UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 6, 2007
MASTEC, INC.
(Exact Name of Registrant as Specified in Its Charter)
Florida
(State or Other Jurisdiction of Incorporation)
(State or Other Jurisdiction of Incorporation)
| Florida | 0-08106 | 65-0829355 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
800 S. Douglas Road, 12th Floor, Coral Gables, Florida 33134
(Address of Principal Executive Offices) (Zip Code)
(Address of Principal Executive Offices) (Zip Code)
(305) 599-1800
(Registrant’s Telephone Number, Including Area Code)
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 Results of Operations and Financial Condition
On November 6, 2007, MasTec, Inc. (the “Company”) announced its financial results for the
three and nine months ended September 30, 2007. A copy of the Company’s earnings press release is
furnished as Exhibit 99.1 to this report on Form 8-K and is hereby incorporated by reference.
The earnings press release includes certain financial information, including income from
continuing operations before legacy legal issues and other charges
and diluted earnings
per share before legacy legal issues and other charges, not derived in accordance with GAAP. The
Company believes that this information is useful to investors as it indicates more clearly the
Company’s comparative year-to-year operating results. In addition, this non-GAAP financial
information is among the primary indicators the Company uses as a basis for evaluating Company
performance, allocating resources, setting certain incentive compensation targets, and forecasting
of future periods. In addition, the earnings press release includes the non-GAAP financial measure,
liquidity. The Company defines liquidity as availability under its credit facility plus
unrestricted bank cash. The Company believes that this information is useful to investors as it
indicates more clearly the Company’s capital resources.
The non-GAAP financial measures described above are intended to enhance an investor’s overall
understanding of the Company’s past financial performance and prospects for the future and should
be considered in addition to, not as a substitute for measures of the Company’s financial
performance prepared in accordance with GAAP. A reconciliation of these non-GAAP financial
measures to GAAP is provided in the table entitled “Reconciliation of Non-GAAP Disclosures” in the
earnings press release.
The information contained in this report on Form 8-K, including Exhibit 99.1, shall not be
deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any
registration statement filed by the Company under the Securities Act of 1933, as amended.
ITEM 7.01 Regulation FD Disclosure
On November 6, 2007, the Company announced its financial results for the three and nine months
ended September 30, 2007. In addition, the Company updated its 2007 guidance as set forth in the
earnings release. A copy of the Company’s earnings press release is furnished as Exhibit 99.1 to
this report on Form 8-K. The information contained in this report on Form 8-K, including Exhibit
99.1, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by
reference in any registration statement filed by the Company under the Securities Act of 1933, as
amended.
ITEM 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 — Press Release dated November 6, 2007.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MASTEC, INC. |
||||
| Date: November 6, 2007 | By: | /s/ C. Robert Campbell | ||
| C. Robert Campbell | ||||
| Executive Vice President and Chief Financial Officer | ||||
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EXHIBIT INDEX
| Exhibit No. | Description | |||||
99.1 |
Press Release dated November 6, 2007. | |||||
Exhibit 99.1
 |
| Contact: J. Marc Lewis, Vice President-Investor Relations 305-406-1815 305-406-1886 fax marc.lewis@mastec.com |
800 S. Douglas Road, 12th Floor Coral Gables, Florida 33134 Tel: 305-599-1800 Fax: 305-406-1960 www.mastec.com |
For Immediate Release
MasTec Announces 2007 Third Quarter Results
Coral Gables, FL (November 6, 2007) — MasTec, Inc. (NYSE: MTZ) today announced that income
from continuing operations, on a pro forma basis before legacy legal issues and other charges, was
$12.4 million, or $0.18 earnings per diluted share on revenue of $266.9 million for the quarter
ended September 30, 2007. This compares with income from continuing operations of $14.3 million,
or $0.22 per diluted share, on revenue of $252.2 million in the prior year quarter. This pro forma
income in the third quarter of 2007 does not include a charge of $39.1 million primarily related to
the acceleration of closure on various legacy legal cases, claims and other disputes. Prior
earnings guidance excluded the positive or negative impact of these issues. When including these
charges, the Company reported a quarterly loss from continuing operations of $26.7 million, or
$0.40 loss per diluted share.
For 2006 and 2007, the Company recently estimated that it would spend over $20 million on outside
legal fees and expenses, with inadequate or unsatisfactory progress in many cases. As a result,
MasTec’s senior management recently announced that it has made a significant shift in strategy
regarding these older cases, claims and other disputes. The shift in strategy is to accelerate
closure of many of the older legal cases, claims and other disputes, while protecting the economic
interests of the Company and its shareholders and allowing management to focus on growing and
improving the business. Most of the legacy litigation relates to the years 2001 through 2005 and
generally does not involve current customers. As a part of this change in strategy, the $39.1
million charge in the third quarter includes an estimated settlement amount of $9.0 million related
to the wage and hour lawsuit settlement announced on October 26, and additional charges primarily
related to certain legacy litigation, claims and other disputes.
Cash and liquidity remain strong, with operating cash flow for the nine months ended September 30,
2007, of $44 million, up 83% from the same period in 2006. Additionally, MasTec had liquidity,
defined as availability under our credit facility plus unrestricted bank cash, of $151 million at
September 30, 2007 compared with $112 million at September 30, 2006.
Jose R. Mas, MasTec’s President and Chief Executive Officer, commented, “We are positioning the
Company to focus on the important opportunities ahead of us. By getting the older legacy legal
issues behind us, we can focus management on growing and improving our core businesses.”
Mr. Mas added, “We dedicated a significant amount of resources in the last few months to expanding
our install-to-the-home workforce and operational capabilities for our largest
customer. We recently hired approximately 1,700 new technicians and are poised to continue our
growth with this important customer. We currently have a number of third-party service providers
in many of the markets we serve, which were brought in to meet the accelerating demand, and we are
in the process of regaining these markets.”
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Financial results for the fourth quarter of 2007 depend, in large part, on how quickly MasTec gets
the third-party service technicians out of some of its traditional install-to-the-home markets.
This process is controlled by the customer, and, as of today, MasTec still has a number of markets
with third-party technicians. Even though the Company expects to have substantially all markets
reclaimed by year end, the speed of reclamation will have a dramatic impact on fourth quarter
financial performance. The Company has also had some unexpected customer spending delays as annual
customer budgets wind down. Finally, MasTec sees margin pressure in its energy operations as it
ramps up employees and equipment for the expected multi-year grid and expansion modernization
projects. The Company is updating its guidance for the fourth quarter of 2007 to revenue of $258
to $263 million, with income from continuing operations ranging from 14 to 16 cents per share.
This guidance does not include any impact of litigation, either positive or negative.
Summary financials are as follows:
Condensed Unaudited Consolidated Statements of Operations
(In thousands, except per share amounts)
(In thousands, except per share amounts)
| For the Three Months Ended | ||||||||
| September 30, | ||||||||
| 2007 | 2006 | |||||||
Revenue |
$ | 266,864 | $ | 252,236 | ||||
Costs of revenue, excluding depreciation |
230,867 | 213,293 | ||||||
Depreciation |
4,283 | 3,668 | ||||||
General and administrative expenses, including
non-cash stock compensation expense
of $1,099 in 2007 and $2,169 in 2006 |
55,865 | 20,892 | ||||||
Interest expense, net of interest income |
2,220 | 2,180 | ||||||
Other income, net |
228 | 3,097 | ||||||
Income (loss) from continuing operations
before minority interest |
(26,143 | ) | 15,300 | |||||
Minority interest |
(597 | ) | (986 | ) | ||||
Income (loss) from continuing operations |
(26,740 | ) | 14,314 | |||||
Loss from discontinued operations |
(5,416 | ) | (21,936 | ) | ||||
Net loss |
$ | (32,156 | ) | $ | (7,622 | ) | ||
Basic net income (loss) per share: |
||||||||
Continuing operations |
$ | (0.40 | ) | $ | 0.22 | |||
Discontinued operations |
(0.08 | ) | (0.34 | ) | ||||
Total basic net loss per share |
$ | (0.48 | ) | $ | (0.12 | ) | ||
Basic weighted average common shares outstanding |
66,408 | 65,024 | ||||||
Diluted net income (loss) per share: |
||||||||
Continuing operations |
$ | (0.40 | ) | $ | 0.22 | |||
Discontinued operations |
(0.08 | ) | (0.33 | ) | ||||
Total diluted net loss per share |
$ | (0.48 | ) | $ | (0.12 | ) | ||
Diluted weighted average common shares outstanding |
66,408 | 66,243 | ||||||
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Condensed Consolidated Balance Sheets
(In thousands)
(In thousands)
| September 30, | December 31, | |||||||
| 2007 | 2006 | |||||||
| (Unaudited) | ||||||||
Assets |
||||||||
Total current assets |
$ | 385,097 | $ | 339,920 | ||||
Property and equipment, net |
73,513 | 61,212 | ||||||
Goodwill |
184,318 | 151,600 | ||||||
Deferred taxes, net |
38,835 | 49,317 | ||||||
Other assets |
25,208 | 43,405 | ||||||
Long-term assets held for sale |
— | 659 | ||||||
Total assets |
$ | 706,971 | $ | 646,113 | ||||
Liabilities and Shareholders’ Equity |
||||||||
Current liabilities |
$ | 209,436 | $ | 175,878 | ||||
Other liabilities |
30,580 | 36,521 | ||||||
Long-term debt |
160,769 | 128,407 | ||||||
Long-term liabilities related to assets held for sale |
— | 596 | ||||||
Total shareholders’ equity |
306,186 | 304,711 | ||||||
Total liabilities and shareholders’ equity |
$ | 706,971 | $ | 646,113 | ||||
Condensed Unaudited Consolidated Statements of Cash Flows
(In thousands)
(In thousands)
| For the Nine Months | ||||||||
| Ended September 30, | ||||||||
| 2007 | 2006 | |||||||
Net cash provided by operating activities |
$ | 44,106 | $ | 24,089 | ||||
Net cash used in investing activities |
(30,989 | ) | (36,888 | ) | ||||
Net cash provided by financing activities |
30,921 | 80,690 | ||||||
Net increase in cash and cash equivalents |
44,038 | 67,891 | ||||||
Net effect of currency translation on cash |
9 | 47 | ||||||
Cash and cash equivalents — beginning of period |
89,046 | 2,024 | ||||||
Cash and cash equivalents — end of period |
$ | 133,093 | $ | 69,962 | ||||
Earnings per share amounts from continuing operations, discontinued operations and net income
(loss), as presented in the condensed financial statements above, are calculated individually and
may not sum to totals due to rounding differences.
Management will hold a conference call to discuss results of operations for the quarter ended
September 30, 2007 on Wednesday, November 7, 2007 at 10:30 a.m. Eastern time. The call-in number
for the conference call is (913) 312-0652 and the replay number is (719) 457-0820, with a pass code
of 1044010. The replay will run for 30 days. Additionally, the call will be broadcast live over
the Internet and can be accessed and replayed through the investor relations section of the
Company’s website at www.mastec.com.
MasTec is a leading specialty contractor operating mainly throughout the United States across a
range of industries. The Company’s core activities are the building, installation, maintenance and
upgrade of communication and utility infrastructure systems. The Company’s corporate website is
located at www.mastec.com.
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MasTec, Inc.
Reconciliation of Non-GAAP Disclosures — Unaudited
Reconciliation of Non-GAAP Disclosures — Unaudited
| For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||||||
| September 30, | September 30 | |||||||||||||||||||||||
| 2007 | 2006 | Percent Change | 2007 | 2006 | Percent Change | |||||||||||||||||||
Reconciliation of Earnings per Share: |
||||||||||||||||||||||||
Net income (loss) per common share,
in accordance with GAAP — diluted |
$ | (0.40 | ) | $ | 0.22 | (281.8 | %) | (0.06 | ) | 0.48 | (112.5 | %) | ||||||||||||
Charge for settlement of litigation,
claims and other disputes |
0.58 | 0.00 | N/A | 0.59 | 0.00 | N/A | ||||||||||||||||||
Net income per common share, excluding
charge for settlement of litigation,
claims and other disputes- diluted |
$ | 0.18 | $ | 0.22 | (18.2 | %) | 0.53 | 0.48 | 10.4 | % | ||||||||||||||
| September 30, 2007 | September 30, 2006 | |||||||
| (In thousands) | (In thousands) | |||||||
Reconciliation of Liquidity to Cash: |
||||||||
Cash per consolidated balance sheet |
$ | 133,093 | $ | 69,962 | ||||
Less restricted cash |
(18,050 | ) | — | |||||
Plus credit facility availability |
35,942 | 41,780 | ||||||
Liquidity |
$ | 150,985 | $ | 111,742 | ||||
| Three Months Ended | Nine Months Ended | |||||||
| September 30, 2007 | September 30, 2007 | |||||||
| (In thousands) | (In thousands) | |||||||
Reconciliation of income from
continuing operations to EBITDAR from
continuing operations: |
||||||||
Loss from continuing operations |
$ | (26,740 | ) | $ | (3,664 | ) | ||
Interest expense, net of interest income |
2,220 | 7,136 | ||||||
Benefit for income taxes |
— | — | ||||||
Depreciation and amortization |
4,579 | 12,615 | ||||||
Non-cash stock compensation expense |
1,099 | 4,566 | ||||||
Vehicle and equipment lease expense |
5,922 | 19,308 | ||||||
EBITDAR from continuing operations |
$ | (12,920 | ) | $ | 39,961 | |||
EBITDAR from continuing operations is income from continuing operations adjusted by adding net
interest expense, income taxes from continuing operations, depreciation and amortization from
continuing operations, non-cash stock compensation expense from continuing operations, and vehicle
and equipment lease expense. Management uses EBITDAR from continuing operations internally to
measure the amount of cash generated by us and to make decisions about the amount of capital
expenditures we will make and where to allocate capital. EBITDAR from continuing operations,
however, is not a term that has specific meaning in accordance with GAAP and may be calculated
differently by other companies. We believe that this measure enhances the user’s overall
understanding of our current financial performance, our ability to service our debt, and our
ability to fund future growth. Therefore, we believe that this measure provides useful information
to our investors regarding our performance and overall results of operations. EBITDAR from
continuing operations should not be considered in isolation, as a
substitute for earnings from operations or cash flows data calculated in accordance with GAAP, or
as a measure of a company’s profitability or liquidity.
This press release contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act. These statements are based on management’s current expectations
and are subject to a number of risks, uncertainties, and assumptions, including that our revenue
and earnings per share may differ from that projected, that we may be impacted by business and
economic conditions affecting our customers, material changes in estimates for legal costs or case
settlements, adverse determinations on any claim, lawsuit or proceeding, the highly competitive
nature of our industry, dependence on a limited number of customers, the ability of our customers
to terminate or reduce the amount of work, or in some cases prices paid for services under many of
our contracts, the adequacy of our insurance, legal and other reserves and allowances for doubtful
accounts, any exposure related to our recently sold DOT projects and assets, restrictions imposed
by our credit facility and senior notes, the outcome of our plans for future operations, growth,
and services, including backlog and acquisitions, as well as other risks detailed in our filings
with the Securities and Exchange Commission. Actual results may differ significantly from results
expressed or implied in these statements. We do not undertake any obligation to update
forward-looking statements.
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