MasTec [MTZ] Conference call transcript for 2022 q1
2022-05-06 17:52:05
Fiscal: 2022 q1
Operator: Welcome to MasTec's First Quarter 2022 Earnings Conference Call, initially broadcast on Friday, May 6, 2022. Let me remind participants that today's call is being recorded. At this time, I'd like to turn the call over to your host, Marc Lewis, MasTec's Vice President of Investor Relations. Marc?
Marc Lewis: Thanks, Kevin. Good morning, everyone, and welcome to MasTec's first quarter 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 industry where we operate. These forward-looking statements are the company's expectations on the day of the initial broadcast of this conference 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 today's call. Today's remarks by management, we will be discussing adjusted financial metrics 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 press release. With us today, we have Jose Mas, our Chief Executive Officer; and George Pita, our EVP and Chief Financial Officer. The form of the call will be opening remarks and announcements by Jose, followed by a financial review from George. These discussions will be followed by a Q&A period, and we expect the call last about 60 minutes. We have a lot of important things to talk about today. So, I'll turn the call over to Jose so we can get started. Jose?
Jose Mas: Thanks, Marc. Good morning, and welcome to MasTec's 2022 First Quarter Call. Today, I'll be reviewing our first quarter results as well as providing my outlook for the markets we serve. First, some first quarter highlights. Revenue for the quarter was $1.954 billion. Adjusted EBITDA was $99 million, adjusted earnings per share was negative $0.03, and backlog at quarter end was more than $10.6 billion, a record level and the first time we've exceeded $10 billion. In summary, results were generally in line with revenue, EBITDA and EPS slightly ahead of our expectations. Before getting into specifics about our quarter or guidance, I'd like to offer my perspective on MasTec's business today. MasTec is currently in the midst of a significant transition as it relates to our business mix and earnings. Based on the anticipated weakness in the oil and gas segment that started around the time of the pandemic in 2020, we set course to invest in those areas of our business where we felt we had excellent long-term growth opportunities. In addition to our organic initiatives, we made a number of acquisitions in 2021 that repositioned MasTec and enhanced our service offerings. Based on these investments, we expect significant revenue growth and diversification in 2022 and beyond. As an example, non-oil and gas revenue totaled $4.5 billion for full year 2020. In 2022, we expect these revenues to approach $7.8 billion, on over 70% anticipated growth rate in 24 months. We're even further encouraged by the level of current and planned investments we are seeing from our customers. We are aggressively responding to our customers' needs and request to ramp to meet their long-term build plans. This gives us tremendous confidence and the decisions we've made over the last 2 years will drive significant shareholder appreciation. I believe our first quarter results begin to demonstrate our stated goals. First quarter, non-oil and gas revenues and earnings both grew over 65% compared to last year's first quarter. While we still have considerable work to do to reach the level of performance that we expect of ourselves, we are making progress. Yesterday, in our earnings release, we updated 2022 guidance. Our guidance was impacted by 2 primary factors: First, the delay of completion of the Mountain Valley Pipeline, which was announced earlier this week; and second, the impact we are seeing in our solar business from the Department of Commerce anti-circumvention investigation that is currently ongoing in the solar industry. We expected 2022 to be a challenging year for our oil and gas business as new project activity significantly declined during 2021. While recent world events and increased commodity prices should have a positive impact on the need for new pipelines, we don't expect a meaningful impact until 2023. In the meantime, we were expecting to complete the Mountain Valley Pipeline project in 2022. That project, however, has now been delayed until a second half of 2023 in-service date and in our updated guidance released yesterday, we have removed that project from our current year guidance. In addition to the pipeline project, we reduced our guidance expectation for solar revenues within our Clean Energy segment. Solar has been a focused area of growth for us that we believe offers great long-term opportunities. Although we expected solar revenues in 2022 to nearly double 2021 levels. We are now moderating our view because of the Department of Commerce's anti-circumvention investigation into 4 countries: Cambodia; Malaysia; Thailand; and Vietnam. These 4 countries represent approximately 80% of all of the solar panels sold in the United States. The risk of the investigation would be added tariffs that could range anywhere from 50% to 250% of the total panel costs. Further complicating the issue is that these tariffs would be retroactive to February of this year. This investigation has made it nearly impossible to move forward with a project that was dependent on these panels. Our preliminary decision on the investigation is due by August 26. A decision will provide clarity for developers who today have too much of an unknown risk. While we expect activity to quickly ramp following a decision, many of the panels that were slated to be shipped to the U.S. are now being sent to other countries, potentially delaying shipment to U.S. projects following a decision. Based on this, our guidance now assumes roughly $350 million in solar revenue, a reduction of $250 million from our previous guidance based on projects that are either ongoing or using panels that are not affected by the investigation. We are hopeful that this guidance will prove to be conservative, but it's our best estimate today. Our quarter-end solar backlog is approximately the same as the $350 million revenue guidance number. To put this impact in perspective, aside from our stated backlog, we have been either verbally awarded or are in negotiations for another nearly $1.5 billion of solar work that was to be performed partly in 2022. Thus, regardless of the impact in 2022, expected resolution of this issue should not change our aggressive growth targets that we expect in our 2023 solar business. In addition to the long-term solar opportunities, we're also encouraged about the progress we've made in growing and expanding our power delivery business. We made 2 transformative acquisitions in that business last year, having acquired INTREN exactly one year ago yesterday, and Henkel's and McCoy at the end of the year. Integration efforts are ongoing and we're encouraged by both our progress and more importantly, the long-term potential of the business. Customers have responded very well to our more robust service offerings, and we are encouraged by the potential opportunities that exist for our power delivery business today. More importantly, we're encouraged by our customers' desire to see us continue to grow and expand as we work to meet their needs. Collaborative efforts with our customers on reliability, grid hardening, renewable connectivity and EV charging provides us with excellent opportunities for long-term revenue growth. Now, I'd like to cover some industry specifics. Our Communications revenue for the quarter was $664 million, a 17% year-over-year increase, and we expect full year revenue to grow by over 20%. Backlog at quarter end increased 31% year-over-year and by over $300 million sequentially. We are rapidly expanding both our geographic presence as well as adding resources to meet our customers' demands. We added over 2,000 team members to this segment year-over-year and nearly 800 sequentially. We have experienced a significant amount of demand related to fiber expansion opportunities, both from existing customers as well as a number of RDOF-funded new entrants. As a reminder, the Rural Digital Opportunity Fund, or RDOF, will provide $20 billion of funding over the next 10 years to build and connect gigabit broadband speeds in underserved rural areas. Only about half of those funds have been awarded. Additionally, in October of 2020, the FCC established a 5G fund for rural America which will provide up to $9 billion in funding over the next decade to bring 5G wireless broadband connectivity to rural America. Finally, the infrastructure bill included an additional $65 billion for broadband funding. These funds, the majority of which will be spent in the future in addition to the increased private spending by wireless companies, ILECs and cable TV operators are creating an environment for significant incremental spending in the years to come. As one of the leading turnkey contractors of choice, we are investing and expanding to meet this increased demand. We are also gearing up in our wireless markets as we expect significant project activity acceleration in the second half of 2022, as we've previously communicated. Moving to our Power Delivery segment. Revenue was $650 million versus $134 million in last year's first quarter. First quarter of 2022 included results both for INTREN and Henkels and McCoy. The segment is on pace to generate approximately $2.6 billion in annual revenue with substantial growth opportunities for the future. We believe the scale we have been able to create positions us as a leader in the market with great opportunities ahead. With changes in electrical transmission and distribution needs, our customers have a clear goal of modernizing the power grid with a focus on reliability, fire hardening, renewable connectivity and growth in electrical vehicle usage. Our combined service offering allows us to provide our customers with cost-effective solutions at scale to meet their demands. We're excited about our competitive position in the market, and this clearly is a segment that is reshaping how MasTec will look in the future. We are confident that margin performance will continue to improve and are becoming more optimistic on the long-term potential margin outlook for the segment. Moving to our Oil and Gas segment. Revenue was $211 million versus $726 million last year. After the adjustment in guidance for the Mountain Valley Pipeline, we expect revenue in this segment of approximately $1.4 billion versus nearly $2.6 billion last year. Our current 2022 revenue expectation does not include any large project construction activity and demonstrates what we believe will be the trough level for this segment. Discussion for future projects are very active, approaching levels we haven't seen in a few years. This, coupled with carbon sequestration and hydrogen projects give us great opportunities to build off of our revenue base level. Moving to our Clean Energy and Infrastructure segment, revenue was $436 million for the first quarter versus $350 million in the prior year, a 24% year-over-year increase. With our reduced solar guidance, we expect full year revenue to approximate $2.2 billion, a roughly 15% increase over 2021. Backlog in this segment was up 22% year-over-year. We believe our diversification is our strength in this segment as we're capable of meeting any of our customers' demands. While renewable has been our focus, and we've discussed our business -- our solar business earlier, we've made great strides in our civil infrastructure business, along with baseload generation projects we built. For example, we're now in our second advanced class turbine installation project. These turbines are capable of running both gas and hydrogen, and we believe our success on this project will lead to many more opportunities with this utility customer. To recap, we've had some curveballs thrown our way so far this year. While we've been managing through these challenges, I want to reiterate how strongly I believe that we position MasTec in a way that will allow us to enjoy significant long-term opportunities with our customers. While 2022 will be more challenging than we originally expected, I think our second half of 2022 performance will demonstrate both MasTec's margin and growth potential. In light of that, we started buying back shares at the end of the first quarter. It's important to note that our philosophy around buybacks has been to try to buy back shares opportunistically. As an example, our last 3 buyback programs were executed years ago at average prices of $19, $44 and $33 a share. I'd like to again thank the men and women of MasTec for their performance. I'm honored and privileged to lead such a great group. The men and women of MasTec are committed to the values of safety, environmental stewardship, integrity, honesty and in providing our customers a great-quality project at the best value. These traits have been recognized by our customers, and it's because of our people's great work that we've been able to position ourselves for continued growth and success. Before turning the call over to George, I'd also like to thank the investment community. 15 years ago this quarter, I had the opportunity to become CEO of MasTec. We've been fortunate to see and do a lot over the last 15 years. And while I'm extremely proud of what we built over that time, I truly feel the best is yet to come, and I couldn't be more excited about what lies ahead in the next 15 years. I'll now turn the call over to George for our financial review. George?
George Pita: Thanks, Jose, and good morning, everyone. Today, I'll cover our first quarter financial results as well as our updated 2022 guidance. 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, our SEC filings or on our website. First quarter results were slightly above our guidance, with revenue at $1.95 billion, and adjusted EBITDA of $99 million, which was approximately $9 million above our guidance, primarily as a result of higher revenue levels. As previously communicated, first quarter 2022 results reflect a number of factors that make year-over-year comparisons difficult to assess, including: a seasonally slow quarter accentuated with project start-up costs; operations and integration activity on recently completed fourth quarter acquisitions; and a significant year-over-year decline in our Oil and Gas segment operations. It is worth noting that the revenue diversification strategy initiated in 2020 has begun manifesting itself during the first quarter, with 58% of our first quarter revenue derived from recurring master service agreements versus only 28% during the first quarter last year. Most of this increase is derived from recurring programmatic utility services in our expanded power delivery segment. We continue to expect a significant shift in our end market operations during the balance of 2022 with accelerating revenue and earnings in our non-oil and gas operations, namely the communications, Clean Energy & Infrastructure or Clean Energy and Power Delivery segments. This trend should become more evident during the second quarter, supporting our expectation that second half 2022 adjusted EBITDA will exceed last year's level. As we have previously indicated, we believe 2022 is a transition year, and that performance in the second half of 2022 will serve as a precursor towards a strong 2023. To reiterate Jose's comments regarding our updated 2022 guidance of $9.2 billion in revenue. The change in view is primarily composed for approximately $250 million in expected solar project delays caused by panel delivery interruptions as a result of the U.S. Department of Commerce anti-circumvention investigation announced in late March and approximately $500 million in large oil and gas project revenue shifting from the second half of 2022 into 2023 as a result of regulatory and judicial permitting impacts. We expect both of these issues will be resolved in 2022 and will provide further momentum to expected strength in 2023. In support of our belief of future growth opportunities, as of yesterday, we have repurchased approximately 680,000 MasTec shares for a total cost of approximately $50 million, an average price of slightly under $73. This leaves us with approximately $109 million, in remaining open share repurchase authorization from our Board of Directors. Now, I will cover some detail regarding our segment results and expectations. First quarter Communications segment revenue was $664 million, with an adjusted EBITDA margin rate of 6.2% of revenue. This performance was generally in line with our expectation and includes the impact of various new wireline market start-up costs for RDOF work and lower levels of wireless revenue as 5G deployments are expected to ramp this summer. We expect accelerating Communications segment year-over-year revenue growth in the second quarter in the mid to high 20% range, with improved adjusted EBITDA margin rate performance in the mid to high 11s. Our annual 2022 guidance for this segment is essentially unchanged, with annual Communications segment revenue ranging between $3.1 billion to $3.2 billion, and adjusted EBITDA margin rate in the low to mid-11s. Within the second half of 2022, we expect higher revenue and adjusted EBITDA margin rate performance in the third quarter based on expected normal seasonality. First quarter Clean Energy segment was $436 million, and adjusted EBITDA margin rate was 2.5% of revenue. This performance was generally in line with our expectation based on a seasonally slow quarter with low overhead absorption. Based on project timing, inclusive of expected solar project delays, we anticipate that second quarter Clean Energy segment revenue will approximate $500 million, with adjusted EBITDA margin rate in the low to mid-4% range. Our annual 2022 Clean Energy segment revenue expectation, inclusive of approximately $250 million in solar project timing delays from the Department of Commerce solar panel investigation is now between $2.1 billion to $2.2 billion, and our adjusted EBITDA margin rate expectation is in the high 5% to low 6% range. Within the second half of 2022, we expect slightly higher revenue levels in the third quarter based on project timing and seasonality while expecting a slightly higher adjusted EBITDA margin rate in the fourth quarter based on expected project completion timing. While 2022 project activity has been hampered on the wind side by a lack of transmission capacity and on the solar side by panel delivery interruptions, the expected future demand for renewable power generation is unprecedented, and we believe that once logistical and tariff issues that are affecting 2022 are resolved, 2023 and beyond should provide significant future revenue and adjusted EBITDA growth opportunities. As a reminder, last quarter, we renamed our Electrical Transmission segment to Power Delivery to better reflect our expanded service offerings and capacity in the utility service market, including electrical and gas distribution, which occurred from 2021 acquisitions. We firmly believe that our expanded geographic operations, customer reach and scale provide a compelling suite of service offerings to support our customers' needs as they work to transition to renewable power generation and harden the current grid. First quarter Power Delivery segment revenue was $650 million, and adjusted EBITDA margin rate was 8.2% of revenue. This performance slightly exceeded our expectation for both revenue and adjusted EBITDA margin rate. Within this segment, acquisition revenue, primarily comprised of Henkels and INTREN, generated approximately $540 million in revenue, mostly from recurring, programmatic MSA utility services spend. As I previously stated, these acquisitions significantly improved MasTec's revenue stream profile, both increasing the level of recurring MSA revenue and diversifying our customer base. We anticipate that second quarter Power Delivery segment revenue will approach first quarter levels with a slight sequential improvement in second quarter adjusted EBITDA margin rate. Our annual 2022 Power Delivery segment revenue expectation remains between $2.5 billion to $2.6 billion. And our annual adjusted EBITDA margin rate expectation remains in the high single to low double-digit range. First quarter Oil and Gas segment revenue was $211 million, and our adjusted EBITDA margin rate was 11.1% of revenue, generally in line with our expectations. As expected, this was a substantial year-over-year decrease with a substantial revenue decline, causing adjusted EBITDA to decrease approximately $144 million when compared to the first quarter last year. We expect second quarter Oil and Gas segment revenue will accelerate to the low $300 million range with adjusted EBITDA margin rate slightly improving on a sequential basis. Our annual '22 guidance view for this segment now assumes that approximately $500 million of selected large project activity, initially expected to restart in July will instead move to 2023 due to judicial and regulatory permitting issues. Accordingly, our annual 2022 revenue guidance for this segment approximates $1.4 billion to $1.5 billion, and adjusted annual EBITDA margin rate is expected in the low to mid-teens. Within the second half of 2022, we expect higher revenue levels and adjusted EBITDA margin rate performance in the third quarter as compared to the fourth quarter due to expected normal seasonality. First quarter adjusted corporate segment costs were approximately $37 million or 1.8% of consolidated first quarter revenue. Our first quarter consolidated GAAP, general and administrative expense, inclusive of $13.6 million in acquisition and integration costs, was 7.4% of revenue compared to 4% of revenue a year ago. As we have previously indicated, we are currently integrating and optimizing certain corporate and G&A functions for recently closed 2021 acquisitions, and expect higher annual 2022 corporate costs while this process is underway. Adjusted annual '22 corporate segment costs are expected to approximate 130 to 150 basis points of revenue. We are pleased with the integration progress we have made to date and expect that we will be substantially complete with these efforts during our third quarter. We expect to incur approximately a cumulative $26 million of acquisition and integration costs in the second and third quarters, with a higher level of expected cost in the second quarter. As I mentioned earlier, our efforts to diversify our customer base and increase the level of revenue generated through recurring MSA work are clearly evident in our first quarter 2022 results. For the first time since I have been at MasTec, no single customer represented more than 10% of first quarter 2022 consolidated revenue. And our top 10 customers represented only 42% of our total consolidated revenue. While it's possible that AT&T might once again exceed 10% of total revenue threshold, it is clear that a significant diversification of our customer base has occurred. Also, first quarter 2022 revenue derived from master service agreements reached 58% of our total revenue compared to only 28% a year ago. And this increase is primarily derived from recurring type utility service spend from our 2021 acquisitions, greatly increasing the repeatable nature of our revenue profile. As of March 31, 2022, we had record total backlog of approximately $10.6 billion, up sequentially approximately $700 million, and up approximately $2.8 billion, when compared to the same period last year. Importantly, this represented record first quarter backlog levels across communications, clean energy and power delivery segments, demonstrating the end market revenue shift that is occurring within our operations. That said, as we've indicated for years, backlog can be lumpy as contracts burn off each quarter and new contract awards only come into backlog at a single point in time. Now, I will discuss our cash flow, liquidity and working capital usage. In summary, our long-term capital structure is solid with no significant near-term maturities and ample liquidity, giving us full flexibility to take advantage of any potential growth opportunities to maximize shareholder value. As indicated in yesterday's release, we've invested approximately $50 million in MasTec share repurchases thus far in 2022, acquiring 680,000 shares at an average price slightly under $73 per share. We have approximately $109 million in the remaining open share repurchase authorization from our Board of Directors. We ended the quarter with approximately $1 billion in liquidity and net debt, defined as total debt less cash and cash equivalents at $1.69 billion, essentially flat versus our year-end level. This equates to a comfortable 2.0x trailing 12-month leverage metric. First quarter cash provided by operating activities was approximately $132 million. We ended the first quarter with DSOs at 89 days compared to 80 days for last year's first quarter, and this includes recent fourth quarter acquisitions, which were slightly higher than the consolidated total. As we look forward towards the balance of 2022 and work towards acquisition integration, we anticipate second and third quarter DSOs will range in the high 80s to low 90s, with the continued expectation that DSOs will fall back into our target range of the mid- to high 80s by year-end 2022. We currently anticipate that annual 2022 cash flow from operations will approximate $600 million to $650 million, and expect year-end 2022 debt levels to be slightly down compared to year-end 2021 levels. Within this expectation, we anticipate that higher levels of second and third quarter revenue will consume working capital and increase borrowing levels by 10% or so when compared to the first quarter levels before decreasing again in the fourth quarter. Moving to our updated 2022 guidance. We project annual 2022 revenue of approximately $9.2 billion, with adjusted EBITDA ranging between $850 million to $875 million, and adjusted diluted earnings ranging between $4.22 and $4.44 -- sorry, excuse me, $4.47. As I previously mentioned, the primary changes in our revenue guidance from our previous expectation related to $750 million of solar and large project oil and gas activity that is now expected to shift into 2023. As I will discuss later, the adjusted earnings per share view also includes incremental interest expense of approximately $0.09 per adjusted diluted share from higher expected short-term borrowing rates over the balance of 2022 from recent and forecasted Federal Reserve rate actions. For the second quarter, we expect revenue of $2.2 billion, with adjusted EBITDA of $177 million or 8% of revenue, and adjusted diluted earnings per share of $0.72. As we have previously provided some color regarding our annual 2022 segment expectations, I will now briefly cover some additional guidance expectations for modeling purposes. We anticipate net cash CapEx spending in 2022 at approximately $150 million, with an additional $220 million to $240 million to be incurred under finance leases. And this level reflects some initial CapEx investment for 2021 acquisitions. We are revising our expectation for annual 2022 interest expense levels to $76 million to incorporate higher short-term interest rates from both recent and expected Federal Reserve actions during 2022. For modeling purposes, estimated 2022 share count is 75.8 million shares, and this only includes the impact of share repurchases to date. As a reminder, if you model additional share repurchases, also consider the interest expense impact of additional borrowings. We expect annual 2022 depreciation expense to approximate $350 million, 3.8% of revenue. And lastly, we expect that annual 2022 adjusted income tax rate will approximate 24.5%. This concludes our prepared remarks. I'll now turn the call over to the operator for Q&A. Operator?
Operator: Our first question today comes from Justin Hauke of Baird.
Justin Hauke: Great. So first of all, I appreciate all the color on the solar and the MVP issue. That makes it pretty clear as to what was flowing through. I did want to clarify, maybe I missed it, but just on the backlog impact of that, I think you said that there's $350 million of solar in there today, and that's the stuff that's not impacted by the tariffs, and that's mostly '22 solar work. But did you take out $250 million of the work that you were previously expecting? And then the same thing on MVP, the $500 million that got pushed into 2023, is that -- since you only have 18 months backlog, is that fully in your backlog at this point?
Jose Mas: So Justin, a couple of things. On the solar side, we've got a lot of jobs that we've either been verbally awarded or in negotiations that we currently -- without a start date, we're not going to put them in backlog. So the balance of the work that we expected to perform in 2022 was going to be added to backlog. So nothing was ever actually taken out of backlog. The stuff that kind of made it in backlog in Q1 is what we expect is going to be completed in 2022. We didn't add any other projects awarded that we don't actually have an understanding for start date yet. So there was no negative impact to backlog related to that issue, other than the positive that would have come from projects being awarded that would have been done in 2022. On the oil and gas pipeline side, we did not remove the Mountain Valley pipeline from backlog as we still expect it to complete within the 18-month period of our backlog view.
Justin Hauke: Okay. All right. And then, I guess -- my second question is just on the oil and gas, and you talked about at least from a revenue standpoint that this is kind of the trough because there's no large projects that are in there. I'm just wondering on the margin, the low to mid-teens EBITDA margin? Is that also a trough margin? Or is there under-absorption in that to where -- if you stayed at this level, would the margins otherwise be higher if you were rightsized for MVP? Or is that kind of a project level margin?
Jose Mas: I mean there's no question, right, that we're under absorbed. I think we're -- irrespective of what's happening in the market this year, we feel that 2023 is going to improve considerably. Based on the activity that we're seeing across all of our customers. I think today, the sentiment is dramatically different than it was months ago. I think there are a lot of projects that are in queue. The problem is that it takes time to get them from queue to construction. Some of it is just being able to order pipeline and the amount of time it takes to get it delivered. So we expect '23 to be a lot better. And thus, we've got a lot of costs that we're incurring today based on the fact that we know we're going to be able to put a lot of people back to work in 2023. So it's definitely not a margin profile that is optimized by any stretch of the imagination. If we didn't think that '23 would be better, if we didn't see future projects coming, there's no question we would cut more costs than we already have.
Operator: Our next question comes from Neil Mehta of Goldman Sachs.
Neil Mehta: Jose, George, team, the first question was around share repurchases, and thanks for the color and good to see you guys. In the market given the recent stock price performance, can you just talk about your philosophy around share repurchases that you gave a little bit of color about how you historically have approached it? And is there an opportunity to be aggressive to the extent that market volatility continues here through the balance of the year?
Jose Mas: It's something that we always consider, obviously when you look at what we've done over the course of many years, we really only buy shares when we think that there's something with a story that either we think is misunderstood or where we think the value isn't really aligned with the longer-term opportunities, right? So we go back to 2015, we were able to buy shares at $19. In that '18, '19 time frame, we bought them at $40. And if you -- and then right at the beginning of -- during the pandemic shortly thereafter, we bought a lot of shares because we felt that just the progress of the business, what we were seeing, what we think we'd be working on the earnings profile that we were expecting longer term, we think, created an enormous amount of value and an opportunity for us to do that. And quite frankly, we feel the same way today, right? We know that '22 is going to be a challenging year. We know that it was always going to be a transition year. We had a lot of things coming in and out this year. But internally, we're incredibly positive about our future and where we think we can take it. So we feel that if we perform and we execute on our plan, our earnings profile is going to change dramatically, and we think that the stock today is relatively cheap to where it's going to be, and that's why we started buying back shares. So that's our philosophy. That's really when we jump into the market. We'll see what happens, right? And to the extent of capacity, I think we have a lot of capacity to do what we think is right ultimately for the business. So it's a decision. We've got to look at investing in buybacks. We've got to look at what's potentially out there inorganically. We've got to look at the organic growth opportunities that we have, and we have to allocate capital. And again, I think historically, we've really only allocated towards buybacks when we feel there's something disjointed about our stock price relative to the opportunities that we see ahead.
Neil Mehta: That's helpful, Jose. And I guess the follow-up is an investor conversations this morning. One of the question marks is as we think about your full year EBITDA guidance, it's very much back-half weighted. And so when you see that, there's always questions about confidence around execution and ability to hit the number. Can you just give the market a little more color about what gives you confidence around the guidance? And what happens in 3Q relative to 2Q or the back half relative to 2Q to get that EBITDA acceleration?
Jose Mas: Look, we spend a lot of time going through that. Obviously, we historically haven't really made big adjustments to guidance. So this was something that we took very seriously. We spent a lot of time on. We looked at it on a month-by-month cycle. So we -- it wasn't just quarter-to-quarter for us, but we looked at how things were moving from April to May, May to June, June to July, what the things that had to happen for us to be able to attain our guidance relative to that. And I think we feel incredibly comfortable, right? I think we're going to see a lot of acceleration in the second part of our second quarter. It may not be evident as we release financials, but it will be evident to us internally as the months go by. We know what projects we have booked. We know what projects we're starting. So we've got a very high level of confidence to the balance of our plan to what we think we can achieve in the second half of the year. And more importantly, I think -- and we've been saying this for a long time, right? We knew that the second half of this year was going to be a really good part of the year for us. We're excited about what it's going to mean long term. We can't wait to demonstrate what we think the revenue growth will be and more importantly what the margin profile will look like in the second half. And ultimately, what that means for 2023 and beyond as people get to get a fairly good look at the business in a more normalized state without all of the ins and outs and the noise that we have as we transition from being a very business that had a lot of EBITDA related to oil and gas, which has now shifted to being a much more diversified earnings stream, and we're pretty proud of that.
Operator: Our next question comes from Alex Rygiel of B. Riley.
Alex Rygiel: And really nice quarter. Jose, congratulations. A couple of questions. First, I think it's actually a big positive here for us to see MasTec at sort of a base level of business here with a majority of the revenue coming from reoccurring. What I'm excited about here is what we can layer on top of that over the next couple of years. And you've mentioned a number of sort of newer growth opportunities such as EV charging, carbon capture and some new customers within communications. Can you expand upon some of those sort of new opportunities that are maybe not in the next 6 months, but over the next 2 to 3 years?
Jose Mas: Sure, Alex. We keep saying it, and it's quite remarkable to us what's happening in the industries that we serve, right? When you think about each one of our segments in telecom, it's -- the world is changing, right? I mean when you see the amount of dollars that are being invested by the government on broadband expansion plans, when you look at what all the private guys are doing, both from a 5G perspective and a fiber perspective, how they're viewing their businesses, totally differently long term than they've traditionally done. I mean we're -- the network plans of the future are going to be so vastly different than anything we've ever seen before. And it's an incredibly exciting time to be in these industries. And I think the opportunities, the new businesses that are going to get created from them are far beyond anything we could have imagined. The same thing in power delivery, right? We are going through an energy transformation in this country, how power is generated, how power is delivered, how power is used. It's impacting every single part of the energy chain. And luckily, over the course of the last number of years, we've been able to build out a service offering that pretty much touches it all. So, I think not only are we going to enjoy the increased revenues for the work that we've traditionally done, but all of these new types of services that are being created. I think the easiest one for people to understand is really electrical vehicles because we see them on the street. But there's so much more happening to the grid, it is different than what we've traditionally done. When you think about battery backups, battery power and all of the things that have to happen, a lot of the technologies that's being installed in the grid, which, again, is totally different than anything we've historically seen in our Clean Energy and Infrastructure business and everything from roads to bridges to what's happening in renewables to what's happening with baseload generation. I think there's a new found understanding of how important baseload generation is in every one of our customers is going to have some sort of that. These new dual-sourced engines that burn gas and hydrogen, I think, are going to be an absolutely huge part of the generation chain going forward. And we're privileged to touch so many of these different areas that are going to think, are going to offer tremendous opportunities for growth for us. So it's just an incredibly exciting time to be part of these different industries.
Alex Rygiel: And then lastly, how conservative were you in revising your guidance for the uncertainty in the solar market? And do you see there to be opportunities to complete some of these projects may be in phases whereby you complete Phase 1 and then you come back 3 or 6 months later and it's still the solar panels?
Jose Mas: So the answer to the latter part of the question is yes, right? I think that some customers, especially jobs that are underway, they're having to make do and they're having to try to make the best financial decisions that they can, right? This -- aside from that, it is a serious issue, right? We've got so many unknowns related to those development projects. They don't have the capacity to be able to pass those incremental costs along. So until there is certainty, the industry is going to slow down. This isn't -- I don't think it's -- at first, I think there was a lot of noise. There was a lot of doubt. A lot of people thought the industry could figure our way through it. I think right now, Department of Commerce has to make the decision. The good thing is, I think it's gotten tremendous political coverage. It's become a political football. This could destroy Biden's whole energy thesis. And because of that, I think sanity is going to prevail. And I think we've seen the Secretary of Energy in the last 2 weeks, to be very critical of what's going on, be very frustrated with the Department of Commerce. There's a lot of pressure on Commerce. They've put out some recent letters here in the last few days that I think they're feeling the pressure, and I think there's going to be a quick decision. So the question is going to be all about what does the decision saying ultimately, how fast does the market come back. Again, there is -- what this is going to drive is an incredible amount of pent-up demand. And when the spigot turns back on, it's going to be flowing and everybody is going to have to react, and I think it's going to create amazing opportunities. From a conservative nature of guidance, look, I think we provided the best level of guidance that we could today. We're hopeful that some of these things turn in our favor, and we're able to talk about how conservative this guidance was, but I think it's realistic, right? So I think we've taken a realistic approach to the business to the challenges that are in front of us. We think we're doing everything we can to mitigate them and we feel good about our ability to hit it.
Operator: Our next question is from Marc Bianchi of Cowen.
Marc Bianchi: I think I heard in the prepared remarks that the solar backlog was $350 million. So that would imply it's kind of 20% of the division's backlog. Can you talk about what the rest of the backlog is? Is it all wind? Or what types of projects are there? And then what's the difference in execution on those types of projects? Or some relatively higher or lower risk? And what does the margin profile look like relative to one and another?
Jose Mas: Sure. So we've -- I mean we've talked about the diversity in that segment for a long time. I think it's really the strength of that business. Wind is a huge component. It's where we got started. It's still a primary source of revenue for that market. But we've grown our civil infrastructure piece a lot. We made the acquisition of a company called FNF probably 1.5 years ago now, which is really a civil infrastructure play that works on predominantly roads and bridges. That's been an incredibly well performing acquisition for us. They've done a great job of building and growing their business. It was really -- the thesis behind that was what we thought was coming with the infrastructure bill. It was really our first foray into that business, and I think it's -- that's been a business that's performed above segment averages since we've owned it. The industrial side of our business. And when I say that, I talk a lot about a lot of the -- when we talk about the advanced class turbines and the installations we're seeing across utilities, it's a huge driver of the future of our business and what we're seeing. Again, we think baseload generation is garnering an enormous amount of attention. I think this is the cleanest form of baseload generation. I think it's truly revolutionary. And for us to have been involved in a couple of the first projects ever built in this country, I think, give us a tremendous runway in terms of what we're going to ultimately be able to do with that business. So I'd say the backlog is frankly composed of all 3 of those components. It's work that we expect to get done within the next 18 months, a lot of it within the next 12 months. So it really creates a lot of the thesis and basis for the revenue targets that we've laid out today for that business.
Marc Bianchi: Okay. And am I right to interpret the margin guidance there that you ought to be getting into sort of the high single digits by the time we get to fourth quarter? And if that's right, how does that set you up for '23? Should we be thinking that, that's kind of the level you should be at in '23 in that business?
Jose Mas: And that's what we've been saying for a long time, right? We've been talking about our growth, our -- the investments that we've made in growing those different diversification plays within that industry. I think you're going to see a huge margin shift in that business in the second half. So I think you're accurate on your assessment. And I think that will be a margin profile that we strive to perform on a full year basis in '23.
Operator: Next question today comes from Jamie Cook of Credit Suisse.
Jamie Cook: I guess 2 questions Jose, strategically as you're thinking about just the oil and gas business and what potentially getting better in 2023, 2024. At the same time, it's a fairly cyclical business, volatile business, while starts and stops to projects, I mean, do you think over time, business just given the risk it creates earnings and cyclicality? And then I guess my second question, to what degree as we're thinking about the project that's more sort of delayed this year, to what degree that -- should we think about that would be additive to 2023?
Jose Mas: Sure. So Jamie, I think I'd say a couple of things. First, when we think about oil and gas, right, and the nature of that business since we've owned it, I'd argue that while cyclical, it's been cyclical to the upside, right? I mean it's a business that had dramatic growth for us from the -- literally, from the 2012, 2013 time frame all the way to '18, '19. So it had an amazing run. There's no question that since the pandemic, that business has changed, right? The dynamics of that business, the expectations of that business, everything we were seeing around clean energy and all of the climate change goals that were being talked about. But I think there's also been a fundamental change, right? I think there's definitely been -- the realization of the importance of baseload power in this country, I think that gas is going to drive that to a large extent. I think with all of the recent developments that have happened between Russia and Ukraine and the need for natural gas around the world, and the U.S. is positioned in that and the potential for the U.S. to export LNG around the world. I think that the sentiment around that business has radically changed. I think now when you -- now you start reading a lot of articles to talk about the lack of pipeline capacity and the need for more pipelines, which is something that probably would have been unfathomable a year ago. There's a level of that market that, that market has historically performed at that we think it will get back to, right? I don't know that it's ever going to get back to the peaks, but I think that it will definitely be at a much healthier level than it is today. And we're pretty excited about it, right? We're not really trying to hide that because we've been talking about this base level that we're at $1.4 billion. We think that's a sustainable level over a very long period of time. And that anything that adds to that will be additive. On top of that, you throw in the new technologies that are coming when you think about carbon capture and sequestration and what's happening with hydrogen pipelines, which I still think over time, that's going to be the bulk of that business. I think the business is going to converge into those types of activities more so than the historical pipeline. I think there's also going to be a point in time in which they're all active, right? You're still working on historical gas pipelines, you're building a lot of these new pipelines, and it's going to create a very active period for a period of time. So from my perspective, just being in the industry, being one of the industry leaders in that market, I think, give us tremendous potential over the long term. And at this point, with what it's doing today and the values at which we're trading at, it's almost option value when you think about our stock. As it relates to MVP, look, when MVP goes, it's going to be a great job. We've got a lot of work left to do on it. Our assumption at this point is it will go in '23, it would obviously have a significant positive impact to '23. I don't know that we're even baking that in at this point. We're ready to build it when it's ready to go. We think the customers being very mindful about it. I think they're taking all the right steps to ultimately have a successful project. We're encouraged by the confidence that they have in terms of their desire to ultimately build that project and when they do, we'll be there to build it for them.
Operator: Our next question is from Adam Thalhimer of Thompson Davis.
Adam Thalhimer: I just wanted to clarify really quickly. What are the expectations for the power delivery margin in the back half? Not sure I caught that.
Jose Mas: So what we said was, roughly, we expect roughly 10% margins for the full year. Obviously, it will be a little bit lower in the first half of the year, picking up in the second half. So it's low 8s in the first and second quarter and then building up from there.
George Pita: We talked about being high single digit to low double digit for the year, Adam. So it will be a little bit above that in the second half of the year as we continue to expand third quarter, particularly with the seasonality should be more profitable.
Adam Thalhimer: Okay. And is that what you said -- you made a comment to somebody else's question where you said that margin carries through into '23. Was that power delivery?
Jose Mas: Well, I think it was the whole business, right? I think the earlier questions were more about clean energy, right, because our clean energy margins are going to -- should be in the high single digits in the second half of the year. I think the question was related to that, and what it means for that business on a full year basis relative to what we've historically been doing it. So I think there's a fundamental shift in change in that business in the second half of '22 versus what we've seen. But I'd argue that a lot of our businesses are going to look the same, right? I think we're going to get into a period of time where absorption is high, utilizations are really high going into '23, and it should bode really well for first half '23 margins compared to first half '22 margins.
George Pita: And Adam, I would say on the power delivery side, we have as much opportunity on the top side as we do margin, right? Really with all the advance -- with all the combination of our operations with Henkels and INTREN and the things that we've done, we really think and the things that are happening relative to the grid and the spend, we're kind of at this 2.5, 2.6 run rate this year. We would certainly expect the opportunities to grow that as we move into '23, with that should come some leverage.
Operator: Our next question is from Andy Kaplowitz of Citigroup.
Andy Kaplowitz: When you look at the overall clean energy business and the delays in solar, as well as how difficult supply chain in general has been, how difficult is it to deliver that high 5% to low 6% range margin guidance you gave today for the year? And then maybe stepping back, Jose, how are you thinking about MasTec's ability to deal with the current environment, high inflation, labor costs, continuing supply chain headwind?
Jose Mas: Sure. So look, I think it's lower than the margin expectations we had going in. So I think we've tempered it a little bit on the clean energy side because of some of those things that you've laid out, right? The shift of the business, some of the issues we've had to deal with. So we're not excited about high 5s, low 6s. We -- quite frankly, that we believe and feel those margins should be significantly better. We also think we'll demonstrate that towards the second half of the year and prove out that that's a business that should be in the high single digits on a full run rate basis. So again, we still think they're suboptimal and they're suboptimal for a lot of the reasons you just laid out. When we think about the balance of our business and all of the issues that are happening, whether it's inflation, whether it's labor costs, whether it's material delays. We're seeing the impacts across our business. We're not immune to it. I think when you look at our guidance and really the range that we've laid out, right, part of it is MVP, part of it is solar. And then there's a part that I think deals with that as well. We're working as hard as we can to work with our customers, to allow relief where we can get it for all of those same issues, but it takes time and I think everybody sees it. Everybody understands it. I don't think there's been a lot of pushback from customers to ultimately appropriately compensate us for those expenses and for the work that we're doing. But we're not immune to it. And again, I think from a customer perspective, I think one of the benefits of working with MasTec and one of the advantages that we have as customers are looking for companies that they can rely on and they know are going to complete their projects on time, because labor is a real issue, right? And for us, having the amount of people that we have and the scale that we have, we give customers a lot of confidence that if we say we can do something, we're going to get it done.
Andy Kaplowitz: And then as you've been integrating Henkels, maybe give us an update on how you're thinking about the overall business. Any surprises, positive or negative so far? I know your medium-term goals are $3 billion to $3.5 billion for Power Delivery and double digits to low-teens margins. As you've really gone to know the business, can you talk about what you're seeing and the ability to get to that level?
Jose Mas: I think we've seen 2 things that have been somewhat surprising. One is the level of interest of our customers to see us continue to grow and the opportunity subset that we're seeing because of it. So, I think that just -- I think George alluded to it here a second ago that the top line opportunities within that segment are probably more than we anticipated. And then two, when we look at the business and we look at the challenges that we have, I think, ultimately, the long-term margin profile opportunity is probably better than we had anticipated as well, right? So it's almost -- it's a great story. It's one that we think it's going to be obviously one of the primary drivers of our total business. It's a business that we think we're going to be able to grow above company average margins over the long term with good margin opportunities ahead. So again, a great business to be engaged with. We're super excited about the opportunities, and we can't wait to continue to deliver and work at improving their performance.
Operator: Our next question is from Brent Thielman of D.A. Davidson.
Brent Thielman: Jose, I mean, it looks like you're sticking to the view that the second half should see a pretty big ramp up here in communications. I guess just what are you hearing from your customers in terms of rollout for 5G? And do you feel like you have even more clarity into that than you did a few months ago when you were guiding to that?
Jose Mas: Look, I don't think the clarity has changed, which is why the guidance hasn't changed, right? So we've been in constant dialogue with our customers. We know what their build plans are. We know it by month. We know it by site. We always expected second half to be dramatically bigger than first half. I think it's playing out exactly like that. I don't think we -- obviously, have been very concerned about the material issues in the supply chain, and we're feeling really good about where that's trending and how that's looking and supporting our view for what we think is going to be a really strong second half.
Brent Thielman: Okay. And then, just wondering with the Commerce Department issues and Solar. How do you -- are you taking a different approach to jobs you're going to add to backlog from here? I'm just curious if there's a different approach from here?
Jose Mas: Yes. I think at this point, right, we have to have an understanding of when the project is going to start, how it's going to start, how is the customer going to view the project? Are they depending on panel deliveries? Where are the panels coming from? Are there tasks that they're going to do without panels and how committed really are they to that? And what does that mean? So I think all of those things will take into account to ultimately decide what goes into backlog or not. In the meantime, we're going to continue to work with our customers. We're trying to continue to expand our presence within that market. I think when it's all said and done, we're going to have a great solar business for a very long time. But there's no question that over the course of the next few months, the industry is going to shake out. I think there'll be some players that are around and some others that aren't. So it's going to be really important to be mindful of that as you think about where you commit your resources long term.
Operator: Our next question is from Sean Eastman of KeyBanc.
Sean Eastman: I'm doing well. I'm doing well. Just coming back to the O&G segment, could we just get a little bit more color on the bridge from the first half to second half, both in terms of the revenue and the margins? I'd just like to have as much color there as possible because it still looks like quite a big jump up even with MVP being pushed out into 2023.
Jose Mas: Look, so what we have left in that business, right, is more seasonal. So when we think about the second quarter versus the first quarter, we expect revenues to grow north of 50% from Q1 to Q2. We have probably just slightly lower than that from Q2 to Q3, and then it will come down again in Q4 based on some of the weather patterns at the end of the year. So a lot of our work gets pushed into those months that are most workable. And I think if we can demonstrate in Q2 that we've got that kind of revenue growth, and I think it will play really well into what we'll be able to accomplish in Q3. Those changes in growth rates aren't dramatically different than what they've historically been, albeit it's been much bigger. But I don't think that the trend lines have been radically different. So that's kind of our expectation. We've got a lot of projects that are starting up now because of the winter weather and Q2 and Q3 will be our strongest quarters with Q3 being our best, and then it will drop again in Q4. So nothing really unexpected there. From a margin profile perspective, I think you're going to see similar margins into Q2 as we grow. Q3 will be our best margin quarter as it normally is. And then Q4 is usually a good margin quarter for us as well, although it will be slightly less than Q3.
Sean Eastman: Okay. And then just drilling in on the operating leverage expected in the business, particularly in communications and in clean energy. Over the past year, 2 years, sort of expanding capacity, hiring, training, expanding the footprint, getting ready for growth has been a drag on margins. Where are we at there? I mean, are we sort of ready to go and as the revenue comes through, we'll really start to see that leverage? Or is this still an ongoing process over a multiyear period?
Jose Mas: Well, a couple of things. I think you begin to see the fruits of your efforts over a long period of time. So I think revenues are going to grow substantially this year versus where they were last year. I think you'll see continual revenue growth as the year progresses. We've got a pretty good jump from Q1 to Q2 in that business. I don't -- as we think about the guidance that we've laid out, I don't think it's optimal numbers, right? I think at the end of the day, we're still adding resources. We are still -- and I think we alluded to it in our prepared remarks. We're being just -- we're almost grounding in opportunities relative to that segment and the opportunities that exist longer term. So to the extent that the opportunities keep coming to the extent that the opportunities are longer term in nature, we're going to continue to invest, we're going to continue to grow. This is going to be a really long cycle. We kind of touched on the public dollars or the Federal dollars that are going into the space. The reality is, we're only seeing a very, very small sliver of that to date and what's already had a huge impact in the business. So if these dollars ever really make it to the field and to the business, I mean, the size of this market is going to be -- is going to dwarf what we see today. So, I still think there's tremendous opportunity. So I don't think we're going to be in a position where we stop adding resources or stop training. But I think what you are seeing in the business is the increased revenue allows us to absorb those costs in a much more efficient manner than we've been able to do over the course of the last couple of years, which is why we expect to see margin improvement in the second half of the year. But our long-term margin profile in that business hasn't changed. I just think it's a balance of how much do you push margins versus how much do you invest in growth. And I still think we're in that cycle, and I think we'll be in that cycle for a while. With that said, we expect improvement this year, and we expect improvement next year.
Operator: Our next question is from Noelle Dilts of Stifel.
Noelle Dilts: So first, I just have a point of clarification. On MVP, I thought that last quarter, there was some discussion that even if full construction doesn't start, there might be like $100 million to $150 million of work that would still happen. Is that also pushed out at this point? And it sounds like some of the projects we thought maybe could backfill the whole or perhaps a bit delayed just because of the availability of. Maybe you could give us an update on how you're looking at those projects and as it seems like maybe just getting tight to the limiting factor in some of those moving forward.
Jose Mas: Yes. So I'll start with the second part of the question first. I think projects -- the supply chain issue is obviously impacting projects that people are trying to do in an expedited fashion. So is there a chance for some activity to hit late in the year, there is. We haven't really included a lot of that because we still think there's a lot of risk, so we try to take as conservative a view as we can. When we think about MVP, it's obviously been something that's extremely fluid. So we've taken the full 500 out at this point. And again, hope that it ends up being conservative, but I don't know that we've got a great answer on truly understanding what those numbers will look like. So we took it all out.
Noelle Dilts: Okay, got it. And then, I guess, going back to Solar, yet again, I'm just trying to reconcile what seems to be extremely mixed commentary and opinions on what this means for the solar market across the contractor group. So I'm just curious, one, if you're seeing any differences in how utility-scale solar customers are sort of treating the panel issue and sort of the willingness to maybe put up a bond or something like that to cover the potential tariff versus smaller developers? And then you sort of talked about this, but are you getting calls from your customers today saying, "Hey, we're pushing projects out to 2023?" Or with this guidance reduction, are you just trying to get ahead of that?
Jose Mas: Look, so we can only talk for ourselves, I guess, for the customers that we deal with, right? I think that when you think about -- but it makes logical sense, right? When you think about the market, panels are an enormous cost of a project north of 50%, and you have the potential for those costs to escalate by 2.5x. So there is no developer in the country that can price that into their model and especially do that retroactively after they've agreed on selling power at a certain number. So I think that's just logical, right? When you kind of play out what risk some developers are willing to take versus other, there is a difference there. I think at this point, there's a difference between a project that maybe is towards its end versus starting. There have definitely been projects that have been put on hold pending the outcome of this. I think you can take a view that, look, there's going to be a resolution in August and things are going to get better in the second half of the year. I think that's a very logical view. We didn't take that view. We decided to kind of moderate the year based on what we know today without having the risk of what could potentially come in the second half of the year. We see customers like NextEra that have been very vocal. They've talked about moving 2 to 3 gigawatts out of 2022 into future years. The positive there is they haven't changed their outlook through '25. So that just means that all of their time lines will compress, construction cycles will compress, which is going to make it even more interesting for contractors like us. But look, I think we're being as open with the market as we possibly can be. We've laid out the issue. We've laid out the potential risk. We're all going to be able to follow it together. But I think that for where we are today, I think it's the best way to approach the year.
Operator: Our next question comes from Avi Yara Lewittes of UBS.
Steven Fisher: This is Steve Fisher. So the -- we've heard a number of implications coming out of this commerce investigation, so similar to what Noelle said, especially around the timing. So just kind of wondering when should we expect the biggest impact of this overhang speed for MasTec as you guys see it now. I know last quarter, you said Q1 2023 was supposed to be big on solar for you unseasonably. So is that still looking that way? Or is that now at risk?
Jose Mas: Look, I mean, the commerce investigation has to have a decision by August 26. It's a preliminary decision, the final decision will come in January, but whatever we learn in August will probably be within the ultimate decision. So I think that August will be a very good sign of what is to come. There may be things that have to happen post that, depending on what their investigation finds to ultimately get to the right answers. But I think we're a few months away from knowing where this investigation is headed and how much or not of an impact it's going to have on the business. As it relates to 2022, yes, all the projects that we -- everything has been delayed, right? So projects that we thought would start in the second quarter, even if they're good projects, developers took their time to make sure that their panels weren't impacted, to make sure that it's -- again, it's only 4 countries that are involved. There are other countries in the world where you can buy panels. The problem is that over 80% of the panels come from those 4 countries. So there's a lot happening in the supply chain world today. But most developers are trying to figure this out either by securing new panels, waiting out the investigation using American manufactured panels. So there's a lot of noise and a lot of things happening. But at the end of the day, right, the majority of panels available to the U.S. are for the moment, right? It's an issue. So until this issue is resolved, there's not perfect clarity. The $350 million that we've guided to solar, we feel great about. We know exactly what the projects are. We've got great communications with the customers. We know exactly what they're doing, why they're doing it. And that's -- so it's not the same time frame that we originally laid out. And thus, a little bit of the change in quarterly guidance from us, but I think we have perfect clarity on what's going to happen on those jobs that represent those dollars for us.
Steven Fisher: Got it. And just continuing down that line of thought. So the $250 million that you took out of Solar for this year, are you thinking that you're able to offset that through other parts of the clean energy business? Like are you able to move some resources around to maybe offer some upside after that cut?
Jose Mas: No, we took it out, right? So we lowered our clean energy guidance by that amount. Reason being right is, again, project accelerations in this environment with the supply chain where it exists are difficult. The labor that we use for solar is different than the labor that we use in our other business. It's -- will there be some opportunities to save from people? The answer is yes. But I mean, look, if work is -- it's hard to get a new project in anything today and have it built quickly with the supply chain where it sits, right? So no, we did not -- we just took out the revenue from our model based on what we're seeing in the industry.
Operator: Ladies and gentlemen, that's all the time we have for questions today. I would like to hand the call over to Jose Mas for any additional or closing remarks.
Jose Mas: Just want to thank everybody for joining us today, and we look forward to updating you again on our next quarterly call. So I appreciate you being with us today. Thank you.
Operator: Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation. You may now disconnect.
