MasTec, Inc.

Quarter 2025 Financial Results Conference Call. Today's call is being recorded. I'd like to turn the call over to Chris McRae, Vice President of Investor Relations.

Good morning, and thank you for joining us for Moss Tech's First Quarter 2025 Financial Results Conference Call. Joining me today are Jose Moss, Chief Executive Officer, and Paul DeMarco, Chief Financial Officer. We've prepared slides to supplement our remarks, which are posted on Moss Tech's website under the Investors tab and through the webcast link. There's also a companion document with information and analytics on the quarter, a guidance summary to assist in financial modeling. Please read the forward-looking statement disclaimer contained in the slides accompanying this call. During this call, we'll make forward-looking statements regarding our plans and expectations about the future as of the date of this call. Because these statements are based on current assumptions and factors that involve risks and uncertainties, our actual performance and results may differ materially from our forward-looking statements. Our Form 10-K is as updated by current periodic reports, include the detailed discussion of principal risks and uncertainties that may cause such differences. In today's remarks, we'll be discussing adjusted financial metrics reconciled in yesterday's press release and supporting schedules. We may also use certain non-GAAP financial measures in the conference call. A reconciliation of any non-GAAP financial measures not reconciled in these comments to the most comparable GAAP financial measures can be found in our earnings press release. And I'll turn the call over to Mark Lewis for some parting remarks.

Mark. Thanks, Chris. Good morning, everyone. This is my 92nd consecutive quarterly earnings call after more than 23 years as VP of Investor Relations. And MOSTEC has unquestionably been the highlight of my 50-year professional career. It's been an incredible ride. I've had the best hour job in America, and I was blessed to have Leanne, the best corporate wife of 52 years, to keep things running at home while I was traveling the world talking about the next big thing at MOSTEC. There are lots of Moss State people to thank. I'd first like to thank our chairman, Jorge Moss, for his leadership and inspiration. Jorge taught me that adversity is always only temporary. There are always hidden opportunities, and you just have to look for them and exploit them to your full advantage. I'd also like to thank our board and general counsel, Albert DeCardenas, who have been constant sources of guidance and strength. They were steady in good times and bad and never failed in their leadership and wise counsel for the management team. I'd also like to thank our prior CEO, Austin Schoenfelter, who hired me in 2002, and along with prior CFO, Bob Campbell, who both took us through a very challenging turnaround and recapitalization process in the early 2000s, which put MyStack on the path to growth and future success. I'd like to thank my good friend and longtime COO, Bob Apple, who has led a great team of men and women. A great team is always the foundation of a successful company, and their ever-improving performance has made my job easy. I'd like to thank George Pita for his financial leadership as CFO and the hundreds of financial support and operational staff who supported me in my efforts. And now Paul DeMarco bringing new outside-the-box thinking to the CFO role. But most of all, I'd like to thank Jose Mas. There were a lot of skeptics when he took over as CEO in 2007 at 35 years of age, and he proved them all wrong. His leadership and vision for diversification and growth has turned Mas into a Fortune 500 company that we're all proud to be a part of. The corporate culture he's created is why I've been here so long and why so many of my co-worker friends have been here for 10, 20, and even 30 years. He's the best CEO I've ever worked for, and I know the best is yet to come for Mostek under his brilliant and success-driven leadership. Finally, I'd like to thank all the thousands of shareholders, portfolio managers, and analysts I've worked with over the years. We've had a lot of success together and some fun, and I really miss talking to each of you. Most of all, I'll miss being on the road, confidently telling you about Mostek's next pathway to growth and ever-increasing shareholder value. I love this company. It's history. It's hard to leave a great company and a job you truly love, but the time is right for me and for Mostek. I'm excited to turn IR over to Chris McRae, a long-time TR professional who will take investor relations at Mostek to the next level. With that said, as I have often said over the last 23 years, Mostek had another great quarter. and there are a lot of good things to talk about today. So it is my pleasure to turn the call over to my good friend Jose Mas for one last time. Jose? Thanks, Mark.

Good morning, and welcome to MAS Tech's 2025 first quarter call. Before getting started today, I'd like to say a few words about Mark Lewis. Today is bittersweet. I'm excited for Mark as he begins a new chapter in his life and for his successor, Chris, whom I think is going to do an amazing job. but obviously in some ways sad as well. As Mark said, I became CEO of Mostek in 2007 at the age of 35, and quite frankly, with lots to learn in the investor relations world. Mark was a solid constant for Mostek, and his guidance and direction not only served me well, but all Mostek stakeholders. I also want to commend Mark for his leadership through actions. Mark truly loves Mostek and everything it stands for. He personifies our goal for all MOSTEC team members, which is to not only be an employee, but rather part of a family where you can dream, excel, grow, and provide a better future for your own family. Mark, thank you for everything. We will miss you, but know that you will always be a part of MOSTEC. Good luck, my friend. Now I'd like to review our first quarter results, as well as provide my outlook for the markets that we serve. I'm pleased to report that we exceeded guidance in revenue, EBITDA, and EPS for the first quarter. We also delivered year-over-year growth despite a difficult comparison quarter. As a reminder, in last year's first quarter, our pipeline business had a strong start as we were completing the Mountain Valley pipeline. Pipeline segment EBITDA in last year's first quarter was $93 million, compared to $45 million in this year's first quarter. So the balance of our business, our non-pipeline segments, improved EBITDA from $97 million in last year's first quarter to $155 million in this year's first quarter, a 60% year-over-year increase. Non-pipeline revenue was up by over 21%, with every segment delivering double-digit revenue growth. Our power delivery segment revenue was up 13%. Our clean energy and infrastructure business was up 22%. And our communications business saw revenues increase 35% year over year. More importantly, backlog was up materially and represented one of the largest sequential increases in the company's history. Backlog increased over 10% sequentially, and book-to-bill for the quarter was 1.55 times. Every segment delivered backlog growth. With our solid performance across our non-pipeline segments and a significantly improving pipeline market, demonstrated by backlog more than doubling in that segment sequentially, MOSTEC is incredibly well positioned, and we remain very optimistic about both our full-year and longer-term outlook. In fact, today, we raised guidance for full year 2025, increasing revenue guidance to $13,650,000,000, increasing the range of our EBITDA guidance to $1,120,000,000 to $1,160,000,000, and increased the range of EPS guidance to a midpoint of $6.08 per share. Our midpoint EPS guide is a 54% increase over last year and an over three-fold increase from 2023 EPS. Turning to some segment highlights. In our communications segment, top-line growth in the first quarter was 35% year-over-year, coupled with 82% adjusted EBITDA growth with a 180 basis point improvement in margin. Backlog increased 7% sequentially to $4.9 billion. The telecom infrastructure demand backdrop remains robust and we believe should be fairly well resistant to macro pressures given the capital investments being made to support broadband delivery and enable the AI economy. In the first quarter, we saw revenue growth from nearly all of our top 10 customers. Mostech's wireless business continues to see growth from expanded geography served and from broadening of services. We have a large core customer in this business, where ongoing work to support infrastructure technology upgrades continues to perform well. In wireline, overall demand continues to be supported by broadband infrastructure build-outs and federal investment. Middle-mile broadband build-outs and the recent surge in hyperscaler CapEx associated with data centers is also driving fiber demand. We see no material slowdown in project opportunities for macro concerns around AI power intensity. The bottom line is there is a race to build data center capacity. The data center opportunity for MOSTECH crosses all segments, and we coordinate that opportunity from a central office with joint customer outreach to hyperscalers and other customers. Turning to power delivery. First quarter revenues increased nearly 13% year-over-year and beat our forecasts, with profit in line and a slight decline in margins versus prior year. We were pleased with the solid performance, but note that it could have been even better as it included weather impacts and some productivity headwinds in select projects, so it was not representative of optimal segment performance. We still see the full year playing out as expected with double-digit revenue growth and high single-digit margins. The GreenLink transmission project remains on plan and is anticipated to build revenue production as the year develops. We are now actively working on two segments of the transmission line and multiple substations. We continue to see GreenLink producing strong revenue in 2025 estimated now to be between $375 and $450 million. We are still very bullish on grid investment demand, which is backed by substantial utility customer capex spend for years to come as utilities focus on meeting strong powered load growth demands. This demand requires large capex commitments across transmission, substation, distribution, and new generation capacity. Our backlog this quarter increased 6% sequentially to $5 billion in this segment. We continue to target a broad set of projects of varying scope, and we expect a number of larger award projects to be awarded in late 2025, early 2026. Shifting to clean energy and infrastructure, first quarter revenue grew 22% year-over-year and adjusted EBITDA more than doubled to $57 million with a margin of 6.2%, also a significant increase from prior year. Our business in clean energy and infrastructure continues to see strong demand, though we are certainly aware of some of the concerns around federal renewable support. I'd note that tariff-driven material inflation or unfavorable policy shifts don't change the fact that renewals represent shovel-ready power at a competitive rate. Near-term political factors will not fundamentally change this backdrop, and we feel very good about the future of renewables as a competitive source of clean power. Backlog for this segment was up sequentially to a record level of $4.4 billion in and booked a bill was nearly 1.2 times. Regarding potential changes to the IRA and other legislation or regulatory shifts, there are scenarios that would create some timing headwinds, but if we take a step back, we have an administration that is leaning towards a pro-energy stance and acting to reduce burdensome regulation that could accelerate permitting on projects that we build. So while we have to be mindful of changes, we don't see a meaningful risk to our 2025 business outlook. Our first quarter renewable performance represents the state of this market today. We grew revenue nearly 25% year over year and met our profit plan. Further, we grew backlog despite a strong revenue burn rate. Both wind and solar businesses saw solid backlog growth for the sixth straight quarter, and we are well covered for our 2025 plan from a combination of recent and 2024 bookings. One reason for our confidence is increased work generated from framework agreements with our key customers, which is a testament to our ability to serve larger or more complex projects where others have often struggled. We have a great funnel of projects, either in negotiations or bidding, and our 2026 backlog build is off to a great start. Infrastructure and industrial in the period had solid results with double-digit revenue year-over-year revenue growth. Meeting plan and adjusted EBITDA exceeding plan also was strong growth from the prior year. The demand climate remains firm, and we have seen no tariff-related delays. Now turning to our pipeline infrastructure segment, we saw revenue decline 44% with a slightly greater drop in profit of 52%. We've noted the driver here being the challenging comparisons from MVP project wind down last year. The top line actually beat our projections on stronger than expected project starts, though the margin decrease from prior year was more in line. More importantly, backlog bookings were strong, and we expect further increases throughout the year. Bookings in the first quarter included over $1.1 billion of new contracts, more than doubling our 18-month backlog to $1.5 billion, the highest level we've had in six quarters. Our customers continue to invest in pipeline capacity to serve gas-fired power generation needs that are well short of forecasted demand looking out some years. We fully expect to benefit from a multi-year investment curve in this important base load generation source. So, we see a low point this past quarter in revenue terms and a positive slope of demand and business volume to come. I'm more bullish today about our 2026 outlook. We expect strong revenue growth in our pipeline segment in 2026 with continued company-leading margins. Coupled with significant momentum and improvement in our non-pipeline business, we expect a strong multi-year outlook from Ostech. Last quarter, I emphasized MOSTEC's model strength in our diversity, our strong market position, and our ability to operate at scale for our customers. To follow up on this, I'd note that we are now talking to customers across multiple segments about framework agreements that further solidify our presence in key markets, which is a testament to MOSTEC's ability to serve our markets at scale. We are in a great position to capitalize on market opportunities for scaled service providers over the coming years. With that said, we also need to keep focusing on operational execution and evolving our business processes to ensure both consistency of outcomes and strong structural profitability. Our margin improvement opportunity is real, and we are taking many steps to realize it. We look forward to updating you on the steps we take along the road to achieving our goal of consistent double-digit margins. I'd like to take this opportunity to thank the men and women of MOSTEC. 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. I will now turn the call over to Paul for our financial review.

Paul? Thank you, Jose, and good morning, everyone. We are pleased to report solid first quarter results and to exceed the overall expectations that we laid out in our March earnings call. The macro news flow this quarter has been pretty volatile, and our results illustrate that MOSTECH sits on a foundation of strong structural demand and stable long-term drivers. This is true even if marginal outcomes can be influenced by macro and sector-specific effects from global trade, regulatory, or funding factors downstream from us. As Jose noted, we feel very good about our business today and into the years ahead. Let me start with some first quarter highlights. First quarter revenue was above expectations at $2.85 billion, and adjusted EBITDA was $164 million, exceeding guidance by about 5% and 3% respectively. Communications and clean energy and infrastructure led the way, both exceeding forecasted adjusted EBITDA by double digits. 18-month backlog at quarter end totaled $15.9 billion, up $1.6 billion from year end and $3 billion year over year. This represents another record for the company and includes a big improvement in the pipeline segment after waning levels seen during 2024 as a completed MVP. As Jose noted, we have solid visibility to support our 2025 outlook, and we are actively building the book for 2026 and beyond. We generated cash flow from operations of $78 million in the first quarter, with DSOs at 66 days, in line with our expectations. Capital expenditures net of disposals in the period were slightly higher than the prior year as we accelerated certain capital investments, resulting in free cash flow of $45 million versus $93 million in Q1 of 24. We completed $37 million of share repurchases in the first quarter and extinguished our remaining authorization in April, bringing the year-to-date total to $77 million at an average price of $110 per share. Our board authorized an additional $250 million repurchase program earlier this week, and we will continue to be opportunistic when acquiring MOSTEC stock. On tariffs, while nobody is unaffected by potential downstream economic impacts, MOSTECH is fairly insulated from the direct exposure, and we currently don't see a meaningful impact overall to our 2025 financial forecast. We buy limited foreign source materials, and we carry only about $115 million in inventory. We also have various contractual protections on most projects that further mitigate risk to our job economics. Regarding some highlights from first quarter segment performance, first quarter communication results saw impressive top and bottom line growth, easily exceeding our forecast for the period. we saw a strong start to 2025 in our wireless and wireline businesses, both contributing to the revenue growth and earnings beat. The adjusted EBITDA margin increase of 180 basis points year over year was also ahead of plan, though still below long-term margin potential. We see the first quarter adjusted EBITDA margin of 6.9% as an expected low for the year, held back somewhat by business investments to support expected growth and by reduced operating leverage, largely on the wireline side. Overall, end market strength remains firm, witnessing the communications backlog growth that Jose covered. First quarter backlog additions were led by the wireline side and included a significantly diverse set of customers. In clean energy and infrastructure, I'd highlight that a significant year-over-year improvement in adjusted EBITDA margin, up 350 basis points to 6.2%, was great to see, and we forecast a hold around that level in Q2, but with further improvement expected in the second half. This would come from volume development across the business as projects ramp, including a few that were slower to start than we initially modeled. We see all three segment verticals contributing to achieve our full-year target for margin improvement and volume growth this year. On CE&I backlog, visibility for 2025 revenue looks really strong at this point, and we are more focused on developing contracted work for next year, with a strong start already in place. I know some are skeptical now about the relative strength of renewables as we look at 2026, especially on the wind market, given a few publicized project approval delays on the offshore side. I note that we really aren't seeing that sentiment with our customers. We are progressing with large projects in various onshore markets. We're seeing it with contract signings in real time. And actually, we could book more work in renewables in the second quarter than we just did in the first. Regarding pipeline infrastructure, Jose noted that we exceeded our top line forecast, but we missed our adjusted EBITDA target, primarily due to project mix. I'll reiterate that first quarter was the most challenging comparison for the year, with MVP revenue peaking in 1Q24 and then declining sequentially from there. We should benefit from anticipated volume ramping from the first quarter level. Jose also noted the strong pipeline backlog development. We booked over a dozen jobs this quarter, each with contract values over $10 million, and two of those were over $250 million in booked value. There were also numerous other smaller book-and-burn jobs, so we are seeing diverse demand spread across our various service offerings. We also expect to bid on several larger projects currently anticipated for contracting in the second half of this year. Power delivery saw particularly strong revenue growth this quarter, beating our plan by around $50 million, while adjusted EBITDA was more in line, despite some productivity pressures, largely in our non-union business, and adverse weather in the central region. All other regional markets exceeded 1Q forecasts. Power delivery backlog grew solidly in the first quarter, and we see a double-digit revenue growth year from the segment. further backed by tailwinds from Midwest utility clients that resolved their rate cases in Q4 and are increasing capital expenditures as anticipated so far this year. We've talked about our potential for stronger margins, and we're actively taking steps to achieve this through automation tools, but also deliberate steps taken across our business lines to improve and unify processes around total lifecycle project management. We have already made great strides in enhancing risk management and contract terms, but there is more to come, and we look forward to talking more about this over time. Achieving stronger structural margins across the business remains a top priority. Shifting to updated consolidated guidance, I'd like to remind you that we've posted a supplemental guidance document on our IR website and encourage you to review that for segment and other financial guidance details. We are now raising 2025 annual revenue guidance to $13.65 billion, with adjusted EBITDA ranging from $1.12 to $1.16 billion. Adjusted EBITDA performance is driven by almost 30% growth in our non-pipeline segments year over year. Adjusted EPS is forecasted to be $5.90 to $6.25, with the midpoint of 54% versus 2024. We expect Q2 revenue of $3.4 billion, adjusted EBITDA of $270 to $280 million, and adjusted EPS of $1.36 to $1.46. Our 2025 expectations include the significant year-over-year improvements laid out for our non-pipeline segments, partially offset by lower levels of pipeline activity due to MVP's contribution in 2024. The 2025 expected results lay a very strong foundation for future value creation, as we continue to expect pipeline segment growth to accelerate in 2026 and beyond. We are raising 2025 revenue estimates to account for the first quarter beat and continuing strong visibility to project activity, while maintaining our 8.2% to 8.5% EBITDA margin forecast. The improvement in EPF is driven by higher earnings, coupled with lower depreciation and tax rate expectations. Just to note, on pipeline infrastructure, our forecast implies that second half expected revenue will be up low double digits as we lap the MVP wind down and new project activity continues to ramp. In power delivery, we previously noted that this year would have a slow start, and we continue to anticipate improving project volumes and productivity as the year progresses. We do not see a material impact from either tariffs or other changes to federal infrastructure support in the outlook for the current year, and as such, do not factor in any explicit impact. that we have considered the broader macro uncertainty of the current policy environment as we discount risk in our forward planning. On cash flow in the balance sheet, we maintain our approximately $700 million of cash flow from operations forecast for 2025, assuming DSOs average around the mid-60s for the balance of the year. We ended the quarter with total liquidity of $2.2 billion and net leverage of 1.9 times, both in line with year-end levels. We were pleased that both S&P and Moody's revised Mustix outlook is stable in March, reflecting the considerable 2024 improvements in our financial metrics and strong outlook for our business. Given our current balance sheet profile, we have substantial capacity and optionality around capital allocation, and we will continue to base decisions on optimizing return on invested capital. Supporting organic growth will continue to be a top priority, complemented by opportunistic and largely tuck-in acquisitions that complement our current service line strengths. We will also continue to maintain a share purchase authorization and will deploy capital to buybacks on an opportunistic basis when our share price trades below our view of intrinsic value. This completes our prepared remarks, and I'll now turn the call back over to the operator for Q&A.

Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star one to ask a question.

We'll pause for just a moment.

We'll go first to Sangeeta Jain with KeyBank Capital Markets.

Good morning. Thank you for taking my questions. Jose and Paul, if you could just give us a little more detail on the oil and gas bookings maybe the geographies where you're seeing most interest, and if these bookings came in maybe a little bit sooner than you were expecting.

Yeah, good morning, Sanjita. So I'd say a couple things. I think, you know, Paul in his prepared remarks talked about almost a dozen projects. So, you know, I think the surprising part of that, it wasn't driven by any single one really large project. We had two projects that were over $250 million, as Paul mentioned. But I think we feel great about it. The reality is that we have a lot of other projects that we feel we're in line to win. We have a number of projects that we've been verbally awarded that aren't in backlog yet. So we actually expect our backlog to increase as the year progresses in 2025. And again, we're super bullish on what the pipeline market's going to deliver in 2026 and beyond.

Great. And if I can ask a follow-up on capital allocation, I know Paul just mentioned tuck-in type acquisitions or buybacks. Could you help us with end markets that you feel would be most suitable for Maastricht at this point where you could look for acquisitions?

Sure. I think we haven't changed. We're still super focused on organic growth. I think there's so much upside to our business both in terms of the opportunities that we're seeing and more importantly in the margin progression that we think we're going to be able to deliver. With that said, there are still within the businesses that we're in, there's still a number of pockets of geographies where we think we can strengthen. There's still some customers we think we can do a better job of building relationships with. I think those are the key things that we're looking at as we look at acquisition targets. And we think it's an improving market. I think there's a lot of interest out there. I think the uncertainty over the course of the last six months have made especially tuck-ins more reasonable, and it's something that we hope we can execute on during 25.

Thank you so much for taking my question.

Thank you.

We'll go next to Jamie Cook with Truist Securities.

Hi, good morning, and congrats on a nice quarter. I guess my first question, Jose, sorry, back on the pipeline business again. I think you said last quarter that, you know, given what you saw, in terms of booking potentials, you thought, you know, revenues and pipeline in 2026 could potentially be, you know, at 2024 levels. So I'm sorry if I missed it because there's multiple calls going on, but can you just sort of give us an update on your thoughts there and your confidence level? And I guess within pipeline, just the competitive environment, I would assume it's, you know, the projects are yours to sort of lose I guess as I would say with no one else in it and then my second question just the color on the power delivery it sounded like you know the margins were off to a slower start than what you thought just a little more color there and I think you said the same thing on the I can't remember what other business maybe it was clean energy but I guess I'm trying to understand you know what the true earnings power of the quarter would be if we didn't have that noise and obviously the implications of what that would mean for your full year guide thanks

Sure. So a couple things. I think as we think about the pipeline business, we haven't changed really our guide significantly for 25. So a lot of what we're seeing is really for 26. If things play out the way that they should, there's some potential in the back half of 25 to be a little bit better than what we're saying. But a lot of what we're booking and seeing is really for 26 and beyond. We did say last quarter that we were beginning to see 26 shape up to a place where It should be at or exceed 24 levels. We still feel that way. So we've got, again, a lot of optimism as to what's happening in the pipeline business, and hopefully that continues. If gas continues to play a larger role in future energy generation, we're going to be a bigger beneficiary. So, again, super exciting what's happening there. And I think what's really important to note there is, you know, obviously that's our highest margin business. And to the extent that that business grows, it's going to have a significant impact on the overall earnings opportunity of the company. And that's probably what excites us the most. And I think maybe something that a lot of people miss, right, it's not just that the business is growing, it's that our highest margin business is expected to grow nicely for years to come. On the project side, we actually performed really well on the clean energy side. We didn't have any projects of note to call out. We actually exceeded our expectations. our margin guidance in clean energy and infrastructure quite a bit relative to our previous guide, so we feel really good about how that business is performing. We were a little light in revenues in clean energy because a couple projects started early in Q2 rather than late in Q1. On the power delivery segment, we did call out a couple projects. We did have one particular project that was significantly impacted by weather. If not, the margins in that business would have been – better. We actually think that the margins would also have exceeded what we originally guided to. When you look at the progression of that business going from Q1 to Q2, it's very similar to what we delivered last year, that that business in particular had a 290 basis point improvement in Q1 of 24. To Q2 of 24, we're guiding something similar to that, and based on the fact that the margins should have been better in Q1, we feel really comfortable about our ability in hitting that. So All in all, the quarter could have been better, but quite frankly, I think we feel great momentum going into Q2 and the balance of the year, so we feel great about where we're at.

Thanks and congratulations.

Thank you, Jamie.

We'll go next to Andy Kaplowitz with Citi.

Thanks, everyone. Mark, it's been a true pleasure. We'll miss you.

Thanks.

Jose, could you give us more color into what you're seeing in communications? You beat your revenue guidance in Q1, raised your outlook for the year, but I think there's some consternation out there that at least fiscal stimulus, whether it's RDOF or BEAD, could be slowed a bit. I know that BEAD hasn't been in your guidance. It's still wireline going faster than wireless for you. When do you fully ramp up on all the market share wins that you've had and or the fiber to data center opportunity?

Sure. So great question, Andy. I think when we think about beads, because I'd like to cover that, we've always said we didn't expect much impact to it in 25. We do think it'll be a catalyst for 26 and beyond with some awards in 25. But there's no doubt that it's, you know, AI and middle mile fiber today is, you know, it feels like a much better and larger long-term opportunity. And when you think about the size of beads, it's actually somewhat unbelievable that we're saying that. So I think the state of the market is fantastic. I think the opportunity subset is greater than what we expected. Bookings have been really strong. We expect bookings to continue. So I'm really bullish about the opportunities in that business. I'm bullish about Our margin progression opportunities in that business over time, I think today, you know, even in Q1, we hired a little bit more. We're having to hire more people than we probably expected. Training costs are having an impact in that business. But the revenue growth is offsetting that, and I think that just plays itself really well out over the next couple years as we hit consistency and improvement in margins. I think we're in early, early innings, to the latter part of your question. A lot of the projects that we're starting on are really the first phases of much larger projects. So, again, we feel this is the beginning of what's going to be a very long cycle in support of what's happening predominantly with AI.

Now, Dave, maybe just stepping back, I asked you this last quarter, but I think I need to ask you again. Frankly, it doesn't seem fair after you've booked so much this quarter, but Paul just mentioned booking more work in clean energy in Q2 than you did in Q1. So maybe you can talk about whether you can continue to sequentially grow backlog in this environment. And have you noticed any changes in your customers' conversations or behavior since Liberation Day?

I think the most important thing to think about is a short-term, and generally speaking, renewables is the fastest dispatchable form of power and the most cost-competitive. there's massive power demand, which means renewables are going to be a huge part of new generation for a really long time. I mean, Paul, I think you caught it well. Paul said we expect our renewables business, we have an opportunity to book more in Q2 than we did in Q1. When you look at just renewables, our book to bill in the first quarter was 1.45. So, I mean, we're feeling really, really good about our conversations with our customers. We've talked about alliance agreements and how we're really contracting with key customers in that space and the opportunity that we're getting to view their pipeline much longer out than 25. We're talking about what they're seeing for 26. We're talking about tariffs. We're talking about IRA, the progression of their business. And quite frankly, I think when we've modeled out 25, we've taken all that into account. I think we've been conservative. I think that If we can get through the tariff talk and we can get through the IRA talk somewhat unscathed, I think there's a lot of opportunity for this business to not only perform better in 2025, but more importantly to perform a lot better in the outer years.

Appreciate all the color. Thanks, Andy.

We'll go next to Ati Modak with Goldman Sachs.

Hey, good morning, team. Jose, can you talk about the nature of the pipeline projects that you've booked already? You highlighted two larger ones. Are those long-haul pipelines? What's in the small ones? And how should we think about the order sizes in the second half of the year as you look at contracting?

Yeah, so I'd say if you think about the pipeline business in general, there's a significant amount of infrastructure that needs to be built for power demand. You've got still takeaway capacity needs. You've got the LNG potential and what we're seeing there over the long term. It's an incredibly active market. We wouldn't consider any of the projects that we booked in Q1 to be really large projects. There are large projects coming that we feel that we will be a significant part of, so we expect really strong further awards as the year plays out. with, quite frankly, a lot more activity in outer years. So there's been an unbelievable shift in the perception and just the confidence of that business on behalf of our customers over the last six months since the new administration came in, and I think we're seeing a lot of project activity that, quite frankly, we didn't expect, and I think that's really positive.

Thank you. And then on the framework agreements you spoke about, can you give us any more color there and how that de-risks your forward backlog visibility, especially in a world where the market might be concerned about things like IRA, for instance? I think you said framework agreements are across segments, so maybe any color there?

I think it's a big shift, right? I think, unfortunately, and I hate to go back, but we had a tough 2023 with the integration of IEA, but I think that that taught us a lot about that business and what was important in that business, which was to really align ourselves with key customers and key projects. I think we've done that. I think it's now in our third solid quarter there where we've delivered good results. I think a lot of it has to do with how we changed that business and how we went to market. I think the evolution of that are these framework agreements and these alliances. I think in those, the goal of that, right, is to kind of guarantee resources to a customer for a certain amount of work over a long period of time. What that does is it allows us to go into that customer and view their project workflow for long periods of times, multiple years, and to specifically start working on projects very early on, which gives us incredible visibility into the likelihood of those projects happening, what the risks are, what the potential IRA risks are to a project, what tariff risks are to a project, which allows us to really make high assessment as to the viability of when that project will go. I think it's paramount to our business. I think it's the most important thing that we do, and I think we're doing a great job at it today. I think the customer relationships and our ability to continue to add alliance agreements quarter after quarter has been phenomenal and will continue to help drive our business for a really long time. So it's a very, very important part of what we're doing.

That's very helpful, Jose. Thank you. Thank you.

We'll go next to Steven Fisher with UBS.

Thanks, good morning, and congrats on a great quarter. Just wanted to come back to follow up on Andy's question on the communications. I mean, clearly you have a lot of opportunities there and a great setup for 26, and your slide is very helpful. And just looking at that slide shows that your second half of the year in communications is pretty flat. with last year. So just curious, I'm sure it's just sort of timing, but why in light of all the trends here, only flat revenue growth in communications in the second half of the year?

Steve, thank you for the question. I think when we think about our business, I think we had a really good first quarter. I think we've got great progression planned into not only the second quarter, but second half versus first half as a total company. I think there's a lot of opportunity for things to go better across the different segments in our business, but there's also a lot of noise, right? We've got, obviously, the administration has created volatility, and I think that today we've taken the position that we'd rather be conservative as we look at 25 versus really pushing a lot of things through with so many unknowns left to know in the market. again, we feel good. And hopefully as some of this stuff settles out, we'll be able to both relook at the second half of the year and more importantly, 26 and beyond.

That makes good sense. And then a similar question on the pipeline side, obviously very strong bookings. It sounds like you've got more to come. And you did only raise the guidance there by about $75 million. So I'm curious if if there were any offsets to that. And I would think typically on these pipeline projects, especially if they're not like the really huge ones, the time between booking and actually getting started is usually fairly short, if I understand that correctly. So I'm just curious, is that conservatism again? Are there permits that need to be kind of arranged here? Why isn't that wrapping up a bit sooner?

We shouldn't see a lot of it in the second quarter. So the reality is that the potential starts to really bake itself in late third quarter, early fourth. And again, you know, a couple of months slips on a job has a huge impact. So again, I think we've taken a very prudent assessment of what it means for the balance of 25. And again, you know, we're hopeful that as some of this stuff shakes out and settles out that, you know, some of this will be better.

Sounds good. Thanks very much.

Thanks, Steve.

We'll go next to Justin Hockey with Robert W. Baird.

Oh, great. I guess I wanted to ask on the power delivery and some of the large transmission lines that have been announced, like in the Texas region. And just, you know, I know you've talked about in the past that you've got the capacity to do like another green link and you'd feel comfortable about that. And I guess I was just going to ask, you know, just, any kind of geographic strength where you feel, you know, maybe you've got a more competitive position on winning something of that size. I don't know if it's just in the West or if Texas would include that. And then I guess a corollary to that is just looking at your head count. It's actually down a little bit year over year despite the growth. And so just thinking about where you see head count going against kind of the growth trends that you're seeing and your ability to kind of ramp up training and staffing to meet that. Thank you.

Sure. So I would say a couple things. One is I think the transmission market is incredibly robust. There are a number of projects in the market that will be getting awarded, you know, late 25, early 26. We see broad geographic opportunities. You mentioned Texas. The West Coast is extremely active. You think about, you know, what's happening at PJM and MISO. There's just tremendous opportunities across quite frankly, the entire country, and the needs are there. We feel we're incredibly well positioned to take advantage of that, both for medium and large-sized jobs. So we feel great about our competitive position. We feel good that we will win another large job and have multiple jobs working concurrently over the years to come, and we think that's a big part of our transmission driver. On a people perspective, the biggest impact has been the hit to our pipeline business. Obviously, our pipeline business is employs a lot of people. We have a large union operation there where we scale up and down based on our per project basis. So I think if our total employee count is down but our non-pipeline employee count is way up, And as the pipeline business comes back, there'll be a significant ramp in personnel related to pipeline as well. So when we think about people, it's our most important assets. It's one of the most important things that we need to focus on to grow. It's the key to our business. We invest heavily in not just the development of our craft, but in the development of our management. We've opened up over 45 training centers across the country, and we feel good about not just our ability to develop our people, but more importantly, to meet the demands of our customers. So it's going to scale up and down, and I'm highly confident that by the end of this year we'll be at record levels of team members.

Thanks for that perspective. My second one would just be you talked a lot about the indirect benefit from the data center infrastructure, but I know you also have some direct work that you've done for them. You know, I think about $200 million that you did last year. I guess just any update on maybe some of the direct work that you've won and thinking about the revenue potential for that business in 2025. And that's my last question. Thank you.

Sure. A lot of talk about data centers over the course of the last quarter. Different hyperscalers are doing different things. I think one hyperscaler in particular, they are shifting their business a little bit. We're seeing tons of opportunities. The opportunity subset is incredible, both direct and indirect. And we feel that we're going to continue to grow our business in both areas. There have been some shifts in 25 that have negatively impacted us as well. Those are built into our models, but we think the opportunity subset far exceeds that.

We'll go next to Drew Chamberlain with JP Morgan.

Yeah, thanks for taking the questions. First one, just on the renewable side, I mean, Jose, To the extent that some of these projects might end up facing delays, so into tariffs or other sorts of policy concerns, do you think you have an ability to pull in other projects or replace teams onto other areas of work to backfill whatever could come of any revenue holes?

That's why alliance agreements and framework agreements are so important, because you're looking at portfolio views in addition to just individual projects. With that said, we've talked extensively about this, but when one of our projects is in backlog, a lot of the work that we start is under what we call LNTPs. This is backlog. work that's ready to go, projects that have started, that are starting in short order. So, again, when we look at our 2025 guidance and the revenue that we have in our plan, we do not feel there is much risk at all about any delays or any push-outs. When we look longer term to the project subset, that's where we do more management of portfolios versus projects. And, again, I think that's been our strength. I think that's what's allowed us to deliver 25% growth in the first quarter, which I think, you know, is really, really strong relative to the industry when we look at the balance of the year. You know, we're expecting, you know, 20% growth, 25% growth in our renewables business in 25 versus 24. I think that's going to be a great number relative to the industry. And, again, I think a lot of that has to do with how we've managed our customers and our projects.

I have one. Okay, great. Makes sense. And then just appreciate the revenue color for 25 from Greenlink there. I think there might have been a bit more than some folks had been thinking was going to come in 25. Can you just talk a little bit about how that project is starting and what additional color you can provide about revenue cadence throughout the next couple of years there?

Yeah, I think it's within the previous guide that we put out. It's a tighter range than what we had said, maybe towards the upper end, but within the range that we had previously stated. I think we feel great about the start. We're on both segments of the transmission line with multiple substations. It's a long project. Again, we feel really good about the first six months or so that we've been on it. We started it late in the fourth quarter. A lot to do, a lot of opportunity there. We expect that that's going to grow considerably in revenues in the years to come on an annual basis. So, again, perfect project for us. And, again, our goal is to begin to hunt for the next one and at least start with two concurrently. Great. Thanks, Jose. Thanks, Drew.

We'll go next to Liam Burke with B. Reilly.

Thank you. Good morning, Jose.

Good morning, Liam. Jose, you touched on in one of your earlier questions on LNG. Is your pipeline business seeing any benefit now, or is that something on the holdback that we can expect in the future?

I think the truth is those are longer-term projects. There's a lot of... A lot of projects out there that are being discussed, priced out, preliminary pricing, but not part of what we're expecting when we talk about either current backlog or even backlog growth within 2025.

Great. And on the regulatory front, there's been a lot of chatter, obviously, about the renewables, but have you seen any positive benefits of deregulation?

I think that there's optimism relative to what's coming. I don't know that anything has been done that has significantly changed the permitting environment today, but I think that that is one thing that can be done that could have a huge positive impact on the business. There are a lot of people in the administration focused on that, on ways to do just that. There's a lot of conversations happening, but I wouldn't say it's impacted the market yet.

Great. Thank you, Jose.

Thanks, Liam.

We'll go next to Brian Brophy with Stifel.

Thanks. Good morning, everybody. Just one for me. You guys took down depreciation guidance a bit here, and obviously it's already down a bit from last year. Can you talk about the drivers for that change and then how you're thinking about any structural changes to the capital requirements for the business? Thanks.

Hi, Brian. This is Paul. So, I mean, I've I've talked a lot about the focus on depreciation from a peer perspective. It's pretty clear that our depreciation was running at much higher levels. We've continued to focus on that. We continue to evaluate our useful lives. We still had gains on sale in this period despite the changes we made to our depreciation policy last year. It will continue to be a focus. The amount of capital we deploy, as we've talked about, is going to be driven by utilization and and making sure that we're having high efficiency out of the fleet that we have. So I think we're still at a moderated level. You know, the growth of the pipeline segment can be a driver. It's obviously our most capital intensive segment. But, you know, our guidance for the year, we took CapEx up a little bit, you know, really to take advantage of some of those opportunities we see. But we'll continue to evaluate, you know, the appropriate level of depreciation. And I think it's, you know, a downward trend relative to, our revenue should be expected.

And maybe just to add, I think that as an overall theme, right, we're hyper-focused on improving margins, and obviously fleet utilization is a huge driver of that and one that we're super-focused on.

Thanks. I'll pass it on. Thank you.

We'll go next to Joseph Osha with Guggenheim Partners.

Good morning. Thanks for taking my question. Just sort of a two-part question. First, looking at your leverage, it ticked back up a little bit. I'm wondering how we should think about the longer-term target. I know there's been some talk about maybe continuing to drive that lower. And then secondly, looking at the buybacks, Jose, you talked about picking up the stock when it falls below an intrinsic value. Can we think about some rough timeframe in terms of executing this new 250 million, or is it going to be dependent upon the price of the stock? Thank you.

Yeah, I'll answer the buyback question and then let Paul talk a little bit about leverage. I think a couple things to think about, right? We're not – I mean, first, our balance sheet's in great shape, and it's getting better. I guess it's the overarching theme, so it gives us tremendous flexibility to not just think about buybacks but to also think about M&A. I think specific to buybacks, the way you should think about it is we're not habitual buyers. We only buy when we feel the price is dislocated from the opportunity that exists. The last time we bought was in 2002 at $72, and before that it was in 2020 at $33. So we view ourselves as opportunistic buyers. We felt that the opportunity that presented itself here in the short window was too good to pass up, and we'll continue to manage in that capacity. Paul, do you want to cover the leverage?

Sure. From a leverage perspective, our financial policy is below two times. It's really rounding for the quarter. You know, I think we talked about we did accelerate some CapEx into Q1 to plan for the needs of the business and to hedge against tariffs a little bit. But, you know, we think with just the normal cash flow generation that we will continue to generate, we'll deliver naturally, giving ourselves plenty of opportunity again to deploy capital to the manner that we see most attractive at the time.

Thank you very much.

We'll go next to Kashi Harrison with Piper Sandler.

Good morning, and thank you for taking my question. So, you know, based on the commentary today, it sounds like you're expecting continued bookings growth through year-end despite all the tariff uncertainty. You know, what's behind that viewpoint? Is that just based on discussions you're having with your customers? And can you share your perspective on why that tariff uncertainty isn't driving more

delays in in order activity so couple things I'd say generally speaking and forget about order activity for a second do I think that there's going to be impacts to the market I think there's no question that the markets already been impacted I think that You see it in suppliers. You see it in other companies associated in the space. It's not like the market is off and running. There's no question that there's hesitancy across certain buyers. There's projects that have been pushed out. I think we are bucking the trend. And the reason we're bucking the trend is because we made an enormous amount of effort and gains in aligning ourselves with the right customers and the right projects and that would be well ahead of these potential issues. So I'm not making market statements. I'm not trying to sit here and talk to you about the state of the market because I think there's risk in the state of the market. I don't think there's risk in our portfolio and the projects that we have, the backlog that we have, and the revenue generation that we expect both in 2025 and even for 2026. So much of our 2026 revenue will be from projects that we start in 2025. So we feel good about it, and we've gone in painstaking detail with our customers about potential tariffs, what items could be tariffed, where they're at in that cycle, and what it means to the projects that we're expecting to do. And that's why we're so confident in our ability to manage through this. But, again, we're not sticking our head in the sand. We're not blind. We understand that there could be market risk. We just think that they're not going to affect us to the level that they may affect others.

That's a really great color. Thank you. And then just for my follow-up question, just going back to the discussions on pipelines, you know, you talked about potentially revisiting 2023 revenue levels or greater in 2020. Sorry, yeah, 24 levels, sorry, by 2026. Can you help us think through the path towards or if there is a path towards your prior 2017 peak of $3.5 billion or even the more recent peak of $2.5 billion, just trying to think about where that business could go, not necessarily in one year, but on a multi-year basis. Thank you.

Based on the activity levels that we're seeing, the truth is that that isn't out of the question. It's quite remarkable that we say that because a year or two ago, if you would have asked us that question, we would never have dreamed of giving that answer. I'm not saying that we're there. I'm not saying that activity levels are the same. But, you know, with what we're seeing in potential future projects, the opportunity to maybe one day get there again, it is possible. So, again, that's why we're so bullish. We don't have to get there, quite frankly. But if we can get anywhere near those levels, it's a monumental shift to the earnings potential of the company.

Thank you. Thank you.

We'll go to our next question from Adam Thalheimer with Thompson Davis.

Thanks. Good quarter, guys. Mark, congratulations on your retirement. And Chris, welcome to the call. Most of my questions have been asked. Jose, I did want to ask you on power delivery, the market challenges you saw in distribution last year, are those behind you yet? And as you look at the year-over-year comparisons, when did that flip from a headwind to a tailwind?

Yeah, so thanks for the question. I think that things are obviously better. We talked a lot about, especially the Midwest utilities and kind of a lot of the rate case resolutions that they went through in the fourth quarter. Obviously, that doesn't get all fixed in a quarter, so we actually expect an improving environment throughout the year, although in the first quarter it was slightly better than where it had been in the second half of the year, but still a tough comp on a year-over-year basis because it's A lot of that didn't start until post-Q1 last year. We feel good and, quite frankly, expected to get better. I think we're in a great spot.

I'll turn it over. Thanks. Thanks, Adam.

There are no other questions at this time.

So I'd just like to take this opportunity to thank everybody for joining us on today's call. We look forward to updating you on our second quarter call. And again, thank the men and women of MOSTIC for their hard work, commitment, and dedication. Thank you.

This does conclude today's conference call. Thank you for your participation.