Segments and Related Information

3 Months Ended

Mar. 31, 2020

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.

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. 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 Three Months Ended March 31,
Revenue:	2020			2019
Communications ^(a)	$	644.1		$	612.8
Oil and Gas	359.1			621.3
Electrical Transmission	128.1			94.9
Power Generation and Industrial	286.3			189.4
Other	0.0			0.0
Eliminations	(1.0		)	(0.1		)
Consolidated revenue	$	1,416.6		$	1,518.3


(a)	Revenue generated primarily by utilities customers represented 15.2% and 15.6% of Communications segment revenue for the three month periods ended March 31, 2020 and 2019, respectively.



	For the Three Months Ended March 31,
EBITDA:	2020			2019
Communications	$	50.8		$	45.3
Oil and Gas	74.4			107.4
Electrical Transmission	8.3			3.8
Power Generation and Industrial	5.0			3.2
Other	7.4			6.2
Corporate	(31.9		)	(29.5		)
Consolidated EBITDA	$	114.0		$	136.4



	For the Three Months Ended March 31,
Depreciation and Amortization:	2020		2019
Communications	$	19.7	$	14.7
Oil and Gas	28.1		34.6
Electrical Transmission	5.9		4.5
Power Generation and Industrial	4.0		3.1
Other	0.0		0.0
Corporate	2.8		2.1
Consolidated depreciation and amortization	$	60.5	$	59.0



	For the Three Months Ended March 31,
EBITDA Reconciliation:	2020		2019
Income before income taxes	$	36.5	$	55.1
Plus:
Interest expense, net	17.0		22.3
Depreciation	53.1		54.2
Amortization of intangible assets	7.4		4.8
Consolidated EBITDA	$	114.0	$	136.4

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 both the three month periods ended March 31, 2020 and 2019, revenue of $1.4 billion was derived from U.S. operations. For the three month periods ended March 31, 2020 and 2019, revenue of $45.7 million and $78.9 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 $911.5 million and $874.7 million as of March 31, 2020 and December 31, 2019, respectively, and, for the Company’s businesses in foreign countries, totaled $25.8 million and $31.1 million, respectively. Intangible assets and goodwill, net, related to the Company’s U.S. operations totaled approximately $1.4 billion as of both March 31, 2020 and December 31, 2019, respectively, and for the Company’s businesses in foreign countries, totaled approximately $51.4 million and $56.4 million as of March 31, 2020 and December 31, 2019, respectively. The majority of the Company’s long-lived and intangible assets and goodwill in foreign countries relate to its Canadian operations. As of March 31, 2020 and December 31, 2019, amounts due from customers from which foreign revenue was derived accounted for approximately 4% and 5%, respectively, of the Company’s consolidated net accounts receivable position, which represents accounts receivable, net, less deferred revenue. For the three month periods ended March 31, 2020 and 2019, revenue from governmental entities was approximately 2% and 1%, respectively, of total revenue, substantially all of which was derived from the Company’s U.S. operations.

Significant Customers

For the three month periods ended March 31, 2020 and 2019, AT&T represented 24% and 23%, respectively, of the Company’s total consolidated revenue. 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 wireless, wireline/fiber and various install-to-the-home services. Revenue from AT&T is included within the Communications segment.