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DATE
Friday, Aug. 1, 2025 at 1:00 p.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Jose Mas
Chief Financial Officer — Paul DiMarco
Vice President, Investor Relations — Chris Mecray
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TAKEAWAYS
Total Revenue-- $3.54 billion in revenue for Q2 2025, representing 20% year-over-year growth and 25% sequential growth from Q1 2025.
Adjusted EBITDA-- Adjusted EBITDA was $275 million for Q2 2025, in line with company forecast, largely driven by improved performance in Clean Energy and Infrastructure.
EPS Guidance-- Midpoint of adjusted EPS guidance raised to $6.34 per share for full year 2025, a 60% year-over-year increase in the adjusted EPS guidance midpoint versus 2024.
Full-Year Revenue Guidance-- Increased to a $13.9 billion-$14 billion range for full year 2025, up $300 million from the prior target.
Backlog-- Closed at $16.45 billion in backlog at Q2 2025, up 23% year-over-year and 4% sequentially; book-to-bill ratio of 1.2x.
Non-Pipeline Business Revenue-- Increased 26% year-over-year in Q2 2025, with EBITDA up 42% year-over-year from $181 million to $257 million.
Power Delivery Revenue-- Up 20% year-over-year in Q2 2025, with segment backlog increasing 14%, and management expecting mid-teens revenue growth for full year 2025.
Communications Segment Revenue-- Rose 42% year-over-year in Q2 2025, with adjusted EBITDA up 55% year-over-year and adjusted EBITDA margin improving by 90 basis points; backlog reached $5 billion, a 13% year-over-year increase in communications segment backlog.
Clean Energy and Infrastructure Segment-- Revenue grew 20% year-over-year in Q2 2025, with adjusted EBITDA rising from $47.3 million to $83.3 million, and backlog for the Clean Energy and Infrastructure segment was up 11% to $4.9 billion.
Pipeline Infrastructure Segment Revenue-- Revenue for the pipeline infrastructure segment decreased by 6% year-over-year in Q2 2025, with a 52% sequential revenue increase from Q1 2025; segment backlog fell 5% sequentially.
Headcount-- Workforce expanded by nearly 4,000 employees in Q2 2025, an increase of over 10% in workforce, attributed to current and anticipated demand across all segments.
Share Repurchases-- $40 million repurchased in Q2 2025 ($77 million year-to-date); new $250 million share repurchase authorization announced.
Operating Cash Flow Guidance-- Raised to $700 million-$750 million in cash flow from operations for full year 2025.
Capital Expenditures-- Net cash CapEx outlook raised to $140 million for full year 2025 to support growth investments.
SUMMARY
Management indicated that operational investments, especially in pipeline and workforce expansion, may impact near-term margins but are intended to support accelerating demand into 2026 and beyond, as discussed in the context ofMasTec(MTZ 2.23%)'s 2025 and 2026 business outlook. Strong customer demand was emphasized in multiple segments, with specific customer plans (e.g.,AT&T(NYSE: T),Verizon(NYSE: VZ),T-Mobile(NASDAQ: TMUS)) cited as evidence of continued multi-year infrastructure growth. Executive comments confirmed that bookings and backlog gains are highly concentrated among top-tier developers, reducing exposure to policy or incentive risks for 2025 and 2026. Recent US legislation was noted to have preserved renewable tax credits through 2027, providing project pipeline visibility through 2030. Company leaders described underutilized capacity in pipeline construction, highlighted their strong market position, and detailed their ability to manage multiple large-scale projects simultaneously as demand rises. Acceleration in data center-driven fiber deployments and grid investments was identified as a key market expansion catalyst, expected to continue sustaining revenue growth across communications and power delivery through the medium term.
CEO Mas affirmed, "We are increasing revenue guidance to a range of $13.9 to $14 billion for full year 2025, a roughly $300 million increase over previous guidance."
CEO Mas stated, "Our Communications segment improved 300 basis points sequentially and Clean Energy improved 120 basis points. We expect further sequential improvements in the third quarter in both our Communications and Power Delivery segments, with margins in our Clean Energy segment expected to be about even with the second quarter."
CFO DiMarco detailed, "Adjusted EBITDA performance is driven by almost 30% expected growth in our non-pipeline segments year-over-year."
CEO Mas noted, "We have not taken any of that into account in any of our thought processes. We don't know. Obviously, that would be upside."
CFO DiMarco confirmed, "We completed $40 million of share repurchases in the second quarter and extinguished our prior remaining authorization, bringing the year-to-date total to $77 million at an average price of $110 per share."
INDUSTRY GLOSSARY
Book-to-Bill Ratio: A measure comparing the value of new contracts ("bookings") secured during a given period to the revenue ("billings") recognized; a ratio above 1.0 indicates backlog growth.
Safe Harboring: Process by which project sponsors secure eligibility for certain tax credits by incurring specified costs or meeting requirements before legislative or regulatory deadlines, providing future project certainty.
DSO (Days Sales Outstanding): Average number of days it takes a company to collect payment after a sale has been made.
Full Conference Call Transcript
Operator: Thank you for standing by. And welcome to MasTec's Second Quarter 2025 Financial Results Conference Call. Today's call is being recorded. I'd like to turn the call over to Chris Mecray, Vice President of Investor Relations.
Chris Mecray: Good morning, everybody, and thank you for joining us for MasTec's Second Quarter 2025 Financial Results Conference Call. Joining me today are Jose Mas, Chief Executive Officer, and Paul DiMarco, Chief Financial Officer. We've prepared slides to supplement our remarks, which are posted on MasTec's website under the Investors tab and through the webcast link. There's also a companion document with information and analytics on the quarter and a guidance summary to assist in financial modeling. Please read the forward-looking statement disclaimer contained in the slides accompanying this call. During this call, we will make forward-looking statements regarding our plans and expectations about the future as of the date of this call.
Because these statements are based on current assumptions and factors that involve risks and uncertainties, actual performance and results may differ materially from our forward-looking statements. Our Form 10-Ks, as updated by our current and periodic reports, includes a detailed discussion of risks and uncertainties that may cause such differences. In today's remarks, we'll be discussing adjusted financial metrics reconciled in yesterday's press release and supporting schedules. We may also use certain non-GAAP financial measures in this conference call. A reconciliation of any non-GAAP financial measures not reconciled in these comments to the most comparable GAAP financial measures can be found in our earnings press release, slides, or companion documents. I'll now turn the call over to Jose.
Jose Mas: Thank you. Good morning, and welcome to MasTec's February call. Today, I will be reviewing our second quarter results as well as providing my outlook for the markets we serve. I am pleased to report that we exceeded guidance in revenue, met our EBITDA expectation, and beat our EPS guidance for the second quarter. We're happy to have delivered significant year-over-year growth in revenue despite the difficult comparison from the Mountain Valley pipeline completion in the first half of last year. The remaining segments in our non-pipeline business improved EBITDA from $181 million to $257 million in this year's second quarter, a 42% year-over-year increase.
Revenue for our non-pipeline business was up 26%, with power delivery and clean energy and infrastructure both up 20% and communications up 40% year-over-year. We expect revenues to sequentially increase again by double digits in the third quarter. Margins for our non-pipeline segments also improved 100 basis points year-over-year and posted a strong 230 basis point sequential improvement. Our 300 basis points sequentially and Clean Energy improved 120 basis points. We expect further sequential improvements in the third quarter in both our Communications and Power Delivery segments, with margins in our Clean Energy segment expected to be about even with the second quarter.
Jose Mas: Total company backlog in the quarter also remained healthy, posting a 23% year-over-year growth, including a 4% sequential increase resulting in a book-to-bill ratio in the second quarter of 1.2 times. The sequential growth from the first quarter included an 11% increase from clean energy and infrastructure, inclusive of solid growth for both renewables and infrastructure, and by ongoing growth of 2% from communications, offset partly by flatter performance in pipeline and power delivery, inclusive of stronger burn rates in the period. We expect further backlog growth in 2025 at record levels of backlog. We are increasing revenue guidance to a range of $13.9 to $14 billion for full year 2025, a roughly $300 million increase over previous guidance.
We are slightly increasing the range of our EBITDA guidance to $1.13 billion to $1.16 billion. We are increasing the range of EPS guidance to a midpoint of $6.34 per share. Our midpoint EPS guide implies a 60% increase year-over-year. I'd like to highlight that we are seeing clear acceleration across our business. Revenue is stronger than our initial guidance, and demand is incredibly strong. During the second quarter, we added nearly 4,000 new team members, an over 10% increase in our workforce. This compares to an increase of a couple hundred in last year's second quarter.
These additions are a direct result of the demand we are enjoying today, but more importantly, for the need we see to scale up for what we are expecting in 2026 and beyond. Every segment added team members in the quarter, including our pipeline segment. I'd like to remind everyone that entering 2025, we expected to rightsize resources in our pipeline segment and set some assets as we initially expected revenues in the $1.8 billion range versus last year's $2.1 billion.
We now expect revenues to be approximately $2 billion in pipeline this year, but more importantly, the investment we are making in increasing headcount and equipment in our pipeline segment is being driven by the incredible demand we are seeing for 2026 and beyond. These increases in headcount will position us to take advantage of the growing opportunities ahead. However, this investment is slightly impacting margins in 2025. While these additions should allow us to further increase our margin potential, we expect any impact to be short-term, particularly in our pipeline segment.
We expect pipeline segment margins to improve sequentially in the third quarter and achieve its best margin performance in the fourth quarter, setting us up for strong performance going into 2026.
Jose Mas: In our communications segment, revenue in the second quarter was up 42% year-over-year, while adjusted EBITDA grew 55% with a 90 basis point improvement in margin. Backlog increased sequentially to a record $5 billion and increased 13% from the prior year. The market backdrop for telecom infrastructure remains very healthy and dynamic, given robust capital investments being made by our customers to support broadband. We saw continued year-over-year revenue growth in the second quarter from nearly all of our top 10 customers, and our list of significant customers has increased meaningfully in recent years. MasTec's wireless business continues to see strong growth from expanded geographies served and from continued broadening of services.
Jose Mas: In wireline, overall strong demand continues to be supported by broadband infrastructure build-outs and by federal investment. Middle mile broadband build-outs and the recent surge in hyperscaler CapEx associated with data centers are also driving substantial fiber deployment demand. Over the last few months, a number of our customers have laid out very specific goals. AT&T recently announced a milestone of passing over 30 million fiber locations and reaffirmed their goal of achieving 60 million by 2030, basically doubling over the next five years. Verizon publicly stated their goal to also double fiber passings by 2028. And T-Mobile is looking to add 12 to 15 million fiber passings by 2030.
These ambitious plans, in conjunction with both increased demand from the traditional cable broadband carriers and a number of new entrant overbuilders, create significant growth opportunities for MasTec.
Jose Mas: Turning to power delivery, second quarter revenues increased 20% year-over-year and slightly beat our forecast, with profit and margins as expected. We believe we are on track to meet our full-year targets and continue to expect margin improvement in the second half of the year from a combination of volume growth, mix improvement, and solid execution. We still expect mid-teens revenue growth and high single-digit margins for the year. Our optimism and bullishness on overall grid investment remains unchanged. The need for substantial utility customer capital expenditures in the coming years is pressing as power demand drives the need to upgrade and add to an aging infrastructure.
This demand requires large CapEx commitments across transmission, substations, distribution, as well as new generation capacity. Backlog this quarter for the segment was up about 14% versus 2024. We continue to target a broad set of projects of varying scope, and we still expect several larger projects to be awarded in the coming periods.
Jose Mas: Our Clean Energy and Infrastructure segment, second quarter revenue grew 20% year-over-year, and adjusted EBITDA nearly doubled from $47.3 million to $83.3 million, with a margin of 7.4%, an increase of 240 basis points from the prior year. New awards accelerated in the second quarter and totaled $1.6 billion for the segment compared to $1.1 billion in the first quarter. Backlog was up 11% to a new record level of $4.9 billion, and book-to-bill was 1.4 times. We remain in great shape to deliver our 2025 goals and are already progressing well in building backlog for 2026. Within this segment, both Renewables and Infrastructure had double-digit growth and solid margin performance.
We see significant opportunities for new bookings for the second half in these areas, as well as opportunities for behind-the-meter power and infrastructure, given substantial experience in this area. We are fully covered for our 2025 revenue guidance, and recent bookings continue to fill in the 2026 year.
Jose Mas: An important development during the quarter was the passage of the One Big Beautiful Bill. The legislation leaves intact tax credits associated with renewables through 2027 and created a clear path for safe harboring projects that would allow construction through 2030. A subsequent executive order was signed, and we expect more clarity in the coming months. As it relates to MasTec, and as demonstrated in our backlog, we are very confident that our customer mix is heavily skewed to the top-tier developers, who will have a high level of success in their ability to safe harbor projects.
We are also confident in the ability for renewables to compete as electricity demand continues to expand, driven by artificial intelligence and data center construction. The cost of competitive power becomes increasingly more important in a global marketplace. For example, in The Middle East, renewable power is being sold at approximately $15 a megawatt hour compared to $50 in The U.S. in an unsubsidized and free market. In the domestic energy generation, I have no doubt that renewables will continue to play an important role along with other sources, including natural gas.
Jose Mas: Turning to our pipeline infrastructure segment, we saw revenue decline 6% and EBITDA drop to $62 million from $135 million the year before. We've noted the primary driver here being the challenging comparisons from the MVP project wind-down last year. Pipeline revenue of $540 million was well higher than our guidance of about $475 million and a substantial acceleration from the first quarter with a 52% sequential increase as overall activity picks up. Profits in the quarter met our plan on slightly weaker margins than forecasted as we invested to prepare for future demand.
While backlog for the segment was down about 5% sequentially, our second quarter backlog does not include a number of verbally awarded projects whose contracts we expect to sign shortly. As I previously covered, we expect backlog growth through the balance of the year. Gas-fired generation is clearly going to play a much more significant role in future years than we were expecting, and we fully expect to benefit from a multi-year investment curve in this important baseload generation source. I'm very bullish and excited about both the short and long-term outlook for our pipeline segment.
Jose Mas: In summary, 2025 is shaping up very well, and the momentum we are building across every segment is very encouraging. I've mentioned previously that we are working more closely with key customers across multiple segments at MasTec on framework agreements that benefit both parties while strengthening our position in diversified end markets. We are very excited about our market position and the ability to leverage close customer relationships to improve visibility and outcomes for our business as we execute on growth with scaled businesses across our enterprise. Of course, the outcomes are dictated and determined in large part by our execution against this significant volume opportunity.
Our efforts on operational execution and evolving our business processes to ensure both consistency of outcomes and strong structural profitability is a primary focus. Our margin improvement opportunity is real, and we are taking many steps to realize it. I'm particularly pleased with the progress we showed in the second quarter and expect to have a lot more to show in this regard across our segments in the second half as we continue to develop volumes across the business and refine our operational execution in key areas.
As we talk about execution, I'd also like to thank all of our people at MasTec for their continued commitment to our corporate values of safety, environmental stewardship, integrity, and honesty, all while serving our customers with diligence and ensuring the delivery of a great work product. Thank you all. I will now turn the call over to Paul for our financial review. Paul?
Paul DiMarco: Thank you, Jose, and good morning. As Jose mentioned, we're very pleased that our second quarter results exceeded guidance, coming in large part from strong sequential volume development and continued solid execution. We remain highly confident in our business positioning today and into the years ahead, and this is true across all of our end markets, given solid demand drivers that will require significant investment infrastructure for years to come. This is the case regardless of which technologies are favored and whether financing mechanisms include government incentives. Our customers are clear. They need us to fulfill plans that include major projects across the spectrum of markets we serve. Let me start with some quarterly highlights.
Second quarter revenue was well above expectations at $3.54 billion, a new quarterly record, with 20% growth year-over-year and 25% growth sequentially from the first quarter. Adjusted EBITDA of $275 million met our forecast. Three of our four segments beat volume expectations in the period, while the standout performance in profit and margins came from Clean Energy and Infrastructure. Eighteen-month backlog at quarter-end totaled $16.45 billion, an increase of 4% from the first quarter and 23% year-over-year. This represents another record level of total backlog for MasTec, with the growth led by an 11% increase recorded at CE and I that included continued strong bookings in the renewables portfolio.
Is fully booked for the current year and continues to build momentum for 2026 and beyond. We generated cash flow from operations of $6 million in the second and $84 million year-to-date, with DSOs at sixty-five days, a one-day improvement from the first quarter. Both in line with our expectations. Our strong second quarter revenue growth with consistent DSOs drove higher working capital investment in the quarter. Free cash flow for Q2 was a use of $45 million versus the source of $53 million in the prior year quarter. Variance was driven mainly by higher working capital investment versus last year, as well as somewhat higher capital expenditures as we accelerated certain capital investments for growth.
You may recall in 2024, saw DSOs decrease from seventy-nine days in Q1 to sixty-nine days for Q2, allowing us to reduce working capital last year. Whereas this year did not have the same benefit with DSOs remaining consistent in the mid-60s. We completed $40 million of share repurchases in the second quarter and extinguished our prior remaining authorization, bringing the year-to-date total to $77 million at an average price of $110 per share. Also in the second quarter, our Board authorized an additional $250 million repurchase program.
Paul DiMarco: Regarding some highlights from the second quarter segment performance, our Communications segment produced quite significant top and bottom line growth, with revenue easily exceeding our forecast for the period, and benefiting from continued strong demand in both wireless and wireline businesses. From a diverse set of customers across the telecom and tech landscape. The adjusted EBITDA margin of 90 basis points year-over-year was generally in line with guidance inclusive of certain program expenditures ahead of expected growth that held back margin performance. Second quarter adjusted EBITDA margin was 9.9%, compared with 9% in the prior year, and increased significantly from 6.9% in the first quarter as volumes ramped positively.
Overall, end market strength remained strong, second quarter backlog increased 2% or $102 million despite the record segment revenue in the quarter. Power delivery continues to see substantial growth across the country, we exceeded our quarterly revenue forecast by close to $50 million, producing 20% growth year-over-year. Adjusted EBITDA was generally in line with our forecast. Power delivery backlog increased slightly as solid bookings were partially offset by the record quarterly revenue earned in Q2. We continue to see significant new bookings opportunities as we look forward for the balance of the year. And anticipate structural growth for this business for years to come, given the anticipated electricity demand and system upgrade requirements for our utility clients.
Paul DiMarco: In clean energy and infrastructure, we saw continued improvement in Q2 adjusted EBITDA margin, increased 230 basis points year-over-year. Our renewables business was a strong contributor to the CE and I margin performance, with the benefit of some impacts from project closeouts in the quarter. We continue to see strong performance in the second half from operating leverage with higher volume, and continued focus on strong execution. Guidance assumes margins hold at similar levels to Q2 in the second half of the year. On CE and I backlog, we saw solid bookings from all three business verticals, contributing to the 11% sequential increase.
This included almost $200 million of renewables backlog growth despite the noise in the period from the big beautiful bill legislation. These new project additions continue to build our book for future years, and reinforce the sentiment among our customers that their projects are essential, driven by strong offtake demand. We remain highly optimistic about the sector, driven by the fundamental cost competitiveness of renewable energy and the limited availability of near-term alternatives for new power generation.
Paul DiMarco: Regarding pipeline infrastructure, our revenue result in the quarter beat our expectations by nearly $65 million on strong product development driven by a host of smaller and medium-sized projects. Adjusted EBITDA margin for the quarter was in line with expectations, with an 11.5% margin versus guidance of low double digits. But we did see less flow through from the incremental revenue due to the investments made to support future growth. The year-over-year comparison remained challenged by the MVP project completion in the first half of last year, and we now expect that we will revert to growth beginning in the third quarter to complement ongoing sequential growth after the lower first quarter volume result.
Pipeline backlog development was more muted versus the large increase reported in the first quarter, but we continue to see solid new awards totaling over $450 million in the period. And the backlog did not include certain Project Verbal awards as Jose mentioned. We continue to expect to bid on a number of larger projects in the second half of this year, with a robust bid schedule that demand drivers related to LNG export domestic, residential, and commercial demand is leading to a clear resurgence of pipeline construction activity. Last quarter, I highlighted our focus on margin enhancement over time. Particularly in our non-pipeline segments, communications, power delivery, and clean energy infrastructure.
Collectively, these segments delivered an 8.5 adjusted EBITDA margin in the second quarter, a 100 basis point improvement year-over-year. We remain optimistic about continued progress in 2025 for these operations, including a solid increase sequentially in the third quarter with margins approaching double digits for the first time. This expected improvement is driven by operating leverage on higher volume and our continued focus on execution, productivity, and disciplined cost management.
Paul DiMarco: Shifting to our updated consolidated guidance, I'd like to remind you that we posted a supplemental guidance document on our IR website and encourage you to review it. We are increasing our full-year 2025 revenue guidance to a range of $13.9 billion to $14 billion, with adjusted EBITDA ranging from $1.13 billion to $1.16 billion. Adjusted EBITDA performance is driven by almost 30% expected growth in our non-pipeline segments year-over-year. Adjusted EPS is forecasted to be $6.23 to $6.44, with the midpoint up 60% versus 2024. We expect Q3 revenue of $3.9 billion, adjusted EBITDA of $370 million, and adjusted EPS of $2.28.
We are increasing 2025 revenue estimates to account for the second quarter beat and the continued strong demand visibility with significant year-over-year improvements in most segments, partially offset by the lower pipeline revenue recorded in the first half due to MVP project runoff. On adjusted EBITDA margins, we expect second-half year-over-year margin expansion for communications and power delivery, offset by slightly lower second-half margins year-over-year for pipeline and clean energy, due to the investments we are making to support anticipated future growth. Similarly, we are raising our net cash capital expenditure guidance to $140 million as we procure additional equipment to support this growth.
Also notable, we still do not see material impact from either tariffs or federal tax incentive changes from the recent big beautiful bill legislation in our 2025 outlook, though we have considered a measure of general macro uncertainty from the current policy geopolitical environment as we discount risk in our forecast planning.
Paul DiMarco: Regarding cash flow and the balance sheet, we are increasing our expectation to $700 million to $750 million of cash flow from operations for 2025, assuming DSOs average around the mid-60s for at least the back half of the year. In June, we successfully refinanced our credit facilities, resulting in an extension of maturities and favorable adjustments to certain terms, covenants, and pricing. Our strong balance sheet and a well-structured debt profile provide us significant financial flexibility to pursue a disciplined return-focused capital allocation strategy. Our top priority remains supporting our robust organic growth opportunities through investments in equipment and capacity expansion, where we see compelling returns.
We will also continue to evaluate opportunistic accretive acquisitions that complement our existing service lines, consistent with our long-standing approach. In addition, we maintain a share repurchase authorization and will deploy capital to buybacks opportunistically. This completes our prepared remarks, and I'll now turn the call over to the operator for Q&A.
Operator: Thank you. Please press the star key followed by the digit one on your telephone. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. Again, please press star one to ask a question. We will pause for just a moment to allow everyone to signal. We will now take our first question from Steven Fisher from UBS. Please go ahead.
Steven Fisher: Thanks. Good morning. Just a follow-up on the clean energy comments you made. Just curious about what you experienced in terms of customer feedback and activity during the quarter as all the policy uncertainty played out. I know it sounds like you're pretty well set on 2025, but did that change things around with any specific projects or what you might have already had booked for 2026? And how much actually do you have in your '26 plan booked at the moment?
Jose Mas: Good morning, Steve. So I would say a couple of things. I'd say, you know, our customers so far have been unaffected. Right? I think what everybody's plans were for '25 are ongoing, quite frankly, what everybody's plans were for '26 are ongoing. The work that we booked, the success that we've had in bookings in both the first and the second quarter, have nothing to do with the federal legislative process as it's played out. I think it's completely solidified our plan for '25. It's put us in an incredible position for '26 where we would expect to further grow that piece of the business.
And, you know, at the end of the day, we're really excited about what came out of the legislation. We think the one big beautiful bill is a good bill for MasTec, we've got an executive order that we're paying attention to. But we work for top-tier developers, and we think that they're in the best position to really maintain their business over a really long cycle.
Steven Fisher: Okay. That's helpful. And then, in power delivery, just curious how you're thinking about the timing of bookings here. I think Jose, you said the coming periods. Could that mean still the second half of this year? And what are you thinking your focus projects here? Is it more on the very high voltage lines or, you know, it'd be substations or anything else or all the above?
Jose Mas: If you look at our guidance, we're guiding to grow just under 20% for the year. That's virtually all organic. So I think we've done a great job in that business. Margin progression is happening in that business as we expected. We're really excited about what the second half is going to bring for us in power delivery. We think our positioning in the market is fantastic. We expect to be a player on big margin expansion, and what we've done to build margins.
And because we're very acquisitive in that business, I think we've made tremendous inroads in margin expansion and then really positioning in the market, and we're really excited about what's going to come in that market for us.
Steven Fisher: Thank you very much. Thanks, Steve.
Operator: We will take our next question from Philip Shen from ROTH Capital Partners. Please go ahead.
Philip Shen: Hey, guys. Thanks for taking the questions. First one is a follow-up, Jose, on the expectations for how that could play out and maybe the different outcomes? And how are the Tier one customers positioned for those different outcomes? Thanks.
Jose Mas: Sure. So look, I think a number of our customers today have a very large portfolio of safe harbor projects. The way that the legislation is written is, you know, through '27, everybody keeps their credit beyond '27 is what you have safe harbored. There's a lot of opportunities for people to further safe harbor projects all the way into the middle of '26. There will be some changes in the executive order relative to that. We think they'll be manageable. And more importantly, we think they'll be manageable by the top-tier developers.
I think the work that we've done post-CIA acquisition in terms of really focusing ourselves on the customers that we were working for, the relationships that we're creating. When you look at our customer base today in that industry, we think it's best in class. It's tier one. And we think those are the ones that are best positioned to take advantage of the opportunities that will exist to safe harbor. It literally puts your projects in play all the way to 2030. Obviously, there's another election in 2028.
So we'll see what happens, but, you know, I'm excited about not just '26, I'm I have no doubt in my mind that this business is going to grow for us in 2026. I think it'll grow beyond that. And over time, and we said it in our prepared remarks, I actually think the market's becoming a lot more competitive when you look at the sources of power that exist. Right? You've got nuclear, which is a ways out. You've got gas that will see significant increases in three to five years. But when you look at the price of that, renewables start getting really competitive even without subsidies.
When you look at the rest of the world and what they're able to build renewables at, in a free market, it's a low cost. So it is a formidable form of power generation at a low cost, especially when you consider storage. And we think the market's going to be strong for a really, really long time with or without federal incentives.
Philip Shen: Great. Thank you. And then you talked about the acceleration that might continue. And so I was wondering if you could just kind of give it a little bit more color post-OVB what the conversations were like with customers, you see really an aggressive kind of amount of activity in July? And then do you expect that acceleration to sustain through Q3 and Q4? Do you think that kind of slows down as we get through the year? Thanks.
Jose Mas: So I would say not yet. So the bookings that we enjoyed in Q1 and Q2 had nothing to do with the bill. Right? So in Q1, we booked over a billion dollars in new projects, which we were really excited about. I think we had a 1.4 times book-to-bill in that market in Q1. We booked $1.6 billion in Q2, and I think that acceleration is critically important. We're going to have a really strong second half of the year. I think we're going to have a really good third quarter yet again. And I would argue that none of that has to do with the bill.
Depending on what happens with the executive order, there is a possibility in place that people work really hard to safe harbor and pull in a lot of work. We have not taken any of that into account in any of our thought processes. We don't know. Obviously, that would be upside domestic and others in the industry. We'll keep working with our customers to see if that's going to be required or not. Hopefully, it won't be. And people will work off their current safe harboring over the course of the next five or so years.
Philip Shen: Great. Thank you. One more, if I may. As it relates to margin, in terms of EBITDA margin, what are your latest thoughts on the overall trajectory in '26 and '27? Are double-digit margins still on the table in the near to medium term? Thanks.
Jose Mas: From a total company perspective or specific to clean energy?
Philip Shen: Total company. Thanks.
Jose Mas: Yeah. So from a total company perspective, look, we're really bullish on every segment that we operate in. We're seeing significant acceleration. As we said, obviously, the big driver to margins in our business is our pipeline segment. It's historically been our highest margin business. We're really bullish about what's going to come there. I think, you know, when you look at our guidance for this year, you know, we're in that low 8% range. I don't know that, you know, we're not going to sit here today and talk about getting to double digits in 2026, but over the long term, that is our goal. We think we can achieve that.
Obviously, it has a lot to do with the mix of our business, but we think today when we look at our outlook over the next few years, the mix potential of our business has never been better.
Philip Shen: Great. Thanks for the questions, and I'll pass it on. Thank you.
Operator: We will now move to Andy Kaplowitz from Citigroup. Please go ahead.
Andy Kaplowitz: Good morning, everyone.
Jose Mas: Morning, Andy.
Andy Kaplowitz: Jose, so you did raise your pipeline revenue forecast a bit, but as you said, backlog was down slightly sequentially. So could you give us some more color on what you're seeing? You mentioned, I think, some projects you expect to book shortly. Is it possible to quantify that? And then I know you've talked about revenue at least as big as '20 as in '24 and '26. So maybe you could update us on the potential of this cycle. Could it be comparable to pre-COVID levels?
Jose Mas: Sure. Thanks for the question, Andy. So a couple of things I'd say. Our pipeline business isn't about this year, and quite frankly, it's about '26 and beyond. We've said before, which is we think that our 2026 pipeline business will look a lot more like our '24 pipeline business, which is a sizable increase from where we'll be in 2025. Historically, obviously, it's been our best-performing business, it's been our highest margin business. It peaked at about $3.5 billion of revenues. I think on our last call, we said, you know, if the market plays out the way that we're seeing, there's potential to ultimately get there over time. Still feel that way.
It's somewhat remarkable that we're even saying that, based on where the business has been in the last couple of years. But the level of activity that we're seeing today is, in my mind, somewhat unprecedented. Again, not necessarily for '26, but even beyond '26. And we're making significant investments today. Right? We're investing in people. We're investing in equipment, and we're preparing for what we think is going to be a really large cycle. We'll see the beginning of in '26.
Andy Kaplowitz: Helpful, Jose. And maybe a similar question in communication. There seems to be, you know, a ton of drivers there, you know, whether it's fiber to the home, but now fiber to the data center. I think the big beautiful bill helps with, you know, 100% bonus depreciation. So maybe you can talk about the durability and duration of the cycle as you see it today, both in wireline and wireless.
Jose Mas: So again, Andy, it's been something that has somewhat caught us by surprise, the strength of the market. Our revenue guidance this year is north of 20%, again, all organic. When you look at the first half of the year, we outpaced that. We're bullish about not just this year, but what's going to quite frankly happen in '26 and beyond. We've got a number of new customers that keep coming to us with different plans, with different opportunities. We're pricing a lot of things in that market. You know, there's no reason that we don't think that next year is going to be another really strong growth year.
And quite frankly, we think we're at the beginning of the cycle there as well. You know, there's been a lot of talk about beads and Beads hasn't even shown up yet. So we'll see, you know, how that also impacts the market. But today, the drivers of the business, that middle fiber expansion, which is, you know, being built to not only focus on data centers, but really all of the growth that we're seeing across different industries, is really driving that business, and we don't expect that to end anytime soon.
Andy Kaplowitz: Thanks, Jose.
Jose Mas: Thanks, Andy.
Operator: We will take our next question from Sangeetha Jain from KeyBanc Capital Markets. Please go ahead.
Sangeetha Jain: If I can follow-up with one more on the communications segment. Can you talk specifically about MasTec's split wireline versus wireless as you lap the Eric?
Jose Mas: Frankly, the wireless business for a long time was the biggest piece of the business. It's not anymore. Our wireless business is probably roughly 40% of what we do. The balance is wireline. Wireline has a lot of growth. Our wireless business though, we're still really bullish on. You know, the Ericsson project is really less than a year old. It really started in the second half of last year. So we're in the first year of what's going to be a long multi-year cycle on that specific opportunity. We see tons of opportunities with other carriers on the wireless side based on what they've got planned in the coming years.
We actually think that business will see again, significant growth opportunities within the entire communication sector. And the wireline market is really there's as much demand as we've seen. So going to continue to grow for us. So we think both sectors are strong, both sectors have tremendous growth opportunities over the coming years. And you know, while the wireline is just bigger in total scope, we really like our position in both.
Sangeetha Jain: And thank you for that, Jose. And if I can follow-up on that, itself, would you need to make investments on that wireline side similar to what you are doing in pipelines if the cycle does materialize the way it's looking today?
Jose Mas: I think we've done it. We talked a little bit about that on our first quarter call. We also added people in that business in a sizable way in the second quarter. I think, you know, we've talked about ramping up for the demand. I think we've been in that circumstance now for multiple quarters. So I actually think we're pretty well positioned there. I don't think...
Operator: We will take our next question from Julien Dumoulin-Smith from Jefferies. Please go ahead.
Julien Dumoulin-Smith: Hey. Good morning, team. Good morning, Jose. Thanks for the time. I appreciate it. Just maybe to kick it off a little bit, let's talk about margins here a little bit. I mean, obviously, you're talking about investing and reinvesting in the business in anticipation. What's the timeline and cadence here of seeing that inflect in certain segments here? I mean, obviously, as you said yourself, some of those may not necessarily fully translate in bookings or at least meaningful revenue increases in '26. How do you think about the cadence of that margin improvement through the cycle here?
And then secondly, to follow-up on the pipeline commentary earlier, there's some pretty mega projects contemplated here for the back half of the year. I mean, obviously, given your market position, can we make presumptions about some of those large ones your position therein? I mean, just being aligned with those partners.
Jose Mas: Yeah. So I'd say a couple of things. I'd say, when we think about investments relative to margin, our backlog's way up. Like, I mean, considerably up since the beginning of the year. It's been across virtually all of our segments. We see what's coming. We see what's not in backlog, but we feel confident we're going to win. And thus the reason for the investment decisions that we've made. So we're really trying to get ahead of that. We're really trying to be in a position so that when that work comes in, we can hit it and execute on the highest margin that we can relative to that.
So we think that a lot of our investment will be captured in '25 relative to what we're going to need to take advantage of some of these growing markets. Obviously, there's always a need for investment, but I think we're doing a lot of that as we speak. As it relates to pipeline, look, we're the largest pipeline builder in North America. We think we're the best pipeline builder in North America, bar none. We've got the largest fleet. We've got great people, and we think that for any owner that's out there that's interested in building a pipeline, there would be no reason not to contact MasTec and want MasTec on your project for lots of reasons.
And we think that'll play out in the marketplace.
Julien Dumoulin-Smith: Got it. And thank you. And just to clarify from earlier, the renewable timing, obviously, you saw good progress here. How do you think about the timing of those projects getting pulled in? You made allusion to it to, you know, even within your existing backlog?
Jose Mas: It depends on well, not in existing backlog because, you know, our existing backlog is only eighteen months. So we wouldn't have anything today in backlog for 2027. Yeah. I think us, you know, in a perfect world, you know, customers have dozens of gigawatts of projects planned from now through 2030. Hopefully, they can work that plan off in the process that they're expecting. If something changes relative to the executive order and they have to accelerate that, we will definitely see a significant acceleration of the business. Then we'll have to manage to that. I think that's speculative, I don't really want to get into that.
I actually think that there's going to be a reasonable way to safe harbor projects and we won't see significant acceleration across the industry. But we'll the time will tell.
Julien Dumoulin-Smith: Excellent, guys. Thank you so much. Best of luck. Exciting time.
Operator: We'll take our next question from Ati Modak from Goldman Sachs.
Ati Modak: Jose, you mentioned the headcount increase on the pipeline side in particular. Can you talk about the capacity building targets there? And then how many large pipelines can you be working on at the same time? And is there a difference in utilization rates as we think of...
Jose Mas: Sure. So the 4,000 number that we gave was company-wide. Obviously, margin opportunity and potential doesn't necessarily vary by type by size of project. Sometimes it does by contract structure. So, you know, the cost-plus world allows you a lower margin than if you're doing units. So we've predominantly done most of the units with some cost-plus. We'll see what that mix looks like in the future. In terms of scale, you know, we would argue we're underutilized, right, at $2 billion. Our peak was, I don't know, a couple of years ago, we were doing 3.5 billion in sales in pipeline.
So we think that the opportunity for us to increase the level of productivity with the assets that we own is tremendous. And we don't think that there's a we don't think from a terms of scale and our ability to perform that there'll be a lack of projects. So for us, it's going to be about who do we want to partner with, what customers do we want to work for. And how big and how quick do we want to scale that business over time.
Ati Modak: Got it. And then on that note, I guess, on the verbally awarded contract that you were talking about, can you help us understand the nature of that between connector lines or long haul lines? And is there a way to assess how much of the pipeline on average you are bidding for or you could be getting awards for?
Jose Mas: Terms of the total market or of a specific project?
Ati Modak: For a long haul pipeline, anything like that? I mean, you bidding for the entire thing? Is it reasonable to expect you're going to get the entire thing or 40%, 50%?
Jose Mas: Yeah. Look. So it depends on the customer. There are projects that we've in their entirety, there are projects where we've done half a project, a majority of a project, and it all depends on the customer, the size of project, the location, the risk tolerance. Right? For us, you know, again, we've got a lot of availability. We've got, you know, we think the most flex in the marketplace relative to our ability to gear up for any project. And we are going to responsibly try to be as strong as we can in that business and grow that business as quickly and as reasonably as we can at the margin profile that we've historically enjoyed.
Ati Modak: Thank you. Appreciate that.
Operator: Thank you. We'll take our next question from Drew Chamberlain from JPMorgan.
Drew Chamberlain: Thank you for taking the questions. First of all, I just want to follow-up on the pipeline margins here. And obviously, appreciate the investment that you've put into the business quarter. But can you maybe talk a little bit about how much further investment you need to have in 2025 to be ready for the coming years? And then also, I mean, maybe just touching a little bit, I know we've talked about the revenue volumes in the past being 3.5%. But I mean, also the margin profile then was also in the 20s, right?
And so I'm just wondering if you think about as that revenue ramps, do you think there's any structural change in what the margin potential is here? I'm not talking about, like, what you've guided to, but how you think about...
Jose Mas: Structurally different. If you look at, you know, even if you look at 25, which, you know, we don't want to focus on 25, but if we look at the back half of 25, our guidance again, you know, '26 isn't the peak year by any stretch of the imagination. I think the cycle starts in '26. I think the performance in '26 will obviously be better than performance in '25. Again, we've said approaching '24 levels. But over time, as the volume continues to increase, there is no reason why we shouldn't be able to attain historical margin profiles. Again, we've always guided towards high to mid-teens in that market.
The opportunity to outperform that is there, but that's based on execution. So no, we don't think there's anything structurally different that wouldn't allow us if we execute well to achieve a similar level of margins as we've historically done.
Drew Chamberlain: Okay. Thank you. And then a quick one on cash. I mean, obviously, a big ramp here in the second half of the year. In the implied guidance. And can you just maybe talk about what's giving you confidence in that ramp? I mean, I appreciate you did last year, so it's clearly achievable. But what's giving you confidence this year? And then maybe if there are a few points that make you worried about whether it's achievable or not, things that could be headwinds in the second half to cash? I mean, what would those be?
Paul DiMarco: It's really just timing of the sequential growth. Right? So we had big sequential growth in Q2. It and it'll moderate as we go through Q3 and Q4. From the prior quarter. It's just working capital. That's the only working capital timing. You know, our DSOs and the low to mid-sixties are where we think they'll be structurally. So, you know, it'll have a benefit of reducing those any further. So it's just timing. Of investing for the various jobs.
Drew Chamberlain: Okay. Great. Thank you both.
Operator: Thank you. We will now move to Jamie Cook from Truist Securities. Please go ahead.
Jamie Cook: Hi, good morning. Nice quarter. I guess, Jose, obviously, lots of growth opportunities ahead of you and you're investing in your business. As you talked about increasing your labor. I'm wondering to what degree does that create a short-term headwind, as you think about margins, at least in the 2026. You know what I mean? Just as we're absorbing those costs and training people, etcetera. And then I guess my second question and I'm sorry if someone's asked this, but there's, like, five calls this morning. Just your thoughts, you know, on M&A, your peers or your peer is making some pretty aggressive moves on the acquisition front.
To what degree do you think you need to do more acquisitions to continue to enhance your competitive positioning? And to what degree do you need to do acquisitions to ramp the labor growth? Thank you.
Jose Mas: Yes, so a couple of things. I'd say that when we look at the investments that we're making, we think we're absorbing those costs in 2025. I think we absorbed some of them in the second quarter, which was why we, you know, handily beat revenues but didn't necessarily have a lot of flow through on EBITDA. We've got a little bit of that in Q3 again, where we've guided revenue slightly higher, but without a significant amount of flow through, we think that has to do with the investments. We actually think that starts to turn as early as the fourth quarter.
We don't expect there to be significant lingering impacts of that going into '26, where we think we'll be highly utilized across these investments that we've made. So we're again, we think that's a great story and really important. As it relates to M&A and what we've said in the past, look, we've, you know, we were very acquisitive in the 2022-2023 time frame. We talked about really focusing on the organic opportunities that are in front of us. That's been our focus. When you look at our revenue growth this year, when you look at our earnings growth, you look at our 60% EPS growth this year relative to last year, that's been virtually all organic.
And I think that was important for the organization at that moment in time with the, you know, some of the issues that we had with the integration of IA. I think we're through that. We think we're in a very different position. To your question of do we need to do M&A, our answer is we do not need to do M&A. When we look at '26, right, we see and we laid out a goal when we did the 2022. We wanted to exceed $15 billion in revenue. We put a midterm target on that. You know, here we are three years later, I'm highly convinced that next year will exceed $15 billion in revenue in 2026.
I think we'll improve our EBITDA margins in 2026 versus 2025. When we look at our EPS, we think we can exceed $8 of EPS in 2026 versus where we've been. So from a necessity point of view, no, to grow at double digits and to continue to grow earnings at double digits, we do not feel we need to do M&A. With that said, there are M&A opportunities out there that we're intrigued by that we think could potentially help further grow the business? The answer is yes, right? And I think that as an organization, we're getting to a place where we're more ready for it than we've been in the last couple of years.
Again, we're not looking to do anything transformational. We think we've been really good at tuck-ins over time, so that's where we'll focus. But as we kind of alluded to on our last call, I do think you can expect us to be more active in the M&A world on a go-forward basis.
Jamie Cook: Thank you.
Operator: We'll take our next question from Justin Hauke from Robert W. Baird. Go ahead.
Justin Hauke: Oh, great. I think most of my questions have been answered. I just have one quick one. Just turning back to the Communications segment. I think your previous guidance for the second half was that it would be kind of flattish. And now 3Q in particular is really strong and I guess second half up high single digits, maybe close to 10%. Is that the data center fiber work that's driving that? Or what's the change versus kind of the previous outlook that it would be flattish here in the second half?
Jose Mas: Well, I think it's outperformance in the first half. Right? So if you look at the first half, again, we grew, you know, first half revenue versus last year in the comms business is up 38%. Which is really impressive. I think that if anything, I'd argue we're being a little conservative in the second half, and I think it's broad-based. I think the wireless business is performing well, it's strong. We've done a really good job of gearing up and or did a really good job at gearing up and preparing for the larger projects we had in that business. I think that's showing in execution today.
We continue to see tons of wireline opportunities, new ones, that we're pricing that will, you know, have some impact towards the '25, but quite frankly, will probably impact '26 more. So we continue to see activity. I think, you know, obviously, the wireless build-out started in the '25, so the twenty-five second half comps are more difficult than the first half twenty-five as part of the reason for the large variances in growth. Again, we, you know, when we look at, you know, the cycle and what we think we can in this business over a longer period of time, we think high single to low double-digit top-line growth is very reasonable in this market for that segment.
Justin Hauke: Great. That's all I had. Thank you.
Jose Mas: Thank you.
Operator: We will now take our next question from Brian Brophy from Stifel. Please go ahead.
Brian Brophy: Appreciate you squeezing us in here. Wanted to ask about power delivery margins. There was some discussion about project inefficiencies in the queue and I think the press release as well. I think this is the second quarter you guys have talked about this. Any more color on what is driving these project inefficiencies? Is it related to Greenlink at all? And how should we be thinking about this potential headwind in the second half?
Jose Mas: Well, if you think about our second half guide, for margins and power delivery are double digits. We think we'll achieve that in both quarters, third and fourth. So I think it's no different than the commentary we've put out in the past. I don't think there's anything significant to really highlight. I'd say, you know, in some areas, I think we had some weather impacts. We had, you know, geographically, we had areas that really improved and areas that probably held us back a little bit. I do think there, you know, we said it in Q1. There's some margin that we felt we left on the table there in the first half of the year.
You know, with that said, I mean, we were still up, right, in both earnings and in revenue on a year-over-year basis. So, you know, revenue was up about 17% in the first half year-over-year. EBITDA was 10% in the first half year-over-year. So it's not that we didn't improve, it's quite frankly, we thought we could have improved more. And I think we'll start to show that in the second half of the year.
Brian Brophy: Thanks. I'll pass it on.
Operator: We will take our next question from Brent Thielman from D.A. Davidson. Please go ahead.
Brent Thielman: Hey, thanks. Jose, just at an e-book, you get a lot of businesses that would benefit indirectly from the AI data center build-out. Maybe just refresh us on some of the things you're doing more directly for data centers, kind of size it for us, and are you investing more in it and trying to scale that up?
Jose Mas: And the short answer is yes. I think everything from, you know, we started in that world. We talked about it. It feels like a long time ago, but, you know, we really started that on the civil side of our business with our infrastructure business. I think it's grown where we're doing a lot of power-associated work relative to data centers. Business continues to grow there. It's performing, you know, as expected or better. I think we're probably more optimistic about the longer-term opportunities of what we have in that market than we've ever been.
And I think over the next couple of quarters, hopefully, we'll be able to talk more about what that is and what services we're specifically trying to target.
Brent Thielman: Excellent. Thank you.
Operator: We will take our next question from Liam Burke from B. Riley Securities.
Liam Burke: Thank you. Good morning, Jose. Good morning, Paul.
Jose Mas: Good morning, Liam.
Liam Burke: Jose, excuse me. Pipeline's accelerating and you laid out all the reasons why this or is there has there been any change in the competitive front?
Jose Mas: I mean, we're not afraid of the competition. I think that, no, it's a matter of there's obviously been a huge sentiment change. So if you would have asked our customers a year ago, you know, the outlook was nowhere near what it is today. So I think as the, you know, obviously the election changed a lot, the reliance on natural gas in the future has changed a lot. It's changed the business. Our customers are responding to that change, but it doesn't happen overnight, right? So any of these projects there's obviously a lot of engineering planning. You gotta order pipe. You gotta work on routes and get permitting and that's happening. Right?
So the level of activity that we're seeing is incredible. We will get, you know, more than our share of that we believe, and it's just a matter of timing. Right? So we're, you know, we see what's coming in the second half of the year. We're excited about it, and we're preparing for that. That's kind of what's driving the business today and the investment decisions that we're making today.
Liam Burke: Great. And then just real quickly, and you mentioned this in your prepared comments that nuclear is way out there, but are there any early discussions on any of the providers on getting you involved?
Jose Mas: Look. It's the beauty of our business. Right? We evolved with every one of our markets. We evolve in the different technologies as they come up. Obviously, paying really close attention to it and there's no doubt in my mind that when the time comes that becomes a growing source of generation, we will be engaged.
Liam Burke: Great. Thank you, Jose.
Jose Mas: Thank you.
Operator: That will conclude today's Q&A session. I would now like to turn the call back over to management for any additional or closing remarks.
Operator: Thank you all for joining. This concludes today's call. Thank you for participating. And as a reminder, visit our investor website for a replay and transcript of the call, which should be posted when available. Have a good day. Thank you.
Operator: That concludes today's call. Thanks for participating. And as a reminder, please visit our Investor website for a replay and a transcript of the call, which will be posted when available.