Related Party Transactions

9 Months Ended

Sep. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Note 15 – Related Party Transactions

MasTec purchases, rents and leases equipment and purchases various types of supplies and services used in its business, including ancillary construction services, project-related site restoration and marketing and business development activities from a number of different vendors on a non-exclusive basis, and from time to time, rents equipment to, or performs construction services on behalf of, entities that are associated with members of subsidiary management. For the three month periods ended September 30, 2019 and 2018, such payments to related party entities totaled $25.5 million and $34.2 million, respectively, and for the nine month periods ended September 30, 2019 and 2018, totaled approximately $71.8 million and $65.9 million, respectively. Payables associated with these related party arrangements totaled approximately $20.3 million and $17.3 million as of September 30, 2019 and December 31, 2018, respectively. Revenue from related party arrangements associated with members of subsidiary management totaled approximately $0.7 million and $3.2 million for the three month periods ended September 30, 2019 and 2018, respectively, and totaled $1.6 million and $9.4 million for the nine month periods ended September 30, 2019 and 2018, respectively. As of September 30, 2019 and December 31, 2018, related amounts receivable, net, totaled approximately $0.1 million and $0.3 million, respectively.

Non-controlling interests in entities consolidated by the Company represent ownership interests held by members of management of certain of the Company’s subsidiaries, primarily in the Company’s Oil and Gas segment. The Company has subcontracting arrangements with one of these entities for the performance of ancillary oil and gas construction services.

In February 2018, MasTec acquired a construction management firm specializing in steel building systems, of which Juan Carlos Mas, who is the brother of Jorge Mas, Chairman of MasTec’s Board of Directors, and José R. Mas, MasTec’s Chief Executive Officer, was a minority owner, for approximately $6.1 million in cash and an estimated earn-out liability of approximately $1.4 million, net, as adjusted. The net assets acquired included notes payable to the former owners totaling approximately $2.6 million and accrued interest of approximately $0.1 million, which amounts were subsequently repaid. Amounts outstanding for advances made by the Company on behalf of this entity totaled approximately $0.4 million, net, and $1.0 million as of September 30, 2019 and December 31, 2018, respectively, which amount is expected to be settled under customary terms associated with the related purchase agreement.

The Company rents and leases equipment and purchases equipment supplies and servicing from CCI, in which it has a 15% equity investment. Juan Carlos Mas serves as the chairman of CCI, and a member of management of a MasTec subsidiary is a minority owner. For the three month periods ended September 30, 2019 and 2018, MasTec paid CCI approximately $7.7 million and $9.0 million, net of rebates, respectively, and for the nine month periods ended September 30, 2019 and 2018, paid approximately $23.6 million and $19.9 million, net of rebates, respectively, related to these arrangements. Amounts payable to CCI, net of rebates receivable, totaled approximately $12.3 million as of September 30, 2019. As of December 31, 2018, amounts payable totaled $4.9 million, and rebates receivable totaled $2.9 million.

MasTec has a subcontracting arrangement with an entity for the performance of construction services, the minority owners of which include an entity controlled by Jorge Mas and José R. Mas, along with two members of management of a MasTec subsidiary. For the three month periods ended September 30, 2019 and 2018, MasTec incurred subcontracting expenses of approximately $3.1 million and $1.1 million, respectively, and for the nine month periods ended September 30, 2019 and 2018, incurred approximately $9.3 million and $7.8 million, respectively. As of September 30, 2019 and December 31, 2018, related amounts payable totaled approximately $3.2 million and $0.4 million, respectively.

MasTec has a leasing arrangement for an aircraft that is owned by an entity that Jorge Mas owns. For the three month periods ended September 30, 2019 and 2018, MasTec paid approximately $0.6 million and $0.9 million, respectively, related to this leasing arrangement, and for both the nine month periods ended September 30, 2019 and 2018, paid approximately $2.0 million.

MasTec has arrangements to perform construction services on a cost-plus basis on behalf of a Miami soccer franchise (the “Franchise”) in which Jorge Mas and José R. Mas are minority owners. These arrangements include the construction of a soccer facility and stadium. For the three and nine month periods ended September 30, 2019, MasTec charged approximately $5.2 million and $7.4 million, respectively, under these arrangements, of which $4.6 million was outstanding as of September 30, 2019.

MasTec leases employees and provides satellite communications services to a customer in which Jorge Mas and José R. Mas own a majority interest. For the three month periods ended September 30, 2019 and 2018, MasTec charged approximately $0.3 million and $0.4 million, respectively, to this customer, and for the nine month periods ended September 30, 2019 and 2018, charged $1.1 million and $1.3 million, respectively. As of September 30, 2019 and December 31, 2018, outstanding receivables related to these arrangements totaled approximately $0.7 million and $0.6 million, respectively.

Split Dollar Agreements

The Company has split dollar life insurance agreements with trusts, of which Jorge Mas or José R. Mas is a trustee. For both the three month periods ended September 30, 2019 and 2018, the Company paid $0.6 million in connection with the split dollar agreements for Jorge Mas, and no payments were made for José R. Mas. For both the nine month periods ended September 30, 2019 and 2018, the Company paid $1.1 million in connection with the split dollar agreements for Jorge Mas. and paid $0.7 million for both the nine month periods ended September 30, 2019 and 2018 for José R. Mas. As of September 30, 2019 and December 31, 2018, life insurance assets associated with these agreements totaled approximately $20.3 million and $18.5 million, respectively.