Q4 2023 MasTec Inc Earnings Call
Participants
J. Marc Lewis; VP of IR; MasTec, Inc.
Jose Ramon Mas; CEO & Director; MasTec, Inc.
Paul Dimarco; Executive VP & CFO; MasTec, Inc.
Adam Robert Thalhimer; Director of Research & Partner; Thompson, Davis & Company, Inc., Research Division
Andrew Alec Kaplowitz; MD & U.S. Industrial Sector Head; Citigroup Inc., Research Division
Brent Edward Thielman; MD & Senior Research Analyst; D.A. Davidson & Co., Research Division
Brett Castelli; Equity Analyst; Morningstar Inc., Research Division
Brian Daniel Brophy; Associate; Stifel, Nicolaus & Company, Incorporated, Research Division
Justin P. Hauke; Senior Research Associate; Robert W. Baird & Co. Incorporated, Research Division
Marc Gregory Bianchi; MD & Senior Energy Analyst; TD Cowen, Research Division
Min Chung Cho; Research Analyst of Diversified Industrials; B. Riley Securities, Inc., Research Division
Neil Singhvi Mehta; VP and Integrated Oil & Refining Analyst; Goldman Sachs Group, Inc., Research Division
Sangita Jain; Associate; KeyBanc Capital Markets Inc., Research Division
Steven Fisher; Executive Director and Senior Analyst; UBS Investment Bank, Research Division
Presentation
Operator
Welcome to MasTec's Fourth Quarter 2023 Earnings Conference Call initially broadcast on Friday, March 1, 2024. Let me remind participants that today's call is being recorded. At this time, I'd like to turn the call over to our host, Marc Lewis, MasTec's Vice President of Investor Relations. Marc?
J. Marc Lewis
Thanks, Maddie, and good morning, everyone. Welcome to MasTec's fourth quarter call.
The following statement is made pursuant to the safe harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. In these communications, we may make certain statements that are forward-looking such as statements regarding MasTec's future results, plans and anticipated trends in the industries where we operate. These forward-looking statements are the company's expectations on the day of the initial broadcast of the call. And the company does not undertake to update these expectations based on subsequent events or knowledge.
Various risks, uncertainties and assumptions are detailed in our press releases and filings with the SEC. Should one or more of these risks or uncertainties materialize or should any of our underlying assumptions prove incorrect, actual results may differ significantly from results expressed or implied in these communications today.
In today's remarks by management, we'll be discussing adjusted financial metrics reconciled in yesterday's press release and supporting schedules. In addition, we may use certain non-GAAP financial measures in this conference call. A reconciliation of any non-GAAP financial measures not reconciled in these comments to the most comparable GAAP financial measure can be found in our earnings press release.
Please note that today, we have two documents associated with the webcast on the Events & Presentations page of our website at mastec.com. There is a companion document with information and analytics about the quarter and year just ended and a guided summary for 2024 to assist you in developing your financial models going forward. Both PDF files are available for download.
With us today, we have Jose Mas, our Chief Executive Officer; and Paul Dimarco, EVP and Chief Financial Officer. The format of the call will be opening remarks and announcements by Jose, followed by a financial review from Paul. These discussions will be followed by a Q&A period, and we expect the call to last about 60 minutes.
We had a nice quarter and a lot of important things to talk about today, so I'm going to go ahead and turn it over to Jose. Jose?
Jose Ramon Mas
Thanks, Marc. Good morning, and welcome to MasTec's 2023 Fourth Quarter and Year-End Call. Today, I'll be reviewing our fourth quarter and full year results as well as providing my outlook for 2024 and the markets we serve.
First, some fourth quarter highlights. Revenue was $3.3 billion, a 9% year-over-year increase. Fourth quarter adjusted EBITDA was $231 million and fourth quarter adjusted EPS was $0.66.
For the full year, 2023 revenue was $12 billion, a 23% year-over-year increase. 2023 adjusted EBITDA was $860 million, a 10% year-over-year increase. 2023 full year adjusted earnings per share was $1.97. And full year cash flow from operations was $687 million. And net debt was reduced by $535 million since the first quarter.
In summary, our fourth quarter performance was slightly better than our guidance with strong performance in our pipeline business and strong cash collections across the entire business. While we enjoyed year-over-year growth in both revenue and EBITDA, our performance was significantly below our original expectations.
As we discussed in detail on our last call, we had a number of challenges related to the acquisition of IEA, coupled with moderated spending by customers in the second half of the year. While we expect some continued pressure in the early part of 2024, I'd like to walk through a number of positive developments that I believe will have a significant impact on our ability to grow both revenue and earnings and get back to our long-term targeted revenue goals.
During the fourth quarter, in our Communications segment, we significantly expanded our relationship with our biggest wireless customer, AT&T. In addition to the maintenance contract we announced on our third quarter call, AT&T expanded both our scope and geographic territory on our core wireless work.
This expansion, coupled with their recent announcement of a complete swap-out of Nokia equipment to Ericsson equipment over a 5-year period, is expected to significantly increase our wireless business over the next few years. While we won't see the impact of this new award until the second half of 2024, this award alone should increase our 2025 segment revenues by double digits.
This, coupled with the continued demand for our wireline services, where we saw double-digit growth in 2023, and the expected impact of BEAD's funding, gives us great visibility for future years. We've invested heavily in our Communications segment. And we believe starting in the second half of 2024 and beyond, the benefit of these investments will be materialized with solid revenue growth and, more importantly, improved margins.
Our Oil and Gas pipeline segment overperformed as revenue and EBITDA both came in higher than estimates. On our third quarter call, we guided pipeline revenues down with the same EBITDA dollars for 2024, resulting in higher margin expectation. This is due to the expected completion of the MVP project during the second quarter of 2024.
While we're holding that guidance, we are very encouraged about the strength in this market. While backlog is down, demand is actually up considerably. We expect this segment to return to a more book-and-burn cadence as it relies less on larger projects.
We're also really encouraged about 2025 and beyond. Based on verbal awards and, obviously, based on project timings, we expect this business to grow in 2025. We had previously talked about a longer-term expectation of annual revenues in the range of $1.5 billion to $2 billion. We now expect long-term annual revenue to consistently be at or above the higher end of the range.
Our Power Delivery business performed slightly above expectations in the fourth quarter and secured long-term extensions and expansions during the quarter with current key customers. Post quarter end, a negative rate case ruling in Illinois has impacted our customers in the state. Having a large presence in the area, we've moderated 2024 revenue expectations to be roughly flat to 2023. We're hopeful that this will be conservative but feel as prudent as we think about 2024 segment revenues.
Exelon, who owns one of the utilities in the state, has significantly cut capital expenditures for distribution spend in Illinois but has also announced increases in transmission spending in the state and increased CapEx outside of Illinois. We believe we are well positioned to participate in that growth but again have taken a conservative view until we have better clarity.
While we've experienced some fluctuation in capital spending by different utilities in different geographic areas in the second half of 2023, some of which we continue to expect in early '24, there is no question about the need and commitment for significant capital spending on our nation's electrical infrastructure. Expectation for load growth is increasing across the country. And a number of utilities this quarter announced increases to their expected capital spending.
It's important to remember that in 2021, just 2 short years ago, MasTec's Power Delivery business generated $1 billion of revenue for the year. We closed out 2023 generating over $2.7 billion or nearly a threefold increase in revenue in just 2 years. With the integration efforts of the acquisitions in Power Delivery behind us, we believe we are better positioned than ever.
While the majority of our business is recurring MSA-driven, our project business has the greatest opportunity for growth. We are currently bidding on a number of very large projects, any one of which individually could grow the segment by double digits annually. After spending the last few years building out our platform geographically, we are really excited about this segment's future.
Finally, in our Clean Energy and Infrastructure segment, margins were in line with our expectations for the fourth quarter. We spent a lot of time on our last call talking about the issues and challenges we faced in 2023. I'd like to spend time today on 2024 and beyond and what we're seeing in the market. Today, we've guided segment revenues of $4.4 billion for 2024. This compares to about $4 billion in 2023.
To add some color, our renewable revenue was budgeted by performing a bottoms-up project review. For example, we built an estimate of every project we've won or believe we will win and estimated a cadence of quarterly revenue. We took into account potential challenges and risks projects may face and took a conservative view. All this to say that our process for 2024 is significantly different and more conservative than last year.
While short-term challenges still exist, we strongly believe in the long-term fundamentals of this segment. The undeniable shift towards renewables and the cost-competitiveness they offer create significant opportunities for the market. We continue to believe that we have significant opportunities to grow revenue. And 2024 does not reflect the growth potential we expect to achieve.
For example, between what we've been awarded and expect to be awarded over the next 2 quarters, not only does it solidify 2024 revenue but actually carries over a similar amount of revenue into 2025. With continued strong demand, our growth potential in 2025 and beyond should help us achieve our original annual revenue goals for this segment.
In summary, while we know we've had our challenges, we are incredibly bullish about our ability to grow our business and build scale to deliver to our customers safe and cost-competitive solutions to help them meet their infrastructure needs. I strongly believe that the investments we've made in the last few years to build scale along our vertical offerings and position ourselves as a leader in the businesses we operate in will translate to not only strong levels of revenue growth but the ability to meaningfully improve margins.
I want to make sure I emphasize that thought. I truly believe that the most successful companies in our space are those that have the scale to meet our customers' demand. Our customers' projects have significantly increased in size and scope. And there is no question that our customers want to simplify and work with less partners.
I believe that over the last few years, our biggest accomplishment has been to position ourselves as one of only a few partners that's viewed throughout our industry as a partner whose size and scale affords us capabilities to take on any project. While I'm proud of that accomplishment, I also understand the need for this advantageous positioning to be reflected in our financial results.
I'm optimistic that our results will show continued improvement throughout 2024. As we expect revenue to be more predictable and consistent, we are working and focusing on improving margins. While incremental revenue has a very positive impact on margins, as we reach our desired scale across our segments, it allows us to focus on maximizing efficiency. Again, I'm looking forward to the opportunities that 2024 and beyond bring and providing our stakeholders with better consistency in our performance.
I'd like to take this opportunity to thank the men and women of MasTec. The men and women of MasTec are committed to the values of safety, environmental stewardship, integrity, honesty and in providing our customers a great-quality project at the best value. I also know how competitive our people are and the desire they have to perform at a very high level. I know they're up for the task.
I'll now turn the call over to Paul for our financial review. Paul?
Paul Dimarco
Thanks, Jose, and good morning, everyone. Before I turn to the financial review, I wanted to provide color on some key developments for 2023 and financial initiatives going forward. Despite the disappointing financial performance and visibility we provided last year, we made significant progress on key areas of our integration in Power Delivery and Clean Energy.
In Power Delivery, we are deploying a regional operating model, consolidating leadership over our various companies in common geographies to drive efficiency and enhanced customer support. In Clean Energy, we are organizing this segment in the market sectors, namely renewables, infrastructure and industrial with the various components of our legacy business and IEA integrated to effectively deliver the full breadth of our operating capabilities to our customers.
We are now focused on fully deploying consistent tools and processes across each segment to put all our teams in a position to excel. We are confident these strategic changes will enable us to capitalize on the robust long-term demand afforded by our end markets.
From a financial perspective, we are keenly focused on capital allocation to ensure we are generating appropriate returns on the capital we deploy. As we look at investments for organic growth, we have enhanced our evaluation of capital expenditure allocations to drive higher utilization of owned equipment and operating profit. Coupled with our ongoing working capital initiatives, we expect to drive higher returns on invested capital and improve our strategic flexibility.
Now I will turn to our 2023 financial review. Fourth quarter revenue was $3.3 billion, in line with our guidance. And adjusted EBITDA was $231 million or 7.1%, exceeding guidance by approximately $10 million. Adjusted earnings per share was $0.66, exceeding guidance by $0.22, driven primarily by the adjusted EBITDA beat.
Accordingly, annual 2023 results followed suit. Revenue of $12 billion was in line with our guidance while adjusted EBITDA of $860 million and adjusted earnings per share of $1.97 both exceeded our annual guidance expectations.
We generated almost $500 million of cash flow from operations in the fourth quarter, bringing the total for 2023 to $687 million. This exceeded guidance by almost $300 million, driven by a significant improvement in DSO, which at 74 days was down 11 days sequentially from the third quarter.
Our liquidity remained very strong at $1.6 billion. Cash flow generation has been a key area of focus for MasTec. And we are very pleased with the efforts displayed across the company to achieve these results. Our strong cash flow performance resulted in net debt at year-end of $2.5 billion, a $315 million reduction year-over-year and puts net leverage at 2.9x.
18-month backlog at year-end totaled $12.4 billion with sequential growth in each segment, excluding Oil and Gas pipeline due to the significant work performed on MVP in Q4. I'll cover more details on the individual segments shortly.
Turning now to the segment performance and expectations. Fourth quarter Communications revenue was $760 million with an adjusted EBITDA margin of 7.6%, both in line with guidance. Annual 2023 Communications segment revenue was $3.26 billion, flat year-over-year, with adjusted EBITDA margins declining 140 basis points to 8.9%. As we discussed last quarter, the reduction in second half volume had a negative impact on operating leverage and margins.
Our outlook for this segment continues to improve, particularly on the wireless front, where AT&T has revised its long-term build plan and is consolidating its vendor base to drive efficiency. We expect to begin realizing the benefits of these consolidations in the second half of 2024 and be fully ramped in 2025.
Based on preliminary estimates, these developments should drive 10%-plus revenue growth in the segment. You can see these benefits begin to come through in the segment backlog, which grew by approximately $325 million versus Q3. We anticipate that Communications segment annual 2024 revenue will approximate $3.5 billion with adjusted EBITDA margin improving 50 to 60 basis points year-over-year.
Q1 revenue is expected to be $700 million with adjusted EBITDA margins in the mid-single-digit range. Q1 guidance reflects historical trends of a modest decline in volume sequentially from the fourth quarter as well as potential short-term disruption from the realignments in our wireless business. We expect year-over-year growth in the segment for each subsequent quarter of 2024.
Fourth quarter Clean Energy and Infrastructure segment revenue was $1.1 billion, slightly below our guidance, with adjusted EBITDA margin of 4.8%. Full year segment revenue was approximately $4 billion with adjusted EBITDA margin of 4.3%. Backlog for this segment was up slightly from Q3 to $3.1 billion. Of note, year-end backlog includes a reduction in our industrial sector of $200 million due to the previously discussed indefinite pause of construction on the Rochester Hub project.
For 2024, we expect Clean Energy segment revenue to approximate $4.4 billion, representing low double-digit growth. Adjusted EBITDA margins are expected to be in the mid-single digits with at least 100 basis point improvement versus 2023. Q1 revenue is expected to be $775 million, showing a slight contraction versus 2023 due to timing of project burn. We currently expect adjusted EBITDA margins to remain in the low single digits with modest margin expansion versus last year.
Fourth quarter pipeline segment revenue was $800 million with adjusted EBITDA margins of 11.9%. We had good production on a number of fronts, leading to higher adjusted EBITDA margins than anticipated. Annual segment revenue was just shy of $2.1 billion with adjusted EBITDA margins of 13.7%.
We anticipate 2024 pipeline segment revenue will decline to $1.9 billion. We expect adjusted EBITDA to be flat year-over-year at $285 million with the anticipated margin expansion due to a lower contribution of cost-plus work. First quarter revenue will be approximately $600 million with adjusted EBITDA margin in the low double digits. Q1 will likely be the highest revenue quarter for this segment in 2024.
Fourth quarter Power Delivery segment revenue was $658 million and adjusted EBITDA margin was 8%, both in line with our expectations. Annual 2023 Power Delivery segment revenue was approximately $2.7 billion with annual adjusted EBITDA margin of 7.9%.
2024 began with some challenges in parts of our Power Delivery segment as certain customers in Illinois received unfavorable rate case decisions. We are optimistic this will be resolved in the coming months but feel it's prudent to factor in a prolonged appeal process in our outlook.
Accordingly, 2024 annual revenue is expected to approximate $2.8 billion with annual adjusted EBITDA margins similar to 2023. First quarter revenue is forecasted at $550 million, seeing the biggest quarterly impact from this deferred spending and lower levels of transmission activity versus '23 as we transition from certain completed projects to new work expected to start in Q2. The reduced operating leverage will weigh on earnings in Q1 with adjusted EBITDA margins in the mid-single digits.
Annual 2024 Corporate segment costs are expected to approximate 125 basis points of consolidated revenue. And investments reported in our Other segment are expected to generate approximately $30 million of adjusted EBITDA.
Turning to our consolidated guidance announced yesterday. We are projecting 2024 annual revenue of approximately $12.5 billion with adjusted EBITDA approximating $955 million. Adjusted earnings per share is expected to approximate $2.69. This represents double-digit adjusted EBITDA growth and approximately 30% adjusted EPS growth versus 2023.
We expect Q1 revenue of $2.625 billion, adjusted EBITDA of $130 million or 5% and an adjusted diluted loss of $0.48 per share. This expectation includes the combination of a normal seasonally slow first quarter and the Q1 impacts we noted earlier in our Communications and Power Delivery segments.
In terms of the cadence for 2024, we expect the majority of our revenue growth to come in the second and third quarters with Q4 roughly flat last year without any contribution from MVP. Our guidance indicates a 50 basis point improvement in full year adjusted EBITDA margins. And we expect the majority of this expansion to also come during Q2 and Q3.
We expect to generate approximately $550 million of cash flow from operations in 2024, assuming DSOs are in the high 70s over the course of the year. Coupled with the anticipated growth in adjusted EBITDA, we expect to reduce leverage to the low 2s by the end of 2024. We remain committed to maintaining our investment-grade rating and have proactively communicated our outlook to the various rating agencies.
In closing, I've enjoyed the first year of engagement with our analysts and our investor community. I look forward to continuing to build relationships with you and improve our communication and your confidence in our performance and outlook.
That concludes our prepared remarks. I'll now turn the call over to the operator for Q&A.
Question and Answer Session
Operator
(Operator Instructions) We will take our first question from Sangita Jain with KeyBanc.
Sangita Jain
Jose and Paul, if I can ask you on your Power Delivery bookings, you expressed a lot of optimism on the bookings momentum. Can you share with us how close we may be to some of those translating into backlog? Is it like a first half event or later? And also, given that you're working through these large projects, what gives you the confidence in the high single-digit margins in this segment?
Jose Ramon Mas
Yes, so a couple of things. I think that on the project side of our Power Delivery business, where we've been really excited for a period of time, we think we have been really close on a number of projects that we haven't won over the last couple of years. We've obviously been doing a lot of integration as we integrated all the acquisitions that we've made. And I think our -- where we stand in the market today versus where we were a year or 2 ago is a very different place. And I think customers recognize that.
And I think customers are excited about giving us an opportunity to work on large projects. And I think we're going to be very successful this year on being able to attain that. So I do think that over the coming quarters, hopefully, we'll have at least something to announce and talk about and add to backlog, which I think could have an impact as early as 2024. With that said, for margins for the year, we're basically guiding relatively flat margins on a year-over-year basis. So there's not a big change in the margin profile for 2024 as it was in 2023.
Sangita Jain
Great. And if I can follow up with one on Communications, you talked about the AT&T, Ericsson contract. Can you help us understand what your scope may be on the AT&T FirstNet program maybe?
Jose Ramon Mas
So our contract with AT&T is what they call a turf contract, right? So in certain geographic areas, we have exclusivity on specific types of work. And that isn't really changing. So whether -- whatever initiative they'll be doing in the geographies that we've been awarded, we're going to be the ones that perform those services.
Operator
We will take next question from Brian Brophy with Stifel.
Brian Daniel Brophy
Been hearing a lot about the ramp in the tax credit transferability market on the Clean Energy side in recent months. Curious what you guys are seeing here, how impactful it is for your customer base. And how important is it to the Clean Energy outlook overall?
Jose Ramon Mas
Well, there's no question that the sentiment has been improving. Transferability is having a significant impact. But I think more importantly, what we've done as a company is we really went through every project that we see potential on in terms of stuff that we expect to happen in 2024. I think we significantly derisked our expectations relative to understanding where every project stands from a financing perspective, from an interconnect perspective. And I think that while we talked a lot about this last year, it's something that, quite frankly, we don't have to hope to talk a lot about this year.
There are a number of other projects that could hit, quite frankly, that we've probably underestimated their ability to be performed in '24. But anything that has significant risk to it, we've kind of moved it aside and not counted it for '24. But there's no question that the sentiment is improving. The opportunity to use different methods to finance projects has improved considerably since the latter part of next year. And I think as a total industry, we're going to see a significant increase in what comes out in the second half of 2024.
Brian Daniel Brophy
Okay, that's great. And then another one on Power Delivery. Obviously, low single-digit guidance on the top line, probably a little bit lower than some expected. It sounds like some of it kind of a customer mix issue in Illinois. But just curious what you guys are embedding on the emergency restoration side in 2024 relative to 2023, given the easier comp there.
Jose Ramon Mas
So we didn't -- we haven't assumed that it's going to be any better than 2023. 2023 was a really low storm year. It's very difficult to model that. So we have a very -- we have a baseline budget that you've got to include something for. So it's not much different than what '23 was. So I think there's opportunity there.
To be clear on the previous part, I mean, Exelon did announce a significant reduction, right? They've announced a $1.25 billion reduction over 3 years in distribution spend. It is a big area for us. So that is what's having the impact, where we've slightly moderated our revenue target for 2024 in our Power Delivery business.
Operator
We will take our next question from Andy Kaplowitz with Citigroup.
Andrew Alec Kaplowitz
Jose, I just want to go back to your comments on Communications for a second. You did see a significant uptick in sequential bookings as you guys mentioned. You already talked about the higher scope of work with AT&T and Nokia there, Ericsson also transition later this year.
But could you break down what you were thinking in terms of core wireless and wireline for '24? And could you tell us how much larger your contract is with AT&T now maybe versus what it was? And did you actually see a positive inflection in your core markets, excluding this new work that you have?
Jose Ramon Mas
Well, when we look at '23, let's start with '23, right, what we've said is our wireless business was down versus '22. Our wireline business was up double digits, right? So we had another strong wireline year. We've talked a lot about this on our third quarter call. So that was really unchanged through the balance of the year.
As we think about 2024, we expect our wireline business to be up again because it's a very strong market. There's changes in cadences. We did see a slowdown in the second half of '23 versus the first half of '23. But again, the demand in that business is extremely high. And when you add on BEAD's funding, which will start impacting the business in '25, it's a very positive development.
On the wireless side, it's different, right? On the wireless side, I think this particular award, coupled with the change that AT&T is doing in their network, will have a significant impact on MasTec. And today, our wireline, wireless -- it used to be we were bigger on wireless. Quite frankly, today, we're bigger on wireline. So it's about a 60-40 split.
This contract will probably get it closer to 50-50 over the course of the next couple of years. And it's going to have a meaningful impact to our wireless business. So our wireless business has the ability to grow probably 30% to 50% from where it was in '23. So it's a significant award that has a significant impact on the total revenues for the segment.
Andrew Alec Kaplowitz
Very helpful, Jose. And then kind of a similar question for the Clean Energy side, could you tell us what you're assuming for IEA in '24, maybe differences between wind, solar and infrastructure? Obviously, you've seen there's still a fair amount of noise in the developer world. I think you said you're only assuming sort of what you can tell is already going forward. So how did you sort of discount like the noise that's out there in the developer world, especially on the IEA side, for '24?
Jose Ramon Mas
Yes. So the first -- I think the first thing that's really important to kind of focus on is, as we looked at '24, even in late '23, right, we're not viewing it as MasTec legacy versus IEA. We've gone to market with one business, so we've got a MasTec renewables business. We do have different operating groups that might perform the work. But in-market, we're in-market as MasTec renewables with one leadership team.
And when we think about the industry as a whole, it ends up being very focused on customers, right? Each customer is in a different place. Each customer has different challenges. So it's really about understanding where every customer sits on a particular project, irrespective of what's happening across the entire marketplace. The entire marketplace, there is definitely some that have more challenges than others. I think it's going to get better for everybody as the year goes on. But we've really focused on those developers and projects that we think are primed to be built in '24, are going to have less issues. And that's kind of how we've built our model.
Surprisingly, when we think about '24, the growth in wind and solar has been somewhat equal. We're seeing a lot of strength in the wind market, especially on the repowering side. We've had a lot of bookings there. We think that's -- what we like about that is the predictability of it. Those projects have a lot less potential issues as you think about the constructability during a year. So wind has been -- and quite frankly, it was pretty strong for us in '35, our split -- in '23.
Our split last year was about 60-40, 40% being wind. And I think it's going to be somewhat similar this year in '24 so that the market's held. And we feel good about how we built our plan from a bottoms-up perspective. There's opportunity. We know there's going to be challenges on certain projects. So we took some overall contingencies. But I do think as the year goes on, things will get better and there might be some projects that you get to add on in the second half of '24.
Operator
We will take our next question from Steven Fisher with UBS.
Steven Fisher
Wanted to just follow up on that last question, wondering if you can maybe bridge for us the $4.4 billion of expected revenues in Clean Energy versus the $3.1 billion of year-end backlog. How much of that kind of incremental $1.3 billion is discrete renewable projects that are maybe in like limited notice to proceed that you expect to put into backlog and then burn versus how much is maintenance or small capital projects, just kind of flow work or maybe there's something specific in civil infrastructure or industrial that you have expected to bridge that sort of backlog versus revenue gap?
Jose Ramon Mas
Yes. So I guess, generally, right, when you think about industrial and civil, to get it out of the way, backlog is pretty much set in those. We believe that in our backlog numbers, we have most of the burn required in 2024. We've -- there's some work that you're going to book and burn. But for the most part, we think we're sitting in a really good place relative to backlog versus revenue expectations.
On the renewable side of the business, the reality is that, in our minds, right, the business is much better than what backlog shows. I think you're going to see considerable backlog build in Q1. And I think you'll see considerable backlog build again in Q2. And that will give, in my opinion, at least the outside world that doesn't see our numbers day-to-day, the comfort that our '24 is solidified.
In our prepared remarks, we talked about that actually having a really positive impact for '25 because these projects actually have a similar, if not a little bit greater, amount of volume activity in '25 than they do in '24, which I think positions us incredibly well for a really strong growth year in '25. But the good thing is we've identified them, right?
So even though they may not be in backlog, we know every project. We've identified it. We know when they're supposed to sign. Most of it is under LNTP, if not all of it. But it's really about, at the end of the day, getting into a signed contract and being able to work on it. And that's what we hope to be able to deliver in the first and second quarter from a backlog perspective.
Steven Fisher
Okay, that's helpful. And then just a little bit of near-term cadencing, I guess, in terms of your Q1 numbers, we're already starting March here, so 2/3 of the quarter is done. I guess, to what extent are there still any notable things that have to happen in order to hit your Q1 numbers?
I've seen you've factored in all the January and February weather and timing of solar projects. And then do you have an overall kind of first half versus second half EBITDA mix, just to kind of get an early framing of what you're thinking about Q2?
Jose Ramon Mas
Yes. So look, on the first quarter, obviously, we're deep in the first quarter, so I think we've taken into account everything that we know as of today. Weather was a little bit of an issue in certain geographic parts that impact -- that are impacting our first quarter. But it's really not much different than, quite frankly, what our expectation was coming out of our third quarter call, maybe with the exception of the Illinois rate case and the impact that, that's had on our Power Delivery business in Q1. Outside of that, I think everything is pretty consistent with our expectations.
When we think about second quarter and third quarter and we do year-over-year comps, we have a pretty similar ramp to what we had last year from an earnings perspective, right? We expect our earnings in the second, third and fourth quarter to be above where they were in '23. But we don't expect any particular quarter to be dramatically above. So I think margin profiles are going to be consistent with where they were generally last year. And it's going to really be driven by the revenue expectations.
Paul stated the second and third quarter are going to be our 2 biggest quarters. And I think that we'll be able to show -- and it has moderate growth, right? So we're going to have nice growth between the second and third quarter, very similar to last year. So if you take last year's cadence, I think we're going to have a similar cadence in 2024.
Operator
We will take our next question from Marc Bianchi with TD Cowen.
Marc Gregory Bianchi
Jose, I think I heard you say that you had some optimism about the Oil and Gas business in '25 and beyond because the roll-off of this MVP does create a tough comp when you get to '25. So can you talk about where that -- those opportunities are and when we might get some visibility on that as sort of external spectators?
Jose Ramon Mas
Well, I think it's multiple things. One, I actually think that the gas side of the pipeline business is incredibly active, especially in certain geographic areas. I think you're going to see that materialize as our year goes on just from -- some of it will be book and burn. But I think we'll have a really strong year outside of MVP.
And then when we think about '25, we see that continuing just based on the conversations we're having with customers. And then more importantly, we're starting to see real jobs on some of the other alternative types of pipeline builds, right, whether that be carbon capture or hydrogen. We think that becomes real in '25. We think that becomes meaningful. It probably changes the business, right, because it's -- I think that's going to be very consistent in nature for a long period of time.
So I think the mix of our business, what we would call oil -- we view it more as a pipeline business, right? So I think there's going to be more diversity in that business in '25, which is going to lead to some of that growth that we talked about. So it's not specifically what we used to do, but it's a mix of what we're seeing in the future.
Marc Gregory Bianchi
And the margin composition of that opportunity, would it be similar to sort of what's implied here in the back half of the year?
Jose Ramon Mas
It is.
Operator
We will take our next question from Neil Mehta with Goldman Sachs.
Neil Singhvi Mehta
It's Neil Mehta here. I guess, Jose, I had some industry questions on the utility side, which is there's been a lot of talk about this load growth transition from a market that has been flat in power demand to inflecting for a variety of reasons, including data centers and electric vehicles and onshoring. So just would love your perspective as you talk to your utility customers about what that means for the CapEx profile of the industry and what does the industry need to do in order to meet growing load.
Jose Ramon Mas
I think we're seeing it, right? If you look at -- not to plug you, Neil, but you actually put out a note yesterday that listed a number of different utilities that had raised their CapEx here in the first quarter. I thought it was a thoughtful note. I thought it was important and reflective of what's really happening in the industry.
And that's what we're seeing, right? Our customers are talking about it. Our customers aren't just talking about it, but they're raising their CapEx dollars to deal with it. We don't think this is a short-term initiative. We think this is going to last for a really long time. And we think we're just starting to see the beginning of it. So this is an incredibly exciting market to be in.
Again, there has been some issues with the cadence of that spend over the course of the last year. But there's no question in my mind where the direction of that is going. From our perspective, we think we sit in a really good place. We've added an enormous amount of scale in that business.
And we think that's really going to start to pay off for us here in the next year or so. So we're really excited about what's happening in the industry. And I think that -- generally, I think people underestimate the capital requirements to meet the growing demand of energy use that we're going to have over the coming years.
Neil Singhvi Mehta
Yes. And there's a related question, which is there's been a lot of talk about the impacts of wildfires across the utility system, and certainly -- unfortunately, we've seen a lot of incidents here over the last year or 2. I just -- again, your perspective on this is, does this represent a challenge that you see yourself as well positioned to help utilities mitigate? And just as you think about specifically in the utility system, what are different things that they can do as they think about trying to head off this problem?
Jose Ramon Mas
I think it's two things. I think one is wildfires and the other is storms. And I think that when you think about the West Coast, they've been more impacted by fires. The East Coast has been more impacted by storm. The fixes for either one are somewhat similar. So the investments in undergrounding systems, in hardening systems across the country become more and more meaningful as we deal with climate change.
So I do think that those are -- the challenge, right, is who's going to pay for it and what's -- where does state stand in terms of funding these initiatives and where is the cost of power in a particular state and how willing is that Public Service Commission to grant the utility dollars to be able to do it.
We're based here in Florida. In Florida, there's been a huge initiative in the state. The Public Service Commission has passed a 30-year program with tens of billions of dollars of funding to allow the utilities here to do that. I think we're going to see more of that as time goes on. I think it's necessary. And I think it's going to be meaningful across the country in addition to what's happening with load growth, right?
This helps offset. These investments help you manage some of the issues that are going to come with load growth. But they are different and they both need to be dealt with. So these are all catalysts and positive trends that we're going to see in this industry for a long time.
Operator
We will take our next question from Adam Thalhimer with Thompson, Davis.
Adam Robert Thalhimer
Congrats on the strong Q4 cash flow.
Jose Ramon Mas
Thanks, Adam.
Adam Robert Thalhimer
Jose, your comment about double-digit Communications revenue growth next year was interesting. What's the driver of that again?
Jose Ramon Mas
Just that wireless win, right? That contract by itself should allow us to grow double digits for the full segment next year.
Adam Robert Thalhimer
And then related to that -- given that dynamic, what kind of margins do you think you could generate with that kind of revenue growth?
Jose Ramon Mas
Improving margins, right? So if we go back a few years, at scale, our business has been declining, right? When you think about our wireline business over the course of the last year, it declined. That's challenging for margins. There's obviously a start-up phase, where we invest in the business, which we've kind of baked into the margin profile that we're expecting for '24. But with scale, right, the incremental revenue comes at a higher margin. And that's going to help drive margins up. So that's a really important part of our '25 and beyond story as well.
Operator
We will take our next question from Brett Castelli with Morningstar.
Brett Castelli
Just on Power Delivery, can you talk about your capabilities today on the transmission side of that business maybe relative to history?
Jose Ramon Mas
Sure. So we -- I mean, we actually started that business, I don't know, now maybe 10, 12 years ago, really focused on the transmission side. That's where we started. We did some big projects, wanted to get into the more predictable cadence of the business. So we really started focusing on distribution. Our efforts in 2021 and '22 through the acquisitions that we made were really to expand our geographic scope.
The primary nature of those acquisitions was also heavy MSA, heavy distribution, although they all had transmission resources available. I think since those acquisitions have made, we've really grown and added to our transmission capabilities in terms of talent and capabilities. And I think today, we're in a position where we've done some jobs here in the last 2 years that are of size and of scale.
And I think we've really positioned ourselves to be a significant player in that market for a long time. Again, in our prepared remarks, we talked about a number of jobs that we're currently bidding that we feel comfortable and good that we'll be successful on some. And they'll have a meaningful impact to our business.
So it's -- that's probably going to be the biggest growth part of our Power Delivery business over the next couple of years. There is an incredible amount of demand across the country and there's more coming. So it's an important part of where we're trying to take that business.
Brett Castelli
And then I think you mentioned consolidation of contractors by your customer base in your prepared remarks. Is that maybe more pronounced in a certain segment or segments? Or just kind of curious on how you're seeing that across the business.
Jose Ramon Mas
I think it's actually part of the same comments with scale. So I think we're actually seeing it in all of our businesses, right? We see it in the award of our biggest customer in wireless in Communications. We're seeing it in what some of the utilities did. We did talk about a nice awards in our utility business of markets where we feel some of our customers consolidated their vendors.
We're seeing it in the clean energy space, where developers, large utilities are using less vendors for their renewable projects portfolios on a go-forward basis. So we think as projects get bigger, as consolidation happens across our customers as well, people tend to want to work with less partners. And we think that's a really important part of the story.
We think scale matters. We think we've built great scale. And our customers believe in the scale capabilities that we have. And we do think that's a really important part of what's going to make companies successful in the future. And that's really what we've been building towards.
Operator
We will take our next question from Justin Hauke with Robert W. Baird.
Justin P. Hauke
I guess, the first one, just truly kind of just a numeric one that I wanted to clarify in terms of the backlog and what's in it and what's not. So I think you said the AT&T scope addition was booked in the fourth quarter. But the Nokia to Ericsson equipment scope that you're talking about in the second half, that's not in backlog yet. That will be when you go into the second half.
And then the other numeric on that aspect would be in the Clean Energy. I think you said that you debooked the Rochester job that was $200 million. I'm just curious if there were any other significant debookings in the quarter in that segment as you kind of scrub the backlog.
Jose Ramon Mas
There was no other debookings. Obviously, we announced the issues with that project in the third quarter. The Li-Cycle project is on hold. So we've taken it out of backlog. It was a project that we had been working on. So typically, once a project hits backlog, usually we build it. There's very few instances where we've had to take anything out of backlog. Obviously, Li-Cycle was its own -- had its own issues.
When we think about comms, a portion of it is in backlog. I think that again we're not expecting significant impact from that until the latter part of the year. And again, that's -- our backlog is -- we only take the 18-month view. So there is a component for that, but it's a relative -- we think a much smaller component than what the actual award means over the long term.
Justin P. Hauke
Okay. And then I guess, my second question is just, maybe it's another numeric one, but just kind of quantifying the Illinois and the Exelon impact in the Power Delivery business. I guess, I didn't realize that, that was such a big geography for you. So maybe you can just give some context. I mean, the 2024 guidance assumes like 2% growth for that segment. How much is the Illinois rate case weighing on the revenue growth outlook there?
Jose Ramon Mas
So I'd say a couple of things. Exelon was -- is our fourth-largest customer at MasTec. So it's not all in Illinois, but it's a good chunk of it is. They have a meaningful cut for '24. We originally talked about mid-single-digit revenue growth in this market for '24 versus what we're saying today. And I think that entire drop is the impact.
So if you want to call it $100 million, $150 million of impact in '24, that's kind of what we've built in, assuming we don't -- we're not able to really put those people on other work, which I think there's going to be an opportunity for us. So again, we talked about it being somewhat of a conservative view, but that's our view today. So we've kind of taken the entire impact that we expect in '24 completely out of guidance.
Operator
We will take our next question from Brent Thielman with D.A. Davidson.
Brent Edward Thielman
Just on the $550 million cash from operations bogey, could you talk about the puts and takes that could get you potentially above that this year, just given you had a pretty strong finish to 2023?
Paul Dimarco
Yes, this is Paul. I think the biggest driver is just around the DSO. So I said we're assuming we kind of spend the year in the high 70s versus the 74 we ended the year at. So I think there's some opportunity for us to continue to perform better from a DSO perspective. And at the revenue levels we're generating, each day is north of $30 million of cash flow so that's a pretty meaningful opportunity.
Brent Edward Thielman
Okay, great. And then just back to Clean Energy, Jose, could you just speak to the margin profile, the structure of the contracts, anything else for the new business that you're adding into the backlog at this point and maybe how that all informs your view around higher levels of profitability for that business group kind of over the medium term? I know you've got your expectations for this year but kind of looking out beyond that.
Jose Ramon Mas
Yes, look, it's a great question. One, obviously, as '23 played out and even a little bit into early '24, we're still working on contracts that were won a while ago. Obviously, everybody knows the challenges that have existed with supply chain. So as you -- as you're working on older projects in those businesses, sometimes it has a negative impact to margins.
Historically, and even as we look at our '23 performance, our wind margin significantly outperformed our solar margins. That has everything to do with the fact that we've been in wind for a long time and we're a lot newer to solar. We've got a ton of opportunity to increase our solar margins, which we need to do and we need to accomplish. I think that's going to be the bigger driver of the margin growth over time.
But wind margins, quite frankly, are holding with what we've historically done. So as the wind market comes back and as that becomes a bigger driver of revenues, we do think that the margin profile there is considerably, at least from our performance perspective, considerably better. If you go way back, we used to -- there were years where this business performed at double digits, the whole segment. A lot of that was driven by wind.
We're seeing similar margin potentials in some of those projects on a go-forward basis. We've got to get our solar business there over time, which is what we're working on. Obviously, the solar business is what's going to grow faster. So we're encouraged. '23 again was a tough year. We're going to have ups and downs in '24. We've kind of built that into our model. But I really think that our focus today is on executing these projects and driving margins out of the business. And our goal, our objective is really to increase those margins over time.
Operator
We will take our next question from Min Cho with B. Riley Securities.
Min Chung Cho
A couple of quick questions. In terms of -- Paul, you mentioned that you're breaking out the Clean Energy section into several market sectors. Can you provide a general revenue breakout right now of where like the renewables versus infrastructure and industrial stand?
Jose Ramon Mas
Yes, our renewables business is just over 60% of the total segment.
Min Chung Cho
Okay. That's obviously where all the growth potential is going forward.
Paul Dimarco
Yes, Min, infrastructure has got good opportunities as well, right? I mean, so -- and that business had a meaningful -- both our legacy and IEA had a good scale in that business in different geographies. And with the infrastructure bill, there are a number of opportunities there as well. We have deemphasized industrial in the near term just in light of some of the challenges we had on projects over '21 and into latter part of '23. So I do think there's -- renewables will, for sure, drive the growth. But infrastructure has got some good opportunities as well.
Min Chung Cho
Excellent, very helpful. And then just finally, obviously, Jose, I know you've been scaling up kind of with expectations for growth for the next couple of years. And it sounds like there's so much more growth to come, we're just at the very beginning and it's across all of your end markets. And labor is always an issue, will continue to be an issue. But when do you think the industry gets to kind of full capacity and where you start to see elongation of the cycle where it really benefits margins?
Jose Ramon Mas
I think each segment is different. I think in some segments, quite frankly, we're almost there. I think one of the really important things is customers recognize it, right? They talk about it. They don't necessarily feel it yet because they know there's still flex in the system. But everybody knows we're going to get to that point. I think coming out of '24 into '25, across all of our segments, we're going to feel some of that, some more than others. And I do think that at that point, it does start impacting what we do with customers, how we talk about it and how we price things.
Operator
We currently do not have any further questions. I will turn it back to Mr. Mas for closing remarks.
Jose Ramon Mas
Just want to thank everybody for participating today, and we look forward to updating you on our first quarter call here in a short period of time. Thank you.
Operator
This concludes today's call. Thank you for your participation. You may now disconnect.
