J. Marc Lewis - Vice President-Investor Relations José Ramón Mas - Chief Executive Officer George L. Pita - Chief Financial Officer & Executive Vice President.

Matt Duncan - Stephens, Inc. Tahira Afzal - KeyBanc Capital Markets, Inc. Daniel Mannes - Avondale Partners LLC John Bergstrom Rogers - D. A. Davidson & Co. William Bremer - Maxim Group LLC Chad Dillard - Deutsche Bank Securities, Inc. Adam Robert Thalhimer - BB&T Capital Markets.

Welcome to MasTec's Second Quarter 2015 Earnings Conference Call initially broadcast on August 18, 2015. Let me remind participants that today's call is being recorded. At this time, I would like to turn the call over to Marc Lewis, MasTec's Vice President of Investor Relations. Please go ahead..

Thanks, Eric. Good morning, everyone. And welcome to MasTec's second quarter 2015 earnings conference 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 will make no effort 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 these communications.

In today's remarks by management, we will be discussing continuing operations and adjusted financial metrics as discussed and reconciled in yesterday's press release and supporting schedules. In addition, we may make certain non-GAAP measures in this conference call.

A reconciliation of any non-GAAP financial measure not reconciled in these comments to the most comparable GAAP financial measure can be found in our earnings release, our SEC filings, or in the Investors and News sections of our website located at mastec.com.

Also note the comparisons to 2014 comparable numbers are made to the restated quarterly numbers as filed in our 2014 10-K filed on July 31. With us today, we have José Mas, our CEO; and George Pita, our CFO. The format of call will be opening remarks and analysis by José followed by a financial review from George.

These discussions will be followed by a Q&A period, and we expect the call to last about 60 minutes. We have a lot of important things to talk about today, so let's go ahead.

José?.

a slowdown in our Wireless business, and decreasing oil prices, which have had a negative impact on our Oil & Gas segment.

In 2015, these issues, coupled with the decline in the value of the Canadian dollar, extraordinary weather with rain and flooding impacting us across multiple geographies, and the Audit Committee investigation, which required an enormous amount of time and effort from senior management as well as segment management, have resulted in performance that was well below our expectations.

We are disappointed with our results and, quite frankly, I expect more from myself and I expect more from our team.

We recognize we have had multiple issues over the last few quarters, however, I am very confident that over the coming quarters, you will begin to see the opportunities we have in front of us develop, and we are confident in our ability to execute at a high level as we have demonstrated over a long period of time. Now, some second quarter highlights.

Revenue for the quarter was $1.067 billion, EBITDA was $71 million, earnings per share were $0.10, and cash flow from operations was $48 million. Our results for the quarter were negatively impacted predominantly by our Electrical Transmission business.

Revenues in this segment were down $39 million year-over-year and EBITDA was a negative $21 million or a $41 million swing from last year's second quarter. While our Oil & Gas business was also impacted by adverse weather, revenue was up 13%, EBITDA was up 14%, and margins were up slightly.

As we look beyond 2015, we believe the outlook is very strong.

We expect considerable revenue growth and associated margins primarily driven by a very active Oil & Gas market where we expect record revenues, a growing and robust fiber-to-the-home market, driven by gigabit deployment, and an improving wireless market with multiple carriers spending increasing levels of CapEx.

Now I'd like to cover some industry specifics. Our Communications revenue for the quarter was $469 million versus $528 million last year. The drop in revenues, as expected, came from our Wireless business.

Margins in this segment were also impacted by weather and we expect margins to improve for the back half of 2015 versus the second quarter and approximate first half levels. Our current expectations are that Communications margins will be a little lower for the year than we expected due to lower revenue levels in our Wireless business.

We still, however, expect to see over 100 basis point improvement in margins from last year's levels in Communications, this, despite an almost 35% expected organic decline in our Wireless business.

As volume returns in Wireless, we are in a good position to leverage our resources and geographic presence, which we think will have a very positive effect on overall Communication margins in 2016. In our install-to-the-home market, as has been expected, AT&T recently closed on the acquisition of DIRECTV.

We look forward to working with our customer to maximize the value of the acquisition, and we feel we have good opportunities to maintain or grow our business.

We are beginning to see increased activity again relative to the AT&T Digital Life product, and as we announced last quarter, we are providing expert for Sprint's Direct 2 You initiative, which continues to ramp to new cities across the country weekly.

Wireline revenues for the quarter were up over 20% year-over-year and we continue to see strong demand in everything from electric distribution to fiber rollout and expansion. We expect gigabit revenues will continue to ramp, and expect considerable growth as we begin to ramp construction activity based on current backlog.

Our Wireless business, as expected, was down year-over-year. However, as we have previously said, we were in a very different position going into 2015 than what we faced in 2014. As you may recall, we entered 2014 expecting significant Wireless growth with the award of a contract in late 2013.

We aggressively ramped our resources and the revenues didn't materialize. We struggled from a margin perspective in this business in 2014 due to having to adjust resources during the year.

We started 2015 rightsizing this business, and margins are significantly better for the first half of 2015 compared to 2014, and we expect margins in the second half of 2015 to outpace last year's margins as well. Margins improved despite roughly a 40% negative organic growth in the quarter and revenue softness from our primary customers.

For example, one customer, where volume had been growing nicely, has slowed its rollout while they determine their optimum architecture. As these decisions get finalized, the industry and MasTec should see an uptick in activity.

We expect increased levels of Wireless spend in 2016, and combined with our scale and geographic presence, we expect a return to solid revenue growth in 2016. Revenue in our Electrical Transmission business was $78 million versus $117 million in last year's second quarter.

The Transmission group's performance in the second quarter was negatively impacted due to extreme weather conditions, right-of-way access, material escalation, and estimates of future cost. One large transmission project required demobing and remobing after several weeks due to the right-of-way being completely flooded.

Foundations and equipment were under water. This project substantially finishes in late September. Another large project had weather impacts causing revenue and margin fade due to the effect of increased material and labor to deal with construction weather-related challenges.

Future project estimated costs were taken into account for these potential construction conditions. While neither of these projects will finish in the last position, we significantly increased the cost to complete for both, which caused a large loss for the quarter.

This segment was also greatly impacted by the Audit Committee investigation, requiring an enormous time of energy throughout the entire organization from senior management to project staff. While we expect their performance to improve, our guidance assumes a roughly breakeven EBITDA performance for the balance of the year.

We are seeing a very competitive environment with a number of jobs being pushed out into 2016. Despite this, bidding activity is robust and we believe the business will get back to a normalized state. Moving to our Power Generation & Industrial segment, revenue was $103 million for the second quarter versus $95 million in the prior year.

EBITDA margins improved to nearly 8%, almost doubling last year's performance. The bidding environment for 2016 is strong and we expect continued improved performance from this segment. Our Oil & Gas Pipeline segment had revenues of $411 million for the second quarter compared to revenues of $365 million in last year's second quarter.

EBITDA margin for this segment was 10.1%, up from 6.6% sequentially. For 2015, this segment is being negatively impacted by Canadian dollar decline, a challenged Canadian CapEx environment and depressed commodity prices. However, the outlook for 2016 and beyond continues to improve.

During the second quarter, MasTec closed on its joint venture with Grupo Carso and Energy Transfer. Under these ventures, our consortium will build, own and operate 337 miles of 42-inch pipelines in the U.S., providing transportation services for CFE, the Mexican electric company.

Subsequent to quarter end, MasTec signed a construction agreement with the consortium to build the pipeline. That contract will be included in our backlog totals next quarter. In addition, MasTec has been awarded and is in final stages of contract negotiations on other U.S.

pipeline projects exceeding $1 billion in value which we expect to add to backlog over the balance of 2015 with the majority of that work to be completed in 2016. We also remain very active as it relates to opportunities in Mexico.

We expect Mexico to offer us excellent opportunities related to pipeline construction in-country, and expect to have active projects in 2016. To recap, 2015 is a challenging year for us. We understand we've had significant issues over several quarters. However, I want to reiterate the confidence we have in our business.

We believe our growth in 2016 will be driven primarily by our Oil & Gas, wireline and wireless markets. Again, with current negotiation and bidding, we expect our Oil & Gas business to have a record year in 2016.

We expect continued growth of our gigabit business and the related opportunities, and we expect demand for our Wireless business to grow in 2016 as carriers ramp CapEx levels. I would now like to turn the call over to our CFO, George Pita, for our financial review..

AT&T was 17%, DIRECTV was 12%. Momentum Midstream was 9%. Berkshire Hathaway Energy, Plains All American Pipeline, Duke Energy and Wisconsin Energy were 3% each, and Energy Transfer, Sprint and CNRL were each at 2% of total revenue.

Individual construction projects comprised 55% of our second quarter revenue with master service agreements comprising 45% and this mix is generally in line with recent trends. At quarter end, our 18-month backlog from continuing operations was approximately $4.1 billion compared to $3.9 billion last year and $4.2 billion at the end of last quarter.

As mentioned earlier, we have several large awards not in backlog yet and we expect significant growth in our Oil & Gas backlog during the balance of 2015 as we look forward to a strong 2016 for this segment.

As we have said for a long time, backlog numbers can be lumpy and bounce around some and we do not believe that 90-day swings in backlog are necessarily indicative of the longer-term trends in our overall business. Please keep in mind that our backlog amounts can fluctuate just due to the timing of when contracts get signed.

We do not count contracts signed after quarter end in our reported backlog and we do not count verbal assurances. Also, please note that our backlog numbers are only for 18 months into the future. It means that some significant and longer duration projects may not be fully reflected in backlog.

Lastly, our longer-term master service agreement work is reflected in backlog only at its 18-month value even if the MSA contract runs beyond the 18-month period. Second quarter 2015 continuing operations adjusted EBITDA was $71 million compared to $108 million last year.

On a rate basis, second quarter continuing operations adjusted EBITDA was 6.7% compared to 9.8% last year, a 310 basis point decrease, with 250 basis points of this decline due to losses at our Electrical Transmission segment.

Regarding other areas of the income statement, second quarter 2015 depreciation and amortization expense was in line with our expectation, at 4% of revenue compared to 3.3% last year, and this reflects the impact of the Pacer and WesTower acquisitions completed during 2014.

Second quarter 2015 GAAP general and administrative expense, as a percentage of revenue, was 6.5% compared to 4.9% in the second quarter of 2014.

On a dollar basis, second quarter 2015 GAAP general and administrative expense increased approximately $15 million over last year with virtually all of these increase due to WesTower integration costs and Audit Committee investigation related costs incurred during the quarter.

Interest expense during the second quarter of 2015 was flat compared to last year at $12.9 million and this level includes approximately $800,000 of cost incurred during the quarter for consent solicitation agent fees to extend financial reporting deadlines for our senior notes.

As I mentioned earlier, we are now current with all our reporting requirements. Second quarter 2015 GAAP, provision for income taxes was $1.4 million, and this includes $2.8 million of a provision recorded during the quarter to reflect the impact of a tax law change in Alberta, Canada.

Excluding the impact of this item, we expect our tax rate for fiscal 2015 to approximate 44.5% and our rate expectation for the 2015 year has increased due to lower levels of overall income as well as lower levels of foreign earnings which are typically taxed at lower statutory rates than U.S. operations.

And finally, second quarter 2015 continuing operations adjusted diluted earnings per share were $0.10 compared to $0.42 last year, and continuing operations diluted loss per share was $0.05 compared to continuing operations diluted income per share of $0.39 last year. Now, let me talk about cash flow, liquidity, and our capital structure.

On a year-to-date basis, we have generated $166 million in cash flow from operations compared to $55 million last year, a $111 million increase, despite lower earnings levels. Our second quarter 2015 accounts receivable days sales outstanding, or DSOs, were 86 days compared to 92 days for the second quarter of 2014, a six-day decrease.

As we have previously indicated, we expect the DSOs should normally range in the mid to high 80s. We continue to anticipate strong full year 2015 cash flow from operations when compared against last year. Regarding our spending on capital equipment, second quarter 2015 cash CapEx, net of disposals, was $26 million.

We added approximately $14 million in capital leases and other financed equipment purchases for a total CapEx spend, net of disposals, of $40 million.

Year-to-date, we have incurred $44 million of cash CapEx, net of disposals, and added $27 million in capital leases and other financed equipment purchases for a total CapEx spend, net of disposals, of $71 million.

We have moderated our planned CapEx spend in the second half of 2015 and now estimate that we will spend approximately $70 million in cash CapEx with an additional $40 million to $50 million in finance CapEx, for a total CapEx of $110 million to $120 million for the year.

Liquidity at June 30, calculated as cash plus availability on our senior revolving credit facility, was $473 million compared to $572 million at the end of the first quarter. Despite lower levels of expected 2015 earnings, our capital structure and liquidity are strong, thus affording us the financial flexibility to pursue strategic opportunities.

That said, we recognize that given lower expected 2015 earnings performance, leverage levels will be slightly higher than historical levels. We believe that leverage levels will significantly improve with the combination of improved 2016 earnings and continued strong cash flow from operations.

Moving on to our 2015 full year guidance, we are now projecting annual revenue of $4.2 billion to $4.3 billion, with continuing operations adjusted EBITDA of $325 million to $340 million, and continuing operations adjusted diluted earnings per share of $0.73 to $0.83.

Our 2015 full year guidance includes the impact of our first half results as well as the negative impact of approximately $0.05 per share from a higher than expected 2015 income tax rate, which is now assumed at 44.5%.

Our estimate for the full year share count per diluted earnings per share is about 81 million shares and 80.5 million shares for Q3 and Q4, and these estimates reflect the repurchase of over 5 million shares during the first half of 2015.

We currently estimate third quarter 2015 revenue will range between $1.1 billion to $1.2 billion from continuing operations and continuing operations adjusted EBITDA will range between $100 million to $108 million and continuing operations adjusted diluted earnings per share will range between $0.31 to $0.37 per share.

If you do the math, you will note that our revenue guidance assumes that second half 2015 revenue levels will increase between 3% to 8% over first half 2015 levels and this is due to the expected seasonality of our business. This guidance also assumes second half 2015 revenue will decrease in the mid double-digit range versus second half 2014 levels.

And this is due to lower expected levels of Canadian Oil & Gas revenues, which is the result of combined decreased demand and the impact of foreign exchange rate changes, as well as expected revenue declines during the second half of 2015 versus last year in Electric Transmission and Wireless services.

Our guidance also assumes improved second half 2015 EBITDA when compared to first half results.

And this is expected due to the seasonality of our Oil & Gas business, as well as the non-recurrence of $16 million in first quarter 2015 Canadian wind farm project losses and improved Electrical Transmission segment results when compared to the first half performance.

In summary, we've had a challenging first half start to 2015, particularly in Q2, but we believe that the 2016 outlook is strong and that we are well positioned to capitalize on various growth opportunities across the markets we serve in the U.S., Canada and Mexico.

And that concludes my remarks and now I'll turn the call back to the operator for Q&A.

Operator?.

Thank you. And we'll take our first question from Matt Duncan with Stephens Investment..

Hey, good morning, guys..

Good morning, Matt..

So José, I want to start by talking about the issues in the Electrical segment. So if I'm hearing you guys correctly, it sounds like you're pretty confident that most of the issue there is really tied to the distraction from the accounting review.

So can you talk a little bit more in detail about sort of how your people were distracted, what it did to your ability to win awards, and how quickly do you think you can get that segment sort of back on track?.

Sure, Matt. There is no question in my mind that the entire segment was extremely involved in the investigation.

Numerous people from all over the organization had to play a significant role during the investigation, which unquestionably took from their focus their time, their attention to the business, and I think it's reflected in the results of the business. I think that's behind us. There's no question that we've struggled on some jobs.

We're hoping that as everybody refocuses on the business, things get better, life resumes to normal, jobs improve, and our win and our success rate going forward gets a lot better. We've got a lot of bids outstanding in that group right now. We feel really good about a couple of them.

And it's hard to put into words the frustration that I know they felt, and they did a great job in getting through it. But no question, it was an enormous amount of time, effort and distraction for both them and the company as a whole..

Okay. And then second question, I'll hop back in the queue. You sound extremely confident in the outlook for the business in 2016 on a number of fronts. The stock has obviously gotten pretty significantly beat up here and I understand there's obviously going to be some constraints on the balance sheet.

But how are you guys thinking about the potential for repurchasing some stock here or are you guys personally stepping up and buying stock and sort of sending the message of how confident you are here in the business as we look out to next year?.

We've always said we're going to be very opportunistic as it relates to buying back stock. Our position hasn't changed. We obviously bought back a considerable amount of stock earlier this year. It's definitely something that's on the table as is personal buying as well. So I think we're very bullish on the future.

We're very bullish on what's going to happen. We're very disappointed as to where we stand this year. And I think, over the coming months, we'll demonstrate our confidence in the business going forward..

Okay. Thanks..

Thank you..

The next question is from Tahira Afzal with KeyBanc Capital Markets..

Good morning, José and team..

Good morning, Tahira.

How are you?.

number one, DIRECTV and AT&T have merged, they have laid out a CapEx plan; number two, you've seen several of your midstream – core midstream customers really come out with new adjusted CapEx plans and outlook.

As you look into next year, and you've indicated strong outlook, has there been any change on the margin and what the drivers are for next year?.

Well, let's talk about margins for a second, right. I think that obviously, our margins this year are below our expectations. Again, we're disappointed with the results that we're going to deliver in 2015. Our business is really driven by utilization levels. And unfortunately, this year across a number of our businesses, utilization has been really low.

Even our Oil & Gas business that we think is performing okay right now is very underutilized relative to what their opportunity and their potential is from a revenue output. I think that will take care of itself because I think the amount of demand in that industry for 2016-2017 and beyond is far beyond what we could have ever imagined a year ago.

We're very excited. We think it's coming. We think it'll be demonstrated by backlog growth in the near future. And I don't think that's just a comment from us. I think that's a comment for the industry. I think that's going to be a fantastic industry for many years to come for lots of reasons.

When we look at our Wireless business, obviously, we've invested heavily there. We think we've got the largest geographic presence. We think we're in a great position to take advantage of that market as it comes back. Bottom line is organic levels are down, north of 40% for the second quarter.

We're having significant negative organic decline on a year-over-year basis. And we think that's going to turn. And the important part of that is even though we've had these massive organic declines, margins are still holding. They're better than they were last year. They're nowhere near where we want them to be or think they can be.

But they're holding, and as that business comes back and revenue ticks up, we think it's going to have a significant impact on margins on a go-forward basis. And we think that's a very important part of our story in 2016. So again, Oil & Gas is going to drive the business just because of what we believe is going to be phenomenal revenue growth.

I think our Wireless business is going to come back strong with the associated margins. Our Wireline business and everything associated with gigabit, whether it's electric distribution, fiber deployment, that business is going to be fantastic for time to come.

I think on a year-over-year basis, our comps in Electrical Transmission are going to be obviously very low. And I think we'll get that business back on track. Power Gen is very doing well. So we're very excited about 2016 what it brings to us.

The AT&T and DIRECTV merger is something that we think we've got a great opportunity to, at a minimum, maintain our business. We think there's some solid growth opportunities that hopefully we'll be able to talk about as time goes on. But we're excited.

It's unfortunate the year that we're having, it's unfortunate the last 18 months that we've had as a business, but I think it's about to turn and turn in a very positive way..

Got it. Thank you. Then, I guess, follow up to that, if I look back 2013 was a year when you had Oil & Gas really hit on all cylinders. And it seems you were excited you could potentially beat that. At that point, you had operating margins of 7%.

As I look into next year, is there any reason why you couldn't reach those other than just execution and weather?.

We should absolutely reach that. And I think revenues will far exceed 2013 levels..

Thank you very much..

Thank you, Tahira..

Our next question is from Dan Mannes with Avondale Partners..

(38:36) everyone..

Good morning. Dan..

So I was wondering if you could help me a little bit. Obviously, you've spent a lot of time talking about the second quarter. But when you look at your secondhalf guidance, it looks like relative to the previous guidance, there's maybe in the range of $60 million of lower EBITDA. Now, obviously the Electric business will be a piece of that.

But can you maybe walk us through what's changed in your secondhalf view relative to maybe the last time you gave guidance? Because I'm having a little bit of trouble bridging that..

Sure. So I think if you take that $60 million, and let's just use that as a number for now, about half of that is the Electric Transmission business. So the roughly $60 million goes to $30 million.

We expect probably a couple of hundred million lighter in activity than what we initially thought with a lot of that being in Wireless, so there's an associated margin that goes with that that obviously takes off that as well.

And then I think we've got some – I think those two are the big buckets, and then everything else is relatively small in comparison to the differences for the second half of the year. Those are the two big drivers..

Got it. And then the other thing I was going to ask, on the Electric side, given some of these challenges, and I know you said you don't have any projects going to loss, but certainly you've seen some margin fade.

Any thoughts on – Idon't want to say retrenching, but looking maybe about bidding policy, things like that, are there changes you can make fundamentally to the business? Or do you think you were running it fine before, this is just bad luck?.

Well, I think we've done a great job in that business over many years of really building that business on an organic basis. As you recall, we made one major acquisition there years back. We've dramatically grown that business organically for a significant period of time.

I think we've had a little bit of a perfect storm hit us in terms of a couple of projects that either were pushed out into 2016, a couple of projects we didn't win, and then having a business that significant amount of its time and focus was involved in something that did nothing to benefit the business.

From things as simple as rightsizing the business as the business was shrinking, we were very constrained on what we were able to do in the business because of the Audit Committee investigation. So I think that even managing the business on a day-to-day basis became very challenging with a lot of outside forces influencing that.

I think that's gone, and I think it allows us to go back into that business, make the necessary changes, again, refocus on what we're doing and hopefully improve it very quickly..

Got it. Thank you..

Thanks, Dan..

The next question is from John Rogers with D.A. Davidson..

Hi. Good morning..

Good morning, John..

Could you talk a little bit more about the pipeline projects that you're looking at, or that you've already booked in the third quarter? And specifically, George, you mentioned it looks like you're going to be making about an $84 million equity investment there.

Is that foregone profits that you're donating in there? I mean, are these cash-positive contracts? I just want to understand that a little bit better and any risks associated with this work as an equity investment as opposed to traditional relationships..

We talked extensively about this on one of our last calls and the entire equity contribution relates to two projects that we were awarded in as a consortium member and an RFP process. Both of the projects are in the U.S., and they're basically pipelines to transport gas from the U.S. to Mexico for CFE.

We think that the projects from a return on equity investment are extremely attractive. We've got some incredible partners in that consortium. We decided to invest equity in that deal on a standalone basis irrespective of the construction.

The construction we're going to perform at typical margins, and really it's an added benefit of being able to invest in the project. The project will have billions of dollars of free cash flow over its life. It's an initial term of 25 years with an extension beyond that.

The project will be 80%, 85% financed from the outside, the rest of it will be equity, which is the equity contribution we're making. We'll own a third of that consortium and, again, it's a fantastic project.

It's a fantastic return on our equity and something that quite frankly if we get the opportunity to do in the future, we're going to look very closely at..

Okay. Thanks for that, José.

And then the second question I had was, given that you're through the audit review and some of the issues, have you changed your thoughts on either acquisitions or divestitures of any operations? I mean, did you think about your portfolio of businesses?.

Look, we evaluate our portfolio of businesses all the time. I think that when we look across all of our different segments today, we're very satisfied with the segments we're in. We think each of those segments afford us the opportunity for significant growth over a long period of time.

Quite frankly, irrespective of the issues we've had in our Transmission business, we're very bullish on that industry, on where the industry is headed, on the amount of capital that's flowing into that industry, the amount and size of projects on a go-forward basis. So our outlook on that business hasn't changed at all.

We have looked at our internal processes. We have looked at how we're bidding large projects, at how we're tracking large projects. So I think we've made some necessary and appropriate changes to ensure that we're never in this position again on a go-forward basis. But our outlook on the industry and on being in the business has not changed..

Okay. Thanks, José. Congratulations on getting through this..

Our next question is from William Bremer with Maxim Group..

Good morning, José. Good morning, George..

Good morning, Bill..

Could we just go into a little bit of the current pricing of the bookings per segment, and how the pricing at this time is going into each segment?.

Well, I think when you look at Oil & Gas, I think pricing in oil and gas market is actually quite strong. I think the market was slow in early 2014. I think it improved towards the back half of 2014 and I think it's actually stayed pretty solid. Obviously, you have pockets where things become more competitive.

Some of the shorter-term work is more competitive because people are trying to stay busy in anticipation of what's expected to be a very active future. When you look at our Communications business, obviously, there's a lot going on there and we've got multiple segments on the Wireline business. I think you're going to see price escalation continue.

The wireless market has obviously – it's having a difficult year relative to the overall industry. So again, from a short-term basis, I think you see margin pressure. On a longer-term basis, I don't think there's significant margin pressure. Our Power Gen business is improving and I think pricing there and pricing potential there is getting stronger.

And in Transmission, again, you've got some short-term projects that I think have more of a margin drag than – or more margin dynamics than you do on long-term project. So again, as we look forward, I don't think margins and pricing's an issue in the industry.

Quite frankly, in most of those industries, I see pricing getting a lot better in the short term..

Okay. My follow-up is on the pipeline arena, the very large amounts of projects that are not in backlog right now. And more importantly, potentially performing some work in-country in Mexico.

Can you just speak on those two, please?.

Well, what we've said today is we signed the deal with the consortium to build the pipeline in the U.S., which is obviously a significant size, over 300 miles of 42-inch pipe. That's a very sizable job that will go into backlog in the third quarter. Also since quarter-end, we've been awarded over $1 billion of U.S.

pipeline work, which I'm sure some of it will go in backlog in Q3, and some of it will go in backlog in Q4. But it'll obviously be a significant increase to our current backlog. There's a lot more out there. There's a lot. It's a very, very active market today.

I think when all is said and done, we're going to be very, very full towards the end of the year as it relates to 2016. I think we're going to have significant 2017 bookings already in hands (47:38) as we finish 2015. And then I think as you look at Mexico, it's a whole other market. It's one that we've been talking about now for several quarters.

We've been in country there for a long time. Very optimistic about what's going on there. And I think there's no doubt in my mind that we'll be building pipe in Mexico next year. And I think awards on that will also come shortly..

Great. Thank you..

Thank you, Bill..

The next question is from Vishal Shah with Deutsche Bank..

Hi. This is Chad Dillard on for Vishal..

Hey, good morning..

Good morning. So, I just wanted to go back to the Electrical Transmission segment.

So, if you back out the underperforming projects, can you talk about what the margins would look like? And then also I know you mentioned that one of those projects would be rolling off in September, but I just want to get a sense for the other ones just in terms of timing for project roll off?.

Well, I think to (48:40) margin drag on a couple of projects, and then you have significantly lower revenues than what we're anticipating. So, as we look at the back half of the year, I think we have a very moderated look on what our revenues are going to be relative to our original expectations.

And based on that revenue level, which is challenging relative to our overall cost basis, we expect EBITDA margins to either be breakeven or slightly positive, which I think is a reflection of where the business is at those revenue levels..

Okay. And then so it seems like you see some pretty positive opportunity over the near term in Oil & Gas, but may take a little bit to get Electrical Transmission back towards growing backlog.

So my question is like what sort of flexibility do you have to shift resources from one segment to another just to improve that utilization?.

Well, I think when you look at Transmission and Oil & Gas they're obviously different. We've got – I don't know that they're fully transferrable from one end – from one segment to the other. At the end of the day, we're going to right size our Electrical Transmission business to the business they have.

We've been working very hard at positioning ourselves to take advantage of the growth in the Oil & Gas market. We've been hiring people, we've been hiring key superintendents.

We bought a lot of equipment over the last couple of years and we think we're very well poised and ready for what we think is going to be a significant growth in that market and our ability to execute on that..

Okay. Thank you..

And our next question is from Adam Thalhimer with BB&T Capital Markets..

Hey. Good morning, guys..

Good morning, Adam..

Hey, José, in the Oil & Gas business, I mean I guess there will be this year with oil and gas prices down and production starting to flatten out.

Well given that backdrop, I mean why – what really drives strong pipeline spend in the next few years?.

Well, it's specific projects, right? So I think you've got a dozen extremely large pipelines that are all, in my opinion, going to get built. There are very specific reasons why each of those projects are going to get built. We're not going to get obviously all of those.

But I think as an industry, there's an enormous amount of work that, I think, many will benefit from. I think you're seeing a lot of those pipelines currently being awarded, being divvied out to multiple contractors, so I think the backlog building season for contractors in general is going to be very strong. Some work starts in late 2015.

A lot of work starts in early 2016. I think we've been tracking those projects. I think the majority of those projects are going forward. Pipes been bought, right of way has been procured. Some final permits are waiting, and then you're going to see an enormous amount of activity.

So, we feel very strong about what's happening and we think that goes well into 2017 and 2018 regardless of where oil prices are.

Again, we're working on a significant number of projects that have nothing to do with oil that obviously are gas related with the price of where gas is added, say, it's a very cheap natural resources that I think they're figuring out ways at how to ultimately use that and benefit from that.

And I think a lot of projects that you're seeing are based on that..

Okay. Good.

And then the Fiber business, how does that works? Are you seeing chunks of work to bid on or is that more a situation where you need to go out and procure more MSAs?.

Well, I think you have two natures to the business. You have a lot of incumbents that are working. You've got obviously new entrants. I think from an incumbent perspective, obviously having MSAs is beneficial because you get the opportunity to be there in that market working.

There are a lot of MSAs currently going out specifically or contracts going out specifically for gigabit work, and we're participating in those and think we're going to get our fair share of that. So, it's a very exciting market, one that we think there's going to be tremendous growth for years to come.

Obviously, we got our foot in that earlier this year. The work that we have quite frankly doesn't really ramp in any significant way until 2016 that we currently have in backlog, and with a lot of other opportunities that we're looking at, we feel good about our ability to continue to grow that at a nice clip..

Okay. Thanks, José..

Thanks, Adam..

It appears there are no further questions at this time. Mr. Mas, I'd like to turn the conference back to you for any additional or closing remarks..

Sure. I'd like to thank everybody for participating on today's call and for their interest in MasTec. And I look forward to updating everybody on our third quarter call. Thank you..

This concludes today's call. Thank you for your participation..