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MasTec Announces Record Second Quarter 2017 Financial Results and Increased 2017 Annual Guidance

August 03, 2017

- Record Q2 Revenue of $1.9 Billion Increased 53%
- Record Q2 GAAP Net Income and Diluted Earnings per Share
- Record Q2 Adjusted Net Income, Adjusted Diluted Earnings per Share and Adjusted EBITDA
- 2017 Annual Guidance for Revenue, Diluted Earnings per Share, Adjusted EBITDA and Adjusted Diluted Earnings per Share all Increased

CORAL GABLES, Fla., Aug. 3, 2017 /PRNewswire/ -- MasTec, Inc. (NYSE: MTZ) today announced strong second quarter financial results and increased 2017 guidance.

  • Record second quarter 2017 revenue was $1.89 billion, a 53% increase compared with $1.23 billion for the same period last year, exceeding the Company's previously announced second quarter 2017 expectation by $390 million.
  • Record second quarter 2017 GAAP net income increased 241% to $83.3 million, or $0.99 per diluted share, compared to $24.4 million, or $0.30 per diluted share, in the second quarter of 2016.
  • Record second quarter 2017 adjusted net income, adjusted diluted earnings per share and adjusted EBITDA, all non-GAAP measures were as follows:
    • Adjusted net income was $86.7 million compared to $29.9 million in the same period of the prior year. Adjusted diluted earnings per share was $1.03, compared to $0.36 in the second quarter of 2016, exceeding the Company's previously announced second quarter 2017 expectation by $0.38.
    • Adjusted EBITDA was $202 million; a 94% increase compared to $104 million in the second quarter of 2016, exceeding the Company's previously announced second quarter 2017 expectation by approximately $52 million.

Adjusted net income, adjusted diluted earnings per share and adjusted EBITDA, which are all non-GAAP measures, exclude certain items which are detailed and reconciled to the most comparable GAAP-reported measures in the attached Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures.

Jose Mas, MasTec's Chief Executive Officer, commented, "Our second quarter performance significantly exceeded our expectations primarily due to record levels of Oil & Gas project activity, with segment revenues at $1.1 billion, a 168% increase over last year's second quarter level. Our current performance, coupled with significant opportunities for future growth across all of our segments, position us well for continued long-term growth."

The Company also announced it has recently completed two acquisitions in the third quarter of 2017, including a Texas based provider of heavy civil, water, sewer and drainage systems infrastructure for private developers, state and local municipalities and a leasing company of Oil & Gas specialty pipeline equipment.

Mr. Mas added the following, "We believe the acquisition of an Oil & Gas specialty equipment provider, will reduce our overall equipment costs and provide us with a competitive advantage during the current multi-year cycle of significant Oil & Gas pipeline project activity, which we expect to continue at record levels. Additionally, we believe that geographic expansion of our heavy civil operations, as well as entry into the water, sewer and drainage systems infrastructure market operations will provide an exciting platform to benefit from increasing demand trends in this market."

George Pita, MasTec's Executive Vice President and Chief Financial Officer, noted, "We significantly exceeded our second quarter expectations in our Oil & Gas segment, including acceleration of some second half 2017 project activity, and are pleased to be in the position of increasing our 2017 guidance to new record levels."

Based on the information available today, the Company is increasing 2017 annual guidance, and providing third quarter guidance. The Company currently estimates 2017 annual revenue of approximately $6.0 billion. 2017 annual GAAP net income is expected to increase 58% over 2016 to approximately $212 million with GAAP diluted earnings per share expected to be $2.53, a 57% increase over 2016. 2017 annual adjusted EBITDA, a non-GAAP measure, is expected to increase 30% over 2016 to $620 million with adjusted diluted earnings per share, a non-GAAP measure, expected to be $2.73, a 44% increase over 2016.

For the third quarter of 2017, the Company expects revenue of approximately $1.65 billion.  Third quarter 2017 GAAP net income is expected to increase 4% over 2016 to approximately $59 million with GAAP diluted earnings per share expected to approximate $0.69. Third quarter 2017 adjusted EBITDA, a non-GAAP measure, is expected to increase 1% over the 2016 period and approximate $167 million with adjusted diluted earnings per share, a non-GAAP measure, expected to approximate $0.73.

Management will hold a conference call to discuss these results on Friday, August 4, 2017 at 9:00 a.m. Eastern Time.  The call-in number for the conference call is (913) 981-5571 and the replay phone number is (719) 457-0820 with a pass code of 5477409.  The replay will be available for 30 days.  Additionally, the call will be broadcast live over the Internet and can be accessed and replayed through the Investors section of the Company's website at www.mastec.com.

The following tables set forth the financial results for the periods ended June 30, 2017 and 2016:


 


Condensed Unaudited Consolidated Statements of Operations

(In thousands, except per share amounts)




For the Three Months Ended

June 30,

For the Six Months Ended

June 30,


2017

2016

2017

2016









Revenue  

$

1,890,180

$

1,232,404

$

3,048,364

$

2,206,630

Costs of revenue, excluding depreciation and amortization               


1,626,335

1,068,182

2,597,469

1,952,583

Depreciation and amortization


45,379

40,657

88,282

79,664

General and administrative expenses      


70,823

67,852

135,604

127,900

Interest expense, net


14,791

12,639

27,388

24,797

Equity in earnings of unconsolidated affiliates

(6,060)

(489)

(7,706)

(3,555)

Other expense (income), net   


146

1,524

576

(11,830)

Income before income taxes

$

138,766

42,039

206,751

37,071

Provision for income taxes     


(55,434)

(17,601)

(82,792)

(15,514)

Net income            

$

83,332

$

24,438

$

123,959

$

21,557

Net income attributable to non-controlling interests       


1,664

350

1,321

162

Net income attributable to MasTec, Inc.   

$

81,668

$

24,088

$

122,638

$

21,395









Earnings per share:







Basic earnings per share

$

1.01

$

0.30

$

1.52

$

0.27

Basic weighted average common shares outstanding   


80,925

80,351

80,812

80,253

Diluted earnings per share

$

0.99

$

0.30

$

1.49

$

0.26

Diluted weighted average common shares outstanding   


82,292

81,266

82,226

81,043

 

Condensed Unaudited Consolidated Balance Sheets

(In thousands)




June 30,


December 31,


2017

2016

Assets



Current assets         

$

1,790,707

$

1,402,486

Property and equipment, net   


648,456

549,084

Goodwill and other intangibles, net        


1,226,234

1,175,585

Other long-term assets           


158,088

55,977

Total assets   

$

3,823,485

$

3,183,132





Liabilities and Equity








Current liabilities    

$

928,731

$

839,990

Long-term debt       


1,313,860

961,379

Long-term deferred tax liabilities, net     


252,834

178,355

Other long-term liabilities       


94,898

99,774

Equity     


1,233,162

1,103,634

        Total liabilities and equity           

$

3,823,485

$

3,183,132

 


Condensed Unaudited Consolidated Statements of Cash Flows

(In thousands)




For the Six Months Ended

June 30,


2017

2016





Net cash (used in) provided by operating activities

$

(87,993)

$

28,488

Net cash used in investing activities

(149,292)

(59,872)

Net cash provided by financing activities              


216,623

36,046

Effect of currency translation on cash    


125

(888)

Net (decrease) increase in cash and cash equivalents         


(20,537)

3,774

Cash and cash equivalents - beginning of period   

$

38,767

$

4,984

Cash and cash equivalents - end of period       

$

18,230

$

8,758

 


Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures - Unaudited

(In millions, except for percentages and per share amounts)




For the Three Months Ended June 30,

For the Six Months Ended    

June 30,

Segment Information

2017

2016

2017

2016

Revenue by Reportable Segment







Communications

$

592.2

$

592.2

$

1,151.7

$

1,103.8

Oil and Gas

1,140.4

425.6

1,596.2

718.4

Electrical Transmission

96.6

95.6

195.4

181.9

Power Generation and Industrial

60.7

119.7

107.3

201.1

Other

1.9

3.9

3.6

7.3

Eliminations

(1.6)

(4.6)

(5.8)

(5.9)

Corporate

-

-

-

-

Consolidated revenue

$

1,890.2

$

1,232.4

$

3,048.4

$

2,206.6











For the Three Months Ended June 30,

For the Six Months Ended    

June 30,


2017

2016

2017

2016

EBITDA


198.9

95.3

322.4

141.5

Non-cash stock-based compensation expense

3.4

3.9

7.2

7.4

Restructuring charges

-

5.1

0.6

9.1

    Project results from non-controlled joint venture

-

-

7.0

-

Adjusted EBITDA

202.3

104.3

337.1

158.1

Adjusted EBITDA by Reportable Segment







     Communications

$

59.6

$

66.6

$

108.1

$

128.4

     Oil and Gas

154.0

56.5

247.9

76.1

     Electrical Transmission

3.5

(7.8)

7.3

(30.9)

     Power Generation and Industrial

4.7

4.8

5.6

7.7

     Other

6.8

0.3

8.5

0.5

     Corporate

(26.3)

(16.1)

(40.3)

(23.7)

Adjusted EBITDA

$

202.3

$

104.3

$

337.1

$

158.1











For the Three Months Ended June 30,

For the Six Months Ended    

June 30,


2017

2016

2017

2016

EBITDA margin

10.5%

7.7%

10.6%

6.4%

Non-cash stock-based compensation expense   


0.2%

0.3%

0.2%

0.3%

Restructuring charges

-

0.4%

-

0.4%

    Project results from non-controlled joint venture

-

-

0.2%

-

Adjusted EBITDA margin

10.7%

8.5%

11.1%

7.2%

Adjusted EBITDA Margin by Reportable Segment






Communications


10.1%

11.2%

9.4%

11.6%

Oil and Gas        


13.5%

13.3%

15.5%

10.6%

Electrical Transmission      


3.7%

(8.1)%

3.7%

(17.0)%

Power Generation and Industrial       


7.8%

4.0%

5.2%

3.8%

Other

353.7%

7.2%

235.2%

6.8%

Corporate           


NA


NA


NA


                NA

Adjusted EBITDA margin

10.7%

8.5%

11.1%

7.2%









 

Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures - Unaudited

 (In millions, except for percentages and per share amounts)




For the Three Months Ended

June 30,

For the Six Months Ended

June 30,


2017

2016

2017

2016

EBITDA and Adjusted EBITDA Reconciliation









Net income

$

83.3

$

24.4

$

124.0

$

21.6

Interest expense, net


14.8

12.6

27.4

24.8

Provision for income taxes

55.4

17.6

82.8

15.5

Depreciation and amortization

45.4

40.7

88.3

79.7

EBITDA

$

198.9

$

95.3

$

322.4

$

141.5

Non-cash stock-based compensation expense

3.4

3.9

7.2

7.4

Restructuring charges

-

5.1

0.6

9.1

Project results from non-controlled joint venture

-

-

7.0

-

Adjusted EBITDA

$

202.3

$

104.3

$

337.1

$

158.1

 

For the Three Months Ended

June 30,

For the Six Months Ended

June 30,


2017

2016

2017

2016

EBITDA and Adjusted EBITDA Margin Reconciliation









Net income

4.4%

2.0%

4.1%

1.0%

Interest expense, net


0.8%

1.0%

0.9%

1.1%

Provision for income taxes

2.9%

1.4%

2.7%

0.7%

Depreciation and amortization

2.4%

3.3%

2.9%

3.6%

EBITDA margin

10.5%

7.7%

10.6%

6.4%

Non-cash stock-based compensation expense

0.2%

0.3%

0.2%

0.3%

Restructuring charges

-

0.4%

0.0%

0.4%

Project results from non-controlled joint venture

-

-

0.2%

-

Adjusted EBITDA margin


10.7%

8.5%

11.1%

7.2%

 

Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures - Unaudited

 (In millions, except for percentages and per share amounts)




For the Three Months Ended

June 30,

For the Six Months Ended

June 30,


2017

2016

2017

2016

Adjusted Net Income Reconciliation







Net income

$

83.3

$

24.4

$

124.0

$

21.6

Non-cash stock-based compensation expense

3.4

3.9

7.2

7.4

Restructuring charges

-

5.1

0.6

9.1

Project results from non-controlled joint venture

-

-

7.0

-

Income tax effect of adjustments (a)


0.0

(3.4)

(3.6)

(6.6)

Adjusted net income

$

86.7

$

29.9

$

135.1

$

31.5

 

For the Three Months Ended

June 30,

For the Six Months Ended

June 30,


2017

2016

2017

2016

Adjusted Diluted EPS Reconciliation









Diluted earnings per share

$

0.99

$

0.30

$

1.49

$

0.26

Non-cash stock-based compensation expense

0.04

0.05

0.09

0.09

Restructuring charges

-

0.06

0.01

0.11

Project results from non-controlled joint venture

-

-

0.08

-

Income tax effect of adjustments (a)


0.00

(0.04)

(0.04)

(0.08)

Adjusted diluted earnings per share

$

1.03

$

0.36

$

1.63

$

0.39

     (a)   Represents the tax effect of the adjusted items that are subject to tax, including the tax effects of share-based 
     compensation expense. Tax effects are determined based on the tax treatment of the related items, the incremental
     statutory tax rate of the jurisdictions pertaining to each adjustment, and taking into consideration their effect on pre-tax
     income.

 


Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures - Unaudited

(In millions, except for percentages and per share amounts)









Guidance for the

Three Months Ended

September 30, 2017 Est.

For the

Three Months Ended

September 30, 2016

EBITDA and Adjusted EBITDA Reconciliation 






Net income

$

59

$

56.5

Interest expense, net

16

13.1

Provision for income taxes

39

38.8

Depreciation and amortization

49

42.6

EBITDA

$

163

$

151.0

Non-cash stock-based compensation expense    


4

3.9

Restructuring charges

-

4.7

Project results from non-controlled joint venture

-

5.1

Adjusted EBITDA 

$

167

$

164.8






EBITDA and Adjusted EBITDA Margin Reconciliation 






Net income


3.6%

3.6%

Interest expense, net

1.0%

0.8%

Provision for income taxes

2.4%

2.4%

Depreciation and amortization

3.0%

2.7%

EBITDA margin 


9.9%

9.5%

Non-cash stock-based compensation expense    


0.2%

0.2%

Restructuring charges

-

0.3%

Project results from non-controlled joint venture

-

0.3%

Adjusted EBITDA margin

10.1%

10.4%








Guidance for the

Three Months Ended

September 30, 2017 Est.

For the

Three Months Ended

September 30, 2016

Adjusted Net Income Reconciliation



Net income

$

59

$

56.5

Non-cash stock-based compensation expense

4

3.9

Restructuring charges

-

4.7

Project results from non-controlled joint venture

-

5.1

Income tax effect of adjustments (a)

(0)

(4.0)

Adjusted net income

$

62

$

66.3








Guidance for the

Three Months Ended

September 30, 2017 Est.

For the

Three Months Ended

September 30, 2016

Adjusted Diluted EPS Reconciliation






Diluted earnings per share

$

0.69

$

0.69

Non-cash stock-based compensation expense

0.04

0.05

Restructuring charges

-

0.06

Project results from non-controlled joint venture

-

0.06

Income tax effect of adjustments (a)

(0.01)

(0.05)

Adjusted diluted earnings per share

$

0.73

$

0.81








     (a)   Represents the tax effect of the adjusted items that are subject to tax, including the tax effects of share-based
     compensation expense.  Tax effects are determined based on the tax treatment of the related items, the incremental statutory
     tax rate of the jurisdictions pertaining to each adjustment, and taking into consideration their effect on pre-tax income.

 


Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures - Unaudited

(In millions, except for percentages and per share amounts)




Guidance for

the Year Ended

December 31,

For the

Year Ended

December 31,

For the

Year Ended

December 31,


2017 Est.

2016

2015

EBITDA and Adjusted EBITDA Reconciliation







Net income (loss)

$

212

$

134.0

$

(79.7)

Interest expense, net

60

50.7

48.1

Provision for income taxes

141

91.8

12.0

Depreciation and amortization

186

164.9

169.7

EBITDA

$

598

$

441.5

$

150.0

Non-cash stock-based compensation expense    


14

15.1

12.4

Restructuring charges

1

15.2

-

Goodwill and intangible asset impairment

-

-

78.6

Acquisition integration costs              


-

-

17.8

Audit Committee investigation related costs

-

-

16.5

Project results from non-controlled joint venture

7

5.1

16.3

Court mandated mediation settlement

-

-

12.2

Loss on equity investee interest rate swaps

-

-

4.4

Adjusted EBITDA

$

620

$

476.9

$

308.1







EBITDA and Adjusted EBITDA Margin Reconciliation







Net income (loss)


3.5%

2.6%

(1.9)%

Interest expense, net

1.0%

1.0%

1.1%

Provision for income taxes

2.4%

1.8%

0.3%

Depreciation and amortization

3.1%

3.2%

4.0%

EBITDA margin

10.0%

8.6%

3.6%

Non-cash stock-based compensation expense    


0.2%

0.3%

0.3%

Restructuring charges

0.0%

0.3%

-

Goodwill and intangible asset impairment

-

-

1.9%

Acquisition integration costs              


-

-

0.4%

Audit Committee investigation related costs

-

-

0.4%

Project results from non-controlled joint venture

0.1%

0.1%

0.4%

Court mandated mediation settlement

-

-

0.3%

Loss on equity investee interest rate swaps

-

-

0.1%

Adjusted EBITDA margin


10.3%

9.3%

7.3%

 

Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures - Unaudited

(In millions, except for percentages and per share amounts)




Guidance for

the Year Ended

December 31,

For the

Year Ended

December 31,

For the

Year Ended

December 31,


2017 Est.

2016

2015

Adjusted Net Income







Net income (loss)

$

212

$

134.0

$

(79.7)

Non-cash stock-based compensation expense    


14

15.1

12.4

Restructuring charges

1

15.2

-

Goodwill and intangible asset impairment

-

-

78.6

Acquisition integration costs              


-

-

17.8

Audit Committee investigation related costs

-

-

17.4

Project results from non-controlled joint venture

7

5.1

16.3

Court mandated mediation settlement

-

-

12.2

Loss on equity investee interest rate swaps

-

-

4.4

Impact of Alberta tax law change

-

-

2.8

Income tax effect of adjustments (a)

(5)

(11.7)

(30.8)

Adjusted net income

$

229

$

157.7

$

51.4









Guidance for

 the Year Ended

December 31,

For the

Year Ended

December 31,

For the

Year Ended

December 31,


2017 Est.

2016

2015

Adjusted Diluted EPS Reconciliation





Diluted earnings (loss) per share

$

2.53

$

1.61

$

(0.98)

Non-cash stock-based compensation expense    


0.17

0.19

0.15

Restructuring charges

0.01

0.19

-

Goodwill and intangible asset impairment

-

-

0.97

Acquisition integration costs              


-

-

0.22

Audit Committee investigation related costs

-

-

0.21

Project results from non-controlled joint venture

0.08

0.06

0.20

Court mandated mediation settlement

-

-

0.15

Loss on equity investee interest rate swaps

-

-

0.05

Impact of Alberta tax law change

-

-

0.03

Income tax effect of adjustments (a)

(0.06)

(0.14)

(0.38)

Adjusted diluted earnings per share

$

2.73

$

1.90

$

0.64

     (a)   Represents the tax effect of the adjusted items that are subject to tax, including the tax effects of share-based
     compensation expense.  Tax effects are determined based on the tax treatment of the related items, the incremental
     statutory tax rate of the jurisdictions pertaining to each adjustment, and taking into consideration their effect on pre-tax
     income.

 

The tables may contain slight summation differences due to rounding.

MasTec, Inc. is a leading infrastructure construction company operating mainly throughout North America across a range of industries. The Company's primary activities include the engineering, building, installation, maintenance and upgrade of communications, energy and utility infrastructure, such as: wireless, wireline/fiber, satellite communications and customer fulfillment activities; petroleum and natural gas pipeline infrastructure; electrical utility transmission and distribution; power generation; and industrial infrastructure. MasTec's customers are primarily in these industries. The Company's corporate website is located at www.mastec.com. The Company's website should be considered as a recognized channel of distribution, and the Company may periodically post important, or supplemental, information regarding contracts, awards or other related news on the Presentations/Webcasts page in the Investors section therein.

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 trends in oil, natural gas, electricity and other energy source prices; volatility in capital expenditures by our customers, financing availability and cost, customer consolidation and technological and regulatory changes in the industries we serve; our ability to accurately estimate the costs associated with our fixed price and other contracts, including any material changes in estimates for completion of projects, and performance on such projects; our ability to manage projects effectively and in accordance with our estimates; the effect of economic conditions on demand for our services; market conditions, technological developments and regulatory changes that affect us or our customers' industries; the highly competitive nature of our industry; risks related to our strategic arrangements, including our cost and equity investees; fluctuations in foreign currencies; risks associated with operating in or expanding into additional international markets, which could restrict our ability to expand globally and harm our business and prospects or any failure to comply with laws applicable to our foreign activities; customer disputes related to our performance of services; disputes with, or failures of, our subcontractors to deliver agreed-upon supplies or services in a timely fashion; any material changes in estimates for legal costs or case settlements or adverse determinations on any claim, lawsuit or proceeding; our ability to replace non-recurring projects with new projects; the timing and extent of fluctuations in geographic, weather, equipment and operational factors affecting the industries in which we operate; our ability to attract and retain qualified personnel, key management and skilled employees, including from acquired businesses, and our ability to enforce any noncompetition agreements, integrate acquired businesses within expected timeframes and achieve the revenue, cost savings and earnings levels from such acquisitions at or above the levels projected, including the risk of potential asset impairment charges, including write-downs of goodwill; any exposure related to divested businesses; any exposure resulting from system or information technology interruptions or data security breaches; risks related to the restatement of certain of our fiscal year 2014 interim financial statements; the impact of U.S. federal, local or state tax legislation and other regulations affecting corporate income taxes, as well as, those affecting renewable energy, electricity prices, electrical transmission, oil and gas production, broadband and related projects and expenditures; the effect of state and federal regulatory initiatives, including costs of compliance with existing and future environmental requirements; increases in fuel, maintenance, materials, labor and other costs; our dependence on a limited number of customers; the ability of our customers, including our largest customers, to terminate or reduce the amount of work, or in some cases, the prices paid for services on short or no notice under our contracts; the impact of any unionized workforce on our operations, including labor availability and relations; liabilities associated with multi-employer pension plans, including underfunding and withdrawal liabilities, for our operations that employ unionized workers; the adequacy of our insurance, legal and other reserves and allowances for doubtful accounts; restrictions imposed by our credit facility, senior notes, and any future loans or securities; our ability to obtain performance and surety bonds; the outcome of our plans for future operations, growth and services, including business development efforts, backlog, acquisitions and dispositions; any dilution or stock price volatility that shareholders may experience in connection with shares we may issue as consideration for earn-out obligations or as purchase consideration in connection with past or future acquisitions, or other stock issuances; 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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SOURCE MasTec, Inc.

J. Marc Lewis, Vice President-Investor Relations, 305-406-1815, 305-406-1886 fax, marc.lewis@mastec.com

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