MasTec, Inc.

Thank you for standing by and welcome to MassTech's second 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, everybody, and thank you for joining us for MozTech's second quarter 2025 financial results conference call. Joining me today are Jose Mas, Chief Executive Officer, and Paul DiMarco, Chief Financial Officer. We've prepared slides to supplement our remarks, which are posted on MozTech's website under the Investors tab and through the webcast link. There's also a companion document with information and analytics from the quarter and 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 will 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, as updated by our current and periodic reports, includes a detailed discussion of 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 this 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 slides or companion documents. I'll now turn the call over to Jose.

Thank you. Good morning and welcome to MOSTEX 2025 second quarter call. Today, I will be reviewing our second quarter results as well as providing my outlook for the markets we serve. I am pleased to report that we exceeded guidance in revenue, met our EBITDA expectation, and beat our EPS guidance for the second quarter. We're happy to have delivered significant year-over-year growth in revenue despite the difficult comparison from the Mountain Valley pipeline completion in the first half of last year. The remaining segments, our non-pipeline business, improved EBITDA from $181 million to $257 million in this year's second quarter, a 42% year-over-year increase. Revenue for our non-pipeline business was up 26%, with power delivery and clean energy and infrastructure both up 20% and communications up 40% year-over-year. We expect revenues to sequentially increase again by double digits in the third quarter. Margins for our non-pipeline segments also improved 100 basis points year-over-year and posted a strong 230 basis point sequential improvement. Both our communications segment and power delivery segment improved EBITDA margins 300 basis points sequentially, and clean energy improved 120 basis points. We expect further sequential improvements in the third quarter in both our communications and power delivery segments, with margins in our clean energy segment expected to be about even with the second quarter. Total company backlog in the quarter also remained healthy, posting a 23% year-over-year growth, including a 4% sequential increase, resulting in a book-to-bill ratio in the second quarter of 1.2 times. The sequential growth from first quarter included an 11% increase from clean energy and infrastructure, inclusive of solid growth for both renewables and infrastructure. And by ongoing growth of 2% from communications, offset partly by flatter performance in pipeline and power delivery, inclusive of stronger burn rates in the period. We expect further backlog growth in the second half of this year and expect to end 2025 at record levels of backlog. We are increasing revenue guidance to a range of $13.9 to $14 billion for full year 2025, a roughly $300 million increase over previous guidance. We are slightly increasing the range of our EBITDA guidance to $1,130,000,000 to $1,160,000,000, and we are increasing the range of EPS guidance to a midpoint of $6.34 per share. Our midpoint EPS guide implies a 60% increase year over year. I'd like to highlight that we are seeing clear acceleration across our business. Revenue is stronger than our initial guidance, and demand is incredibly strong. During the second quarter, we added nearly 4,000 new team members, an over 10% increase in our workforce. This compares to an increase of a couple hundred in last year's second quarter. These additions are a direct result of the demand we are enjoying today. but more importantly, for the need we see to scale up for what we are expecting in 2026 and beyond. Every segment added team members in the quarter, including our pipeline segment. I'd like to remind everyone that entering 2025, we expected to right-size resources in our pipeline segment and set some assets as we initially expected revenues in the $1.8 billion range versus last year's $2.1 billion. We now expect revenues to be approximately $2 billion in pipeline this year, but more importantly, the investment we are making in increasing headcount in equipment in our pipeline segment is being driven by the incredible demand we are seeing for 2026 and beyond. These increases in headcount will position us to take advantage of the growing opportunities ahead. However, this investment is slightly impacting margins in 2025. While these additions should allow us to further increase our margin potential, we expect any impact to be short-term, particularly in our pipeline segment. We expect pipeline segment margins to improve sequentially in the third quarter and achieve its best margin performance in the fourth quarter, setting us up for strong performance going into 2026. Turning to some segment highlights. In our communications segment, Revenue in the second quarter was up 42% year-over-year, while adjusted EBITDA grew 55%, with a 90 basis point improvement in margin. Backlog increased sequentially to a record $5 billion and increased 13% from the prior year. The market backdrop for telecom infrastructure remains very healthy and dynamic. given robust capital investments being made by our customers to support broadband delivery and enable enhanced artificial intelligence applications. We saw continued year-over-year revenue growth in the second quarter from nearly all of our top 10 customers, and our list of significant customers has increased meaningfully in recent years. MOSTECH's wireless business continues to see strong growth from expanded geography served and from continued broadening of services. In wireline, overall strong demand continues to be supported by broadband infrastructure build-outs and by federal investment. Middle-mile broadband build-outs and the recent surge in hyperscaler CapEx associated with data centers is also driving substantial fiber deployment demand. Over the last few months, a number of our customers have laid out very specific goals. AT&T recently announced a milestone of passing over 30 million fiber locations and reaffirmed their goal of achieving 60 million by 2030, basically doubling over the next five years. Verizon publicly stated their goal to also double fiber passings by 2028. and T-Mobile is looking to add 12 to 15 million fiber passings by 2030. These ambitious plans, in conjunction with both increased demand from the traditional cable broadband carriers and a number of new entrant overbuilders, create significant growth opportunities for MOSTECH. Turning to power delivery, Second quarter revenues increased 20% year over year and slightly beat our forecast, with profit and margins as expected. We believe we are on track to meet our full year targets and continue to expect margin improvement in the second half of the year from a combination of volume growth, mix improvement, and solid execution. We still expect mid-teens revenue growth and high single-digit margins for the year. Our optimism and bullishness on overall grid investment remains unchanged. The need for substantial utility customer capital expenditures in the coming years is pressing as power demand drives the need to upgrade and add to an aging infrastructure. This demand requires large CapEx commitments across transmission, substations, distribution, as well as new generation capacity. Backlog this quarter for the segment was up about 14% versus the second quarter of 2024. We continue to target a broad set of projects of varying scope, and we still expect several larger projects to be awarded in the coming periods. In our clean energy and infrastructure segment, second quarter revenue grew 20% year-over-year, and adjusted EBITDA nearly doubled from $47.3 million to $83.3 million, with a margin of 7.4%. an increase of 240 basis points from the prior year. New awards accelerated in the second quarter and totaled $1.6 billion for the segment compared to $1.1 billion in the first quarter. Backlog was up 11% to a new record level of $4.9 billion and book to bill was 1.4 times. We remain in great shape to deliver our 2025 goals and are already progressing well in building backlog for 2026. Within this segment, both renewables and infrastructure had double-digit growth and solid margin performance. We see significant opportunities for new bookings for the second half in these areas, as well as opportunities for behind-the-meter power infrastructure, giving substantial experience in this area. We are fully covered for our 2025 revenue guidance and recent bookings continue to fill in the 2026 year. An important development during the quarter was the passage of the One Big Beautiful Bill. The legislation leaves intact tax credits associated with renewables through 2027 and created a clear path for safe harboring projects which would allow construction through 2030. A subsequent executive order was signed, and we expect more clarity in the coming months. As it relates to MOSTECH and as demonstrated in our backlog, we are very confident that our customer mix, which is heavily skewed to the top-tier developers, will have a high level of success in their ability to safe harbor projects. We are also confident in the ability for renewables to compete over time, even without federal subsidies. As electricity demand continues to expand, driven by artificial intelligence and data center construction, the cost of competitive power becomes increasingly more important in a global marketplace. For example, in the Middle East, renewable power is being sold at approximately $15 a megawatt hour compared to $50 in the U.S. in an unsubsidized and free market. I have no doubt that renewables will continue to play an important role in the domestic energy generation along with other sources, including natural gas. Turning to our pipeline infrastructure segment, we saw revenue decline 6% and EBITDA drop to $62 million from $135 million the year before. We've noted the primary driver here being the challenging comparisons from the MVP project wind down last year. Pipeline revenue of $540 million was well higher than our guidance of about $475 million and a substantial acceleration from the first quarter with a 52% sequential increase as overall activity picks up. Profits in the quarter met our plan on slightly weaker margins than forecasted as we invested to prepare for future demand. While backlog for this segment was down about 5% sequentially, our second quarter backlog does not include a number of verbally awarded projects whose contracts we expect to sign shortly. As I previously covered, we expect backlog growth through the balance of the year. Gas-fired generation is clearly going to play a much more significant role in future years than we were expecting, and we fully expect to benefit from a multi-year investment curve in this important base load generation source. I'm very bullish and excited about both the short and long-term outlook for our pipeline segment. In summary, 2025 is shaping up very well, and the momentum we are building across every segment is very encouraging. I've mentioned previously that we are working more closely with key customers across multiple segments at MassTech on framework agreements that benefit both parties while strengthening our position in diversified end markets. We saw continued progress in the second quarter with such agreements, which have been particularly helpful in securing visibility in all segments. We are very excited about our market position and the ability to leverage close customer relationships to improve visibility and outcomes for our business as we execute on growth with scaled businesses across our enterprise. Of course, the outcomes are dictated and determined in large part by our execution against this significant volume opportunity. Our efforts on operational execution and evolving our business processes to ensure both consistency of outcomes and strong structural profitability is a primary focus. Our margin improvement opportunity is real, and we are taking many steps to realize it. I'm particularly pleased with the progress we showed in the second quarter and expect to have a lot more to show in this regard across our segments in the second half as we continue to develop volumes across the business and refine our operational execution in key areas. As we talk about execution, I'd also like to thank all of our people at Mostek for their continued commitment to our corporate values of safety, environmental stewardship, and integrity and honesty. all while serving our customers with the diligence and ensuring the delivery of a great work product. Thank you all. I will now turn the call over to Paul for our financial review. Paul?

Thank you, Jose, and good morning. As Jose mentioned, we're very pleased that our second quarter results exceeded guidance, coming in large part from strong sequential volume development and continued solid execution. We remain highly confident in our business positioning today and into the years ahead, and this is true across all of our end markets, given solid demand drivers that will require a significant investment in infrastructure for years to come. This is the case regardless of which technologies are favored and whether financing mechanisms include government incentives. Our customers are clear. They need us to fulfill plans that include major projects across the spectrum of markets we serve. Let me start with some quarterly highlights. Second quarter revenue was well above expectations at $3.54 billion, a new quarterly record, with 20% growth year-over-year and 25% growth sequentially from the first quarter. Adjusted EBITDA of $275 million met our forecast. Three of our four segments beat volume expectations in the period, while the stand-up performance in profit and margins came from clean energy and infrastructure. Eighteen-month backlog at quarter end totaled $16.45 billion, an increase of 4% from the first quarter and 23% year-over-year. This represents another record level of total backlog for MOSDEC, with the growth led by an 11% increase recorded at CE&I that included continued strong bookings in the renewables portfolio, which is fully booked for the current year and continues to build momentum for 2026 and beyond. We generated cash flow from operations of $6 million in the second quarter and $84 million year-to-date, with DSOs at 65 days, a one-day improvement from the first quarter, both in line with our expectations. Our strong second quarter revenue growth with consistent DSOs drove higher working capital investment in the quarter. Pre-cash flow for Q2 was a use of $45 million versus the source of $253 million in the prior year quarter. The variance was driven mainly by higher working capital investment versus last year, as well as somewhat higher capital expenditures as we accelerated certain capital investments for growth. You may recall in 2024, we saw DSOs decrease from 79 days in Q1 to 69 days for Q2, allowing us to reduce working capital last year, whereas this year did not have the same benefit with DSOs remaining consistent in the mid-60s. We completed $40 million of share repurchases in the second quarter and extinguished our prior remaining authorization, bringing the year-to-date total to $77 million at an average price of $110 per share. Also in the second quarter, our board authorized an additional $250 million repurchase program. Regarding some highlights from second quarter segment performance, Our communications segment produced quite significant top-end bottom-line growth, with revenue easily exceeding our forecast for the period and benefiting from continued strong demand in both wireless and wireline businesses from a diverse set of customers across the telecom and tech landscape. The adjusted EBITDA margin of 90 basis points year-over-year was generally in line with guidance, inclusive of certain program expenditures ahead of expected growth that held back margin performance. Second quarter adjusted EBITDA margin was 9.9%, compared with 9% in the prior year, and increased significantly from 6.9% in the first quarter as volumes ramped positively. Overall end market strength remained strong, and second quarter backlog increased 2%, or $102 million, despite the record segment revenue in the quarter. Power delivery continues to see substantial growth across the country, and we exceeded our quarterly revenue forecast by close to $50 million, producing 20% growth year-over-year. Adjusted EBITDA was generally in line with our forecast. Power delivery backlog increased slightly as solid bookings were partially offset by the record quarterly revenue earned in Q2. We continue to see significant new bookings opportunities as we look forward to the balance of the year and anticipate structural growth for this business for years to come, given the anticipated electricity-to-demand and system upgrade requirements for our utility clients. In clean energy and infrastructure, we saw continued improvement in Q2 adjusted EBITDA margin, which increased 230 basis points year over year. Our renewables business was a strong contributor to the CE&I margin performance, with the benefit of some impacts from project closeouts in the quarter. We continue to see strong performance in the second half from operating leverage with higher volume and continued focus on strong execution. Our guidance assumes margins hold at similar levels to Q2 in the second half of the year. On CE&I backlog, we saw solid bookings from all three business verticals, contributing to the 11% sequential increase. This included almost $200 million of renewables backlog growth, despite the noise in the period from the Big Beautiful Build legislation. These new project additions continue to build our book for future years and reinforce the sentiment among our customers that their projects are essential, driven by strong off-take demand. We remain highly optimistic about the sector, driven by the fundamental cost competitiveness of renewable energy and the limited availability of near-term alternatives for new power generation. Regarding pipeline infrastructure, our revenue result in the quarter beat our expectations by nearly $65 million on strong project development driven by a host of smaller and medium-sized projects. Adjusted EBITDA margin for the quarter was in line with expectations, with an 11.5% margin versus guidance of low double digits. but we did see less flow-through from the incremental revenue due to the investments made to support future growth. The year-over-year comparison remained challenged by the MVP project completion in the first half of last year, and we now expect that we will revert to growth beginning in the third quarter to complement ongoing sequential growth after the lower first quarter volume result. Pipeline backlog development was more muted versus the large increase reported in the first quarter, but we continue to see solid new awards totaling over $450 million in the period. and the backlog did not include certain project verbal awards, as Jose mentioned. We continue to expect to bid on a number of larger projects in the second half of this year, with a robust bid schedule that reflects strong sources of demand across multiple geographies and related to numerous major gas basins domestically. The continued diversity of demand drivers related to LNG export, domestic, residential, and commercial demand is leading to a clear resurgence of pipeline construction activity that we are seeing play out over multiple years to come. Last quarter, I highlighted our focus on margin enhancement over time, particularly in our non-pipeline segments, communications, power delivery, and clean energy and infrastructure. Collectively, these segments delivered an 8.5% adjusted EBITDA margin in the second quarter, a 100 basis point improvement year over year. We remain optimistic about continued progress in the second half of 2025 for these operations, including a solid increase sequentially in the third quarter, with margins approaching double digits for the first time. This expected improvement is driven by operating leverage on higher volume and our continued focus on execution, productivity, and disciplined cost management. Shifting to our updated consolidated guidance, I'd like to remind you that we've posted 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 range between $13.9 and $14 billion, with adjusted EBITDA ranging from $1.13 to $1.16 billion. Adjusted EBITDA performance driven by almost 30% expected growth in our non-pipelined segments year over year. Adjusted EPS is forecasted to be $6.23 to $6.44, with the midpoint up 60% versus 2024. We expect Q3 revenue of $3.9 billion, adjusted EBITDA of $370 million, and adjusted EPS of $2.28. We are increasing 2025 revenue estimates to account for the second quarter beat and the continued strong demand visibility with significant year-over-year improvements in most segments, partially offset by the lower pipeline revenue recorded in the first half due to MVP project runoff. On adjusted EBITDA margins, we expect second half year-over-year margin expansion for communications and power delivery, offset by slightly lower second half margins year over year for pipelining clean energy due to the investments we are making to support anticipated future growth. Similarly, we are raising our net cash capital expenditure guidance to $140 million as we procure additional equipment to support this growth. Also notable, we still do not see material impacts from either tariffs or federal tax incentive changes from the recent Big Beautiful Bill legislation in our 2025 outlook. that we have considered a measure of general macro uncertainty from the current policy and geopolitical environment as we discount risk in our forecast planning. Regarding cash flow in the balance sheet, we are increasing our expectation to $700 to $750 million of cash flow from operations for 2025, assuming DSOs average around the mid-60s for the balance of the year. We ended the quarter with total liquidity of approximately $2 billion and net leverage of 2.0 times, which we expect to decrease in the back half of the year. In June, we successfully refinanced our credit facilities, resulting in extensions of maturities and favorable adjustments to certain terms, covenants, and pricing. Our strong balance sheet and well-structured debt profile provide us significant financial flexibility to pursue a disciplined, return-focused capital allocation strategy. Our top priority remains supporting our robust organic growth opportunities through investments in equipment and capacity expansion, where we see compelling returns. We will also continue to evaluate opportunistic, accretive acquisitions that complement our existing service lines, consistent with our longstanding approach. In addition, we maintain a share or purchase authorization and will deploy capital to buybacks opportunistically. This completes our prepared remarks, and I'll now turn the call over to the operator for Q&A.

Thank you. If you would like to ask a question at this time, please press the star key followed by the digit 1 on your telephone. please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. Again, please press star one to ask a question. We will pause for just a moment to allow everyone to signal. We will now take our first question from Stephen Fisher from UBS. Please go ahead.

Thanks. Good morning. Just to follow up on the clean energy comments you made, just curious about kind of what you experienced in terms of customer feedback and activity during the quarter. You know, as all the policy uncertainty played out, I know you're, sounds like you're pretty well set on 25, but did that kind of change things around with any specific projects or what you might have already had booked for 2026? And how much actually do you have in your 26 plan booked at the moment?

Good morning, Steve. So I would say a couple things. I'd say, you know, our customers so far have been unaffected, right? I think what everybody's plans were for 25 are ongoing. Quite frankly, what everybody's plans were for 26 are ongoing. The work that we booked, the success that we've had in bookings in both the first and the second quarter, you know, have nothing to do with the federal legislative process as it's played out. I think it's completely solidified our plan for 25. It's put us in an incredible position for 26 where we're where we would expect to further grow that piece of the business. And, you know, at the end of the day, we're, you know, we're really excited about what came out of the legislation. We think the one big, beautiful bill is a good bill for Moss Tech. Obviously we've got an executive order that we're paying attention to, but we work for top tier developers and we think that they're in the best position to really maintain their business over a really long cycle.

Okay. That's helpful. And then, In power delivery, just curious how you're thinking about the timing of bookings here. I think Jose said the coming periods. Could that mean still the second half of this year? And what are you thinking are your focus projects here? Is it more on the very high voltage lines or it would be substations or anything else or all the above?

We're focused on all of the above. I think we've made great progress in the business. If you look at our guidance, we're guiding to grow just under 20% for the year. That's virtually all organic. So I think we've done a great job in that business of building off of what already was a good 2024. I think margin progression is happening in that business as we expected. We're really excited about what the second half is going to bring for us in power delivery. We think our positioning in the market is fantastic. We expect to be a player on big projects as we go forward, but also on the day-to-day business, right? The day-to-day business is really important for us. It's the bulk of what we do. We're constantly winning projects. We're constantly getting more competitive. We're talking a lot about, you know, margin expansion opportunities and what we've done to build margins. And if you think about where we've come in that business from, you know, just a few years ago in 22, 23, as we were very acquisitive in that business, I think we've made tremendous inroads in margin expansion and in really positioning in the market. And we're really excited about what's going to come in that market for us.

Thank you very much. Thanks, Steve.

We will take our next question. From Philip Shen from Road Capital Partners. Please go ahead.

Hey, guys. Thanks for taking the questions. First one is a follow-up, Jose, on the EO. What are your expectations for how that could play out and maybe the different outcomes? And how are the Tier 1 customers positioned for those different outcomes? Thanks.

Sure. So, look, I think a number of our customers today have a lot of a very large portfolio of safe harbor projects. The way that the legislation is written is, you know, through 27, everybody keeps their credits. Beyond 27, it's what you have safe harbored. There's a lot of opportunities for people to further safe harbor projects all the way into the middle of 26. There will be some changes in the executive order relative to that. We think they'll be manageable. And more importantly, we think they'll be manageable by the top-tier developers. I think the work that we've done post-CIA acquisition in terms of, you know, really focusing ourselves on the customers that we were working for, the relationships that we were creating, When you look at our customer base today in that industry, we think it's best in class. It's tier one. And we think those are the ones that are best positioned to take advantage of the opportunities that will exist to safe harbor. It literally puts your projects in play all the way to 2030. Obviously, there's another election in 2020, 28. So we'll see what happens. But, you know, we're excited about, again, not just 26. We're, you know, I'm I have no doubt in my mind that this business is going to grow for us in 2026. I think it will grow beyond that. And over time, and we said it in our prepared remarks, I actually think the market's becoming a lot more competitive. When you look at, you know, the sources of power that exist, right, you've got nuclear, which is a ways out. You've got gas that we'll see, you know, significant increases in three to five years. But when you look at the price of that, renewables start getting really competitive, even without subsidies. When you look at the rest of the world and what they're able to build renewables at in a free market, it's a low cost. So it is a formidable market. form of power generation at a low cost, especially when you consider storage. And we think the market's going to be strong for a really, really long time with or without federal incentives.

Great. Thank you. And then you talked about also how bookings have accelerated, I think, for clean energy. And I think in the back half that might continue. And so I was wondering if you could just kind of give it a little bit more color post-OBB what the conversations were like with customers. Did you see really an aggressive amount of activity in July? Do you expect that acceleration to sustain through Q3 and Q4, or do you think that kind of slows down as we get through the year? Thanks.

I would say not yet. The bookings that we enjoyed in Q1 and Q2 had nothing to do with the bill. In Q1, we booked over a billion dollars in new projects, which we were really excited about. I think we had, I don't remember, 1.4 times booked a bill in that market in Q1. We booked $1.6 billion in Q2, and I think that acceleration is critically important. I think we're going to have a really strong second half of the year. I think we're going to have a really good third quarter yet again. And I would argue that none of that has to do with the bill. You know, depending on what happens with the executive order, there is a possibility in place that people work really hard to safe harbor and pull in a lot of work. We have not taken any of that into account in any of our thought process. That would... We don't know. Obviously, that would be upside to Mostic and others in the industry, but we'll keep working with our customers to see if that's going to be required or not. Hopefully, it won't be, and people will work off their current safe harboring over the course of the next five or so years.

Great. Thank you. One more, if I may, as it relates to margin. In terms of EBITDA margin, what are your latest thoughts on the overall trajectory in 26 and 27? are double-digit margins still on the table in the near to medium term? Thanks.

Yeah, so the question is from a, I'm not sure if the question is from a total company perspective or specific to clean energy.

Total company, thanks.

Yeah, so from a total company perspective, Look, we're really bullish on every segment that we operate in. We're seeing significant acceleration. As we said, obviously the big driver to margins in our business is our pipeline segment. It's historically been our highest margin business. We're really bullish about what's going to come there. I think when you look at our guidance for this year, we're in that low 8% range. I don't know that we're not going to sit here today and talk about getting to double digits in 2026, but over the long term, that is our goal. We think we can achieve that. Obviously, it has a lot to do with the mix of our business, but we think today when we look at our outlook over the next few years, the mixed potential of our business has never been better.

Great. Thanks for the questions, and I'll pass it on.

Thank you.

We will now move to Andy Kaprowitz from Citigroup. Please go ahead.

Good morning, everyone. Good morning, Andy. Okay, so you did raise your pipeline revenue forecast a bit, but as you said, the backlog was down slightly sequentially. So could you give us a little more color on what you're seeing? You mentioned, I think, some projects you expect to book shortly. Is it possible to quantify that? And then I know you've talked about revenue at least as big as in 24 and 26. So maybe you could update us on the potential of this cycle. Could it be comparable to pre-COVID levels?

Sure. Thanks for the question, Andy. So a couple of things I'd say. Our pipeline business isn't about this year. And quite frankly, it isn't even about next year. We stand firm with what we said before, which is we think that our 2026 pipeline business will look a lot more like our 24 pipeline business. which is a sizable increase from where we'll be in 2025. Historically, obviously, it's been our best-performing business. It's been our highest-margin business. It peaked at about $3.5 billion in revenues. I think on our last call, we said, you know, if the market plays out the way that we're seeing, there's potential to ultimately get there over time. We still feel that way. It's somewhat remarkable that we're even saying that based on where the business has been in the last couple years. But the level of activity that we're seeing today is, you know, in my mind, somewhat unprecedented. Again, not necessarily for 26, but even beyond 26. And we're making significant investments today, right? We're investing in people, we're investing in equipment, and we're preparing for what we think is going to be a really large cycle, which we'll see the beginning of in 26.

Helpful, Jose. And maybe a similar question in communication. There seems to be, you know, a ton of drivers there. You know, whether it's fiber to the home, but now fiber to the data center. I think the big, beautiful bill helps with, you know, 100% bonus depreciation. So maybe you can talk about sort of the durability and duration of this cycle as you see it today, both in wireline and wireless.

So, again, Andy, it's been something that has somewhat caught us by surprise, the strength of the market. You know, our revenue guidance this year is, you know, north of 20%, again, all organic. When you look at the first two quarters, we outpaced that. We're bullish about not just this year, but what's going to, quite frankly, happen in 26 and beyond. We've got a number of new customers that keep coming to us with different plans, with different opportunities. We're pricing a lot of things in that market. There's no reason that we don't think that next year is going to be another really strong growth year. And quite frankly, we think we're at the beginning of the cycle there as well. You know, there's been a lot of talk about beads, and, you know, beads hasn't even shown up yet. So we'll see, you know, how that also impacts the market. But today, you know, the drivers of the business, that middle fiber expansion, which is, you know, being built to not only focus on data centers, but really all of the growth that we're seeing across different industries is really driving that business, and we don't expect that to end anytime soon.

Thanks, Jose.

Thanks, Andy.

We will take our next question from Sangeeta Jain from KeyBank Capital Markets. Please go ahead.

Hi, good morning. Thanks for taking the questions. Jose, if I can follow up with one more on the communication segment. Can you talk specifically about master explicit wireline versus wireless as you lapped the Ericsson order? And as we talked about, all the fiber opportunities come up.

Sure. So, again, historically, a wireless business for a long time was the biggest piece of the business. It's not anymore. Our wireless business is probably roughly 40% of what we do. The balance is wireline. Wireline has a lot of growth. Our wireless business, though, we're still really bullish on. You know, the Ericsson project is really less than a year old. It really started in the second half of last year, so we're in the first year of what's going to be a long multiyear cycle on that specific opportunity. We see tons of opportunities with other carriers on the wireless side based on what they've got planned in the coming years. We actually think that that business will see, again, significant growth opportunities within the entire communications sector. And the wireline market is really, there's as much demand as we've seen. So that's going to continue to grow for us. So we think both sectors are strong. Both sectors have tremendous growth opportunities over the coming years. And while the wireline is just bigger in total scope, we really like our position in both.

And thank you for that, Jose. And if I can follow up on that itself, would you need to make, investments on that wireline side, similar to what you are doing in pipelines, if the cycle does materialize the way it's looking today?

I think we've done it. We talked a little bit about that on our first quarter call. We also added people in that business in a sizable way in the second quarter. I think we've talked about ramping up for the demand. I think we've been in that circumstance now for multiple quarters, so I actually think we're pretty well positioned there. I don't think that the level of investment on a go-forward basis – is going to be different than what it's been in the last couple quarters. So I think we'll continue to build off that.

Great. Appreciate that. Thanks, Jose.

Thank you.

We will take our next question from Julian DeMoulin-Smith from Jefferies. Please go ahead.

Hey, good morning, team. Good morning, Jose. Thanks for the time. I appreciate it. Just maybe to kick off a little bit, let's talk about margins here a little bit. I mean, obviously, you're talking about investing and reinvesting in the business in anticipation. What's the timeline and cadence here of seeing that inflect in certain segments here? I mean, obviously, as you said yourself, some of those may not necessarily fully translate in bookings or at least meaningful revenue increases in 26. How do you think about the cadence of that margin improvement through the cycle here? And then secondly, to follow up on the pipeline commentary earlier, There's some pretty mega projects contemplated here for the past year. I mean, obviously, given your market position, can we make presumptions about some of those large ones in your position they're in? I mean, just being aligned with those partners?

Yeah, so I'd say a couple of things. I'd say, you know, when we think about investments relative to margin, our backlog is way up. I mean, considerably up since the beginning of the year. It's been across virtually all of our segments. We see what's coming. We see what's not in backlog, but we feel confident we're going to win, and thus the reason for the investment decisions that we've made. So we're really trying to get ahead of that. We're really trying to be in a position so that when that work comes in, we can hit it and execute on the highest margin that we can relative to that. So we think that a lot of our investment will be captured in 2025 relative to what we're going to need, to take advantage of some of these growing markets. Obviously, there's always a need for investment, but we think we're doing a lot of that as we speak. As it relates to pipeline, look, we're the largest pipeline builder in North America. We think we're the best pipeline builder in North America, bar none. We've got the largest fleet. We've got great people, and we think that for any owner that's out there that's interested in building a pipeline, there would be no reason not to contact MOSTIC and want MOSTIC on your project for lots of reasons. and we think that that'll play out in the marketplace.

Got it, and thank you. Just to clarify from earlier the renewable timing, obviously saw good progress here. How do you think about the timing of those projects getting pulled in? You made allusion to it earlier, but maybe to put a finer point on it, do you think that you actually see a shift forwards into 26 and 27 specifically on the renewable business, even within your existing backlogs?

It depends on, well, not an existing backlog because, you know, our existing backlog is only 18 months, so we wouldn't have anything today in backlog for 2027, regardless of where we stand with customers and our expectations for the work that we'll do for them in 2027. I'd say that I don't think customers are there yet. I think, you know, in a perfect world, you know, customers have, you know, dozens of gigawatts of projects planned from now through 2030, and hopefully they can work that plan off in the process that they're expecting. If something changes relative to the executive order and they have to accelerate that, we will definitely see a significant acceleration of the business, and then we'll have to manage to that. I think that's speculative, so I don't really want to get into that. I actually think that there's going to be a reasonable way to save harbor projects, and we won't see significant acceleration across the industry, but we'll have time to tell.

Excellent, guys. Thank you so much. Best of luck. Exciting times.

take our next question from Ati Modak from Goldman Sachs hey guys good morning Jose you mentioned a headcount increase on the pipeline side in particular can you talk about the capacity building targets there and then how many large pipelines can you be working on at the same time and is there a difference in utilization rates as we think of margins between the long haul lines and the connector lines

Sure. So the 4,000 number that we gave was company-wide. Obviously, pipeline was a big part of that. We feel like we perform well on all types of projects, large and small. We've said that in the past. We think the margin opportunity and potential doesn't necessarily vary by size of project. Sometimes it does by contract structure. So the cost-plus world allows you a lower margin than than if you're doing units. So we've predominantly done most of the units with some cost plus. We'll see what that mix looks like in the future. In terms of scale, you know, we would argue we're underutilized, right? At $2 billion, our peak was, I don't know, a couple years ago, we were doing $3.5 billion in sales and pipeline. So we think that the opportunity for us to increase the level of productivity with the assets that we own is tremendous. And we don't think that there's a – that there'll be a lack of projects. So for us, it's going to be about who do we want to partner with, what customers do we want to work for, and how big and how quick do we want to scale that business over time.

Got it. And then on that note, I guess on the verbally awarded contracts that you were talking about, can you help us understand the nature of that between sort of connector lines or long-haul lines, and is there a way to assess how much of the pipeline on average you are bidding for or you could be getting awards for?

in terms of the total market or a specific project?

For a long-haul pipeline, I mean, are you bidding for the entire thing? Is it reasonable to expect you're going to get the entire thing or 40%, 50%, anything like that?

Yeah, look, so it depends on the customer. There are projects that we've done in their entirety. There are projects where we've done, you know, half a project, a majority of a project, and it all depends on the customer, the size of project, the location, the risk tolerance, right? For us... You know, again, we've got a lot of availability. We've got, you know, we think the most flex in the marketplace relative to our ability to gear up for any project. And we are going to responsibly try to, you know, be as strong as we can in that business and grow that business as quickly and as reasonably as we can at the margin profile that we've historically enjoyed.

Thank you. I appreciate that. Thank you.

We'll take our next question. from Drew Chaverman from JP Morgan.

Yeah, good morning. Thank you for taking the questions. First, I just want to follow up on the pipeline margins here. And obviously, I appreciate the investment that you've put into the business this quarter, but can you maybe talk a little bit about how much further investment you need to have in 2025 to be ready for the coming years? And then also, I mean, maybe just touching a little bit, I know we've talked about the revenue volumes in the past being three and a half, but, I mean, also the margin profile then was also in the 20s, right? And so I'm just wondering if you think about, you know, as that revenue ramps, do you think there's any structural change in what the margin potential is here? I'm not talking about, like, what you've guided to, but how you think about the potential for that business. Are there things that have changed? Labor costs? you know, other input costs that might have necessarily changed to make you think differently about the margin profile?

I mean, the long-term answer is no. There's nothing structurally different. If you look at, you know, even if you look at 25, which I know we don't want to focus on 25, but if we look at the back half of 25, our guidance profile on the margin side is way up, right? So we'll be back to the mid-teens in the second half. of 25 versus the first half of 25. Again, 26 isn't the peak year by any stretch of the imagination. I think the cycle starts in 26. I think the performance in 26 will obviously be better than the performance in 25. Again, we've said approaching 24 levels. But over time, as the volume continues to increase, there is no reason why we shouldn't be able to attain historical margin profiles. Again, we've always guided towards high to mid-teens in that market. the opportunity to outperform that is there, but that's based on execution. So, no, we don't think there's anything structurally different that wouldn't allow us, if we execute well, to achieve a similar level of margins as we've historically done.

Okay. Thank you. And then a quick one on cash. I mean, obviously, a big ramp here in the second half of the year in the implied guidance. Can you just maybe talk about What's giving you confidence in that ramp? I mean, I appreciate you did it last year, and so it's clearly achievable, but what's giving you confidence this year? And then maybe if there are a few points that make you worried about whether it's achievable or not, or things that could be headwinds in the second half to cash, I mean, what would those be?

It's really just timing of the sequential growth, right? So we had big sequential growth in Q2, and it'll moderate as we go through Q3 and Q4. from the prior quarter. It's just working capital. That's the only, working capital timing. Our DSOs in the low to mid 60s are where we think they'll be structurally. So we don't have a benefit of reducing those any further. So it's just timing of investing for the various jobs.

Okay, great. Thank you both. Thank you.

We will now move to Jamie Cook from Truist Securities. Please go ahead.

Hi, good morning. Nice quarter. I guess, Jose, obviously lots of, you know, growth opportunities ahead of you and you're investing in your business as you talked about increasing your labor. I'm wondering to what degree does that create a short-term headwind, you know, as you think about margins, at least in the first part of 2026, you know what I mean, just as we're absorbing those costs and training people, et cetera. And then I guess my second question, and I'm sorry if someone's asked this, but there's like five calls this morning. Just your thoughts on M&A. Your peer is making some pretty aggressive moves on the acquisition front. To what degree do you think you need to do more acquisitions to continue to enhance your competitive positioning? And to what degree do you need to do acquisitions to ramp the labor growth? Thank you.

Yes, a couple things. I'd say that when we look at the investments that we're making, we think we're absorbing those costs in 2025. We think we absorbed some of them in the second quarter, which was why we handily beat revenues but didn't necessarily have a lot of flow through on EBITDA. We've got a little bit of that in Q3 again, where we've guided revenues slightly higher, but Without a significant amount of flow-through, we think that has to do with the investments. We actually think that starts to turn as early as the fourth quarter. We don't expect there to be significant lingering impacts of that going into 26, where we think we'll be highly utilized across these investments that we've made. So, again, we think that's a great story and really important. As it relates to M&A and what we've said in the past, look, we were very acquisitive in the 22-23 timeframe. We talked about really focusing on the organic opportunities that are in front of us. That's been our focus when you look at our revenue growth this year, when you look at our earnings growth. When you look at our 60% EPS growth this year relative to last year, that's been virtually all organic. And I think that that was important for the organization at that moment in time with some of the issues that we had with the integration of IA. We think we're through that. We think we're in a very different position. To your question of do we need to do M&A, our answer is we do not need to do M&A. When we look at 26, right, we see, you know, we laid out a goal when we did the IA acquisition in the summer of 2022 that we wanted to exceed $15 billion in revenue. We put a midterm target on that. You know, here we are three years later. I'm highly convinced that next year we'll exceed $15 billion in revenue in 2026. I think we'll improve our EBITDA margins in 2026 versus 2025. When we look at our EPS, we think we can exceed $8 of EPS in 2026 versus where we've been. So from a necessity point of view, no, to grow at double digits and to continue to grow earnings at double digits, we do not feel we need to do M&A. With that said, are there M&A opportunities out there that we're intrigued by that we think could potentially help further grow the business? The answer is yes, right? And I think that as an organization, we're getting to a place where we're more ready for it than we've been in the last couple years. Again, we're not looking to do anything transformational. We think we've been really good at tuck-ins over time, so that's where we'll focus. But, you know, as we kind of alluded to in our last call, I do think you can expect us to be more active in the M&A world on a go-forward basis.

Thank you.

We will take our next question from Justin Hawkey from Robert W. Baird. Please go ahead.

Oh, great. I think most of my questions have been answered. I just have one quick one. Just turning back to the communication segment, you know, I think your previous guidance for the second half was that it would be kind of flattish and Now, 3Q in particular is really strong, and I guess second half up, high single digits, maybe close to 10%. Is that the data center fiber work that's driving that, or what's the change versus kind of the previous outlook that it would be flattish here in the second half?

Well, I think it's the outperformance in the first half, right? So if you look at the first half, again, we grew first half revenue versus last year in the comms businesses up. 38%, which is really impressive. I think that, if anything, I'd argue we're being a little conservative in the second half, and I think it's broad-based. I think the wireless business is performing well. It's strong. We've done a really good job at gearing up, or we did a really good job at gearing up and preparing for some of the larger projects we had in that business. I think that's showing in execution today. We continue to see tons of wireline opportunities, new ones. That we're pricing that will have some impact towards the end of 25, but quite frankly, will probably impact 26 more. So we continue to see activity. I think, you know, obviously the wireless build out started in the second half of 25. So the 25 second half comps are more difficult than the first half 25. That's part of the reason for the large variances in growth. But again, when we look at the cycle and what we think we can accomplish in this business over a longer period of time, we think high single to low double-digit top-line growth is very reasonable in this market for that segment.

Great. That's all I have. Thank you. Thank you.

We will now take our next question from Brian Brophy from Statham. Please go ahead.

Yeah, thanks. Good morning, everybody. Appreciate you squeezing us in here. Wanted to ask about power delivery margins. There was some discussion about project inefficiencies in the queue, and I think the press release as well. And I think this is the second quarter you guys have talked about this. Any more color on what is driving these project inefficiencies? Is it related to Greenlink at all? And how should we be thinking about this potential headwind in the second half?

Well, if you think about our second half guide for margins and power delivery are double digits. We think we'll achieve that in both quarters, third and fourth. So I think it's no different than the commentary we've put out in the past. I don't think there's anything significant to really highlight. I'd say, you know, in some areas, I think we had some weather impacts. We had, you know, geographically, we had... Areas that really improved and areas that probably held us back a little bit. I do think we said it in Q1, there's some margin that we thought we left on the table there in the first half of the year. With that said, we were still up in both earnings and in revenue on a year-over-year basis. So, you know, our revenue was up about 17% in the first half year over year. EBITDA was up 10% in the first half year over year. So it's not that we didn't improve. It's quite frankly, we thought we could have improved more. And I think we'll start to show that in the second half of the year.

Thanks. I'll pass it on.

We will take our next question from Brent Thielman from DA Davidson. Please go ahead.

Hey, thanks. Congrats on all the momentum here. Jose, just at a, you look, you get a lot of businesses that sort of benefit indirectly from the AI data center build out. Maybe just refresh us on, you know, some of the things you're doing more directly for data centers, kind of size it for us. And are you investing more in it and trying to scale that up?

The short answer is yes. I think everything from, you know, we started in that world. We talked about it. It feels like a long time ago, but we really started that on the civil side of our business with our infrastructure business. I think it's grown where we're doing a lot of power-associated work relative to data centers. We're obviously doing a lot of telecom work related to data centers. Our business continues to grow there. It's performing as expected or better. I think we're probably more optimistic about the longer-term opportunities of what we have in that market than we've ever been, and I think over the next couple quarters, hopefully, we'll be able to talk more about what that is and what services we're specifically trying to target.

Excellent. Thank you. Thank you.

We will take our next question from Dean Burke from B Riley Securities.

Thank you. Good morning, Jose. Good morning, Paul. Good morning, Liam. Jose, excuse me. Pipeline's accelerating, and you laid out all the reasons why. Is it just the challenge you have in front of you is scaling the business, or has there been any change in the competitive front?

I mean, we're not afraid of the competition. I think that, no, it's a matter of there's obviously been a huge sentiment change. So if you would have asked our customers a year ago, you know, the outlook was, you know, nowhere near what it is today. So I think as the, you know, obviously the election changed a lot. The reliance on natural gas in the future has changed a lot. It's changed the business. Our customers are responding to that change, but it doesn't happen overnight. Right. So any of these projects, there's obviously a lot of engineering planning. You got to order pipe. You got to, uh, uh, you got to work on routes and get permitting and, uh, And that's happening, right? So the level of activity that we're seeing is incredible. We will get more than our share of that, we believe, and it's just a matter of timing, right? So we see what's coming in the second half of the year. We're excited about it, and we're preparing for that. And that's kind of what's driving the business today and the investment decisions that we're making today.

Great. And then just real quickly, and you mentioned this in your prepared comments, that nuclear is way out there, but are there any early discussions on any of the providers on getting you involved?

Look, it's the beauty of our business, right? We evolve with every one of our markets. We evolve in the different technologies as they come up. Obviously, we're paying really close attention to it, and there's no doubt in my mind that when the time comes that that becomes a growing source of generation, we will be engaged.

Great. Thank you, Jose. Thank you.

That will conclude today's Q&A session. I would now like to turn the call back over to management for any additional or closing remarks.

Thank you all for joining. This concludes today's call. Thanks for participating. And as a reminder, please visit our investor website for a replay and transcript of the call, which will be posted when available. Have a good day.

Thank you. That concludes today's call. Thanks for participating. And as a reminder, please visit our investor website for our replay and a transcript of the call, which will be posted when available.