Related Party Transactions

12 Months Ended

Dec. 31, 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 in which members of subsidiary management have ownership or commercial interests. For the years ended December 31, 2019, 2018 and 2017, such payments to related party entities totaled approximately $108.0 million, $134.4 million and $110.7 million, respectively. Payables associated with such related party arrangements totaled approximately $14.7 million and $17.3 million as of December 31, 2019 and 2018, respectively. Revenue from such related party arrangements totaled approximately $2.3 million, $10.3 million and $2.6 million for the years ended December 31, 2019, 2018 and 2017, and related amounts receivable, net, were de minimis as of December 31, 2019 and totaled approximately $0.3 million as of December 31, 2018.

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. In 2017, the Company acquired the remaining non-controlling interests of one of these entities, with which it previously had a subcontracting arrangement for the performance of ancillary oil and gas construction services, for approximately $21.4 million in cash and an estimated earn-out liability of $9.7 million, as adjusted. Cash paid to acquire the remaining interests of this entity is reflected within payments to non-controlling interests in the consolidated statements of cash flows.

In 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. Amounts outstanding for advances made by the Company on behalf of this entity totaled approximately $0.5 million, net, and $1.0 million as of December 31, 2019 and 2018, respectively, which are expected to be settled under customary terms associated with the related purchase agreement. In 2017, MasTec acquired an oil and gas pipeline equipment company that was formerly owned by a member of subsidiary management for approximately $40.6 million in cash and an estimated earn-out liability of $75.5 million, as adjusted. MasTec previously leased equipment from this company.

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 and an entity that is owned by the Mas family are minority owners. For the years ended December 31, 2019, 2018 and 2017, MasTec paid CCI approximately $41.7 million, $57.6 million and $54.9 million, net of rebates, respectively, related to this activity. Amounts payable to CCI, net of rebates receivable, totaled approximately $0.2 million as of December 31, 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 years ended December 31, 2019, 2018 and 2017, MasTec incurred subcontracting expenses of approximately $10.3 million, $9.9 million and $78.0 million, respectively. As of December 31, 2019 and 2018, related amounts payable totaled approximately $0.2 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 years ended December 31, 2019, 2018 and 2017, MasTec paid approximately $2.4 million, $2.7 million and $2.0 million, respectively, related to this leasing arrangement.

MasTec performs construction services on a cost-plus basis on behalf of a professional Miami soccer franchise (the “Franchise”) in which Jorge Mas and José R. Mas are minority owners. Services provided by MasTec include the construction of a soccer facility and stadium. For the year ended December 31, 2019, MasTec charged approximately $12.6 million under these arrangements, of which $3.9 million was outstanding as of December 31, 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 years ended December 31, 2019, 2018 and 2017, MasTec charged approximately $1.4 million, $1.7 million and $1.6 million, respectively,

to this customer. As of December 31, 2019 and 2018, outstanding receivables related to services provided totaled approximately $0.8 million and $0.6 million, respectively.

One of the Company’s subsidiaries has a subcontracting arrangement with a contractual joint venture in which it holds a 35% undivided interest, for which the related project was almost fully complete as of December 31, 2019. Outstanding performance guarantees on behalf of this contractual joint venture totaled Canadian $26.4 million as of both December 31, 2019 and 2018, or approximately $20.3 million and $19.4 million, respectively.

Split Dollar Agreements

MasTec has a split dollar life insurance agreement with (i) Jorge Mas, and José R. Mas and Juan Carlos Mas, as trustees of the Jorge Mas Irrevocable Trust (the “Jorge Mas trust”); and (ii) José R. Mas, and Jorge Mas, Juan Carlos Mas and Patricia Mas, as trustees of the José Ramon Mas Irrevocable Trust (the “José R. Mas trust”), both of which were amended and restated in February 2018. The Company is the sole owner of each of the policies and is designated as the named fiduciary under each split dollar agreement, and the policies subject to the split dollar agreement may not be surrendered without the express written consent of the applicable trust. The total maximum face amount of the insurance policies subject to the split dollar agreements is capped at $200 million in the case of Jorge Mas and $75 million in the case of Jose R. Mas. Upon the death of the applicable executive or the survivor thereof and his wife under the applicable policy, the Company is entitled to receive a portion of the death benefit under the policy equal to the greater of (i) premiums paid by the Company on the policy and (ii) the then cash value of the policy (excluding surrender charges or other similar charges or reductions) immediately before the triggering death. In addition, each executive is entitled to purchase the applicable policy under certain events, including a change in control of the Company.

The Company paid approximately $1.1 million in each of the years ended December 31, 2019, 2018 and 2017 in connection with the split dollar agreements for Jorge Mas, and paid approximately $0.7 million in each of the years ended December 31, 2019, 2018 and 2017 in connection with the split dollar agreements for José R. Mas. Life insurance assets associated with these agreements, which amounts are included within other long-term assets, totaled approximately $20.3 million and $18.5 million as of December 31, 2019 and 2018, respectively.