets, gross, as of December 31, 2019 | $ | 34.5 | $ | 72.9 | $ | 286.5 | $ | — | $ | 26.3 | $ | 420.2 | |||||||||||
| Accumulated amortization | (191.2 | ) | — | (17.5 | ) | (208.7 | ) | ||||||||||||||||
| Other intangible assets, net, as of December 31, 2019 | $ | 34.5 | $ | 72.9 | $ | 95.3 | $ | — | $ | 8.8 | $ | 211.5 | |||||||||||
Classification changes (b) | — | (69.8 | ) | — | 69.8 | — | — | ||||||||||||||||
Measurement period adjustments (c) | — | — | (0.2 | ) | — | — | (0.2 | ) | |||||||||||||||
| Currency translation adjustments | — | (3.1 | ) | — | — | — | (3.1 | ) | |||||||||||||||
| Amortization expense | (5.9 | ) | (1.0 | ) | (0.5 | ) | (7.4 | ) | |||||||||||||||
| Other intangible assets, net, as of March 31, 2020 | $ | 34.5 | $ | — | $ | 89.2 | $ | 68.8 | $ | 8.3 | $ | 200.8 | |||||||||||
| (a) | Consists principally of trade names and non-compete agreements. |
| (b) | In connection with its first quarter assessment of goodwill and indefinite-lived intangible assets, management reassessed the indefinite life classification of its two pre-qualification intangible assets. Management determined that, based on changes in the assets’ characteristics, including current and expected changes in the customer mix of the associated reporting units, a finite life classification for these assets was more appropriate. As a result, in the first quarter of 2020, the Company changed the classification of these pre-qualification intangible assets from indefinite-lived to finite-lived and began amortizing them on an accelerated basis. As of March 31, 2020, the estimated remaining weighted average useful life of these assets was approximately 12 years. |
| (c) | Represents adjustments to preliminary estimates of fair value within the measurement period of up to one year from the date of acquisition. |
Amortization expense associated withof intangible assets for the three month periods ended September 30, 2017March 31, 2020 and 20162019 totaled $6.0 million and $5.2 million, respectively, and for the nine month periods ended September 30, 2017 and 2016, totaled $15.0$7.4 million and $15.7$4.8 million, respectively.
The aggregate purchase price for these entities, as adjusted, was composed of approximately $175.1 million in cash, net of cash acquired, plus earn-out liabilities and Gas segment.a mandatorily redeemable non-controlling interest valued at approximately $22.2 million and $17.8 million, respectively. The Company refers to its traditional earn-out arrangements and the mandatorily redeemable non-controlling interest collectively as “Earn-outs,” which are generally payable annually and are recorded within other current and other long-term liabilities in the consolidated balance sheets. Earn-outs for the 2019 acquisitions have terms ranging from 3 to 5 years. As of March 31, 2020, the range of remaining potential undiscounted Earn-out liabilities for the 2019 acquisitions was estimated to be between $2 million and $71 million; however, there is no maximum payment amount. Determination of the estimated fair values of the net assets acquired and the estimated earn-outEarn-out liabilities for these acquisitions iswas preliminary as of September 30, 2017, andMarch 31, 2020; as a result, further adjustments to management’s preliminarythese estimates may occur.
| Acquisition consideration: | 2017 | ||
| Cash | $ | 118.8 | |
| Fair value of contingent consideration (earn-out liability) | 89.6 | ||
| Total consideration transferred | $ | 208.4 | |
| Identifiable assets acquired and liabilities assumed: | |||
| Current assets, primarily composed of accounts receivable and $2.8 million of cash acquired | $ | 42.7 | |
| Property and equipment | 56.9 | ||
| Amortizing intangible assets | 26.8 | ||
| Other long-term assets | 0.5 | ||
| Current liabilities, including current portion of capital lease obligations and long-term debt | (28.4 | ) | |
| Long-term debt, including capital lease obligations | (9.9 | ) | |
| Deferred income taxes | (15.5 | ) | |
| Total identifiable net assets | $ | 73.1 | |
| Goodwill | $ | 135.3 | |
| Total net assets acquired, including goodwill | $ | 208.4 | |
Acquisition Results. For the three and nine month periods ended September 30, 2017,March 31, 2020 and 2019, unaudited supplemental pro forma revenue totaled approximately $1,955.8 million$1.4 billion and $5,077.4 million,$1.6 billion, respectively, and unaudited supplemental pro forma net income totaled approximately $64.4$37.3 million and $192.0$48.1 million, respectively. For the three and nine month periods ended September 30, 2016, pro forma revenue totaled approximately $1,634.5 million and $3,934.6 million, respectively, and pro forma net income totaled approximately $59.0 million and $81.5 million, respectively.
For the three and nine month periods ended September 30, 2017, acquisition-related results included inMarch 31, 2020 and 2019, the Company’s consolidated results of operations included acquisition-related revenue of approximately $62.2$49.5 million and $96.1$39.7 million, respectively, and included acquisition-related net incomeloss of approximately $3.2$1.2 million and $4.7$6.1 million, respectively.respectively, based on the Company’s consolidated effective tax rates. These acquisition-related results do not include the effects of acquisition costs or interest expense associated with consideration paid for the related acquisitions.
Note 4 – Fair Value of Financial Instruments
The Company’s financial instruments include cash and cash equivalents, accounts and notes receivable, cash collateral deposited with insurance carriers, life insurance assets, cost and equity method investments, stock warrants, deferred compensation plan assets and liabilities, accounts payable and other current liabilities, acquisition-related contingent consideration, certain intangible assets and liabilities, including off-market contracts,mandatorily redeemable non-controlling interests and debt obligations.
Fair value is the price that would be received to sell an asset or the amount paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value guidance establishes a valuation hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs that may be used are: (i) Level 1 - quoted market prices in active markets for identical assets or liabilities; (ii) Level 2 - observable market-based inputs or other observable inputs; and (iii) Level 3 - significant unobservable inputs that cannot be corroborated by observable market data, which are generally determined using valuation models incorporating management estimates of market participant assumptions. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Management’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the
Acquisition-Related Contingent Consideration and Other Liabilities
Acquisition-related contingent consideration of inputs specific to the asset or liability.
There were 0 additions to acquisition-related contingent consideration and other comprehensive income or loss, as appropriate. Forliabilities from new business combinations for the three month period ended March 31, 2020, and ninefor the three month periodsperiod ended September 30, 2017,March 31, 2019, additions from new business combinations totaled $64.6 million and $89.6 million, respectively. There were no payments of ASC 805 contingent consideration$15.2 million. Measurement period adjustments for the three month period ended September 30, 2017,March 31, 2020 totaled an increase of approximately $1.1 million and paymentsrelated to a business in the Company’s Communications segment. There were 0 measurement period adjustments for the three month period ended March 31, 2019. Fair value adjustments totaled $18.8a net increase of approximately $1.8 million for the ninethree month period ended September 30, 2017. ForMarch 31, 2020, and related to businesses in the Company’s Oil and Gas and Communications segments. Fair value adjustments, including those related to finalization of completed earn-out arrangements, totaled a net increase of approximately $7.2 million for the three month period ended March 31, 2019, and ninerelated to businesses in the Company’s Oil and Gas and Communications segments. There were 0 Earn-out payments in either of the three month periods ended September 30, 2016, payments totaled $5.3 million and $15.8 million, respectively. Foreign currency translation activity was de minimis for both the three and nine month periods ended September 30, 2017 and September 30, 2016. March 31, 2020 or 2019.
Equity Investments
The Company recognized reductions in the expected fair valueCompany’s equity investments as of future earn-out obligations totaling $3.0 million and $11.6 million for certain acquired businesses in the Communications and Electrical Transmission segments for the three and nine month periods ended September 30, 2017, respectively, and, during the first quarter of 2016, the Company recognized a net reduction in the expected fair value of future earn-out obligations of $2.3 million for certain ofMarch 31, 2020 include: (i) the Company’s western Canadian oil and gas businesses.
Investment Arrangements. From time to time, the Company may participate in selected investment or strategic arrangements, including equity interests in various business entities and participation in contractual joint ventures, some of which may involve the extension of loans or other types of financing arrangements. As of March 31, 2020, the Company determined that certain of its investment arrangements were variable interest entities (“VIEs”). Except for one individually insignificant VIE, the Company does not have the power to direct the primary activities that most significantly impact the economic performance of its VIEs nor is it the primary beneficiary. Accordingly, except for the previously mentioned VIE, the Company’s VIEs are not consolidated.
Equity investments, other than those accounted for as equity method investments. See Note 15 - Related Party Transactions.
The Waha JVs.JVs. The Waha JVs own and operate two2 pipelines and a header system that transport natural gas to the Mexican border for export. These pipelines commenced operations in the first half of 2017. There were no equity or other contributions to these joint ventures for the three month period ended September 30, 2017, and for the nine month period ended September 30, 2017, equity and other contributions totaled $73.3 million. As collateral for its equity commitments in the Waha JVs, the Company has issued letters of credit (the “Equity LC Amount”), of which $19 million and $91 million, respectively, were outstanding as of September 30, 2017 and December 31, 2016. Equity in earnings related to the Company’s proportionate share of income from the Waha JVs, which is included within the Company’s Other segment, totaled approximately $7.4$7.6 million and $15.1$6.3 million for the three and nine month periods ended September 30, 2017,March 31, 2020 and 2019, respectively. Equity inCumulative undistributed earnings from the Waha JVs, which represents cumulative equity in earnings for the nineWaha JVs less distributions of earnings, totaled $53.1 million as of March 31, 2020. Distributions of earnings from the Waha JVs, which are included within operating cash flows, totaled $2.6 million and $3.9 million for the three month periodperiods ended September 30, 2016 was de minimis.March 31, 2020 and 2019, respectively. The Company’s net investment in the Waha JVs, which differs from its proportionate share of the net assets of the Waha JVs due primarily to capitalized investment costs, totaled approximately $156 million and $174 million as of March 31, 2020 and December 31, 2019, respectively.
The Waha JVs are party to separate non-recourse financing facilities, each of which are secured by pledges of the equity interests in the respective entities, as well as a first lien security interest over virtually all of their assets. The Waha JVs are also party to certain interest rate swaps.swaps, which are accounted for as qualifying cash flow hedges. The Company reflects its proportionate share of any unrealized fair market value gains or losses from fluctuations in interest rates associated with these swaps within other comprehensive income or loss, as appropriate. For the three month periodperiods ended September 30, 2017,March 31, 2020 and 2019, the Company’s proportionate share of unrecognized unrealized activity on these interest rate swaps was a gaintotaled losses of approximately $1.3$30.3 million, or $0.8$23.0 million, net of tax, and for the nine month period, this activity was a loss of approximately $2.1$7.2 million, or $1.3 million, net of tax. For the three and nine month periods ended September 30, 2016, the Company’s proportionate share of unrecognized unrealized activity on these interest rate swaps was a loss of approximately $0.6 million and $21.1 million, respectively, or $0.3 million and $12.9$5.5 million, net of tax, respectively.
Other investments. In connection with the 2014 acquisition of Pacer, the Company acquired equity interests in two joint ventures. There are no remaining amounts expected to be advanced in connection with these investments, and as of March 2016, all related project work had been completed. In the first quarter of 2016, revenue recognized by Pacer on behalf of these entities totaled $0.6 million. One of these entities was liquidated in 2016, and the second, which is in the final stages of liquidation, is being managed by a receiver to assist with the orderly wind-down of its operations. In the first quarter of 2016, $3.6 million of income was recognized related to changes in expected recoveries from these investments. The Company received $12.1 million of proceeds from the receiver in the first quarter of 2017. The remaining investment, for which the Company now has minimal involvement, is reviewed regularly by corporate management for potential changes in expected recovery estimates, and, during the second quarter ofInvestments. During 2017, the Company recorded $5.8 million of expense related to changes in expected recovery amounts from this investment. The aggregate net carrying value of this investment, which represents expected recoveries under the receivership arrangement, totaled $14.8 million and $31.4 million as of September 30, 2017 and December 31, 2016, respectively, which amounts are included within other current assets.
Prior to completion of the Computex acquisition, certain holders of AVCT’s redeemable common stock elected to redeem their shares, the effect of which, after giving effect to the additional investment described above, was to increase the Company’s beneficial ownership interest in AVCT common stock to approximately 21%. The Company does not have the ability to exert significant influence over the operating and financial policies of AVCT, therefore, the shares are measured on an adjusted cost basis. The initial warrants, which are derivative financial instruments, and the shares, for which are a cost method investment,the fair value was not readily determinable as of both March 31, 2020 and December 31, 2019 due to the nature of the restrictions, are included within other long-term assets in the Company’s consolidated financial statements as of September 30, 2017.statements. The fair value of the initial warrants asis determined based on observable and unobservable Level 3 inputs, approximated their cost basis asincluding market volatility and the rights and obligations of September 30, 2017. Thethe warrants. For both the three month periods ended March 31, 2020 and 2019, there were no material changes in the fair value of the shares is not readily determinable dueCompany’s investment in AVCT.
The Company has equity interests in 3 telecommunications entities that provide certain services to MasTec. Expense recognized in connection with these arrangements totaled $2.7 million for the naturethree month period ended March 31, 2020, and related amounts payable were $2.1 million as of March 31, 2020.
Summarized Financial Information of Equity Method Investments
The following presents summarized information for entities that comprise the Company’s significant equity method investments (in millions):
| For the Three Months Ended March 31, | |||||||
| 2020 | 2019 | ||||||
| Revenue | $ | 39.4 | $ | 37.3 | |||
| Net income | $ | 23.0 | $ | 19.2 | |||
Senior Notes
As of both March 31, 2020 and December 31, 2019, the gross carrying amount of the restrictions. José R. Mas, MasTec’s Chief Executive Officer, isCompany’s 4.875% senior notes due March 15, 2023 (the “4.875% Senior Notes”), which are measured at fair value on a directornon-recurring basis, totaled $400 million. As of Pensare.March 31, 2020 and December 31, 2019, the estimated fair value of the 4.875% Senior Notes, based on Level 1 inputs, totaled $372.0 million and $404.5 million, respectively.
Note 5 -– Accounts Receivable, Net of Allowance, and Contract Assets and Liabilities
The following table provides details of accounts receivable, net of allowance, and contract assets (together, “accounts receivable, net”) as of the dates indicated (in millions):
| March 31, 2020 | December 31, 2019 | ||||||
| Contract billings | $ | 806.0 | $ | 860.4 | |||
| Less allowance | (9.9 | ) | (10.1 | ) | |||
| Accounts receivable, net of allowance | $ | 796.1 | $ | 850.3 | |||
| Retainage | 288.5 | 345.2 | |||||
| Unbilled receivables | 709.4 | 679.4 | |||||
| Contract assets | $ | 997.9 | $ | 1,024.6 | |||
| September 30, 2017 | December 31, 2016 | ||||||
| Contract billings | $ | 626.7 | $ | 564.2 | |||
| Retainage | 287.6 | 268.6 | |||||
| Costs and earnings in excess of billings | 629.5 | 331.6 | |||||
| Accounts receivable, gross | $ | 1,543.8 | $ | 1,164.4 | |||
| Less allowance for doubtful accounts | (9.0 | ) | (8.4 | ) | |||
| Accounts receivable, net | $ | 1,534.8 | $ | 1,156.0 | |||
Contract billings represent the amount of performance obligations that have been billed but not yet collected. Contract assets consist of unbilled receivables and retainage. Unbilled receivables represent the estimated value of unbilled work for projects with performance obligations recognized over time. Retainage whichrepresents a portion of the contract amount that has been billed, but is not duefor which the contract allows the customer to retain a portion of the billed amount until completionfinal contract settlement (generally, from 5% to 10% of performance and acceptance by customers, is expected to be collected within one year. Receivables expected to be collected beyond one year are recorded within other long-term assets. Provisions for doubtful accounts for each ofcontract billings). For the three month periodsperiod ended September 30, 2017 and 2016March 31, 2020, provisions for credit losses totaled $0.4$1.6 million and impairment losses on contract assets were not material.
Contract liabilities consist primarily of deferred revenue. Under certain contracts, the Company may be entitled to invoice the customer and receive payments in advance of performing the related contract work. In those instances, the Company recognizes a liability for advance billings in excess of revenue recognized, which is referred to as deferred revenue. Contract liabilities also include the nine month periods ended September 30, 2017 and 2016,amount of any accrued project losses. Total contract liabilities, including accrued project losses, totaled $1.1approximately $204.3 million and $2.0$206.2 million as of March 31, 2020 and December 31, 2019, respectively, of which deferred revenue comprised approximately $181.4 million and $184.1 million, respectively.
For the three month period ended March 31, 2020, the Company recognized revenue of approximately $105.6 million related to amounts that were included in deferred revenue as of December 31, 2019, resulting primarily from the advancement of physical progress on the related projects during the period.
The Company is party to non-recourse financing arrangements in the ordinary course of business, under which certain receivables are purchased bysettled with the customer’s bank in return for a nominal fee. TheseDiscount charges related to these arrangements, under which amounts can vary based on levels of activity and changes in customer payment terms, improve the collection cycle time of the related receivables. The discount charge, which isare included within interest expense, net, totaled approximately $2.1$1.8 million and $0.8$2.9 million respectively, for the three month periods ended September 30, 2017March 31, 2020 and 2016, and totaled approximately $4.7 million and $1.7 million, respectively, for the nine month periods ended September 30, 2017 and 2016.2019, respectively.
Note 6 -– Property and Equipment, Net
The following table provides details of property and equipment, net, including property and equipment held under capitalfinance leases as of the dates indicated (in millions):
| March 31, 2020 | December 31, 2019 | ||||||
| Land | $ | 4.9 | $ | 4.9 | |||
| Buildings and leasehold improvements | 36.9 | 35.8 | |||||
| Machinery and equipment | 1,670.3 | 1,659.4 | |||||
| Office furniture and equipment | 205.9 | 197.3 | |||||
| Construction in progress | 63.6 | 26.1 | |||||
| Total property and equipment | $ | 1,981.6 | $ | 1,923.5 | |||
| Less accumulated depreciation and amortization | (1,044.3 | ) | (1,017.7 | ) | |||
| Property and equipment, net | $ | 937.3 | $ | 905.8 | |||
| September 30, 2017 | December 31, 2016 | ||||||
| Land | $ | 4.6 | $ | 4.6 | |||
| Buildings and leasehold improvements | 25.7 | 24.2 | |||||
| Machinery and equipment | 1,237.3 | 997.8 | |||||
| Office furniture and equipment | 149.6 | 146.1 | |||||
| Construction in progress | 8.9 | 9.5 | |||||
| Total property and equipment | $ | 1,426.1 | $ | 1,182.2 | |||
| Less accumulated depreciation and amortization | (734.7 | ) | (633.1 | ) | |||
| Property and equipment, net | $ | 691.4 | $ | 549.1 | |||
The gross amount of capitalized internal-use software, which is included within office furniture and equipment, totaled $108.7$144.8 million and $107.8$138.2 million as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively. Capitalized internal-use software, net of accumulated amortization, totaled $24.8$34.8 million and $30.9$31.5 million as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively. Depreciation and amortization expense associated with property and equipment, which includes amortization of capitalized internal-use software, totaled $53.1 million and $54.2 million, respectively, for the three month periods ended September 30, 2017March 31, 2020 and 20162019. Accrued capital expenditures totaled $44.1 million and $37.4 million, respectively, and totaled $123.4$10.7 million and $106.5$5.2 million foras of March 31, 2020 and December 31, 2019, respectively. The effects of accrued capital expenditures are excluded from the nine month periods ended September 30, 2017 and 2016, respectively.Company’s consolidated statements of cash flows given their non-cash nature.
Note 7 -– Debt
The following table provides details of the carrying values of debt as of the dates indicated (in millions):
| Description | Maturity Date | March 31, 2020 | December 31, 2019 | |||||||
| Senior secured credit facility: | September 19, 2024 | |||||||||
| Revolving loans | $ | 332.7 | $ | 339.2 | ||||||
| Term loan | 400.0 | 400.0 | ||||||||
| 4.875% Senior Notes | March 15, 2023 | 400.0 | 400.0 | |||||||
| Finance lease and other obligations | 298.2 | 305.6 | ||||||||
| Total debt obligations | $ | 1,430.9 | $ | 1,444.8 | ||||||
| Less unamortized deferred financing costs | (11.8 | ) | (12.4 | ) | ||||||
| Total debt, net of deferred financing costs | $ | 1,419.1 | $ | 1,432.4 | ||||||
| Current portion of long-term debt | 121.8 | 118.4 | ||||||||
| Long-term debt | $ | 1,297.3 | $ | 1,314.0 | ||||||
| Description | Maturity Date | September 30, 2017 | December 31, 2016 | |||||||
| Senior secured credit facility: | February 22, 2022 | |||||||||
| Revolving loans | $ | 300.6 | $ | 279.9 | ||||||
| Term loan | 400.0 | 237.5 | ||||||||
| 4.875% Senior Notes | March 15, 2023 | 400.0 | 400.0 | |||||||
| Capital lease obligations, weighted average interest rate of 3.5% | In installments through September 1, 2022 | 179.9 | 98.6 | |||||||
| Notes payable and other debt obligations | Varies | 12.1 | 19.8 | |||||||
| Total long-term debt obligations | $ | 1,292.6 | $ | 1,035.8 | ||||||
| Less unamortized deferred financing costs | (13.8 | ) | (9.8 | ) | ||||||
| Total debt, net of deferred financing costs | $ | 1,278.8 | $ | 1,026.0 | ||||||
| Current portion of long-term debt | 86.5 | 64.6 | ||||||||
| Long-term debt | $ | 1,192.3 | $ | 961.4 | ||||||
Senior Secured Credit Facility
The Company has aCompany’s senior secured credit facility (the “Credit Facility”), which was amended and restated on February 22, 2017. The Company refers to its amended and restated credit facility as the “2017 Credit Facility,” and to its previous credit facility as the “2016 Credit Facility.” The 2017 Credit Facility increased the Company’s has aggregate borrowing commitments fromtotaling approximately $1.2$1.75 billion to $1.5 billion, which amount isas of March 31, 2020, composed of $1.1$1.35 billion of revolving commitments and a term loan in the aggregate principal amount of approximately $400 million. The amended and restated credit facility also extended the Credit Facility’s maturity date to February 22, 2022. As of September 30, 2017, term loans in the aggregate principal amount of $400 million were drawn under the 2017 Credit Facility. The term loan is subject to amortization in quarterly principal installments that commenceof $2.5 million commencing in December 2017, which as of September 30, 2017, amounted to $3.1 million,2020, which amount iswill increase to $5.0 million commencing in December 2021. Quarterly principal installments on the term loan are subject to adjustment, for additional term loans and, if applicable, for certain prepayments. As of December 31, 2016, term loans in the aggregate principal amount of $238 million were outstanding.
As of September 30, 2017March 31, 2020 and December 31, 2016,2019, outstanding revolving loans, which included $171$125 million and $119$138 million, respectively, of borrowings denominated in foreign currencies, accrued interest at weighted average rates of approximately 2.96%2.47% and 3.71%3.50% per annum, respectively. The term loan accrued interest at a raterates of 2.86%2.24% and 2.77%3.05% as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively. Letters of credit of approximately $189.1
$143.1 million and $314.3$98.0 million were issued as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively. As of September 30, 2017both March 31, 2020 and December 31, 2016, letters2019, letter of credit fees accrued at 0.750% and 1.00%0.375% per annum respectively, for performance standby letters of credit and at 1.625% and 2.00%1.25% per annum respectively, for financial standby letters of credit. Outstanding letters of credit mature at various dates and most have automatic renewal provisions, subject to prior notice of cancellation. As of September 30, 2017March 31, 2020 and December 31, 2016,2019, availability for revolving loans totaled $610.3$874.2 million and $405.9$912.8 million, respectively, or up to $460.9$506.9 million and $335.7$552.0 million, respectively, for new letters of credit. Revolving loan borrowing capacity included $129.4$175.2 million and $80.9$162.4 million of availability in either Canadian dollars or Mexican pesos as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively. The unused facility fee as of September 30, 2017both March 31, 2020 and December 31, 20162019 accrued at a rate of 0.30% and 0.40%, respectively.0.20%.
The Credit Facility is guaranteed by certain subsidiaries of the Company (the “Guarantor Subsidiaries”) and the obligations under the Credit Facility are secured by substantially all of the Company’s and the Guarantor Subsidiaries’ respective assets, subject to certain exceptions. The Credit Facility requires that the Company maintain a Maximum Consolidated Leverage Ratio, as defined in the Credit Facility, of 3.50 (subject to the Acquisition Adjustment described below). The Credit Facility also requires that the Company maintain a Minimum Consolidated Interest Coverage Ratio, as defined in the Credit Facility, of 3.00. The Credit Facility provides that, for purposes of calculating the Consolidated Leverage Ratio, certain cash charges may be added back to the calculation of Consolidated EBITDA, as defined in the Credit Facility, and funded indebtedness excludes undrawn standby performance letters of credit. Additionally, notwithstanding the terms discussed above, subject to certain conditions, if a permitted acquisition or series of permitted acquisitions having consideration exceeding $50 million occurs during a fiscal quarter, the Consolidated Leverage Ratio may be temporarily increased to up to 3.75 during such fiscal quarter and the subsequent two fiscal quarters. Such right may be exercised no more than two times during the term of the Credit Facility. Subject to customary exceptions, the Credit Facility limits the borrowers’ and the Guarantor Subsidiaries’ ability to engage in certain activities, including acquisitions, mergers and consolidations, debt incurrence, investments, capital expenditures, asset sales, debt prepayments, lien incurrence and the making of distributions or repurchases of capital stock. However, distributions payable solely in capital stock are permitted. The Credit Facility provides for customary events of default and carries cross-default provisions with the Company’s other significant debt instruments, including the Company’s indemnity agreement with its surety provider, as well as customary remedies, including the acceleration of repayment of outstanding amounts and other remedies with respect to the collateral securing the Credit Facility obligations.
Other Credit Facilities. The Company has other credit facilities that support the working capital requirements of its foreign operations. Borrowings under theseoperations and certain letter of credit facilities, which have varying datesissuances. As of maturity and are generally renewed on an annual basis, are denominated in Canadian dollars. As September 30, 2017both March 31, 2020 and December 31, 2016, maximum borrowing capacity totaled Canadian $20.02019, there were 0 borrowings under the Company’s other credit facilities. Additionally, the Company has a credit facility under which it may issue up to $50.0 million and $40.0 million, respectively, or approximately $16.0 million and $29.8 million, respectively.of performance standby letters of credit. As of September 30, 2017March 31, 2020 and December 31, 2016, outstanding borrowings2019, letters of credit issued under this facility totaled approximately $5.4$18.1 million and $13.4$17.1 million, respectively, and accrued interestfees at a weighted average rate of approximately 4.0%0.50% and 3.6%,0.40% per annum, respectively. Outstanding borrowings that are not renewed are repaid with borrowings under the Company’s senior secured credit facility. Accordingly, the carrying amounts of the Company’s borrowings under its other credit facilities, which are included within notes payable and other debt obligations in the table above, are classified within long-term debt in the Company’s consolidated balance sheets. The Company’s other credit facilities are subject to customary provisions and covenants.
Debt Guarantees and Covenants
The 4.875% Senior Notes are senior unsecured unsubordinated obligations and rank equal in right of payment with existing and future unsubordinated debt, and rank senior in right of payment to existing and future subordinated debt and are fully and unconditionally guaranteed on an unsecured, unsubordinated, joint and several basis by certain of the Company’s existing and future 100%-owned direct and indirect domestic subsidiaries that are each guarantors of the Company’s Credit Facility or other outstanding indebtedness. See Note 16 - Supplemental Guarantor Condensed Unaudited Consolidating Financial Information.
MasTec was in compliance with the provisions and covenants of its outstanding debt instruments as of September 30, 2017March 31, 2020 and December 31, 2016.2019.
Additional Information
As of September 30, 2017March 31, 2020 and December 31, 2016,2019, accrued interest payable, which is recorded within other accrued expenses in the consolidated balance sheets, totaled $4.1$2.8 million and $8.5$7.5 million, respectively. Additionally, in connection with the 2017 Credit Facility amendment, the Company paid approximately $6 million in financing costs for the nine month period ended September 30, 2017. For additional information pertaining to the Company’s debt instruments, including its 4.875% Senior Notes, see Note 7 - Debt in the Company’s 20162019 Form 10-K.
Note 8 -– Lease Obligations
In the ordinary course of business, the Company enters into non-cancelable operating leasesagreements that provide financing for certainmachinery and equipment and for other of its facility, vehicle and equipment needs, including related party leases. See Note 15 - Related Party Transactions. RentAs of March 31, 2020, the Company’s leases have remaining lease terms of up to nine years. Lease agreements may contain renewal clauses, which, if elected, generally extend the term of the lease for one to five years for both equipment and relatedfacility leases. Certain lease agreements may also contain options to purchase the leased property and/or options to terminate the lease. In addition, lease agreements may include periodic adjustments to payment amounts for inflation or other variables, or may require payments for taxes, insurance, maintenance or other expenses, which are generally referred to as non-lease components. The Company’s lease agreements do not contain significant residual value guarantees or material restrictive covenants.
Finance Leases
The gross amount of assets held under finance leases as of March 31, 2020 and December 31, 2019 totaled $484.2 million and $463.5 million, respectively. Assets held under finance leases, net of accumulated depreciation, totaled $384.4 million and $375.9 million as of March 31, 2020 and December 31, 2019, respectively. Depreciation expense associated with finance leases totaled $15.8 million and $10.0 million for the three month periods ended March 31, 2020 and 2019, respectively.
Operating Leases
Operating lease additions for the three month period ended March 31, 2020 totaled $5.8 million and totaled $12.0 million for the three month period ended March 31, 2019, excluding the effect of adoption of ASU 2016-02, Leases (Topic 842), of approximately $230.0 million. For the three month periods ended March 31, 2020 and 2019, rent expense for operating leases that have non-cancelable terms in excess of one year totaled approximately $25.4$35.3 million and $25.9$27.9 million, for the three month periods ended September 30, 2017 and 2016, respectively, and totaled $77.6of which $2.9 million and $74.8$2.3 million, for the nine month periods ended September 30, 2017 and 2016, respectively.respectively, represented variable lease costs. The Company also incurred rent and related expense for facilities, vehicles and equipment having originalleases with terms of one year or less totaling approximately $159.4$77.5 million and $96.7$92.8 million for the three month periods ended September 30, 2017March 31, 2020 and 2016, respectively,2019, respectively. Rent expense for operating leases is generally consistent with the amount of the related payments, and totaling $347.8 millionis included within operating activities in the consolidated statements of cash flows.
Additional Lease Information
Future minimum lease commitments as of March 31, 2020 were as follows (in millions):
Finance Leases | Operating Leases | ||||||
| 2020, remaining nine months | $ | 96.6 | $ | 66.8 | |||
| 2021 | 115.0 | 68.2 | |||||
| 2022 | 74.6 | 43.3 | |||||
| 2023 | 26.9 | 21.2 | |||||
| 2024 | 3.0 | 13.8 | |||||
| Thereafter | — | 30.6 | |||||
| Total minimum lease payments | $ | 316.1 | $ | 243.9 | |||
| Less amounts representing interest | (17.9 | ) | (20.4 | ) | |||
| Total lease obligations, net of interest | $ | 298.2 | $ | 223.5 | |||
| Less current portion | 116.9 | 80.1 | |||||
| Long-term portion of lease obligations, net of interest | $ | 181.3 | $ | 143.4 | |||
As of March 31, 2020, finance leases had a weighted average remaining lease term of 2.7 years and $213.9 million for the nine month periods ended September 30, 2017a weighted average discount rate of 4.1%. Non-cancelable operating leases had a weighted average remaining lease term of 4.2 years and 2016, respectively.a weighted average discount rate of 4.1% as of March 31, 2020.
Note 9 – Stock-Based Compensation and Other Employee Benefit Plans
The Company has stock-based compensation plans, under which shares of the Company’s common stock are reserved for issuance. Under all stock-based compensation plans in effect as of September 30, 2017, including employee stock purchase plans,March 31, 2020, there were approximately 4.9 million
3,154,000 shares available for future grant. InNon-cash stock-based compensation expense under all plans totaled $4.0 million and $3.7 million for the three month periods ended March 2017,31, 2020 and 2019, respectively. Income tax benefits associated with stock-based compensation arrangements totaled $0.9 million and $3.2 million for the Company’s boardthree month periods ended March 31, 2020 and 2019, respectively, including net tax deficiencies related to the vesting of directors adopted the Amendedshare-based payment awards totaling $0.1 million and Restated 2013 Incentive Compensation Plan (the “Amended 2013 ICP”), which was effective as of January 1, 2017 and changed the amount ofnet tax the Company can withhold for employee tax withholdings on share-based awards, as provided under ASU 2016-09. The Company adopted ASU 2016-09 as of January 1, 2017, as discussed in Note 1 - Business, Basis of Presentation and Significant Accounting Policies.benefits totaling $2.3 million, respectively.
Restricted Shares
MasTec grants restricted stock awards and restricted stock units (together, “restricted shares”), to eligible participants, which are valued based on the closing market share price of MasTec common stock (the “market price”) on the date of grant. During the restriction period, holders of restricted stock awards are entitled to vote the shares. TotalAs of March 31, 2020, total unearned compensation related to restricted shares as ofSeptember 30, 2017was approximately $15.8$41.1 million,, which is expected to be recognized over a weighted average period of approximately 1.12.4 years. The intrinsicThe fair value of restricted shares that vested, which is based on the market price on the date of vesting, totaled $0.1$5.6 million and $13.6 million for both the three month periods ended September 30, 2017March 31, 2020 and 2016, and totaled $11.9 million and $1.5 million for the nine month periods ended September 30, 2017 and 2016,2019, respectively.
Activity, restricted shares: (a) | Restricted Shares | Per Share Weighted Average Grant Date Fair Value | ||||
| Non-vested restricted shares, as of December 31, 2019 | 1,221,593 | $ | 45.36 | |||
| Granted | 927,579 | 27.04 | ||||
| Vested | (156,502 | ) | 39.02 | |||
| Canceled/forfeited | (230,500 | ) | 60.04 | |||
| Non-vested restricted shares, as of March 31, 2020 | 1,762,170 | $ | 34.36 | |||
Activity, restricted shares: (a) | Restricted Shares | Per Share Weighted Average Grant Date Fair Value | ||||
| Non-vested restricted shares, as of December 31, 2016 | 1,970,586 | $ | 21.61 | |||
| Granted | 193,348 | 39.47 | ||||
| Vested | (304,211 | ) | 40.72 | |||
| Canceled/forfeited | (30,041 | ) | 20.24 | |||
| Non-vested restricted shares, as of September 30, 2017 | 1,829,682 | $ | 20.34 | |||
| (a) | Includes 2020. |
Employee Stock Purchase Plans
The Company has certain employee stock purchase plans (collectively, “ESPPs”), under which shares of the Company'sCompany’s common stock are available for purchase by eligible employees. The following table provides details pertaining to the Company’s ESPPs for the periods indicated:
| For the Three Months Ended March 31, | |||||||
| 2020 | 2019 | ||||||
Cash proceeds (in millions) | $ | 1.5 | $ | 1.2 | |||
| Common shares issued | 53,399 | 35,732 | |||||
| Weighted average price per share | $ | 27.82 | $ | 34.48 | |||
| Weighted average per share grant date fair value | $ | 7.95 | $ | 8.76 | |||
| For the Nine Months Ended September 30 | |||||||
| 2017 | 2016 | ||||||
Cash proceeds (in millions) | $ | 2.4 | $ | 2.0 | |||
| Common shares issued | 68,789 | 115,556 | |||||
| Weighted average price per share | $ | 34.72 | $ | 16.88 | |||
| Weighted average per share grant date fair value | $ | 9.00 | $ | 4.58 | |||
| For the Three Months Ended September 30 | For the Nine Months Ended September 30 | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Non-cash stock-based compensation expense | $ | 3.4 | $ | 3.9 | $ | 10.5 | $ | 11.3 | |||||||
| Income Tax Effects: | |||||||||||||||
| Income tax effect of non-cash stock-based compensation | $ | 1.3 | $ | 1.7 | $ | 3.8 | $ | 5.6 | |||||||
Excess tax benefit from non-cash stock-based compensation (a) | $ | 0.0 | $ | 0.3 | $ | 0.1 | $ | 1.4 | |||||||
Note 10 – Other Retirement Plans
Multiemployer Plans. Certain of MasTec’s subsidiaries, including certain subsidiaries in Canada, contribute amounts to multiemployer pension and other multiemployer benefit plans and trusts (“MEPPs”), which are recorded as a component of employee wages and salaries within costs of revenue, excluding depreciation and amortization. Contributions are generally based on fixed amounts per hour per employee for employees covered under these plans. Multiemployer plan contribution rates are determined annually and assessed on a “pay-as-you-go” basis based on union employee payrolls. Union payrolls cannot be determined for future periods because the number of union employees employed at a given time, and the plans in which they may participate, vary depending upon the location and number of ongoing projects at a given time and the need for union resources in connection with those projects. Total contributions to multiemployer plans and the related number of employees covered by these plans including with respect to the Company’s Canadian operations, for the periods indicated were as follows:
| Multiemployer Plans | |||||||||||||||||
| Covered Employees | Contributions (in millions) | ||||||||||||||||
| Low | High | Pension | Other Multiemployer | Total | |||||||||||||
| For the Three Months Ended March 31: | |||||||||||||||||
| 2020 | 1,119 | 1,424 | $ | 5.4 | $ | 1.7 | $ | 7.1 | |||||||||
| 2019 | 1,626 | 2,117 | $ | 7.0 | $ | 1.3 | $ | 8.3 | |||||||||
| Multiemployer Plans | |||||||||||||||||
| Covered Employees | Contributions (in millions) | ||||||||||||||||
| Low | High | Pension | Other Multiemployer | Total | |||||||||||||
| For the Three Months Ended September 30: | |||||||||||||||||
| 2017 | 3,669 | 7,057 | $ | 36.7 | $ | 2.7 | $ | 39.4 | |||||||||
| 2016 | 4,170 | 4,910 | $ | 26.4 | $ | 2.9 | $ | 29.3 | |||||||||
| For the Nine Months Ended September 30: | |||||||||||||||||
| 2017 | 550 | 7,057 | $ | 68.1 | $ | 8.0 | $ | 76.1 | |||||||||
| 2016 | 1,112 | 4,910 | $ | 43.4 | $ | 7.6 | $ | 51.0 | |||||||||
The fluctuations in the average number of employees covered under multiemployer plans and related contributions in the table above arerelated primarily related to higher levelstiming of activity for the Company’s union resource-based project activityprojects, the majority of which are within the Company’sits oil and gas operations.
Note 11 – Equity
Share Activity
The Company’s share repurchase programs provide for the repurchase of shares of MasTec common stock from time to time in open market transactions or in privately-negotiated transactions in accordance with applicable securities laws. The timing and the amount of any repurchases is determined based on market conditions, legal requirements, cash flow and liquidity needs and other factors. The Company’s share repurchase programs do not have an expiration date and may be modified or suspended at any time at the Company’s discretion. Share repurchases, which are recorded at cost and are held in the Company’s treasury, are funded with available cash or with availability under the Credit Facility. The Company may use either authorized and unissued shares or treasury shares to meet share issuance requirements. Treasury stock is recorded at cost.
During the three month period ended March 31, 2020, the Company repurchased approximately 3.6 million shares of its common stock for an aggregate purchase price of $119.4 million. Of the 3.6 million repurchased shares, 0.6 million were repurchased for $28.8 million under a $150 million share repurchase program that was established in September 2018 and completed in the first quarter of 2020, and 3.0 million were repurchased for $90.6 million under the Company’s December 2018 $100 million share repurchase program. For the three month period ended March 31, 2019, share repurchases totaled approximately $0.6 million, which were completed under the Company’s September 2018 $150 million share repurchase program.
As of March 31, 2020, $159.4 million was available for future share repurchases under all of the Company’s open share repurchase programs, which included $9.4 million under the Company’s December 2018 share repurchase program and $150 million under a new share repurchase program that was authorized on March 19, 2020.
Accumulated Other Comprehensive Loss
Note 12 -– Income Taxes
In determining the quarterly provision for income taxes, management uses an estimated annual effective tax rate based on forecasted annual pre-tax income, permanent tax differences, statutory tax rates and tax planning opportunities in the various jurisdictions in which the Company operates.
The effect of significant discrete items is separately recognized in the quarter(s) in which they occur. For the three month periodperiods ended September 30, 2017,March 31, 2020 and 2019, the Company recognized certain tax credits based upon the results of a study that is currently underway, which amount was determined based on management’s estimates and currently available information. Further adjustments to the amount recognized may occur as the results of the study are finalized, which is expected to occur in the fourth quarter of 2017.
In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer’s social security payments, net totaled $11.8 millionoperating loss utilization and long-term deferredcarryback periods, modifications to the net interest deduction limitations and technical corrections to tax liabilities, net, totaled $178.4 million. In addition, as of September 30, 2017 and December 31, 2016, accrueddepreciation methods for qualified improvement property (QIP). At this time, management does not believe that the CARES Act will have a material impact on the Company’s income and other taxes payable, which are included within other accrued expenses, totaled $19.8 million and $40.3 million, respectively.tax provision for 2020. The Company adopted Income Taxes (Topic 740): Balance Sheet Classificationwill continue to evaluate the impact of Deferred Taxes (“ASU 2015-17”), which changed the classification requirements for deferred tax assetsCARES Act on its financial position, results of operations and liabilities, effective January 1, 2017. ASU 2015-17 requires long-term classification of all deferred
Note 13 -– Segments and Related Information
Segment Discussion
The Communications segment performs engineering, construction, maintenance and customer fulfillment activities related to communications infrastructure, primarily for wireless and wireline/fiber communications and install-to-the-home customers, and, to a lesser extent, infrastructure for utilities, among others. MasTecThe Company performs engineering, construction and maintenance services onfor oil and natural gas pipelines and processing facilities for the energy and utilities industries through its Oil and Gas segment. The Electrical Transmission segment primarily serves the energy and utility industries through the engineering, construction and maintenance of electrical transmission lines and substations. The Power Generation and Industrial segment primarily serves energy, utility and other end-markets through the installation and construction of conventional andpower facilities, including from renewable power facilities,sources, related electrical transmission infrastructure, ethanol/biofuel facilities and various types of heavy civil and industrial infrastructure. The Other segment includes equity investees, the services of which vary from those provided by the Company’s four primary segments, as well as other small business units that perform construction and other services for a variety of international end-markets.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is the measure of profitability used by management to manage its segments and, accordingly, in its segment reporting. As appropriate, the Company supplements the reporting of consolidated financial information determined in accordance with U.S. GAAP with certain non-U.S. GAAP financial measures, including EBITDA. The Company believes these non-U.S. GAAP measures provide meaningful information and help investors understand the Company’s financial results and assess its prospects for future performance. The Company uses EBITDA to evaluate its performance, both internally and as compared with its peers, because it excludes certain items that may not be indicative of the Company’s core operating results for its reportable segments, as well as items that can vary widely across different industries or among companies within the same industry, and for non-cash stock-based compensation expense, can also be subject to volatility from changes in the market price per share of our common stock or variations in the value of shares granted.industry. Segment EBITDA is calculated in a manner consistent with consolidated EBITDA.
Summarized financial information for MasTec’s reportable segments is presented and reconciled to consolidated financial information for total MasTec in the following tables, (in millions):including a reconciliation of consolidated income before income taxes to EBITDA, all of which are presented in millions. The tables below may contain slight summation differences due to rounding.
| For the Three Months Ended September 30 | For the Nine Months Ended September 30 | For the Three Months Ended March 31, | ||||||||||||||||||||
| Revenue: | 2017 | 2016 | 2017 | 2016 | 2020 | 2019 | ||||||||||||||||
Communications (a) | $ | 610.5 | $ | 624.3 | $ | 1,762.2 | $ | 1,728.0 | $ | 644.1 | $ | 612.8 | ||||||||||
| Oil and Gas | 1,161.0 | 736.0 | 2,757.2 | 1,454.3 | 359.1 | 621.3 | ||||||||||||||||
| Electrical Transmission | 81.8 | 101.7 | 277.3 | 283.6 | 128.1 | 94.9 | ||||||||||||||||
| Power Generation and Industrial | 96.9 | 123.6 | 204.1 | 324.7 | 286.3 | 189.4 | ||||||||||||||||
| Other | 10.6 | 7.6 | 14.2 | 14.9 | 0.0 | 0.0 | ||||||||||||||||
| Eliminations | (5.0 | ) | (7.0 | ) | (10.9 | ) | (12.7 | ) | (1.0 | ) | (0.1 | ) | ||||||||||
| Consolidated revenue | $ | 1,955.8 | $ | 1,586.2 | $ | 5,004.1 | $ | 3,792.8 | $ | 1,416.6 | $ | 1,518.3 | ||||||||||
| (a) | Revenue generated primarily by utilities customers represented |
| For the Three Months Ended September 30 | For the Nine Months Ended September 30 | For the Three Months Ended March 31, | ||||||||||||||||||||
| EBITDA: | 2017 | 2016 | 2017 | 2016 | 2020 | 2019 | ||||||||||||||||
| Communications | $ | 65.3 | $ | 62.8 | $ | 173.2 | $ | 190.9 | $ | 50.8 | $ | 45.3 | ||||||||||
| Oil and Gas | 108.1 | 117.8 | 356.1 | 187.6 | 74.4 | 107.4 | ||||||||||||||||
| Electrical Transmission | 4.5 | (8.3 | ) | 11.2 | (42.0 | ) | 8.3 | 3.8 | ||||||||||||||
| Power Generation and Industrial | 9.3 | 6.1 | 14.8 | 13.8 | 5.0 | 3.2 | ||||||||||||||||
| Other | 10.1 | (3.1 | ) | 11.6 | (2.6 | ) | 7.4 | 6.2 | ||||||||||||||
| Corporate | (22.0 | ) | (24.3 | ) | (69.2 | ) | (55.1 | ) | (31.9 | ) | (29.5 | ) | ||||||||||
| Consolidated EBITDA | $ | 175.3 | $ | 151.0 | $ | 497.7 | $ | 292.6 | $ | 114.0 | $ | 136.4 | ||||||||||
| For the Three Months Ended March 31, | |||||||
| Depreciation and Amortization: | 2020 | 2019 | |||||
| Communications | $ | 19.7 | $ | 14.7 | |||
| Oil and Gas | 28.1 | 34.6 | |||||
| Electrical Transmission | 5.9 | 4.5 | |||||
| Power Generation and Industrial | 4.0 | 3.1 | |||||
| Other | 0.0 | 0.0 | |||||
| Corporate | 2.8 | 2.1 | |||||
| Consolidated depreciation and amortization | $ | 60.5 | $ | 59.0 | |||
| For the Three Months Ended September 30 | For the Nine Months Ended September 30 | ||||||||||||||
| Depreciation and Amortization: | 2017 | 2016 | 2017 | 2016 | |||||||||||
| Communications | $ | 13.8 | $ | 12.5 | $ | 39.4 | $ | 37.2 | |||||||
| Oil and Gas | 26.0 | 20.7 | 71.1 | 58.2 | |||||||||||
| Electrical Transmission | 5.8 | 6.1 | 17.3 | 17.1 | |||||||||||
| Power Generation and Industrial | 2.9 | 1.6 | 5.8 | 4.6 | |||||||||||
| Other | 0.0 | 0.0 | 0.1 | 0.0 | |||||||||||
| Corporate | 1.6 | 1.7 | 4.7 | 5.1 | |||||||||||
| Consolidated depreciation and amortization | $ | 50.1 | $ | 42.6 | $ | 138.4 | $ | 122.2 | |||||||
| For the Three Months Ended March 31, | |||||||
| EBITDA Reconciliation: | 2020 | 2019 | |||||
| Income before income taxes | $ | 36.5 | $ | 55.1 | |||
| Plus: | |||||||
| Interest expense, net | 17.0 | 22.3 | |||||
| Depreciation | 53.1 | 54.2 | |||||
| Amortization of intangible assets | 7.4 | 4.8 | |||||
| Consolidated EBITDA | $ | 114.0 | $ | 136.4 | |||
| For the Three Months Ended September 30 | For the Nine Months Ended September 30 | ||||||||||||||
| EBITDA Reconciliation: | 2017 | 2016 | 2017 | 2016 | |||||||||||
| Income before income taxes | $ | 107.6 | $ | 95.3 | $ | 314.3 | $ | 132.4 | |||||||
| Plus: | |||||||||||||||
| Interest expense, net | 17.6 | 13.1 | 45.0 | 37.9 | |||||||||||
| Depreciation and amortization | 50.1 | 42.6 | 138.4 | 122.2 | |||||||||||
| Consolidated EBITDA | $ | 175.3 | $ | 151.0 | $ | 497.7 | $ | 292.6 | |||||||
Foreign Operations. Operations and Other. MasTec operates in North America, primarily in the United States and Canada, and, to a lesser extent, in Mexico.Mexico and the Caribbean. For both the three month periods ended March 31, 2020 and 2019, revenue of $1.4 billion was derived from U.S. operations. For the three month periods ended September 30, 2017March 31, 2020 and 2016,2019, revenue of $1.9 billion and $1.5 billion, respectively, was derived from U.S. operations, and revenue of $61.0$45.7 million and $73.8$78.9 million, respectively, was derived from foreign operations, the majority of which was from the Company’s Canadian operations. For the nine month periods ended September 30, 2017operations in its Oil and 2016, revenue of $4.8 billionGas segment, and, $3.6 billion, respectively, was derived from U.S. operations, and revenue of $160.7 million and $222.8 million, respectively, was derived from foreign operations, the majority of which wasto a lesser extent, from the Company’s Canadian operations. The majority of the Company’s foreignwireless operations during the three and nine month periods ended September 30, 2017 and 2016 were in the Company’s Oil and Gas segment.Mexico. Long-lived assets held in the U.S. included property and equipment, net, of $629.2$911.5 million and $475.3$874.7 million as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively, and, for the Company’s businesses in foreign countries, the majority of which are in Canada, totaled $62.2$25.8 million and $73.8$31.1 million, respectively. Intangible assets and goodwill, net, related to the Company’s U.S. operations totaled approximately $1.2 billion and $1.1$1.4 billion as of September 30, 2017both March 31, 2020 and December 31, 2016,2019, respectively, and for the Company’s businesses in foreign countries, the majority of which are in Canada, totaled approximately $114.3$51.4 million and $107.8$56.4 million as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively. AmountsThe majority of the Company’s long-lived and intangible assets and goodwill in foreign countries relate to its Canadian operations. As of March 31, 2020 and December 31, 2019, amounts due from customers from which foreign revenue was derived accounted for approximately 6%4% and 8%5%, respectively, of the Company’s consolidated net accounts receivable position, as of September 30, 2017 and December 31, 2016, which represents accounts receivable, net, less BIEC.
deferred revenue. For the three month periods ended March 31, 2020 and 2019, revenue from governmental entities was approximately 2% and 1%, respectively, of total revenue, substantially all of which was derived from the Company’s U.S. operations.
Significant Customers
| For the Three Months Ended September 30 | For the Nine Months Ended September 30 | ||||||
| Customer: | 2017 | 2016 | 2017 | 2016 | |||
Energy Transfer affiliates (a) | 49% | 35% | 40% | 26% | |||
AT&T (including DIRECTV®) (b) | 21% | 30% | 25% | 34% | |||
Note 14 -– Commitments and Contingencies
MasTec is subject to a variety of legal cases, claims and other disputes that arise from time to time in the ordinary course of its business. See Note 14 - Commitmentsbusiness, including project contract price and Contingencies in the Company’s 2016 Form 10-K for additional information.acquisition purchase price disputes. MasTec cannot provide assurance that it will be successful in recovering all or
any of the potential damages it has claimed or in defending claims against the Company. The outcome of such cases, claims and disputes cannot be predicted with certainty and an unfavorable resolution of one or more of them could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.
COVID-19 Pandemic
During March 2020, the World Health Organization declared a global pandemic related to the rapidly growing outbreak of a novel strain of coronavirus (COVID-19). The COVID-19 pandemic has significantly affected economic conditions in the United States and internationally as national, state and local governments reacted to the public health crisis by requiring mitigation measures that have disrupted business activities for an uncertain period of time. The effects of the COVID-19 pandemic could affect the Company’s future business activities and financial results, including from governmental permitting approval delays, reduced crew productivity, higher operating costs and lower levels of overhead cost absorption and/or delayed project start dates or project shutdowns that may be requested or mandated by governmental authorities or others.
The effects of the COVID-19 pandemic on the Company’s financial results for the three month period ended March 31, 2020 were limited. Most of the Company’s construction services are currently deemed essential under governmental mitigation orders and substantially all of its business segments continue to operate. Management’s top priority has been to take appropriate actions to protect the health and safety of its employees, customers and business partners, including adjusting its standard operating procedures to respond to evolving health guidelines. Management believes that it is taking appropriate steps to mitigate any potential impact to the Company; however, given the uncertainty regarding the potential effects of the COVID-19 pandemic, any future impacts cannot be quantified or predicted with specificity.
Other Commitments and Contingencies
Leases. In the ordinary course of business, the Company enters into non-cancelable operating leases for certain of its facility, vehicle and equipment needs, including related party leases. See Note 8 - Lease Obligations and Note 15 - Related Party Transactions.
Letters of Credit. In the ordinary course of business, the Company is required to post letters of credit for its insurance carriers and surety bond providers and in support of performance under certain contracts as well as certain obligations associated with the Company’s costequity investments and equity investees,other strategic arrangements, including its variable interest entities. Such letters of credit are generally issued by a bank or similar financial institution. The letter of credit commits the issuer to pay specified amounts to the holder of the letter of credit under certain conditions. If this were to occur, the Company would be required to reimburse the issuer of the letter of credit, which, depending upon the circumstances, could result in a charge to earnings. As of September 30, 2017March 31, 2020 and December 31, 2016,2019, there were $189.1$161.2 million and $314.3$115.1 million, respectively, of letters of credit issued under the Company’s Credit Facility.credit facilities. The Company is not aware of any material claims relating to its outstanding letters of credit as of September 30, 2017March 31, 2020 or December 31, 2016.2019.
Performance and Payment Bonds. In the ordinary course of business, MasTec is required by certain customers to provide performance and payment bonds for contractual commitments related to projects in process.its projects. These bonds provide a guarantee to the customer that the Company will perform under the terms of a contract and that the Company will pay its subcontractors and vendors. If the Company fails to perform under a contract or to pay its subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. The Company must reimburse the surety for expenses or outlays it incurs. As of September 30, 2017March 31, 2020 and December 31, 2016,2019, outstanding performance and payment bonds totaled $119.2approximated $577.5 million and $72.9$551.4 million, respectively, and estimated costs to complete projects secured by these bonds totaled $51.3$162.8 million and $9.5$194.7 million as of September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively. These amounts do not include performance and payment bonds associated with the Company’s equity investees.
The Company has other investment arrangements, as discussed in Note 4 - Fair Value of Financial Instruments and Note 15 - Related Party Transactions. From time to time, the Companyunder which it may incur costs or provide financing, performance, financial and/or other guarantees to or in connection with its investees.guarantees. See Note 4 - Fair Value of Financial Instruments regarding the Company’s other investment arrangements.
Self-Insurance. MasTec maintains insurance policies for workers’ compensation, general liability and automobile liability, which are subject to per claim deductibles. The Company is self-insured up to the amount of the deductible. The Company also maintains excess umbrella coverage. As of September 30, 2017March 31, 2020 and December 31, 2016,2019, MasTec’s estimated liability for unpaid claims and associated expenses, including incurred but not reported losses related to these policies, totaled $98.5$125.3 million and $85.8$123.4 million, respectively, of which $67.5$85.8 million and $55.2$87.3 million, respectively, were reflected within other long-term liabilities in the consolidated balance sheets.
MasTec also maintains an insurance policy with respect to employee group medical claims, which is subject to annual per employee maximum losses. MasTec’s estimated liability for employee group medical claims totaled $2.6$4.7 million and $4.2 million as of both September 30, 2017March 31, 2020 and December 31, 2016.2019, respectively.
The Company is required to post collateral, generally in the form of letters of credit, surety bonds and provide cash collateral to certain of its insurance carriers and to provide surety bonds in certain states.carriers. Insurance-related letters of credit for the Company’s workers’ compensation, general liability and automobile liability policies amounted to $84.6 million and $85.1$64.0 million as of September 30, 2017both March 31, 2020 and December 31, 2016, respectively. In addition, cash collateral deposited with insurance carriers, which is included within other long-term assets, amounted to $1.5 million for these policies as of both September 30, 2017 and December 31, 2016.2019. Outstanding surety bonds related to workers’ compensation self-insurance programs amounted to $13.7 million and $13.5$38.5 million as of September 30, 2017both March 31, 2020 and December 31, 2016, respectively.2019.
Collective Bargaining Agreements and Multiemployer Plans. As discussed in Note 10 - Other Retirement Plans, certain of MasTec’s subsidiaries are party to various collective bargaining agreements with unions representing certain of their employees, which require the Company to
pay specified wages, provide certain benefits to their union employees and contribute certain amounts to multiemployer pension and other multiemployer benefits plans and trusts.MEPPs. The Employee Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980 (collectively, “ERISA”), which governs U.S.-registered multiemployer pension plans,MEPPs, subjects employers to substantial liabilities in the event of thean employer’s complete or partial withdrawal from, or upon termination of, such plans.
The Company currently contributes, and in the past, has contributed to, plans that are underfunded, and, therefore, could have potential liability associated with a voluntary or involuntary withdrawal from, or termination of, these plans. As described in the Company’s 2016 Form 10-K, the Company, along with other members of the Pipe Line Contractors Association (the “PLCA”), voluntarily withdrew from the Central States Southeast and Southwest Areas Pension Fund (“Central States”) in November 2011, for which the Company established and paid a $6.4 million withdrawal liability. The Company is in arbitration to determine if there is any remaining amount owed on this withdrawal liability, and during the third quarter of 2017, the Company recognized $0.6 million of expense in connection with the expected settlement of this matter.
Indemnities. The Company generally indemnifies its customers for the services it provides under its contracts, as well as other specified liabilities, which may subject the Company to indemnity claims, liabilities and related litigation. As of September 30, 2017March 31, 2020 and December 31, 2016,2019, the Company was not aware of any material asserted or unasserted claims in connection with these indemnity obligations.
Other Guarantees. In the ordinary course of its business, from time to time, MasTec guarantees the obligations of its subsidiaries, including obligations under certain contracts with customers, certain lease obligations and in some states, obligations in connection with obtaining contractors’ licenses. MasTec has also issued performance and other guarantees in connection with certain of its equity investees.investments. MasTec also generally warrants the work it performs for a one to two year period following substantial completion of a project. Much of the work performed by the Company is evaluated for defects shortly after the work is completed. Accrued warrantyWarranty claims are, andhave historically havenot been de minimis.material. However, if warranty claims occur, the Company could be required to repair or replace warrantied items, or, if customers elect to repair or replace the warrantied item using the services of another provider, the Company could be required to pay for the cost of the repair or replacement.
Concentrations of Risk. The Company had approximately 455295 customers for the ninethree month period ended September 30, 2017.March 31, 2020. As of September 30, 2017 and DecemberMarch 31, 2016, one customer2020, 2 customers each accounted for approximately 44%16% and 24%15%, respectively, of the Company’s consolidated net accounts receivable position, which represents accounts receivable, net, less BIEC.deferred revenue. As of September 30, 2017 and December 31, 2016, a separate customer2019, 3 customers each accounted for approximately 17%, 13% and 17%11%, respectively, of the Company’s consolidated net accounts receivable position. In addition, the Company derived 83% and 80%, respectively,62% of its revenue from its top ten10 customers for both the three month periods ended September 30, 2017March 31, 2020 and 2016, and derived 80% and 76% of its revenues, respectively, from its top ten customers for the nine month periods ended September 30, 2017 and 2016.2019.
Note 15 -– Related Party Transactions
MasTec purchases, rents and leases equipment and purchases various types of supplies and services used in its business, including ancillary construction services, project-related site restoration and marketing and business development activities from a number of different vendors on a non-exclusive basis, including CCI,and from time to time, rents equipment to, or performs construction services on behalf of, entities in which members of subsidiary management have ownership or commercial interests. For the Company hasthree month periods ended March 31, 2020 and 2019, such payments to related party entities totaled approximately $25.3 million and $28.5 million, respectively, and the related payables totaled approximately $6.4 million and $14.7 million as of March 31, 2020 and December 31, 2019, respectively. Revenue from such related party arrangements totaled approximately $1.0 million and $0.3 million for the three month periods ended March 31, 2020 and 2019, respectively. As of March 31, 2020, related amounts receivable, net, totaled approximately $0.1 million, and as of December 31, 2019 were de minimis.
In 2018, MasTec acquired a cost method investment.construction management firm specializing in steel building systems, of which Juan Carlos Mas, who is the brother of Jorge Mas, Chairman of MasTec’s Board of Directors, and José R. Mas, MasTec’s Chief Executive Officer, was a minority owner, for approximately $6.1 million in cash and an estimated earn-out liability of approximately $1.4 million, net, as adjusted. Amounts outstanding for advances made by the Company on behalf of this entity totaled approximately $0.7 million and $0.5 million, net as of March 31, 2020 and December 31, 2019, respectively, which are expected to be settled under customary terms associated with the related purchase agreement.
The Company rents and leases equipment and purchases equipment supplies and servicing from CCI, in which it has a 15% equity investment. Juan Carlos Mas serves as the chairman of CCI.CCI, and a member of management of a MasTec subsidiary and an entity that is owned by the Mas family are minority owners. For the three month periods ended September 30, 2017March 31, 2020 and 2016,2019, MasTec paid CCI approximately $22.9$0.3 million and $10.0$6.0 million, respectively, for equipment supplies, rentals, leases and servicing. For the nine month periods ended September 30, 2017 and 2016, MasTec paid CCI approximately $34.9 million and $13.7 million, respectively, net of rebates.rebates, respectively, related to this activity. As of September 30, 2017March 31, 2020 and December 31, 2016, related payables2019, amounts payable to CCI, net of rebates receivable, totaled approximately $6.1$1.4 million and $1.5$0.2 million, respectively.
MasTec has a subcontracting arrangement with an entity for the performance of construction services, the minority owners of which include an entity controlled by Jorge Mas and José R. Mas, along with two2 members of management of a MasTec subsidiary. For the three month periods ended September 30, 2017March 31, 2020 and 2016,2019, MasTec incurred $39.2subcontracting expenses of approximately $0.7 million and $5.6 million, respectively, of expenses under this subcontracting arrangement, and for the nine month periods ended September 30, 2017 and 2016, MasTec incurred $54.8 million and $8.8$1.6 million, respectively. During the third quarter of 2016, the Company sold equipment totaling $0.3 million to this entity. As of September 30, 2017March 31, 2020 and December 31, 2016,2019, related amounts payable totaled $20.1approximately $0.6 million and $0.1$0.2 million, respectively.
MasTec has a leasing arrangement for an aircraft that is owned by an entity that Jorge Mas owns. For the three month periods ended March 31, 2020 and 2019, MasTec paid approximately $0.6 million and $0.7 million, respectively, related to this leasing arrangement.
MasTec performs construction services on behalf of a professional Miami soccer franchise (the “Franchise”) in which Jorge Mas and José R. Mas are minority owners. Services provided by MasTec include the construction of a soccer facility and stadium, including wireless infrastructure services. For the three month period ended March 31, 2020, MasTec charged approximately $4.0 million under these arrangements, of which $3.6 million was outstanding as of March 31, 2020. Payments for other expenses related to the Franchise totaled $0.2 million for the three month period ended March 31, 2020.
MasTec leases employees and provides satellite communications services to a customer in which Jorge Mas and José R. Mas own a majority interest. For both three month periods ended September 30, 2017 and 2016, MasTec charged approximately $0.2 million to this customer, and for both the nine month periods ended September 30, 2017 and 2016, charged $0.6 million. As of both September 30, 2017 and December 31, 2016, outstanding receivables from employee leasing arrangements with this customer totaled $0.2 million. The Company also provides satellite communication services to this customer. For both the three month periods ended September 30, 2017March 31, 2020 and 2016, revenue from satellite communication services provided to this customer totaled approximately $0.2 million, and for the nine month periods ended September 30, 2017 and 2016, satellite communication revenues totaled $0.6 million and $0.7 million, respectively. As of September 30, 2017 and December 31, 2016, receivables from this arrangement totaled2019, MasTec charged approximately $0.3 million and $0.4 million, respectively.respectively, to
this leasing arrangement, and for the nine month periods ended September 30, 2017 and 2016, MasTec paid $1.5 million and $2.0 million, respectively.customer. As of both September 30, 2017March 31, 2020 and December 31, 2016,2019, outstanding receivables related amounts payable were de minimis.
Split Dollar Agreements
MasTec has split dollar life insurance agreements with eachtrusts, of which Jorge Mas or José R. Mas and Jorge Mas. Inis a trustee. There were 0 payments made in connection with the split dollar agreement for José R. Mas, the Company made no paymentsthese agreements in either of the three month periods ended September 30, 2017 and 2016, and paid $0.7 million in each of the nine month periods ended September 30, 2017 and 2016. In connection with the split dollar agreement for Jorge Mas, the Company paid $0.6 million for both the three month periods ended September 30, 2017 and 2016, and paid $1.1 million for both the nine month periods ended September 30, 2017 and 2016.March 31, 2020 or 2019. As of September 30, 2017both March 31, 2020 and December 31, 2016,2019, life insurance assets associated with these agreements totaled $16.6 million and $14.8 million, respectively, which amount is included within other long-term assets.approximately $20.3 million.
Note 16 – Supplemental Guarantor Condensed Unaudited Consolidating Financial Information
The 4.875% Senior Notes are fully and unconditionally guaranteed on an unsecured, unsubordinated, joint and several basis by certain of the Company’s existing and future 100%-owned direct and indirect domestic subsidiaries that are, as of March 31, 2020, each guarantors of the Credit Facility or other outstanding indebtedness (the “Guarantor Subsidiaries”). The Company’s subsidiaries organized outside of the United States and certain domestic subsidiaries (collectively, the “Non-Guarantor Subsidiaries”) do not guarantee these notes. A Guarantor Subsidiary’s guarantee is subject to release in certain customary circumstances, including upon the sale of a majority of the capital stock or substantially all of the assets of such Guarantor Subsidiary; if the Guarantor Subsidiary’s guarantee under the Company’s Credit Facility and other indebtedness is released or discharged (other than due to payment under such guarantee); or when the requirements for legal defeasance are satisfied or the obligations are discharged in accordance with the related indentures.
The following supplemental financial information sets forth the condensed unaudited consolidating balance sheets and the condensed unaudited consolidating statements of operations and comprehensive income (loss) and cash flows for MasTec, Inc., the Guarantor Subsidiaries on a combined basis, the Non-Guarantor Subsidiaries on a combined basis and the eliminations necessary to arrive at the information for the Company as reported on a consolidated basis. Eliminations represent adjustments to eliminate investments in subsidiaries and intercompany balances and transactions between or among MasTec, Inc., the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. Investments in subsidiaries are accounted for using the equity method for this presentation.
The tables below may contain slight summation differences due to rounding.
CONDENSED UNAUDITED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (in(unaudited - in millions)
| For the Three Months Ended September 30, 2017 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | |||||||||||||||||||||||||||||||||
| For the Three Months Ended March 31, 2020 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | |||||||||||||||||||||||||||||||||
| Revenue | $ | — | $ | 1,860.3 | $ | 130.3 | $ | (34.8 | ) | $ | 1,955.8 | $ | — | $ | 1,312.3 | $ | 111.8 | $ | (7.5 | ) | $ | 1,416.6 | ||||||||||||||||
| Costs of revenue, excluding depreciation and amortization | — | 1,640.3 | 120.7 | (34.8 | ) | 1,726.2 | — | 1,138.8 | 95.0 | (7.5 | ) | 1,226.3 | ||||||||||||||||||||||||||
| Depreciation and amortization | — | 41.1 | 9.0 | — | 50.1 | — | 54.2 | 6.3 | — | 60.5 | ||||||||||||||||||||||||||||
| General and administrative expenses | 0.5 | 61.7 | 4.2 | — | 66.4 | 1.0 | 73.9 | 10.6 | — | 85.5 | ||||||||||||||||||||||||||||
| Interest expense (income), net | — | 33.2 | (15.6 | ) | — | 17.6 | ||||||||||||||||||||||||||||||||
| Interest expense, net | — | 15.8 | 1.2 | — | 17.0 | |||||||||||||||||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | — | — | (7.4 | ) | — | (7.4 | ) | — | (0.2 | ) | (7.6 | ) | — | (7.8 | ) | |||||||||||||||||||||||
| Other income, net | — | (4.6 | ) | (0.1 | ) | — | (4.7 | ) | — | (1.1 | ) | (0.2 | ) | — | (1.3 | ) | ||||||||||||||||||||||
| (Loss) income before income taxes | $ | (0.5 | ) | $ | 88.6 | $ | 19.5 | $ | — | $ | 107.6 | $ | (1.0 | ) | $ | 30.9 | $ | 6.5 | $ | — | $ | 36.5 | ||||||||||||||||
| Benefit from (provision for) income taxes | 0.2 | (33.8 | ) | (9.9 | ) | — | (43.4 | ) | 0.3 | (10.0 | ) | 9.3 | — | (0.4 | ) | |||||||||||||||||||||||
| Net (loss) income before equity in income from subsidiaries | $ | (0.3 | ) | $ | 54.8 | $ | 9.6 | $ | — | $ | 64.2 | $ | (0.7 | ) | $ | 20.9 | $ | 15.8 | $ | — | $ | 36.1 | ||||||||||||||||
| Equity in income from subsidiaries, net of tax | 64.1 | — | — | (64.1 | ) | — | 36.9 | — | — | (36.9 | ) | — | ||||||||||||||||||||||||||
| Net income (loss) | $ | 63.8 | $ | 54.8 | $ | 9.6 | $ | (64.1 | ) | $ | 64.2 | $ | 36.2 | $ | 20.9 | $ | 15.8 | $ | (36.9 | ) | $ | 36.1 | ||||||||||||||||
| Net income attributable to non-controlling interests | — | — | 0.4 | — | 0.4 | |||||||||||||||||||||||||||||||||
| Net loss attributable to non-controlling interests | — | — | (0.2 | ) | — | (0.2 | ) | |||||||||||||||||||||||||||||||
| Net income (loss) attributable to MasTec, Inc. | $ | 63.8 | $ | 54.8 | $ | 9.2 | $ | (64.1 | ) | $ | 63.8 | $ | 36.2 | $ | 20.9 | $ | 16.0 | $ | (36.9 | ) | $ | 36.2 | ||||||||||||||||
| Comprehensive income (loss) | $ | 65.2 | $ | 54.9 | $ | 11.1 | $ | (65.5 | ) | $ | 65.7 | $ | 13.0 | $ | 17.5 | $ | (4.1 | ) | $ | (13.6 | ) | $ | 12.8 | |||||||||||||||
| For the Three Months Ended September 30, 2016 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | ||||||||||||||
| Revenue | $ | — | $ | 1,493.9 | $ | 112.7 | $ | (20.4 | ) | $ | 1,586.2 | ||||||||
| Costs of revenue, excluding depreciation and amortization | — | 1,282.3 | 107.2 | (20.4 | ) | 1,369.0 | |||||||||||||
| Depreciation and amortization | — | 33.7 | 8.9 | — | 42.6 | ||||||||||||||
| General and administrative expenses | 0.6 | 60.6 | 5.9 | — | 67.1 | ||||||||||||||
| Interest expense (income), net | — | 28.6 | (15.5 | ) | — | 13.1 | |||||||||||||
| Equity in losses of unconsolidated affiliates | — | — | — | — | — | ||||||||||||||
| Other (income) expense, net | — | (3.4 | ) | 2.3 | — | (1.0 | ) | ||||||||||||
| (Loss) income before income taxes | $ | (0.6 | ) | $ | 92.1 | $ | 3.9 | $ | — | $ | 95.3 | ||||||||
| Benefit from (provision for) income taxes | 0.2 | (33.4 | ) | (5.6 | ) | — | (38.8 | ) | |||||||||||
| Net (loss) income before equity in income from subsidiaries | $ | (0.4 | ) | $ | 58.7 | $ | (1.7 | ) | $ | — | $ | 56.5 | |||||||
| Equity in income from subsidiaries, net of tax | 56.7 | — | — | (56.7 | ) | — | |||||||||||||
| Net income (loss) | $ | 56.3 | $ | 58.7 | $ | (1.7 | ) | $ | (56.7 | ) | $ | 56.5 | |||||||
| Net income attributable to non-controlling interests | — | — | 0.3 | — | 0.3 | ||||||||||||||
| Net income (loss) attributable to MasTec, Inc. | $ | 56.3 | $ | 58.7 | $ | (2.0 | ) | $ | (56.7 | ) | $ | 56.3 | |||||||
| Comprehensive income (loss) | $ | 54.5 | $ | 58.7 | $ | (3.6 | ) | $ | (54.9 | ) | $ | 54.7 | |||||||
| For the Three Months Ended March 31, 2019 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | ||||||||||||||
| Revenue | $ | — | $ | 1,402.4 | $ | 139.1 | $ | (23.2 | ) | $ | 1,518.3 | ||||||||
| Costs of revenue, excluding depreciation and amortization | — | 1,200.7 | 134.5 | (23.2 | ) | 1,312.0 | |||||||||||||
| Depreciation and amortization | — | 54.7 | 4.3 | — | 59.0 | ||||||||||||||
| General and administrative expenses | 0.8 | 67.3 | 4.5 | — | 72.6 | ||||||||||||||
| Interest expense (income), net | — | 37.7 | (15.4 | ) | — | 22.3 | |||||||||||||
| Equity in losses (earnings) of unconsolidated affiliates | — | 0.1 | (6.3 | ) | — | (6.3 | ) | ||||||||||||
| Other expense (income), net | — | 5.0 | (1.5 | ) | — | 3.5 | |||||||||||||
| (Loss) income before income taxes | $ | (0.8 | ) | $ | 36.9 | $ | 19.0 | $ | — | $ | 55.1 | ||||||||
| Benefit from (provision for) income taxes | 0.3 | (12.0 | ) | (0.3 | ) | — | (12.0 | ) | |||||||||||
| Net (loss) income before equity in income from subsidiaries | $ | (0.5 | ) | $ | 24.9 | $ | 18.7 | $ | — | $ | 43.1 | ||||||||
| Equity in income from subsidiaries, net of tax | 43.7 | — | — | (43.7 | ) | — | |||||||||||||
| Net income (loss) | $ | 43.2 | $ | 24.9 | $ | 18.7 | $ | (43.7 | ) | $ | 43.1 | ||||||||
| Net loss attributable to non-controlling interests | — | — | (0.0 | ) | — | (0.0 | ) | ||||||||||||
| Net income (loss) attributable to MasTec, Inc. | $ | 43.2 | $ | 24.9 | $ | 18.7 | $ | (43.7 | ) | $ | 43.1 | ||||||||
| Comprehensive income (loss) | $ | 37.5 | $ | 24.9 | $ | 13.2 | $ | (38.1 | ) | $ | 37.5 | ||||||||
CONDENSED UNAUDITED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (inBALANCE SHEETS (unaudited - in millions)
| For the Nine Months Ended September 30, 2017 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | ||||||||||||||
| Revenue | $ | — | $ | 4,763.4 | $ | 347.4 | $ | (106.7 | ) | $ | 5,004.1 | ||||||||
| Costs of revenue, excluding depreciation and amortization | — | 4,097.7 | 332.6 | (106.7 | ) | 4,323.6 | |||||||||||||
| Depreciation and amortization | — | 112.2 | 26.2 | — | 138.4 | ||||||||||||||
| General and administrative expenses | 1.7 | 187.7 | 12.6 | — | 202.0 | ||||||||||||||
| Interest expense (income), net | — | 91.5 | (46.5 | ) | — | 45.0 | |||||||||||||
| Equity in earnings of unconsolidated affiliates | — | — | (15.1 | ) | — | (15.1 | ) | ||||||||||||
| Other (income) expense, net | — | (9.9 | ) | 5.8 | — | (4.1 | ) | ||||||||||||
| (Loss) income before income taxes | $ | (1.7 | ) | $ | 284.2 | $ | 31.8 | $ | — | $ | 314.3 | ||||||||
| Benefit from (provision for) income taxes | 0.6 | (104.9 | ) | (21.9 | ) | — | (126.2 | ) | |||||||||||
| Net (loss) income before equity in income from subsidiaries | $ | (1.1 | ) | $ | 179.3 | $ | 9.9 | $ | — | $ | 188.2 | ||||||||
| Equity in income from subsidiaries, net of tax | 187.5 | — | — | (187.5 | ) | — | |||||||||||||
| Net income (loss) | $ | 186.4 | $ | 179.3 | $ | 9.9 | $ | (187.5 | ) | $ | 188.2 | ||||||||
| Net income attributable to non-controlling interests | — | — | 1.8 | — | 1.8 | ||||||||||||||
| Net income (loss) attributable to MasTec, Inc. | $ | 186.4 | $ | 179.3 | $ | 8.1 | $ | (187.5 | ) | $ | 186.4 | ||||||||
| Comprehensive income (loss) | $ | 187.5 | $ | 179.3 | $ | 11.1 | $ | (188.6 | ) | $ | 189.3 | ||||||||
| As of March 31, 2020 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | ||||||||||||||
| Assets | |||||||||||||||||||
| Total current assets | $ | — | $ | 1,871.6 | $ | 236.5 | $ | (28.3 | ) | $ | 2,079.8 | ||||||||
| Property and equipment, net | — | 898.8 | 38.5 | — | 937.3 | ||||||||||||||
| Operating lease assets | — | 201.3 | 9.3 | — | 210.6 | ||||||||||||||
| Goodwill and other intangible assets, net | — | 1,260.4 | 161.5 | — | 1,421.9 | ||||||||||||||
| Investments in and advances to consolidated affiliates, net | 1,667.2 | 1,382.7 | — | (3,049.9 | ) | — | |||||||||||||
| Other long-term assets | 18.3 | 39.6 | 186.0 | — | 243.9 | ||||||||||||||
| Total assets | $ | 1,685.5 | $ | 5,654.4 | $ | 631.8 | $ | (3,078.2 | ) | $ | 4,893.5 | ||||||||
| Liabilities and equity | |||||||||||||||||||
| Total current liabilities | $ | — | $ | 1,205.6 | $ | 82.7 | $ | (28.3 | ) | $ | 1,260.0 | ||||||||
| Long-term debt, including finance leases | — | 1,294.9 | 2.4 | — | 1,297.3 | ||||||||||||||
| Advances from consolidated affiliates, net | — | — | 199.3 | (199.3 | ) | — | |||||||||||||
| Long-term operating lease liabilities | — | 131.7 | 11.7 | — | 143.4 | ||||||||||||||
| Other long-term liabilities | — | 482.4 | 20.5 | — | 502.9 | ||||||||||||||
| Total liabilities | $ | — | $ | 3,114.6 | $ | 316.6 | $ | (227.6 | ) | $ | 3,203.7 | ||||||||
| Total equity | $ | 1,685.5 | $ | 2,539.8 | $ | 315.2 | $ | (2,850.6 | ) | $ | 1,689.8 | ||||||||
| Total liabilities and equity | $ | 1,685.5 | $ | 5,654.4 | $ | 631.8 | $ | (3,078.2 | ) | $ | 4,893.5 | ||||||||
| As of December 31, 2019 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | ||||||||||||||
| Assets | |||||||||||||||||||
| Total current assets | $ | — | $ | 1,987.8 | $ | 248.1 | $ | (62.4 | ) | $ | 2,173.6 | ||||||||
| Property and equipment, net | — | 862.0 | 43.9 | — | 905.8 | ||||||||||||||
| Operating lease assets | — | 214.7 | 15.2 | — | 229.9 | ||||||||||||||
| Goodwill and other intangible assets, net | — | 1,265.6 | 167.3 | — | 1,433.0 | ||||||||||||||
| Investments in and advances to consolidated affiliates, net | 1,768.9 | 1,233.5 | — | (3,002.4 | ) | — | |||||||||||||
| Other long-term assets | 18.4 | 42.6 | 193.8 | — | 254.7 | ||||||||||||||
| Total assets | $ | 1,787.3 | $ | 5,606.2 | $ | 668.3 | $ | (3,064.8 | ) | $ | 4,997.0 | ||||||||
| Liabilities and equity | |||||||||||||||||||
| Total current liabilities | $ | 0.1 | $ | 1,141.6 | $ | 139.8 | $ | (62.4 | ) | $ | 1,219.1 | ||||||||
| Long-term debt, including finance leases | — | 1,310.9 | 3.1 | — | 1,314.0 | ||||||||||||||
| Advances from consolidated affiliates, net | — | — | 167.5 | (167.5 | ) | — | |||||||||||||
| Long-term operating lease liabilities | — | 143.0 | 11.6 | — | 154.6 | ||||||||||||||
| Other long-term liabilities | — | 493.1 | 24.5 | — | 517.6 | ||||||||||||||
| Total liabilities | $ | 0.1 | $ | 3,088.6 | $ | 346.5 | $ | (229.9 | ) | $ | 3,205.3 | ||||||||
| Total equity | $ | 1,787.2 | $ | 2,517.6 | $ | 321.8 | $ | (2,834.9 | ) | $ | 1,791.7 | ||||||||
| Total liabilities and equity | $ | 1,787.3 | $ | 5,606.2 | $ | 668.3 | $ | (3,064.8 | ) | $ | 4,997.0 | ||||||||
| For the Nine Months Ended September 30, 2016 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | ||||||||||||||
| Revenue | $ | — | $ | 3,521.5 | $ | 302.2 | $ | (30.9 | ) | $ | 3,792.8 | ||||||||
| Costs of revenue, excluding depreciation and amortization | — | 3,054.5 | 298.0 | (30.9 | ) | 3,321.6 | |||||||||||||
| Depreciation and amortization | — | 96.6 | 25.6 | — | 122.2 | ||||||||||||||
| General and administrative expenses | 1.7 | 172.1 | 21.2 | — | 195.0 | ||||||||||||||
| Interest expense (income), net | — | 83.8 | (45.9 | ) | — | 37.9 | |||||||||||||
| Equity in earnings of unconsolidated affiliates | — | — | (3.5 | ) | — | (3.5 | ) | ||||||||||||
| Other income, net | — | (12.7 | ) | (0.1 | ) | — | (12.8 | ) | |||||||||||
| (Loss) income before income taxes | $ | (1.7 | ) | $ | 127.2 | $ | 6.9 | $ | — | $ | 132.4 | ||||||||
| Benefit from (provision for) income taxes | 0.6 | (47.3 | ) | (7.6 | ) | — | (54.3 | ) | |||||||||||
| Net (loss) income before equity in income from subsidiaries | $ | (1.1 | ) | $ | 79.9 | $ | (0.7 | ) | $ | — | $ | 78.1 | |||||||
| Equity in income from subsidiaries, net of tax | 78.8 | — | — | (78.8 | ) | — | |||||||||||||
| Net income (loss) | $ | 77.7 | $ | 79.9 | $ | (0.7 | ) | $ | (78.8 | ) | $ | 78.1 | |||||||
| Net income attributable to non-controlling interests | — | — | 0.4 | — | 0.4 | ||||||||||||||
| Net income (loss) attributable to MasTec, Inc. | $ | 77.7 | $ | 79.9 | $ | (1.1 | ) | $ | (78.8 | ) | $ | 77.7 | |||||||
| Comprehensive income (loss) | $ | 69.2 | $ | 79.9 | $ | (9.2 | ) | $ | (70.3 | ) | $ | 69.6 | |||||||
CONDENSED UNAUDITED CONSOLIDATING BALANCE SHEETS (in millions)
| As of September 30 2017 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | ||||||||||||||
| Assets | |||||||||||||||||||
| Total current assets | $ | — | $ | 1,576.0 | $ | 259.8 | $ | (88.1 | ) | $ | 1,747.7 | ||||||||
| Property and equipment, net | — | 600.8 | 90.6 | — | 691.4 | ||||||||||||||
| Goodwill and other intangible assets, net | — | 1,187.9 | 143.0 | — | 1,330.9 | ||||||||||||||
| Investments in and advances to consolidated affiliates, net | 1,279.7 | 848.0 | 710.2 | (2,837.9 | ) | — | |||||||||||||
| Other long-term assets | 15.8 | 25.7 | 130.6 | — | 172.1 | ||||||||||||||
| Total assets | $ | 1,295.5 | $ | 4,238.4 | $ | 1,334.2 | $ | (2,926.0 | ) | $ | 3,942.2 | ||||||||
| Liabilities and equity | |||||||||||||||||||
| Total current liabilities | $ | — | $ | 982.5 | $ | 107.7 | $ | (88.1 | ) | $ | 1,002.2 | ||||||||
| Long-term debt | — | 1,181.1 | 11.2 | — | 1,192.3 | ||||||||||||||
| Other long-term liabilities | — | 432.0 | 12.7 | — | 444.7 | ||||||||||||||
| Total liabilities | $ | — | $ | 2,595.6 | $ | 131.6 | $ | (88.1 | ) | $ | 2,639.1 | ||||||||
| Total equity | $ | 1,295.5 | $ | 1,642.8 | $ | 1,202.6 | $ | (2,837.9 | ) | $ | 1,303.0 | ||||||||
| Total liabilities and equity | $ | 1,295.5 | $ | 4,238.4 | $ | 1,334.2 | $ | (2,926.0 | ) | $ | 3,942.2 | ||||||||
| As of December 31, 2016 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | ||||||||||||||
| Assets | |||||||||||||||||||
| Total current assets | $ | — | $ | 1,256.3 | $ | 175.8 | $ | (29.6 | ) | $ | 1,402.5 | ||||||||
| Property and equipment, net | — | 456.6 | 92.5 | — | 549.1 | ||||||||||||||
| Goodwill and other intangible assets, net | — | 1,037.4 | 138.2 | — | 1,175.6 | ||||||||||||||
| Investments in and advances to consolidated affiliates, net | 1,083.9 | 625.9 | 861.2 | (2,571.0 | ) | — | |||||||||||||
| Other long-term assets | 12.6 | 25.3 | 18.0 | — | 55.9 | ||||||||||||||
| Total assets | $ | 1,096.5 | $ | 3,401.5 | $ | 1,285.7 | $ | (2,600.6 | ) | $ | 3,183.1 | ||||||||
| Liabilities and equity | |||||||||||||||||||
| Total current liabilities | $ | — | $ | 759.7 | $ | 109.9 | $ | (29.6 | ) | $ | 840.0 | ||||||||
| Long-term debt | — | 938.7 | 22.7 | — | 961.4 | ||||||||||||||
| Other long-term liabilities | — | 256.2 | 21.9 | — | 278.1 | ||||||||||||||
| Total liabilities | $ | — | $ | 1,954.6 | $ | 154.5 | $ | (29.6 | ) | $ | 2,079.5 | ||||||||
| Total equity | $ | 1,096.5 | $ | 1,446.9 | $ | 1,131.2 | $ | (2,571.0 | ) | $ | 1,103.6 | ||||||||
| Total liabilities and equity | $ | 1,096.5 | $ | 3,401.5 | $ | 1,285.7 | $ | (2,600.6 | ) | $ | 3,183.1 | ||||||||
| For the Nine Months Ended September 30, 2017 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | |||||||||||||||||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | — | $ | 222.0 | $ | (43.4 | ) | $ | — | $ | 178.6 | |||||||||||||||||||||||||||
| For the Three Months Ended March 31, 2020 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | |||||||||||||||||||||||||||||||||
| Net cash provided by operating activities | $ | — | $ | 189.6 | $ | 13.7 | $ | — | $ | 203.3 | ||||||||||||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||||||||||||||||||
| Cash paid for acquisitions, net of cash acquired | — | (116.0 | ) | — | — | (116.0 | ) | |||||||||||||||||||||||||||||||
| Capital expenditures | — | (70.0 | ) | (13.3 | ) | — | (83.3 | ) | — | (59.3 | ) | (1.2 | ) | — | (60.6 | ) | ||||||||||||||||||||||
| Proceeds from sale of property and equipment | — | 12.5 | 1.1 | — | 13.6 | — | 7.8 | 0.6 | — | 8.4 | ||||||||||||||||||||||||||||
| Payments for other investments | — | (3.8 | ) | (73.3 | ) | — | (77.1 | ) | — | — | (12.0 | ) | — | (12.0 | ) | |||||||||||||||||||||||
| Proceeds from other investments | — | 1.2 | 12.2 | — | 13.4 | — | 0.6 | — | — | 0.6 | ||||||||||||||||||||||||||||
| Other investing activities, net | — | 4.8 | — | — | 4.8 | |||||||||||||||||||||||||||||||||
| Net cash used in investing activities | $ | — | $ | (176.1 | ) | $ | (73.3 | ) | $ | — | $ | (249.4 | ) | $ | — | $ | (46.1 | ) | $ | (12.6 | ) | $ | — | $ | (58.7 | ) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||||||||||||||||||
| Proceeds from credit facilities | — | 1,988.1 | 14.3 | — | 2,002.4 | — | 673.0 | 3.0 | — | 675.9 | ||||||||||||||||||||||||||||
| Repayments of credit facilities | — | (1,817.4 | ) | (23.0 | ) | — | (1,840.4 | ) | — | (668.8 | ) | (2.9 | ) | — | (671.8 | ) | ||||||||||||||||||||||
| Repayments of other borrowings and capital lease obligations | — | (52.6 | ) | (8.3 | ) | — | (60.8 | ) | ||||||||||||||||||||||||||||||
| Payments of acquisition-related contingent consideration | — | (18.8 | ) | — | — | (18.8 | ) | |||||||||||||||||||||||||||||||
| Distributions to non-controlling interests | — | — | (1.3 | ) | — | (1.3 | ) | |||||||||||||||||||||||||||||||
| Proceeds from stock-based awards, net | 0.9 | — | — | — | 0.9 | |||||||||||||||||||||||||||||||||
| Other financing activities, net | — | (6.3 | ) | — | — | (6.3 | ) | |||||||||||||||||||||||||||||||
| Net financing activities and advances (to) from consolidated affiliates | (0.9 | ) | (131.9 | ) | 132.8 | — | — | |||||||||||||||||||||||||||||||
| Payments of finance lease obligations | — | (30.4 | ) | (0.4 | ) | — | (30.9 | ) | ||||||||||||||||||||||||||||||
| Repurchases of common stock | (119.4 | ) | — | — | — | (119.4 | ) | |||||||||||||||||||||||||||||||
| Proceeds from stock-based awards | 1.5 | — | — | — | 1.5 | |||||||||||||||||||||||||||||||||
| Payments for stock-based awards | (0.6 | ) | — | — | — | (0.6 | ) | |||||||||||||||||||||||||||||||
| Net financing activities and advances from (to) consolidated affiliates | 118.5 | (119.2 | ) | 0.6 | — | — | ||||||||||||||||||||||||||||||||
| Net cash (used in) provided by financing activities | $ | — | $ | (38.9 | ) | $ | 114.5 | $ | — | $ | 75.6 | $ | — | $ | (145.4 | ) | $ | 0.3 | $ | — | $ | (145.2 | ) | |||||||||||||||
| Effect of currency translation on cash | — | — | 0.2 | — | 0.2 | — | — | 0.9 | — | 0.9 | ||||||||||||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | $ | — | $ | 7.0 | $ | (2.0 | ) | $ | — | $ | 5.1 | |||||||||||||||||||||||||||
| Net (decrease) increase in cash and cash equivalents | $ | — | $ | (1.9 | ) | $ | 2.2 | $ | — | $ | 0.2 | |||||||||||||||||||||||||||
| Cash and cash equivalents - beginning of period | $ | — | $ | 28.3 | $ | 10.5 | $ | — | $ | 38.8 | $ | — | $ | 36.4 | $ | 35.0 | $ | — | $ | 71.4 | ||||||||||||||||||
| Cash and cash equivalents - end of period | $ | — | $ | 35.3 | $ | 8.5 | $ | — | $ | 43.8 | $ | — | $ | 34.5 | $ | 37.2 | $ | — | $ | 71.7 | ||||||||||||||||||
| For the Nine Months Ended September 30, 2016 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | ||||||||||||||
| Net cash provided by operating activities | $ | — | $ | 87.2 | $ | 39.9 | $ | — | $ | 127.1 | |||||||||
| Cash flows from investing activities: | |||||||||||||||||||
| Cash paid for acquisitions, net of cash acquired | — | (4.1 | ) | — | — | (4.1 | ) | ||||||||||||
| Capital expenditures | — | (84.0 | ) | (5.1 | ) | — | (89.1 | ) | |||||||||||
| Proceeds from sale of property and equipment | — | 3.1 | 3.7 | — | 6.8 | ||||||||||||||
| Payments for other investments | — | (3.8 | ) | (5.0 | ) | — | (8.9 | ) | |||||||||||
| Proceeds from other investments | — | — | 1.1 | — | 1.1 | ||||||||||||||
| Net cash used in investing activities | $ | — | $ | (88.8 | ) | $ | (5.3 | ) | $ | — | $ | (94.1 | ) | ||||||
| Cash flows from financing activities: | |||||||||||||||||||
| Proceeds from credit facilities | — | 1,093.8 | 93.0 | — | 1,186.8 | ||||||||||||||
| Repayments of credit facilities | — | (1,056.1 | ) | (93.8 | ) | — | (1,149.9 | ) | |||||||||||
| Repayments of other borrowings and capital lease obligations | — | (37.6 | ) | (12.4 | ) | — | (50.0 | ) | |||||||||||
| Payments of acquisition-related contingent consideration | — | (16.5 | ) | (3.3 | ) | — | (19.8 | ) | |||||||||||
| Proceeds from stock-based awards, net | 3.4 | — | 0.5 | — | 3.9 | ||||||||||||||
| Other financing activities, net | 1.4 | — | — | — | 1.4 | ||||||||||||||
| Net financing activities and advances (to) from consolidated affiliates | (4.8 | ) | 15.1 | (10.3 | ) | — | — | ||||||||||||
| Net cash used in financing activities | $ | — | $ | (1.3 | ) | $ | (26.3 | ) | $ | — | $ | (27.6 | ) | ||||||
| Effect of currency translation on cash | — | — | (1.0 | ) | — | (1.0 | ) | ||||||||||||
| Net (decrease) increase in cash and cash equivalents | $ | — | $ | (2.9 | ) | $ | 7.3 | $ | — | $ | 4.4 | ||||||||
| Cash and cash equivalents - beginning of period | $ | — | $ | 4.7 | $ | 0.3 | $ | — | $ | 5.0 | |||||||||
| Cash and cash equivalents - end of period | $ | — | $ | 1.8 | $ | 7.6 | $ | — | $ | 9.4 | |||||||||
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (unaudited - in millions)
| For the Three Months Ended March 31, 2019 | MasTec, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated MasTec, Inc. | ||||||||||||||
| Net cash used in operating activities | $ | — | $ | (43.5 | ) | $ | (3.3 | ) | $ | — | $ | (46.8 | ) | ||||||
| Cash flows from investing activities: | |||||||||||||||||||
| Cash paid for acquisitions, net of cash acquired | — | (93.7 | ) | — | — | (93.7 | ) | ||||||||||||
| Capital expenditures | — | (32.9 | ) | (1.5 | ) | — | (34.4 | ) | |||||||||||
| Proceeds from sale of property and equipment | — | 4.8 | 3.9 | — | 8.7 | ||||||||||||||
| Payments for other investments | — | (1.4 | ) | (0.8 | ) | — | (2.2 | ) | |||||||||||
| Proceeds from other investments | — | 10.4 | — | — | 10.4 | ||||||||||||||
| Net cash (used in) provided by investing activities | $ | — | $ | (112.8 | ) | $ | 1.6 | $ | — | $ | (111.2 | ) | |||||||
| Cash flows from financing activities: | |||||||||||||||||||
| Proceeds from credit facilities | — | 862.7 | 3.7 | — | 866.4 | ||||||||||||||
| Repayments of credit facilities | — | (667.2 | ) | (3.6 | ) | — | (670.8 | ) | |||||||||||
| Payments of finance lease obligations | — | (16.7 | ) | (0.5 | ) | — | (17.2 | ) | |||||||||||
| Repurchases of common stock | (5.7 | ) | — | — | — | (5.7 | ) | ||||||||||||
| Proceeds from stock-based awards | 1.1 | — | — | — | 1.1 | ||||||||||||||
| Net financing activities and advances from (to) consolidated affiliates | 4.6 | (27.3 | ) | 22.7 | — | — | |||||||||||||
| Net cash provided by financing activities | $ | — | $ | 151.5 | $ | 22.3 | $ | — | $ | 173.8 | |||||||||
| Effect of currency translation on cash | — | — | — | — | — | ||||||||||||||
| Net (decrease) increase in cash and cash equivalents | $ | — | $ | (4.8 | ) | $ | 20.6 | $ | — | $ | 15.8 | ||||||||
| Cash and cash equivalents - beginning of period | $ | — | $ | 11.9 | $ | 15.6 | $ | — | $ | 27.4 | |||||||||
| Cash and cash equivalents - end of period | $ | — | $ | 7.1 | $ | 36.2 | $ | — | $ | 43.2 | |||||||||
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts but are the intent, belief, or current expectations of our business and industry and the assumptions upon which these statements are based. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenuesrevenue and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions or dispositions. Words such as “anticipates,” “expects,” “intends,” “will,” “could,” “would,” “should,” “may,” “plans,” “believes,” “seeks,” “estimates,” “forecasts,” “targets” and variations of these words and negatives thereof and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.
These risks and uncertainties include those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this report and in our 20162019 Form 10-K, including those described under “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors,” as updated by Item 1A, “Risk Factors” in this report and other filings we make with the SEC. Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false. Readers are cautioned to not place undue reliance on forward-looking statements, which reflect management’s view only as of the date of this report. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following is a discussion of our business, financial positioncondition and results of operations as of and for the three and nine month periods ended September 30, 2017March 31, 2020 and 20162019. This discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto in Item 1 of this Quarterly Report on Form 10-Q (this “Form 10-Q”), and the audited consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contained in our 20162019 Form 10-K. In this MD&A, “$” means U.S. dollars unless specified otherwise.
Impact of the COVID-19 Pandemic
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (COVID-19). The pandemic has significantly affected economic conditions in the United States and internationally, accelerating during the first half of March and continuing into April, as federal, state and local governments reacted to the public health crisis with mitigation measures, creating significant uncertainties in the U.S. economy. The extent to which the COVID-19 pandemic could affect our business, operations and financial results will depend upon numerous evolving factors that we may not be able to accurately predict.
The effects of the pandemic on our financial results for the three month period ended March 31, 2020 were limited. To date, most of our construction services are currently deemed essential under state and local pandemic mitigation orders and all of our business segments continue to operate. Our top priority has been to take appropriate actions to protect the health and safety of our employees, customers and business partners. We have adjusted our standard operating procedures within our business operations to ensure continued employee and customer safety and are continually monitoring evolving health guidelines and responding to changes as appropriate. These procedures include implementation of appropriate distancing programs and required use of certain personal protective equipment for our crew operations, as well as appropriate sanitation measures for key equipment and facilities. We have also incorporated work at home programs where necessary for our administrative offices.
The impact of the COVID-19 pandemic may continue to affect our future business activities for an indefinite period of time. These impacts may include lost productivity from governmental permitting approval delays, reduced crew productivity due to social distancing, other mitigation measures or other factors, higher operating costs and lower levels of overhead cost absorption, and/or delayed project start dates or project shutdowns that may be requested or mandated by governmental authorities or others. To the extent that future business activities are adversely affected by the pandemic, we intend to take appropriate actions designed to mitigate these impacts; however, there can be no assurance that we will be successful in these efforts.
Additionally, potential disruptions in future economic activity as a result of the COVID-19 pandemic may have adverse effects across our end markets, but given the uncertainty regarding the magnitude and duration of the pandemic’s effects, we are unable to predict with specificity or quantify any potential future impact on our business, financial condition and/or results of operations.
As of March 31, 2020, we maintain a strong balance sheet, have strong relationships with our banking partners and have ample liquidity totaling approximately $946 million, comprising $874 million of availability under our credit facility and $72 million of cash. Our business operations typically generate significant cash flow, affording us the flexibility to invest strategically in our efforts to maximize shareholder value through mergers and acquisitions, share repurchases and capital expenditures. We are carefully managing liquidity and monitoring any potential effects from the pandemic on our financial results, cash flows and/or working capital and intend to take appropriate actions in efforts to mitigate any impacts; however, there can be no assurance that we will be successful in these efforts.
Business Overview
We are a leading infrastructure construction company operating mainly throughout North America across a range of industries. Our primary activities include the engineering, building, installation, maintenance and upgrade of communications, energy, utility and utilityother infrastructure, such as: wireless, wireline/fiber install-to-the-home and customer fulfillment activities; petroleum and natural gas pipeline infrastructure; electrical utility transmission and distribution; conventional andpower generation, including from renewable power generation;sources; heavy civilcivil; and industrial infrastructure. Our customers are primarily in these industries. Including our predecessor companies, we have been in business for almostover 90 years. For the twelve month period ended March 31, 2020, we had an average of approximately 20,000 employees and 380 locations. We offer our services primarily under the MasTec service mark and, as of September 30, 2017, we had approximately 21,500 employees and 415 locations.mark. We have been consistently ranked among the top specialty contractors by Engineering News-Record for the past several years.
We provide our services to a diversified base of customers. We often provide services under master service and other service agreements, which are generally multi-year agreements. The remainder of our work is generated pursuant to contracts for specific projects or jobs that require the construction or installation of an entire infrastructure system or specified units within an infrastructure system. Revenue from non-recurring, project specific work may experience greater variability than master service and other service agreement work due to the need to replace the revenue as projects are completed. If we are not able to replace work from completed projects with new project work, we may not be able to maintain our current revenue levels or our current level of capacity and resource utilization. We actively review our backlog of project work and take appropriate action to minimize such exposure.
We manage our operations under five operating segments, which represent our five reportable segments: (1) Communications; (2) Oil and Gas; (3) Electrical Transmission; (4) Power Generation and Industrial and (5) Other. This structure is generally focused on broad end-user markets for our labor-based construction services. See Note 13 - Segments and Related Information and Note 14 - Commitments and Contingencies in the notes to the condensed unaudited consolidated financial statements, which are incorporated by reference, for segment related information as well as operating results by segment and significant customer concentrations.
Backlog
Estimated backlog represents the amount of revenue we expect to realize over the next 18 months from future work on uncompleted construction contracts, including new contracts under which work has not begun, as well as revenue from change orders and renewal options. Our estimated backlog also includes amounts under master service and other service agreements and includes our proportionate share of estimated revenue from proportionately consolidated non-controlled contractual joint ventures. Estimated backlog for work under master service and other service agreements is determined based on historical trends, anticipated seasonal impacts, experience from similar projects and estimates of customer demand based on communications with our customers. WeBased on current expectations of our customers’ requirements, we expect to realize approximately 25%70% of our September 30, 2017 estimated March 31, 2020 backlog in 2017.2020. The following table presents 18-month estimated backlog by reportable segment, as of the dates indicated:
| Reportable Segment (in millions): | September 30, 2017 | June 30, 2017 | September 30, 2016 | March 31, 2020 | December 31, 2019 | March 31, 2019 | ||||||||||||||||
| Communications | $ | 3,505 | $ | 3,375 | $ | 3,125 | $ | 3,987 | $ | 4,228 | $ | 4,337 | ||||||||||
| Oil and Gas | 907 | 1,506 | 1,134 | 2,597 | 1,929 | 2,537 | ||||||||||||||||
| Electrical Transmission | 268 | 295 | 269 | 434 | 512 | 409 | ||||||||||||||||
| Power Generation and Industrial | 331 | 85 | 116 | 1,307 | 1,289 | 716 | ||||||||||||||||
| Other | 3 | 4 | 7 | 1 | 1 | 1 | ||||||||||||||||
| Estimated 18-month backlog | $ | 5,014 | $ | 5,265 | $ | 4,651 | $ | 8,326 | $ | 7,959 | $ | 8,000 | ||||||||||
Approximately 65%40% of our backlog as of September 30, 2017March 31, 2020 is attributable to amounts under master service or other service agreements, pursuant to which our customers are not contractually committed to purchase a minimum amount of services. Most of these agreements can be canceled on short or no advance notice. Timing of revenue for construction and installation projects included in our backlog can be subject to change as a result of customer delays or cancellations, regulatory factorsor other delays, including from the potential adverse effects of the COVID-19 pandemic on economic activity, and/or other project-related factors. These changes could cause estimated revenue to be realized in periods later than originally expected, or not at all. In the past, we haveWe occasionally experiencedexperience postponements, cancellations and reductions in expected future work from master service agreements and/or construction projects due to changes in our customers’ spending plans, as well as on construction projects due to market volatility and regulatory delays and/or other factors. There can be no assurance as to our customers’ requirements or the accuracy of our estimates. As a result, our backlog as of any particular date is an uncertain indicator of future revenue and earnings.
Backlog is not a term recognized under U.S. GAAP; however, it is a common measurement used in our industry. Our methodology for determining backlog may not, however, be comparable to the methodologies used by others. Backlog differs from the amount of our remaining performance obligations, which are described in Note 1 - Business, Basis of Presentation and Significant Accounting Policies in the notes to the consolidated financial statements, which is incorporated by reference. As of March 31, 2020, total 18-month backlog differed from the amount of our remaining performance obligations due primarily to the inclusion of $3.4 billion of estimated future revenue under master service and other service agreements within our backlog estimates, as described above, and the exclusion of approximately $0.8 billion of remaining performance obligations and estimated future revenue under master service and other service agreements in excess of 18 months, which amount is not included in the backlog estimates above. Backlog expected to be realized in 2020 differed from the amount of remaining performance obligations expected to be recognized for the same period due primarily to the inclusion of approximately $1.1 billion of estimated future revenue under master service and other service agreements that is included within the related backlog estimate.
Economic, Industry and Market Factors
Our revenue and results of operations can be subject to seasonal and other variations. These variations are influenced by weather, customer
spending patterns, bidding seasons, project schedules, andpublic health matters, holidays and/or timing, in particular, for large non-recurring projects and holidays.projects. Typically, our revenue is lowest inat the first quarterbeginning of the year and during the winter months because cold, snowy or wet conditions cause project delays. Revenue is generally higher during the summer and fall months due to increased demand for our services when favorable weather conditions exist in many of the second quarter is typically higher thanregions in the first quarter, as some projects begin,which we operate, but continued cold and wet weather can often impactaffect second quarter productivity. The third and fourth quarters are typically the most productive quarters of the year, as a greater number of projects are underway and weather is normally more accommodating to construction projects. In the fourth quarter, many projects tend to be completed by customers seeking to spend their capital budgets before the end of the year, which generally has a positive impacteffect on our revenue. However, the holiday season and inclement weather can cause delays, which can reduce revenue and increase costs on affected projects. Any quarter may be positively or negatively affected by adverse or unusual weather patterns, including warm winter weather, excessive rainfall, flooding or natural catastrophes such as hurricanes or other severe weather, making it difficult to predict quarterly revenue and margin variations.
Additionally, our industry can be highly cyclical. Fluctuations in end-user demand within the industries we serve, or in the supply of services within those industries, can impactaffect demand for our services. As a result, our business may be adversely affected by industry declines or by delays in new projects. Variations in project schedules or unanticipated changes in project schedules, in particular, in connection with large construction and installation projects, can create fluctuations in revenue, which may adversely affect us in a given period,quarter, even if not in total.for the full year. In addition, revenue from master service and other service agreements, while generally predictable, can be subject to volatility. The financial condition of our customers and their access to capital; variations in project margins; regional, national and global economic, political and market conditions; regulatory or environmental influences; and acquisitions, dispositions or strategic investments/other arrangements can also materially affect quarterly results in a given period. Accordingly, our operating results in any particular period may not be indicative of the results that can be expected for any other period. The effects of the COVID-19 pandemic could also result in greater seasonal and cyclical volatility than would otherwise exist under normal conditions.
Critical Accounting Estimates
This discussion and analysis of our financial condition and results of operations is based upon our condensed unaudited consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the amounts reported in our condensed unaudited consolidated financial statements and the accompanying notes.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis of making judgments about our operating results, including the results of percentage-of-completion projects,construction contracts accounted for under the cost-to-cost method, and the carrying values of assets and liabilities that are not readily apparent from other sources. Given that management estimates, by their nature, involve judgments regarding future uncertainties, actual results may differ from these estimates if conditions change or if certain key assumptions used in making these estimates ultimately prove to be inaccurate. Our accounting policies and critical accounting estimates are reviewed periodically by the Audit Committee of the Board of Directors. Refer to Note 1 - Business, Basis of Presentation and Significant Accounting Policies in the notes to our condensed unaudited consolidated financial statements, which is incorporated by reference, and to our 2016 Form 10-K for discussion of our significant accounting policies. During the thirdfirst quarter of 2017,2020, we performed a quantitative assessmentassessments of the goodwill and an indefinite-lived pre-qualification intangible asset associated with certain of our operating segmentsreporting units and of two indefinite-lived pre-qualification intangible assets in conjunction with our quarterly review of reporting units for indicators of impairment. Based on the results of these assessments, we determined that the estimated fair value of one of the reporting units in our Electrical Transmission operatingOil and Gas segment, for which the related goodwill has a carrying value of approximately $14 million, exceeded its carrying value by approximately 10%, and that the fair valuesvalue of twoa separate reporting unit, for which the related goodwill has a carrying value of our reporting units andapproximately $15 million, exceeded its carrying value by approximately 10%. In addition, we reassessed the indefinite-livedindefinite life classification of a pre-qualification intangible asset inwithin our Oil and Gas operating segment and a pre-qualification intangible asset within our Electrical Transmission segment with a combined carrying value of $70 million, and determined that based on changes in the assets’ characteristics, including current and expected changes in the customer mix of the associated reporting units, a finite life classification for whichthese assets was more appropriate. As a result, we changed the carrying values totaledclassification of these pre-qualification intangible assets from indefinite-lived to finite-lived, and began amortizing them on an accelerated basis, with an estimated remaining weighted average useful life of approximately $130 million, exceeded their carrying values by approximately 10% for each. 12 years as of March 31, 2020.
Significant changes in the assumptions or estimates used in management’s assessment, such as a reduction in profitability and/or cash flows, could result in non-cash goodwill and indefinite-lived intangible asset impairment charges in the future.
We believe that our accounting estimates pertaining to: the recognition of revenue recognition for percentage-of-completion projects, includingand project profit or loss, which we define as project revenue, less project costs of revenue, including project-related depreciation; allowancesdepreciation, in particular, on construction contracts accounted for doubtful accounts;under the cost-to-cost method, for which the recorded amounts require estimates of costs to complete and the amount and probability of variable consideration included in the contract transaction price; fair value estimates, including those related to business acquisitions, valuations of goodwill, and indefinite-lived intangible assets; estimated liabilities for future earn-out obligations; fair values of financial instruments;assets and acquisition-related contingent consideration; income taxes; self-insurance liabilities; and litigation and other contingencies, are the most critical in the preparation of our consolidated financial statements as they are important to the portrayal of our financial condition and require significant or complex judgment and estimates on the part of management. Actual results could, however, vary materially from these accounting estimates. Refer to Note 1 - Business, Basis of Presentation and Significant Accounting Policies in the notes to the consolidated financial statements, which is incorporated by reference, and to our 2019 Form 10-K for discussion of our significant accounting policies.
Results of Operations
Comparison of Quarterly Results
The following table, which may contain slight summation differences due to rounding, reflects our consolidated results of operations in dollar and percentage of revenue terms for the periods indicated (dollar amounts in millions). Our consolidated results of operations are not necessarily comparable from period to period due to the impacteffect of recent acquisitions and certain other items, which are described in the comparison of results section below.
For the Three Months Ended September 30 | For the Nine Months Ended September 30 | For the Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||
| Revenue | $ | 1,955.8 | 100.0 | % | $ | 1,586.2 | 100.0 | % | $ | 5,004.1 | 100.0 | % | $ | 3,792.8 | 100.0 | % | $ | 1,416.6 | 100.0 | % | $ | 1,518.3 | 100.0 | % | ||||||||||||||||
| Costs of revenue, excluding depreciation and amortization | 1,726.2 | 88.3 | % | 1,369.0 | 86.3 | % | 4,323.6 | 86.4 | % | 3,321.6 | 87.6 | % | 1,226.3 | 86.6 | % | 1,312.0 | 86.4 | % | ||||||||||||||||||||||
| Depreciation and amortization | 50.1 | 2.6 | % | 42.6 | 2.7 | % | 138.4 | 2.8 | % | 122.2 | 3.2 | % | ||||||||||||||||||||||||||||
| Depreciation | 53.1 | 3.7 | % | 54.2 | 3.6 | % | ||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 7.4 | 0.5 | % | 4.8 | 0.3 | % | ||||||||||||||||||||||||||||||||||
| General and administrative expenses | 66.4 | 3.4 | % | 67.1 | 4.2 | % | 202.0 | 4.0 | % | 195.0 | 5.1 | % | 85.5 | 6.0 | % | 72.6 | 4.8 | % | ||||||||||||||||||||||
| Interest expense, net | 17.6 | 0.9 | % | 13.1 | 0.8 | % | 45.0 | 0.9 | % | 37.9 | 1.0 | % | 17.0 | 1.2 | % | 22.3 | 1.5 | % | ||||||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | (7.4 | ) | (0.4 | )% | — | — | % | (15.1 | ) | (0.3 | )% | (3.5 | ) | (0.1 | )% | (7.8 | ) | (0.6 | )% | (6.3 | ) | (0.4 | )% | |||||||||||||||||
| Other income, net | (4.7 | ) | (0.2 | )% | (1.0 | ) | (0.1 | )% | (4.1 | ) | (0.1 | )% | (12.8 | ) | (0.3 | )% | ||||||||||||||||||||||||
| Other (income) expense, net | (1.3 | ) | (0.1 | )% | 3.5 | 0.2 | % | |||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 107.6 | 5.5 | % | $ | 95.3 | 6.0 | % | $ | 314.3 | �� | 6.3 | % | $ | 132.4 | 3.5 | % | $ | 36.5 | 2.6 | % | $ | 55.1 | 3.6 | % | |||||||||||||||
| Provision for income taxes | (43.4 | ) | (2.2 | )% | (38.8 | ) | (2.4 | )% | (126.2 | ) | (2.5 | )% | (54.3 | ) | (1.4 | )% | (0.4 | ) | (0.0 | )% | (12.0 | ) | (0.8 | )% | ||||||||||||||||
| Net income | $ | 64.2 | 3.3 | % | $ | 56.5 | 3.6 | % | $ | 188.2 | 3.8 | % | $ | 78.1 | 2.1 | % | $ | 36.1 | 2.5 | % | $ | 43.1 | 2.8 | % | ||||||||||||||||
| Net income attributable to non-controlling interests | 0.4 | 0.0 | % | 0.3 | 0.0 | % | 1.8 | 0.0 | % | 0.4 | 0.0 | % | ||||||||||||||||||||||||||||
| Net loss attributable to non-controlling interests | (0.2 | ) | (0.0 | )% | (0.0 | ) | (0.0 | )% | ||||||||||||||||||||||||||||||||
| Net income attributable to MasTec, Inc. | $ | 63.8 | 3.3 | % | $ | 56.3 | 3.5 | % | $ | 186.4 | 3.7 | % | $ | 77.7 | 2.0 | % | $ | 36.2 | 2.6 | % | $ | 43.1 | 2.8 | % | ||||||||||||||||
We review our operating results by reportable segment. See Note 13 - Segments and Related Information in the notes to the condensed unaudited consolidated financial statements, which is incorporated by reference. Our reportable segments are: (1) Communications; (2) Oil and Gas; (3) Electrical Transmission; (4) Power Generation and Industrial and (5) Other. Management’s review of reportable segment results includes analyses of trends in revenue, EBITDA and EBITDA margin. We calculate EBITDA for segment reporting purposes consistentis calculated consistently with our consolidated EBITDA calculation. See the discussion of our non-U.S. GAAP financial measures, including certain adjusted non-U.S. GAAP measures, as described, following the comparison of results discussion below. The following table presents revenue, EBITDA and EBITDA margin by reportable segment for the periods indicated (dollar amounts in millions):
| Revenue | EBITDA and EBITDA Margin | Revenue | EBITDA and EBITDA Margin | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the Three Months Ended September 30 | For the Nine Months Ended September 30 | For the Three Months Ended September 30 | For the Nine Months Ended September 30 | For the Three Months Ended March 31, | For the Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reportable Segment: | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Communications | $ | 610.5 | $ | 624.3 | $ | 1,762.2 | $ | 1,728.0 | $ | 65.3 | 10.7 | % | $ | 62.8 | 10.1 | % | $ | 173.2 | 9.8 | % | $ | 190.9 | 11.0 | % | $ | 644.1 | $ | 612.8 | $ | 50.8 | 7.9 | % | $ | 45.3 | 7.4 | % | ||||||||||||||||||||||||||||
| Oil and Gas | 1,161.0 | 736.0 | 2,757.2 | 1,454.3 | 108.1 | 9.3 | % | 117.8 | 16.0 | % | 356.1 | 12.9 | % | 187.6 | 12.9 | % | 359.1 | 621.3 | 74.4 | 20.7 | % | 107.4 | 17.3 | % | ||||||||||||||||||||||||||||||||||||||||
| Electrical Transmission | 81.8 | 101.7 | 277.3 | 283.6 | 4.5 | 5.5 | % | (8.3 | ) | (8.1 | )% | 11.2 | 4.0 | % | (42.0 | ) | (14.8 | )% | 128.1 | 94.9 | 8.3 | 6.5 | % | 3.8 | 4.0 | % | ||||||||||||||||||||||||||||||||||||||
| Power Generation and Industrial | 96.9 | 123.6 | 204.1 | 324.7 | 9.3 | 9.6 | % | 6.1 | 4.9 | % | 14.8 | 7.3 | % | 13.8 | 4.3 | % | 286.3 | 189.4 | 5.0 | 1.7 | % | 3.2 | 1.7 | % | ||||||||||||||||||||||||||||||||||||||||
| Other | 10.6 | 7.6 | 14.2 | 14.9 | 10.1 | 95.2 | % | (3.1 | ) | (40.6 | )% | 11.6 | 81.7 | % | (2.6 | ) | (17.4 | )% | 0.0 | 0.0 | 7.4 | NM | 6.2 | NM | ||||||||||||||||||||||||||||||||||||||||
| Eliminations | (5.0 | ) | (7.0 | ) | (10.9 | ) | (12.7 | ) | — | — | — | — | — | — | — | — | (1.0 | ) | (0.1 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Corporate | — | — | — | — | (22.0 | ) | NA | (24.3 | ) | NA | (69.2 | ) | NA | (55.1 | ) | NA | — | — | (31.9 | ) | — | (29.5 | ) | — | ||||||||||||||||||||||||||||||||||||||||
| Consolidated Results | $ | 1,955.8 | $ | 1,586.2 | $ | 5,004.1 | $ | 3,792.8 | $ | 175.3 | 9.0 | % | $ | 151.0 | 9.5 | % | $ | 497.7 | 9.9 | % | $ | 292.6 | 7.7 | % | $ | 1,416.6 | $ | 1,518.3 | $ | 114.0 | 8.0 | % | $ | 136.4 | 9.0 | % | ||||||||||||||||||||||||||||
Three Months Ended September 30, 2017March 31, 2020 Compared to Three Months Ended September 30, 2016March 31, 2019
Revenue. For the three month period ended September 30, 2017,March 31, 2020, consolidated revenue increased to $1,956totaled $1,417 million from $1,586as compared with $1,518 million an increasefor the same period in 2019, a decrease of $370$102 million, or 23%7%. Revenue decreased in our Oil and Gas segment by $262 million, or 42%, offset, in part by revenue increases in our Power Generation and Industrial segment of $97 million, or 51%, our Electrical Transmission segment of $33 million, or 35%, and in our Communications segment of $31 million, or 5%. Acquisitions contributed $50 million in revenue for the three month period ended March 31, 2020, and organic revenue decreased by approximately $151 million, or 10%, as compared with the same period in 2016, driven largely by our Oil and Gas segment, for which revenue increased by $425 million, or 58%, offset, in part by lower revenue in our Power Generation and Industrial, Electrical Transmission and Communications segments, of $61 million in total, or 7%. Organic revenue increased by approximately $308 million, or 19%, and acquisitions contributed $62 million in revenue.2019.
Communications Segment. Communications revenue was $610$644 million for the three month period ended September 30, 2017,March 31, 2020, as compared with $624$613 million for the same period in 2016, a decrease2019, an increase of $14$31 million, or 2%5%. Acquisitions contributed $38$31 million of revenue which was offset by a decrease infor the three month period ended March 31, 2020, and organic revenue of $51increased by approximately $1 million or 8%.as compared with the same period in 2019. The decreaseincrease in organic revenue was primarily driven by lowerhigher levels of wireless and wireline/fiber revenue, offset, in large part, by a continued decrease in install-to-the-home and customer fulfillment revenue as compared with the same period in 2017, as previously disclosed.the prior year.
Oil and Gas Segment. Oil and Gas revenue was $1,161$359 million for three month period ended September 30, 2017,March 31, 2020, as compared with $736$621 million for the same period in 2016, an increase2019, a decrease of $425$262 million, or 58%. The increase in Oil42%, as expected, primarily due to project timing and Gas revenue was driven primarily by an increase in multiple large long-haulmix, including the effects of regulatory disruptions on selected pipeline construction projects.activity.
Electrical Transmission Segment. Electrical Transmission revenue was $82$128 million for the three month period ended September 30, 2017,March 31, 2020 as compared with $102$95 million for the same period in 2016, a decrease2019, an increase of $20$33 million, or 20%35%, drivendue primarily byto higher levels of project activity and timing.activity.
Power Generation and Industrial Segment. Power Generation and Industrial revenue was $97$286 million for the three month period ended September 30, 2017,March 31, 2020 as compared with $124$189 million for the same period in 2016, a decrease2019, an increase of $27$97 million, or 22%51%. Acquisitions contributed $25 million ofOrganic revenue which was offsetincreased by a decrease in organic revenue of $51$78 million, or 42%. The decrease41%, for the three month period ended March 31, 2020 as compared with the same period in organic revenue was driven2019, due primarily by lowerto higher levels of renewable power project activity and timing.
Costs of revenue, excluding depreciation and amortization. Costs of revenue, excluding depreciation and amortization, increaseddecreased by $357approximately $86 million, or 26%7%, to $1,726from $1,312 million for the three month period ended September 30, 2017, as compared with $1,369March 31, 2019 to $1,226 million for the same period in 2016. Higher2020. Lower levels of revenue contributed $319a decrease of $88 million of an increase in costs of revenue, excluding depreciation and amortization, whereas decreasedreduced productivity resulted incontributed an increase of approximately $38$2 million. Costs of revenue, excluding depreciation and amortization, as a percentage of revenue increased by approximately 20020 basis points, from 86.3%86.4% of revenue for the three month period ended September 30, 2016March 31, 2019 to 88.3%86.6% of revenue for the same period in 2017. The basis point increase2020, due primarily to lower levels of revenue.
Depreciation. Depreciation was driven by reduced project efficiencies and mix in our Oil and Gas segment, offset, in part, by improved project efficiencies and mix in our Communications, Electrical Transmission and Power Generation and Industrial segments. Additionally, costs of revenue, excluding depreciation and amortization, improved in our Other segment for the three month period ended September 30, 2017 as compared with the same period in 2016 due to a reduction in project losses on a proportionately consolidated non-controlled Canadian joint venture, which totaled $0.4 million for the three month period ended September 30, 2017 as compared with $5 million in the prior year period. This project, which is managed by a third party and for which we have minimal direct construction involvement, has experienced delays, which has extended the timeline and resulted in project losses.
Amortization of intangible assets. Amortization of intangible assets was $7 million, or 0.5% of revenue, for the three month period ended March 31, 2020, as compared with $5 million, or 0.3% of revenue, for the same period in 2019, an increase of $8approximately $3 million, or 54%. Acquisitions contributed $3 million of amortization of intangible assets for the three month period ended March 31, 2020. As a percentage of revenue, amortization of intangible assets increased by 20 basis points due to the effects of acquisitions, as well as lower levels of revenue.
General and administrative expenses. General and administrative expenses were $86 million, or 6.0% of revenue, for the three month period ended March 31, 2020, as compared with $73 million, or 4.8% of revenue, for the same period in 2019, an increase of $13 million, or 18%. Acquisitions contributed $4 million of incremental depreciation and amortization for the three month period ended September 30, 2017 as compared with the same period in 2016. As a percentage of revenue, depreciation and amortization decreased slightly due primarily to higher levels of revenue.
Interest expense, net. Interest expense, net of interest income, was $18$17 million, or 0.9%approximately 1.2% of revenue, for the three month period ended September 30, 2017March 31, 2020 as compared with $13$22 million, or 0.8%1.5% of revenue, for the same period in 2016.2019. The increasedecrease related primarily to a reduction in interest expense was primarily due to higher levels of financing costs, includingfrom credit facility activity as well as a decrease in discount charges on financing arrangements as well as an increasefor trade receivables. Interest expense from credit facility activity decreased by approximately $5 million due to a combination of lower average balances and a decrease in interest expense on our Credit Facility in the third quarter of 2017 as compared with 2016.rates.
Equity in earnings of unconsolidated affiliates. Equity in earnings or losses of unconsolidated affiliates includes our share of income or losses from equity investees. For the three month periodperiods ended September 30, 2017,March 31, 2020 and 2019, equity in earnings from unconsolidated affiliates was $7totaled approximately $8 million and $6 million, respectively, and related primarily to our investments in the Waha JVs, which commenced operations in 2017.JVs.
Other income,(income) expense, net. Other income,(income) expense, net, consists primarily of gains or losses from sales of, or changes in estimated recoveries from, assets and investments, certain legal/other settlements and gains or losses from changes to estimated earn-out accruals, and certain restructuring charges related to losses on disposal of excess fixed assets. For the three month period ended September 30, 2017, otheraccruals. Other income, net, was $5 million, as compared with $1 million for the same period in the prior year. Other income, net, for the three month period ended September 30, 2017 included approximately $3 million of income from changes to estimated earn-out accruals. Gains on sales of equipment, net, totaled $2 million and $1 million for the three month periods ended September 30, 2017 and 2016, respectively.
Provision for income taxes. Income tax expense was de minimis for the three month period ended March 31, 2020 as compared with $12 million for the same period in the prior year. In the thirdfirst quarter of 2017, we had2020, pre-tax income of $108decreased to $36 million as compared with $95$55 million for the same period in the prior year. Our effective tax rate decreased to 1.2% for the three month period ended September 30, 2017 decreased versusMarch 31, 2020 from 21.8% for the same period in 2016, primarily due2019. Our effective tax rate for the three month period ended March 31, 2020 included a benefit of approximately $10 million related to the release of certain valuation allowances on Canadian deferred tax creditsassets that were recognized duringno longer necessary. For the third quarter of 2017, offsetthree month period ended March 31, 2019, our effective tax rate was favorably affected by the effectrecognition of losses inapproximately $2 million of excess tax benefits from the vesting of share-based awards and reduced foreign jurisdictions.earnings.
Analysis of EBITDA by Segment
Communications Segment. EBITDA for our Communications segment was $65$51 million, or 10.7%7.9% of revenue, for the three month period ended September 30, 2017,March 31, 2020, as compared with $63$45 million, or 10.1%7.4% of revenue, for the same period in 2016,2019, an increase of approximately $5 million, or 12%. As a percentage of revenue, EBITDA increased by approximately 50 basis points, or $3 million, or 4%. The increase was primarily due to productionproject mix and efficiencies. Higher levels of revenue contributed an increase in EBITDA of $2 million.
Oil and Gas Segment. EBITDA for our Oil and Gas segment was $108$74 million, or 9.3%20.7% of revenue, for the three month period ended September 30, 2017,March 31, 2020, as compared with $118$107 million, or 16.0%17.3% of revenue, for the same period in 2016,2019, a decrease of $33 million, or 31%. Lower levels of revenue contributed a decrease in EBITDA of $10$45 million, or approximately 8%. Higher revenuewhereas improved productivity contributed an increase in EBITDA of $68 million, which was offset by a decrease in EBITDA from lowerapproximately $12 million. EBITDA margins increased by approximately 340 basis points due primarily to reducedimproved project efficiencies, closeouts and mix.
Electrical Transmission Segment. EBITDA for our Electrical Transmission segment was $5$8 million, or 5.5%6.5% of revenue, for the three month period ended September 30, 2017,March 31, 2020, as compared with EBITDA of negative $8$4 million, or negative 8.1%4.0% of revenue, for the same period in 2016, for2019, an improvementincrease in EBITDA of $13 million. The improvement in Electrical Transmissionapproximately $5 million, or 120%. As a percentage of revenue, EBITDA wasincreased by approximately 250 basis points, due primarily to a combination ofimproved project efficiencies, closeouts and mix, the non-recurrencemix. Higher levels of revenue contributed an increase in EBITDA of approximately $4 million of restructuring charges for the three month period ended September 30, 2016, and improved cost and overhead utilization.$1 million.
Power Generation and Industrial Segment. EBITDA for our Power Generation and Industrial segment was $9$5 million, or 9.6%1.7% of revenue, for the three month period ended September 30, 2017,March 31, 2020, as compared with EBITDA of $6$3 million, or 4.9%1.7% of revenue, for the same period in 2016,2019, an improvementincrease in EBITDA of $3approximately $2 million, or 52%.54% due to higher levels of revenue. As a percentage of revenue, segment EBITDA improved by approximately 470 basis points as compared with the same period in the prior year due to improved project efficiencies and mix, offset, in part, by reduced cost and overhead utilization due to lower revenue.was generally flat.
Other Segment. EBITDA from Other businesses was $10$7 million for the three month period ended September 30, 2017,March 31, 2020 as compared with EBITDA of negative $3$6 million for the same period in 2016, an improvement of $13 million. Other segment EBITDA for the three month period ended September 30, 20172019, and included $7approximately $8 million and $6 million, respectively, of equity in earnings from unconsolidated affiliates, related primarily to our investments in the Waha JVs, which commenced operations in the first half of 2017, and, for the three month periods ended September 30, 2017 and 2016, included losses of $0.4 million and $5 million, respectively, on a proportionately consolidated non-controlled Canadian joint venture. The remaining improvement in Other segment EBITDA was driven by an increase in EBITDA from our oil and gas operations in Mexico.JVs.
Corporate. Corporate EBITDA was negative $22$32 million for the three month period ended September 30, 2017,March 31, 2020, as compared with EBITDA of negative $24$30 million for the same period in 2016,2019, for an increasea decrease in EBITDA of approximately $2 million. Corporate EBITDA for the three month period ended September 30, 2017March 31, 2020 included approximately $3$2 million of income fromexpense related to changes toin estimated earn-out accruals. For the three month period ended September 30, 2017, other corporate expenses increasedaccruals, net, as compared with the prior year period primarily as a result of costs related to the timing of legal matters and other settlements.
Foreign Operations
Our foreign operations are primarily in Canada.Canada and, to a lesser extent, in Mexico and the Caribbean. See Note 13 - Segments and Related Information in the notes to the condensed unaudited consolidated financial statements, which is incorporated by reference.
Non-U.S. GAAP Financial Measures
As appropriate, we supplement our reported U.S. GAAP financial information with certain non-U.S. GAAP financial measures, including earnings before interest, income taxes, depreciation and amortization (“EBITDA”). In addition, we have presented “Adjusted, adjusted EBITDA” as well as (“Adjusted EBITDA”), adjusted net income (“Adjusted Net Income”) and adjusted diluted earnings per share (“Adjusted Diluted Earnings Per Share”). TheThese “adjusted” non-U.S. GAAP measures exclude, as applicable to the particular periods, non-cash stock-based compensation expense, certain restructuring charges, project results, which for the periods presented, were losses, from a proportionately consolidated non-controlled Canadian joint venture that was underway when we acquired Pacer in 2014, and whose sole activity involves the constructionexpense; amortization of a bridge, a business in which we do not otherwise engage, is managed by a third party, and for which we have minimal direct construction involvement and automatically terminates upon completion of the project, and charges or recoveries from multi-employer pension plan withdrawals,intangible assets; and, for Adjusted Net Income and Adjusted Diluted Earnings Per Share, the tax effects of the adjusted items, including non-cash stock based compensation. Thestock-based compensation expense, and the effects of changes in statutory tax rates. These definitions of EBITDA and Adjusted EBITDA above are not the same as in our Credit Facility or in the indenture governing our senior notes; therefore, EBITDA and Adjusted EBITDA as presented in this discussion should not be used for purposes of determining our compliance with the covenants contained in our debt instruments.
We use EBITDA and Adjusted EBITDA, as well as Adjusted Net Income and Adjusted Diluted Earnings Per Share to evaluate our performance, both internally and as compared with our peers, because these measures exclude certain items that may not be indicative of our core operating results, as well as items that can vary widely across different industries or among companies within the same industry, and, for non-cashindustry. Non-cash stock-based compensation expense can also be subject to volatility from changes in the market price per share of our common stock or variations in the value and number of shares granted. Additionally,granted, and amortization of intangible assets is subject to acquisition activity, which varies from period to period. We believe these adjusted measures provide a baseline for analyzing trends in our underlying business.
We believe these non-U.S. GAAP financial measures provide meaningful information and help investors understand our financial results and assess our prospects for future performance. Because non-U.S. GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-U.S. GAAP financial measures having the same or similar names. These financial measures should not be considered in isolation from, as substitutes for, or alternative measures of, reported net income or diluted earnings per share, and should be viewed in conjunction with the most comparable U.S. GAAP financial measures and the provided reconciliations thereto. We believe these non-U.S. GAAP financial measures, when viewed together with our U.S. GAAP results and related reconciliations, provide a more complete understanding of our business. We strongly encourage investors to review our consolidated financial statements and publicly filed reports in their entirety and not rely on any single financial measure.
The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA in dollar and percentage of revenue terms, for the periods indicatedindicated. The tables below (dollar amounts in millions). The tables below may contain slight summation differences due to rounding.
| For the Three Months Ended September 30 | For the Nine Months Ended September 30 | For the Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||
| Net income | $ | 64.2 | 3.3 | % | $ | 56.5 | 3.6 | % | $ | 188.2 | 3.8 | % | $ | 78.1 | 2.1 | % | $ | 36.1 | 2.5 | % | $ | 43.1 | 2.8 | % | ||||||||||||||||
| Interest expense, net | 17.6 | 0.9 | % | 13.1 | 0.8 | % | 45.0 | 0.9 | % | 37.9 | 1.0 | % | 17.0 | 1.2 | % | 22.3 | 1.5 | % | ||||||||||||||||||||||
| Provision for income taxes | 43.4 | 2.2 | % | 38.8 | 2.4 | % | 126.2 | 2.5 | % | 54.3 | 1.4 | % | 0.4 | 0.0 | % | 12.0 | 0.8 | % | ||||||||||||||||||||||
| Depreciation and amortization | 50.1 | 2.6 | % | 42.6 | 2.7 | % | 138.4 | 2.8 | % | 122.2 | 3.2 | % | ||||||||||||||||||||||||||||
| Depreciation | 53.1 | 3.7 | % | 54.2 | 3.6 | % | ||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 7.4 | 0.5 | % | 4.8 | 0.3 | % | ||||||||||||||||||||||||||||||||||
| EBITDA | $ | 175.3 | 9.0 | % | $ | 151.0 | 9.5 | % | $ | 497.7 | 9.9 | % | $ | 292.6 | 7.7 | % | $ | 114.0 | 8.0 | % | $ | 136.4 | 9.0 | % | ||||||||||||||||
| Non-cash stock-based compensation expense | 3.4 | 0.2 | % | 3.9 | 0.2 | % | 10.5 | 0.2 | % | 11.3 | 0.3 | % | 4.0 | 0.3 | % | 3.7 | 0.2 | % | ||||||||||||||||||||||
| Restructuring charges | — | — | % | 4.7 | 0.3 | % | 0.6 | 0.0 | % | 13.8 | 0.4 | % | ||||||||||||||||||||||||||||
| Project results from non-controlled joint venture | 0.4 | 0.0 | % | 5.1 | 0.3 | % | 7.4 | 0.1 | % | 5.1 | 0.1 | % | ||||||||||||||||||||||||||||
| Charges (recoveries) from multi-employer pension plan withdrawals | 0.6 | 0.0 | % | — | — | % | 0.6 | 0.0 | % | — | — | % | ||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 179.6 | 9.2 | % | $ | 164.8 | 10.4 | % | $ | 516.7 | 10.3 | % | $ | 322.8 | 8.5 | % | $ | 118.0 | 8.3 | % | $ | 140.1 | 9.2 | % | ||||||||||||||||
A reconciliation of EBITDA to Adjusted EBITDA and Adjusted EBITDA margin by reportable segment, for the periods indicated is as follows:
| For the Three Months Ended September 30 | For the Nine Months Ended September 30 | For the Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||
| EBITDA | $ | 175.3 | 9.0 | % | $ | 151.0 | 9.5 | % | $ | 497.7 | 9.9 | % | $ | 292.6 | 7.7 | % | $ | 114.0 | 8.0 | % | $ | 136.4 | 9.0 | % | ||||||||||||||||
| Non-cash stock-based compensation expense | 3.4 | 0.2 | % | 3.9 | 0.2 | % | 10.5 | 0.2 | % | 11.3 | 0.3 | % | 4.0 | 0.3 | % | 3.7 | 0.2 | % | ||||||||||||||||||||||
| Restructuring charges | — | — | % | 4.7 | 0.3 | % | 0.6 | 0.0 | % | 13.8 | 0.4 | % | ||||||||||||||||||||||||||||
| Project results from non-controlled joint venture | 0.4 | 0.0 | % | 5.1 | 0.3 | % | 7.4 | 0.1 | % | 5.1 | 0.1 | % | ||||||||||||||||||||||||||||
| Charges (recoveries) from multi-employer pension plan withdrawals | 0.6 | 0.0 | % | — | — | % | 0.6 | 0.0 | % | — | — | % | ||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 179.6 | 9.2 | % | $ | 164.8 | 10.4 | % | $ | 516.7 | 10.3 | % | $ | 322.8 | 8.5 | % | $ | 118.0 | 8.3 | % | $ | 140.1 | 9.2 | % | ||||||||||||||||
| Reportable Segment: | ||||||||||||||||||||||||||||||||||||||||
| Communications | $ | 65.5 | 10.7 | % | $ | 63.0 | 10.1 | % | $ | 173.6 | 9.9 | % | $ | 191.4 | 11.1 | % | $ | 50.8 | 7.9 | % | $ | 45.3 | 7.4 | % | ||||||||||||||||
| Oil and Gas | 108.1 | 9.3 | % | 118.0 | 16.0 | % | 356.1 | 12.9 | % | 194.1 | 13.3 | % | 74.4 | 20.7 | % | 107.4 | 17.3 | % | ||||||||||||||||||||||
| Electrical Transmission | 4.5 | 5.5 | % | (3.8 | ) | (3.7 | )% | 11.8 | 4.3 | % | (34.7 | ) | (12.2 | )% | 8.3 | 6.5 | % | 3.8 | 4.0 | % | ||||||||||||||||||||
| Power Generation and Industrial | 9.3 | 9.6 | % | 6.1 | 4.9 | % | 14.8 | 7.3 | % | 13.9 | 4.3 | % | 5.0 | 1.7 | % | 3.2 | 1.7 | % | ||||||||||||||||||||||
| Other | 10.5 | 98.9 | % | 2.1 | 27.2 | % | 19.0 | 133.3 | % | 2.6 | 17.2 | % | 7.4 | NM | 6.2 | NM | ||||||||||||||||||||||||
| Corporate | (18.3 | ) | NA | (20.6 | ) | NA | (58.6 | ) | NA | (44.4 | ) | NA | (27.9 | ) | — | (25.8 | ) | — | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 179.6 | 9.2 | % | $ | 164.8 | 10.4 | % | $ | 516.7 | 10.3 | % | $ | 322.8 | 8.5 | % | $ | 118.0 | 8.3 | % | $ | 140.1 | 9.2 | % | ||||||||||||||||
The tablestable below, which may contain slight summation differences due to rounding, reconcilereconciles reported net income and reported diluted earnings per share, the most directly comparable U.S. GAAP financial measures, to Adjusted Net Income and Adjusted Diluted Earnings Per Share.
Beginning in 2020, our computation of Adjusted Net Income includes the effect of intangible asset amortization, as discussed above. Accordingly, all prior year periods have been updated to conform with the current period presentation.
| For the Three Months Ended September 30 | |||||||||||||||
| 2017 | 2016 | ||||||||||||||
| Net Income (in millions) | Diluted Earnings Per Share | Net Income (in millions) | Diluted Earnings Per Share | ||||||||||||
| Reported U.S. GAAP measure | $ | 64.2 | $ | 0.77 | $ | 56.5 | $ | 0.69 | |||||||
| Adjustments: | |||||||||||||||
| Non-cash stock-based compensation expense | 3.4 | 0.04 | 3.9 | 0.05 | |||||||||||
| Restructuring charges | — | — | 4.7 | 0.06 | |||||||||||
| Project results from non-controlled joint venture | 0.4 | 0.00 | 5.1 | 0.06 | |||||||||||
| Charges (recoveries) from multi-employer pension plan withdrawals | 0.6 | 0.01 | — | — | |||||||||||
| Total adjustments, pre-tax | $ | 4.4 | $ | 0.05 | $ | 13.7 | $ | 0.17 | |||||||
Income tax effect of adjustments (a) | (0.6 | ) | (0.01 | ) | (4.0 | ) | (0.05 | ) | |||||||
| Adjusted non-U.S. GAAP measure | $ | 68.0 | $ | 0.82 | $ | 66.3 | $ | 0.81 | |||||||
| For the Nine Months Ended September 30 | For the Three Months Ended March 31, | |||||||||||||||||||||||||||||
| 2017 | 2016 | 2020 | 2019 | |||||||||||||||||||||||||||
| Net Income (in millions) | Diluted Earnings Per Share | Net Income (in millions) | Diluted Earnings Per Share | Net Income (in millions) | Diluted Earnings Per Share | Net Income (in millions) | Diluted Earnings Per Share | |||||||||||||||||||||||
| Reported U.S. GAAP measure | $ | 188.2 | $ | 2.27 | $ | 78.1 | $ | 0.96 | $ | 36.1 | $ | 0.48 | $ | 43.1 | $ | 0.57 | ||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||
| Non-cash stock-based compensation expense | 10.5 | 0.13 | 11.3 | 0.14 | 4.0 | 0.05 | 3.7 | 0.05 | ||||||||||||||||||||||
| Restructuring charges | 0.6 | 0.01 | 13.8 | 0.17 | ||||||||||||||||||||||||||
| Project results from non-controlled joint venture | 7.4 | 0.09 | 5.1 | 0.06 | ||||||||||||||||||||||||||
| Charges (recoveries) from multi-employer pension plan withdrawals | 0.6 | 0.01 | — | — | ||||||||||||||||||||||||||
| Amortization of intangible assets | 7.4 | 0.10 | 4.8 | 0.06 | ||||||||||||||||||||||||||
| Total adjustments, pre-tax | $ | 19.1 | $ | 0.23 | $ | 30.3 | $ | 0.37 | $ | 11.4 | $ | 0.15 | $ | 8.5 | $ | 0.11 | ||||||||||||||
Income tax effect of adjustments (a) | (4.1 | ) | (0.05 | ) | (10.6 | ) | (0.13 | ) | (2.7 | ) | (0.04 | ) | (4.4 | ) | (0.06 | ) | ||||||||||||||
| Adjusted non-U.S. GAAP measure | $ | 203.1 | $ | 2.45 | $ | 97.7 | $ | 1.20 | $ | 44.9 | $ | 0.60 | $ | 47.2 | $ | 0.62 | ||||||||||||||
| (a) | Represents the tax effect of the adjusted items that are subject to tax, including the tax effects of non-cash stock-based compensation expense, which for the three month period ended March 31, 2019 included excess tax benefits of approximately $2.3 million from the vesting of share-based |
Financial Condition, Liquidity and Capital Resources
Our primary sources of liquidity are cash flows from operations, availability under our Credit Facility and our cash balances. Our primary liquidity needs are for working capital, capital expenditures, insurance and performance collateral in the form of cash and letters of credit, earn-out obligations, cost and equity investeeinvestment funding requirements, debt service and income taxes and share repurchase programs.taxes. We also evaluate opportunities for strategic acquisitions and investments from time to time, and we may consider opportunities to borrow additional funds, or to repurchase refinance or retire outstanding debt or repurchase additional shares of our outstanding common stock in the future under share repurchase authorizations, or to repurchase, refinance or retire outstanding debt, any of which may require our use of cash.
Capital Expenditures. For the ninethree month period ended September 30, 2017,March 31, 2020, we spent $83$61 million on capital expenditures, or $70$52 million, net of asset disposals, and incurred approximately $131$27 million of equipment purchases under capital lease and other financing arrangements.finance leases. We estimate that we will spend approximately $105$180 million on capital expenditures, or approximately $90$150 million, net of asset disposals, in 2017,2020, and expect to incur approximately $155$140 million to $160 million of equipment purchases under capital lease or other financing arrangements.finance leases. Actual capital expenditures may increase or decrease in the future depending upon business activity levels, as well as ongoing assessments of equipment lease versus buy decisions based on short and long-term equipment requirements.
Acquisitions and Acquisition-Related Contingent ConsiderationEarn-Out Liabilities. We typically utilize cash for ourbusiness acquisitions and other strategic acquisitions of other businesses, and for the nine month period ended September 30, 2017, we used $116 million of cash for this purpose.arrangements. In addition, in most of our acquisitions, we have agreed to make future earn-out payments to the sellers whichthat are contingent upon the future earnings performance of the acquired businesses. Certain earn-outbusinesses, which we also refer to as “earn-out” payments. Earn-out payments may be paid in either cash or, under specific circumstances, MasTec common stock, or a combination thereof, at our option. Potential future earn-out obligations are measured at their estimated fair value as of the date of acquisition, with subsequent changes in fair value recorded in earnings as a component of other income or expense. The estimated total value of earn-out obligations recorded asfuture acquisition-related contingent consideration and other liabilities as of September 30,
Income Taxes. For the three month period ended March 31, 2020, tax refunds, net of tax payments were no payments related to earn-out obligationsde minimis, whereas for the three month period ended September 30, 2017, and for the nine month period ended September 30, 2017, we made payments of $19 million. For the three and nine month periods ended September 30, 2016, we made payments of $5 million and $20 million, respectively, related to earn-out obligations.
Working Capital. We need working capital to support seasonal variations in our business, primarily due to the effect of weather conditions on external construction and maintenance work and the spending patterns of our customers, both of which influence the timing of associated spending to support related customer demand. Working capital needs are generally higher during the summer and fall months due to increased demand for our services when favorable weather conditions exist in many of the regions in which we operate. Conversely, working capital needs are typically converted to cash during the winter months. These seasonal trends, however, can be offset by changes in the timing of projects, which can be affected by project delays or accelerations and/or other factors that may affect customer spending.
Working capital requirements also tend to increase when we commence multiple projects or particularly large projects because labor, including subcontractor costs, and certain other costs, including inventory, become payable before the receivables resulting from work performed are collected. The timing of billing milestonesbillings and project close-outs can contribute to changes in unbilled revenue. As of September 30, 2017,March 31, 2020, we expect that substantially all of our CIEBunbilled receivables will be billed to customers in the normal course of business within the next 12twelve months. AccountsTotal accounts receivable, balances, which consistconsists of contract billings, as well as CIEBunbilled receivables and retainage, increasednet of allowance, decreased to $1.5$1.8 billion as of September 30, 2017March 31, 2020 from $1.2$1.9 billion as of December 31, 20162019, due primarily to higherlower levels of quarterly revenue, offset, in part, by higher DSOs, as well as the ramp-up of various projects, primarily in our oil and gas business.described further below.
Our payment billing terms are generally net 30 days, and some of our contracts allow our customers to retain a portion of the contract amount (generally, from 5% to 10% of billings) until the job is completed. As part of our ongoing working capital management practices, we evaluate opportunities to improve our working capital cycle time through contractual provisions and certain financing arrangements. For certain customers, we maintain inventory to meet the materials requirements of the contracts. Occasionally, certain of our customers pay us in advance for a portion of the materials we purchase for their projects or allow us to pre-bill them for materials purchases up to specified amounts. Vendor terms are generally 30 days. Our agreements with subcontractors often contain a “pay-if-paid” provision, whereby our payments to subcontractors are made only after we are paid by our customers.
Summary of Financial Condition, Liquidity and Capital Resources
Sources and Uses of Cash
As of September 30, 2017,March 31, 2020, we had $746approximately $820 million in working capital, defined as current assets less current liabilities, as compared with $562$954 million as of December 31, 2016, an increase2019, a decrease of approximately $183$135 million. Total cashCash and cash equivalents of $44totaled approximately $72 million and $71 million as of September 30, 2017 increased by $5 million from total cashMarch 31, 2020 and cash equivalents of $39 million as of December 31, 2016.2019, respectively.
Sources and uses of cash are summarized below (in millions):
| For the Nine Months Ended September 30 | |||||||
| 2017 | 2016 | ||||||
| Net cash provided by operating activities | $ | 178.6 | $ | 127.1 | |||
| Net cash used in investing activities | $ | (249.4 | ) | $ | (94.1 | ) | |
| Net cash provided by (used in) financing activities | $ | 75.6 | $ | (27.6 | ) | ||
| For the Three Months Ended March 31, | |||||||
| 2020 | 2019 | ||||||
| Net cash provided by (used in) operating activities | $ | 203.3 | $ | (46.8 | ) | ||
| Net cash used in investing activities | $ | (58.7 | ) | $ | (111.2 | ) | |
| Net cash (used in) provided by financing activities | $ | (145.2 | ) | $ | 173.8 | ||
Operating Activities. Cash flow from operations is primarily influenced by changes in the timing of demand for our services and operating margins, but canis also be affected by working capital needs associated with the various types of services we provide. Working capital is affected by changes in total accounts receivable, CIEB,prepaid expenses and other current assets, accounts payable, and accrued expenses and BIEC,deferred revenue, all of which tend to be related. These working capital items are affected by changes in revenue resulting from both the timing and the volume of work performed, by variability in the timing of customer billings and collections of receivables, as well as settlement of payables and other obligations. Net cash provided by operating activities for the ninethree month period ended September 30, 2017March 31, 2020 was $179$203 million, as compared with approximately $127$47 million of net cash provided byused in operating activities for the same period in 2016.2019, for an increase in cash provided by operating activities of approximately $250 million. The increase in cash flow from operating activities was driven by an increase in net income of $110 millionprimarily due to growth in revenue and an increase in the effect of non-cash adjustments of $107 million, partially offset by a decrease in the effect of networking capital-related changes in assets and liabilities, of $165 million.net.
Our days sales outstanding, (“DSO”), net of BIEC,deferred revenue (“DSO”) was 67104 as of September 30, 2017, as compared with 68March 31, 2020 and 91 as of December 31, 20162019. The increase in DSO for the three month period ended March 31, 2020 was primarily due to timing of project activity and 61mix, as well as delays in ordinary course quarter-end collections as a result of September 30, 2016.administrative and operational disruptions to our customers resulting from voluntary and government-mandated responses to the COVID-19 pandemic. DSO net of BIEC, is calculated as total accounts receivable, net of allowance, less BIEC,deferred revenue, divided by average daily revenue for the most recently completed quarter as of the balance sheet date. DSOs can fluctuate from period to period due to the timing of billings, collections and settlements, timing of project close-outs and retainage collections, changes in project and customer mix and the effect of working capital initiatives. Other than matters subject to litigation, we do not anticipate material collection issues related to our outstanding accounts receivable balances, nor do we believe that we have material amounts due from customers experiencing financial difficulties. WeBased on current expectations, we expect to collect substantially all of our outstanding accounts receivable net,balances within the next twelve months.
Investing Activities. Net cash used in investing activities increaseddecreased by $155$52 million to $249$59 million for the ninethree month period ended September 30, 2017March 31,
2020 from $94$111 million for the ninethree month period ended September 30, 2016.March 31, 2019. Cash paid for acquisitions, net, decreased by approximately $94 million. For the ninethree month period ended September 30, 2017, payments for acquisitions,March 31, 2020, we spent $61 million on capital expenditures, or $52 million, net of cash acquired, totaled $116 million due to our 2017 acquisitions, an increase of $112 millionasset disposals, as compared with the same period in 2016. Payments for other investments,$34 million, or $26 million, net which relates primarily to activity associated with cost and equity investees, was $64 million for the nine month period ended September 30, 2017, as compared with $8 millionof asset disposals, for the same period in 2016, representingthe prior year, for an increase in cash used in investing activities of approximately $56$26 million. PaymentsFor the three month period ended March 31, 2020, payments for other investments totaled $12 million and related primarily to equity investments in certain telecommunications entities, whereas for the ninethree month period ended September 30, 2017 related to our equity investment in the Waha JVs,March 31, 2019, payments for which we have $19 million in letters of credit issued as collateral as of September 30, 2017, as described in Note 4 - Fair Value of Financial Instruments in the notes to the condensed unaudited consolidated financial statements, which is incorporated by reference. Proceeds from other investments for the nine month period ended September 30, 2017 related to recoveries from an equity method investment that is in the final stages of liquidation and is being managed by a receiver. Additionally, for the nine month period ended September 30, 2017, we spent $83 million on capital expenditures, or $70 million, net of asset disposals, as compared with capital expenditures, net of asset disposals, of $82totaled $2 million, for the same period in the prior year, for a decreasean increase of $10 million in cash used in investing activities of $12 million.
Financing Activities. Net cash used in financing activities for the ninethree month period ended September 30, 2016, for an increase inMarch 31, 2020 was $145 million, as compared with net cash provided by financing activities of $103$174 million for the three month period ended March 31, 2019, for an increase in cash used in financing activities of $319 million. Credit facility relatedand other borrowing-related activity, net, for the ninethree month period ended September 30, 2017,March 31, 2020, totaled $162$4 million of borrowings, net of repayments, as compared to $37with $196 million for the ninethree month period ended September 30, 2016,March 31, 2019, for a decrease in cash provided by financing activities of approximately $191 million. Additionally, for the three month period ended March 31, 2020, payments for repurchases of common stock totaled $119 million, whereas for the three month period ended March 31, 2019, share repurchases totaled $6 million, for an increase in cash provided by credit facility-relatedused in financing activities net, of $125 million, which increase was partially offset by payments of $6 million for Credit Facility-related financing costs. Payments of acquisition-related contingent consideration for the nine month periods ended September 30, 2017 and 2016 were generally flat, totaling $19 million in 2017 as compared with $20 million in 2016.approximately $114 million.
Senior Secured Credit Facility
We have a senior secured credit facility, that we refer to as our “Credit Facility,” which was amended and restated in February 2017. As of September 30, 2017,2019 (the “Credit Facility”). Aggregate borrowing commitments under the Credit Facility has aggregate borrowing commitments of approximately $1.5total $1.75 billion, composed of $1.1$1.35 billion of revolving commitments and an outstandinga term loan totaling $400 million in the aggregateoriginal principal amount of $400 million.amount. Borrowings under the Credit Facility are used for working capital requirements, capital expenditures and other corporate purposes, including investments inshare repurchases, equity or other investees,investments, potential acquisitions or other strategic arrangements and the repurchase or prepayment of indebtedness.
We are dependent upon borrowings and letters of credit under the Credit Facility to fund our operations. Should we be unable to comply with the terms and conditions of the Credit Facility, we would be required to obtain modifications to the Credit Facility or obtain an alternative source of financing to continue to operate, neither of which may be available to us on commercially reasonable terms, or at all. The Credit Facility is subject to certain provisions and covenants, as more fully described in Note 7 - Debt in the notes to the condensed unauditedaudited consolidated financial statements which is incorporated by reference.included in our 2019 Form 10-K.
4.875% Senior Notes
We have outstanding $400 million of 4.875% senior notes due March 15, 2023 (our “4.875% Senior Notes”), which were issued in 2013 in a registered public offering. outstanding. The 4.875% Senior Notes are guaranteed by certain of our subsidiaries and are subject to certain provisions and covenants, as more fully described in Note 7 - Debt and Note 17 - Supplemental Guarantor Condensed Consolidating Financial Information in the notes to the audited consolidated financial statements included in our 20162019 Form 10-K. Also, see Note 16 - Supplemental Guarantor Condensed Unaudited Consolidating Financial Information in the notes to the condensed unaudited consolidated financial statements in this Form 10-Q, which areis incorporated by reference.
Debt Covenants
We were in compliance with the provisions and covenants contained in our outstanding debt instruments as of September 30, 2017.March 31, 2020.
Additional Information
For detailed discussion and additional information pertaining to our debt instruments, see Note 7 - Debt in the notes to the audited consolidated financial statements included in our 20162019 Form 10-K. Also see Note 7 - Debt in the notes to the condensed unaudited consolidated financial statements in this Form 10-Q for current period balances and discussion, which is incorporated by reference.
Off-Balance Sheet Arrangements
As is common in our industry, we have entered into certain off-balance sheet arrangements in the ordinary course of business. Our significant off-balance sheet transactions include liabilities associated with non-cancelable operating leaseswith durations of less than twelve months, letter of credit obligations, surety and performance and payment bonds entered into in the normal course of business, self-insurance liabilities, liabilities associated with multiemployer pension plans, liabilities associated with certain indemnification and guarantee arrangements and obligations relating to our costequity and equity investees,other investment arrangements, including our
variable interest entities. Refer to Note 14 - Commitments and Contingencies, Note 4 - Fair Value of Financial Instruments and Note 15 - Related Party Transactions in the notes to the condensed unaudited consolidated financial statements, which are incorporated by reference.
Impact of Inflation
The primary inflationary factors affecting our operations are labor and fuel costs, and to a lesser extent, material costs. In times of low unemployment, our labor costs may increase due to shortages in the supply of skilled labor. Additionally, the prices of oil and gas are subject to unexpected fluctuations due to events outside of our control, including geopolitical events and fluctuations in global supply and demand, which have recently caused volatility in the oil markets.demand. We closely monitor inflationary factors and any impact they may have on our operating results or financial condition.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
As of September 30, 2017,March 31, 2020, our variable interest rate debt was primarily related to our Credit Facility. Interest on outstanding revolving loans and our Term Loanterm loan under our Credit Facility accrues at variable rates based, at our option, on a Eurocurrency rate, as defined in the Credit Facility, plus a margin, or a base rate, as defined in the Credit Facility, plus a margin. As of September 30, 2017,March 31, 2020, we had $301$333 million aggregate principal amount of
outstanding revolving loans under our Credit Facility with a weighted average interest rate of 2.96%2.47% and a term loan with a balance of $400 million with an interest rate of 2.86%2.24%. A 100 basis point increase in the applicable interest rates under our credit facilities would have increased our interest expense by approximately $5$2 million for the ninethree month period ended September 30, 2017.March 31, 2020.
As of September 30, 2017,March 31, 2020, our fixed interest rate debt primarily included $400 million aggregate principal amount of 4.875% Senior Notes and an aggregate $187$298 million of capitalfinance lease obligations, and notes payable, which accrued interest at a weighted average interest rate of approximately 3.4% as of September 30, 2017.4.1%. None of this debt subjects us to interest rate risk, but we may be subject to changes in interest rates if and when we refinance this debt at maturity or otherwise.
Foreign Currency Risk
Certain of our consolidated revenue and operating expenses are in foreign currencies. Our foreign operations are primarily in Canada. Revenue generated from foreign operations represented 3% of our total revenue for the ninethree month period ended September 30, 2017.March 31, 2020. Revenue and expense related to our foreign operations are, for the most part, denominated in the functional currency of the foreign operation, which minimizes the impact that fluctuations in exchange rates would have on net income or loss. We are, however, subject to fluctuations in foreign currency exchange rates when transactions are denominated in currencies other than the functional currencies. Such transactions were not material to our operations for the three or nine month periodsperiod ended September 30, 2017.March 31, 2020. Translation gains or losses, which are recorded in other comprehensive income or loss, result from translation of the assets and liabilities of our foreign subsidiaries into U.S. dollars. For the three and nine month periods ended September 30, 2017, foreign currency translation effects totaled approximately $0.6 million and $2.4 million of gains, respectively, and related primarily to our Canadian operations.
Our exposure to fluctuations in foreign currency exchange rates could increase in the future if we continue to expand our operations outside of the United States. We seek to manage foreign currency exposure by minimizing our consolidated net asset and liability positions in currencies other than the functional currency, which exposure was not significant to our consolidated financial position as of September 30, 2017.March 31, 2020. We may enter into foreign currency derivative contracts in the future to manage such exposure.
Other Market Risk
As discussed in Note 4 - Fair Value of Financial Instruments in the notes to the condensed unaudited consolidated financial statements, which is incorporated by reference, we have certain investments that may be subject to market risk and could be subject to volatility based on market conditions.
| ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2017.March 31, 2020.
Changes in Internal Control over Financial Reporting
Although the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments had no significant effect on our results of operations, cash flows or financial position, certain updates to our internal controls were implemented in connection with its adoption. We have not experienced any material impact to our internal controls over financial reporting due to the COVID-19 pandemic. There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2017March 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
Refer to Note 14 –- Commitments and Contingencies in the notes to our condensed unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q, which is incorporated by reference in this Item 1, for a discussion of any recent material developments related to our legal proceedings since the filing of our 20162019 Form 10-K.
ITEM 1A. RISK FACTORS
Our business and operations, and the operations of our customers, may be adversely affected by epidemics or pandemics such as the COVID-19 pandemic.
We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases. The global spread of COVID-19 has created significant volatility, uncertainty and economic disruption, including significant volatility in the U.S. economy and financial markets. The
extent to which the COVID-19 pandemic could affect our business, operations, financial results and the trading price of our common stock will depend on numerous evolving factors that we may not be able to accurately predict, including the duration and scope of the pandemic, governmental and business actions that have been and continue to be taken in response to the pandemic, including mitigation efforts such as stay at home and other social distancing orders, as well as the impact of the pandemic on the U.S. economy, economic activity and actions taken in response, including from stimulus efforts such as the Families First Coronavirus Act and the Coronavirus Aid, Relief and Economic Security (“CARES”) Act.
A public health epidemic or pandemic, such as the COVID-19 pandemic, poses the risk that we or our employees, customers and/or business partners may be prevented from conducting ordinary course business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities or others, or that the pandemic may otherwise interrupt or affect business activities. The effects of the pandemic on our business, operations and financial results for the first quarter of 2020 were limited. We have adjusted standard operating procedures within our business operations to ensure continued employee and customer safety and are continually monitoring evolving health guidelines as well as market conditions and responding to changes as appropriate. We cannot be certain, however, that these efforts will prevent further disruption due to effects of the pandemic on business and market conditions. In addition, in light of the federal and state mandates implemented to control the spread of COVID-19, we have taken steps that allow administrative personnel to work remotely. Many of these measures are being deployed for the first time and, despite our implementation of security measures, there is no guarantee that the data security and privacy safeguards we have put in place will be completely effective or that we will not encounter some of the common risks associated with employees accessing Company data and systems remotely.
If overall global economic conditions weaken as a result of efforts to contain the spread of COVID-19, this may result in a reduction in demand across our end markets, including in the oil and gas sector, which has recently experienced a significant decline in demand and volatility in oil prices. Unfavorable market conditions, market uncertainty and/or economic downturns could have a negative effect on demand for our customers’ services and/or the profitability of services. Our customers may not have the ability to fund capital expenditures for infrastructure, or may have difficulty obtaining financing for planned projects, which could reduce their capital spending and/or result in reduced demand for our services and/or delays or cancellations of current or planned future projects. We could also incur incremental costs to operate in the current environment or experience lower levels of overhead absorption from a reduction in revenue, both of which could negatively affect our margins and profitability. Additionally, the economic and market disruptions resulting from COVID-19 could also lead to greater than normal uncertainty with respect to the realization of estimated amounts, including our backlog estimates and our provisions for credit losses. Additionally, our customers could seek to delay payments to us as a result of the pandemic’s financial effects on them. The ultimate extent, duration and impact of the COVID-19 pandemic is uncertain, the effects of which could be significant, and we cannot predict or quantify with any certainty the extent to which it could adversely affect our future financial condition, results of operations, liquidity, cash flows or the market price of our common stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table provides information about repurchases of our common stock during the quarter ended September 30, 2017March 31, 2020:
Period | Total Number of Shares Purchased (a) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program (b) | Approximate Dollar Value of Shares that May Yet be Purchased under the Program | ||||||||||
| July 1 through July 31 | — | $ | — | — | $ | 100,000,000 | ||||||||
| August 1 through August 31 | 462 | $ | 40.00 | — | $ | 100,000,000 | ||||||||
| September 1 through September 30 | — | $ | — | — | $ | 100,000,000 | ||||||||
| Total | 462 | — | ||||||||||||
Period | Total Number of Shares Purchased (a) (b) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program (c) | Approximate Dollar Value of Shares that May Yet be Purchased under the Program (d) | ||||||||||
| January 1 through January 31 | — | $ | — | — | $ | 128,846,586 | ||||||||
| February 1 through February 29 | 183,737 | $ | 49.41 | 173,558 | $ | 120,340,405 | ||||||||
| March 1 through March 31 | 3,396,366 | $ | 32.66 | 3,396,366 | $ | 159,419,290 | ||||||||
| Total | 3,580,103 | 3,569,924 | ||||||||||||
| (a) |
| (b) |
| (c) | Includes repurchases of 0.6 million shares under our $150 million September |
| (d) | Includes $9.4 million available for repurchase under our December 2018 share repurchase program and $150.0 million available for repurchase under our March 2020 share repurchase program, which was publicly announced on March 19, 2020. |
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 6. EXHIBITS
| Exhibit No. | Description | |
| 31.1* | ||
| 31.2* | ||
| 32.1** | ||
| 32.2** | ||
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| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | |
| 104 | The cover page of MasTec, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL (included with the Exhibit 101 attachments). | |
______________
| * | Filed herewith. |
| ** | Furnished herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MASTEC, INC. | ||
| Date: | ||
/s/ JOSÉ R. MAS | ||
| José R. Mas | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
/s/ GEORGE L. PITA | ||
| George L. Pita | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
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