MasTec, Inc. (MTZ)

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MasTec (MTZ)

Q4 2012 Earnings Call

March 01, 2013 9:00 am ET

Executives

J. Marc Lewis - Vice President of Investor Relations

Jose Ramon Mas - Chief Executive Officer and Director

C. Robert Campbell - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Andy Kaplowitz - Barclays Capital, Research Division

Tahira Afzal - KeyBanc Capital Markets Inc., Research Division

Alexander J. Rygiel - FBR Capital Markets & Co., Research Division

William D. Bremer - Maxim Group LLC, Research Division

Noelle C. Dilts - Stifel, Nicolaus & Co., Inc., Research Division

Veny Aleksandrov - FIG Partners, LLC, Research Division

Adam R. Thalhimer - BB&T Capital Markets, Research Division

Tristan Richardson - D.A. Davidson & Co., Research Division

Presentation

Operator

Welcome to MasTec's Fourth Quarter and Fiscal Year-End 2012 Earnings Conference Call, initially broadcast on March 1, 2013. Let me remind participants that today's call is being recorded.

At this time, I'd like to turn the call over to Marc Lewis, MasTec's Vice President of Investor Relations. Marc?

J. Marc Lewis

Thank you, Ginny. Good morning, everyone. Welcome to MasTec's Fourth Quarter Earnings Conference Call. The following statement is made pursuant to the Safe Harbor for forward-looking statements as 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 this conference call, and the company will make no effort 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 Securities and Exchange Commission. 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.

In today's remarks by management, we will primarily be discussing adjusted financial metrics as discussed and 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 release, our 10-K or in the Investors and News sections of our website located at mastec.com.

With us today, we have Jose Mas, our Chief Executive Officer; and Bob Campbell, our Executive Vice President and Chief Financial Officer. Before I hand over the call, we'll hear opening remarks and analysis by Jose, followed by a financial review from Bob. These discussions will be followed by a Q&A period and we expect the call to last for about 60 minutes.

We have a lot of great things to talk about today, and I'd like to turn the call over to Jose. Jose?

Jose Ramon Mas

Thank you, Marc. Good morning, and welcome to MasTec's 2012 year-end call. Today, I will be reviewing our fourth quarter and full year results, as well as providing my outlook for 2013 and the markets we serve.

Before getting into details, I'd like to take a step back and make some observations. A few years ago, we publicly set out to diversify our business and put ourselves in a position to have greater growth opportunities with improved margins. Over the course of the last 5 years, we have grown revenue from just under $1 billion to $3.7 billion with some pretty remarkable organic growth. And during that same time frame, EBITDA has grown sixfold. We accomplished these objectives despite a difficult market environment. While these are impressive financial results, our greatest accomplishment is how we positioned ourselves across a number of growth industries that offer us expanding opportunities for both continued growth and better margins during an improving market environment which, today, we are clearly in.

Now some full year highlights. 2012 revenue was up 32% to $3.7 billion. Organic revenue growth for the full year was 25%. 2012 continuing operations adjusted EBITDA was up 35% to $332 million. Full year cash flows from operations was $172 million and 2012 full year continuing operation adjusted EPS was up 55% to $1.50. For the fourth quarter, revenue was up 27% to $932 million, organic revenue growth for the quarter was 26%, fourth quarter continuing operations adjusted EBITDA was up 100% to $99 million and quarterly cash flow from operations was $57 million, and fourth quarter continuing operations adjusted EPS was up 283% to $0.46.

In summary, we had another excellent quarter and an excellent 2012. More importantly, 2013 is shaping up to be another record year for MasTec. While we are bullish about all the markets we serve, we expect the primary growth engines of the company to be our pipeline, wireless and transmission markets. We'll cover those more specifically later.

Also, it's important to note that included in our 10-K is a business breakdown by segments. From this point forward, we will be providing financial data by the following segments: communications, oil and gas pipeline, electrical transmission and a power generation and industrial segment. Bob will provide more details on those later.

Now I would like to cover some industry specifics. Our communications revenue for 2012 was $1.8 billion, an 8.4% increase over 2011. Our install-to-the-home revenue was up 10% over the prior year, driven by the full year results of the acquisition we made in 2011, which expanded our territory and gave us a large presence in the northeast. Highlights for 2012 included the successful integration of our acquisition and the extension of our contract with DIRECTV through 2016. We expect single-digit growth in this market in 2013.

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