MasTec, Inc. (MTZ)

Company website 2020 Financial Report Stock Analysis 2019 ESG Report

6.8

Billion Dollars

in total revenue in 2020

18^%

of Revenue

came from MasTec’s renewable energy infrastructure business

45^%

of Electrical Transmission

45% of MasTec’s electrical transmission business went toward enhancing the reliability of transmission lines

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The Path to Drawdown: Grid Expansion

A massive scaling of emissions-free energy sources is needed to solve climate change. And thankfully, renewable sources like solar and wind are quickly expanding their capacity worldwide. But to reliably provide renewable energy to every household and organization in the world, we need a power grid that’s much bigger and more flexible.

The power grid is the dynamic network of electricity generation, transmission, storage, and consumption that 85% of the world relies on. But its initial design for constant, centralized power production is not conducive to the intermittency of solar and wind power. For the world’s electricity supply to become completely renewable, the power grid needs to become more adaptable than it is today. Many technologies - constant renewables like geothermal and nuclear, utility-scale energy storage systems, batteries, and smart appliances - contribute to grid flexibility.

The power grid also needs to expand to support a renewable transition. Where the grid spans larger geographies and more electricity sources, it can even out the total output and variability of renewables. Electricity generated in Texas during the summer can then be used to power houses in snowy Chicago during the winter. To achieve this scale, the IEA estimates that, between 2020 and 2030, around 16 million km of distribution and transmission lines need to be built, an increase of 80% compared with the past decade.

About

MasTec, Inc. (stock ticker: MTZ) engineers, builds, installs, maintains, and upgrades infrastructures. They primarily serve customers in the utility, communications and government industries. MasTec’s headquarters are located in Coral Gables, Florida.

MTZ's Role in Drawdown

MasTec contributes to the Drawdown solutions of grid flexibility and grid expansion through several of their business segments.

Through their Electrical Transmission segment, they build the infrastructure that connects the US power generation to consumers. They work with their customers to design and build innovative, smart energy solutions, including modernizing overstressed sections of the electric grid with insufficient capacity, and upgrading aging electric infrastructure. They also build and maintain high voltage electric power transmission systems, substations, switchyards and distribution systems.

Through their Clean Energy and Infrastructure segment, MasTec is one of the largest renewables contractors in North America. They provide engineering, procurement, and construction services and project management solutions to the power market including renewable energy power sources. As of the end of 2020, their Clean Energy and Infrastructure segment accounted for about 25% of their total revenue.

MTZ: What We Like

As one of their growth strategies, MasTec has a track record (p. 63-64) of acquiring companies to expand their grid flexibility/expansion operations as well as their capacity to build new renewable energy facilities:

<::marker> In 2019 MasTec completed the acquisition of a company specializing in construction projects in the power industry
<::marker> They acquired a wind turbine services company in 2018

What We Want to See Improve

Divest from Oil & Gas Segment

MasTec (p. 8) is one of the largest pipeline contractors in North America that constructs and maintains pipelines and processing facilities for the fossil fuel industry. In fact their oil & gas business segment accounts for over 28% of their total revenue. They also build pumping stations, compressor stations, and treatment facilities where oil and natural gas are conditioned before transporting to market. MasTech acquired (p. 63-64) two companies specializing in oil and gas pipelines, indicating that they have no intention of downsizing their oil & gas segment.

Disclose GHG Emissions

We are encouraged to see that some of MasTec’s operations are starting to report (p. 16) their GHG emissions to the Carbon Disclosure Project. But these figures are still not publicly available. We urge them to disclose both direct and indirect GHG emissions from all operations as soon as possible and include these metrics in a comprehensive sustainability report.

Set Absolute Emissions Reduction Targets

While we acknowledge MasTec’s steps (pp. 15-17) toward environmental sustainability, these efforts remain weak and unguided by precise targets. We urge them to set science-based targets for reducing absolute GHG emissions within a specified timeline so as to be in line with staying below 1.5°C of global warming. We further encourage MasTec to outline how they plan to achieve these targets - switching to renewable energy for their own operations, divest from their oil and gas business, electrifying their fleet, etc.

Related Electrical Infrastructure Stocks in the Climate Index

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Allocated	Company	Description
4.34%	ABB Ltd (ABB)	ABB offers EV charging, solar and modular substations, distribution automation to expand the power grid. A larger grid can integrate more renewables
4.19%	Eaton Corporation plc (ETN)	Eaton offers electrical components, industrial components, power distribution for the electrical grid. Grid expansion is key for integrating renewables
1.08%	Quanta Services, Inc. (PWR)	Quanta offers engineering, construction and repair of electric grid infrastructure. Expanding the power grid is necessary for integrating more renewables
0.42%	MasTec, Inc. (MTZ)	MasTec builds the infrastructure that connects the US power generation to consumers. Expanding the grid is critical for integrating more renewables
0.42%	WESCO International, Inc. (WCC)	WESCO helps the power grid expand and adapt to a growing integration of clean energy. A key Drawdown solution for a more resilient and green grid
0.31%	Sunnova (NOVA)	Sunnova provides residential solar and energy storage systems in the United States. Both are critical for electrifying the energy system
0.17%	SPX Corporation (SPXC)	SPC makes transformers and cooling equipment for power generation and transmission - expanding the grid helps to integrate more renewable energy
0.03%	Willdan Group (WLDN)	Willdan helps utilities with new construction, improve efficiency, and demand response - all valuable in expanding and making the grid more resilient