Segments and Related Information

12 Months Ended

Dec. 31, 2019

Note 13 – Segments and Related Information

Segment Discussion

The Company manages its operations under five operating segments, which represent its five reportable segments: (1) Communications; (2) Oil and Gas; (3) Electrical Transmission; (4) Power Generation and Industrial and (5) Other. This structure is generally focused on broad end-user markets for the Company’s labor-based construction services. All five reportable segments derive their revenue from the engineering, installation and maintenance of infrastructure, primarily in North America.

The Communications segment performs engineering, construction, maintenance and customer fulfillment activities related to communications infrastructure, primarily for wireless and wireline/fiber communications and install-to-the-home customers, and, to a lesser extent, infrastructure for utilities, among others. The Company performs engineering, construction and maintenance services for oil and natural gas pipelines and processing facilities for the energy and utilities industries through its Oil and Gas segment. The Electrical Transmission segment primarily serves the energy and utility industries through the engineering, construction and maintenance of electrical transmission lines and substations. The Power Generation and Industrial segment primarily serves energy, utility and other end-markets through the installation and construction of power facilities, including from renewable sources, related electrical transmission infrastructure, ethanol/biofuel facilities and various types of heavy civil and industrial infrastructure. The Other segment includes equity investees, the services of which vary from those provided by the Company’s primary segments, as well as other small business units that perform construction and other services for a variety of international end-markets.

The accounting policies of the reportable segments are the same as those described in Note 1 - Business, Basis of Presentation and Significant Accounting Policies. Intercompany revenue and costs among the reportable segments are de minimis and accounted for as if the sales were to third parties because these items are based on negotiated fees between the segments involved. All intercompany transactions and balances are eliminated in consolidation. Intercompany revenue and costs between entities within a reportable segment are eliminated to arrive at segment totals. Eliminations between segments are separately presented. Corporate results include amounts related to corporate functions such as administrative costs, professional fees, acquisition-related transaction costs (exclusive of acquisition integration costs, which are included within the segment results of the acquired businesses), and other discrete items, such as goodwill and/or intangible asset impairment. Segment results include certain allocations of centralized costs such as general liability, medical and workers’ compensation insurance and certain information technology costs. Income tax expense, which is recorded within corporate results, is managed on a consolidated basis and is not allocated to the reportable segments.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is the measure of profitability used by management to manage its segments and, accordingly, in its segment reporting. As appropriate, the Company supplements the reporting of consolidated financial information determined in accordance with U.S. GAAP with certain non-U.S. GAAP financial measures, including EBITDA. The Company believes these non-U.S. GAAP measures provide meaningful information and help investors understand the Company’s financial results and assess its prospects for future performance. The Company uses EBITDA to evaluate its performance, both internally and as compared with its peers, because it excludes certain items that may not be indicative of the Company’s core operating results for its reportable segments, as well as items that can vary widely across different industries or among companies within the same industry, and for non-cash stock-based compensation expense, can also be subject to volatility from changes in the market price per share of the Company’s common stock or variations in the value of shares granted. Segment EBITDA is calculated in a manner consistent with consolidated EBITDA.

Summarized financial information for MasTec’s reportable segments is presented and reconciled to consolidated financial information for total MasTec in the following tables, including a reconciliation of consolidated income before income taxes to EBITDA, all of which are presented in millions. The tables below may contain slight summation differences due to rounding.



	For the Years Ended December 31,
Revenue:	2019			2018			2017
Communications ^(a)	$	2,618.8		$	2,556.8		$	2,424.4
Oil and Gas	3,117.2			3,288.7			3,497.2
Electrical Transmission	413.9			397.3			378.2
Power Generation and Industrial	1,034.3			665.0			299.9
Other	0.2			3.5			20.8
Eliminations	(1.2		)	(1.9		)	(13.5		)
Consolidated revenue	$	7,183.2		$	6,909.4		$	6,607.0


(a)	Revenue generated primarily by utilities customers represented 15.0%, 14.9% and 13.4% of Communications segment revenue for the years ended December 31, 2019, 2018 and 2017, respectively.



	For the Years Ended December 31,
EBITDA:	2019			2018			2017
Communications	$	208.8		$	290.4		$	247.4
Oil and Gas	634.2			451.6			402.2
Electrical Transmission	29.5			10.5			17.6
Power Generation and Industrial	40.1			40.4			22.6
Other	26.5			24.4			19.8
Corporate	(115.7		)	(156.4		)	(88.7		)
Consolidated EBITDA	$	823.4		$	660.8		$	620.9

For the year ended December 31, 2019, Corporate EBITDA included $3.3 million of indefinite-lived pre-qualification intangible asset impairment charges. For the year ended December 31, 2018, Corporate EBITDA included $47.7 million of goodwill impairment charges and Other segment EBITDA included project gains of $1.0 million from a proportionately consolidated non-controlled Canadian joint venture, which is managed by a third party and for which the Company has minimal direct construction involvement. For the year ended December 31, 2017, Other segment EBITDA included project losses from this non-controlled joint venture of $7.9 million.



	For the Years Ended December 31,
Depreciation and Amortization:	2019		2018		2017
Communications	$	65.0	$	59.3	$	53.2
Oil and Gas	127.2		113.7		96.7
Electrical Transmission	20.0		19.8		22.8
Power Generation and Industrial	14.1		13.7		9.1
Other	0.1		0.1		0.1
Corporate	9.1		6.3		6.1
Consolidated depreciation and amortization	$	235.5	$	212.9	$	188.0



	As of December 31,
Assets:	2019		2018		2017
Communications	$	1,958.1	$	1,461.7	$	1,314.4
Oil and Gas	1,762.4		1,965.3		1,762.6
Electrical Transmission	463.9		423.9		471.4
Power Generation and Industrial	570.5		358.7		288.6
Other	192.2		193.9		153.2
Corporate	49.9		36.5		76.4
Consolidated segment assets	$	4,997.0	$	4,440.0	$	4,066.6



	For the Years Ended December 31,
Capital Expenditures:	2019		2018		2017
Communications	$	36.0	$	69.3	$	40.5
Oil and Gas	59.7		83.5		57.7
Electrical Transmission	6.8		10.2		14.9
Power Generation and Industrial	12.7		6.5		5.4
Other	0.0		0.0		0.0
Corporate	11.3		10.9		4.9
Consolidated capital expenditures	$	126.5	$	180.4	$	123.4



	For the Years Ended December 31,
EBITDA Reconciliation:	2019		2018		2017
Income before income taxes	$	510.9	$	365.3	$	371.8
Plus:
Interest expense, net	77.0		82.6		61.0
Depreciation and amortization	235.5		212.9		188.0
Consolidated EBITDA	$	823.4	$	660.8	$	620.9

Foreign Operations and Other. MasTec operates in North America, primarily in the United States and Canada, and, to a lesser extent, in Mexico and the Caribbean. For the years ended December 31, 2019, 2018 and 2017, revenue of $6.9 billion, $6.7 billion and $6.4 billion, respectively, was derived from U.S. operations, and revenue of $233.5 million, $164.3 million and $211.5 million, respectively, was derived from foreign operations, the majority of which was from the Company’s Canadian operations in its Oil and Gas segment, and, to a lesser extent, from the Company’s wireless operations in Mexico. Long-lived assets held in the U.S. included property and equipment, net, of $874.7 million, $707.4 million and $649.5 million as of December 31, 2019, 2018 and 2017, respectively, and, for the Company’s businesses in foreign countries, totaled $31.1 million, $40.4 million and $57.0 million, respectively. Intangible assets and goodwill, net, related to the Company’s U.S. operations totaled approximately $1.4 billion as of December 31, 2019, and totaled $1.2 billion as of both December 31, 2018 and 2017, and for the Company’s businesses in foreign countries, totaled approximately $56.4 million, $61.5 million and $112.8 million, respectively. The majority of the Company’s long-lived and intangible assets and goodwill in foreign countries relate to its Canadian operations. As of each December 31, 2019, 2018 and 2017, amounts due from customers from which foreign revenue was derived accounted for approximately 5% of the Company’s consolidated net accounts receivable position, which represents accounts receivable, net, less deferred revenue. For the years ended December 31, 2019, 2018 and 2017, revenue from governmental entities was less than 1% of total revenue, substantially all of which was derived from the Company’s U.S. operations.

Significant Customers

Revenue concentration information for significant customers as a percentage of total consolidated revenue was as follows:



	For the Years Ended December 31,
	2019	2018	2017
Customer:
AT&T (including DIRECTV^®) ^(a)	20%	23%	25%
Equitrans Midstream Corporation/EQT Corporation ^(b)	11%	20%	—%
Energy Transfer affiliates ^(c)	8%	14%	40%

(a)

The Company’s relationship with AT&T is based upon multiple separate master service and other service agreements, including for installation and maintenance services, as well as construction/installation contracts for AT&T’s: (i) wireless business; (ii) wireline/fiber businesses; and (iii) various install-to-the-home businesses, including DIRECTV^®. Revenue from AT&T is included in the Communications segment.


(b)	The Company's relationship with Equitrans Midstream Corporation and its affiliates, which was spun off from EQT Corporation and its affiliates in 2018, is based upon various construction contracts for pipeline activities. Revenue from Equitrans Midstream Corporation and its affiliates is included in the Oil and Gas segment.

(c)

The Company's relationship with Energy Transfer affiliates is based upon various construction contracts for pipeline activities with Energy Transfer Operating, L.P., and its subsidiaries and affiliates. Revenue from Energy Transfer affiliates is included in the Oil and Gas segment.