(Exact name of registrant as specified in its charter)
Florida
65-0829355
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
800 S. Douglas Road, 12th Floor
Coral Gables,
Florida
33134
(Address of principal executive offices)
(Zip Code)
(305) 599-1800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock, $0.10 Par Value
MTZ
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☑
As of July 29, 2019, MasTec, Inc. had 76,310,551 shares of common stock outstanding.
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2019
2018
2019
2018
Revenue
$
1,939,006
$
1,617,804
$
3,457,346
$
3,014,638
Costs of revenue, excluding depreciation and amortization
1,633,400
1,366,584
2,945,448
2,603,883
Depreciation and amortization
59,944
51,676
118,975
101,615
General and administrative expenses
70,819
67,602
143,436
131,224
Interest expense, net
16,623
20,795
38,881
37,854
Equity in earnings of unconsolidated affiliates
(6,551
)
(5,824
)
(12,811
)
(11,409
)
Other expense (income), net
4,812
788
8,317
(2,301
)
Income before income taxes
$
159,959
$
116,183
$
215,100
$
153,772
Provision for income taxes
(39,736
)
(35,782
)
(51,770
)
(46,908
)
Net income
$
120,223
$
80,401
$
163,330
$
106,864
Net income (loss) attributable to non-controlling interests
513
(91
)
507
(188
)
Net income attributable to MasTec, Inc.
$
119,710
$
80,492
$
162,823
$
107,052
Earnings per share (Note 2):
Basic earnings per share
$
1.59
$
1.02
$
2.17
$
1.34
Basic weighted average common shares outstanding
75,183
78,984
75,088
80,061
Diluted earnings per share
$
1.58
$
1.01
$
2.15
$
1.32
Diluted weighted average common shares outstanding
75,747
80,062
75,661
81,136
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
3
MASTEC, INC.
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2019
2018
2019
2018
Net income
$
120,223
$
80,401
$
163,330
$
106,864
Other comprehensive income (loss):
Foreign currency translation gains (losses), net of tax
113
(1,652
)
13
(2,175
)
Unrealized (losses) gains on equity investee activity, net of tax
(8,732
)
2,937
(14,194
)
10,653
Comprehensive income
$
111,604
$
81,686
$
149,149
$
115,342
Comprehensive income (loss) attributable to non-controlling interests
513
(91
)
507
(188
)
Comprehensive income attributable to MasTec, Inc.
$
111,091
$
81,777
$
148,642
$
115,530
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
4
MASTEC, INC.
CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and per share amounts)
June 30, 2019
December 31, 2018
Assets
Current assets:
Cash and cash equivalents
$
59,176
$
27,422
Accounts receivable, net (Note 5)
1,841,768
1,923,970
Inventories, net
126,965
113,709
Prepaid expenses
44,096
56,558
Other current assets
55,007
47,330
Total current assets
$
2,127,012
$
2,168,989
Property and equipment, net
852,804
747,808
Operating lease assets
241,493
—
Goodwill, net
1,144,176
1,100,350
Other intangible assets, net
190,149
169,370
Other long-term assets
241,737
253,436
Total assets
$
4,797,371
$
4,439,953
Liabilities and equity
Current liabilities:
Current portion of long-term debt, including finance leases
$
106,882
$
82,655
Current portion of operating lease liabilities
77,629
—
Accounts payable
633,245
669,712
Accrued salaries and wages
125,672
90,218
Other accrued expenses
158,318
133,033
Billings in excess of costs and earnings
200,576
227,056
Other current liabilities
88,831
80,937
Total current liabilities
$
1,391,153
$
1,283,611
Long-term debt, including finance leases
1,250,812
1,324,223
Long-term operating lease liabilities
168,698
—
Deferred income taxes
256,519
263,687
Other long-term liabilities
178,851
176,408
Total liabilities
$
3,246,033
$
3,047,929
Commitments and contingencies (Note 14)
Equity
Preferred stock, $1.00 par value: authorized shares - 5,000,000; issued and outstanding shares – none
$
—
$
—
Common stock, $0.10 par value: authorized shares - 145,000,000; issued shares - 91,626,986 and 91,327,009 (including 1,152,993 and 1,251,533 of unvested stock awards) as of June 30, 2019 and December 31, 2018, respectively
9,163
9,133
Capital surplus
799,162
789,009
Retained earnings
1,281,198
1,118,375
Accumulated other comprehensive loss
(74,675
)
(60,494
)
Treasury stock, at cost: 15,344,917 and 15,329,817 shares as of June 30, 2019 and December 31, 2018, respectively
(466,727
)
(466,125
)
Total MasTec, Inc. shareholders’ equity
$
1,548,121
$
1,389,898
Non-controlling interests
$
3,217
$
2,126
Total equity
$
1,551,338
$
1,392,024
Total liabilities and equity
$
4,797,371
$
4,439,953
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
5
MASTEC, INC.
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except shares)
Common Stock
Treasury Stock
Capital Surplus
Retained Earnings
Accumulated Other Comprehensive Loss
Total MasTec, Inc. Shareholders’ Equity
Non-Controlling Interests
Total Equity
Shares
Amount
Shares
Amount
For the Three Months Ended June 30, 2019
Balance as of March 31, 2019
91,591,398
$
9,159
(15,344,917
)
$
(466,727
)
$
793,748
$
1,161,487
$
(66,056
)
$
1,431,611
$
2,121
$
1,433,732
Net income
119,710
119,710
513
120,223
Other comprehensive loss
(8,619
)
(8,619
)
(8,619
)
Non-cash stock-based compensation
4,220
4,220
4,220
Issuance of restricted shares, net
57
—
—
—
—
Other stock issuances, net of shares withheld for taxes
35,531
4
1,194
1,198
1,198
Contributions from non-controlling interests
—
584
584
Balance as of June 30, 2019
91,626,986
$
9,163
(15,344,917
)
$
(466,727
)
$
799,162
$
1,281,198
$
(74,675
)
$
1,548,121
$
3,217
$
1,551,338
For the Three Months Ended June 30, 2018
Balance as of March 31, 2018
91,063,699
$
9,106
(10,171,531
)
$
(245,573
)
$
779,449
$
885,277
$
(56,519
)
$
1,371,740
$
2,457
$
1,374,197
Net income (loss)
80,492
80,492
(91
)
80,401
Other comprehensive income
1,285
1,285
1,285
Non-cash stock-based compensation
3,389
3,389
3,389
Forfeiture of restricted shares, net
(8,797
)
(1
)
1
—
—
Other stock issuances, net of shares withheld for taxes
25,378
3
986
989
989
Acquisition of treasury stock, at cost
(664,218
)
(29,862
)
(29,862
)
(29,862
)
Balance as of June 30, 2018
91,080,280
$
9,108
(10,835,749
)
$
(275,435
)
$
783,825
$
965,768
$
(55,234
)
$
1,428,032
$
2,366
$
1,430,398
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
6
MASTEC, INC.
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except shares)
Common Stock
Treasury Stock
Capital Surplus
Retained Earnings
Accumulated Other Comprehensive Loss
Total MasTec, Inc. Shareholders’ Equity
Non-Controlling Interests
Total Equity
Shares
Amount
Shares
Amount
For the Six Months Ended June 30, 2019
Balance as of December 31, 2018
91,327,009
$
9,133
(15,329,817
)
$
(466,125
)
$
789,009
$
1,118,375
$
(60,494
)
$
1,389,898
$
2,126
$
1,392,024
Net income
162,823
162,823
507
163,330
Other comprehensive loss
(14,181
)
(14,181
)
(14,181
)
Non-cash stock-based compensation
7,940
7,940
7,940
Issuance of restricted shares, net
233,419
23
(23
)
—
—
Other stock issuances, net of shares withheld for taxes
66,558
7
2,236
2,243
2,243
Acquisition of treasury stock, at cost
(15,100
)
(602
)
(602
)
(602
)
Contributions from non-controlling interests
—
584
584
Balance as of June 30, 2019
91,626,986
$
9,163
(15,344,917
)
$
(466,727
)
$
799,162
$
1,281,198
$
(74,675
)
$
1,548,121
$
3,217
$
1,551,338
For the Six Months Ended June 30, 2018
Balance as of December 31, 2017
90,935,584
$
9,094
(8,132,811
)
$
(147,124
)
$
775,387
$
857,154
$
(63,712
)
$
1,430,799
$
2,554
$
1,433,353
Cumulative effect of adoption, Topic 606
1,562
1,562
1,562
Net income (loss)
107,052
107,052
(188
)
106,864
Other comprehensive income
8,478
8,478
8,478
Non-cash stock-based compensation
6,571
6,571
6,571
Issuance of restricted shares, net
96,018
10
(10
)
—
—
Other stock issuances, net of shares withheld for taxes
48,678
4
1,877
1,881
1,881
Acquisition of treasury stock, at cost
(2,702,938
)
(128,311
)
(128,311
)
(128,311
)
Balance as of June 30, 2018
91,080,280
$
9,108
(10,835,749
)
$
(275,435
)
$
783,825
$
965,768
$
(55,234
)
$
1,428,032
$
2,366
$
1,430,398
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
7
MASTEC, INC.
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Six Months Ended June 30,
2019
2018
Cash flows from operating activities:
Net income
$
163,330
$
106,864
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
118,975
101,615
Non-cash interest expense, net
737
1,451
Non-cash stock-based compensation expense
7,940
6,571
Benefit from deferred income taxes
(14,190
)
(172
)
Equity in earnings of unconsolidated affiliates
(12,811
)
(11,409
)
Gains on sales of assets, net, including fixed assets held-for-sale
(6,074
)
(6,920
)
Other non-cash items, net
(2,899
)
2,686
Changes in assets and liabilities, net of acquisitions:
Accounts receivable, net
117,023
(471,716
)
Inventories
(265
)
(8,550
)
Other assets, current and long-term portion
6,187
58,949
Accounts payable and accrued expenses
(26,355
)
188,511
Billings in excess of costs and earnings
(28,406
)
44,524
Other liabilities, current and long-term portion
28,269
10,813
Net cash provided by operating activities
$
351,461
$
23,217
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired
(94,647
)
(6,684
)
Capital expenditures
(57,455
)
(87,997
)
Proceeds from sale of property and equipment
19,567
13,884
Payments for other investments
(4,972
)
(35,713
)
Proceeds from other investments
14,705
5,415
Net cash used in investing activities
$
(122,802
)
$
(111,095
)
Cash flows from financing activities:
Proceeds from credit facilities
1,627,909
1,638,874
Repayments of credit facilities
(1,754,043
)
(1,374,552
)
Proceeds from (repayments of) other borrowings, net
1
(15,800
)
Payments of finance lease obligations
(38,646
)
(37,926
)
Payments of acquisition-related contingent consideration
(29,267
)
(15,929
)
Proceeds from (distributions to) non-controlling interests
584
(559
)
Proceeds from stock-based awards, net
2,289
1,927
Repurchases of common stock
(5,652
)
(128,311
)
Net cash (used in) provided by financing activities
$
(196,825
)
$
67,724
Effect of currency translation on cash
(80
)
512
Net increase (decrease) in cash and cash equivalents
$
31,754
$
(19,642
)
Cash and cash equivalents - beginning of period
$
27,422
$
40,326
Cash and cash equivalents - end of period
$
59,176
$
20,684
Supplemental cash flow information:
Interest paid
$
43,102
$
36,068
Income tax payments (refunds), net
$
39,417
$
(13,975
)
Supplemental disclosure of non-cash information:
Additions to property and equipment from finance leases
$
110,164
$
39,548
The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.
8
MASTEC, INC.
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Business, Basis of Presentation and Significant Accounting Policies
Nature of the Business
MasTec, Inc. (collectively with its subsidiaries, “MasTec” or the “Company”) is a leading infrastructure construction company operating mainly throughout North America across a range of industries. The Company’s primary activities include the engineering, building, installation, maintenance and upgrade of communications, energy, utility and other infrastructure, such as: wireless, wireline/fiber and customer fulfillment activities; petroleum and natural gas pipeline infrastructure; electrical utility transmission and distribution; power generation, including renewables; heavy civil; and industrial infrastructure. MasTec’s customers are primarily in these industries. MasTec reports its results under five reportable segments: (1) Communications; (2) Oil and Gas; (3) Electrical Transmission; (4) Power Generation and Industrial; and (5) Other.
Basis of Presentation
The accompanying condensed unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in the annual audited consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying condensed consolidated balance sheet as of December 31, 2018 is derived from the Company’s audited financial statements as of that date. Because certain information and footnote disclosures have been condensed or omitted, these condensed unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2018 contained in the Company’s 2018 Annual Report on Form 10-K (the “2018 Form 10-K”). In management’s opinion, all normal and recurring adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been included. When necessary, certain prior year amounts have been reclassified to conform to the current period presentation. Interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. The Company believes that the disclosures made in these condensed unaudited consolidated financial statements are adequate to make the information not misleading.
Principles of Consolidation
The accompanying condensed unaudited consolidated financial statements include MasTec, Inc. and its subsidiaries and include the accounts of all majority owned subsidiaries over which the Company exercises control and, when applicable, entities in which the Company has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. Other parties’ interests in entities that MasTec consolidates are reported as non-controlling interests within equity. Net income or loss attributable to non-controlling interests is reported as a separate line item below net income or loss. The Company’s investments in entities for which the Company does not have a controlling interest, but for which it has the ability to exert significant influence, are accounted for using the equity method of accounting.For equity investees in which the Company has an undivided interest in the assets, liabilities and profits or losses of an unincorporated entity, but the Company does not exercise control over the entity, the Company consolidates its proportional interest in the accounts of the entity.
Translation of Foreign Currencies
The assets and liabilities of foreign subsidiaries with a functional currency other than the U.S. dollar are translated into U.S. dollars at period-end exchange rates, with resulting translation gains or losses included within other comprehensive income or loss. Revenue and expenses are translated into U.S. dollars at average rates of exchange during the applicable period. Substantially all of the Company’s foreign operations use their local currency as their functional currency. Currency gains or losses resulting from transactions executed in currencies other than the functional currency are included in other income or expense, net. In these condensed unaudited consolidated financial statements, “$” means U.S. dollars unless otherwise noted.
Management Estimates
The preparation of consolidated financial statements in accordance with U.S. GAAP requires the use of estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates are based on historical experience and various other assumptions, the results of which form the basis of making judgments about the Company’s operating results and the carrying values of assets and liabilities that are not readily apparent from other sources. Key estimates include: the recognition of revenue and project profit or loss, which the Company defines as project revenue, less project costs of revenue, including project-related depreciation, in particular, on construction contracts accounted for under the cost-to-cost method, for which the recorded amounts require estimates of costs to complete and the amount and probability of variable consideration included in the contract transaction price; fair value estimates, including those related to acquisitions, valuations of goodwill and intangible assets, acquisition-related contingent consideration and equity investments; allowances for doubtful accounts; asset lives used in computing depreciation and amortization; fair values of financial instruments; self-insurance liabilities; other accruals and allowances; income taxes; and the estimated effects of litigation and other contingencies. While management believes that such estimates are reasonable when considered in conjunction with the Company’s consolidated financial position and results of operations taken as a whole, actual results could differ materially from those estimates.
Significant Accounting Policies
Revenue Recognition
The Company recognizes revenue from contracts with customers under Accounting Standards Codification (“ASC”) Topic 606 (“Topic 606”). Under Topic 606, revenue is recognized when, or as, control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which an entity expects to be entitled in exchange for the goods and services transferred. Revenue is primarily recognized by the Company over time utilizing the cost-to-cost measure of progress, which best depicts the continuous transfer of control of goods or services to the customer, and correspondingly, when performance obligations are satisfied for the related contracts.
9
Contracts. The Company derives revenue primarily from construction projects performed under: (i) master and other service agreements, which provide a menu of available services in a specific geographic territory that are utilized on an as-needed basis, and are typically priced using time and materials or a fixed price per unit basis; or (ii) contracts for specific projects requiring the construction and installation of an entire infrastructure system or specified units within an infrastructure system, which are subject to multiple pricing options, including fixed price, unit price, time and materials, or cost plus a markup. Revenue derived from projects performed under master service and other service agreements totaled 33% and 37% of consolidated revenue for the three month periods ended June 30, 2019 and 2018, respectively, and totaled 36% and 38% for the six month periods ended June 30, 2019 and 2018, respectively.
For certain master service and other service agreements under which the Company performs installation and maintenance services, primarily for install-to-the-home service providers in its Communications segment, revenue is recognized at a point in time. This is generally when the work order has been fulfilled, which is typically the same day the work is initiated. Point in time revenue accounted for approximately 5% and 7% of consolidated revenue for the three month periods ended June 30, 2019 and 2018, respectively, and accounted for approximately 5% and 8% for the six month periods ended June 30, 2019 and 2018, respectively. Substantially all of the Company’s other revenue is recognized over time.
The cost estimation process for recognizing revenue over time under the cost-to-cost method is based on the professional knowledge and experience of the Company’s project managers, engineers and financial professionals. Management reviews estimates of total contract transaction price and total project costs on an ongoing basis. Changes in job performance, job conditions and management’s assessment of expected variable consideration are factors that influence estimates of the total contract transaction price, total costs to complete those contracts and the Company’s profit recognition. Changes in these factors could result in revisions to revenue in the period in which the revisions are determined, which could materially affect the Company’s consolidated results of operations for that period. Provisions for losses on uncompleted contracts are recorded in the period in which such losses are determined. For both the six month periods ended June 30, 2019 and 2018, project profit was affected by less than 5% as a result of changes in contract estimates included in projects that were in process as of December 31, 2018 and 2017. Revenue recognized for the three month periods ended June 30, 2019 and 2018 as a result of changes in revenue estimates, including from variable consideration, from performance obligations satisfied or partially satisfied in prior periods totaled approximately $22.6 million and $5.2 million, respectively, and totaled $28.9 million and $47.4 million for the six month periods ended June 30, 2019 and 2018, respectively.
The Company may incur certain costs that can be capitalized, such as initial set-up or mobilization costs. Such costs, which are amortized over the life of the respective projects, were not material for the three or six month periods ended June 30, 2019 and 2018.
Performance Obligations.A performance obligation is a contractual promise to transfer a distinct good or service to a customer, and is the unit of account under Topic 606. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the performance obligation is satisfied. The vast majority of the Company’s performance obligations are completed within one year.
Remaining performance obligations represent the amount of unearned transaction price under contracts for which work is wholly or partially unperformed, including the Company’s share of unearned transaction price from its proportionately consolidated non-controlled joint ventures. As of June 30, 2019, the amount of the Company’s remaining performance obligations was $5.3 billion. The Company expects to recognize approximately $3.5 billion of its remaining performance obligations as revenue during 2019, with the remainder to be recognized primarily in 2020.
Variable Consideration. Transaction prices for the Company’s contracts may include variable consideration, which comprises items such as change orders, claims and incentives. Management estimates variable consideration for a performance obligation utilizing estimation methods that it believes best predict the amount of consideration to which the Company will be entitled. Management’s estimates of variable consideration and the determination of whether to include estimated amounts in the transaction price are based largely on engineering studies and legal opinions, past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer and all other relevant information that is reasonably available at the time of the estimate. To the extent unapproved change orders, claims and other variable consideration reflected in transaction prices are not resolved in the Company’s favor, or to the extent incentives reflected in transaction prices are not earned, there could be reductions in, or reversals of, previously recognized revenue.
As of June 30, 2019 and December 31, 2018, the Company included approximately $43 million and $56 million, respectively, of change orders and/or claims in the transaction price for certain contracts that were in the process of being resolved in the normal course of business, including through negotiation, arbitration and other proceedings. These transaction price adjustments are included within costs and earnings in excess of billings or accounts receivable, net of allowance, as appropriate. As of both June 30, 2019 and December 31, 2018, these change orders and/or claims were primarily related to certain projects in the Company’s Oil and Gas segment. The Company actively engages with its customers to complete the final approval process, and generally expects these processes to be completed within one year. Amounts ultimately realized upon final acceptance by customers could be higher or lower than such estimated amounts.
Recently Issued Accounting Pronouncements
See the recent accounting pronouncements discussion below for information pertaining to the effects of recently adopted and other recent accounting pronouncements, as updated from the discussion in the Company’s 2018 Form 10-K.
Accounting Pronouncements Adopted in 2019
Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842), which, together with its related clarifying ASUs (collectively, “ASU 2016-02”), provides revised guidance for lease accounting and related disclosure requirements, including a requirement for lessees to recognize right-of-use assets and lease liabilities on the balance sheet for leases with durations greater than twelve months. Under the new guidance, lessees classify leases as either finance or operating leases. Lease expense is recognized based on an effective interest method for finance leases, and on a straight-line basis over the term of the lease for operating leases.
The Company adopted ASU 2016-02 during the first quarter of 2019 using the modified retrospective method as of January 1, 2019, without adjusting comparative periods in the financial statements. The most significant effect of the new guidance was the recognition of operating lease right-of-use assets and a liability for operating leases. The accoun
