Related Party Transactions

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Related Party Transactions

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, business development and administrative activities, from a number of different vendors on a non-exclusive basis, and from time to time, rents equipment to, sells certain supplies, or performs construction services on behalf of, entities in which members of subsidiary management have ownership or commercial interests. For the three month periods ended June 30, 2023 and 2022, such payments to related party entities totaled approximately $10.7 million and $7.8 million, respectively, and for the six month periods ended June 30, 2023 and 2022, totaled approximately $26.8 million and $14.6 million, respectively. Payables associated with such arrangements totaled approximately $1.3 million and $2.6 million as of June 30, 2023 and December 31, 2022, respectively. Revenue from such related party arrangements totaled approximately $5.2 million and $1.3 million for the three month periods ended June 30, 2023 and 2022, respectively, and for the six month periods ended June 30, 2023 and 2022, totaled approximately $7.4 million and $5.1 million, respectively. Related amounts receivable totaled approximately $4.4 million and $3.2 million as of June 30, 2023 and December 31, 2022, respectively.

The Company rents and leases equipment and purchases certain supplies and servicing from CCI. 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, 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 three and six month periods ended June 30, 2023, MasTec paid CCI approximately $0.3 million and $1.3 million, respectively, related to this activity, and for the three and six month periods ended June 30, 2022, MasTec paid approximately $0.7 million and $1.7 million, respectively. Amounts payable to CCI totaled approximately $0.6 million as of both June 30, 2023 and December 31, 2022.

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 both the three and six month periods ended June 30, 2023, MasTec incurred subcontracting expenses in connection with this arrangement of approximately $0.4 million, and for both the three and six month periods ended June 30, 2022, subcontracting expenses totaled approximately $0.1 million. Related amounts payable totaled approximately $0.3 million as of June 30, 2023, and as of December 31, 2022, such payables were de minimis.

MasTec has a leasing arrangement for an aircraft that is owned by an entity that Jorge Mas owns. For the three month periods ended June 30, 2023 and 2022, MasTec paid approximately $0.7 million and $0.6 million, respectively, related to this leasing arrangement, and for the six month periods ended June 30, 2023 and 2022, MasTec paid approximately $1.4 million and $1.3 million, respectively.

MasTec has performed construction services on behalf of a professional Miami soccer franchise (the “Franchise”) in which Jorge Mas and José R. Mas are majority owners. Services provided by MasTec have included the construction of a soccer facility and stadium as well as wireless infrastructure services. MasTec expects to perform additional construction services for the Franchise beginning in the second half of 2023. For the three and six month periods ended June 30, 2023, MasTec charged approximately $0.1 million and $0.2 million, respectively under these arrangements, and related amounts receivable totaled approximately $0.2 million as of June 30, 2023. Payments for other expenses related to the Franchise for both the three month periods ended June 30, 2023 and 2022 totaled approximately $0.2 million, and for the six month periods ended June 30, 2023 and 2022, totaled approximately $0.6 million and $0.3 million, respectively.

MasTec has a subcontracting arrangement to perform construction services for an entity, in which José R. Mas has a minority interest, and of which a member of management of a MasTec subsidiary owns the remaining interest. For the three month periods ended June 30, 2023 and 2022, revenue recognized by MasTec under this arrangement totaled approximately $36.1 million and $31.9 million, respectively, and totaled approximately $77.9 million and $60.7 million, respectively, for the six month periods ended June 30, 2023 and 2022. As of June 30, 2023 and December 31, 2022, related amounts receivable totaled approximately $50.4 million and $42.0 million, respectively. MasTec pays a management fee to this entity in connection with the subcontracting arrangement, under which MasTec incurred approximately $0.7 million and $0.5 million for the three month periods ended June 30, 2023 and 2022, respectively, and totaled approximately $1.2 million and $0.7 million, respectively, for the six month periods ended June 30, 2023 and 2022. As of June 30, 2023 and December 31, 2022, related amounts payable totaled approximately $0.1 million and $0.3 million, respectively.

From time to time, the Company advances amounts to the former owners of acquired businesses, which, under the provisions of the related purchase agreements, the former owners are obligated to repay. The Company made no advances for the three month period ended June 30, 2023, and for the three month period ended June 30, 2022, such advances totaled approximately $0.1 million. For the six month periods ended June 30, 2023 and 2022, such advances totaled approximately $0.1 million and $1.4 million, respectively. Amounts receivable for such advances totaled approximately $2.1 million and $2.0 million as of June 30, 2023 and December 31, 2022, respectively. In addition, the Company has a subcontracting arrangement with an entity in which it has a 25% interest. The Company’s interest in this entity is accounted for as an equity method investment. For both the three and six month periods ended June 30, 2023, the Company made equity contributions of approximately $3.6 million to this entity, of which $0.2 million was paid in cash. The Company made no equity contributions for the three month period ended June 30, 2022, and for the six month period ended June 30, 2022 equity contributions totaled approximately $0.5 million. As of June 30, 2023 and December 31, 2022,

the Company’s net investment in this entity was a liability of approximately $0.1 million and $0.2 million, respectively, which net amount included approximately $1.1 million of deferred revenue as of June 30, 2023, and $2.3 million of accounts receivable, net, less deferred revenue as of December 31, 2022, related to the subcontracting arrangement as of the respective periods. Additionally, the Company has certain arrangements with an entity in which members of management have an ownership interest, including a fee arrangement in conjunction with a $15.0 million letter of credit issued by the Company on behalf of this entity. Income recognized in connection with these arrangements totaled approximately $0.2 million for both the three month periods ended June 30, 2023 and 2022, and totaled approximately $0.4 million for both the six month periods ended June 30, 2023 and 2022. As of both June 30, 2023 and December 31, 2022, related amounts receivable totaled $0.4 million.

In 2018, the Company acquired a construction management firm specializing in steel building systems, of which Juan Carlos Mas was a minority owner at the time of acquisition. In the second quarter of 2023, the Company paid $16.1 million of contingent consideration in connection with the finalization of the earn-out arrangement related to this acquisition, as calculated under the terms of the purchase agreement. Approximately 25% of this earn-out payment was paid to Juan Carlos Mas, consistent with the terms of the purchase agreement.

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, including the ownership interests in two entities that the Company acquired in the second quarter of 2023. See Note 3 - Acquisitions, Goodwill and Other Intangible Assets, Net for additional information. In the first quarter of 2023, the Company acquired the remaining 15% equity interests of the non-controlling interests in one of these entities from two members of subsidiary management for $10.0 million in cash, plus 120,000 shares of MasTec common stock, valued at approximately $11.6 million.

Split Dollar Agreements

MasTec has split dollar life insurance agreements with trusts, for one of which Jorge Mas is a trustee, and for the other of which José R. Mas is a trustee. The Company paid $0.5 million and $0.7 million, respectively, in the second quarters of 2023 and 2022 in connection with these agreements. As of June 30, 2023 and December 31, 2022, life insurance assets associated with these agreements totaled approximately $27.1 million and $25.8 million, respectively.