MasTec, Inc.

Welcome to MazTec's first quarter 2022 earnings conference call, initially broadcast on Friday, May 6, 2022. Let me remind participants that today's call is being recorded. At this time, I'd like to turn the call over to your host, Mark Lewis, MazTec's Vice President of Investor Relations. Mark.

Thanks, Kevin. Good morning, everyone, and welcome to MazTec's first 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 MOSTECH's future results, plans, and anticipated trends in the industry before we operate. These forward-looking statements are the company's expectations on the day of the initial broadcast of this conference 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 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 today's call. In today's remarks about management, we will be discussing adjusted financial metrics reconciled in yesterday's press release and supporting schedules. In addition, 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 press release. With us today, we have Jose Mas, our Chief Executive Officer, and George Pita, our EVP and Chief Financial Officer. The format of the call will be opening remarks and announcements by Jose, followed by a financial review from George. The discussions will be followed by a Q&A period, and we expect the call to last about 60 minutes. We have a lot of important things to talk about today, so I'll turn the call over to Jose so we can get started. Jose?

Thanks, Mark. Good morning, and welcome to MAS Tech's 2022 first quarter call. Today, I'll be reviewing our first quarter results as well as providing my outlook for the markets we serve. First, some first quarter highlights. Revenue for the quarter was $1,954,000,000. Adjusted EBITDA was $99,000,000. Adjusted earnings per share was negative $0.03. And backlog at quarter end was more than $10.6 billion, a record level and the first time we've exceeded $10 billion. In summary, results were generally in line with revenue, EBITDA, and EPS slightly ahead of our expectations. Before getting into specifics about our quarter or guidance, I'd like to offer my perspective on Maastricht's business today. Maastricht is currently in the midst of a significant transition as it relates to our business mix and earnings. Based on the anticipated weakness in the oil and gas segment that started around the time of the pandemic in 2020, we set course to invest in those areas of our business where we felt we had excellent long-term growth opportunities. In addition to our organic initiatives, we made a number of acquisitions in 2021 that repositioned MOSTIC and enhanced our service offerings. Based on these investments, we expect significant revenue growth and diversification in 2022 and beyond. As an example, non-oil and gas revenue totaled $4.5 billion for full year 2020. In 2022, we expect these revenues to approach $7.8 billion, an over 70% anticipated growth rate in 24 months. We're even further encouraged by the level of current and planned investments we are seeing from our customers. We are aggressively responding to our customers' needs and request a ramp to meet their long-term build plans. This gives us tremendous confidence that the decisions we've made over the last two years will drive significant shareholder appreciation. I believe our first quarter results begin to demonstrate our stated goals. First quarter, non-oil and gas revenues and earnings both grew over 65% compared to last year's first quarter. While we still have considerable work to do to reach the level of performance that we expect of ourselves, we are making progress. Yesterday, in our earnings release, we updated 2022 guidance. Our guidance was impacted by two primary factors. First, the delay of completion of the Mountain Valley Pipeline, which was announced earlier this week. And second, the impact we are seeing in our solar business from the Department of Commerce anti-circumvention investigation that is currently ongoing in the solar industry. We expected 2022 to be a challenging year for our oil and gas business as new project activity significantly declined during 2021. While recent world events and increased commodity prices should have a positive impact on the need for new pipelines, we don't expect a meaningful impact until 2023. In the meantime, we were expecting to complete the Mountain Valley Pipeline project in 2022. That project, however, has now been delayed until a second half of 2023 in-service date, and in our updated guidance release yesterday, we have removed that project from our current year guidance. In addition to the pipeline project, we reduced our guidance expectation for solar revenues within our clean energy segment. Solar has been a focused area of growth for us that we believe offers great long-term opportunities. Although we expected solar revenues in 2022 to nearly double 2021 levels, we are now moderating our view because of the Department of Commerce's anti-circumvention investigation into four countries, Cambodia, Malaysia, Thailand, and Vietnam. These four countries represent approximately 80% of all of the solar panels sold in the United States. The risk of the investigation would be added tariffs that could range anywhere from 50 to 250 percent of the total panel costs. Further complicating the issue is that these tariffs would be retroactive to February of this year. This investigation has made it nearly impossible to move forward with a project that was dependent on these panels. A preliminary decision on the investigation is due by August 26. A decision will provide clarity for developers who today have too much of an unknown risk. While we expect activity to quickly ramp following a decision, many of the panels that were slated to be shipped to the U.S. are now being sent to other countries, potentially delaying shipment to U.S. projects following a decision. Based on this, our guidance now assumes roughly $350 million in solar revenue, a reduction of $250 million from our previous guidance. based on projects that are either ongoing or using panels that are not affected by the investigation. We are hopeful that this guidance will prove to be conservative, but it's our best estimate today. Our quarter-end solar backlog is approximately the same as the $350 million revenue guidance number. To put this impact in perspective, aside from our stated backlog, we have been either verbally awarded or are in negotiations for another nearly $1.5 billion of solar work that was to be performed partly in 2022. Thus, regardless of the impact in 2022, expected resolution of this issue should not change our aggressive growth targets that we expect in our 2023 solar business. In addition to the long-term solar opportunities, we're also encouraged about the progress we've made in growing and expanding our power delivery business. We made two transformative acquisitions in that business last year, having acquired Intran exactly one year ago yesterday and Henkels & McCoy at the end of the year. Integration efforts are ongoing, and we're encouraged by both our progress and, more importantly, the long-term potential of the business. Customers have responded very well to our more robust service offerings, and we are encouraged by the potential opportunities that exist for our power delivery business today. More importantly, we're encouraged by our customers' desire to see us continue to grow and expand as we work to meet their needs. Collaborative efforts with our customers on reliability, grid hardening, renewable connectivity, and EV charging provides us with excellent opportunities for long-term revenue growth. Now, I'd like to cover some industry specifics. Our communications revenue for the quarter was $664 million, a 17% year-over-year increase, and we expect full-year revenue to grow by over 20%. Backlog at quarter end increased 31% year-over-year and by over $300 million sequentially. We are rapidly expanding both our geographic presence as well as adding resources to meet our customers' demands. We added over 2,000 team members to this segment year-over-year and nearly 800 sequentially. We have experienced a significant amount of demand related to fiber expansion opportunities both from existing customers as well as a number of RDOF-funded new entrants. As a reminder, the Rural Digital Opportunity Fund, or RDOF, will provide $20 billion of funding over the next 10 years to build and connect gigabot broadband speeds in underserved rural areas. Only about half of those funds have been awarded. 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. Finally, the infrastructure bill included an additional $65 billion for broadband funding. These funds the majority of which will be spent in the future, in addition to the increased private spending by wireless companies, ILEX, and cable TV operators, are creating an environment for significant incremental spending in the years to come. As one of the leading turnkey contractors of choice, we are investing and expanding to meet this increased demand. We are also gearing up in our wireless markets as we expect significant project activity acceleration in the second half of 2022, as we've previously communicated. Moving to our power delivery segment, revenue was $650 million versus $134 million in last year's first quarter. First quarter of 2022 included results both for Entrant and Henkels & McCoy. The segment is on pace to generate approximately $2.6 billion in annual revenue with substantial growth opportunities for the future. We believe the scale we have been able to create positions us as a leader in the market with great opportunities ahead. With changes in electrical transmission and distribution needs, our customers have a clear goal of modernizing the power grid with a focus on reliability, fire hardening, renewable connectivity, and growth in electrical vehicle usage. Our combined service offering allows us to provide our customers with cost-effective solutions at scale to meet their demands. We're excited about our competitive position in the market, and this clearly is a segment that is reshaping how MOSTIC will look in the future. We are confident that margin performance will continue to improve and are becoming more optimistic on the long-term potential margin outlook for the segment. Moving to our oil and gas segment, revenue was $211 million versus $726 million last year. After the adjustment in guidance for the Mountain Valley pipeline, we expect revenue in this segment of approximately $1.4 billion versus nearly $2.6 billion last year. Our current 2022 revenue expectation does not include any large project construction activity and demonstrates what we believe will be the trough level for this segment. Discussion for future projects are very active, approaching levels we haven't seen in a few years. This, coupled with carbon sequestration and hydrogen projects, give us great opportunities to build off of our revenue base level. Moving to our clean energy and infrastructure segment, revenue was $436 million for the first quarter versus $350 million in the prior year, a 24% year-over-year increase. With our reduced solar guidance, we expect full-year revenue to approximate $2.2 billion, a roughly 15% increase over 2021. Backlog in this segment was up 22% year-over-year. We believe our diversification is our strength in this segment as we're capable of meeting any of our customers' demands. While renewable has been our focus, and we discussed our solar business earlier, we've made great strides in our civil infrastructure business along with base load generation projects we've built. For example, we're now in our second advanced class turbine installation project. These turbines are capable of burning both gas and hydrogen, and we believe our success on this project will lead to many more opportunities with this utility customer. To recap, We've had some curveballs thrown our way so far this year. While we've been managing through these challenges, I want to reiterate how strongly I believe that we position Maastricht in a way that will allow us to enjoy significant long-term opportunities with our customers. While 2022 will be more challenging than we originally expected, I think our second half of 2022 performance will demonstrate both Maastricht's margin and growth potential. In light of that, we started buying back shares at the end of the first quarter. It's important to note that our philosophy around buybacks has been to try to buy back shares opportunistically. As an example, our last three buyback programs were executed years ago at average prices of $19, $44, and $33 a share. I'd like to again thank the men and women of MOSTEC for their performance. I'm 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 position ourselves for continued growth and success. Before turning the call over to George, I'd also like to thank the investment community. Fifteen years ago this quarter, I had the opportunity to become CEO of Mostek. We've been fortunate to see and do a lot over the last 15 years, and while I'm extremely proud of what we've built over that time, I truly feel the best is yet to come, and I couldn't be more excited about what lies ahead in the next 15 years. I'll now turn the call over to George for our financial review. George?

Thanks, Jose, and good morning, everyone. Today I'll cover our first quarter financial results as well as our updated 2022 guidance. As Mark indicated at the beginning of the call, our discussion of financial results and guidance will include non-GAAP adjusted earnings and adjusted EBITDA. Reconciliation and details of non-GAAP measures can be found on our press release, our SEC filing, or on our website. First quarter results were slightly above our guidance, with revenue at $1.95 billion and adjusted EBITDA of $99 million, which was approximately $9 million above our guidance, primarily as a result of higher revenue levels. As previously communicated, first quarter 2022 results reflect a number of factors that make year-over-year comparisons difficult to assess. including a seasonally slow quarter accentuated with project startup costs, operations and integration activity on recently completed fourth quarter acquisitions, and a significant year-over-year decline in our oil and gas segment operations. It is worth noting that the revenue diversification strategy initiated in 2020 has begun manifesting itself during the first quarter with 58% of our first quarter revenue derived from recurring master service agreements versus only 28% during the first quarter last year. Most of this increase is derived from recurring programmatic utility services in our expanded power delivery segment. We continue to expect a significant shift in our end market operations during the balance of 2022 with accelerating revenue and earnings in our non-oil and gas operations, namely the communications, clean energy and infrastructure, or clean energy, and power delivery segments. This trend should become more evident during the second quarter, supporting our expectation that second half 2022 adjusted EBITDA will exceed last year's level. As we have previously indicated, we believe 2022 is a transition year and that performance in the second half of 2022 will serve as a precursor towards a strong 2023. To reiterate Jose's comments regarding our updated 2022 guidance of $9.2 billion in revenue, The change in view is primarily composed of approximately $250 million in expected solar project delays caused by panel delivery interruptions as a result of the U.S. Department of Commerce anti-circumvention investigation announced in late March and approximately $500 million in large oil and gas project revenue shifting from the second half of 2022 into 2023 as a result of regulatory and judicial permitting impacts. We expect both of these issues will be resolved in 2022 and will provide further momentum to expected strength in 2023. In support of our belief of future growth opportunities, as of yesterday, we have repurchased approximately 680,000 MOSDEC shares for a total cost of approximately $50 million. an average price of slightly under $73. This leaves us with approximately $109 million in remaining open share repurchase authorization from our board of directors. Now I will cover some detail regarding our segment results and expectations. First quarter communications segment revenue was $664 million with an adjusted EBITDA margin rate of 6.2% of revenue. This performance was generally in line with our expectation and includes the impact of various new wireline market startup costs for RDOF work and lower levels of wireless revenue as 5G deployments are expected to ramp this summer. We expect accelerating communications segment year-over-year revenue growth in the second quarter in the mid to high 20% range, with improved adjusted EBITDA margin rate performance in the mid to high 11s. Our annual 2022 guidance for this segment is essentially unchanged, with annual communications segment revenue ranging between $3.1 to $3.2 billion and adjusted EBITDA margin rate in the low to mid-11s. Within the second half of 2022, we expect higher revenue and adjusted EBITDA margin rate performance in the third quarter based on expected normal seasonality. First quarter clean energy segment was $436 million and adjusted EBITDA margin rate was 2.5% of revenue. This performance was generally in line with our expectation based on a seasonally slow quarter with low overhead absorption. Based on project timing, inclusive of expected solar project delays, we anticipate that second quarter clean energy segment revenue will approximate $500 million with adjusted EBITDA margin rate in the low to mid-4% range. Our annual 2022 clean energy segment revenue expectation, inclusive of approximately $250 million in solar project timing delays from the Department of Commerce solar panel investigation, is now between $2.1 to $2.2 billion, and our adjusted EBITDA margin rate expectation is in the high-5 to low-6% range. Within the second half of 2022, we expect slightly higher revenue levels in the third quarter based on project timing and seasonality, while expecting a slightly higher adjusted EBITDA margin rate in the fourth quarter based on expected project completion timing. While 2022 project activity has been hampered on the wind side by a lack of transmission capacity and on the solar side by panel delivery interruptions, The expected future demand for renewable power generation is unprecedented, and we believe that once logistical and tariff issues that are affecting 2022 are resolved, 2023 and beyond should provide significant future revenue and adjusted EBITDA growth opportunities. As a reminder, last quarter we renamed our electrical transmission segment to Power Delivery, to better reflect our expanded service offerings and capacity in the utility service market, including electrical and gas distribution, which occurred from 2021 acquisitions. We firmly believe that our expanded geographic operations, customer reach, and scale provide a compelling suite of service offerings to support our customers' needs as they work to transition to renewable power generation and harden the current grid. First quarter power delivery segment revenue was $650 million, and adjusted EBITDA margin rate was 8.2% of revenue. This performance slightly exceeded our expectation for both revenue and adjusted EBITDA margin rate. Within this segment, acquisition revenue, primarily comprised of Henkels and Intran, generated approximately $540 million in revenue, mostly from recurring programmatic MSA utility services spend. As I previously stated, these acquisitions significantly improve MOSTECH's revenue stream profile, both increasing the level of recurring MSA revenue and diversifying our customer base. We anticipate that second quarter power delivery segment revenue will approach first quarter levels with a slight sequential improvement in second quarter adjusted EBITDA margin rate. Our annual 2022 power delivery segment revenue expectation remains between $2.5 to $2.6 billion, and our annual adjusted EBITDA margin rate expectation remains in the high single to low double-digit range. First quarter oil and gas segment revenue was $211 million, and our adjusted EBITDA margin rate was 11.1% of revenue, generally in line with our expectation. As expected, this was a substantial year-over-year decrease, with a substantial revenue decline causing adjusted EBITDA to decrease approximately $144 million when compared to the first quarter last year. We expect second quarter oil and gas segment revenue will accelerate to the low $300 million range, with adjusted EBITDA margin rate slightly improving on a sequential basis. Our annual 2022 guidance view for this segment now assumes that approximately $500 million of selected large project activity, initially expected to restart in July, will instead move to 2023 due to judicial and regulatory permitting issues. Accordingly, our annual 2022 revenue guidance for this segment approximates $1.4 to $1.5 billion. An adjusted annual EBITDA margin rate is expected in the low to mid-teens. Within the second half of 2022, we expect higher revenue levels and adjusted EBITDA margin rate performance in the third quarter as compared to the fourth quarter due to expected normal seasonality. First quarter adjusted corporate segment costs were approximately $37 million or 1.8% of consolidated first quarter revenue. Our first quarter consolidated GAAP general and administrative expense, inclusive of $13.6 million in acquisition and integration costs, was 7.4% of revenue compared to 4% of revenue a year ago. As we have previously indicated, We are currently integrating and optimizing certain corporate and G&A functions for recently closed 2021 acquisitions and expect higher annual 2022 corporate costs while this process is underway. Adjusted annual 2022 corporate segment costs are expected to approximate 130 to 150 basis points of revenue. We are pleased with the integration progress we have made to date and expect that we will be substantially complete with these efforts during our third quarter. We expect to incur approximately a cumulative $26 million of acquisition and integration costs in the second and third quarters, with a higher level of expected costs in the second quarter. As I mentioned earlier, our efforts to diversify our customer base and increase the level of revenue generated through recurring MSA work are clearly evident in our first quarter 2022 results. For the first time since I have been at MOSTEC, no single customer represented more than 10% of first quarter 2022 consolidated revenue, and our top 10 customers represented only 42% of our total consolidated revenue. While it is possible that AT&T might once again exceed 10% of total revenue threshold, it is clear that a significant diversification of our customer base has occurred. Also, first quarter 2022 revenue derived from master service agreements reached 58% of our total revenue compared to only 28% a year ago, and this increase is primarily derived from recurring type utility service spend from our 2021 acquisitions. greatly increasing the repeatable nature of our revenue profile. As of March 31, 2022, we had record total backlog of approximately $10.6 billion, up sequentially approximately $700 million, and up approximately $2.8 billion when compared to the same period last year. Importantly, this represented record first quarter backlog levels across communications, clean energy, and power delivery segments, demonstrating the end market revenue shift that is occurring within our operations. That said, as we've indicated for years, backlog can be lumpy as contracts burn off each quarter and new contract awards only come into backlog at a single point in time. Now I will discuss our cash flow, liquidity, and working capital usage. In summary, our long-term capital structure is solid with no significant near-term maturities and ample liquidity, giving us full flexibility to take advantage of any potential growth opportunities to maximize shareholder value. As indicated in yesterday's release, we've invested approximately $50 million in MOSTECH share repurchases thus far in 2022, acquiring 680,000 shares at an average price slightly under $73 per share. We have approximately $109 million in remaining open share repurchase authorization from our board of directors. We ended the quarter with approximately $1 billion in liquidity and net debt, defined as total debtless cash and cash equivalents, at $1.69 billion, essentially flat versus our year-end level. This equates to a comfortable 2.0 times trailing 12-month leverage metric. First quarter cash provided by operating activities was approximately $132 million. We ended the first quarter with DSOs at 89 days compared to 80 days for last year's first quarter, and this includes recent fourth quarter acquisitions, which were slightly higher than the consolidated total. As we look forward towards the balance of 2022 and work towards acquisition integration, we anticipate second and third quarter DSOs will range in the high 80s to low 90s, with the continued expectation that DSOs will fall back into our target range of the mid to high 80s by year-end 2022. We currently anticipate that annual 2022 cash flow from operations will approximate $600 to $650 million and expect year-end 2022 debt levels to be slightly down compared to year-end 2021 levels. Within this expectation, we anticipate that higher levels of second and third quarter revenue will consume working capital and increase borrowing levels by 10% or so when compared to the first quarter levels before decreasing again in the fourth quarter. Moving to our updated 2022 guidance, we project annual 2022 revenue of approximately $9.2 billion, with adjusted EBITDA ranging between $850 million to $875 million. and adjusted diluted earnings ranging between $4.22 and $4.44. As I previously mentioned, the primary changes in our revenue guidance from our previous expectation related to $750 million of solar and large project oil and gas activity that is now expected to shift into 2023. As I will discuss later, the adjusted earnings per share view also includes incremental interest expense of approximately $0.09 per adjusted diluted share from higher expected short-term borrowing rates over the balance of 2022 from recent and forecasted Federal Reserve rate actions. For the second quarter, we expect revenue of $2.2 billion with adjusted EBITDA of $177 million, or 8% of revenue. and adjusted diluted earnings per share of 72 cents. As we have previously provided some color regarding our annual 2022 segment expectations, I will now briefly cover some additional guidance expectations for modeling purposes. We anticipate net cash capex spending in 2022 at approximately $150 million, with an additional $220 to $240 million to be incurred under finance leases and this level reflects some initial CapEx investments for 2021 acquisitions. We are revising our expectation for annual 2022 interest expense levels to $76 million to incorporate higher short-term interest rates from both recent and expected Federal Reserve actions during 2022. For modeling purposes, estimated 2022 share count is 75.8 million shares, and this only includes the impact of share repurchases to date. As a reminder, if you model additional share repurchases, also consider the interest expense impact of additional borrowings. We expect annual 2022 depreciation expense to approximate $350 million, or 3.8% of revenue. And lastly, we expect that annual 2022 adjusted income tax rate will approximate 24.5%. This concludes our prepared remarks. We'll now turn the call over to the operator for Q&A. Operator?

Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. Please ensure that the mute button is switched off to allow your signal to reach our equipment. And in order to allow all participants the opportunity to ask a question, we ask that you please limit yourselves to one question and one related follow-up question and rejoin the queue if necessary. Our first question today comes from Justin Houck of Baird.

Oh, great. Thanks. So first of all, I appreciate all the color on the solar and the MVP issue, and that makes it pretty clear as to what was flowing through. I did want to clarify, maybe I missed it, but just on the backlog impact of that, I think you said that there's $350 million of solar in there today, and that's the stuff that's not impacted by the tariffs, and that's mostly $22 million. solar work. But did you take out $250 million of the work that you were previously expecting? And then the same thing on MVP, the $500 million that got pushed into 2023, is that, since you only have 18-month backlog, is that fully in your backlog at this point?

So, Justin, a couple things. On the solar side, we've got a lot of jobs that we've either been verbally awarded or in negotiations that, you know, we currently, without a start date, we're not going to put them in backlog. So the balance of the work that we expected to perform in 2022 was going to be added to backlog, so nothing was ever actually taken out of backlog. The stuff that, you know, kind of made it in backlog in Q1 is what we expect is going to be completed in 2022. We didn't add any other projects awarded that we don't actually have an understanding for start date yet, so there was no negative impact to backlog related to that issue, other than the positive that would have come from projects being awarded that would have been done in 2022. On the oil and gas pipeline side, we did not remove the Mountain Valley pipeline from backlog, as we still expect it to complete within the 18-month period of our backlog view.

Okay. All right. Thanks for clarifying that. And then I guess my second question is just on the oil and gas, and you talked about, at least from a revenue standpoint, that this is kind of the trough because there's no large projects that are in there. I'm just wondering, on the margin, the low to mid-teens EBITDA margin, is that also a trough margin, or is there under-absorption in that to where, you know, if you stayed at this level, would the margins otherwise be higher if you were right-sized for for MVP, or is that kind of a project-level margin?

I mean, there's no question, right, that we're under-absorbed. I think we're, irrespective of what's happening in the market this year, we feel that 2023 is going to improve considerably based on the activity that we're seeing across all of our customers. I think today the sentiment is dramatically different than it was months ago. I think there are a lot of projects that are in queue. The problem is that it takes time to get them from queue to construction. Some of it is just being able to order a pipeline and the amount of time it takes to get it delivered. So we expect 23 to be a lot better, and thus we've got a lot of costs that we're incurring today based on the fact that we know we're going to be able to put a lot of people back to work in 2023. So it's definitely not a margin profile that That is optimized by any stretch of the imagination. If we didn't think the 23 would be better, if we didn't see future projects coming, there's no question we would cut more costs than we already have.

Okay. All right. Thank you.

I appreciate it.

Thank you.

Appreciate it. Our next question comes from Neil Mehta of Goldman Sachs.

Good morning, Jose, George's team. The first question was around share repurchases, and thanks for the color, and good to see you guys in the market, given the recent stock price performance. Can you just talk about your philosophy around share repurchases? You gave a little bit of color about how you historically have approached it, and is there an opportunity to be aggressive to the extent that market volatility continues here through the balance of the year?

You know, it's something that we always consider. Obviously, when you look at what we've done over the course of many years, we really only buy shares when we think that there's, you know, something with the story that either we think is misunderstood or we think the value isn't really aligned with the longer-term opportunities, right? So, you know, if we go back to 2015, we were able to buy shares at $19. In that 18-19 timeframe, we bought them at $40. And if you And then right at the beginning of, or during the pandemic, shortly thereafter, we bought a lot of shares because we felt that just the progress of the business, what we were seeing, what we think we'd be working on, the earnings profile that we were expecting longer term, we think created an enormous amount of value and an opportunity for us to do that. And quite frankly, we feel the same way today, right? We know that 22 is going to be a challenging year. We know that it was always going to be a transition year. We had a lot of things coming in and out this year. But internally, we're incredibly positive about our future and where we think we can take it. So we feel that if we perform and we execute on our plan, our earnings profile is going to change dramatically. And we think that the stock today is relatively cheap to where it's going to be. And that's why we started buying back shares. So that's our philosophy. That's really when we jump into the market. We'll see what happens, right? And To the extent of capacity, I think we have a lot of capacity to do what we think is right ultimately for the business. So, you know, it's a decision. You know, we've got to look at, you know, investing in buybacks. We've got to look at, you know, what's potentially out there inorganically. We've got to look at the organic growth opportunities that we have, and we have to allocate capital. And again, I think historically we've really only allocated towards buybacks when we feel there's something disjointed about our stock price relative to the opportunities that we see ahead.

That's helpful, Jose. And I guess the follow-up is in investor conversations this morning, one of the question marks is, as we think about your full-year EBITDA guidance, it's very much back half-weighted. And so when you see that, there's always questions about confidence around execution and ability to hit the number. Can you just give the market a little more color about what gives you confidence around the guidance and what happens in 3Q relative to 2Q or the back half relative to 2Q to get that EBITDA acceleration?

Look, we spent a lot of time going through that. Obviously, we historically haven't really made big adjustments to guidance, so this was something that we took very seriously. We spent a lot of time on. We looked at it on a month-by-month cycle, so it wasn't just quarter-to-quarter for us, but we looked at how things were moving from April to May, May to June, June to July, what what the things that had to happen for us to be able to attain our guidance relative to that. And I think we feel incredibly comfortable. I think we're going to see a lot of acceleration in the second part of our second quarter. It may not be evident as we release financials, but it'll be evident to us internally as the months go by. We know what projects we have booked. We know what projects we're starting. So we've got a very high level of confidence to the balance of our plan to what we think we can achieve in the second half of the year. And more importantly, I think, and we've been saying this for a long time, right, we knew the second half this year was going to be, you know, a really good part of the year for us. You know, we're excited about what it's going to mean long term. We can't wait to demonstrate, you know, what we think the revenue growth will be and, more importantly, what the margin profiles will look like in the second half and ultimately what that means for 2023 and beyond as people get to get, you know, a fairly good look at the business in a more normalized state without all of the ins and outs and the noise that we have as we transition from, you know, being a very, you know, business that, you know, had a lot of EBITDA related oil and gas, which has now shifted to being a much more diversified earning stream. Uh, and we're pretty proud of that. Thank you, sir. Thanks, Neil.

Our next question comes from Alex Regal of B Riley.

Thank you. And a really nice quarter. Jose, congratulations. A couple of questions. Um, first, you know, I think it's, it's, uh, It's actually a big positive here for us to see Moss Tech at sort of a base level of business here with a majority of the revenue coming from reoccurring. What I'm excited about here is what we can layer on top of that over the next couple of years. And you've mentioned a number of sort of newer growth opportunities, such as EV charging, carbon capture, and some new customers within communication. Can you expand upon some of those sort of new opportunities that are maybe not in the next six months, but over the next two to three years?

Sure, Alex. We keep saying it, and it's quite remarkable to us what's happening in the industries that we serve. When you think about each one of our segments in telecom, the world's changing. When you see the amount of dollars that are being invested by the government on broadband expansion plans, When you look at what all the private guys are doing, both from a 5G perspective and a fiber perspective, how they're viewing their businesses totally differently, you know, long-term than they've traditionally done. I mean, the network plans of the future are going to be so vastly different than anything we've ever seen before. And it's an incredibly exciting time to be in these industries. And I think the opportunities, the new businesses that are going to get created from them are far beyond anything we could have imagined. You know, the same thing in power delivery, right? We are going through an energy transformation in this country, how power is generated, how power is delivered, how power is used. It's impacting every single part of the energy chain. And, you know, luckily over the course of the last number of years, we've been able to build out, you know, a service offering that pretty much touches it all. So I think, you know, not only are we going to enjoy the increased revenues for the work that we've traditionally done, but all of these new type of services that are being created. You know, I think the easiest one for people to understand is really, Electrical vehicles because we see them on the street, but there's so much more happening to the grid. It's different than what we've traditionally done You know when you think about you know battery backups about battery power and all the things that have to happen a lot of the technologies that's being Installed in the grid which again is totally different than anything we've historically seen in our clean energy and infrastructure business and anything and everything from You know roads to bridges to what's happening in renewables to what's happening with you know base load generation I think there's a newfound understanding of how important base load generation is, and every one of our customers is going to have some sort of that. These new dual-sourced engines that burn gas and hydrogen, I think, are going to be an absolutely huge part of the generation chain going forward, and we're privileged to touch so many of these different areas that I think are going to offer tremendous opportunities for growth for us. So it's just an incredibly exciting time to be part of these different industries.

And then lastly, how conservative were you in revising your guidance for the uncertainty in the solar market? And do you see there to be opportunities to complete some of these projects maybe in phases whereby you complete phase one and then you come back three or six months later and install the solar panels?

So the answer to the latter part of the question is yes, right? I think that some customers, especially jobs that are underway, they're having to make do and they're having to try to make the best financial decisions that they can, right? This Aside from that, it is a serious issue. We've got so many unknowns related to those development projects. They don't have the capacity to be able to pass those incremental costs along. Until there's certainty, the industry is going to slow down. At first, I think there was a lot of noise. There was a lot of doubt. A lot of people thought the industry could figure a way through it. I think right now, the Department of Commerce has to make the decision. The good thing is I think it's gotten tremendous political coverage. It's become a political football. You know, this could destroy Biden's, you know, whole energy, you know, thesis. And because of that, I think, you know, sanity is going to prevail. And I think, you know, we've seen the Secretary of Energy in the last two weeks be very critical of what's going on, be very frustrated with the Department of Commerce. There's a lot of pressure on Commerce. They've put out some recent letters here in the last few days that that I think they're feeling the pressure, and I think there's going to be a quick decision. So the question is going to be all about what does the decision say, and ultimately how fast does the market come back. Again, what this is going to drive is an incredible amount of pent-up demand, and when the spigot turns back on, it's going to be flowing, and everybody's going to have to react, and I think it's going to create amazing opportunities. From a conservative nature of guidance, look, I think we provided the best level of guidance that we could today. We're hopeful that some of these things turn in our favor and we're able to talk about how conservative this guidance was, but I think it's realistic, right? So I think we've taken a realistic approach to the business, to the challenges that are in front of us. We think we're doing everything we can to mitigate them, and we feel good about our ability to hit it.

Very helpful.

Thank you. Thank you, Alex.

Our next question is from Mark Bianchi of Cohen.

Hey, thanks. I think I heard in the prepared remarks that the solar backlog was 350, so that would imply it's kind of 20% of the division's backlog. Can you talk about what the rest of the backlog is? Is it all wind or what types of projects are there? And then what's the difference in execution on those types of projects? Are some relatively higher or lower risk? And what does the margin profile look like relative to one another?

Sure. So we've talked about the diversity in that segment for a long time. I think it's really the strength of that business. Wind is a huge component. It's where we got started. It's still a primary source of revenue for that market. But we've grown our civil infrastructure piece a lot. We made the acquisition of a company called F&F probably a year and a half ago now, which is really a civil infrastructure play that works on predominantly roads and bridges. That's been an incredibly well-performing acquisition for us. They've done a great job of building and growing their business. The thesis behind that was what we thought was coming with the infrastructure bill. It was really our first foray into that business, and I think that's been a business that's performed above segment averages since we've owned it. The industrial side of our business, and when I say that, I talk a lot about You know, a lot of the – when we talk about the advanced class turbines and the installations we're seeing across utilities, it's a huge driver of the future of our business and what we're seeing. Again, we think baseload generation is garnering an enormous amount of attention. I think this is the cleanest form of baseload generation. I think it's truly revolutionary. And for us to have been involved in a couple of the first projects ever built in this country I think give us, you know, tremendous runway in terms of what we're going to ultimately be able to do with that business. You know, I'd say the backlog is frankly composed of, you know, of all three of those components. It's work that, you know, we expect to get done within the next 18 months, a lot of it within the next 12 months. So it really creates a lot of the thesis and basis for the revenue targets that we've laid out today for that business.

Okay. And am I... am I right to interpret the margin guidance there that you ought to be getting into sort of the high single digits by the time we get to fourth quarter? And if that's right, how does that set you up for, for 23? Should we be thinking that that's kind of the level you should be at in 23 in that business?

And that's what we've been saying, you know, for a long time, right? We've, we've been talking about our growth, our, The investments that we've made in growing those different diversification plays within that industry, I think you're going to see a huge margin shift in that business in the second half, so I think you're accurate on your assessment, and I think that'll be a margin profile that we strive to perform on a full-year basis in 23. Okay.

Thanks for the comments, Jose.

Thank you.

Our next question today comes from Jamie Cook of Credit Suisse.

Hi. Good morning. I guess two questions. and strategically as you're thinking about just the oil and gas business and with potentially getting better in 2023 and 2024, at the same time, it's a fairly cyclical business, volatile business, a lot of, you know, starts and stops to projects. I mean, do you think, you know, over time, has this just given the risk decreased earnings and cyclicality? And then I guess my second question, to what degree, as we're thinking about the projects that were sort of delayed this year, you know, to what degree should we think about that as being additive to 2023? Thank you.

Sure. So, Jamie, I think I'd say a couple things. First, when we think about oil and gas, right, and the nature of that business since we've owned it, you know, I'd argue that while cyclical, it's been, you know, cyclical to the upside, right? I mean, it's a business that had dramatic growth for us from, you know, literally from the 2012, 2013 timeframe all the way to 18, 19. So it had an amazing run. There's no question that since the pandemic, that business has changed, right? The dynamics of that business, the expectations of that business, everything we were seeing around clean energy and all of the climate change goals that were being talked about. But I think there's also been a fundamental change, right? I think there's definitely been the realization of the importance of baseload power in this country. I think that gas is going to drive that to a large extent. I think with all of the recent developments that have happened between Russia and Ukraine and the need for natural gas around the world and the U.S.' 's position in that and the potential for the U.S. to export LNG around the world, I think that the sentiment around that business has radically changed. I think now when you you know, now you start reading a lot of articles that talk about the lack of pipeline capacity and the need for more pipelines, which is something that, you know, probably would have been unfathomable a year ago. There's a level of that market that that market has historically performed at that we think it'll get back to, right? I don't know that it's ever going to get back to the peaks, but I think that it'll definitely be at a much healthier level than it is today. And we're pretty excited about it, right? We're not really trying to to hide that because we've been talking about this base level that we're at at $1.4 billion. We think that's a sustainable level over a very long period of time. And anything that adds to that will be additive. On top of that, you throw in the new technologies that are coming when you think about carbon capture and sequestration and what's happening with hydrogen pipelines, which I still think over time that's going to be the bulk of that business. I think the business is going to converge significantly. into those types of activities more so than the historical pipeline. I think there's also going to be a point in time in which they're all active, right? You're still working on, you know, historical gas pipelines. You're building, you know, a lot of these new pipelines, and it's going to create, you know, a very active period for a period of time. So from my perspective, just being in the industry, being one of the industry leaders in that market, I think give us tremendous potential over the long term. And, you know, at this point with, you know, what it's doing today and, and the values which we're trading at, it's almost option value when you think about our stock. As it relates to MVP, look, when MVP goes, it's going to be a great job. We've got a lot of work left to do on it. Our assumption at this point is it'll go in 23. It would obviously have a significant positive impact at 23. I don't know that we're even baking that in at this point. We're ready to build it when it's ready to go. We think the customer is being very mindful about it. I think they're taking all the right steps to ultimately have a successful project. We're encouraged by the confidence that they have in terms of their desire to ultimately build that project, and when they do, we'll be there to build it for them.

Thank you. I appreciate the call.

Thanks, Jamie.

Our next question is from Adam Palheimer of Thompson Davis.

Hey, good morning, guys. I just wanted to clarify real quickly, what are the expectations for the power delivery margin in the back half? I'm not sure I caught that.

So what we said was, you know, roughly we expect, you know, roughly 10% margins for the full year. You know, obviously it'll be a little bit lower in the first half of the year, picking up in the second half. So it's, you know, low eights in the first and second quarter, and then, you know, building up from there.

We talked about it being high single-digit to low double-digit for the year, Adam, so it'll be a little bit above that in the second half of the year as we continue to expand. Third quarter, particularly with the seasonality, should be more profitable.

Okay, and is that what you said? You made a comment to somebody else's question where you said that margin carries through into 2023. Was that power delivery?

Well, I think it was the whole business, right? I think the earlier questions were more about clean energy, right? Because our clean energy margins are going to, you know, should be in the high single digits in the second half of the year. I think the question was related to that and what it means for that business on a full year basis relative to what we've historically been doing that. So I think there's a fundamental shift and change in that business in the second half of 22 versus what we've seen. But I'd argue that, you know, a lot of our businesses are going to look the same, right? I think we're going to get into a period of time where, You know, absorption's high, utilizations are really high going into 23, and it should bode really well for first half 23 margins compared to first half 22 margins.

And, Adam, I would say on the power delivery side, you know, we have as much opportunity on the top side as we do margin, right? You know, really, with all the combination of our operations with ankles and entrant and the things that we've done, we really think, and the things that are happening relative to the grid and the spend, you know, we're kind of at this 2.5, 2.6 run rate this year. You know, we would Certainly expect opportunities to grow that as we move into 23. With that should come some leverage.

Got it. Okay. Good color. Thanks, guys.

Thanks, Adam. Our next question is from Andy Kaplowitz of Citigroup.

Hey, good morning, everyone. Morning, Andy. When you look at the overall clean energy business and the delays in solar energy, As well as how difficult supply chain in general has been, how difficult is it to deliver that high 5% to low 6% range margin guidance you gave today for the year? And then maybe stepping back, Jose, how are you thinking about MassDict's ability to deal with the current environment, high inflation, labor costs, continuing supply chain headwind?

Sure. Look, I think it's lower than the margin expectations we had going in. So I think we've tempered it a little bit on the clean energy side because of some of those things that you've laid out, right? You know, the shift of the business, you know, some of the issues we've had to deal with. So, you know, we're not excited about, you know, high fives, low sixes. We, you know, quite frankly that we believe and feel those margins should be significantly better. We also think we'll demonstrate that, you know, towards the second half of the year and and prove out that that's a business that should be in the high single digits on a full run rate basis. So again, we still think they're suboptimal, and they're suboptimal for a lot of the reasons you just laid out. When we think about the balance of our business and all of the issues that are happening, whether it's inflation, whether it's labor costs, whether it's material delays, we're seeing the impacts across our business. We're not immune to it. I think when you look at our guidance, And really the range that we've laid out, right, you know, part of it is MVP, part of it is solar, and then there's a part that I think deals with that as well. You know, we're working as hard as we can, you know, to work with our customers to, you know, allow relief where we can get it for all of those same issues. But, you know, it takes time, and I think everybody sees it. Everybody understands it. I don't think there's been a lot of pushback from customers to ultimately appropriately compensate us for those expenses and for the work that we're doing. but, you know, we're not immune to it. And, again, I think from a customer perspective, I think one of the benefits of working with Mostek and one of the advantages that we have, you know, is customers are looking for companies that they can rely on and they know are going to complete their projects on time because labor is a real issue, right? And for us, you know, having the amount of people that we have and the scale that we have, we give customers a lot of confidence that if we say we can do something, we're going to get it done.

Thanks for that, Jose. And then as you've been integrating Henkels, maybe give us an update on how you're thinking about the overall business. Any surprises, positive or negative so far? I know your medium-term goals are $3.5 billion for power delivery and double digits to low team's margins. As you've really gotten to know the business, can you talk about what you're seeing and the ability to get to that level?

I think we've seen two things that have been somewhat surprising. One is the level of interest of our customers to see us continue to grow and the opportunity subset that we're seeing because of it. So I think that just, you know, I think George alluded to it here a second ago that the top line opportunities within that segment are probably more than we anticipated. And then two, you know, when we look at the business and we look at the challenges that we have, I think ultimately the long-term margin profile opportunity is probably better than we had anticipated as well. Right. So it's, It's a great story. It's one that we think is going to be obviously one of the primary drivers of our total business. It's a business that we think we're going to be able to grow above company average margins over the long term with good margin opportunities ahead. So, again, a great business to be engaged with. We're super excited about the opportunities, and we can't wait to continue to deliver and work at improving their performance.

Appreciate it, Jose. Thank you, Andy.

Thank you.

Our next question is from Brent Tillman of DA Davidson.

Hey, thanks. Good morning. Hey, Jose, it looks like you're sticking to the view that the second half should see a pretty big ramp up here in communications. I guess just what are you hearing from your customers in terms of rollout for 5G, and do you feel like you have even more clarity into that than you did a few months ago when you were guiding to that?

I don't think the clarity has changed, which is why the guidance hasn't changed. We've been in constant dialogue with our customers. We know what their build plans are. We know it by month. We know it by site. We always expected second half to be dramatically bigger than first half. I think it's playing out exactly like that. I don't think we obviously have been very concerned about the material issues in the supply chain, and we're feeling really good about you know, where that's trending and how that's looking and supporting our view for what we think is going to be a really strong second half.

Okay. And then just wondering with the, you know, the Commerce Department issues and solar, how do you – are you taking a different approach to jobs you're going to add to backlog from here? I'm just curious if there's a different approach from here.

Yeah, I think at this point, right, we have to have an understanding of when the project's going to start, how it's going to start, you know, how is the customer going to view the project? Are they depending on panel deliveries? Where are the panels coming from? Are there tasks that they're going to do without panels? And, you know, how committed really are they to that and what does that mean? So I think all of those things we'll take into account to ultimately, you know, decide what goes into backlog or not. In the meantime, you know, we're going to continue to work with our customers. We're trying to continue to expand. Our presence within that market, I think when it's all said and done, we're going to have a great solar business for a very long time. But there's no question that over the course of the next few months, you know, the industry is going to shake out. I think, you know, there'll be some players that, you know, are around and some others that aren't. So it's going to be really important to be mindful of that as you think about where you commit your resources long term.

Interesting point. Okay. Thank you. Best of luck. Thanks, Brent.

Our next question is from Sean Eastman of KeyBank.

Hi, team. Thanks for taking my questions. I'm doing well. I'm doing well, thanks. Just coming back to the ONG segment, could we just get a little bit more color on the bridge from the first half to second half, both in terms of the revenue and the margins? I'd just like to have as much color there as possible because it still looks like quite a big... jump up even with MVP being pushed out into 2023?

Look, so what we have left in that business, right, is more seasonal. So when we think about the second quarter versus the first quarter, we expect revenues to grow north of 50% from Q1 to Q2. We have probably just slightly lower than that from Q2 to Q3, and then it'll come down again in Q4 based on some of the weather patterns at the end of the year. So a lot of our work gets pushed into those months that are most workable. And I think if we can demonstrate in Q2 that we've got that kind of revenue growth, then I think it'll play really well into what we'll be able to accomplish in Q3. Those changes in growth rates aren't dramatically different than what they've historically been, albeit it's been much bigger. But I don't think that the The trend lines have been radically different, so that's kind of our expectation. We've got a lot of projects that are starting up now because of the winter weather, and Q2 and Q3 will be our strongest quarters with Q3 being our best, and then it'll drop again in Q4. So nothing really unexpected there. From a margin profile perspective, I think you're going to see similar margins into Q2 as we grow. Q3 will be our best margin quarter as it normally is. And then Q4 is usually a good margin quarter for us as well, though it'll be slightly less in Q3.

Okay, thanks for that, Jose. And then just drilling in on the operating leverage expected in the business, particularly in communications and in clean energy, over the past year or two years, sort of expanding capacity, hiring, training, You know, expanding the footprint, getting ready for growth has been, you know, a drag on margins. Where are we at there? I mean, are we sort of ready to go and, you know, as the revenue comes through, we'll really start to see that leverage? Or is this still an ongoing process over a multi-year period?

Well, a couple things. I think you begin to see the fruits of your efforts over a long period of time. So I think, you know, revenues are going to grow substantially this year versus where they were last year. I think you'll see, you know, continual revenue growth as the year progresses. We've got a pretty good jump from Q1 to Q2 in that business. I don't, you know, as we think about the guidance that we've laid out, I don't think it's optimal numbers, right? I think at the end of the day, we're still adding resources. You know, we are still, and I think we alluded to it in our prepared remarks, we're being, you know, just we're almost drowning in opportunities relative to, you know, that segment and the opportunities that exist longer term. So, you know, to the extent that the opportunities keep coming, to the extent that the opportunities are longer term in nature, we're going to continue to invest. We're going to continue to grow. This is going to be a really long cycle. You know, we kind of touched on the public dollars or the federal dollars that are going into the space. The reality is we're only seeing a very, very small sliver of that to date and what's already had a huge impact in the business. So if these dollars ever really make it, you know, to the field and to the business, I mean, the size of this market is going to be – it's going to dwarf what we see today. So I still think there's tremendous opportunity, so I don't think we're going to be in a position where we stop adding resources or stop training. but I think what you are seeing in the business is the increased revenue allows us to absorb those costs in a much more efficient manner than we've been able to do over the course of the last couple of years, which is why we expect to see margin improvement in the second half of the year. Our long-term margin profile in that business hasn't changed. I just think it's a balance of how much do you push margins versus how much do you invest in growth, and I still think we're in that cycle, and I think we'll be in that cycle for a while. With that said, You know, we expect improvement this year and we expect improvement next year.

Helpful. I'll turn it over. Thanks a lot, Jose. Our next question is from Noel Diltz of Stifel.

Thanks. So, first I just have a point of clarification. On MVP, I thought that last quarter there was some discussion that even if full construction doesn't start, there might be like 100 to 150 million of work that would still happen. Is that also pushed out at this point? And it sounds like some of the projects we thought maybe could backfill that hole are perhaps a bit delayed just because of the availability of... Maybe if you could give us an update on how you're looking at those projects and if it seems like maybe just getting pipe is a limiting factor in some of those moving forward. Thanks.

Yeah, so I'll start with the second part of the question first. I think, you know, projects... The supply chain issue is obviously impacting... projects that people are trying to do in an expedited fashion. So, you know, is there a chance for some activity to hit, you know, late in the year? There is. We haven't really included a lot of that because we still think there's a lot of risk, so we try to take as conservative a view as we can. When we think about MVP, you know, it's obviously been something that's extremely fluid, so, you know, we've taken the full 500 out at this point, and again, hope that it ends up being conservative, but I don't know that we've got a great answer on truly understanding what those numbers will look like. So we took it all out.

Okay, got it. And then I guess going back to solar yet again, I'm just trying to reconcile what seems to be extremely mixed commentary and opinions on what this means for the solar market across the contractor group. So I'm just curious, one, if you're seeing any differences in how utility-scale solar customers are sort of treating the panel issue and, um, you know, sort of the willingness to maybe put up a bond or something like that to cover the potential, um, tariff versus smaller developers. And then, you know, you sort of talked about this, but are you getting calls from your customers today saying, Hey, we're pushing projects out to 2023 or with this guidance reduction, are you just trying to get ahead of that? Thanks.

Look, so, uh, We can only talk for ourselves, I guess, and for the customers that we deal with, right? I think that when you think about, but it makes logical sense, right? When you think about the market, panels are an enormous cost of a project, north of 50%, and you have the potential for those costs to escalate by two and a half times. So there is no developer in the country that can price that into their model and especially do that retroactively after they've agreed on selling power at a certain number. So I think that's just logical, right? When you kind of play out what risks some developers are willing to take versus others, there is a difference there. I think at this point, you know, there's a difference between a project that maybe is towards its end versus, you know, starting. There have definitely been projects that have been put on hold pending the outcome of this. You know, I think you can take a view that, look, there's going to be a resolution in August and things are going to get better in the second half of the year. I think that's a very logical view. We didn't take that view. We decided to kind of moderate the year based on what we know today without having the risk of what could potentially come in the second half of the year. We see customers like Nextera that have been very vocal. They've talked about moving two to three gigawatts out of 2022 into future years. You know, the positive there is they haven't changed their outlook through 25. So that just means that all of their timelines will compress. Construction cycles will compress. which is going to make it even more interesting for contractors like us. But look, I think we're being as open with the market as we possibly can be. We've laid out the issue. We've laid out the potential risk. We're all going to be able to follow it together. But I think that for where we are today, I think it's the best way to approach the year.

Our next question comes from Avi Yaroslavets of UBS.

Hey, guys. Thanks for taking my question. I'm Steve Fisher. So we've heard a number of different implications coming out of this commerce investigation, similar to what Noel said, especially around the timing. So just kind of wondering when should we expect the biggest impact of this overhang to be for MOSTECH as you guys see it now? I know last quarter you said Q1 2023 was supposed to be big on solar for you or unseasonably so. So is that still looking that way or is that now at risk?

You know, look, I mean, the commerce investigation has to have a decision by August 26th. It's a preliminary decision. The final decision will come in January. But whatever we learn in August will probably be within the ultimate decision. So I think that, you know, August will be a very good sign of what is to come. There may be things that have to happen post that depending on what their investigation finds to ultimately get to the right answers. But I think, you know, we're a few months away from knowing where this investigation is headed and how much or not of an impact it's going to have on the business. As it relates to 2022, yeah, all the projects that we – everything's been delayed, right? So projects that we thought would start in second quarter, even if they're good projects, developers took their time to make sure that, you know, Their panels weren't impacted to make sure that... Again, it's only four countries that are involved. There are other countries in the world where you can buy panels. The problem is that over 80% of the panels come from those four countries. So there's a lot happening in the supply chain world today. But most developers are trying to figure this out either by securing new panels, waiting out the investigation using American manufactured panels, So there's a lot of noise and a lot of things happening, but at the end of the day, right, the majority of panels available to the U.S. are, for the moment, right, it's an issue. So until this issue is resolved, you know, there's not perfect clarity. The $350 million that we've guided to solar we feel great about. We know exactly what the projects are. We've had great communications with the customers. We know, you know, exactly what they're doing, why they're doing it, and, you know, that's So, you know, it's not the same timeframe that we originally laid out and thus, you know, a little bit of the change in quarterly guidance from us. But, you know, I think we have perfect clarity on what's going to happen on those jobs that represent those dollars for us.

Got it. Thanks for that. And just continuing down that line of thought. So the 250 that you took out of solar for this year, are you thinking that you're able to offset that through other parts of the clean energy business? Are you able to move some resources around?

to maybe offer some upside after that cut no we took it out right so we lowered our clean energy guidance by that amount uh reason being right is again you know project accelerations in this environment with the supply chain where it exists are difficult uh you know the labor that we use for solar is different than the labor that we use in our other business it's it's uh will there be some opportunities to save from people? The answer is yes. But, I mean, look, if work is – it's hard to get a new project in anything today and have it built quickly with the supply chain where it sits, right? So, no, we did not. We just took out the revenue from our model based on, you know, what we're seeing in the industry.

Sounds good. Thanks, guys.

Thank you.

Ladies and gentlemen, that's all the time we have for questions today. I'd like to hand the call over to Jose Mas for any additional or closing remarks.

Just want to thank everybody for joining us today, and we look forward to updating you again on our next quarterly call. So appreciate you being with us today. Thank you.

Ladies and gentlemen, that now concludes today's conference call. We thank you for your participation. You may now disconnect.