MasTec, Inc. (MTZ)

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MasTec (MTZ)

Q1 2013 Earnings Call

May 03, 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

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

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

William D. Bremer - Maxim Group LLC, Research Division

Tahira Afzal - KeyBanc Capital Markets Inc., Research Division

Liam D. Burke - Janney Montgomery Scott LLC, Research Division

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

John B. Rogers - D.A. Davidson & Co., Research Division

Presentation

Operator

Good day, and welcome to the MasTec's First Quarter Fiscal Year 2013 Earnings Conference Call, initially broadcast on May 3, 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

Thanks, Odette, and good morning, everyone. Welcome to MasTec's first quarter earnings conference 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 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 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.

In today's remarks by management, we will be discussing continuing operations adjusted financial metrics as discussed and reconciled in yesterday's press release, filings and supporting schedules. In addition, we may use certain non-GAAP financial measures in this call. A reconciliation of all non-GAAP financial measures not reconciled in these comments to the most comparable GAAP measure can be found in our earnings press release, our 10-Q or the Investor 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 VP and Chief Financial Officer.

Format of the call would be 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 about 60 minutes.

We have a lot of great things to talk about today, so now I'll turn it over to Jose. Jose?

Jose Ramon Mas

Thanks, Marc. Good morning, and welcome to MasTec's 2013 first quarter call. Today, I will be reviewing our first quarter results, as well as providing my outlook for the markets we serve.

First, some first quarter highlights. Revenue for the quarter was $919 million, a 24% increase over the prior year's first quarter. Continuing operations adjusted EBITDA was $79 million, an increase of 61% over the prior year's first quarter. EBITDA margins were 8.6%, a 190-basis-point improvement. Earnings per share were $0.27, up 93%. And cash flow from operations was $32 million.

In summary, we had a record revenue, record EBITDA and a very strong start to the year. Revenue growth was broad-based, with growth across all of our segments with the exception of our renewable power generation business. We are fortunate to be in industries where demand for our services is high. We are experiencing increased opportunities across most of our segments, and our focus today is executing on those opportunities over both the short and long term. As a result, we are heavily investing in our business and gearing up for what we believe to be a very active and exciting future.

With our recent upsized bond offering that Bob will discuss later in detail, we further strengthened our balance sheet. We are also seeing an increasing number of what we believe to be very good acquisition candidates. While most of our growth has been organic over the last couple of years, acquisitions give us the ability to increase our resources and better take advantage of those opportunities we are enjoying.

Now I would like to cover our segment data. Our communications segment's revenue was $425 million for the quarter versus $389 million last year. EBITDA margin for this segment was 10.9% for the first quarter versus 8.4% in last year's first quarter. The growth in this segment was led by our wireless business, which was up 31% year-over-year. Demand for our wireless services is high, and we are experiencing growth from both our largest customer as well as new customers. The wireless industry has experienced some growth in a number of areas including the deployment of LTE, an increase in the number of new cellular towers being constructed and a shift in long-term maintenance focused more on tower climbs versus surface work. Having a sizable and stable workforce focusing on tower climbing capabilities will be a key to success in this market. We are investing in those capabilities and believe we are a market leader in that business today.

Our oil and gas pipeline segment had revenues of $319 million for the first quarter compared to revenues of $168 million in last year's first quarter, or a 90% year-over-year increase. EBITDA margin for this segment was 13.3% versus 7.5% in last year's first quarter. We are off to a very good start.

Backlog was up sequentially from $220 million to $387 million. We expect revenue growth to exceed 30% in 2013 versus 2012. This growth will be driven by our continued success in the different shale plays, along with increased activity in large-diameter, long-haul pipeline construction.

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