Note 13 – Segments and Related Information

Segment Discussion

MasTec manages its operations under five operating segments, which represent MasTec’s five reportable segments: (1) Communications; (2) Oil and Gas; (3) Electrical Transmission; (4) Power Generation and Industrial and (5) Other. This structure is generally focused on broad end-user markets for MasTec’s labor-based construction services. All five reportable segments derive their revenue 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 and install-to-the-home customers, and, to a lesser extent, infrastructure for utilities, among others. MasTec performs engineering, construction and maintenance services for oil and natural gas pipelines and processing facilities for the energy and utilities industries through its Oil and Gas segment. The Electrical Transmission segment primarily serves the energy and utility industries through the engineering, construction and maintenance of electrical transmission lines and substations. The Power Generation and Industrial segment primarily serves energy, utility and other end-markets through the installation and construction of power facilities, including renewables, related electrical transmission infrastructure, ethanol/biofuel facilities and various types of heavy civil and industrial infrastructure. The Other segment includes equity investees, the services of which vary from those provided by the Company’s primary segments, as well as other small business units that perform construction and other services for a variety of international end-markets.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is the measure of profitability used by management to manage its segments and, accordingly, in its segment reporting. As appropriate, the Company supplements the reporting of 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, and for non-cash stock-based compensation expense, can also be subject to volatility from changes in the market price per share of the Company’s common stock or variations in the value of shares granted. 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 may contain slight summation differences due to rounding.



	For the Three Months Ended March 31,
Revenue:	2019			2018
Communications ^(a)	$	612.8		$	627.1
Oil and Gas	621.3			536.5
Electrical Transmission	94.9			114.0
Power Generation and Industrial	189.4			117.6
Other	0.0			1.9
Eliminations	(0.1		)	(0.3		)
Consolidated revenue	$	1,518.3		$	1,396.8


(a)	Revenue generated primarily by utilities customers represented 15.6% and 17.8% of Communications segment revenue for the three month periods ended March 31, 2019 and 2018, respectively.



	For the Three Months Ended March 31,
EBITDA:	2019			2018
Communications	$	45.3		$	82.1
Oil and Gas	107.4			33.0
Electrical Transmission	3.8			4.6
Power Generation and Industrial	3.2			4.8
Other	6.2			5.9
Corporate	(29.5		)	(25.8		)
Consolidated EBITDA	$	136.4		$	104.6



	For the Three Months Ended March 31,
Depreciation and Amortization:	2019		2018
Communications	$	14.7	$	14.6
Oil and Gas	34.6		25.5
Electrical Transmission	4.5		5.3
Power Generation and Industrial	3.1		3.0
Other	0.0		0.0
Corporate	2.1		1.5
Consolidated depreciation and amortization	$	59.0	$	49.9



	For the Three Months Ended March 31,
EBITDA Reconciliation:	2019		2018
Income before income taxes	$	55.1	$	37.6
Plus:
Interest expense, net	22.3		17.1
Depreciation and amortization	59.0		49.9
Consolidated EBITDA	$	136.4	$	104.6

Foreign Operations. MasTec operates in North America, primarily in the United States and Canada, and, to a lesser extent, in Mexico. For both the three month periods ended March 31, 2019 and 2018, revenue of $1.4 billion was derived from U.S. operations, and revenue of $78.9 million and $33.8 million, respectively, was derived from foreign operations, the majority of which was from the Company’s Canadian operations in its Oil and Gas segment. Long-lived assets held in the U.S. included property and equipment, net, of $764.1 million and $707.4 million as of March 31, 2019 and December 31, 2018, respectively, and, for the Company’s businesses in foreign countries, the majority of which are in Canada, totaled $35.4 million and $40.4 million, respectively. Intangible assets and goodwill, net, related to the Company’s U.S. operations totaled approximately $1.3 billion and $1.2 billion as of March 31, 2019 and December 31, 2018, respectively, and for the Company’s businesses in foreign countries, the majority of which are in Canada, totaled approximately $62.3 million and $61.5 million as of March 31, 2019 and December 31, 2018, respectively. As of March 31, 2019 and December 31, 2018, amounts due from customers from which foreign revenue was derived accounted for approximately 6% and 5%, respectively, of the Company’s consolidated net accounts receivable position, which represents accounts receivable, net, less BIEC.

Significant Customers

Revenue concentration information for significant customers as a percentage of total consolidated revenue was as follows:



	For the Three Months Ended March 31,
Customer:	2019	2018
AT&T (including DIRECTV^®) ^(a)	23%	27%
Energy Transfer affiliates ^(b)	6%	26%

(a)

The Company’s relationship with AT&T is based upon multiple separate master service and other service agreements, including for installation and maintenance services, as well as construction/installation contracts for AT&T’s: (i) wireless business; (ii) wireline/fiber businesses; and (iii) various install-to-the-home businesses, including DIRECTV®. Revenue from AT&T is included in the Communications segment.


(b)	The Company's relationship with Energy Transfer affiliates is based upon various construction contracts for pipeline activities with Energy Transfer Partners L.P., and its subsidiaries and affiliates, all of which are consolidated by Energy Transfer Equity, L.P. Revenue from Energy Transfer affiliates is included in the Oil and Gas segment.