Company: MTZ
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000015615-25-000021
Chunk: 286

Company: MASTEC INC
Filing Date: 2025-02-28
Form: 10-K
Item: Item 5
Chunk 286
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.  As of December 31, 2023, approximately $0.3 million was included within current liabilities within the consolidated balance sheets related to such costs.

75

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 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