Company: MTZ
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000015615-25-000021
Chunk: 2187

Company: MASTEC INC
Filing Date: 2025-02-28
Form: 10-K
Item: Item 5
Chunk 2187
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economic trends and events, including: levels of inflation, market interest rates and/or supply chain disruptions; industry and/or market conditions, including the potential effects of regulatory and other uncertainty, including uncertainty related to the implementation and pace of spending under governmental infrastructure programs and initiatives; project permitting uncertainty; financial, competitive and other conditions, including declines in the operating performance of our reporting units; entity-specific events; the potential effects of longer-term changes in consumer behavior due to regulatory, climate-related or other factors, and other relevant factors or events that could affect earnings and cash flows.

Based on the results of the qualitative assessments for the year ended December 31, 2024, we performed quantitative testing for (i) two reporting units within the Communications operating segment; (ii) one reporting unit within the Clean Energy and Infrastructure operating segment; and (iii) one reporting unit within the Pipeline Infrastructure operating segment.  Factors considered by management in determining the reporting units for which quantitative assessments were performed included the effects of current or expected changes in market conditions on the future business outlook, including, as described above, the potential future effects of macroeconomic trends and events, industry, market and regulatory factors, climate-related or other factors, rates of success on new project awards and levels of operating activity.

For the reporting units for which quantitative testing was performed, we estimated their fair values using a combination of market and income approaches using Level 3 inputs.  Under the market approach, fair values were estimated using published market multiples for comparable companies and applying them to revenue and EBITDA.  Under the income approach, a discounted cash flow methodology was used, considering: (i) management estimates, such as projections of revenue, operating costs and cash flows, taking into consideration historical and anticipated financial results; (ii) general economic, market and regulatory conditions; and (iii) the impact of planned business and operational strategies.  We believe the assumptions used in our quantitative goodwill impairment tests are reflective of the risks inherent in the business models of the applicable reporting units and within the units’ industry.  Estimated discount rates were determined using the weighted average cost of capital for each reporting unit at the time of the analysis, taking into consideration the risks inherent within each reporting unit individually.  Significant assumptions used in testing the reporting units included terminal values based on a terminal growth rate of 3.0%, five to seven years of discounted cash flows prior to the terminal value, including revenue growth and EBITDA margin assumptions, and discount rates ranging from 9.5% to 11.0