MasTec, Inc. (MTZ) Earnings

Management highlights

- Overall Q2 2026 Performance * Consolidated revenue reached $4.375 billion, up 23% year-over-year; adjusted EBITDA was $384 million, up 40% year-over-year; adjusted EPS was $2.22, up 49% year-over-year, all exceeding prior guidance. * Quarter-end backlog hit a new record of $21.4 billion, up nearly $5 billion year-over-year and $1 billion sequentially, with a consolidated book-to-bill ratio of 1.2x. * Adjusted EBITDA margins expanded 100 basis points year-over-year, driven by broad-based strength across most business segments. - Acquisition of Superior Group * The acquisition of Superior Group, the largest acquisition in MOSTEC's history, closed in July 2026, adding 3,000 skilled employees and expanding capabilities in mission-critical electrical infrastructure for data centers. * The acquisition deepens customer relationships, broadens the addressable market, and positions MOSTEC to lead a generational infrastructure investment cycle driven by AI, electrification, and digital infrastructure growth. * Cross-selling opportunities between MOSTEC and Superior are already progressing well, with customer conversations exceeding initial expectations. - End Market Demand Trends * Unprecedented demand for large mission-critical infrastructure projects across power delivery, clean energy, and pipeline is driving backlog growth, with most new backlog expected to contribute to revenue starting in 2027. * Grid modernization, system hardening, reliability upgrades, and growing power demand from data centers are driving strong, long-term growth in power delivery. * Renewables, especially solar which now makes up 60-65% of the renewables portfolio, continue to drive strong backlog growth in clean energy and infrastructure, with growing demand for peaking power generation and turnkey data center projects. * Long-term pipeline fundamentals are very strong, with growing demand from power generation projects and resolution of existing pipeline bottlenecks; reported backlog does not reflect the full extent of long-term visibility in this segment.

Guidance

- Full year 2026 consolidated guidance has been upgraded from prior levels, with new expectations of $18.2 billion in total revenue, $1.6 billion in adjusted EBITDA, and $9.30 in adjusted EPS, representing 27%, 39%, and 42% year-over-year growth respectively. - Q3 2026 consolidated guidance expects $4.9 billion in total revenue, $482 million in adjusted EBITDA, and $2.98 in adjusted EPS. - Communications segment full year 2026 guidance has been revised downward: revenue is now expected to be $3.25 billion, with EBITDA margins 100 basis points lower than prior year, at high single digits, to account for near-term project deferrals. - Power Delivery full year 2026 revenue guidance now includes the contribution from Superior, reaching $5.725 billion, with low double-digit EBITDA margins, up from prior core guidance. - Clean Energy and Infrastructure full year 2026 guidance is raised to $6.8 billion in revenue, with high single-digit EBITDA margins, both ahead of prior expectations. - Pipeline Infrastructure full year 2026 guidance remains largely unchanged, as most recent backlog growth is for 2027 revenue and beyond. - Full year 2026 operating cash flow is expected to exceed $1 billion, with the majority generated in Q4, and net leverage is expected to fall below 2x by year end, consistent with company policy.

Segment performance

1. Communications Segment: $890 million in Q2 2026 revenue, $73 million in EBITDA, with an 8.2% EBITDA margin. This segment contributes 20.3% of total Q2 revenue. Full year 2026 revenue is expected to be $3.25 billion, with EBITDA margins in the high single digits. 2. Power Delivery Segment: $1.25 billion in Q2 2026 revenue, $113 million in EBITDA, with a 9%+ EBITDA margin. This segment contributes 28.6% of total Q2 revenue. Segment backlog reached a new record of $6.3 billion, with a 1.1 book-to-bill ratio. Full year 2026 revenue is expected to be $5.725 billion, with EBITDA margins in the low double digits. 3. Pipeline Infrastructure Segment: $643 million in Q2 2026 revenue, $119 million in EBITDA, with an 18.4% EBITDA margin. This segment contributes 14.7% of total Q2 revenue. Segment backlog grew 35% sequentially to $1.8 billion, with a 1.7 book-to-bill ratio, the highest of any segment. Full year 2026 guidance remains largely unchanged from prior projections. 4. Clean Energy and Infrastructure Segment: Over $1.6 billion in Q2 2026 revenue, $128 million in EBITDA. This segment contributes 36.6% of total Q2 revenue. Segment backlog grew $500 million sequentially to $7.8 billion, with a 1.3 book-to-bill ratio. Full year 2026 revenue is expected to be $6.8 billion, with EBITDA margins in the high single digits, both ahead of prior expectations.

Risks & headwinds

- Communications segment faces short-term revenue pressure: wireless project delays stem from carriers holding upgrades to pair with new spectrum rollouts that will not launch until 2027, while wireline project delays stem from delayed starts for replacement projects after RDoF projects wrap up, and permitting challenges. - Higher than expected indirect fuel and equipment costs, plus execution issues on select communications projects, reduced Q2 2026 margins in that segment more than anticipated. - Proposed state-level pauses or bans on new data center development in some high-demand states do not currently have a material impact on MOSTEC, as the company has limited exposure to those geographies; any long-term impact could be offset by development in other states and international markets. - Proposed FCC bans on Chinese solar inverters are not expected to have a material impact on MOSTEC's near to medium-term projects, due to grandfathering provisions for already planned projects. - Uneven demand timing across segments is mitigated by MOSTEC's diversified business model, but near-term underperformance in communications could pressure short-term consolidated results even as other segments offset the impact.

Analyst Q&A

• Q: What is the long-term outlook for communications infrastructure, specifically long-haul construction, after current near-term headwinds? /

  A: Industry capital investment is not declining, only shifting timing. Carriers are holding wireless site upgrades to pair with newly purchased spectrum rollouts coming in 2027, creating short-term delays but long-term demand. Hyperscaler wireline and fiber interconnect opportunities are large, with MOSTEC pursuing billions of dollars in these projects, though they take time to develop. Long-term fundamentals for the communications segment remain unchanged, with management confident in a return to stronger growth in 2027.

• Q: Where are the growing large project pursuits that management references, and will full-year 2026 backlog end higher than the current Q2 level? /

  A: Most large new pursuits are tied to mission-critical infrastructure across power delivery, clean energy and infrastructure, and pipeline. Management confirms full-year 2026 backlog will end higher than the current Q2 record of $21.4 billion, with power delivery, clean energy and infrastructure, and pipeline expected to drive all of the net backlog growth for the rest of the year. Most recent backlog growth will contribute to 2027 revenue rather than 2026, as projects have long lead times. The Superior acquisition has meaningfully increased MOSTEC's exposure to this fast-growing mission-critical market.

• Q: Why did pipeline backlog grow strongly in Q2 but full-year revenue guidance stayed unchanged? /

  A: The large sequential backlog growth in pipeline this quarter comes from newly signed projects that will not start construction until 2027, so they do not impact 2026 revenue. Management notes that reported backlog always understates long-term visibility in the pipeline segment, which has strong multi-year growth prospects driven by power generation demand and existing pipeline bottlenecks. Full-year 2026 guidance was set at the start of the year, and management still expects to hit that target, with the new backlog boosting 2027 and beyond results instead.

• Q: What is the impact of potential state-level data center development pauses on MOSTEC's business? /

  A: Most of the states considering pauses are not core geographies for MOSTEC's current data center project pipeline, so the impact is expected to be minimal. Many other states are actively recruiting data center development to boost local economies, creating new offsetting opportunities. Even if domestic development slows, long-term demand for data centers will not disappear, and MOSTEC can pursue international opportunities in regions with lower power costs, so the long-term fundamental outlook for this business remains strong.

• Q: What is the expected margin impact from the recently closed Superior acquisition, and how is integration progressing? /

  A: Superior has higher EBITDA margins than MOSTEC's legacy core power delivery business, and it is a key driver of the higher margin guidance for power delivery in the second half of 2026. As of the Q2 call, the acquisition had only been closed for a week, but integration has progressed extremely well, with pre-close planning already complete. The deal structure leaves Superior largely standalone, so it requires less intensive integration than many prior acquisitions, and cross-selling efforts with existing MOSTEC customers are already underway. Management expects Superior to outperform initial expectations.