Company: MTZ
Filing Date: 2025-10-30
Form Type: 10-Q
Source: 0000015615-25-000128
Chunk: 20

Company: MASTEC INC
Filing Date: 2025-10-30
Form: 10-Q
Item: Part I, Item 1
Chunk 20
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Acquisition-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, 2025 and December 31, 2024, respectively.(b)For the nine months ended September 30, 2025, fair value adjustments related primarily to decreases within the Company’s Power Delivery segment, which were partially offset by increases primarily within the Company’s Pipeline Infrastructure segment.  For the nine months ended September 30, 2024, such adjustments related primarily to increases within the Company’s Clean Energy and Infrastructure and Pipeline Infrastructure segments, which were largely offset by decreases related to acquisitions within the Company’s