MASTEC INC [MTZ] Filings

10-Q 1 mtz-20220630.htm 10-Q mtz-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________

Form 10-Q

_____________________________________________

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __ to __

Commission File Number 001-08106

_____________________________________________

MasTec, Inc.

(Exact name of registrant as specified in its charter)


Florida		65-0829355
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer 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 August 1, 2022, MasTec, Inc. had 75,539,990 shares of common stock outstanding.

MASTEC, INC.

FORM 10-Q

QUARTER ENDED JUNE 30, 2022

TABLE OF CONTENTS


		Page
Part I. FINANCIAL INFORMATION		3
Item 1	Financial Statements (Unaudited)	3
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Equity	6
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4	Controls and Procedures	42
Part II. OTHER INFORMATION		43
Item 1	Legal Proceedings	43
Item 1A	Risk Factors	43
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 4	Mine Safety Disclosures	43
Item 5	Other Information	43
Item 6	Exhibits	44
SIGNATURES		45

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MASTEC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited - in thousands, except per share amounts)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Revenue	$	2,301,792	$	1,962,658	$	4,256,192	$	3,738,082
Costs of revenue, excluding depreciation and amortization	2,028,111		1,675,232		3,761,427		3,189,091
Depreciation	87,001		87,501		172,195		166,766
Amortization of intangible assets	27,673		19,923		53,263		31,170
General and administrative expenses	133,785		81,503		279,175		152,093
Interest expense, net	19,387		13,829		35,428		26,288
Equity in earnings of unconsolidated affiliates, net	(6,587)		(7,525)		(13,364)		(14,871)

Other income, net	(5,825)		(10,632)		(2,071)		(10,711)
Income (loss) before income taxes	$	18,247	$	102,827	$	(29,861)	$	198,256
(Provision for) benefit from income taxes	(1,992)		(27,062)		11,157		(56,379)
Net income (loss)	$	16,255	$	75,765	$	(18,704)	$	141,877
Net income attributable to non-controlling interests	43		314		62		777
Net income (loss) attributable to MasTec, Inc.	$	16,212	$	75,451	$	(18,766)	$	141,100

Earnings (loss) per share (Note 2):
Basic earnings (loss) per share	$	0.22	$	1.04	$	(0.25)	$	1.95
Basic weighted average common shares outstanding	74,445		72,501		74,615		72,470

Diluted earnings (loss) per share	$	0.20	$	1.02	$	(0.27)	$	1.91
Diluted weighted average common shares outstanding	75,537		73,976		74,647		73,913

The accompanying notes are an integral part of these consolidated financial statements.

MASTEC, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited - in thousands)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Net income (loss)	$	16,255	$	75,765	$	(18,704)	$	141,877
Other comprehensive income (loss):
Foreign currency translation (losses) gains, net of tax	(1,743)		843		(830)		1,214
Unrealized gains (losses) on investment activity, net of tax	7,843		(3,465)		21,597		10,374
Comprehensive income	$	22,355	$	73,143	$	2,063	$	153,465
Comprehensive income attributable to non-controlling interests	43		314		62		777
Comprehensive income attributable to MasTec, Inc.	$	22,312	$	72,829	$	2,001	$	152,688

The accompanying notes are an integral part of these consolidated financial statements.

MASTEC, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited - in thousands, except share information)


	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	138,929	$	360,736
Accounts receivable, net of allowance	1,014,616		1,019,324
Contract assets	1,519,387		1,227,927
Inventories, net	123,766		92,595
Prepaid expenses	106,416		91,488
Other current assets	154,108		81,884
Total current assets	$	3,057,222	$	2,873,954
Property and equipment, net	1,571,828		1,436,087
Operating lease right-of-use assets	254,808		260,410
Goodwill, net	1,484,600		1,520,575
Other intangible assets, net	664,994		670,280
Other long-term assets	371,234		360,087
Total assets	$	7,404,686	$	7,121,393
Liabilities and equity
Current liabilities:
Current portion of long-term debt, including finance leases	$	151,987	$	137,912
Current portion of operating lease liabilities	88,365		95,426
Accounts payable	799,905		663,063
Accrued salaries and wages	214,387		203,141
Other accrued expenses	219,827		229,936
Contract liabilities	298,620		313,965
Other current liabilities	124,599		141,155
Total current liabilities	$	1,897,690	$	1,784,598
Long-term debt, including finance leases	2,118,084		1,876,233
Long-term operating lease liabilities	176,549		176,378
Deferred income taxes	470,786		450,361
Other long-term liabilities	256,635		289,962
Total liabilities	$	4,919,744	$	4,577,532
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 - 95,491,405 and 95,371,211 (including 1,686,822 and 1,747,385 of unvested stock awards) as of June 30, 2022 and December 31, 2021, respectively	9,549		9,537
Capital surplus	1,049,576		1,033,615
Retained earnings	2,143,622		2,162,388
Accumulated other comprehensive loss	(58,009)		(78,776)
Treasury stock, at cost: 19,933,055 and 18,941,926 shares as of June 30, 2022 and December 31, 2021, respectively	(663,910)		(586,955)
Total MasTec, Inc. shareholders’ equity	$	2,480,828	$	2,539,809
Non-controlling interests	$	4,114	$	4,052
Total equity	$	2,484,942	$	2,543,861
Total liabilities and equity	$	7,404,686	$	7,121,393

The accompanying notes are an integral part of these consolidated financial statements.

MASTEC, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited - 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, 2022
Balance as of March 31, 2022	95,488,017	$	9,549	(19,129,904)	$	(600,746)	$	1,035,902	$	2,127,410	$	(64,109)	$	2,508,006	$	4,071	$	2,512,077
Net income									16,212				16,212		43		16,255
Other comprehensive income											6,100		6,100				6,100
Non-cash stock-based compensation							6,836						6,836				6,836
Issuance of restricted shares, net	3,752	—					—						—				—
Shares withheld for taxes, net of other stock issuances	(364)	—					(48)						(48)				(48)
Acquisition of treasury stock, at cost				(936,308)	(67,500)								(67,500)				(67,500)
Issuance of shares in connection with acquisition				133,157	4,336		6,886						11,222				11,222


Balance as of June 30, 2022	95,491,405	$	9,549	(19,933,055)	$	(663,910)	$	1,049,576	$	2,143,622	$	(58,009)	$	2,480,828	$	4,114	$	2,484,942

For the Three Months Ended June 30, 2021
Balance as of March 31, 2021	93,253,268	$	9,325	(18,941,926)	$	(586,955)	$	840,567	$	1,899,206	$	(77,234)	$	2,084,909	$	4,066	$	2,088,975
Net income									75,451				75,451		314		75,765
Other comprehensive loss											(2,622)		(2,622)				(2,622)
Non-cash stock-based compensation							6,072						6,072				6,072
Issuance of restricted shares, net	3,114	—					—						—				—

Shares withheld for taxes, net of other stock issuances	(180)	1					(20)						(19)				(19)
Purchase of non-controlling interests							(5,429)						(5,429)		(1,373)		(6,802)
Balance as of June 30, 2021	93,256,202	$	9,326	(18,941,926)	$	(586,955)	$	841,190	$	1,974,657	$	(79,856)	$	2,158,362	$	3,007	$	2,161,369

The accompanying notes are an integral part of these consolidated financial statements.

MASTEC, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited - 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, 2022
Balance as of December 31, 2021	95,371,211	$	9,537	(18,941,926)	$	(586,955)	$	1,033,615	$	2,162,388	$	(78,776)	$	2,539,809	$	4,052	$	2,543,861
Net (loss) income									(18,766)				(18,766)		62		(18,704)
Other comprehensive income											20,767		20,767				20,767
Non-cash stock-based compensation							13,172						13,172				13,172
Issuance of restricted shares, net	168,762	17					(17)						—				—
Shares withheld for taxes, net of other stock issuances	(48,568)	(5)					(4,080)						(4,085)				(4,085)
Acquisition of treasury stock, at cost				(1,124,286)	(81,291)								(81,291)				(81,291)
Issuance of shares in connection with acquisition				133,157	4,336		6,886						11,222				11,222


Balance as of June 30, 2022	95,491,405	$	9,549	(19,933,055)	$	(663,910)	$	1,049,576	$	2,143,622	$	(58,009)	$	2,480,828	$	4,114	$	2,484,942

For the Six Months Ended June 30, 2021
Balance as of December 31, 2020	93,107,440	$	9,311	(18,941,926)	$	(586,955)	$	837,453	$	1,833,557	$	(91,444)	$	2,001,922	$	3,603	$	2,005,525
Net income									141,100				141,100		777		141,877
Other comprehensive income											11,588		11,588				11,588
Non-cash stock-based compensation							11,600						11,600				11,600
Issuance of restricted shares, net	141,195	14					(14)						—				—
Other stock issuances, net of shares withheld for taxes	7,567	1					(2,420)						(2,419)				(2,419)

Purchase of non-controlling interests							(5,429)						(5,429)		(1,373)		(6,802)
Balance as of June 30, 2021	93,256,202	$	9,326	(18,941,926)	$	(586,955)	$	841,190	$	1,974,657	$	(79,856)	$	2,158,362	$	3,007	$	2,161,369

The accompanying notes are an integral part of these consolidated financial statements.

MASTEC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited - in thousands)


	For the Six Months Ended June 30,
	2022		2021
Cash flows from operating activities:
Net (loss) income	$	(18,704)	$	141,877
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	172,195		166,766
Amortization of intangible assets	53,263		31,170
Non-cash stock-based compensation expense	13,172		11,600
Provision for (benefit from) deferred income taxes	6,190		(1,594)


Equity in earnings of unconsolidated affiliates, net	(13,364)		(14,871)
Gains on sales of assets, net	(8,662)		(5,975)
Non-cash interest expense, net	1,709		1,563
Other non-cash items, net	301		(7,836)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable	18,575		32,710
Contract assets	(289,018)		(46,148)
Inventories	(19,844)		5,167
Other assets, current and long-term portion	521		(2,604)
Accounts payable and accrued expenses	99,796		60,452
Contract liabilities	(11,915)		(16,020)
Other liabilities, current and long-term portion	(2,674)		(6,915)
Net cash provided by operating activities	$	1,541	$	349,342
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired	(44,908)		(589,055)
Capital expenditures	(189,870)		(97,029)
Proceeds from sale of property and equipment	17,722		12,960
Payments for other investments	(2,965)		(6,197)
Proceeds from other investments	—		557
Other investing activities, net	—		2,650
Net cash used in investing activities	$	(220,021)	$	(676,114)
Cash flows from financing activities:
Proceeds from credit facilities	1,954,650		414,741
Repayments of credit facilities	(1,741,083)		(161,375)



Payments of finance lease obligations	(83,375)		(76,630)
Repurchases of common stock	(81,291)		—
Payments of acquisition-related contingent consideration	(26,779)		(20,893)
Payments for acquisition-related contingent assets	(17,636)		—
Payments to non-controlling interests, including acquisition of interests	—		(8,888)


Payments for stock-based awards	(4,024)		(3,774)


Other financing activities, net	(3,446)		(2,343)
Net cash (used in) provided by financing activities	$	(2,984)	$	140,838
Effect of currency translation on cash	(343)		87
Net decrease in cash and cash equivalents	$	(221,807)	$	(185,847)
Cash and cash equivalents - beginning of period	$	360,736	$	423,118
Cash and cash equivalents - end of period	$	138,929	$	237,271


Supplemental cash flow information:
Interest paid	$	34,507	$	28,401
Income taxes paid, net of refunds	$	1,304	$	61,180
Supplemental disclosure of non-cash information:
Additions to property and equipment from finance leases	$	126,669	$	98,984

The accompanying notes are an integral part of these consolidated financial statements.

MASTEC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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: power delivery services, including transmission and distribution; wireless, wireline/fiber and customer fulfillment activities; power generation, primarily from clean energy and renewable sources; pipeline infrastructure, including natural gas pipeline and distribution infrastructure; heavy civil; and industrial infrastructure. MasTec’s customers are primarily in these industries. MasTec reports its results under five reportable segments: (1) Communications; (2) Clean Energy and Infrastructure; (3) Oil and Gas; (4) Power Delivery; and (5) Other. In the first quarter of 2022, the Company began integrating the acquisition of Henkels & McCoy Holdings, Inc., formerly known as Henkels & McCoy Group, Inc. (“HMG”), into its operations. The HMG acquisition was completed on December 30, 2021, with its initial balance sheet reported within the Company’s Power Delivery segment. During the first quarter of 2022, the Company reported portions of HMG’s operations within its Power Delivery, Communications and Oil and Gas segments, as appropriate, and HMG’s corporate functions within its Corporate results. Accordingly, HMG’s December 31, 2021 balance sheet information was recast to conform with the new reporting structure. See Note 13 - Segments and Related Information.

Basis of Presentation

The accompanying consolidated financial statements are unaudited and 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 consolidated balance sheet as of December 31, 2021 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 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, 2021 contained in the Company’s 2021 Annual Report on Form 10-K (the “2021 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 with the current period presentation, including for the first quarter 2022 change in segment balance sheet information for HMG, as discussed above. In addition, in the fourth quarter of 2021, the Company updated its presentation of gains or losses, net, from the sale of property and equipment to include such amounts within general and administrative expenses. Previously, such gains or losses were included within other income or expense. 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 consolidated financial statements are adequate to make the information not misleading.

Principles of Consolidation

The accompanying 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, except for mandatorily redeemable non-controlling interests, which are recorded within other liabilities. Net income or loss attributable to non-controlling interests is reported as a separate line item below net income or loss. The Company applies the equity method of accounting for its investments in entities for which it does not have a controlling financial interest, but over which it has the ability to exert significant influence. For equity investees in which the Company has an undivided interest in the assets, liabilities and profits or losses of an unincorporated entity, but 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. For foreign operations for which the local currency is not the functional currency, the operation’s non-monetary assets are remeasured into U.S. dollars at historical exchange rates. All other accounts are remeasured at current exchange rates. Gains or losses from remeasurement are included in other income or expense, net. 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 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 that management believes to be reasonable under the circumstances, including the potential future effects of macroeconomic trends and events, such as rising inflation and interest rate levels; climate-related matters; market, regulatory and industry factors; global events, such as the ongoing military conflict in Ukraine; and public health matters, such as the COVID-19 pandemic. These estimates form

the basis for making judgments about the Company’s operating results and the carrying values of assets and liabilities that are not readily apparent from other sources. 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 these estimates.

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, intangible and other assets, acquisition-related contingent consideration and other liabilities, equity investments and long-lived assets; allowances for credit losses; 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.

General Economic Conditions, including the Effects of COVID-19

The Company has experienced, and may continue to experience, direct and indirect negative effects on its business and operations from negative economic conditions, including recent inflationary effects on fuel prices, labor and materials costs, rising interest rates and supply chain disruptions that have limited the availability of products. The Company may also experience negative effects from possible longer-term changes in consumer and customer behavior resulting from the effects of the COVID-19 pandemic. The COVID-19 pandemic disrupted business activities and global economic conditions beginning in 2020 and has negatively affected the Company’s operations during the same period. The Company has taken steps to mitigate the effects of the COVID-19 pandemic on its business, and its business model has, thus far, proven resilient. While the adverse effects of the COVID-19 pandemic have begun to subside, its effects vary by region, and uncertainties arising from the COVID-19 pandemic could continue to disrupt economic conditions and business activities, particularly as new variants arise. The extent to which general economic conditions and the COVID-19 pandemic, including its emerging variants, could affect the Company’s business, operations and financial results is uncertain as it will depend upon numerous evolving factors that management may not be able to accurately predict, and, therefore, any future impacts on the Company’s business, financial condition and/or results of operations cannot be quantified or predicted with specificity.

The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which was enacted in response to the effects of the COVID-19 pandemic, permitted deferral and/or reduction of certain federal and payroll tax amounts, certain of which the Company pursued. As of June 30, 2022, payroll tax deferrals under the CARES Act, the amount of which is due by December 31, 2022, totaled approximately $42 million.

Significant Accounting Policies

Revenue Recognition

The Company recognizes revenue from contracts with customers when, or as, control of promised services and goods is transferred to customers. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for the services and goods transferred. The Company primarily recognizes revenue 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.

Contracts. The Company derives revenue primarily from construction projects performed under: (i) master and other service agreements, which generally provide a menu of available services in a specific geographic territory that are utilized on an as-needed basis, and are typically priced using either a time and materials or a fixed price per unit basis; and (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 54% and 32% of consolidated revenue for the three month periods ended June 30, 2022 and 2021, respectively, and totaled 56% and 31% for the six month periods ended June 30, 2022 and 2021, respectively.

For certain master service and other service agreements, revenue is recognized at a point in time, primarily for install-to-the-home and certain other wireless services in the Company’s Communications segment. 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 4% of consolidated revenue in each of the three and six month periods ended June 30, 2022 and 2021. Substantially all of the Company’s other revenue is recognized over time.

The total contract transaction price and cost estimation processes used 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, 2022 and 2021, 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, 2021 and 2020. Changes in recognized revenue, net, as a result of changes in total contract transaction price estimates, including from variable consideration, from performance obligations satisfied or partially satisfied in prior periods, for the three month periods ended June 30, 2022 and 2021, totaled a net reduction of approximately $0.6 million and a net increase of approximately $30.5 million, respectively. For the six month periods ended June 30, 2022 and 2021, such changes totaled net increases of approximately $8.8 million and $37.0 million, respectively.

Performance Obligations. A performance obligation is a contractual promise to transfer a distinct good or service to a customer. 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 prices under contracts for which work is wholly or partially unperformed, including the Company’s share of unearned transaction prices from its proportionately consolidated non-controlled joint ventures. As of June 30, 2022, the amount of the Company’s remaining performance obligations was $5.2 billion. Based on current expectations, the Company anticipates it will recognize approximately $2.8 billion of its remaining performance obligations as revenue during 2022, with the majority of the remaining balance expected to be recognized in 2023.

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 transaction prices 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, 2022 and December 31, 2021, the Company included approximately $165 million and $104 million, respectively, of change orders and/or claims in transaction prices for certain contracts that were in the process of being resolved in the ordinary course of business, including through negotiation, arbitration and other proceedings. These transaction price adjustments, when earned, are included within contract assets or accounts receivable, net of allowance, as appropriate. As of both June 30, 2022 and December 31, 2021, these change orders and/or claims primarily related to certain projects in the Company’s Clean Energy and Infrastructure and Power Delivery segments. 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 agreement by customers could be higher or lower than such estimated amounts.

Recently Issued Accounting Pronouncements

The discussion below describes the effects of recent accounting pronouncements, as updated from the discussion in the Company’s 2021 Form 10-K.

Recent Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”) to improve consistency for revenue recognition in the post-acquisition period for acquired contracts as compared to contracts entered into subsequent to acquisition. ASU 2021-08 requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers, rather than at fair value. ASU 2021-08 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company does not expect that this ASU will have a material effect on its consolidated financial statements.

Note 2 – Earnings Per Share

Basic earnings or loss per share is computed by dividing net income or loss attributable to MasTec by the weighted average number of common shares outstanding for the period, which excludes non-participating unvested restricted share awards. Diluted earnings per share is computed by dividing net income attributable to MasTec by the weighted average number of fully diluted shares, as calculated primarily under the treasury stock method, which includes the potential effect of dilutive common stock equivalents, such as issued but unvested restricted shares. If the Company reports a loss, rather than income, the computation of diluted loss per share excludes the effect of dilutive common stock equivalents, as their effect would be anti-dilutive. For the six month period ended June 30, 2022, the Company reported a net loss, which resulted in the exclusion of approximately 1,173,000 weighted average common stock equivalents from the calculation of diluted net loss per share for the related period.

The following table provides details underlying the Company’s earnings per share calculations for the periods indicated (in thousands):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Net income (loss) attributable to MasTec:
Net income (loss) - basic (a)	$	16,212	$	75,451	$	(18,766)	$	141,100
Fair value gain (loss) related to resolved contingent payments (b)	$	1,025	$	—	$	1,025	$	—
Net income (loss) - diluted (a)	$	15,187	$	75,451	$	(19,791)	$	141,100
Weighted average shares outstanding:
Weighted average shares outstanding - basic(c)	74,445		72,501		74,615		72,470
Dilutive common stock equivalents (d)(e)	1,092		1,475		32		1,443
Weighted average shares outstanding - diluted	75,537		73,976		74,647		73,913

(a)For basic net income, calculated as total net income or loss less amounts attributable to non-controlling interests. For diluted net income, calculated as total net income or loss, less amounts attributable to non-controlling interests, adjusted for the fair value gain or loss, if any, related to additional contingent payments to the former owners of an acquired business for which the contingency has been resolved as of the respective period. See discussion above and in Note 3 – Acquisitions, Goodwill and Other Intangible Assets.

(b)For the three and six month periods ended June 30, 2022, represents the fair value gain or loss related to additional contingent payments for which the contingency has been resolved as of June 30, 2022. See Note 3 – Acquisitions, Goodwill and Other Intangible Assets for additional information.

(c)For the three and six month periods ended June 30, 2022, basic shares include approximately 132,000 and 101,000 weighted average shares, respectively, related to additional contingent payments.

(d)For the three and six month periods ended June 30, 2022, weighted average anti-dilutive common stock equivalents totaled approximately 178,000 and 1,273,000 respectively, and for the three and six month periods ended June 30, 2021, totaled approximately 1,000 and 2,000, respectively.

(e)For the three and six month periods ended June 30, 2022, common stock equivalents included approximately 1,000 and 32,000 weighted average shares, respectively, related to additional contingent payments to the former owners of an acquired business. For the six month period ended June 30, 2022, common stock equivalents were anti-dilutive except to the extent of the common stock equivalents associated with the additional contingent payments.

For the three and six month periods ended June 30, 2022, the Company repurchased approximately 936,000 and 1,124,000 shares of its common stock, respectively, the effect of which on the Company’s weighted average shares outstanding for the respective periods was a reduction of approximately 554,000 and 330,000 shares. See Note 11 – Equity for details of the Company’s share repurchase transactions. Additionally, in May 2022 and December 2021, the Company issued approximately 133,000 and 1,975,000 shares, respectively, of its common stock in conjunction with an acquisition. See Note 3 – Acquisitions, Goodwill and Other Intangible Assets for additional information.

Note 3 – Acquisitions, Goodwill and Other Intangible Assets

The following table provides a reconciliation of changes in goodwill by reportable segment for the six month period ended June 30, 2022 (in millions). Goodwill balances as of December 31, 2021 were recast in the first quarter of 2022 to reflect the change in segment reporting for the HMG acquisition, as discussed in Note 1 – Business, Basis of Presentation and Significant Accounting Policies. Goodwill was reallocated based on the estimated relative fair value of the respective HMG reporting units. See Note 13 – Segments and Related Information for additional information.


	Communications		Clean Energy and Infrastructure		Oil and Gas		Power Delivery		Total Goodwill
Goodwill, gross, as of December 31, 2021 (a)	$	614.5	$	166.1	$	561.3	$	303.4	$	1,645.3
Accumulated impairment loss (b)	—				(124.7)		—		(124.7)
Goodwill, net, as of December 31, 2021	$	614.5	$	166.1	$	436.6	$	303.4	$	1,520.6
Additions from new business combinations	3.0		—		4.1