Company: MTZ
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000015615-25-000021
Chunk: 1859

Company: MASTEC INC
Filing Date: 2025-02-28
Form: 10-K
Item: Item 3
Chunk 1859
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 combination activity, including expansion of the Company’s scale and capacity in renewable energy, power delivery, heavy civil and telecommunications services, which activity resulted in significant acquisition and integration costs in prior periods.  These acquisition and integration activities were completed in the fourth quarter of 2023.  For the year ended December 31, 2023, such acquisition and integration costs totaled approximately $71.9 million, of which $64.1 million was included within general and administrative expenses, and of which $7.8 million was included within costs of revenue, excluding depreciation and amortization.  Acquisition and integration costs for the year ended December 31, 2022 totaled approximately $86.0 million, of which $52.0 million was included within general and administrative expenses, and of which $29.3 million and $4.7 million were included within costs of revenue, excluding depreciation and amortization, and other expense, respectively.  As of December 31, 2023, approximately $0.3 million was included within current liabilities within the consolidated balance sheets related to such costs.

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Note 4 – Fair Value of Financial Instruments

Acquisition-Related Contingent ConsiderationAcquisition-related contingent consideration is composed of earn-outs, which represent the estimated fair value of future amounts payable for businesses, which the Company refers to as “Earn-outs,” that are contingent upon the acquired businesses achieving certain levels of earnings in the future.  As of December 31, 2024 and 2023, the estimated fair value of the Company’s Earn-out liabilities totaled $112.7 million and $77.4 million, respectively.  Earn-out liabilities included within other current liabilities totaled approximately $70.0 million and $29.8 million as of December 31, 2024 and 2023, respectively.  The fair values of the Company’s Earn-out liabilities are estimated using income approaches such as discounted cash flows or option pricing models, both of which incorporate significant inputs not observable in the market (Level 3 inputs), including management’s estimates and entity-specific assumptions, and are evaluated on an ongoing basis.  Key assumptions include the discount rate, which, as of December 31, 2024, ranged from 14.0% to 14.5%, with a weighted average rate of 14.2% based on the relative fair value of the respective Earn-out liabilities, and probability-weighted projections of EBITDA.  Significant changes in any of these assumptions could result in significantly higher or