
	Communications		Clean Energy and Infrastructure		Oil and Gas		Power Delivery		Total Goodwill
Goodwill, gross, as of December 31, 2022	$	606.1	$	703.3	$	582.2	$	270.1	$	2,161.7
Accumulated impairment loss (a)	—		—		(116.7)		—		(116.7)
Goodwill, net, as of December 31, 2022	$	606.1	$	703.3	$	465.5	$	270.1	$	2,045.0
Additions from new business combinations	32.6		—		—		—		32.6
Measurement period adjustments (b)	(0.6)		40.5		0.8		0.6		41.3
Currency translation adjustments	—		—		(0.0)		—		(0.0)
Goodwill, net as of September 30, 2023	$	638.1	$	743.8	$	466.3	$	270.7	$	2,118.9

(b) Measurement period adjustments represent adjustments, net, to preliminary estimates of fair value within the measurement period of up to one year from the date of acquisition. Measurement period adjustments, net, for the nine month period ended September 30, 2023 were primarily the result of updated valuations and estimated useful lives of certain fixed assets and updated estimates of certain assets and liabilities, including contract assets and contingent liabilities. As a result of the updates to the estimated useful lives of certain fixed assets, depreciation expense decreased by approximately $6 million for the nine month period ended September 30, 2023, and as a result of the measurement period adjustments related to certain contract assets and liabilities, revenue increased by approximately $35 million and costs of revenue, excluding depreciation and amortization, decreased by approximately $8 million. In addition, measurement period adjustments for the nine month period ended September 30, 2023 included a decrease in deferred tax liabilities of approximately $38 million, an increase in contingent liabilities of approximately $29 million, including for insurance, legal and other matters, and fair value increases of approximately $7 million for certain property and equipment.


	Other Intangible Assets, Net
	Customer Relationships and Backlog		Trade Names (a)		Other (b)		Total
Other intangible assets, gross, as of December 31, 2022	$	1,089.4	$	228.9	$	86.6	$	1,404.9
Accumulated amortization	(388.8)		(28.9)		(40.9)		(458.6)
Other intangible assets, net, as of December 31, 2022	$	700.6	$	200.0	$	45.7	$	946.3
Additions from new business combinations	1.2		0.1		—		1.3

Currency translation adjustments	—		—		(0.0)		(0.0)
Amortization expense	(104.5)		(15.6)		(6.2)		(126.3)
Other intangible assets, net, as of September 30, 2023	$	597.3	$	184.5	$	39.5	$	821.3

Quarterly Assessment for Indicators of Impairment. During the third quarter of 2023, the Company performed a quarterly review for indicators of impairment, which considered its results for the nine month period ended September 30, 2023, together with its expectations of future results, including consideration of the potential effects of shifts in timing for projects, regulatory uncertainty and other matters, and macroeconomic factors, including interest rate levels. In conjunction with this quarterly review, management performed a quantitative assessment of the goodwill associated with two reporting units within the Clean Energy and Infrastructure segment.

For the selected reporting units, management estimated their fair values using a combination of market and income approaches using Level 3 inputs. Under the market approach, fair values were estimated using published market multiples for comparable companies and applying them to revenue and EBITDA. Under the income approach, a discounted cash flow methodology was used, considering: (i) management estimates, such as projections of revenue, operating costs and cash flows, taking into consideration historical and anticipated financial results; (ii) general economic, market and regulatory conditions; and (iii) the impact of planned business and operational strategies. Management believes the assumptions used in its quantitative goodwill impairment tests are reflective of the risks inherent in the business models of the applicable reporting units and within the units’ industry. Estimated discount rates were determined using the weighted average cost of capital for each reporting unit at the time of the analysis, taking into consideration the risks inherent within each reporting unit individually.

Based on the results of these assessments, management determined that, as of September 30, 2023, the estimated fair value of one of these reporting units substantially exceeded its carrying value. The estimated fair value of the second reporting unit, consisting of the IEA component (the “IEA reporting unit”), which had approximately $571 million of goodwill, exceeded its carrying value by approximately 7% as of September 30, 2023. Significant assumptions used in testing this reporting unit included terminal values based on a terminal growth rate of 3%, six years of discounted cash flows prior to the terminal value, and a discount rate of 12%. Significant changes in the assumptions or estimates used in management’s assessment as of September 30, 2023, such as a reduction in profitability and/or cash flows, changes in market, regulatory or other conditions, including decreases in project activity levels and/or the effects of elevated levels of inflation, market interest rates or other market disruptions, including from geopolitical events, could result in non-cash impairment charges to goodwill and indefinite-lived intangible assets in the future.

The Company seeks to grow and diversify its business both organically and through acquisitions and/or strategic arrangements in order to deepen its market presence and customer base, broaden its geographic reach and expand its service offerings. In 2021, the Company initiated a significant transformation of its end-market business operations to focus on the nation’s transition to low-carbon energy sources and position the Company for expected future opportunities. This transformation has included significant business combination activity, including expansion of the Company’s scale and capacity in renewable energy, power delivery, heavy civil and telecommunications services, which activity has resulted in significant acquisition and integration costs, both in the Company’s existing and recently acquired operations. Acquisitions are funded with cash on hand, borrowings under the Company’s senior unsecured credit facility and other debt financing and, for certain recent acquisitions, with shares of the Company’s common stock, and are generally subject to customary purchase price adjustments.

2023 Acquisitions. For the nine month period ended September 30, 2023, MasTec acquired certain of the assets of a telecommunications company specializing in wireless services that is included within the Company’s Communications segment, which acquisition was effective in January; and, effective in July, MasTec acquired all of the equity interests of a telecommunications construction company specializing in broadband and fiber-to-the-home initiatives in the New England area, which is included within the Company’s Communications segment. Determination of the estimated fair values of the net assets acquired and consideration transferred for these acquisitions, which have been accounted for as business combinations under ASC 805, “Business Combinations” (“ASC 805”), was preliminary as of September 30, 2023; as a result, further adjustments to these estimates may occur. Additionally, MasTec acquired 68% and 42% of the equity interests of two equipment companies, both of which are accounted for as asset acquisitions under ASC 805, and were effective in May and included within the Company’s Oil and Gas segment. Based on an evaluation of the respective entities’ operating agreements, under which the Company has voting control with respect to the entities’ operating management, the Company determined that it has control over these entities, and, therefore, has consolidated these entities within the Company’s results of operations, with the other parties’ interests accounted for as non-controlling interests. The aggregate purchase price of the Company’s 2023 acquisitions was composed of approximately $69 million in cash, net of cash acquired, and an earn-out liability valued at approximately $1 million. As of September 30, 2023, the range of remaining potential undiscounted earn-out liabilities for the 2023 acquisitions was estimated to be up to $3 million; however, there is no maximum payment amount. See Note 4 - Fair Value of Financial Instruments for details pertaining to fair value estimates for the Company’s earn-out arrangements.

2022 Acquisitions. During 2022, MasTec completed five acquisitions, which included all of the equity interests of the following: (i) within the Company’s Clean Energy and Infrastructure segment: IEA, a leading utility-scale infrastructure solutions provider in North America, with expertise in renewable energy and heavy civil projects, as well as rail and environmental remediation services, which acquisition was effective in October; and a company specializing in the production of concrete and aggregate products, which acquisition was effective in August; (ii) within the Company’s Oil and Gas segment: an infrastructure construction company focusing on water, sewer and utility projects and with expertise in excavation and site work, which acquisition was effective in January; (iii) within the Company’s Communications segment: a telecommunications company specializing in wireline services, which acquisition was effective as of the end of May; and (iv) within the Company’s Power Delivery segment: a company specializing in the construction of overhead high voltage transmission lines, which acquisition was effective in July.


Acquisition consideration:	IEA		All other		Total
Cash, net of cash acquired	$	564.5	$	48.7	$	613.2
Shares transferred	173.7		—		173.7
Estimated fair value of warrants	10.3		—		10.3
Estimated fair value of contingent consideration	—		2.8		2.8
Total consideration	$	748.5	$	51.5	$	800.0
Identifiable assets acquired and liabilities assumed:
Accounts receivable and contract assets	$	570.0	$	6.1	$	576.1
Current assets	34.5		1.6		36.1
Property and equipment	220.5		30.0		250.5
Long-term assets, primarily operating lease right-of-use assets	40.6		0.3		40.9
Amortizing intangible assets	362.2		5.9		368.1
Accounts payable	(136.5)		(4.6)		(141.1)
Contract liabilities	(151.3)		(1.5)		(152.8)
Current liabilities, primarily accrued expenses	(327.1)		(1.4)		(328.5)
Long-term debt, including finance lease obligations	(330.8)		(0.2)		(331.0)
Long-term liabilities, primarily operating lease liabilities and deferred income taxes	(104.1)		(0.2)		(104.3)
Total identifiable net assets	$	178.0	$	36.0	$	214.0
Goodwill	570.5		15.5		586.0
Total net assets acquired, including goodwill	$	748.5	$	51.5	$	800.0

Amortizing intangible assets related to the IEA acquisition are primarily composed of customer relationships, and to a lesser extent, trade names and backlog. Customer relationship and trade name intangible assets for IEA, in the aggregate, totaled approximately $321 million, which each had a weighted average life of approximately 14 years based on IEA’s operational history and established relationships with, and the nature of, its customers, which are primarily in the renewable energy and specialty civil industries. Backlog intangible assets for IEA totaled approximately $42 million with a weighted average life of approximately 1 year based on estimated cash flows expected to be derived from future work on acquired contracts with customers. The weighted average life of amortizing intangible assets in the aggregate for the IEA acquisition was 13 years.

The goodwill balances for each of the respective acquisitions represent the estimated values of each acquired company’s geographic presence in key markets, assembled workforce and synergies expected to be achieved from the combined operations of each of the acquired companies and MasTec and the acquired company’s industry-specific project management expertise. Approximately $37 million of the goodwill balance related to the 2022 acquisitions is expected to be tax deductible as of September 30, 2023.

The shares of MasTec common stock included in consideration transferred for IEA in the table above consist of approximately 2.7 million shares, valued at approximately $174 million based on the market price of MasTec common stock on the date of closing. Total cash paid for acquisitions, net, includes approximately $44 million of cash acquired. Long-term debt in the table above includes $300 million aggregate principal balance of 6.625% senior unsecured notes that were assumed in connection with the acquisition of IEA. See Note 7 - Debt for additional information.

Consideration transferred for IEA includes the value of certain warrants that were originally issued by IEA, for which the remaining outstanding warrants as of December 31, 2022 had an estimated fair value of $3.1 million. Under the terms of the IEA merger agreement, holders of the IEA warrants became entitled to receive an amount in cash and shares of MasTec common stock upon exercise of the IEA warrants. The number of MasTec shares issued in connection with exercises of such IEA warrants in the first quarter of 2023 was de minimis, and all remaining IEA warrants expired unexercised on March 26, 2023. Fair value gains related primarily to the expired warrants totaled approximately $2.6 million for the nine month period ended September 30, 2023, which amount is reflected in other income.

Contingent consideration included in the table above is composed of earn-out liabilities, which generally equal a portion of the acquired companies’ earnings before interest, taxes, depreciation and amortization (“EBITDA”) in excess of thresholds agreed upon with the sellers, if applicable. The earn-out arrangements for the 2022 acquisitions are payable annually and have five-year terms, as set forth in the respective purchase agreements, and were valued at approximately $3 million in the aggregate. Earn-outs are recorded within other current and other long-term liabilities, as appropriate, in the consolidated balance sheets. See Note 4 - Fair Value of Financial Instruments for details pertaining to fair value estimates for the Company’s earn-out arrangements. As of September 30, 2023, the range of remaining potential undiscounted earn-out liabilities for the 2022 acquisitions was estimated to be up to $2 million; however, there is no maximum payment amount. Current liabilities reflected in the table above also include operating lease liabilities and contingent liabilities for insurance, legal and other matters.

HMG Additional Payments. The HMG purchase agreement, for which the subject acquisition was effective in December 2021, provides for certain additional payments to be made to the sellers if certain acquired receivables are collected by the Company (the “Additional Payments”). Pursuant to the terms of the purchase agreement, a portion of the Additional Payments will be made in cash, with the remainder due in shares of MasTec common stock. The estimated number of potential shares that could be issued related to such Additional Payments will be based on the amounts ultimately collected and the share price as defined within the purchase agreement. Changes in the estimated fair value of potential shares that could be issued, which result from changes in MasTec’s share price as compared with the share price as defined within the purchase agreement, are reflected within other income or expense, as appropriate. For the three and nine month periods ended September 30, 2023, unrealized fair value measurement activity related to the contingent shares totaled gains of approximately $7.4 million and $2.1 million, respectively, and for the three and nine month periods ended September 30, 2022, such activity totaled gains of approximately $1.3 million and $4.5 million, respectively. An Additional Payment of approximately $29.4 million was made in May 2022, which payment was composed of approximately $18 million in cash and 133,157 shares of MasTec common stock, and for which a realized gain of approximately $1 million was recognized within other income, net, in the related period.

As of September 30, 2023 and December 31, 2022, the estimated fair value of remaining Additional Payments totaled approximately $33 million and $37 million, respectively, which amounts are included within other current liabilities in the consolidated balance sheet. For the nine month period ended September 30, 2023, the estimated fair value of remaining Additional Payments included the effect of unrealized fair value gains related to the contingent shares of approximately $2.1 million and a reduction of approximately $2.4 million from changes in collections attributed to acquired balances. The estimated number of shares that would be paid in connection with the remaining Additional Payment liability totaled approximately 160,000 and 170,000 shares as of September 30, 2023 and December 31, 2022, respectively. Of the total remaining Additional Payments as of September 30, 2023, the amount due to the sellers, based on amounts collected as of September 30, 2023, totaled approximately $19.4 million, of which the amount due in shares totaled approximately $6.3 million, or 87,900 shares. See Note 2 - Earnings Per Share for the effect of the above referenced shares on the Company’s earnings per share calculations.

Pro forma results. For the three month periods ended September 30, 2023 and 2022, unaudited supplemental pro forma revenue totaled approximately $3.2 billion and $3.3 billion, respectively, and unaudited supplemental pro forma net income totaled approximately $2.3 million and $40.0 million, respectively. For the nine month periods ended September 30, 2023 and 2022, unaudited supplemental pro forma revenue totaled approximately $8.7 billion and $8.6 billion, respectively, and unaudited supplemental pro forma net loss totaled approximately $65.6 million and $6.9 million, respectively. Supplemental pro forma information for the Company’s first quarter 2023 acquisition has not been presented for the pre-acquisition periods due to the impracticability of obtaining accurate or reliable historical financial information for the assets of the entity that was acquired.

Acquisition-related results. For the three and nine month periods ended September 30, 2023, the Company’s consolidated results of operations included acquisition-related revenue of approximately $533.2 million and $1,503.5 million, respectively, including a total of approximately $483.9 million and $1,374.6 million, respectively, for IEA. For the three and nine month periods ended September 30, 2022, the Company’s consolidated results of operations included acquisition-related revenue of approximately $569.7 million and $1,876.6 million, respectively, including approximately $429.3 million for HMG for the three month period ended September 30, 2022, and $1,457.7 million in the aggregate for HMG and INTREN, LLC for the nine month period ended September 30, 2022. For the three and nine month periods ended September 30, 2023, the Company’s consolidated results of operations included acquisition-related net losses of approximately $2.8 million and

$42.7 million, respectively, based on the Company’s consolidated effective tax rates, and for the three and nine month periods ended September 30, 2022, the Company’s consolidated results of operations included acquisition-related net income of approximately $18.4 million and $37.7 million, respectively, based on the Company’s consolidated effective tax rates. These acquisition-related results include amortization of acquired intangible assets and certain acquisition integration costs, and exclude the effects of interest expense associated with consideration paid for the related acquisitions.

Acquisition and integration costs. The Company has incurred certain acquisition and integration costs in connection with its recent acquisitions, which costs are included within general and administrative expenses, costs of revenue, excluding depreciation and amortization, and other expense, as appropriate. Acquisition and integration costs include: i) the costs of integrating acquired entities, such as: employee termination expenses, including employee compensation relating to the elimination of certain positions that were determined to be redundant, and other integration-type costs, including operating cost redundancies, facility consolidation expenses, lease termination expenses, losses on disposal of identified assets, system migration expenses, training and other integration costs; and ii) legal, professional and other fees associated with the consummation of these acquisitions, including fees paid in connection with certain transaction-related financing commitments, including, in the second half of 2022, bridge financing related to the IEA acquisition. These integration efforts are ongoing and the Company expects to incur any remaining acquisition and integration expenses in the fourth quarter of 2023. For the three and nine month periods ended September 30, 2023, such acquisition and integration costs totaled approximately $21.1 million and $60.9 million, respectively, of which $18.3 million and $53.3 million, respectively, was included within general and administrative expenses, and of which $2.8 million and $7.6 million, respectively, was included within costs of revenue, excluding depreciation and amortization. Acquisition and integration costs for the three and nine month periods ended September 30, 2022 totaled approximately $33.3 million and $59.4 million, respectively, of which $9.2 million and $35.3 million, respectively, was included within general and administrative expenses, and of which $21.4 million was included within costs of revenue, excluding depreciation and amortization, for both periods, and of which $2.7 million was included within other expense for both periods. As of September 30, 2023 and December 31, 2022, approximately $6.7 million and $5.5 million, respectively, was included within current liabilities within the consolidated balance sheets related to such costs.