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Item 3 — Quantitative and Qualitative Disclosures About Market Risk
Mastec, Inc. · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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Interest Rate Risk
Our interest expense is affected by the prevailing interest rate environment. While the cost of our variable-rate debt fluctuates with changes in market interest rates, interest on our fixed rate debt is unaffected by such changes. We manage interest rate risk by maintaining a mix of fixed and variable rate debt obligations. As of June 30, 2026, our variable interest rate debt was primarily related to our Credit Facility and 2025 Term Loan Facility. As of June 30, 2026, we had approximately $476 million of outstanding revolving loans under our Credit Facility, with a weighted average interest rate of 4.78%, and $600 million outstanding under our 2025 Term Loan Facility, with a weighted average interest rate of 4.77%. An additional 100 basis point increase in the applicable interest rates under our Credit Facility and 2025 Term Loan Facility would have increased our interest expense by approximately $7 million for the six months ended June 30, 2026. Additionally, upon the July 2026 closing of the Superior acquisition, we made additional borrowings under our Credit Facility and drew $700 million of variable rate loans under the 2026 Term Loan Facility. See “Recent Transactions.”
As of June 30, 2026, our fixed interest rate debt primarily included $600 million aggregate principal amount of 4.500% Senior Notes, $550 million aggregate principal amount of 5.900% Senior Notes, $75 million aggregate principal amount of 6.625% Senior Notes and $388 million of finance lease obligations, which accrued interest at a weighted average interest rate of approximately 4.90%. None of this debt subjects us to financial statement risk associated with changes in interest rates, but we may be subject to changes in interest rates if and when we refinance this debt at maturity or otherwise.
Foreign Currency Risk
Certain of our consolidated revenue and operating expenses are in foreign currencies. Our foreign operations are primarily in Canada. Revenue generated from foreign operations represented approximately 1% of our total revenue for the six months ended June 30, 2026. Revenue and expense related to our foreign operations are, for the most part, denominated in the functional currency of the foreign operation, which minimizes the impact that fluctuations in exchange rates would have on net income or loss. We are, however, subject to fluctuations in foreign currency exchange rates when transactions are denominated in currencies other than the functional currencies and for our foreign operations with a functional currency other than the local currency. Such activity was not material to our operations for the six months ended June 30, 2026. Translation gains or losses, which are recorded in other comprehensive income or loss, result from translation of the assets and liabilities of our foreign subsidiaries into U.S. dollars. For the six months ended June 30, 2026, foreign currency translation losses, net, totaled approximately $2 million and related primarily to our activities in Canada and Mexico.
Our exposure to fluctuations in foreign currency exchange rates could increase in the future if we continue to expand our operations outside of the United States. We seek to manage foreign currency exposure by minimizing our consolidated net asset and liability positions in currencies other than the functional currency, which exposure was not significant to our consolidated financial position as of June 30, 2026. We may enter into foreign currency derivative contracts in the future to manage such exposure.
Other Market Risk
As discussed in Note 4 – Fair Value of Financial Instruments in the notes to the consolidated financial statements, which is incorporated by reference, we have certain investments that may be subject to market risk and could be subject to volatility based on market conditions.