BAIRD 2026 GLOBAL INDUSTRIAL CONFERENCE - MASTEC INC

Financial Performance:

• Reported EBITDA of approximately $1.1 billion for 2025, with a revised full-year guidance of ~$1.6 billion.
• Revenue growth is strong across most segments, driven by a significant backlog increase experienced in 2026.
• Power delivery, pipeline, and clean energy segments are positioned to exceed the 2028 organic targets set during the May analyst day.
• Communications segment is projected to have flat revenue growth in 2027 but aims for double-digit margins to drive EBITDA growth.
• Cash flow generation is heavy in Q4, with guidance projecting ~$600 million for the quarter, enabling a $250 million share buyback program.
• Superior Group acquisition contributed ~10% of 2026 revenue, with data center exposure expected to grow substantially in 2027.

Guidance and Future Outlook:

• Management reaffirms confidence in 2028 targets ($22 billion revenue, $15 EPS) on an organic basis, noting the Superior acquisition will add to these figures.
• Strong growth is anticipated for 2027 and beyond, fueled by a record pipeline of projects for 2028, 2029, and 2030 in the pipeline and power delivery sectors.
• The company expects the communications business to stabilize in 2027, with revenue flatlining before potential growth resumes as the BEADS program offsets the end of RDOF.
• Hyperscaler fiber activity is entering an early growth cycle, with a 2,100-mile turnkey project (part of a larger 5,000-mile build) expected to start in the second half of 2027.
• Gas generation projects (simple cycle and reciprocating engines) are order-flowing faster than anticipated, with a path to a $1 billion annual business run-rate.

Business Segments and Product Lines:

• Communications: Wireless is viewed as a stable, growing business driven by 5G/6G network rebuilds and capacity expansion; wireline faces short-term headwinds from fiber-to-the-home program gaps (RDOF to BEADS) but benefits from hyperscaler fiber and cable vendor consolidation.
• Power Delivery & Pipelines: A major growth cycle is underway for natural gas pipelines to support power generation and LNG exports, with 2026 showing strong growth despite permit delays in Q3/Q4 2026.
• Clean Energy: Focus remains on simple cycle gas plants and REC engines (low risk) rather than combined cycle; expected to benefit from bipartisan support and energy security needs.
• General Buildings/Data Centers: Expansion via Superior acquisition; business includes electrical and mechanical work for data centers, operating in a labor-constrained but high-margin environment.
• Diversity Strategy: The company intentionally diversified across four segments to mitigate exposure to any single industry macro trend.

Market and Competitive Landscape:

• The natural gas pipeline market is experiencing historically high activity levels for 2028-2030, with fewer competitors than in previous cycles.
• Cable operators (Comcast, Charter) are undergoing vendor consolidation and restructuring, which MOMTECH expects to benefit from via increased outsourcing and market share gains.
• Data center construction bottlenecks are identified as labor (specifically electrical and mechanical trades) rather than permitting or financing.
• Hyperscaler fiber builds are in early cycles, with MOMTECH winning significant share in multi-year turnkey engineering, permitting, and execution deals.

Risks and Challenges:

• Short-term Communications Headwinds: A gap between RDOF and BEADS program funding and customer reassessment of fiber installation priorities are causing flat revenue in the comms segment for 2027.
• Execution Risks: Management cites execution capability and project selection (permitting status, customer risk profile) as the primary risks rather than macro factors.
• Pipeline Permit Delays: Condensed start dates in late 2026 led to temporary schedule slips (60-90 days) affecting Q3/Q4 results, though 2027 is expected to have better project dispersion.
• Labor Constraints: The data center and power sectors face significant labor shortages, particularly for high-skill electrical and mechanical trades, which could limit construction pacing.

Management Commentary and Tone:

• Tone is confident and bullish, emphasizing the unique scale of the current infrastructure build-out cycle, particularly in pipelines and power generation.
• Management expressed optimism regarding the political landscape, viewing natural gas and renewables as having a "bipartisan" future necessity for energy security.
• CEO Jose Mas highlighted that the company has the resources to be "picky and choosy" with projects, prioritizing high-quality accounts with low risk profiles.
• CFO Paul DeMarco noted the strategic decision to suspend late-stage M&A due diligence to execute a timely share buyback, citing the stock's post-election dip as an attractive valuation opportunity.

Analyst Questions and Answers:

• 2028 Target Viability: Management confirmed confidence in the $15 EPS and $22B revenue targets for 2028, adjusting for the Superior acquisition but maintaining the organic outlook.
• Comms Strategy: Asked about cable vendor consolidation, management confirmed this is a long-term tailwind for market share, despite short-term revenue flatness.
• Pipeline Timing: Explained that Q3 2026 underperformance was due to permit delays on a cluster of projects, not a sector decline, with better visibility expected in 2027.
• Data Center Geography: Identified Ohio, Indiana, and Florida as key growth states, noting that local policy shifts (e.g., Florida governor changing stance) are favorable for expansion.
• Union vs. Non-Union: Clarified that the combined entity has capabilities for both union (Superior) and non-union (legacy MOMTECH) work, allowing flexibility across markets.
• Acquisition Suspension: Disclosed that the deal was suspended solely to lift the trading blackout period to facilitate the share buyback, with negotiations remaining open.

Other Key Points:

• Superior Acquisition Impact: The acquisition integrates a strong union electrical force and expands MOMTECH's footprint into data centers, significantly boosting the general building segment.
• Bipartisan Infrastructure: Management noted the recent discussions around a permitting bill, suggesting energy infrastructure has become a rare area of bipartisan agreement compared to pure renewables.
• Stock Buyback Context: The $250 million buyback was executed opportunistically following a stock price drop from ~$200 to $150 post-election, aligning with management's historical value-disciplined approach.
• 2,100 Mile Fiber Project: This is a full-turnkey engineering and execution contract, distinct from typical construction, expected to drive higher margins in the communications wireline sector.