Welcome to MasTec’s Third Quarter 2019 Earnings Conference Call. Initially broadcast on November 1, 2019. Let me remind participants that today’s call is being recorded. At this time, I would like to turn the call over to Marc Lewis, MasTec’s Vice President of Investor Relations. Mark, please go ahead.

Thank you, Savannah. Good morning everyone and welcome to MasTec’s Third Quarter Conference Call. The following statement is made pursuant to the Safe Harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. In these communications, we may make certain statements that are forward-looking, such as statements regarding MasTec’s future results, plans and anticipated trends in the industries where we operate. These forward-looking statements are the company’s expectations on the day of initial broadcast of this call and the company does not undertake to update these expectations based on subsequent events or knowledge, various risks, uncertainties and assumptions are detailed in our press releases and filings with the SEC. Should one or more of these risks or uncertainties materialize or should any of our underlying assumptions prove incorrect, actual results may differ significantly from results expressed or implied in these communications. In today’s remarks by management, we will be discussing adjusted financial metrics as discussed and reconciled in yesterday’s press release and supporting schedules. In addition, we may use certain non-GAAP financial measures in this conference call. A reconciliation of any non-GAAP financial measures not reconciled in these comments to the most comparable GAAP financial measure can be found in our earnings release, our 10-Q or in the posted PowerPoint presentation located in Investors and News sections of our website located at mastec.com. With us today, we have Jose Mas, our CEO; and George Pita, our Executive Vice President and Chief Financial Officer. The format of the call will be opening remarks analysis by Jose followed by a financial review from George. These discussions will be followed by a Q&A period and we expect the call to last about 60 minutes. We had another great quarter, have a lot of important things to talk about today. So, I’ll now turn it over to Jose to get going. Jose?

Thanks, Mark. Good morning and welcome the MasTec’s 2019 third quarter call. Today, I’ll be reviewing our third quarter results as well as providing my outlook for the markets we serve. First, some third quarter highlights. Revenue for the quarter was $2.17 billion, adjusted EBITDA was $252 million, adjusted earnings per share was $1.73, year-to-date cash flow from operations is $441 million and backlog at quarter end was $7.5 billion. In summary, we had another excellent quarter and are on track for another record year. More importantly, it seems like the number and size of opportunities continues to increase. The CEO of Verizon recently said that 5G technology is ultimately one of the most important infrastructures for the 21st century. We are entering one of the most exciting periods in the history of telecommunications. The deployment of 5G wireless technologies is truly a game changer for the consumer, our customers and for MasTec. The expected 5G CapEx budgets and length of the spending cycle are both unprecedented. Over the years we have witnessed significant changes with each evolution of technology from 2G to 3G to 4G LTE and now 5G. In each cycle, MasTec has been out in front of the market developing the capabilities needing for the next deployment cycle opportunity. We have always remained on the cutting edge of capabilities and this much larger and longer cycle is no different. Today, we are pleased to announce that during the fourth quarter, we acquired QuadGen Wireless. QuadGen is a company focused on wireless engineering, network integration and optimization using their proprietary software tools. Through this acquisition, we are adding 600 engineers located both domestically and abroad, which uniquely positions MasTec as a true end-to-end provider of wireless services. 5G significantly enhances the number of opportunities for MasTec based on the total number of network elements involved. Each of those elements added require significant construction activity. Historically, I think MasTec has always been viewed as the muscle behind the networks, we do the physical work that helps these networks perform. With our added resources, it enhances the services we can add around what I’ll refer to as the intellectual services. We are now truly a brain and muscle operation. The reason I bring this up is that in addition to the incremental opportunities available to us in the U.S. market, we have historically had a very difficult time selling wireless services internationally since the majority of our services rely heavily on labor, which is typically a local product. Our expertise on deploying wireless services coupled now with our ability to do extensive front-end work in conjunction with optimization and data maintenance allows us to sell these services across any carrier or geography by our engineering teams in both the U.S. and abroad. Based on how much denser a 5G network is, the level of activity required to deploy those networks around the world is unparalleled. Our reputation, history and expertise uniquely position us to be a leader in 5G deployment. We also feel we’re incredibly well positioned for the long-term maintenance opportunities. This cycle won’t just be about the initial deployment, but will also be driven by the increased maintenance requirements of a bigger, more dense, complex and evolving network. In the near term, we continue to ramp resources as we prepare for the future. We expect strong growth in the years to come with significant margin improvement as we reach full scale and utilization. We are also anxiously awaiting the completion of the T-Mobile, Sprint merger. T-Mobile, Sprint and Dish Network, all have significant build plans. While the build plans are not contingent on the acquisition, each company has a different plan if the acquisition happens or doesn’t; this dynamic has resulted in a slower second half of 2019 across the industry. Once the fate of that acquisition is decided, we expect our industry will quickly see a significant increase in demand. We also expect wireline demand to continue to increase. These new future networks will be supported by fiber and we have a number of customers from telcos, MSOs to independent fiber operators that are aggressively building out in support of these networks. We’re happy to announce that during the third quarter, we were awarded approximately $700 million in new fiber awards. Moving to our Oil & Gas segment. We had another very strong quarter that could have been better. Revenues were impacted by regulatory delays on one large project and that delay will also impact fourth quarter revenues. Despite this delay, margins were strong and we expect margins to maintain at these levels in the fourth quarter. We are enjoying strong broad-based performance across our long-haul and midstream projects, integrity work, utility main replacements and facility construction. We have improved diversification, our top two customers made up less than a quarter of our revenues versus 40% last year highlighting the diversity of our customer mix. We have solid visibility with approximately $800 million of revenue being pushed into next year, by our large project delay coupled with a significant amount of work verbally awarded but not signed. This sets the stage for what we expect to be another great year for our Oil & Gas Group in 2020. While the backlog number of Q3 was not a record levels, when you take into account the verbal awards not yet signed, we have never had better visibility in this segment than we do today. We are also encouraged by the number of opportunities we are seeing beyond 2020. Despite commodity price fluctuations, we continue to see a very robust oil and gas market for years to come. Our transmission group had another solid quarter while we were expecting 2019 to be more of a transition year leading into what we believe will be a very strong 2020 in this business, the last couple of quarters have been better than we were expecting. Margins have been improving and we expect that trend to continue into 2020. Market conditions are strong and there are a number of catalysts driving the business including the shift to clean energy, grid enhancements, including undergrounding and especially in light of the natural disasters across the country and general spending around replacing and strengthening the aging infrastructure. We feel great about our prospects and expect strong backlog growth over the next few quarters. Our Power Generation group also delivered strong revenue growth. Revenues grew 46% from last year’s third quarter. Since 2017, revenues from our Power Generation group have more than tripled from $300 million in 2017 to almost $1 billion this year; with nearly $1 billion in backlog and a number of expected awards, 2020 should be another year of strong growth. Margins have been impacted by our high growth. We have added about 1,000 team members since year-end in our Power Gen segment from a base of about 1300, almost doubling our workforce this year. We expect this segment to return to mid-to-high single digit margins next year. To recap, we’re having a great 2019, our guidance for 2019 represents a 17% increase in EBITDA year-over-year with margins improving 130 basis points over that same period. As we look forward to 2020, we truly believe we are in a privileged position as we expect all of our segments to grow next year. While we’re not ready to give 2020 guidance, we would expect revenue growth to be somewhere in the low-double digit range with margins approaching this year’s levels. We expect 2019 to be another record year of financial performance, but we’re more excited about our longer-term prospects. The markets we serve are evolving, changing and growing and we’re confident MasTec has positioned itself to be a leader across all of the segments we serve. I’d like to take this opportunity to thank the men and women of MasTec for their commitment to safety, their hard work and their sacrifices. Our people are our most important asset and it’s because of their performance that I’m so excited and bullish about our future. I’ll now turn the call over to George for our financial review. George?

Thanks, Jose. And good morning everyone. Today, I’ll cover third quarter financial results, including cash flow, liquidity and capital structure as well as our increased earnings guidance expectation for 2019. As Marc indicated at the beginning of the call, our discussion of financial results and guidance will include non-GAAP adjusted earnings and adjusted EBITDA. Reconciliation and details of non-GAAP measures can be found on our press release, on our website or on our SEC filings. Here are few highlights regarding our third quarter 2019 performance. In summary, we had better than expected third quarter earnings and this strong trend is affording us the opportunity to raise our 2019 adjusted diluted earnings per share guidance by $0.12 to new record levels, despite lower than expected second half 2019 Oil & Gas segment revenue caused by regulatory delays, pushing a portion of a large oil and gas project into 2020. On the balance sheet side, during the quarter, we continued our record cash flow from operations trend and extended, expanded, and favorably re-priced our senior credit facility. We expect record levels of 2019 annual cash flow from operations approaching $600 million through ordinary course collection activity. The combination of these factors leaves our third quarter capital structure with ample liquidity, improved pricing and comfortable leverage metrics allowing us full flexibility to take advantage of future growth opportunities. Third quarter 2019 adjusted EBITDA margin rate increased 110 basis points compared to the same period last year to 12.5% of revenue and adjusted EBITDA of $252 million represented a new quarterly record level. Adjusted diluted earnings of $1.73 per share grew by 30% over last year, exceeding our expectation by $0.11 per adjusted diluted share. Third quarter 2019 adjusted EBITDA and adjusted EBITDA margin rate both exceeded our expectation. Now, I will cover some more detail regarding third quarter segment results. Third quarter 2019 Oil & Gas segment revenue decreased 6% compared to the same period last year, slightly below our expectations, primarily due to lower revenue on a large project caused – the delays caused by regulatory delays that move some second half 2019 project activity to 2020. Third quarter 2019 Oil & Gas segment adjusted EBITDA margin rate was 21.9%, a 690 basis point improvement over the 15% reported for the same period last year, with this performance exceeding our expectation due to the combination of project mix with lower levels of large project cost plus activity and importantly strong project productivity on numerous small pipeline projects. As we look forward into 2020, we have great visibility on multiple and significant project activity. At this point until the estimated timing of 2020 project startup activity becomes clear, we anticipate that Oil & Gas segment 2020 revenue will grow in the high-single digit range with an adjusted EBITDA margin rate in the high teens range. Third quarter 2019 Communications segment revenue increased approximately 3% compared to the same period last year to approximately $680 million. Third quarter 2019 Communications segment adjusted EBITDA margin rate was 8.4% of revenue, a sequential improvement of 40 basis points compared to the second quarter. Third quarter 2019 Communications segment revenue trends are characterized by continued double-digit growth in wireless and wireline fiber services, partially offset by continued decreases in install-to-the-home services. Third quarter 2019 Communications segment adjusted EBITDA margin rate performance continues to reflect ramp-up costs related to fiber project startup costs and crew capacity initiatives as we continue to invest in Communications segment capacity growth in 2019 in order to maximize our future potential. We continue to expect Communications segment revenue, adjusted EBITDA and adjusted EBITDA margin rate will show strong annual 2020 increases when compared to 2019. Third quarter 2019 Electrical Transmission segment revenue increased approximately 4% compared to the same period last year to approximately $103 million. Adjusted EBITDA margin rate was 7.6% of revenue, a 450 basis point improvement compared to the same period last year. This marks the second consecutive quarter of Electrical Transmission segment adjusted EBITDA margin rate in the high single-digit range and we continue to expect strong revenue and adjusted EBITDA growth for this segment in 2020 and beyond. Third quarter 2019 Power Generation and Industrial segment revenue increased approximately 46% to $262 million. Adjusted EBITDA margin rate was below our expectation at 0.9% of revenue, primarily due to adverse weather impacts on selected project activity as well as some operating inefficiencies related to managing a year-to-date 2019 growth rate approximating 16%. We continue to experience a very active market and renewable project activity as evidenced by record Power Generation and Industrial segment third quarter 2019 backlog levels that approach $1 billion. As we look towards 2020, we expect this segment will continue to show revenue growth in 2020 coupled with improved adjusted EBITDA margin rate performance in the mid to high single-digit range. Now, I will discuss a summary of our top 10 largest customers for the third quarter 2019 period as a percentage of revenue. AT&T revenue derived from wireless and wireline fiber services was approximately 14% and install-to-the-home services was approximately 4%. On a combined basis, these three separate service offerings totaled approximately 18% of our total revenue. As a remainder, it is important to note that these offerings while falling under one AT&T corporate umbrella are managed and budgeted independently within that organization giving us diversification within that corporate universe. Equitrans Midstream Corporation was 17% compared to 28% last year reflecting lower activity levels on a large oil and gas project as previously discussed. Energy Transfer was 7%; Phillips 66, Epic Pipeline and Verizon were each 5%. And Kinder Morgan, Iberdrola, the Southern Company and NextEra Energy were each at 2%. Individual construction projects comprised 68% of our third quarter 2019 revenue with master service agreements comprising 32% and this mix reflects the trend over the past year or so of higher levels of large project activity. 18-month backlog as of the third quarter 2019 was approximately $7.5 billion, a 3% sequential decrease when compared to the second quarter, and a 4% decrease compared to the third quarter last year. Notable backlog activity during the third quarter includes a strong sequential increase in power generation and industrial segment backlog and an approximate $700 million sequential increase in total backlog beyond 18 months, driven primarily by significant Communications segment awards during the quarter. Thus, while third quarter 2019 Communications segment, 18-month backlog showed a small sequential decline total Communications segment backlog increased substantially during the third quarter. As we were awarded significant project awards for which work is expected to be performed beyond the reported 18-month backlog period. It is also important to note that 18-month backlog last year included approximately $500 million of Puerto Rican storm restoration services with $250 million each in the Communications and Electrical Transmission segments that ultimately never led to revenue generation and thus unduly impacts year-over-year 18-month backlog comparisons for those segments. Lastly, it should be noted as we have indicated for years, backlog can be lumpy as large contracts burn off each quarter and new large contract awards only come into backlog at a single point in time and this trend is evident in our third quarter 2019 Oil & Gas segment backlog. In summary, our backlog performance and trends support our optimism regarding the strength of our end markets which are exhibiting sizable multiyear growth opportunities. Now, I will discuss cash flow, liquidity, working capital usage and capital investments. Our long-term capital structure is solid with low rates and no significant near-term maturities. During the third quarter, we took advantage of favorable market conditions and increased our senior credit facility by $250 million further increasing our ample liquidity. Liquidity is defined as cash on hand with borrowing capacity. And this level now stands at approximately $1 billion. I would like to take this opportunity to thank the members of our bank group for their continued support and partnership. We ended our third quarter with net debt, defined as total debt less cash of approximately $1.27 billion and a quarter-end leverage book ratio of 1.5 times. In summary, we expect to end 2020 with a strong capital structure and ample liquidity that should give us full flexibility to take advantage of any potential growth opportunities to maximize shareholder value. As of the end of the third quarter, we had approximately $129 million remaining on open share repurchase programs. With regard to our 2019 cash flow performance, we continued our strong performance trend during the third quarter and year-to-date 2019 cash flow from operations of $441 million represented a record level for MasTec. We ended the third quarter with DSOs at 82 days within our stated target range. We continue to expect that annual 2019 cash flow from operations will reach a new record level approaching $600 million and that 2019 free cash flow defined as cash flow from operations less net cash CapEx, once again exceed adjusted net income. As a reminder, year-to-date and expected annual 2019 cash flow performance metrics are based on ordinary course, billing and collection activity. Regarding our spending on equipment during the third quarter of 2019, we purchased approximately $20 million in net cash CapEx defined as cash CapEx, net of equipment disposals and we incurred an additional $53 million in equipment under finance leases. We expect that for the full year 2019 period, we will acquire approximately $90 million in net cash CapEx and also expect to incur approximately $190 million to $200 million in equipment under finance leases. Moving to our current 2019 guidance. We now expect full year 2019 revenue of $7.2 billion. Based on our strong earnings trend, we are increasing our annual 2019 adjusted EBITDA guidance to $842 million or 11.7% of revenue and our adjusted earnings guidance to $5.16 per adjusted diluted share, $0.12 increase. Fourth quarter 2019 revenue is now estimated at $1.7 billion with adjusted EBITDA guidance at $209 million or 12.1% of revenue and adjusted earnings guidance at $1.25 per adjusted diluted share. In summary, our current guidance expectation incorporates lower second half 2019 Oil & Gas segment revenue due to regulatory delays on a large oil and gas project that will move some project activity into 2020 as well as continued strong adjusted EBITDA margin rate performance. In summary, as we move towards the end of 2019, we are pleased to be in position to raise our 2019, full-year guidance expectation to new record levels for adjusted earnings and to confirm expected record 2019 cash flow from operations. Importantly, as we look towards 2020 and beyond, we strongly believe that our markets afford us significant and expanding multiyear growth opportunities and we expect 2020 to be yet another record year for MasTec. That concludes our prepared remarks and now I will turn it back to the operator for Q&A. Operator?

[Operator Instructions] And we will take our first question from Alex Rygiel with B. Riley FBR. Please go ahead.

Jose and George, congratulations on a great quarter.

Thank you, Alex. Good morning.

First question with regards to cash flow, fantastic guidance this year of $600 million plus. When we think about next year, I suspect, your expectation would be even greater next year, and I see less and less uses of cash. So can you comment on how you think about capital allocation in 2020 as it pertains to this massive amount of cash flow generation?

Sure. So, I don’t think anything’s really changed. We’ve obviously have been opportunistic. So we think we’ve made a great acquisition in this quarter that’s going to pay big dividends for us. So, I think our uses of cash are no different than they’ve been right. I think we’re trying to reinvest in our business. We have a ton of organic growth opportunities, we think we’ve got significant acquisition opportunities on a go-forward basis. And then I think you’ve seen us be very active in terms of buying back shares over the last 18 months or so. And we’ve been a little bit more opportunistic related to that and I think that will continue looking at that and decide whether we want to be more opportunistic or be more methodical in nature.

Secondly, your commentary about 2020 is very, very upbeat and pretty exciting. A big component of that includes verbal awards and some delays in projects from this year to next year. So how do you – how comfortable are you with the visibility of that in light of more broader regulatory or permitting uncertainties.

Look, there is no question that we don’t think we’ve ever been in a better position than we are today. We think our backlog number misses that component of our business, which has changed, right. So if you think about what’s going on in the oil and gas industry specifically, those customers have realized the regulatory issues that they’re having, whereas they were fully contracting work a year, 18 months in advance. There are awarding work that far in advance, but not necessarily signing contracts until they get a full understanding of when they’re going forward and how they’re going forward. So that time frame has changed a little bit, which I think is impacting what our backlog looks like, but between backlog, verbal awards, limited notice to proceeds, we have more visibility in that business specifically today than we’ve ever had. That’s why we’re so upbeat. That’s why we don’t think this is a short-term story. I know there’s a lot of concern out there around the oil and gas business, we’re going to have what we think is a fantastic 2020. But even more importantly than that, the visibility that we have today for 2021 and beyond is fantastic. There are a lot of projects that we have in queue that are for 2021. There are some that may be for 2020 that we’re going to push into 2021, quite frankly, we don’t think all of the work that we have in our backlog and in verbal awards will be completed in 2020. So we’re in a great spot in that business today. We’re very encouraged, we obviously we’re very happy with the margin profile we’ve been able to achieve in that business. We think it’s sustainable; when we guide on a go-forward basis, we’ll probably guide slightly lower to be conservative, which is I think typically how we’ve always done it, but we’re very excited there. When you think about telecom, we’re having conversations with our customers far in advance of them actually deploying things and I think that we’re going to see a huge increase in activity levels there. And I think it’s similar, right. We’re not there yet, this acquisition between T-Mobile and Sprint is very important for it to be finalized one way or the other, because it’s really impacting three carriers and as we get light on what’s going to happen there, we think there’s going to be a pretty heavy acceleration in that market as well.

Great quarter. Thank you.

Thank you, Alex.

Next, we will hear from Andrew Kaplowitz with Citi. Please go ahead.

Good morning, guys, nice quarter.

Good morning, Andy, thank you.

Jose, just following up on Alex’s question, you gave guidance, specific guidance for oil and gas revenue growth in 2020 in the high single digits. Are you thinking the underlying growth for oil and gas actually large project is still up in 2020? And then in communications, with the understanding that Sprint, T-Mobile won’t close until early next year, what’s your conviction level the Communications can grow at that company average that George talked about of low-teens growth.

Yes. So, a couple of things; on the Oil & Gas side, I think one of the really nice stories for us in 2019 has been the diversification of the revenue base, we expect that to continue, there’s a lot of opportunities for us across the segment in everything from long haul projects all the way down to working in the streets of large cities rehabbing existing pipelines. We do think that the large project portion of that can grow, we actually – the unknown, there is when those projects actually go, I think the guidance that were given, we feel extremely comfortable about, the reality is that if the projects all go that we think can go, it’s going to be a lot better than that, but I think we’ve – I think it’s prudent to be conservative at this point in time. From the Communications perspective, I feel really strongly that the second half of 2020 is going to be fantastic. I think we’re not 100% sure when maybe that acquisition gets – it’s a big deal, right. Because again, there’s three carriers that are being affected from their capital allocation decisions related to that and as soon as it goes, we think all three of them are going to lead in a pretty big way; irrespective of that, right, because those are the way we think about it. Those three customers per se, haven’t traditionally been very large customers for MasTec. So that’s more about our growth story than it is about our base business. So, our base business, which is comprised more of AT&T and Verizon, that’s going to be very strong. It’s going to be up next year. So, I think we’re very confident in being able to talk about where we expect to be just on the base book of business when you throw in all of the potential opportunities for us, it only gets better.

That’s helpful, Jose. And then your power generation growth has been really strong. You mentioned the lower margin than much of the issue is just a big ramp-up in the workforce, which makes sense. But what point do you concerned in the profitability of the business now, I mean, it’s a much larger book of business for you. So, when you look at the business going forward and you’ve talked about mid to high single-digit profitability, margin profitability in that business. When do you think you can achieve it, you need to sort of stabilize the growth a bit more or is it something next year that we should really expect.

Andy, last year we did about 6% margins in the business, which is a huge improvement from where we had been. Obviously, this year, it’s a little bit more disappointing, obviously, the growth on especially in terms of team members has been a lot more substantial this year than it’s been in the past. We’ve got great opportunities for growth next year; I think a part of what you’re seeing is an investment in yet another further growth cycle in 2020. With that said, we know what – we know exactly, where the margins are project by project, we know what the issues are. There are a number of change orders that are outstanding on a number of those projects that if they come to fruition would help the margin profile. With all that said, based on the book of business that we have, based on the backlog that we have, we’re comfortable that we can at least get back to 2018 levels in 2020 and I think it’s a matter of timing and just the way the project mix has laid itself out in 2019.

Thanks, Jose.

Thank you, Andy.

And next, we will hear from Noelle Dilts with Stifel. Please go ahead.

Thanks, good morning and congratulations on the nice quarter.

Good morning, Noelle. Thank you.

So, you touched on this a little bit in your comments and some of the answers to the question, Jose. but I was hoping you could just drill down a little bit deeper into some of the midstream work that you’re doing in the Permian with Pumpco. You talked about having visibility across all of your pipeline businesses, but I think that’s probably the one that folks worry about the most because it seems like it’s just performing exceptionally well. And you’re seeing really good levels of activity there this year. So, can you discuss just how much visibility you have into that business, what gives you confidence into next year and just how you’re thinking about the sustainability of those margins?

Sure. So, I think it’s no different than the rest of our Oil & Gas business. We’ve got excellent year plan for 2020 based on conversations with customers. We’ve got work booked that actually, won’t even start until 2021 in that area. So, we think the next couple of years are really solid relative to the visibility that we have today, going beyond 2021, I don’t – we haven’t really had a lot of conversations about 2022 and beyond. But that’s usually a lifetime in particular basin. I think we’re seeing expansion of different basins as well that provide opportunities for all of our groups within our Oil & Gas segment. So, we don’t expect a slowdown in that business next year. We expect to have a really good year from a revenue perspective; we think that the margin profile of the work is no different going into 2020 than it was in 2019. So again, we’re very bullish.

Thanks. And then it sounds like there has maybe been some progress in terms of funding some of the grid upgrade initiatives in Puerto Rico. How should we think about that in terms of opportunity for MasTec?

So, Puerto Rico is interesting right, unfortunately for us, when we look at last year’s backlog, it had $500 million of Puerto Rico work associated with it, we’ve taken that out from a comparable perspective, it’s making backlog look worse than what it really is. So, further to the comments that we’ve been making today, I think our backlog is actually a lot stronger than what it seems on paper. The reason it was in backlog as we won what we thought was an excellent project in Puerto Rico. We were ready and excited to get started, obviously, the people that were involved in those contracts and issuing the work, and it was more related to FEMA and the other contract are involved, they were arrested, they’ve been criminally charged. All of that has been cleaned up. So, I feel really good that on a go-forward basis, relative to that one contractor, who is doing the majority of the work on island is no longer there. We think we’re well positioned. We do think there’s going to be a significant inflow of dollars over time into the island and again, we don’t think there’s anybody better positioned than us to do a sizable portion of that work. It’s not in backlog; we’re not counting on it. We are doing some work. We’re doing more work there now actually than we’ve done in a long time. With that said, it’s going to all be about the dollars that flow in and if they flow in, we will do really well with it.

Thank you.

Next, we will hear from Jamie Cook with Credit Suisse. Please go ahead.

Hi, good morning.

Hey, good morning, Jamie.

Good morning and congrats on a nice quarter and outlook, I guess for the next year too. I guess, just one question, a couple of questions, Jose and one and one follow-up, so Mark doesn’t get mad at me. The level of – can you just talk about within Communications, how you’re sort of thinking about the headcount ramp that you’re expecting in 2020 to meet your top-line targets and just sort of the level investment – levels of investment required as we think about 2020 versus 2019. And then I guess my second question is just more strategic again, in particular as your cash flow generation has been very strong, I mean Communications and Oil & Gas have been the two drivers of your earnings growth. I mean is there anything inorganic you could do within the Electric Transmission business or the PG&I business that could sort of ignite the operating profit story there? Or improve the operating profit story there quicker? Thanks.

Sure. So, I’ll start with the second part of your question first, which is the inorganic nature of the two smaller businesses. The easy answer is, yes, there are things that we can do, and there are things that we are looking at, but the harder answer right is I think what we’ve done well especially, in those two businesses is, you look at Power Gen again, it’s tripled in three years. We’ve done that organically for the most part, right, and I think organic growth is a lot harder than acquisitive growth. When you acquire a company, you acquire the business. It goes into your financials, you pay a significant premium forward upfront, but it’s accretive to earnings immediately; when you do it organically, it’s not as expensive, you don’t spend as much money, but obviously, it takes a lot longer for the profits that you worked through your books. So, the growth that we’ve experienced and enjoyed has been organic; long-term, I think that’s a good solution, because the more we can grow organically, it’s going to cost us a lot less. We know the margins are going to come in over time, and I think that’s really been one of the differences with MasTec. We’ve really been an organic story more than an inorganic story for a number of years now. With that said, we’ve gotten to the size and scale, where there are some inorganic opportunities and we are selectively picking them and really going after them and we feel great about it. With your first part of your question, which is a question of how do we ramp and what do we think the numbers are relative to a ramp in 2020, one of the things that we learned in the Oil & Gas business years ago was you really can’t ramp when the work comes. So, if we’re trying to ramp in 2020, we’re too late. So what we’ve been doing is we’ve been ramping going into the cycle, right. So, the reason that our margins are down in 2019 is because we’re spending money organically ramping the business and if, obviously, if that growth doesn’t come, then it’s a bad decision. If the growth comes, which we’re fairly sure that it will, then I think it will play out to be a great decision. So, I think a lot of the investments required for us to take advantage of the work that’s coming. We’re already making. I think the capital allocation to the ramp is going to actually decrease rather than increase, because we’ve been taking those lumps now and will get the credit and the benefit for it in the future. and I think we look at it more that way than we actually do, having to go into 2020 with an aggressive ramp.

Thank you. I’ll get back in queue.

Thanks, Jamie.

Next, we will hear from Adam Thalhimer with Thompson Davis. Please go ahead.

Hey, good morning guys. Jose, I wanted to start on the fiber awards. You talked about $700 million in Q3. Can you give us some color on those and then were those in the Q3 backlog?

So, Adam, good morning. So, a very small portion of them were in backlog, a significant portion of that revenue actually goes beyond the 18-month backlog period. So, most of that $700 million is not in backlog.

Yes, Adam. just when you look at it, we have remaining performance obligations over 18 months that number has gone from a couple of hundred million last quarter to $900 million this quarter, that’s what it really shows.

And is that for an existing? Are you doing fiber work for that customer today and this is an add-on?

Yes.

Okay. And then for my follow-up, I just wanted to ask about QuadGen. How does it fit strategically Jose and how much revenue do you expect?

So, I think, strategically, it’s a fantastic acquisition for us, it’s – for us, it’s almost like a new business. It’s not that it’s completely foreign, we do some of that today within our business. We contract a lot of that business out to other people, the small portions that we do. But it opens a whole other world to us within that industry. I think as these networks become more complex, the amount of engineering support and capacity that you need, especially on the back end of these networks to make them work and to optimize them to make them work at their best. It’s a huge business and it’s one that’s growing, it’s one where the vendor makeup of that business is changing historically, that’s been something that the OEMs have done and I think the carriers have really been looking for other partners to support them in that endeavor. I think they’re one of the leaders in that. They’re a relatively small company today still, but it’s a business that typically carries, obviously, very high multiples associated with it. So, for us, it’s been hard to find the right fit. We think we bought the right company at the right value and we think it just really blows the doors off for strategically and what we’re capable of offering our customers and really, how we can try to contract with our customers differently over time. Every carrier is different; we’ve talked about that at length over time. Each carrier thinks about how they procure these services a little bit different and this really gives us an edge as to really being able to compete with the OEMs and almost really have no competitors relative to the full end-to-end approach that we’re trying to sell and we think that’s something that the carriers are going to really like and really benefit.

Okay. Thanks, guys.

Thanks, Adam.

Next, you will hear from Brent Thielman with D.A. Davidson. Go ahead.

Hey, thank you. Congrats.

Thanks, Brent.

Jose, it seems like we’re hearing more and more about transmission work, both kind of small and large. The last few quarters, frankly, from yourselves and peers and I’m wondering this CapEx wave sort of feel comparable or even larger than prior cycles you’ve experienced?

I think it’s finally coming to fruition. It’s been talked about for a long time. I think there’s just a lot of catalysts and a lot of different drivers that are pushing it today, right. I think, clean energies having a bigger impact on the grid than what we would have thought a couple of years ago, I think all of these natural disasters that we’re seeing on the East and West coasts are going to have a significant impact on grid replacement. So, there’s just a lot of activity, a lot of work. I think we’re again, very early in the cycle and I think the industry is going to do really well relative to it.

Okay. And then a second question is on telecom, we’re hearing a lot about and frankly, seeing some signs and results of a decent pickup and sort of equipment and structures orders in support of kind of the infrastructure needed for the 5G wave. And I take this is encouraging, but I guess I’m wondering why that hasn’t materialized and results for contractors yet, is this all just ordered well in advance of when you’re services are ultimately required?

Well, to be clear, we’ve enjoyed double-digit growth now for 18 months quarter-over-quarter. We’ve been enjoying double-digit growth. So, it’s not like there isn’t growth there. We are more active today than what we’ve been in the last year and a half. The reality is that it’s barely started and it really hasn’t scaled and it will. So, the type of growth that we’re hoping and expecting to see isn’t here yet. But it’s coming; at the end of the day, you go all the way back to – there still isn’t a set of standards that everybody agrees to. So, we’re in very early innings, but everybody’s kind of doing their own thing. I think a lot of that is going to start falling into place. And again, I think the second half of 2020, we’re going to start to see significant ramps going into 2021 and beyond. So again, I think it’s very early. I don’t think it’s something that’s really rolling through anybody’s numbers yet, but it will. And again, we think we’re as well positioned as we could possibly want to be.

Thank you.

Thanks.

Next, we will hear from Blake Hirschman with Stephens Inc.

Yes. good morning, guys.

Good morning, Blake.

On the telecom piece, I think the target has been to get to something like $3 billion in run rate sales, it sounds like you probably won’t get there this year with some of the things going on. Do you think you can get there in 2020?

Yes.

Got it. And then on Electrical Transmission and the situation out west, all the storm hardening out there and the power shutdowns and all that. Do you guys play out there much and do you think you could capture some of that work? Thanks.

Historically, it hasn’t been a big market for us. Obviously, we think they’re going to need a lot of help, we do think we can play a role out there and we’re evaluating that. There’s a lot of focus on that, but I also think we’ve had some – we’ve had some heavy hurricane years on the East Coast last couple of years. I know this year, we weren’t as impacted, Bahamas were obviously hit a lot harder. but I also think it’s important to know things like FP&L in the State of Florida just recently passed $35 billion undergrounding build that they’re going to start working in over the next 30 years. So, allowing them to put it in rate base which is the first time that they’ve ever gotten that pass through the legislature. It’s a huge issue. It’s an incredible amount of incremental spend. So, we’re seeing things all over the country, not just in the West Coast, but obviously, what’s happening in the West Coast is terrible, we keep all of those people that are reflected in our prayers, and yes, we do think there’s opportunities for us out there as well.

And we will move on to our next question from Sean Eastman with KeyBanc Capital Markets.

Hi team, nice job on the Communications here. I really appreciate all the color. It’s interesting to get an update on this dynamic around the Sprint, T-Mobile merger may be holding up some activity levels. The other element that we get questions on is just this AT&T CapEx guidance reflects kind of a down year-over-year trajectory in 2020, obviously, a huge budget with tons of moving pieces, but would you just be curious to get a sense on MasTec’s exposure there whether there is any change in the opportunity set as you see it after seeing this kind of formalized budget for next year from that big customer?

Sure. Good morning, Sean. A couple of things in our revenue with AT&T, on a year-over-year basis is down. Obviously, there’s lots of moving pieces in it for us. Our installation business is down again, which is the primary driver of our revenues are down. AT&T has been pretty vocal about the fact that they’re spending less on fiber than they’ve historically spent and then the offset, where we’ve seen a pretty nice double-digit increase has been on the wireless side of the business. So that really hasn’t changed, it’s kind of in the same story for us all year. AT&T has significant plans, they’re very public about what it is that they want to do, related to 5G and their total wireless build in general. I think obviously, they’ve encountered their own issues with the activists, they’re talking about selling off of significant number of assets. At the end of the day, we think all of that is positive. We think as they generate more cash, it will give them a reason to reinvest in those businesses that they have a longer bent towards, which we think obviously the wireless arena will be one of them. So, things are going well with them, they’re very active and we really, it’s part of our growth story. And on the businesses that really matter to us, we haven’t seen a slowdown and we expect that to continue.

Okay, thanks. Next one from me is just, leverage obviously, below targeted range here. So, some dry powder, I didn’t pick up on exactly how big the outlay is for QuadGen, but just curious kind of capital allocation next year, are there more QuadGen’s out there, do you build on this international opportunity in Communications or do we focus on buybacks here? Any color there would be great.

So in our Q, we’ve got – we paid about $80 million for QuadGen.

Okay.

That’s kind of size of the cash price of the transaction. From an allocation perspective, again, we do think there are some inorganic opportunities out there that we’re looking at. I don’t think we’re going to stay at these leverage levels for long. So, I do expect us to deploy capital in ways where we think it’s more meaningful and provides a greater shareholder return.

Okay, thanks very much.

Thank you.

Next, we will hear from Chad Dillard with Deutsche Bank. Please go ahead.

Hi, good morning guys.

Good morning, Chad.

So, I just wanted to understand some of the puts and takes for your 2020 revenue guidance for Communications. Just I guess how big of a drag do you think the install-to-home component will be. How are you thinking about when the fiber-to-the-home when the comps get easier or when that decline to trough and just any sense on just how FirstNet will be trending next year versus this year?

Sure. So again, we’re not ready to give full guidance next year. But I think that the installation business if it’s down $75 million to $100 million next year, it will probably be in the high end of what that could possibly be down. We’d hope would be better than that, but I think that’s probably the outside range of potential liability. From the FirstNet perspective, it’s book as part of the work plan, the majority I think of what we’re doing today is still to relate it to FirstNet. I think that’s going to continue. So, I still think that a lot of what’s happening with 5G is additive further to the commentary that we just had on the AT&T CapEx that’s something that they’re obviously spending on, they’re not cutting back on that and it’s not something that we expect them to cut back on when you add in what their future needs are. It’s the one side of the business that we’re fairly confident and sure that they’re going to continue to grow their investment and their CapEx into. So, we feel great about it.

Great. And fiber-to-the-home?

From AT&T’s perspective, it’s a very small piece of our business today. So, we don’t really see much difference from 2019 to 2020 on that side.

Got it. Okay. And then just sticking with Communications, kind of similar question. Just if you could talk through the moving parts on the margin side. With the revenue – let’s say, the initial revenue guidance that you gave for 2020. I mean do you think you can actually hit double-digit margins next year? And then just secondly, I mean, any color you can give on the order of magnitude of the long-haul projects that are awarded, but not signed quite yet.

Yes. So, the Communications answer first, we do think we can hit double-digit margins, obviously, it’s going to be somewhat dependent on how quickly some of those opportunities ramp. But I think that at a low-end of that, we feel comfortable that’s probably what our goal would be going into the year. Longer-term, we expect to get back to historical levels in that business. So, we still – our long-term guidance of $12 million to $13 million really hasn’t changed in that business. But I think a great first step would be to be able to hit double digits on the growth that we expect from the long-haul side of the business. It’s – if you take into account, all of the work that we’re expecting, it’s well in excess of $1 billion.

Great, thanks guys. I’ll pass it along.

Thank you.

Next, we will hear from Steven Fisher with UBS. Please go ahead.

Thanks, good morning. Just on the pipeline side. Wondering if you could give us a little more color on the earnings and what was different about the work that you executed in Q3 that made it even higher from a margin perspective compared to the strong Q2? And then what’s the potential to sustain backlog of that higher margin work versus the lower margin cost plus work just because the backlog was down this quarter.

Yes. So again backlog is only a measurement of the work that we have signed, a couple of things, right. Part of what’s going to affect our margins on a quarter-over-quarter basis is the amount of cost plus work that we have versus other types of business that we have. So, I think we absolutely believe that the current margin profile will hold through Q4 when we look at 2020. We don’t think the margin profile of any particular of the project, the groupings of project will be any different, the question will be how much cost plus work we do relative to the rest in the cost-plus work will drive down margins a little bit versus where we are today. So when we think about 2019, we’re going to finish this year doing about $800 million for MVP, which is our biggest cost plus contract, or cost plus like contract; when we looked at 2020, we expect it to be similar size and value. So going into the year, we’re hopeful that we can have very similar margin profile, but again until we – there are some projects that are moving around. So we probably be conservative and call it high teens, which is much greater than anything we’ve ever guided before by the way. But I think that would be the right conservative approach going into the year.

Okay. And then just shifting over to Communications. I wonder if you could just a follow-up give us a little bit more detail on the $700 million. Is the plan there to recognize every quarter the incremental amount of work that falls within your rolling 18-month period? How certain is the timing of all that work and then just a follow-up on the staffing question, are you still adding 250 people a quarter?

So the first part of your answer is yes, that work falls in within the 18-month period, we pick it up. So this is work – some, a lot of it is add-on to the existing markets where we’re currently in. So it’s kind of project phases. So we’ve got a very detailed plan as to when we expect to execute that work and we’ll be adding it in as it falls in. On the staffing period, we continue to hire at that pace. We do expect at some point to slow down that pace. So to the commentary earlier, we expect 2019 to be a heavy year of ramp for us and then hopefully it slows down in 2020.

Perfect, thank you.

Thank you.

We will take our final question from Andrew Wittmann with Baird. Please go ahead.

Okay, great. Thanks guys for taking my question. I wanted to ask about Oil & Gas here as well. You mentioned that there are a bunch of verbal awards that are contracted yet. And those are the ones I wanted to ask about, and specifically trying to get your sense about what needs to happen to get those contracted. Are these heavily waiting on environmental permits? Are they waiting on oil and gas prices or basis differentials to fall in line, so that the economics make sense? Do they need to off-take agreements from shippers. Just trying to get a sense of the likelihood in the things that need to break your way for those to actually move forward?

So the nature of – I’d say it’s a majority of almost all of them is regulatory so it’s permitting, it’s not pricing, it’s not LNG projects that we’re talking about that are in future outer years that, again, we feel very good about. And we think are highly likely to happen, but that’s not what we’re talking about, we’re talking about projects that are missing permits and customers are being a little bit tighter in their time frames around when they actually want to issue, a lot of these, a – lot of these contracts, you got to look right before you start, will you try to give estimates and I think customers are trying to wait for the most accurate estimates possible before they actually go into full signing of contracts, that’s more of what we’re experiencing. So, we feel highly confident that over the next 12 months virtually all of these projects will start, where in that 12-month window is really the key to be able to lock into exactly where we think we’ll be in 2020. But again, I think we’re taking a very conservative view as to how we’re looking at those projects. So the commentary we’ve made today, we feel very comfortable with being able to achieve regardless of what happens with any particular project.

That’s helpful. And that’s all I had. Have a nice day.

Thank you.

And with no further questions, I’d like to turn the call back to Mr. Mas for any additional or closing remarks.

So, this concludes our call here for the third quarter. I’d like to thank everyone who participated and supported us and we look forward to our year-end call next year. Thank you.

And this concludes today’s conference. Thank you for your participation. And you may now disconnect.