MasTec, Inc. (MTZ) Cash Flow Statement

The OCF/NI ratio has been highly erratic, ranging from 0.07 in 2025Q2 to 7.91 in 2025Q1, suggesting that net income is not a reliable proxy for cash generation. The large swings are driven by working capital changes, which have been both positive and negative, indicating that earnings quality is inconsistent. Investors should monitor the sustainability of cash conversion as it appears to be heavily influenced by project timing and client payment terms.

FCF margins have fluctuated from -1.6% to 12.4% over the past year, with the most recent quarter showing a negative margin. This volatility suggests that the company's cash generation is not stable, and the negative FCF in 2026Q2 is primarily due to a significant working capital outflow of -$332.9M. The trajectory appears to be improving in the long term, but the near-term swings warrant caution.

The increase in capex as a percentage of revenue suggests that MasTec is investing heavily in growth, likely to support its accelerating revenue momentum. However, this also means that the company is becoming more capital intensive, which could pressure free cash flow if the investments do not generate proportional returns. The elevated capex may indicate a shift towards more asset-heavy projects, which could have implications for future cash flow stability.

The working capital changes are the primary driver of the erratic operating cash flow, with large outflows in 2026Q2 and 2025Q3, and a large inflow in 2025Q4. This pattern suggests that MasTec's cash conversion cycle is highly variable, possibly due to project milestones and client payment schedules. The negative working capital changes in recent quarters may indicate that the company is funding growth through its balance sheet, which could strain liquidity if not managed carefully.

The significant cash outflows for acquisitions in 2026Q2 and 2026Q1 suggest that MasTec is actively pursuing inorganic growth, which aligns with its accelerating revenue growth. However, this strategy consumes cash that could otherwise be returned to shareholders or used to reduce debt. The lack of dividends and buybacks indicates that management is prioritizing growth investments, but investors should monitor the return on these acquisitions to ensure they create value.

Despite the quarterly volatility, cumulative operating cash flow has been significantly higher than net income, indicating that the company is generating strong cash flow over time. This suggests that the earnings quality is actually good on a cumulative basis, and the working capital swings are timing-related. However, the recent negative FCF in 2026Q2 could signal a turning point, and investors should watch if this trend continues.