MasTec, Inc.

Welcome to Mass Tech's fourth quarter and annual 2020 earnings conference call, initially broadcast on Friday, February 26, 2021. Let me remind participants that today's call is being recorded. At this time, I'd like to turn the call over to Mark Lewis, Mass Tech's Vice President of Investor Relations. Mark?

Thanks, Christina, and good morning, everyone. Welcome to Mass Tech's fourth quarter 2020 earnings 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 MOSDEC'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 conference call, February 26, 2021, and the company does not undertake to update 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 these risks or uncertainties materialize, or should any of our underlying assumptions prove incorrect, actual results may differ significantly from results expressed or implied in these communications. In today's remarks by management, we will be discussing adjusted financial metrics reconciled in yesterday's press releases and supporting schedule. In addition, we may use certain non-GAAP financial measures in this conference call. Reconciliation of the non-GAAP financial measure, not reconciling these comments to the most comparable GAAP financial measure, can be found in our earnings press release, our 10-K, or in our posted PowerPoint presentations located in the investors and news sections of our website located at mostech.com. With us today, we have Jose Mas, our CEO, and George Pita, our CFO. The format of the call will be open to remarks and analysis by Jose, followed by a financial review from George. These discussions will be followed by a Q&A session, and we expect the call to last about 60 minutes. We had another great quarter and a lot of good things to talk about today, so I'll go ahead and turn it over to Jose. Jose?

Thanks, Mark. Good morning, and welcome to Moss Tech's 2020 fourth quarter and year-end call. Today, I will be reviewing our fourth quarter and full year results. as well as providing my outlook for 2021 and the markets we serve. I'd like to thank you for joining us today, and I hope and pray that you and your loved ones are healthy and safe. The safety of our team members has been our top priority, and as I reflect on the unprecedented challenges during 2020, I am incredibly proud of the men and women of MOSTEC. Our operations have exhibited tremendous resiliency during the pandemic, And as I look forward to 2021 and beyond, I am extremely excited about various significant growth opportunities as we provide critical power, communications, and other infrastructure services to our customers. I'd like to congratulate and thank the men and women of MOSTEC for their fantastic performance. I am honored and privileged to lead such a great group. The men and women of MOSTEC are committed to the values of safety, environmental stewardship, integrity, honesty, and in providing our customers a great quality project at the best value. These traits have been recognized by our customers, and it's because of our people's great work that we've been able to deliver these outstanding financial results in a challenging environment and position ourselves for continued growth and success. Now some fourth quarter highlights. Revenue was $1.6 billion for the fourth quarter. Fourth quarter adjusted EBITDA was $262 million. And fourth quarter adjusted EPS was $1.75. For the full year, 2020 revenue was $6.3 billion. 2020 adjusted EBITDA was $810 million. And 2020 full year adjusted earnings per share was $5.11. And finally, cash flow from operations for the year was $937 million, a record level. In summary, we had an excellent quarter and another great year. On our third quarter call in October, we talked about our longer-term goals and our future business mix. Considering the impacts of the pandemic on the oil and gas industries, we laid out a path to achieving an annual revenue target of $10 billion with double-digit margins. One of our key highlights of 2020 was our ability to grow non-oil and gas revenues by almost 12% and non-oil and gas adjusted EBITDA by over 40% despite the pandemic. Our guidance that we provided today reflects continued diversification as we expect our non-oil and gas business to grow approximately 20% in revenues and approximately 45% in EBITDA in 2021. While we didn't lay out a timeline for our $10 billion revenue target in the third quarter, the visibility within our end markets has continued to improve. In just a matter of months since our last call, we believe the size and the scale of growth opportunities has significantly expanded. I believe the recent events in Texas demonstrate the need for significant investment in both infrastructure and continued power generation diversification. We believe MOSTEC's diversification with capabilities in transmission grid and substation construction, power distribution maintenance, renewable construction, including wind, solar, biofuels, and battery storage, coupled with our capabilities around gas fire plant construction with its associated infrastructure, uniquely position MOSTEC to benefit from continued and renewed investments in the power grid. These opportunities, coupled with the growing investments in communication networks from both large carriers and smaller rural-focused operators, provide MOSTEC with significant growth opportunities in 2021 and beyond. In addition to our organic growth opportunities, we are seeing a growing number of potential acquisition targets. Acquisitions over the years have been a source of significant growth for MOSTEC. While we've been less active over the last few years, we believe the right companies can help us fully capture our current market opportunities. Subsequent to year end in the first quarter, we closed on two acquisitions. The first company focuses on integrity work and maintenance work related to gas distribution, and the second company is a fully integrated infrastructure contractor specializing in transportation projects. I'd like to welcome both companies to the MOSTEC family. Included in today's 2021 guidance, revenue contribution for these two companies is about $300 million. In addition, we remain active and are focused primarily on clean energy, power grid services, telecommunications, and infrastructure companies. Now, I'd like to cover some industry specifics. Our communication revenue for the quarter was $569 million. even though margins came in better than expected at 11.1% and were up 300 basis points year over year. For the year, revenues were 2.5 billion and margins were 10.7%, a 270 basis point improvement over last year. Fourth quarter and second half of the year communication revenues were impacted by a slowdown of our largest two customers in this segment. With the recent 5G spectrum auctions now complete, we expect revenue acceleration throughout 2021. While the first quarter of 2021 will be sequentially similar, we are encouraged by our customers' capital plans discussed this earnings season. A key highlight for us in 2020 was our ability to diversify our customer base within our communications segment. Comcast became MOSTECH's third largest customer in 2020, growing over 100% from 2019, and our T-Mobile business also grew significantly in 2020, with sequential growth in the fourth quarter of approximately 60%. We're also very excited with recent developments with rural operators. The Rural Digital Opportunity Fund, or RDOF, which is a follow-up to the Connect America Fund, will provide $20 billion of funding over the next 10 years to build and connect gigabit broadband speeds in unserved rural areas. Additionally, in October of 2020, the FCC established the 5G Fund for Rural America. which will provide up to $9 billion in funding over the next decade to bring 5G wireless broadband connectivity to rural America. We entered the rural telecom space in 1997 through an acquisition and have been serving this customer base for nearly 25 years. I believe we are entering one of the most exciting periods in the history of telecommunications and that the deployment of 5G wireless technologies and the associated networks is truly a game changer for the consumer, our customers, and for Maastricht. Moving to our electrical transmission segment, revenue was $126 million versus $116 million in last year's fourth quarter. Margins decreased year over year and were impacted by poor performance on a particular project, which we expect to complete in the first quarter. We have now begun one of the larger projects we had previously been awarded and expect a much better margin profile in 2021. Backlog remains strong and improved both sequentially and year-over-year. We are confident that we can deliver strong revenue growth this year. Scale in this segment is important for us as we strive to achieve double-digit margins. We believe we are well-positioned for 2021 and beyond as the drivers for this segment remain intact, which include aging infrastructure, reliability, renewable integration, and system hardening. Moving to our oil and gas pipeline segment, revenue was $600 million. While we had nice sequential revenue growth, revenues were negatively impacted by the delayed start of some of our larger projects. Margins for the quarter were again very strong and positively impacted by the reimbursement of delayed project idle equipment costs. Without associated revenue, these reimbursements had a significant impact on margins. Backlog in this segment is strong, and we expect strong double-digit revenue growth in 2021. On our third quarter call, we forecasted a longer-term recurring revenue target of $1.5 to $2 billion a year, assuming a continued depressed oil and gas market. As a reminder, over the last three years, less than 10% of our revenues have come from oil pipelines, with the majority of our business being tied to natural gas. We continue to see strong demand for integrity services, gas distribution, and line replacement activity. We are focused on continuing to diversify our revenues in this segment. Moving to our clean energy and infrastructure segment, revenue was $1.5 billion for the full year versus $1 billion in the prior year, a roughly 50% year-over-year increase. More importantly, EBITDA margins for the year were 5.3%, 140 basis point improvement over last year. The size and scope of the opportunities we are seeing in this segment continues to grow. While this segment has received a lot more attention over the last few quarters, I still think it's an underappreciated part of MOSTEC's portfolio. With a new administration and a clear focus on clean energy, we have seen a significant increase in planned clean energy investments from both traditional customers as well as oil and gas companies that are trying to improve their carbon footprint. For example, earlier this month, Energy Transfer announced the creation of an alternative energy group focused on renewable energy projects. As a leading clean energy contractor and partner, MOSTIC is uniquely positioned to benefit from these investments. I'd also like to highlight the diversification within our clean energy and infrastructure segment. While we got our start and win, today we are capable of meeting any of our customers' demands. While we've seen a significant demand uptick for solar and biofuels, we believe the recent Texas events will create even more demand for reliable baseload generation, including gas-fired plants. In the first quarter, unrelated to the events in Texas, we began construction on a gas-fired plant in Alabama that is replacing an existing coal plant. This plant will be among the world's most fuel efficient and lowest emission natural gas plants. It is important to note that while this plant plans to run on natural gas, the turbine we are installing is capable of eventually burning a mixture of natural gas and green hydrogen, thereby establishing power generation flexibility. This is another market that has tremendous potential for MOSTECH. While George will cover 2021 guidance in detail, I'd like to highlight that our 2021 guidance reflects strong 24% revenue growth, with all of our segments expected to approach double-digit top line increases when compared to last year. We expect both revenues and EBITDA in 2021 to be at record levels. To recap, we had another great year. While times can be challenging and uncertain, opportunities always arise from these challenges. Our customers are looking for ways to change and improve their business models and are looking for strong partners to help them. In that lies our opportunity. Our greatest strength has been to understand the trends in our industry and our customers' needs. Our ability to provide services, whether existing or new, has always been a strength. I'm excited for what the future holds for MOSTEC. I'd like to thank again the men and women of MOSTEC for their commitment to safety, their hard work, and their sacrifices. Keep up the good work. I'll now turn the call over to George for our financial review. George?