Company: MTZ
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000015615-25-000021
Chunk: 2624

Company: MASTEC INC
Filing Date: 2025-02-28
Form: 10-K
Item: Item 7
Chunk 2624
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 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 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 December 31, 2024, the range of potential undiscounted Earn-out liabilities was estimated to be between $21 million and $138 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.  For the years ended December 31, 2024, 2023 and 2022, additions from new business combinations totaled approximately $56.1 million, $1.4 million and $2.8 million, respectively.  There were no measurement period adjustments in either of the years ended December 31, 2024 or 2023, and for the year ended December 31, 2022, measurement period adjustments totaled an increase, net, of approximately $3.3 million and related to a net increase in the Company’s Pipeline Infrastructure segment, partially offset by a decrease in its Communications segment.  For the year ended December 31, 2024, fair value adjustments totaled an increase, net, of approximately $5.2 million and related to increases within the Company