We'll go ahead and get started with the next fireside conversation. Really pleased to have MasTec joining us again this year. Executive Vice President and CFO, Paul DiMarco. Relatively new to the position, but certainly have a couple quarters under you now, Paul. Thank you so much for joining us this year. Thank you. And obviously, a busy schedule once again at the conference. If we could, just for the interest of folks, I'm sure there's still some out there relatively new to the story, quick overview from your perspective. I think it's always interesting to someone new kinda coming into the CFO role this year as well. Some of the key things you're recognizing within the business and maybe some things that you're looking to instill as you've. Sure K inda taken over the role. So Paul, I'll turn it to you. Yeah. Well, thanks for having me, and thanks, everyone, for attending this afternoon. You know, as Brent said, I've been with. I've only been CFO since April, but I've been with MasTec for about 16 years. So I've been around for a while. I've seen a lot of our different business cycles and evolutions over that timeframe, and currently, that's what we're going through, right? We spent the last 2.5 years really diversifying the business again, really working to reduce our concentration in the pipeline segment and put ourselves in a better position to capture some of the longer-term industry trends that we see for growth and margin opportunity going forward. In my tenure here, I was predominantly treasurer for, call it, 14 and a half, 15 years, and then the last year and a half, prior to stepping into the CFO role, I was CFO for our power delivery segment. That's, my experience over that year and a half is really what's shaping a lot of the initiatives that I'm pushing as I move into the CFO role. What I'm pushing the finance team to do is really focus on operational effectiveness and providing our operating partners with visibility to data, and productivity, and information that will allow them to better do their jobs, right? If you think about the diversification that I mentioned, we have new companies of significant size that have come into the business. We have multiple ERP environments across a number of segments. We have disparate systems for managing productivity. So it's really around the standardization of those systems, the standardization of those tools, and then pushing the processes across the organization, so that everyone can operate at the same level of effectiveness and efficiency. Unfortunately, those aren't overnight initiatives, particularly on the ERP side. They'll take some time. But with the, you know, the outlook we have across our end markets and, and the opportunity that affords us from a visibility perspective to really bolster our operations, you know, we're really excited about the, the efforts to push those forward. Good. We'll maybe take some questions here, just do it by business line, and starting with communications. Paul, I mean, maybe just kinda first off. Okay. W alk us sort of, sort of through the bridge to your, your second half expectations for the business. I know it moved a little bit here as of the last quarter. Maybe just walk us through some of the different things you, you've got going on in that, that side of the business. Sure. That business is, you know, roughly 50/50. Probably a little bit higher than half is from wireline or fiber deployment, and the balance would be from our wireless business, so working on wireless infrastructure for the telcos. What we're seeing in the back half of the year is some slowdown in spend on the wireless side. Really, as we look at that generational implementation, you know, it provides a level, at full deployment, which we're not at, it provides a level of speed and latency that none of us need for our phones or tablets or really the base, the main subscriber base for wireless providers today. What the carriers have done is they've said, "In this cost environment, you know, in this cost of capital environment, we're gonna prioritize our capital a little bit differently, right? We're gonna de-emphasize wireless in the near term, move more into kind of a maintenance mode, which we've been in for a number of years, right after 4G was fully deployed, until there's some economic justification for that additional infrastructure investment." So it was a little bit of a, you know, unexpected reaction at this point in the year. So we talked about some softness in revenue on the wireless side. In the back half of 2023, we think we're probably flat year-over-year, going into 2024. On the other side of the business, on the fiber side, you know, we're still seeing very good both support from within the industry, directly from our customers, but that's really being supplemented by government stimulus around fiber penetration, around broadband equity, and eliminating the digital divide. You know, both through RDOF today, which was the Rural Digital Opportunity Fund, which we've been executing on projects for our customers on for the last couple of years. As we move forward, under the IIJA, there was about $50 billion allocated for further broadband equity, which we're really not seeing any benefit from yet. That money was allocated to the states earlier this year from the federal government, and now they're going through a process of grant evaluation, which will ultimately drive it into the construction landscape. We think the wireline side of the business continues to have really good growth trajectory, not just in 2023, but 2024 and beyond. 2024, with really the on-balance sheet spend, 2025, as we start getting into more deployment of the subsidies from the federal government. In the near term, kinda flattish demand on the wireless side, outside of any gain on share with our size as the largest wireless contractor in the States. Yeah. And Paul, I mean, I know you're, you're very committed to the wireless business. You've been in it a long time. Maybe some of the blocking and tackling things you can do in the near term with some of the pullback in spending. And, and the other side, on the wireline side, which sounds very strong, some of the things you're doing there to take greater advantage of that market. So one thing that's unique about the wireless business for us, relative to our other markets, is it's really the only end market where we don't self-perform the majority of the work. So it does afford us. It's more of a programmatic management. We have a self-perform component, but over 50%, probably close to 70% of that work is subcontracted, so we're managing a base of subcontractors in the geographies where we operate. So that obviously affords us more flexibility. There's other, you know, managerial and fixed cost layers that have to be adjusted. But we've been in the wireless business long enough, and we understand some of the ebbs and flows of demand that come from the telcos, so we do have some levers to preserve margin in a lower revenue environment. It's never gonna be perfect, right? We do have some flexibility through, obviously, reduction of subcontractor labor, or renegotiation of rates in a declining environment to keep volume, opportunities for them. There are some levers there. On the wireline side, if we rewind to the beginning of 2022, we talked about some margin pressure because of the geographic expansion that we were undergoing. We opened up, I think it was close to 3 dozen new offices, geographically dispersed across the country, to allow us to provide more wireline services in a more geographically diverse area. Obviously, when you open a new office, month one, month two, you don't have the volume to support all of the fixed costs, so there was some impact to margins last year. You know, those are now much more full from a utilization perspective, and we continue to see more opportunity to drive further penetration from those offices. Really, really have nationwide coverage today. The key around further penetration, it's really around customer partnership, understanding what they need, what's most important to them in terms of their programmatic build-out, and leveraging the size and scale to deliver those results. You know, we're somewhat. We don't see if it's government stimulus or customer-funded, that we don't have visibility to that. We just know that, you know, what we're building for the customer, so that piece doesn't really matter. It's really just having the capabilities in the markets where our customers need to grow, making sure that we reallocate to markets where they have more demand when they ask us to, and then trying to fulfill it from that perspective. Good. Maybe what do you see and hear from your customers that still sort of informs this view of an eventual rebound in, in the wireless side of the business? Yeah. So the base amount of wireless work, just on maintaining the infrastructure, is not something that's new to us, right? So, you know, going back to 4G or 3G, you know, the coverage is done, right? They used to show the maps and say, "Hey, we've got coverage everywhere, and we're done with this investment, and we've got the best 4G network." Now, T-Mobile says they've got the best 5G network. That doesn't mean that, that the wireless infrastructure has to be can be left alone, right? Yeah. There is a significant amount of just base maintenance CapEx, whether it's upkeep or modification of the infrastructure, there is still increasing use in markets where they have to supplement with additional antennas, and that work is, you know, a billion dollars in change for us alone. At our current market share. So we feel just based on the historical spend required to maintain wireless infrastructure, us being flat year-over-year is really not a huge lift. You know, we think that with our size and scale, we are the low-cost provider. So if there is a desire to make the effectiveness or the efficiency of the spend peak, then there's a market share opportunity for us. We don't need that to stay flat, but we do think that's one driver for incremental growth. Beyond that, you know, what is it gonna take to incentivize the carriers to really push that further penetration of 5G, and probably more importantly, from a growth perspective, the small cell or distributed antenna systems that have been talked about in the industry? One is fiber, right? Because every node on a streetlight or a telephone pole has to have fiber connectivity. Because really, the secret of wireless is to get it out of the air as quickly as possible. So that penetration that we've talked about on the wireline side has to be further deployed. But really, then it's what's the use case? How do the, how do the wireless carriers monetize that investment, right? Is it, you know, vehicles talking to each other or to the transportation grid? They have to be able to monetize it and, and it, and drive an additional subscriber base, because it's not gonna be from individuals, consumers, you know, paying more for their cell phones or getting an additional device, you know, which drove some demand in the, some, some investment in the past. Yeah. And maybe just one last one on the communication side. I mean, we'll call it sort of an air pocket here, your confidence and ability to. I think historically, you've done a good job sustaining sort of double-digit EBITDA margins in the business. Sure. Obviously, that will fluctuate your confidence here with what you're seeing in the market. Yeah. I mean, like I talked about earlier, I mean, we've been through some of these demand contractions on the wireless side. Yeah. You know, the nature of the subcontracting, you know, programmatic management affords itself well to. You know, we don't like any of the volatility. Yeah. B ut it is easier than having a, you know, an employee-based workforce that you have to manage that, "Hey, how long. WQ ill this, lower level of activity last, and should we keep that capacity, in-house. Yeah. F or the rebound?" So we feel good about that. And then with the, with the outlook we have on the fiber side, y ou know, we think there should be an opportunity to continue to expand margins on that component of the business, you know, for the foreseeable future. Good. Maybe just shifting to clean energy, and now being several months in, could you talk about some of the synergies you're seeing with the IEA acquisition, revenue and cost synergies between the businesses, now that you're deeper into the transaction? Yeah. Yeah, so there's really a couple that are, that are percolating up, percolating up to the surface. You know, I'd say one is definitely on the customer side. So historically, MasTec's legacy renewable business was, was predominantly non-union. So what that meant is the, the states that we could work in were generally states that were non-union territories. Conversely, IEA, they were double-breasted, so they had both non-union and union capabilities, but preponderance, the majority of their work was in non-union territories. So if we had a big customer that was doing a job in Illinois, right? Historically, we wouldn't be able to bid on that. Now, right, with our consolidated management team, we can say, "Okay, you know, customer, what's your project portfolio? We can execute it on anywhere in the country. So being able to share those opportunities across the segment and not having any geographic restrictions is a big benefit. Additionally, as projects continue to get larger and larger, right, we have some of the larger solar projects that we're looking to execute in 2024. We're planning to execute those across both segments. It's not an IEA job or, you know, a MasTec. Yeah. L egacy job. It's what resources can we bring from both of these entities on a consolidated basis, whether it's fixed assets or management or crews, to make sure that we're effective, productive, and deliver a good, safe project for our customers. So I think those are two big opportunities on the equipment side. You know, there's an anecdotal story that some of the, the leadership told early on around. There were two wind jobs within miles of each other, and as Wanzek was finishing a project, IEA was starting up, and they had to rent some cranes they didn't have access to, but they were sitting there, you know, being broken down on the, on the Wanzek site. Sorry, Wanzek is our, the legacy MasTec renewable contractor. That would've been a perfect opportunity to utilize the owned asset of the consolidated fleet. Yeah. Y ou know, generate revenue with that asset, where it's now sitting there idle, and eliminate the rental cost for a crane. T hat IEA didn't have in their fleet. So, you know, consolidating the views around equipment, consolidating the views around labor resources, huge benefits from a revenue and a utilization side. From a cost perspective, you know, I mentioned the multiple ERP environments. That has some limitation around consolidation of back office until you can work through that. Yeah. But on a lot of the indirect expenses, right? So looking at how do we maximize, you know, fleet maintenance or safety or estimating, right? So that we're getting better utilization out of those individuals, or we're putting people in a, in a different position because we've got excess capacity, or, you know, there's a, a opportunity to redeploy, or in some cases, you know, reduce headcount. It's not. It wasn't the. You know, we talked early on, we didn't talk about a ton of cost synergies. There's gonna be more, but it's not conversely from the Henkels acquisition, where a big component of the value proposition was a reduction in G&A and indirect expense. J ust based on how that organization had developed over time. There's always gonna be some excess, you know, resources in a business, but that's not really the driver for the IEA opportunity. When we get into a single, you know, ERP environment, I think there'll be more opportunities for consolidation, but those initiatives take a little more time. Okay. In the context of kind of the go-to-market strategy for the business segment overall and driving, you know, overall better returns out of the business, what, what are some of the things you, you guys are changing in terms of. Is it customer selection, bid discipline? What are those things that you're doing to drive those margins to towards those long-term targets that you have? Yeah. So there's a couple things. One is just having a consistent view around risk and opportunities in a project, both as you're evaluating them from a, from a pricing perspective during the bid and as you're executing them, right? And so one of the challenges that we've had this year is we had, you know, different management teams, at least for the first half of the year, who evaluated risk differently, who, who, you know, put contingency in their jobs differently. And reconciling those two, as we were trying to come forward with, with our guidance for the segment, has been challenging, right? As we standardize that, it, it allows us to have a much better, much better clarity around the anticipated performance of a job, and, and more importantly, minimize a surprise further on. So that's gonna be an important piece as. Yeah. W e go forward. There's so much activity in the renewable space, that one important aspect is around customer diversification, right? And, you know, there are a lot of great customers. There can be, you know, regulated utilities that do a lot of renewable work, you know, through their non-regulated arm or developers that have built multiple gigawatts. They all have a little bit of, you know, drivers for their business. And, you know, I think it's important, and part of our go-forward strategy is around making sure that we have the right balance there. IEA was probably a little bit, you know, disproportionately weighted towards the developer side. And so then some of the uncertainty that the Inflation Reduction Act has introduced around monetizing tax equity at a higher level has caused some of the delays for their projects, right? Our legacy business does plenty of work for developers, but we also do a lot of work for utilities, so it was more balanced. So, you know, as we look at the business in totality, having the right balance of, of customers so that we can avoid those types of, unforeseen or, you know, variables, right, like, is an important aspect. There will be new things that come into this space because of the demand that there is today for renewable energy, that will change or cause a delay or an acceleration that we have to be prepared for. If we can keep that customer base diversified to some degree, we think we can help minimize some of the impacts, you know, that we saw. from this particular, you know, challenge from a tax equity clarity perspective. And then maybe on that point, it sounds like potentially there should be some more comments coming from the Treasury later this year. Yeah, that's been. Guidance, how impactful do you think that is to your customers' plans? Well, yeah, I think it just gives them clarity so they can move forward. Yeah. Right? And that should be by the end of October. Then people know the box they're operating in and how they can monetize that component of their capital structure, and then we think it moves forward. You know, from the tax equity perspective, that should be off the table. Okay. Maybe on the power delivery side, Paul, maybe just if you could speak to some of your bigger customers in the business, what their plans are for the next few years. I don't think investment in the grid and distribution. Sure. I s an unknown topic here, but I'd be curious to see what you're seeing from some of the customers you're specifically focused on. Yeah. So maybe I'll start on the distribution side or kind of that, you know, the core, you know, grid that most of us see and interact with. A lot of hardening work. You know, we've got a really large presence on the West Coast, post-acquisition of Henkels and Entrin, and there's a lot of talk around undergrounding. You know, I think that is. These are multi-year initiatives that will take a long time to deploy, but incredibly important relative to the risks that those utilities face, relative to wildfire and the age of their infrastructure. So, you know, that's an important topic. Same initiative on the East Coast and in Florida, around storm hardening. You know, that continues to be a focus. You move into the Midwest, you know, you don't think about it as storm as much. I've actually, you know, Intren operates out of Chicago, the amount of winter weather that impacts those lines with ice and just, you know. It's not as in your face as a fire or a hurricane, but. Y ou know, there's a significant amount of work just around infrastructure that gets weighed down or, you know, trees that take down lines. So the consistent theme around hardening and resiliency is very consistent amongst all of our customers. You know, we are fortunate that MasTec qualifies as a minority contractor in basically every state except California. You know, diversity spend is very important to utilities, so that was, for Henkels, for example, the ability to go to customers and say, "Hey, our work for you now qualifies towards your minority spend," a very powerful tool for them, both with procuring more work from their existing customers, as well as opening doors with utilities that they may not have worked with in the past. Then similar to on the clean energy side, we've got a really nice cross-selling opportunity with customers that we've had really good relationships with in one of our operating companies historically. Being able to make those introductions in geographies that are, you know, analogous to other businesses that didn't have those relationships have really paid benefits, and we think will continue to add revenue opportunities to us over time. Okay. I want to touch on oil and gas as well. Just quickly, you've sort of provided some parameters in terms of thinking about the business into next year on the last call. So maybe if you could just speak to what project planning looks like and characterize the opportunity from some of these newer drivers, whether it's renewable fuels, carbon capture, so on and so forth, how real those really are, and context of. Sure. T imeframe over the next couple of years. Yeah. Yeah, so I guess on kind of just the base legacy work, we're seeing a lot more activity, requests for proposals on just traditional natural gas takeaway capacity. It's generally in kind of the southern shales, so it's a lot of activity in Texas and Oklahoma and Louisiana, but that's just the work that we've done historically. There'll be smaller projects. They're not gonna be the large interstate projects that we did kind of, you know, 2015 through, you know, today with the completion, hopefully, of MVP early next year. But good, consistent work, you know, relatively quick turning, relatively quick from bidding to execution, so a lot of that doesn't really even get into backlog. We can, you know, some of it, we can start it in a quarter and have it finished, you know, in the next. But we've been very good historically on generating good margin there. More and more talk around LNG export and some of the transportation requirements to supply those types of facilities as we look at, you know, helping to supplant or support our allies with resources. And as we move into the alternative transportation methods, right, I think carbon capture is, and the transportation associated with carbon capture, gonna likely come to fruition sooner than hydrogen, and we'll come back to hydrogen. But, you know, there's multiple projects in the planning and right of way and procurement stages on carbon capture. There's a chance some of that gets executed in 2024. You know, this is a new type of infrastructure, so like any new infrastructure, they're kind of having some lessons learned as they work through permitting or, you know, the various stages of development. So, you know, there's a chance, but definitely by 2025. You know, there's a lot of support for those projects under the IRA, and very good economics for those developers. And so we think, you know, that should be a really nice supplement to that base level of natural gas transportation for the foreseeable future. You know, hydrogen, to maybe level set, you know, green hydrogen is effectively the production of hydrogen, which can be burned in certain types of, a s a fuel in certain instances from a renewable resource. So it's generally a co-located renewable facility, either solar or wind, coupled with a machine called an electrolyzer, which effectively splits water in two: oxygen and then hydrogen, which is the fuel that can be burned. That hydrogen then needs to be transported to the ultimate use, right? It could be to power a light rail system, it could be to power a municipal bus fleet, or, and most impactfully, the newer generation gas turbines that are being installed have the flexibility to be converted to burn hydrogen, right? So you have to transport it from this hub to its ultimate place of use. So just like natural gas, you know, you can put it on a rail car, you can put it on an 18-wheeler, but the most effective method is through a pipeline, pipeline infrastructure. There's some talk about utilizing existing infrastructure assets. I think most likely, the majority of the transportation based on where these hubs are planned for, are gonna require new pipeline infrastructure as well, and we're really well poised to produce those assets. It's a technology that is proven, but it hasn't been built at the scale that the industry is looking for at a cost that is economical. So that's the stage of that development. It's producing electrolyzers that can produce the quantity of hydrogen to really be impactful in the overall, energy generation landscape. That's what we think is being worked through in the next, you know, 12-18 months, and then there's a huge opportunity for us, really, on the renewable side and on the pipeline side, you know, for years to come. So we're really excited about that, and we think we're, you know, we're positioned better than anyone else because of our, you know, our scale on pipeline infrastructure to really help drive the deployment of that new technology. Good. I wanna sneak my CFO questions in, and maybe top-level kind of thinking, you know, been topical with investors. You've talked about where you wanna get the leverage to proportion of variable rate debt to fixed, especially in this cost of capital environment. I know this is something you've heard plenty about. What does it take to get to the targets you wanna get to for that piece of the pie on the balance sheet? Yeah. There's. I'll call it, I'll call it kind of two-step. One, we've said that we wanna be, you know, at or below 2x-2.5x leverage by the end of the year. We think we've got a pretty clear path to that, both with some nominal debt reduction and with the growth of, of EBITDA that we expect in 2023. There's no, you know, herculean effort around working capital metrics or other changes to the, the nature of the balance sheet to achieve that, but we think that's kind of the, you know, step one. From there, you know, our stated leverage target with the rating agencies, and our various constituents is, you know, is under 2.5x. I kinda think about that as, you know, 2x plus or minus a quarter turn, right? Yeah. We've done that even prior to the investment-grade rating in 2021. We kind of operated in that framework for a long time, and that's really bounces around based on capital allocation, right? So, once we get to that target level, you know, we'll return to kind of our historical capital allocation method of being opportunistic around share repurchases or more tuck-in M&A activity or investing in the organic growth of the company, like we're doing currently. But we think that's a very comfortable level for us, a very comfortable level relative to our rating and an area that we've, you know, been at historically, absent the leverage uptick from recent acquisitions. You know, with the IEA acquisition, we largely funded it with prepayable debt. That was intentional because we wanted the flexibility that it affords us as we, you know, move into this deleveraging environment. I think you'll see us, you know, outside of the nominal reduction, I think you'll see us utilize more fixed- rate instruments over time with the flexibility we have along the tenor chain, as an, as an investment-grade issuer, to, you know, utilize those tenors, rather than historically, we've, we've relied more on term loans or, or the, or the credit facility. So I think you'll see us shift more of that mix. You know, we have about $1.3 billion of fixed- rate debt today between the two tranches of bonds and, and our equipment debt. You know, where we expect leverage to be in the near- in the, you know, next 3 or 4 quarters, that's probably roughly 50%. I think you'll see maybe a little bit of rebalancing from there. But I don't, I don't expect to see a, you know, a massive shift. Yeah. Y ou know, towards, towards fixed- rate at this point. Good. I think we hit our budgeted time. Paul, appreciate it. Thanks, everybody.