MasTec, Inc.

to MassTech's third quarter 2023 earnings conference call, initially broadcast on November the 1st, 2023. Let me remind participants that today's call is being recorded. At this time, I'd like to turn the conference over to Mark Lewis, MassTech's Vice President of Investor Relations. Mark?

Thanks, Elaine. And good morning, everyone. Welcome to MassTech's third 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 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, 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 by 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 call. A reconciliation of any non-GAAP financial measures not reconciling these comments to the most comparable GAAP financial measure can be found in our earnings press release. Please note that we have two documents associated with today's webcast on the Investors and Events and Presentations page of our website at mystech.com. There is a companion document with information and analytics on the quarter just ended and a guided summary to assist in developing your financial models going forward. Both PDF files are available for immediate downloads. With us today, we have Jose Mas, our CEO, and Paul DeMarco, 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 Paul. These 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 now turn it over to Jose so we can get going. Jose?

Thanks, Mark. Good morning, and welcome to Mas Tech's 2023 third quarter call. Today, I'll be reviewing our third quarter results as well as providing my outlook for the markets we serve. As you all know, we moved up our earnings release in this call by two days from our normal cadence. As we went through our quarter close process, given the preliminary results we were seeing for the third quarter relative to our prior guidance and the forward information we were receiving from some of our segments, we determined that it was important to get our earnings release out to the market as soon as our procedures had reached the point that we had sufficient clarity on the data. We appreciate everyone adapting your schedules so that you could join us on this call today. Thank you. Now some third quarter highlights. Revenue for the quarter was $3,257,000,000, a 30% year-over-year increase, organic growth of roughly 10%, and a 13% sequential increase, but well below our previous guidance. Adjusted EBITDA was $271,000,000, a 10% increase over last year, but again, well below our previous estimate. Adjusted earnings per share was $0.95, Cash flow from operations generated during the quarter was 294 million, with a 213 million reduction of net debt during the quarter. We expect further cash flow strength during the fourth quarter and the first quarter of 2024, which Paul will cover later. And finally, backlog of quarter end was 12 and a half billion. In summary, we continue to face challenges this year. We now expect full-year revenue to be about $1 billion, or 7%, below our previous estimates. This revenue shortfall is primarily related to the continued challenges in our clean energy business, where full-year revenues will be off about $900 million versus our initial expectations. The bulk of that shortfall occurred at IEA, which we acquired late last year. As a reminder, IEA generated approximately $2.4 billion in revenue in 2022. While we knew the wind market would be challenged this year, we expected the solar market to allow them to achieve revenue growth in 2023. We now expect revenues for IEA in 2023 to be approximately $1.7 billion. While there is no question we are disappointed in our ability to understand forecasting risk based on project timing, There have been a number of market factors that have an outsized negative impact on IEA. IEA, to a greater degree than MOSTEC's legacy renewable business, had a customer base that was more dependent on using tax equity to help finance projects. While the Inflation Reduction Act has created significant tax incentives that are expected to have a materially positive impact on the solar industry and our business, The delay on clear defining the specifics of the law, for example, domestic content, has created a significant delay to certain customers' ability to access tax equity. While this delay has impacted our ability to achieve our projected revenue, I'd like to make clear that these projects haven't been canceled, but rather delayed. And while there has been some negative commentary on the solar market in general lately, we continue to experience significant demand for our renewable services. While we have started a number of new projects in the second half of 2023, our fourth quarter guidance does not assume new project starts after October. So our fourth quarter guidance is made up of projects we are currently working on. We also believe this to be prudent. It's taken us time to get to know the IE customer base, and we believe we are bringing the right scrutiny to both our legacy and IEA projects as we fill our 2024 pipeline, and believe we will be much more consistent in our ability to forecast a segment's revenue. We are disappointed with the forecasting assumptions we made in 2023 and our understanding of projects' risks and our revenue assumptions. We have made significant changes on how we go to market and how we assess projects and risks. While we're incredibly disappointed about our performance this year, we are still very bullish on our future. The level of interaction we are having with our customers around projects and timing today is as good as we've ever had in our business. We have a level of verbal and expected awards that gives us an opportunity to significantly grow our clean energy business. While we need to be prudent on timing and understand the risks associated around financing, interest rates, and interconnect agreements, our long-term outlook for this market is unchanged. We expect considerable backlog growth both by year-end and into 2024. And while, again, I'm very disappointed with our 2023 results, I truly believe that the combination of IEA and our legacy clean energy business will end up being a great acquisition for Mostek and our shareholders. We will appropriately manage expectations and risks going into 2024 and make conservative revenue assumptions until the market stabilizes. With that said, we expect strong double-digit growth revenue in 2024 in our clean energy segment. In our oil and gas segment, revenues were below our previous estimate, as our ramp on the MVP project took longer than expected. Despite this, our full-year revenue target of $2 billion is unchanged, with more activity expected in the fourth quarter than we originally expected. We now expect the MVP project to extend through the first half of the year. We expect 2024 revenue levels in our oil and gas segment to be slightly lower than 2023, but with slightly better margins, as we expect there will be less cost plus work versus this year. In our communications segment, revenue fell short of expectation, primarily related to a slowdown in wireless spend. For the full year, we expect revenue from our three primary wireless customers, AT&T, Verizon, and T-Mobile, to be down about 14% year over year. We expect this to be offset by strong growth from our wireline customers. As we look ahead to 2024, post-quarter end, we want a significant maintenance contract for our largest communications customer for services we weren't previously providing. This program should be fully ramped by the second quarter of next year and we expect over $100 million a year in annual revenues. This award, combined with a number of large wireline program awards under which we are currently performing engineering services that we expect will convert into construction in the first half of next year, gives us confidence in our ability to grow our communications revenue in the high single digits for 2024, despite some continued capex weakness as some of our customers manage through higher costs of capital. In our power delivery segment, Revenue fell short of expectations as we had a significant year-over-year decline in storm revenue, which also impacted year-over-year margins, along with the number of utilities moderating their spending plans as they dealt with the changing interest rate environment. Margins were up sequentially, and we expect similar performance in both revenues and margins in the fourth quarter. Over the course of the last few months, we have seen a number of utilities begin vendor consolidation efforts. We've had a very good quarter increasing our market share, having been awarded increased scope for 2024. Post-quarter award activity has been strong, and while we've seen some short-term fluctuations in capital spend, we believe the long-term fundamentals of the business has only improved. we expect some continued capital discipline on behalf of the utilities, offset by growth associated with transmission and substation work, leading to expectations of single-digit revenue growth in 2024 with modest margin expansion. Before turning the call over to Paul, I'd like to reflect on where we are today. Post-pandemic, we took steps to fundamentally transform Maastricht. In the three to four years since, We've more than doubled the revenue of the business, despite seeing a significant drop in our oil and gas pipeline revenues. We believe that our transformation, which has seen a significantly increase our presence in power delivery and clean energy, positions this company better than at any point in our history. But this transition has been much more difficult than we expected. The two power delivery acquisitions we made in 2021 are performing well and have strategically positioned us with significant expansion opportunities for future growth. However, they came with their sets of challenges and setbacks and took a lot of effort and time as we integrated them in 2022. Much more difficult has been the combination of IEA, as our full-year performance and revenue deterioration have been difficult to manage and put stress on the organization. While, again, not pleased with our performance, I think we have created an optimal structure as we look to effectively grow and manage this business. Our market strategy has been well received by our customers, and the relationships we've created, solidified, and grown over the last year gives us great confidence regarding our future in clean energy and the market-leading position we believe we can capture. Exiting 2023, we are keenly focused on growing and effectively managing our business for growth, strong margins, and cash flow. For the first time in a few years, we have no new acquisitions to integrate, which will allow us to fully focus on the areas that we need to improve. For those of you new to MosTech, this is my 16th year as CEO. Our revenue for my first year as CEO was around $900 million, and EBITDA was less than $50 million. Those of you that know me know how competitive I am and how I always want to succeed and perform. This has been a challenging year. But understand, I'm as motivated and determined as ever to make sure MOSTEC reaches its full potential. My family is the largest single shareholder at MOSTEC, and our interests are aligned with all shareholders. I bear a great sense of responsibility in knowing that our shareholders have made an investment with their hard-earned dollars in MOSTECH. I do not take that for granted. I can also say, and I know actions speak a lot louder than words, that I believe we are better positioned today than at any point in our history. The long-term opportunities in our segments are better than I think people realize. Despite the short-term challenges, our long-term outlook is intact. Our communications, power delivery, and clean energy segments give us not only strong revenue growth opportunities, but each segment has the ability for margin improvement. Our long-term margin goals are unchanged and have been more impacted not by pricing, but by volume and our ability to absorb costs on higher revenue levels. We look forward to delivering on these expectations and regaining the confidence of the investment community. I'd like to take this opportunity to thank the men and women of MOSTEC. 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. I also know how competitive our people are and the desire they have to perform at a very high level. I know they're up for the task. I will now turn the call over to Paul for our financial review. Paul?