MASTEC INC

Note 12 –Income Taxes

The components of income or loss before income taxes for the periods indicated were as follows (in millions):

The provision for income taxes for the periods indicated were as follows (in millions):

The tax effects of significant items comprising the Company’s net deferred tax liability as of the dates indicated were as follows (in millions):

In assessing the ability to realize the Company’s deferred tax assets, management considers whether it is more likely than not that some portion, or all, of its deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible. Management considers the Company’s projected future taxable income and prudent and feasible tax planning strategies in making this assessment. The Company’s valuation allowances as of both December 31, 2024 and 2023 are related primarily to foreign and state net operating losses and deferred tax assets.

The Company’s deferred tax assets for its state net operating loss carryforwards, which may be carried forward from 5 years to indefinitely, depending on the jurisdiction, totaled approximately $28.7 million and $24.7 million as of December 31, 2024 and 2023, respectively. The Company’s deferred tax assets for its foreign net operating loss carryforwards, which are primarily related to the Company’s Canadian operations, totaled approximately $56.0 million and $59.2 million as of December 31, 2024 and 2023, respectively. The Canadian net operating loss carryforwards, which make up the majority of the foreign net operating loss carryforwards, begin to expire in 2026. As of both December 31, 2024 and December 31, 2023, the Company hadno deferred tax assets for its federal net operating loss carryforwards.

The Company is generally free of additional U.S. federal tax consequences on distributed foreign subsidiary earnings due to a dividends received deduction implemented as part of the move to a territorial tax system in connection with the Tax Cuts and Jobs Act of 2017. The Company has generally not made a provision for income taxes on unremitted foreign earnings because such earnings are insignificant and are intended to be indefinitely reinvested outside the United States. The Company expects that domestic cash resources will be sufficient to fund its domestic operations and cash commitments in the future.

A reconciliation of the U.S. statutory federal income tax rate related to pretax income to the effective tax rate for the periods indicated is as follows:

A reconciliation of the beginning and ending amount of uncertain tax positions, excluding interest and penalties, follows in the table below (in millions).

The Company classifies interest, penalties and recoveries related to uncertain tax positions as a component of income tax expense in the consolidated statements of operations. For the years ended December 31, 2024, 2023 and 2022, interest and penalties totaled approximately $0.7 million, $2.6 million and $0.7 million, respectively. Accrued interest and penalties related to uncertain tax positions were $7.8 million and $5.9 million as of December 31, 2024 and 2023, respectively. The effect on the Company’s tax rate if it were to recognize its gross unrecognized tax benefits as of December 31, 2024 approximates $78.1 million, including interest and penalties. While it is possible that there could be audit settlements and/or lapses in certain statutes of limitation relating to uncertain tax positions, management has determined that it is too difficult to predict the outcome of such matters. During the next 12 months, the Company expects to settle state income tax audits and the applicable statutes of limitations may expire for federal and state uncertain tax positions, which may reduce uncertain tax positions. These reductions would be partially offset by additions, if any, of new uncertain tax positions expected in the next 12 months.

The IRS has examined the Company’s federal income tax returns through 2017. Certain foreign and state taxing authorities are examining various years. The final outcome of these examinations is not yet determinable. With few exceptions, as of December 31, 2024, the Company is no longer subject to state examinations by taxing authorities for years before 2016.

Note 13 –Segments and Related Information

Segment Discussion

The Company manages its operations under five operating segments, which represent itsfive reportable segments: (1) Communications; (2) Clean Energy and Infrastructure; (3) Power Delivery; (4) Pipeline Infrastructure and (5) Other. The reportable segments comprise the structure used by the Company’s Chief Executive Officer who is determined to be the Chief Operating Decision Maker (“CODM”) to make key operating decisions and assess performance. This structure is generally focused on broad end-user markets for the Company’s labor-based construction services. Allfive reportable segments derive their revenue primarily from the engineering, installation and maintenance of infrastructure, primarily in North America.

The Communications segment performs engineering, construction, maintenance and customer fulfillment activities related to communications infrastructure, primarily for wireless and wireline/fiber communications, wireless integration and optimization and install-to-the-home services, as well as infrastructure for utilities, among others. The Clean Energy and Infrastructure segment primarily serves energy, utility, government and other end-markets through the installation and construction of power generation facilities, primarily from clean energy and renewable sources, such as wind, solar, biomass, natural gas and hydrogen, as well as battery storage systems for renewable energy; various types of heavy civil and industrial infrastructure services, including roads, bridges and rail; and environmental remediation services. The Power Delivery segment primarily serves the energy, utility and data center infrastructure industries through the engineering, construction and maintenance of power transmission and distribution infrastructure, including electrical and gas lines, power reserve and battery infrastructure, and distribution network systems, substations and grid modernization; emergency restoration services following natural disasters and accidents; and environmental planning and compliance services. The Pipeline Infrastructure segment performs engineering, construction, maintenance and other services for pipeline infrastructure, including natural gas, water and carbon capture sequestration pipelines, as well as pipeline integrity, including the repair of pipeline infrastructure and facilitating their safe use throughout their lifecycle, and other services for the energy and utilities industries. The Other segment includes certain equity investees, the services of which may vary from those provided by the Company’s primary segments, as well as other small business units with activities in certain international end-markets. In the first quarter of 2025, the Company made changes to its Communications and Power Delivery segment structure to more closely align with the segments’ end markets and to better correspond with the operational management reporting structure of both segments. These changes included moving a component with utility operations previously reported in the Communications segment to the Power Delivery segment; however, as the changes occurred in the first quarter of 2025, all periods presented in this Annual Report are reported under the historical segment structure. The impact of these changes to reportable segments, including historical financial information, will be reflected beginning with the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2025.

The accounting policies of the reportable segments are the same as those described in Note 1 - Business, Basis of Presentation and Significant Accounting Policies. Intercompany revenue and costs among the reportable segments are accounted for as if the sales were to third parties because these items are based on negotiated fees between the segments involved. All intercompany transactions and balances are eliminated in consolidation. Intercompany revenue and costs between entities within a reportable segment are eliminated to arrive at segment totals. Eliminations between segments are separately presented. Corporate results include amounts related to corporate functions, including treasury and administration functions, including for legal and professional matters, including certain settlements, as well as changes in the fair value of Earn-outs, other liabilities and certain investments, acquisition-related transaction costs and other discrete items, including certain integration activities and debt transaction costs. Segment results include certain allocations of centralized costs such as general liability, medical and workers’ compensation insurance and certain information technology and interest costs, as well as certain discrete items, including certain acquisition and business integration and/or streamlining costs. Income tax expense, which is recorded within Corporate results, is managed on a consolidated basis and is not allocated to the reportable segments.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is the measure of profitability used by the Company’s CODM to manage its segments and for segment reporting purposes. As appropriate, the Company supplements the reporting of its consolidated financial information determined in accordance with U.S. GAAP with certain non-U.S. GAAP financial measures, including EBITDA. The Company believes these non-U.S. GAAP measures provide meaningful information and help investors understand the Company’s financial results and assess its prospects for future performance. The Company uses EBITDA to evaluate its performance, both internally and as compared with its peers, because it excludes certain items that may not be indicative of the Company’s core operating results for its reportable segments, as well as items that can vary widely across different industries or among companies within the same industry. Segment EBITDA is used to allocate resources, such as employees, financial and capital resources, for each segment and management monitors segment results compared to prior period, forecasted results and the annual plan. Segment EBITDA is calculated in a manner consistent with consolidated EBITDA.

Summarized financial information for MasTec’s reportable segments is presented and reconciled to consolidated financial information for total MasTec in the following tables, including a reconciliation of consolidated income before income taxes to EBITDA, all of which are presented in millions. The tables below, which may contain slight summation differences due to rounding, reflect certain financial data for each reportable segment.

(a) Revenue generated primarily by utilities customers represented 24.0%,24.3% and 23.6% of Communications segment revenue for the years ended December 31, 2024, 2023 and 2022, respectively.

(b) Total consolidated revenue equals total reportable segment revenue of $12,303.5 million, $11,995.9 million and $9,778.0 million for the years ended December 31, 2024, 2023 and 2022, respectively, as there is no revenue recorded within Corporate results.

(c) For each of the years ended December 31, 2024, 2023 and 2022, other segment items for each reportable segment includes general and administrative expenses, equity in earnings or losses of unconsolidated affiliates, net, and other income or expense, net.

For the year ended December 31, 2024, Corporate results included a loss on debt extinguishment of $11.3 million. In addition, for the year ended December 31, 2024, Corporate results included approximately $10.7 million of expenses related to changes in fair value of acquisition-related contingent items, and for the years ended December 31, 2023 and 2022, such activity included income of approximately $13.9 million and $3.4 million, respectively. For the year ended December 31, 2023, Communications, Clean Energy and Infrastructure and Power Delivery EBITDA included $22.5 million, $37.1 million and $8.5 million, respectively, of acquisition and integration costs related to certain transformative acquisitions, and Corporate results included $3.8 million of such costs. For the year ended December 31, 2022, Communications, Clean Energy and Infrastructure, Power Delivery and Pipeline Infrastructure EBITDA included $4.7 million, $6.4 million, $39.0 million and $8.0 million, respectively, of acquisition and integration costs related to certain transformative acquisitions, and Corporate results included $27.9 million of such costs. Additionally, for the years ended December 31, 2023 and 2022, Corporate results included fair value losses related to an investment of $0.2 million and $7.7 million, respectively, and for the year ended December 31, 2022, Corporate results included bargain purchase gains of $0.2 million. In addition, for the year ended December 31, 2022, Other segment EBITDA included $2.8 million of project gains from a proportionately consolidated non-controlled Canadian joint venture.

Foreign Operations. MasTec operates primarily within the United States and Canada, and, to a far lesser extent, the Caribbean, India and Mexico. Revenue derived from foreign operations totaled $93.3 million, $95.1 million and $149.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. Revenue from foreign operations was derived primarily from the Company’s Canadian operations in its Pipeline Infrastructure segment. As of December 31, 2024, 2023 and 2022, long-lived assets held by the Company’s businesses in foreign countries included property and equipment, net, of $25.3 million, $17.5 million and $21.0 million, respectively, and intangible assets and goodwill, net, of $108.8 million, $32.6 million and $35.5 million, for the respective periods. Substantially all of the Company’s long-lived and intangible assets and goodwill in foreign countries relate to its Canadian operations. As of each of December 31, 2024, 2023 and 2022, amounts due from customers from which foreign revenue was derived accounted for approximately 1% of the Company’s consolidated net accounts receivable position, which is calculated as accounts receivable, net, less deferred revenue.

Significant Customers. No customer represented greater than 10% of the Company’s total consolidated revenue in any of the years ended December 31, 2024, 2023 or 2022. Revenue from governmental entities for the years ended December 31, 2024, 2023 and 2022 totaled approximately 13%,11% and 7% of total revenue, respectively, substantially all of which was derived from its U.S. operations.