Company: MTZ
Filing Date: 2025-10-30
Form Type: 10-Q
Source: 0000015615-25-000128
Chunk: 124

Company: MASTEC INC
Filing Date: 2025-10-30
Form: 10-Q
Item: Part I, Item 2
Chunk 124
---
 that may be used are: (i) Level 1 - quoted market prices in active markets for identical assets or liabilities; (ii) Level 2 - observable market-based inputs or other observable inputs, including quoted market prices for identical or similar assets or liabilities in markets that are not active; and (iii) Level 3 - significant unobservable inputs that cannot be corroborated by observable market data, which are generally determined using valuation models incorporating management estimates of market participant assumptions.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.  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 was 10.5% as of September 30, 2025, and probability-weighted projections of EBITDA.  Significant changes in any of these assumptions could result in significantly higher or lower estimated Earn-out liabilities.  The ultimate payment amounts for the Company’s Earn-out liabilities will be determined based on the actual results achieved by the acquired businesses.  As of September 30, 2025, the range of potential undiscounted Earn-out liabilities was estimated to be between $41 million and $95 million; however, there is no maximum payment amount.Earn-out activity consists primarily of additions from new business combinations; changes in the expected fair value of future payment obligations; and payments.  The following table, which may contain slight summation differences due to rounding, provides a reconciliation of changes in Earn-out liabilities measured at fair value for the periods indicated (in millions):Nine Months EndedSeptember 30, 20252024Balance as of beginning of period (a)$112.7 $77.4 Additions0.3 30.3 Fair value adjustments (b)(3.3)0.5 Payments(24.8)(26.0)Balance as of end of period (a)$84.9 $82.2 (a)Earn-out liabilities included within other current liabilities totaled approximately $46.7 million and $70.0 million as of September 30,