MasTec, Inc. (MTZ)

MTZ 
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MasTec, Inc. (MTZ)

Q1 2014 Results Earnings Conference Call

May 02, 2014 09:00 AM ET

Executives

Marc Lewis - Vice President of Investor Relations

Jose Mas - Chief Executive Officer

George Pita - Executive VP and Chief Financial Officer

Analysts

Andrew Kaplowitz - Barclays Capital

Tahira Afzal - KeyBanc Capital Markets

Alex Rygiel - FBR Capital Markets

Noelle Dilts - Stifel

Jason Wangler - Wunderlich Securities

Vishal Shah - Deutsche Bank

Dan Mannes - Avondale Partners

Will Gabrielski - Stephens Investments

William Bremer - Maxim Group

Adam Thalhimer - BB&T Capital Markets

Liam Burke - Janney Capital Markets

John Rogers - Davidson

Presentation

Operator

Welcome to the MasTec’s First Quarter 2014 Earnings Conference Call, initially broadcast May 2, 2014. Let me remind participants that today’s call is being recorded.

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

Marc Lewis

Thank you, Wayne. Good morning, everyone. Welcome to MasTec’s first quarter 2014 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 several 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 and supporting schedules.

In addition, we may use certain non-GAAP financial measures in this 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 press release, our 10-Q, our 10-K or in the Investor and News sections of our website located at mastec.com.

With us today, we have Jose Mas, our Chief Executive Officer; and George Pita, our Executive VP and Chief Financial Officer. The format of the call will be opening remarks and analysis by Jose, followed by financial review from George. 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 good things to talk about today. So, I’d now like to turn the call over to Jose. Jose?

Jose Mas

Thanks Marc. Good morning and welcome to MasTec’s 2014 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 $964 million, a 5% increase over the prior year’s first quarter. EBITDA was $75 million and earnings per share were $0.21.

In summary, we had a solid quarter considering the significant challenges we faced relating to weather. Both revenues and margins were impacted as we were able to complete less work and on many projects, the work we were able to perform had productivity and cleanup issues.

That being said, we performed well and more importantly, the outlook and demand for our services is excellent.

Over the last couple of years, we have made significant investments in both people and equipment to position us to take advantage of the growing opportunities in our oil and gas transmission and wireless markets. While these have been our main growth drivers and we expect that to continue, we are seeing an improving landscape for the balance of our business.

Our power generation group is experiencing a solid uptick in wind related business. Our installation business is experiencing strong growth in our security initiatives and since our last call only two months ago, there has been a significant amount of additional announcements by a number of carriers related to 1 gigabit high speed connectivity for residential customers. The fiber deployment required for that initiative is a significant opportunity MasTec.

Now I would like to cover some industry specifics. Our communications revenue for the quarter was $447 million versus $425 million last year. This was driven by a 27% increase in our wireless business, offset by decline in both our installation business and our wireline business.

Weather impacted both revenue growth and margins in all three of our communications markets. Our install of a home revenue was down 9% year-over-year. We have significant exposure to the Northeast in this business and weather negatively impacted revenues.

We expect revenue growth in this business, in the second quarter and for the balance of the year, we made a small acquisition, subsequent to quarter end of a company called Speed Wire. Speed Wire is a broadband and security installation company, that was also a leading digitalize installation contractor.

With our combined resources, we are now providing security services in 72 markets, from 28 markets last quarter. We expect security revenues to approach $100 million in 2015. We believe security is a natural extension of our capabilities, and we are bullish on its long-term prospects.

Security coupled with in-home automation and energy’s efficiency is a fragmented market, our national region scale gives us a strong competitive advantage, while wireline revenues for the quarter were down year-over-year, future prospects for that business are as good as we have seen in a long time. As a reminder, the wireline business is where MasTec, actually began.

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