MasTec, Inc.

Welcome to Mass Tech's second quarter 2020 earnings conference call, initially broadcast on July 31, 2020. Let me remind participants that today's call is being recorded, and at this time, I'd like to turn the call over to your host today, Marc Lewis, Mass Tech's Vice President of Investor Relations. Marc.

Thank you, Sarah, and good morning, everyone. Welcome to Mass Tech's second quarter call. The following statement is made pursuant to the safe harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. In these communications, we may make certain statements that are forward-looking, such as statements regarding MOSFET's future results, plans, and anticipated trends in the industries where we operate. These forward-looking statements are the company's expectations on the day of the initial broadcast of this call, and the company does not undertake to update these expectations based on subsequent events or knowledge. Various risks, uncertainties, and assumptions are detailed in our press releases and filings with the SEC. Should one or more of our risks or assumptions prove incorrect or should this information be changing, the results may differ significantly from results expressed or implied in these communications. In today's remarks by management, we will discuss adjusted financial metrics as discussed and reconciled in yesterday's press release and supporting schedules. We may 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 measure can be found in our earnings release, our TINQ, or posted on the PowerPoint presentation located in the investor section of our website located at mystec.com. Just a note on the TINQ availability. We've been attempting to file the TINQ with the SEC since 5 p.m. yesterday, but but an SEC filing system which has prevented the filing from being uploaded and accessible. We expect this will be resolved shortly. With us today we have Jose Mas, our Chief Executive Officer, and George Pita, our Executive Vice President and Chief Financial Officer. The format of the call will be opening remarks and analysis by Jose followed by a financial review from George. These discussions will be followed by a Q&A period and we expect the call to last about 60 minutes. We have another great quarter and a lot of important things to talk about today so I'm now trying to call over to Jose. Jose?

Thanks, Marc. Good morning and welcome to MOSTEC's 2020 second quarter call. I hope and pray that everyone's family is healthy and safe. We are truly in a challenging and unprecedented time as we continue to manage through the COVID-19 pandemic. During this time, the safety of our team members has been our top priority. I have to say I'm so proud of the men and women of MOSTEC Their sacrifices, resilience, creativity, and commitment have been inspiring. Millions of families throughout the U.S. rely on the power, communication, entertainment, and other services we help our customers provide. Our team has delivered, and I'd like to thank the men and women of Mass Tech for their sacrifices and their hard work. First, a quick recap of our second quarter. Revenue for the quarter was $1,569,000,000. Adjusted EBITDA was $166 million. Adjusted earnings per share was $0.95. Cash flow from operations was roughly $295 million and year-to-date cash flow from operations was $497 million. And backlog at quarter end was a second quarter record at $8.2 billion. We had a solid second quarter, meeting our revenue guidance and exceeding our guidance for EBITDA and EPS. It's important to keep in mind that most of our services have been deemed essential under state and local pandemic mitigation orders and all of our business segments have continued to operate. We are managing through the COVID-19 challenges, including first and foremost, the safety of our employees and their families, and other challenges including governmental permitting, crew social distancing mitigation, and the impact that that may have on project schedules and any potential project delays. Our 2020 guidance, which George will cover in detail, assumes the impact of these risks based on the best information we have as of today. While I'll cover our segments in more detail in a minute, I'd like to focus on how I feel Maastricht is positioned for long-term success. I'm extremely optimistic about our future prospects. We are very well positioned to take advantage of the continued and growing investment in telephony networks, including internet connectivity and 5G, The Continued Investment in Grid Reliability in the Energy Sector, and The Growth of the Clean Energy Sector. As it relates to clean energy, during the second quarter, we made the decision to rebrand our Power Generation Industrial Group to Clean Energy and Infrastructure. We believe this better represents what we are actually doing today, as this segment becomes a much larger and important part of MOSTEC's future. As one of the nation's leading clean energy construction companies, we have experienced significant growth over the last few years, growing revenues from $300 million in 2017 to over a billion and a half of expected revenues this year. We expect continued growth in 2021 and believe that by 2022, this segment will exceed the size of what our oil and gas segment is today. Today, We also announced record oil and gas backlog levels. I'd like to offer some color on this segment's backlog. First, we are highly confident that all of the projects in our current backlog will be built. We believe this backlog represents our strength in the market and our ability to offer value while still attaining solid margins. We view this level of backlog as a significant competitive advantage as we do believe new work will slow down through the first half of 2021. There will still be new work awarded but less of it. Basically, if you don't have a lot of backlog today, the next year and a half will be tough. We do expect an improvement in the market as conditions improve and demand increases in a post-COVID environment. In the meantime, between what we have in backlog and other work we have been negotiating with our customers, We believe revenue levels for our oil and gas segment in 2021 will be similar to 2020 levels. While George will cover guidance in detail later, we have lowered our annual revenue guidance in oil and gas based on the delay of two projects which have been impacted by regulatory and judicial issues. As I think about our 2020 guidance, I think there are some important takeaways to highlight. In the midst of a pandemic, our revenue guidance for 2020 is only down about $200 million or 3% less than 2019 full-year revenue. Within that, our oil and gas revenue expectation is that it will be down approximately $800 million in 2020 from 2019. That means the rest of our segment revenues will be up approximately $600 million versus last year Thank you. Thank you. and the efforts we have made over the years of having a strong, diversified service offering. Now I'd like to cover some industry specifics. Our communications revenue for the quarter was $654 million. More importantly, margins came in strong and were up 370 basis points year over year and 380 basis points sequentially. We are seeing strong demand from our customers as they work to meet the demands in this changing environment. COVID has helped highlight the importance of our nation's telecommunications networks and our customers are working hard at providing their customers with reliable and high-speed connectivity. We expect this trend to continue and believe there will be a renewed focus on continuing fiber expansions in the residential markets. This, coupled with the continued opportunities around 5G deployment, provide us with significant opportunities to grow our business. While margins were much improved in the quarter, our revenue has been negatively impacted by COVID. Our installation business has been impacted by strict mitigation efforts related to entering customers' homes, and we continue to have a couple of large markets where work has been very limited. Our guidance assumes these impacts continue through year-end and also include the potential impacts of local permitting delays. As some areas slow reopenings or even move back to more strict closures, We have been working with these cities and municipalities to bolster remote permitting capabilities. Revenue in our electrical transmission segment was $124 million versus $100 million in last year's second quarter. While margins had been improving over the course of the last year, we had a project that negatively impacted margins based on a change in environmental requirements. We believe these increased costs are mostly recoverable and expect to benefit in the second half of the year. Backlog improved both year over year and sequentially, and we made good progress on diversification within this segment. We have been awarded four new MSAs, or Master Service Agreements, as this has been a focus for us to drive consistent recurring work. We believe we are well positioned for 2021 and beyond, as the drivers for this segment remain intact which include aging infrastructure, reliability, renewables, and system hardening. Between our strong backlog and the opportunities we see in the market, we expect to be able to deliver both strong revenue growth coupled with margin expansion in the coming years. Moving to our clean energy and infrastructure segment, revenue was $426 million for the second quarter versus $250 million in the prior year. A 70% year-over-year increase. We continue to achieve significant growth rates in this segment and backlog at quarter end exceeded $1 billion. Margins for this segment were strong at 7.1% and we continue to expect margins to improve over 2019 by over 100 basis points. The size and scope of the opportunities we are seeing in this segment continues to grow. We have made significant investments in this segment to profitably grow our business through organic opportunities. We continue to add talent and resources to meet the increasing demand for our services. While we've highlighted this segment more over the last few quarters, I still think it's an underappreciated part of MOSTEC's portfolio. Between both the opportunities provided by future clean energy initiatives and the potential for an infrastructure bill after the election, We believe this segment provides significant opportunities for long-term growth. Our oil and gas pipeline segment revenue was down as expected. Second quarter revenue was $369 million compared to revenues of $937 million in last year's second quarter. We ended second quarter with backlog of almost $2.7 billion. As a reminder, over the last three years, only 6% of our revenues have come from oil pipelines with the majority of our business being tied to natural gas. We have also focused on growing both our distribution and integrity business over the last few years and we are encouraged by our progress. To recap, we had a good second quarter and are confident we are mitigating the effects and impacts of the COVID-19 virus. While times are challenging and uncertain, opportunities always arise from these challenges. Thank you for joining us today. and their sacrifices. Keep up the good work. I'll now turn the call over to George for our financial review. George?