MasTec Inc

NYSE:MTZ

Earnings Call Transcript 2021-Q3

[Operator]

Welcome to MasTec's Third Quarter 2021 Earnings Conference Call initially broadcast on Friday, November 5, 2021. Let me remind participants that today's call is being recorded.

At this time, I'd like to turn the call over to Marc Lewis, MasTec's Vice President of Investor Relations. Marc?

[Marc Lewis, VP, IR]

Thanks, David. And good morning, everyone. Welcome to MasTec's Third Quarter 2021 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 industries 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.

In today's remarks by management, we'll 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 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 or our 10-Q in the investors and news section of our website located at mastec.com.

With us today, we have Jose Mas, our Chief Executive Officer; and George Pita, our Executive VP and CFO. The format of the call will be opening remarks announced by Jose, followed by a financial review from George. These discussions will be followed by a Q&A session. And we expect the call to last about 60 minutes. We had another good quarter and a lot of important things to talk about today, so I'll going ahead hand it over to Jose.

Jose?

[Jose Mas, CEO & Director]

Thanks, Marc. Good morning and welcome to MasTec's 2021 Third Quarter Call. Today, I will be reviewing our third quarter results as well as providing my outlook for the markets we serve. I'd like to thank you for joining us today, and I hope and pray that you and your loved ones are healthy and safe.

Before getting into the quarterly details, I'd like to offer my perspective on where I think MasTec stands today. At this time last year, during our 2020 third quarter call, we laid out a long-term goal of our pathway to achieving annual revenues of $10 billion plus. It's important to remember, at that time, MasTec was on a path to generate just over $6 billion of revenue in 2020. Still somewhat unsure of where the COVID pandemic would take us, we have seen a significant impact to our Oil and Gas business and the demand and pricing issues it had created. Our ability to provide that outlook was a testament to the strength we were seeing across our non-Oil and Gas business and the growing opportunities we were expecting. Fast forward 12 months, this year, we expect to generate $8 billion in revenue. And our long-term goal of reaching annual revenues exceeding $10 billion is now within reach in what we hope will be a much shorter time frame. Opportunities in our communication, transmission and clean energy segments continue to expand and give us great confidence we will be able to meaningfully grow revenue over the coming years.

We believe we are in the midst of a very unique opportunity. Since becoming CEO in 2007, we've been able to grow MasTec from $900 million in revenue to $8 billion today. And while I've seen and experienced great cycles of growth during that time, I've never seen the number and scope of opportunities we are seeing across our business. Demand for our services is incredibly high, and again, our prospects to deliver long-term revenue growth are better than I've ever seen. While our business continues to expand and our mix continues to diversify away from Oil and Gas, our focus is on margin improvement and execution. Our margin execution across our non-Oil and Gas segments has been below our expectations in 2021. We've been challenged and impacted for multiple reasons, including COVID, labor availability, supply chain delays and poor performance on projects. With that said, we are confident we can achieve the margin targets we previously disclosed as we continue to grow the business in the coming years. We understand and believe that our ability to create shareholder value is driven not only by our revenue growth opportunities but more importantly by our ability to achieve our targeted margins. While we'd like to see our results materialize sooner, we believe the longer-term outlook is not only fully intact but actually improving.

Now some third quarter highlights. Revenue for the quarter was $2.404 billion. Adjusted EBITDA was $278 million. Adjusted earnings per share was $1.81. And backlog at quarter end was $8.5 billion, a year-over-year increase of $821 million. In summary, we had another excellent quarter and are on track for another great year.

There are a number of catalysts that could have a significant impact on our growth. These include within our Communications segment a ramp-up of 5G-related activity and the spend, including in-building solutions; continued focus on expanding fiber networks both in rural communities and in major cities to support broadband services as well as wireless backhaul; an increased focus on smart city initiatives, with increased availability of capital from both the public and private sector. Within our electrical transmission and distribution segment, catalysts include grid modernization, including significant investments for improved grid reliability and system hardening to better prepare for storms and fires; the growing need for new transmission lines to tap into renewable-rich geographies; and the focus on grid architecture related to growing electrical vehicle charging demand.

In our Clean Energy and Infrastructure segment, catalysts include the growing focus on sustainability and climate initiatives, including zero-carbon emission goals; significant investments in renewable power generation, including wind and solar; a focus on other clean energy-generating fuels, including biomass, geothermal and hydrogen; opportunities around carbon capture and its potential benefits; and finally, the role of battery storage and its improving economics. We believe we are very well positioned to benefit from these growing and accelerating trends in our business segments.

Now I'd like to cover some industry specifics. Our Communications revenue for the quarter was $670 million. We expected revenues to be slightly higher. And we continued to experience delays and COVID impacts that affected the acceleration of AT&T's and Verizon's build plans related to last year's spectrum auctions. Highlights for the quarter included our growth with T-Mobile, whose revenue more than doubled over last year's third quarter. In addition, we had another quarter of strong backlog growth. The second quarter of this year represented the largest quarterly sequential segment backlog increase in the company's history, and in the third quarter, we were again able to sequentially grow segment backlog by over $200 million. We expect another similar increase during the fourth quarter.

Margins for the segment were 10.7% in the third quarter; and were impacted by both lower wireless revenues than expected, along with project closeouts related to a large fiber build that is nearing completion. We expect sequential margin improvement in the Communications segment in the fourth quarter and excellent momentum heading into 2022 based on our backlog build.

Over the last few quarters, we've talked about the opportunities related to the Rural Digital Opportunity Fund or RDOF, which will provide $20 billion of funding over the next 10 years to build and connect gigabit broadband speeds in underserved rural areas; and the 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. In addition to these programs, the current pending infrastructure bill has another $65 billion allocated for broadband infrastructure. While not built into any of our models, this amount of investment would likely have a significant impact on the potential opportunities for us in this segment.

Moving to our Electrical Transmission segment. Revenue was $365 million versus $129 million in last year's third quarter. The increase was driven by organic growth of nearly 50% in the quarter on a year-over-year basis; and the first full-quarter contribution of INTREN, which we acquired during the second quarter. Margins for the segment were 9.5%, which exceeded our expectations. The integration of our INTREN acquisition has gone very well, and we are seeing a number of cross-selling opportunities which are positively impacting both MasTec and INTREN.

While backlog was flat sequentially, we have an increasing number of opportunities that should allow us to continue to grow this business at solid double-digit rates for years to come. We believe the changes in electrical distribution and transmission needs led by grid modernizations and hardening, reliability and renewable integration, coupled with the transition towards increased electrical vehicle usage, will have an enormous impact on a last-mile distribution of electricity.

Moving to our Oil and Gas pipeline segment. Revenue was $858 million and margins remained strong. During the third quarter, we were able to accelerate project timing and complete some projects early. Our fourth quarter revenue guidance level is impacted by this acceleration. As a reminder: Last year, we forecasted a longer-term recurring revenue target of $1.5 billion to $2 billion a year, assuming a continued depressed oil and gas market. As commodity prices have increased and maintained strong levels, we have seen an increase in customer requests, as we are working with a number of customers repricing previous projects and are optimistic we will see an uptick in opportunities.

A challenge our customers are facing has been the increased costs of steel pipe related to the supply chain issues. Pipe materials often account for nearly 50% of project costs. While we believe there will be an increasing number of large pipeline projects, we expect the opportunities to materialize in 2023 and beyond as the supply chain issues improve. That, coupled with the continued growth of carbon capture and sequestration and the potential of hydrogen, have improved our longer-term outlook of our pipeline business. While we still expect 2022 to be within our previously disclosed revenue targets, we are becoming a lot more bullish about our opportunities for 2023 and beyond in this segment.

Moving to our Clean Energy and Infrastructure segment. Revenue was $518 million for the third quarter. As a reminder: Segment revenue has grown nearly sevenfold since 2017. We expected a slight sequential improvement in margins that did not materialize. While I believe we have done an amazing job in growing and diversifying the segment, margins haven't materialized as quickly. With that said, we believe we are at the cusp of seeing significant improvements in margins. At MasTec, we take great pride in having been able to perform at high levels over a long period of time. Our conviction in improving margins in this segment are no different. We understand and are addressing the issues that have led to the underperformance, and we have tremendous confidence in the potential of this market and the associated margins we can generate.

We believe our diversification is our strength in this segment, as we are capable of meeting any of our customers' demands. We are actively working on renewable projects, including wind, solar and biomass; baseload generation projects, including dual-source hydrogen-capable projects; as well as our growing presence in the infrastructure market. With a clear national focus on sustainability and clean energy, we have seen a significant increase in planned clean energy investments from our customers as they improve their carbon footprint. As a leading clean energy contractor and partner, MasTec is uniquely positioned to benefit from these investments. Backlog at quarter end in Clean Energy was $1.570 billion versus $891 million at the end of last year's third quarter, a year-over-year increase of nearly $700 million and a slight sequential reduction of over $100 million from the second quarter. Since quarter end, we've either signed or been verbally awarded another roughly $800 million in projects. In addition, the level of project proposal activity and negotiations has never been higher. To recap: We're having a solid 2021 and are very excited about the opportunities in the markets we serve.

Finally, I'd like to highlight the potential opportunities of the pending infrastructure bill. With a significant presence in the telecommunications market, which include 5G build-out capabilities, our involvement in maintaining and building the electric grid, coupled with our exposure to the clean energy market, including wind, solar, biofuels, hydrogen and storage; and our recent expansion into the heavy infrastructure, including road and heavy civil, we believe we are uniquely positioned to benefit from the potential infrastructure spend. We are confident we can hit our growth targets with solely private investments in infrastructure but do recognize the potential acceleration in our markets with significant government spend.

I'd like to again congratulate and thank the men and women of MasTec for their fantastic 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 deliver these financial outstanding results in a challenging environment and position ourselves for continued growth and success.

I'll now turn the call over to George for our financial review. George?

[George Pita, EVP & CFO]

Thanks, Jose. And good morning, everyone. Today, I'll cover our third quarter financial results and our updated annual 2021 guidance expectations. 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, on our website or in our SEC filings.

In summary, we had strong third quarter results with revenue of approximately $2.4 billion, a 42% increase over last year; adjusted EBITDA of approximately $278 million; and adjusted EBITDA margin rate at 11.6% of revenue. This represented record-level third quarter revenue and adjusted EBITDA. Yesterday, we announced a new and increased credit facility of $2 billion, which adds to our ample liquidity, improves pricing and eliminates security requirements. I would like to thank our banking partners for their continued long-term support of MasTec.

Our strong cash earnings profile, coupled with our focus on working capital management during 2021, has allowed us to easily fund organic working capital needs associated with approximately $1.5 billion in year-to-date revenue growth while investing approximately $600 million in strategic acquisitions. At the end of our third quarter, we maintained a strong balance sheet and capital structure with liquidity approximating $1.3 billion, comfortable leverage metrics and with net debt at only 1.3x adjusted EBITDA at quarter end. Given our strong balance sheet and cash flow performance, coupled with the unsecured nature of our new credit facility, we have approached credit rating agencies for review and are hopeful of a positive rating agency action in the near term.

Now I will cover some detail regarding our third quarter segment results and guidance expectations for the balance of 2021.

Third quarter Communications revenue was $670 million, approximately 4% growth compared to last year. This growth level was a few percentage points lower than our expectation, as project start-up issues slowed revenue during the quarter. Our third quarter Communications segment adjusted EBITDA margin rate was 10.7% of revenue, an 80 basis point sequential decline primarily related to the overhead impacts of lower-than-expected third quarter revenue levels.

Our annual 2021 Communications segment expectation is that revenue will range somewhere between $2.5 billion to $2.6 billion, with annual 2021 adjusted EBITDA margin rate approximating 11%. This implies fourth quarter year-over-year revenue growth in the high-teens range despite some continued slower revenue impact on new project start-up activity. This also implies strong improvement in fourth quarter adjusted EBITDA margins, both sequentially and compared to the fourth quarter of last year, as we begin to ramp toward significant expansion in 2022.

Third quarter Clean Energy and Infrastructure segment or clean energy revenue was $518 million. And adjusted EBITDA was approximately $14 million or 2.7% of revenue, below our expectation.

As we indicated on our last quarter's call, we anticipated some continued negative impact on third quarter clean energy adjusted EBITDA margin rate as 2 underperforming projects, highlighted during the prior quarter, would generate third quarter revenue with no margin. We substantially completed those projects during the third quarter, with performance largely as expected. However, during the third quarter, clean energy segment results were also negatively impacted by a COVID-19 outbreak on a project that caused delays and additional cost. At one point during this project, approximately 1/3 of the project field crew and 50% of critical path electricians were either infected with COVID or in quarantine, effectively stopping project production. Thankfully, no significant long-term health issues arose during this outbreak to -- in -- to our employees, and we have substantially completed this project. Absent this unique impact, third quarter clean energy segment adjusted EBITDA margins would have been generally in line with our expectation of a slight sequential adjusted EBITDA margin rate improvement. We believe the issues that have negatively impacted our clean energy segment year-to-date adjusted EBITDA margin performance are largely behind us and, based on project timing, expect that fourth quarter segment revenue will be the largest revenue quarter of the year with over 60% year-over-year revenue growth and strong fourth quarter adjusted EBITDA margin rate improvement to a high single-digit level.

As we have previously indicated, our clean energy segment has grown from $300 million of revenue in 2017 and will approach $2 billion in revenue during 2021. In order to achieve this growth, we have significantly expanded our field crew operations and head count very quickly. This rapid expansion has caused some growing pain inefficiencies, which has impacted our annual 2021 adjusted EBITDA margin performance. As I just indicated, we expect improved performance during the fourth quarter and, importantly, continued strong revenue and adjusted EBITDA margin rate improvement in 2022.

Third quarter Oil and Gas segment revenue was $858 million, and adjusted EBITDA was $171 million. During the quarter, we accelerated work on a large project and achieved substantial completion ahead of schedule. This increased our third quarter revenue by approximately $100 million, accelerating revenue previously expected to occur in the fourth quarter. We would like to recognize the men and women of our MasTec teams for their commitment to safety and quality during this difficult project. We currently expect annual 2021 Oil and Gas segment revenue will range between $2.5 billion to $2.6 billion, with annual 2021 adjusted EBITDA margin rate for this segment expected in the high-teens to low-20% range.

Third quarter Electrical Transmission segment revenue was $365 million, and adjusted EBITDA margin rate of 9.5% of revenue. Third quarter results reflected a full quarter of electrical distribution and storm services from INTREN, which contributed revenue of approximately $175 million to the quarter. Excluding INTREN, organic segment revenue during the third quarter grew $64 million and adjusted EBITDA margin performance was strong.

We expect annual 2021 revenue for the Electrical Transmission segment to approximate $1 billion and annual 2021 adjusted EBITDA margin rate to range somewhere between 6.5% to 7% of revenue. This expectation includes the assumption that second half of 2021 segment adjusted EBITDA margin rate will approximate a low-8% range, a significant improvement when compared to first half '21 performance. We continue to believe that multiple macro end market trends, including renewable power generation, increased distribution needs to support electric vehicle expansion and grid investments for storm and fire hardening, are continuing to develop and should provide our segment substantial future growth opportunities.

Now I will discuss a summary of our top 10 largest customers for the third quarter period as a percentage of revenue. Enbridge was 21% of revenue, reflecting the previously mentioned pipeline project acceleration. Newly defined AT&T services totaled 7% of revenue. As indicated on our 10-Q filed yesterday, reported AT&T revenue amounts have been reclassified to exclude DIRECTV services for all periods, as this entity has been spun off into a separate third-party entity. Revenue performed for AT&T includes wireless, wireline and other services, including smart city deployment projects. NextEra Energy was 6% of revenue, comprising services across multiple segments including clean energy, Communications and Electrical Transmission.

Equitrans Midstream was 5%. Entergy and Comcast were each 4% of revenue. Duke Energy, DIRECTV and Exelon reached 3%; and Enel Green Power was 2%. Individual construction projects comprised 63% of our third quarter revenue, with master service agreements comprising 37%. With the combination of an expected resurgence in wireless MSA work, coupled with the INTREN acquisition whose revenue is virtually all MSA-driven, future MSA revenue is expected to increase as a percentage of our total revenue, highlighting an increased level of MasTec revenue expected to be derived on a recurring basis.

Lastly, as we've indicated for years, backlog can be lumpy, as large contracts burn off each quarter and new large contract awards only come into backlog at a single point in time as a result of actual contract signs. As of September 30, 2021, we had total backlog of approximately $8.5 billion, up approximately $821 million when compared to last year. Importantly, each of our non-Oil and Gas segments' backlog represented a record third quarter level, reflecting continued and expanding strength in these end markets. As noted in yesterday's press release, as expected, Oil and Gas segment backlog was down both sequentially and compared to the third quarter of last year. And we continue with the expectation that 2022 segment revenue will range somewhere between $1.5 billion to $2 billion, with potential sizable growth opportunities in 2023 and beyond.

Now I'll discuss our cash flow, liquidity, working capital usage and capital investments.

As I mentioned earlier in these remarks, yesterday, we announced closing of a new unsecured $2 billion credit facility, which reflects a $250 million increase from our prior facility with improved pricing and extended term. We are hopeful the combination of our consistent and strong cash flow performance coupled with our new unsecured credit facility will provide us a path towards an investment-grade credit rating in the near term. And we are engaging with rating agencies for an updated outlook.

During the third quarter, we managed to reduce our net debt levels by approximately $80 million despite the working capital associated with approximately $450 million in sequential revenue growth. We ended the quarter with $1.3 billion in liquidity; and net debt, define as total debt less cash and cash equivalents, at $1.26 billion, which equates to a very comfortable 1.3x leverage metric.

2021 year-to-date cash provided by operating activities was approximately $500 million. We ended the third quarter with DSOs at 72 days compared to 85 days in Q3 last year. And this level is well below our target DSO range of mid- to high 80s. We are proud of the strength, resilience and consistency of MasTec's cash flow profile.

As we look forward to close outing -- to the closeout of 2021, we expect continued strong cash flow generation despite the working capital associated with our 2021 revenue growth and expect that annual 2021 free cash flow will once again exceed adjusted net income. Assuming no Q4 acquisition activity, net debt at year-end is expected to approximate $1.2 billion, leaving us with ample liquidity and an expected book leverage ratio slightly over 1x adjusted EBITDA. In summary, our long-term capital structure is extremely solid with low interest rates, no significant near-term maturities and ample liquidity, giving us full flexibility to take advantage of any potential growth opportunities to maximize shareholder value.

Moving to our 2021 guidance view. We predict an annual 2021 revenue of $8 billion, with adjusted EBITDA of $930 million or 11.6% of revenue; and adjusted diluted earnings of $5.55 per adjusted diluted share, which is a $0.10 per share increase over our prior expectation of $5.45 per adjusted diluted share. And the earnings per share increase is primarily due to the benefit of lower expected annual 2021 income tax expense.

This translates into a fourth quarter revenue expectation of $1.85 billion, with adjusted EBITDA of $218 million or 11.7% of revenue; and earnings guidance of $1.33 per adjusted diluted share. As previously mentioned, our fourth quarter revenue view includes approximately $100 million in lower revenue expectations for the Oil and Gas segment due to the acceleration of project revenue during the third quarter.

As we have previously provided some color regarding 2021 segment expectations, I will briefly cover other guidance expectations. We anticipate net cash CapEx spending in 2021 at approximately $120 million, with an additional $160 million to $180 million to be incurred under finance leases. As we have previously indicated, as our end market operations shift with non-Oil and Gas segments becoming a larger portion of our overall revenue, our capital spending profile should reduce, as the Oil and Gas segment has historically required the largest level of capital investment.

We expect annual 2021 interest expense levels to approximate $54 million, with this level including approximately $600 million in year-to-date acquisition funding activity. For modeling purposes: Our estimate for 2021 share count continues at 74 million shares. We expect annual 2021 depreciation expense to approximate 4.3% of revenue, inclusive of year-to-date 2021 acquisition activity. As we have previously indicated, this expectation incorporates an increased level of 2021 Oil and Gas segment depreciation expense when compared to 2020, as we are utilizing conservative depreciation life and salvage value estimates on previous capital additions to protect against future market uncertainties. Given these trends, we anticipate that annual 2022 depreciation expense dollar amount and percentage of revenue will decrease when compared to annual 2021 levels.

We expect annual 2021 corporate segment adjusted EBITDA to be a net cost of slightly under 1% of overall revenue. And lastly, we expect that annual 2021 adjusted income tax rate will range approximately 22%, with our third and fourth quarter adjusted income tax rates ranging in the 19% to 20% range primarily due to the benefits of income mix and tax true-up adjustments.

This concludes our prepared remarks, and now we'll turn the call back to the operator for Q&A. Operator?

[Operator]

[Operator Instructions]. We'll take our first question from Alex Rygiel of B. Riley.

[Alexander Rygiel, B. Riley Securities]

Another really, really strong quarter here, so congratulations on that. My first question wants to focus on capital allocation. So clearly you've got an enormous amount of opportunities ahead of you, so my question here is how should we think about capital allocation over the next, say, 2 years. Should we think about you investing a greater amount of your free cash flow back into the business through M&A and some of these organic opportunities? Or do you feel like your biggest bang for your buck is investing and buying back stock at this time?

[Jose Mas, CEO & Director]

Great question, Alex. A couple of things, right? I think we've been making a lot of investments in the business over the course of the last few years. We've added an enormous amount of people at MasTec, and we're thankful for that, right. Our employee count is probably up about 6,000 from where we were at this time last year. Roughly 2,000 of that came from the INTREN acquisition, but the balance of that came organically, so I think we've been really investing in our ability to execute on the longer-term opportunities we see in the business. With that said, we've also been active on the M&A front. It's an incredibly active market and we think there's a lot of good assets out there, so I think you'll continue to see us be active in that market.

And as we continue to generate cash and we're in the advantageous position of being a really good cash flow generator -- I think we've done a great job with cash this year relative to the growth that we've had. I think, after really investing in those two, then we would focus on potentially looking at where we are from a value perspective to invest capital and buying back stock. I think, if you look at us historically, we've always been one to buy our stock at what we think are very attractive levels. We're disappointed about where we trade today from a valuation standpoint. So I think there's a lot of arguments to be made as to why it makes a lot of sense to consider doing that, but I think we've got a lot of priorities and a lot of good things happening. And hopefully, we're in a great position from a cash flow generation perspective last year to take advantage on multiple fronts.

[Alexander Rygiel, B. Riley Securities]

And my second question. I believe you might have said that, subsequent to the end of the quarter, you received another $800 million of awards that'll be dropped into backlog. Was that the case? What markets were these in, generally speaking? And then you seem to have a renewed excitement about the oil and gas sector, looking out into 2022 and '23, so maybe you could round out that excitement for us.

[Jose Mas, CEO & Director]

Sure. So a couple things. The $800 million was specifically to the Clean Energy and Infrastructure segment. So since quarter end, we've been awarded $800 million. We were up about $700 million on a year-over-year basis on backlog. In clean energy, we were down just over $100 million, about $150 million, on a sequential basis. So I think that the wins that we've had post quarter end really give us an enormous amount of confidence in our ability to continue growing that business. I think, more importantly, to what we've already been either awarded or verbally awarded is what's still outstanding. There is an enormous amount of activity happening in that market, of which we feel really, really good about. So again we -- growth in the clean energy side obviously hasn't been our concern. We've done a great job being able to do that. I think for us it's about executing on margins, which I think, hopefully, we'll start seeing in the fourth quarter.

As it relates to the Oil and Gas business, look, we're really excited, I think, compared to where we were a year ago and the challenges we were facing in that market. Obviously commodity prices have been high. We have a lot of customers that are looking at a lot of different pipeline projects that were kind of put on the back burner a year ago. There are still some challenges to get some of those projects to market, but we're actually seeing potential large pipeline activity on multiple projects that are somewhat surprising to us relative to where we've been. When you also look at what's happening with hydrogen and with carbon capture, the potential for our pipeline business longer term, I think, is amazing. I think, long term, we could have a carbon capture and sequestration business that kind of consumes our pipeline business and ultimately is the predominant nature of our pipeline business long term, again something that we wouldn't have expected a year ago. So I think the outlook in that market beyond '22 is really bright and looking a lot better, so very exciting for us.

[Operator]

We'll take our next question from Neil Mehta of Goldman Sachs.

[Neil Mehta, Goldman Sachs Group]

I want to start on the Communications segment and just your thoughts on some of the slower top line growth that we've seen here. What are the drivers, as you see it, to unlock the pace of growth that you anticipate? Talk a little bit about customer conversations around 5G rollout. And are there certain types of communications activity that's being impacted more versus less in the current environment?

[Jose Mas, CEO & Director]

Sure. Thank you, Neil. So it's actually very frustrating, right? We're seeing our backlog grow at levels that we haven't seen in a long, long time. We're -- we continue to win work. We're chasing work. The opportunities for us to continue to grow are -- well, again are as good as we've seen in a long, long time. We've -- we expect further backlog growth in Q4. As we said on the call, we -- it should be at least at the levels of which we saw in Q3. So again we're going to exit 2021 with unbelievable backlog in that segment, and then the frustrating part is it obviously hasn't shown up in the revenue numbers yet. And I think there's lots of reasons for it, right? There's no question that, when we look at our wireless work with AT&T and Verizon, it's been a lot slower to really kick off in a meaningful way than what we expected. We see it, right? We know it's coming. We understand the issues as to why it's not happening.

We don't necessarily want to get into all of them here today, but it's not a matter of if it's going to happen. It's just a matter of timing. And again I think the third and fourth quarter will end up being slightly lower there than what we expected. It's offset by some positives, right? T-Mobile has been a fantastic account for us this year. It continues to grow. The opportunities with them are very exciting for our firm. And then what we're seeing on the fiber side, right: The fiber business is growing leaps and bounds. The engineering work that we're doing today has significantly ramped to its -- which is really the leading indicator to the construction work actually starting. So we think that will have a meaningful impact for us in 2022 with multiple customers, right, even including AT&T, which we think is going to be a big part of our business with them next year. So the mix is a little bit different today than what we probably expected into the second half of the year. I'd say that, for the 2 larger accounts for us, the wireless business has been a little bit slower than we anticipated. With that said, right, in the third quarter, it was probably -- we had a lot more shrinkage in Q1 and Q2 with those customers than we saw in Q3. We actually saw AT&T's business start coming back in Q3, just not to the levels that we expected.

So again, we're very bullish. We know it's coming. We see it around the corner. We're positioning and gearing ourselves for it. We actually think we had an okay quarter relative to what was happening in the market from a top line perspective. On the margin side, we were impacted by some closeouts as well on one of the fiber projects that I think the whole industry has talked about, but if not for that, I think margins would have come in in-line where everybody expected. I think our fourth quarter margins are going to be really strong in that segment. Again wireless revenue is going to be a little bit light, which is why we lowered our revenue targets a little bit there for Q4, but outside of that, that market and the opportunity going into '22 and beyond for that market is just fantastic.

[Neil Mehta, Goldman Sachs Group]

And the follow-up is just the clean margin -- the clean energy business and the margin profile was the huge focus of the last conference call. Just talk about where you are in that progression. And what are the milestones we should be watching for to get confidence in the margin improvement story there?

[Jose Mas, CEO & Director]

Look. We were hoping for more improvement in Q3. Obviously we were impacted by a couple of things. I think they truly were very related to the quarter, right? I think we're through most of our issues. I think we're going to see significant improvement in Q4. We're excited to be able to deliver that. We've been working very hard with that group. I know they're extremely focused on it. And again, somewhat frustrating because we see the light at the end of the tunnel. We see it turning, and hopefully, we're here in the fourth quarter having a very different conversation related to that segment.

[Operator]

Our next question comes from Noelle Dilts of Stifel.

[Noelle Dilts, Stifel, Nicolaus & Company]

So I wanted to dig into clean energy a little bit more. First, you're -- obviously have this really strong backlog going into next year. I was hoping, first, you could touch on the mix of that backlog and how we should think about wind versus solar. And I think, last quarter, you talked about this expectation for sort of an ability to grow that business 25% annually. You also have one of the largest players in the market talking about flattish revenues for next year, so I was hoping you could comment on if -- just how you're thinking directionally about growth and how we should think about that discrepancy.

[Jose Mas, CEO & Director]

Yes, sure. So a couple things, right? I think -- when we look at our Clean Energy and Infrastructure business, I think we have the best diversified business mix of any player in the industry, when you think about everything we can do not just from a renewable perspective but just about every power generation need that our customers are going to have. When you look at renewables in particular, right, you have a big difference between wind and solar. The wind business was a business that over the course of the last year or so has been impacted relative to the available projects and the transmission assets related to wind and the availability of bringing new wind farms on. I think, when you look at the solar side of the business, the solar side of the business has been on fire. It's growing leaps and bounds. So depending on where you're skewed is going to depend on revenue growth opportunities going into '22. '21 for us was a year in which we saw some wind revenue declines, which is partly what you see happening in Q3, right. Our business is converting to much more of a solar business from a growth perspective. I think we'll have a relatively flattish year in '22 on wind. And it -- we think it will pick up again in '23 a lot as some of these transmission lines come -- get built and are in place to really open up a lot of that wind corridor. In the meantime, if you want to grow this business, you've got to grow your solar, right?

I think -- when you look at the peer and competitor you're talking about, I think they actually had a -- we think, a fantastic wind year this year, which we didn't necessarily experience. So we think -- we saw that wind decline in '22. We think -- or in '21. We think that we'll probably see it more in '22, which is why we're -- which I think is where the difference is.

[Noelle Dilts, Stifel, Nicolaus & Company]

Okay. And then second, just I know it's a little bit early to be talking about 2022, but I was hoping you could maybe comment on how generally you're thinking about the timing of work next year. In years past, on the telecom side you tended to see kind of a slow start to the year and then a really strong fourth quarter, but you have some different dynamics here with work appearing to kind of accelerate in the fourth quarter and into the first, so I'm wondering just how you're thinking about the timing there. And then also, on the clean energy side we've heard some others talk about some projects pushing to the right, so do you think you'll see a slower start to the year there and a stronger back half? Any sort of high-level questions there just -- or sorry, thoughts there on how to think about the cadence of earnings for the year would be helpful.

[Jose Mas, CEO & Director]

Sure, Noelle. I think we're obviously working through budget season now and we'll have a much better outlook on our next call relative to timing. Just generally, right, I think our Communications business will be a lot more evenly distributed next year with the amount of projects that we hope to be starting early in the year. I think our Oil and Gas business will probably be a little different, right, where we've got some projects that may delay in Q1 and we expect some of that activity to really start in Q2 and beyond. Clean energy is a mix, right? I think there we're very cognizant of the fact of what is happening with the supply chain issues and what could potentially -- how that could potentially skew projects. So I think it's going to be a fantastic year, but I do think we've got to be cognizant of the fact that, some of that stuff, we're going to have to manage through. And then on the transmission side, I think it's relatively similar to what we saw this year when you pro forma in the INTREN acquisition.

So we feel good about it, lots of challenges ahead. We're dealing with these vaccine mandates that we're going to have to fully understand how it affects the workforce. We're doing everything we can to prepare ourselves for that and to make sure that we have no disruption. A lot of those rules came out yesterday. So lots of things that we're managing, but I think all in all the demand for our services is through the roof, so I think it'll be a really good year across the board, regardless of how you look at it, and maybe a couple ups, a couple downs in different segments, but it should be a great year.

[Operator]

We will take our next question from Andy Kaplowitz of Citigroup.

[Andrew Kaplowitz, Citigroup]

Jose, electronic transmission margin in the high single digits is the highest it's been in a while, I think, since 2014. I know that's probably a lot of INTREN, but with the alleviation of pressure, I think your problem projects are over there. And then INTREN obviously brings nice scale to the business. What kind of opportunities can that open up for you in '22? And do you see a path to a double-digit margin too?

[Jose Mas, CEO & Director]

We're super excited, Andy, just the level of opportunities we're seeing there, the -- I think the way the customers have reacted to the acquisition, the opportunity subset that's come from it. We feel really good that we'll be able to grow the business and grow it at solid margins. A good quarter for us from a margin perspective, right? We'll have a little bit of seasonality in Q4, but we definitely think that the level of margin profile that we saw in Q3 is sustainable throughout all of '22. And again it's, I think, really one of the bright spots of what we were able to deliver in this quarter. And hopefully, we'll be able to talk about some of the other segments in similar light in the coming quarters.

[Andrew Kaplowitz, Citigroup]

That's helpful, Jose. And then I know you're still guiding to that sort of $1.5 billion to $2 billion run rate in Oil and Gas next year, but as you know, Oil and Gas for MasTec has continued to beat expectations. I know maybe there's a little bit of pull forward here but especially on the margin side, so I guess, why shouldn't we think that that's possible in '22, that you sort of sustain these higher margins and there is some upside toward that $1.5 billion to $2 billion?

[Jose Mas, CEO & Director]

I think supply chain is having an impact on the industry, right? So I think projects that started that had commodities bought already, in other words the pipe projects that had pipe bought and pipe sitting, is different than somebody who's trying to build something new today and looking for pipe just because of the dramatic increase -- pipe costs are up. Those costs are up north of 50% over the course of the last few months. I think that has to kind of -- and that's pure project cost, right? So at the end of the day, we've got customers that we know want to do things but are hesitant to pull the trigger based on that. They're working hard to try to figure it out. As I think that becomes clear, then we could probably look at our story a little bit differently, but I think, with what we know today, we still think that's the reasonable outlook for 2022.

[Operator]

We'll take our next question from Justin Hauke of Baird.

[Justin Hauke, Robert W. Baird & Co.]

I've got two; one bigger picture, so I guess I'll start there; and then 1 more -- maybe more financial, but it sounded like the supply chain issues really are more on the Oil and Gas side. And you talked about the clean energy margins maybe more pressured a little idiosyncratic with the COVID outbreak that you had in some of the problem projects, but are there supply chain issues that you're seeing as well there? And where are the bottlenecks that you're seeing, particularly on the solar side, that could impact the timing of some of those starts?

[Jose Mas, CEO & Director]

Well, the reality is that there are supply chain issues everywhere, right? So the issue is how do you manage through them. And how do you ultimately have it -- have the least impact on your business as possible? But we're seeing it in some of the telecom equipment and some of the shipping times of getting stuff here. Different customers handle it differently, right? I -- obviously the larger customers, I think, are less impacted by it than some of the smaller customers. We're seeing some of it on the solar side with some of the supplies that you need in the solar business. We're seeing it in some of just your everyday materials that you use on a construction site. So again I don't think it's had meaningful challenges for us relative to pushing schedules and things, but it's something that we're obviously paying a lot of attention to. The costs of the -- we don't have a lot of commodity to -- risk in our contracts, but we do have some small miscellaneous items that we buy. We've seen cost pressure related to that as well. So I think everybody in today's world is impacted in some way or another. I think we've been able to mitigate those impacts, with the exception of a couple of projects here or there, and hopefully, that's how we're able to manage through it until it gets better.

[Justin Hauke, Robert W. Baird & Co.]

Okay, that's fair enough. I guess the other one is just on the new credit facility and the potential for you guys to get an investment-grade rating here on your debt. I'm just wondering. What kind of interest expense savings are you thinking about for next year? I mean, what could you possibly kind of look at that preliminarily versus the $54 million this year?

[George Pita, EVP & CFO]

Justin, I mean we're looking -- obviously, again for next year, we'll consider -- the cash flow performance this year has been very strong. We would anticipate it's going to be -- continue to be very strong next year. Our capital profile right now is a combination of fixed and floating, all right? And we've just redone the facility. The facility has slightly improved terms, so that will improve -- that should improve the interest expense a little bit year-over-year. The unknown for us going forward is going to be what happens to short-term rates. So it's a little hard to predict. I'd say, generally speaking, there's a little bit of a bias towards a reduction year-over-year on our costs. Obviously we have to approach the rating agencies and we have to get a change in rating before we can see anything else happen relative to our capital structure, but I think the most direct impact to us right now is a slight improvement that we have on our credit facility which will help us. Unknown, when you think about next year, so what happens to short-term rates and how those move, generally speaking, I think most folks would anticipate they're going to go up some. So maybe together, if you push this together, it's kind of a push in terms of the initial view for next year.

I think, what the investment-grade rating would give us, right, it would give us meaningful flexibility going forward, all right, in terms of financing as we look at alternatives and opportunities to maximize shareholder value, so obviously we would be very pleased if we can get into that profile and that rating. We think, based on our cash flow, based on our balance sheet management, based on everything else and now with the change that we've made in our facility which is now an unsecured facility, that's kind of a precursor towards improving our ratings profile. And we think -- with where we are today, we think we're at that point, but obviously we have to get the rating agencies to agree with us. So we're hopeful for that, and more to come when and if that happens.

[Operator]

We'll take our next question from Jamie Cook of Crédit Suisse.

[Jamie Cook, Crédit Suisse]

Jose, I think you mentioned in the prepared remarks the path to get to the $10 billion in revenues is probably approaching quicker than you had originally expected, so could you provide a little more color there? And while we're getting there quicker by segment, is the path to get there bigger in terms of where you're thinking about the segments going? And then at the same level, on that $10 billion in revenues, how are you thinking about the margins in total based on what you've seen from the portfolio today?

[Jose Mas, CEO & Director]

Great question, Jamie. I don't think our views changed dramatically, right? I still think that the -- we've got a slide that we've had in our deck for a long time relative to how we get there. So we still think the Communications business in short order is going to be in that $3.5 billion to $4 billion range. We've talked about Oil and Gas being $1.5 billion to $2 billion, and that's kind of the light that we'd put the $10 billion out. We've talked about, with the growth in transmission and distribution, we're probably closer to $1.5 billion than the $1 billion that we had put out. And our clean energy business really should already be approaching some of the levels that we've talked about. You put that together and I think we've got the outlook for getting there in the relatively short order in the next couple of years, and that's pretty exciting.

When we think about the margin profile of the business, it hasn't really changed long term, right? We've talked about ultimately getting to the point where we think we can consistently hit 13% margins in Communications. Obviously we need scale to do that. We think, over the longer term, we can probably beat that, but we'll build into that. Hopefully, we will get somewhere in that 12% to 13% range on a full year basis next year. When you look at our Oil and Gas margins, we don't really expect much change here, anywhere from the mid-teens to the low 20s. When we think about transmission, we've talked about double digits. When you think about clean energy, we've talked about the high single digits and, over time, working our way into the double-digit category. So nothing has changed, I think, just the speed at which we think we can ultimately achieve it, which I think is great news.

[Jamie Cook, Crédit Suisse]

And then I just guess my follow-up question is just sort of on the M&A front. Obviously you guys have a strong balance sheet and have had success with acquisitions historically. To what degree are the multiples that are out there preventing you from sort of being more aggressive on the M&A front?

[Jose Mas, CEO & Director]

So it's something we debate all the time, right? At the end of the day, we're looking for good companies that we think we can add a lot of value to. We're not just buying -- trying to buy a company for the sake of generating revenues. We're trying to find companies that we think are additive to what it is that we're trying to do for our customers and how we can deliver. So how do we help companies significantly increase their opportunities? And vice versa, how do those companies help us achieve our goals, whether they be margin goals or revenue goals? And we'll pay fair amount. Obviously the values of those companies and the valuation requirements to buy things have increased, but I still think it's a relatively good market for us out there. And I think we'll -- there are a number of deals that we've been working on that we think we'll get to the finish line. And a lot of it is our bread and butter, all right? We buy a lot of smaller companies that we think have tremendous opportunities to grow. I think you'll see us do a number of those before year-end. And again we're excited about the opportunities out there and what we're seeing.

[Operator]

We'll take our next question from Steven Fisher of UBS.

[Steven Fisher, UBS]

Just wanted to follow up on clean energy and the growth there. Just curious. What should be the lead time on the bookings turning to growth? Because I would have thought that -- with the bookings being up so much year-over-year for 3 quarters now, that you'd have organic growth there, but it seems like the organic growth is still negative. So I know you mentioned like COVID-19 impact. I don't know if -- how much of that was driving an organic decline or if it's some of the supply chain stuff, but what should the lead time be in when could that segment turn to organic growth?

[Jose Mas, CEO & Director]

Yes, no, look. I -- a couple of things, right, which I think are important to talk about. First, you've got what we saw in the wind business, right? So when you compare for us 2020 to 2021, we had headwinds in that business, all right? We expected a decline in that business. We think we've done a good job growing the balance of our business to more than offset for that. I think, when we think about '22 and we see the order flow that we've got, we actually see the inverse happening there. We think we're going to have a relatively good wind year relative to '21 from a year-over-year comparison. When you look at the rest of the project work that we're seeing, we think we're going to see considerable organic growth in '22 versus '21. I think -- even in the fourth quarter, all right, when we're able to deliver on what we see relative to our performance last year, I think you'll see considerable organic growth in the fourth quarter for the first time this year.

[Steven Fisher, UBS]

Okay, that's good to hear. And then just on the Oil and Gas business, I'm curious how to think about what the book and burn is running and expected to run. And I know you've -- intend to kind of be in that $1.5 billion to $2 billion of revenue range for next year. The backlog currently is below that, so how should we think about the book and burn? And what gets us back into that revenue range relative to backlog for next year?

[Jose Mas, CEO & Director]

I think the business is going to look a lot more like it did 7, 8 years ago, right, where backlog wasn't anywhere near your total annual revenues. I think that's kind of what the business is leading into. We could very well see the business with backlog levels below $1 billion and still be very comfortable of being able to hit our annual targets.

[Operator]

And we'll take our next question from Brent Thielman of D.A. Davidson.

[Brent Thielman, D.A. Davidson & Co.]

Obviously another really strong quarter for bookings in Communications. It looks like that's going to continue. I guess, Jose, maybe just talk around the diversity of customers you're seeing in terms of new awards and overall sort of inquiry activity.

[Jose Mas, CEO & Director]

Yes. Look. It's been broad-based. We're really excited. The amount of dollars that we're seeing relative to both wireline and wireless activity continues to increase. I think a lot of our bookings -- because of the delays in the wireless side, a lot of the incremental bookings have been on the wireline side from lots of different customers. There are still tens of billions of dollars to deploy from the federal initiatives that are out there that I think are going to only expedite that and increase those levels, so I feel great about where we are relative to the cycle in terms of the customer relationships we've been able to build, the projects we've been able to build or win but more importantly what's coming, right? I still think that we're just really scratching the surface of what this will ultimately be. I think there are some huge programs that are out there that we're in discussions with, with some customers that would meaningfully move these numbers even more. So the fact that we are where we are going into '22, with the backlog levels that we have, with the existing potential that continues to exist out there, again is a -- lots of the reasons why we're so excited about this business long term.

[Brent Thielman, D.A. Davidson & Co.]

Okay. And I guess, on Oil and Gas: I mean I understand the expectations here for 2022. I'd love to just get your thoughts on how far out some of these opportunities are in sequestration; hydrogen; I guess, some of the less-traditional things that you've at least historically done. How far away are these things? And can they manifest and be impactful as early as '23?

[Jose Mas, CEO & Director]

Yes.

[Brent Thielman, D.A. Davidson & Co.]

Okay.

[Jose Mas, CEO & Director]

I thought that would be the easiest answer, Brent. I mean...

[Operator]

We'll take our next question from -- I'm sorry. Go ahead, sir.

[Jose Mas, CEO & Director]

Yes. I mean they're active. They're currently active, all right, so we will definitely expect some of that to hit in '23.

[Operator]

We will take our next question from Adam Thalhimer of Thompson, Davis.

[Adam Thalhimer, Thompson, Davis & Company]

Jose, the -- you said the C-band timing was a little delayed. What are your thoughts on that starting back up?

[Jose Mas, CEO & Director]

Well, one of the challenges that everybody is having is fiber, right? So to the extent that you don't have fiber and you build it then you can't really turn it up. Over the last couple of days, we've seen some stuff on the FAA too which are probably going to impact some of the 5G turnups. So lots of issues to still manage through. I think our customers are -- once they get started, they're going to push construction, right, irrespective of turnup, but I think they got to be smart about their capital allocation, all right? They don't want to put -- they don't want to build stuff and then have it be stranded for significant periods of time. They'll build in anticipation of some stuff, but when they have real clear direction on what's going to be available -- that's what we've seen. We've already seen the increase, all right, so we're already seeing the beginning of that starting to get turned on, which is good. It's just later than we thought and probably less aggressive than we thought in '21. So I do think '22 is going to be a very different year, a much better year; and I think we're already seeing signs of that.

[Adam Thalhimer, Thompson, Davis & Company]

Okay, so the follow-up question would just be, what are your thoughts on the cadence of revenue in comps next year, starts low and just ramps and then builds throughout the whole year?

[Jose Mas, CEO & Director]

Well, for sure, it's going to build throughout the year because a lot of stuff is going to be starting, but I think it's going to start pretty strong, all right? I would expect activity levels to be better than they were in the first quarter of this year and to continue to grow through the balance of the year.

[Operator]

We will take our final question from Sean Eastman of KeyBanc Capital Markets.

[Sean Eastman, KeyBanc Capital Markets]

I just wanted to get an update on where you're at from a human capital perspective. I mean you've talked about adding some huge numbers of people, obviously huge training efforts. I mean, where are we at there? Or do you still need to add a bunch of people and maintain this level of training? Or do you have these people in place now to deliver the backlog you've built up?

[Jose Mas, CEO & Director]

Yes, good question, Sean. One of the questions that we get a lot is what's happening with labor availability and pricing and what kind of challenges does that create for our business. And the reality is that we kind of look at that question very differently, all right? We look at that question and we say we think that's a huge strategic advantage for MasTec, so we've invested heavily in really making MasTec an employer of choice; making MasTec a place where people want to come and build a career, start at one level and really allow yourself to spend your whole career at MasTec. So I think that, to achieve our goals, not just the ones we've verbally laid out but to ultimately achieve what we think we can do, we're obviously going to need to continue to hire people. It's a tough market. And again we think that our size, our diversification, our culture really allows us to have an advantage. I think our customers are looking for companies that they can depend on in an uncertain labor market, so I think those are really important drivers for MasTec and we're going to continue to invest in people and in growing our resources to be able to deliver for our customers.

So I don't think you'll see us stop that. Obviously there'll be pockets where we've got to hire more people in a particular quarter and in a particular couple of quarters and others where we won't, but I think you're going to see a sustained increase to the total numbers. And I don't think we'll ever stop doing that.

[Sean Eastman, KeyBanc Capital Markets]

Okay, interesting. And a lot of companies talking about wage inflation ramping through this year -- obviously you hold sort of a scarce resource here in your labor pool, and I just wanted to get a sense for how you think about deploying that scarce resource. Last quarter, you kind of mentioned some customers wanting to lock up capacity over a longer period of time. I mean, is that what you want to do here? Or do you -- be more nimble and more careful about how you're deploying those resources? I hope that question makes sense, but I'm just kind of curious what your thoughts are there.

[Jose Mas, CEO & Director]

It does. I actually think it's a really good question, Sean, all right? So a lot of different thoughts, all right? One is we're not mercenaries, all right? So we're not going to go to the top dollar every time because that's not the right thing to do for the long-term nature of the business. With that said, all right, customers have to understand the challenges that exist in the marketplace and have to be willing to participate and really pay for what's happening in the market at any given point in time. So there's a balance associated with that and we think we manage that balance well. There's obviously customer relationships that we've had for a long time. We're going to be here for our customers. We're going to do everything that we can to help them meet their build plans, but they have to pay a fair wage. And to the extent that they're not willing to pay a fair wage and -- then we'll have to move our resources to people that will. I think ultimately everybody in the business understands what's going on with labor. And everybody is going to participate in those challenges, but if we run into a customer that's not willing to and -- then we'll take the appropriate actions to allow our people to make a fair wage and a fair return on their time and investment.

We only have so many people. Their jobs are important. And we want to make sure that they're proud of what they build and they feel good about it and that we do too as a company, all right? We need to be paid a fair wage for what we do and we need to deliver for our customers. And again it's a balance that we think we're going to be able to manage fairly well.

[Operator]

That concludes today's question-and-answer session. Jose Mas, at this time, I will turn the conference back to you for any closing remarks.

[Jose Mas, CEO & Director]

All right. So I want to thank everybody for participating today. And we look forward to updating you on our year-end call. Have a great weekend.

[Operator]

This concludes today's call. Thank you for your participation. You may now disconnect.