Jefferies Global Industrials Conference August 14, 2014 NYSE: MTZ
Safe Harbor Statement This presentation 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 the effect of economic downturns on demand for our services, reduced capital expenditures by our customers, reduced financing availability, customer consolidation and technological and regulatory changes in the industries we serve; market conditions, technological developments and regulatory changes that affect us or our customers industries; trends in electricity, oil, natural gas and other energy source prices; 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; 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; any exposure related to divested businesses; any exposure resulting from system or information technology interruptions or data security breaches; the impact of U.S. federal, local or state tax legislation and other regulations 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; fluctuations in foreign currencies; risks associated with operating in 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; the highly competitive nature of our industry; 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, convertible 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 as a result of conversions of convertible notes or other stock issuances; our ability to settle conversions of our convertible notes in cash due to contractual restrictions, including those contained in our credit facility, and the availability of cash; 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. 2
Company Overview MasTec is a leading infrastructure construction company operating mainly throughout North America Consistently ranked among the top specialty contractors by Engineering News-Record ranked #3 in 2012 and 2013 Activities include the engineering, building, installation, maintenance and upgrade of petroleum and natural gas pipeline and facilities, power generation, electrical transmission & distribution and industrial, wireless, wireline/fiber and satellite communications MasTec has a high-quality, diversified customer base, served by about 18,000 employees across approximately 390 locations The Company has grown from $932 million in revenue in 2007 to $4.3 billion in 2013 (CAGR 29%) Adjusted EBITDA (1) has grown from $59 million in 2007 to $449 million in 2013 (CAGR 40%) Note: (1) See Reg. G reconciliation tables in Appendix 3
Transformation Into Higher Growth-Higher Margin Segments End-market diversification has driven MasTec s transformation 2007 Segments 2013 Segments Other Communications Communications Oil & Gas Electrical Transmission Largest Customer 42% Power Gen & Industrial Largest Customer 18% Electrical Transmission Revenue $0.9 Billion Communications 99% Oil & Gas 0% Electrical Transmission ~1% Power Generation & Industrial 0% Other 0% Differences due to rounding Revenue $4.3 Billion Communications 45% Oil & Gas 38% Electrical Transmission 10% Power Generation & Industrial 7% Other ~0 % Differences due to rounding 4
In Millions Double-Digit Revenue Growth 2013 Revenue Mix 29% CAGR 2007 through 2013 $2,143 $2,831 $3,727 $4,325 MSA 45% Project work 55% $932 $1,251 $1,482 2007 2008 2009 2010 2011 2012 2013 Notes: (1) Continuing Operations 5
In Millions Strong Adjusted EBITDA Growth Adjusted EBITDA Continuing Operations 40% CAGR 2007 through 2013 $336 $449 $204 $249 $59 $89 $127 2007 2008 2009 2010 2011 2012 2013 Notes: (1) See Reg. G reconciliation tables in Appendix for Adjusted EBITDA 6
Expanding Adjusted EBITDA Margins Adjusted EBITDA Continuing Operations 8.5% 9.5% 8.8% 9.0% 10.4% 6.3% 7.1% 2007 2008 2009 2010 2011 2012 2013 Notes: (1) See Reg. G reconciliation tables in Appendix for Adjusted EBITDA 7
Backlog Growth Trend 24% CAGR 2007 through 2013 $3,092 $3,358 $4,126 In Millions $1,114 $1,548 $1,922 $2,074 2007 2008 2009 2010 2011 2012 2013 Notes: (1) Continuing Operations 8
2013 Performance Adjusted continuing operations diluted EPS up 24% to $1.90 2013 was another successful year for MasTec, with record revenue and earnings Revenue was up 16% to $4.3 billion Adjusted continuing operations EBITDA was up 34% to $449MM Adjusted continuing operations EBITDA margin up 140 basis points to 10.4% Cash flow from operations up 16% to $200MM for 2013 Significant, top-tier player in well diversified end markets with strong growth in revenue, led by: Oil & Gas, up 70% Wireless, up 38% Electrical, up 37% Notes: (1) See Reg. G reconciliation tables in Appendix for Adjusted EBITDA 9
Key Markets Perspective Now have significant scale in all major markets served Petroleum, natural gas liquids and gas pipeline & facilities Electrical transmission Communications Wireless Install-to-the-home / DirecTV / Home Security / Home Automation Wireline/1Gigabit Fiber Power Generation and Industrial Natural gas turbine power plants and renewables Natural gas / petroleum processing plants and compressor stations, industrial processing plants MasTec believes that each of the key markets is capable of being a $1-2 billion+ business over time MasTec believes it is a top tier contractor in all of the markets served All markets do not need to perform well for MasTec to do well reasonable diversification is a strength 10
MasTec Oil & Gas Segment Continues Strong Growth The Company has a balanced portfolio of gathering lines, mid-stream, long-haul interstate pipeline and related facilities services Revenue from Oil & Gas ($ in millions) Acquisitions of Calgary-based Big Country Energy Services in 2013 and Pacer Construction in 2014 to exploit fast-growing Canadian opportunity 88% CAGR 2008 through 2013 $1,629 2013 revenue of $1.6 billion vs. $959 million in 2012 Strong presence in all major shale basins with the ability to perform work throughout North America $563 $774 $959 Over $250 billion of total capital expenditures required over the next 25 years to support U.S. infrastructure (1) Market opportunity in Mexico is developing $70 $178 2008 2009 2010 2011 2012 2013 Source: (1) Pipeline & Gas Journal, July 2011 11
$ in millions $ in billions MasTec is Well Positioned in Electrical Transmission MasTec Revenue from Electrical Transmission Forecasted North American Awards for Large Transmission Projects 118% CAGR 2009 through 2013 $312 $429 $30.0 $20.2 $24.5 $17.5 $198 $12.1 $11.4 $19 MasTec s transmission business continues to grow rapidly from a small base, benefiting from: Growing market $67 2009 2010 2011 2012 2013 Market share gains Platform serving North America 2012 2013 2014 2015 2016 2017 Source: TransmissionHub, KeyBanc Estimates, August 2013 Large North American transmission line awards ($500MM+) between 2014 and 2017 expected to total almost $100 billion of investment. Utilities are interested in, and have supported, a diversified supplier market. MasTec s strong balance sheet and performance history are competitive advantages. 12
Communications Growth in Wireless and 1-Gigabit Fiber Global Mobile Data Traffic, 2013 to 2018 (Exabytes per month) 60% CAGR 2013 through 2018 10.8 15.9 1.5 2.6 4.4 7.0 2013 2014 2015 2016 2017 2018 Source: Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2013-2018, February 5, 2014 $650MM revenue in 2012 up to ~$900MM in 2013 MasTec Awarded AT&T 16-state Wireless Region (13 Prime) AT&T CAPEX budget at high levels, with multi-year 4G/LTE upgrade program underway Tower crew program announced Q1-14 Growing wireless customer base including Sprint and others New 1 Gigabit Fiber-to-the-home initiative moving forward 13
Communications Growth - Install-to-the-Home MasTec s DIRECTV Offerings Exclusive install-to-the-home provider for DIRECTV in all markets MasTec serves High revenue visibility through Master Service Agreement Over ~60% of truck rolls relate to maintenance and upgrades for existing customers Long-term contract through October 2016 DirecTV s largest contractor (~28%) Expanding Service Offerings to Home Security and Automation Opportunities for AT&T s Digital Life, DIRECTV s LifeShield and Home Automation businesses are excellent opportunities for longterm growth in multiple markets. MasTec s DIRECTV Footprint Note: Some states are less than 100% of Designated Market Area ( DMA ) coverage MasTec s AT&T Digital Life Footprint MasTec Market 14
Rebound in Power Generation & Industrial Our most challenging market for 2013 - uncertainty surrounding extension of the production tax credit ( PTC ) for wind led to a severe contraction of the industry in 2013 PTC was extended in early 2013, which prompted utilities/developers to increase plans for new wind installations driving increased bidding in late 2013 Q2-14 revenue up 49% over Q2-13 Will continue to develop capabilities in petroleum & gas facilities, power generation, solar and biofuels to offset cyclical nature of wind industry Expect EBITDA turnaround in 2014 15
Growth Opportunity: Canadian Expansion MasTec expects to generate ~$700MM in Canada today, primarily in Oil and Gas Market trends indicate further investment/expansion for the foreseeable future The Canadian oil sands are one of the largest crude oil resources on the planet more than $125 billion of capital has been invested in the Canadian oil sands over the last decade Canada s long-haul pipeline expansion to east, west and south should drive future opportunities Oil sands production has grown from approximately 980,000 b/d in 2005 to 2 million b/d in 2013 production is expected to grow to more than 4 million b/d by 2020. Natural gas could attract as much as $386 billion in investments by 2035 and create 3.2 million person-years of employment (or an average of 131,460 jobs annually), says the Conference Board of Canada (1) British Columbia is expected to lead the natural gas investment charge, attracting $181 billion, with Alberta garnering $154 billion from 2012-2035 (1) MasTec recently acquired Pacer and has established Canadian subsidiaries in both its Electrical Transmission and Power Generation segments where infrastructure demands are also increasing Source: (1) Alaska Natural Gas Transportation Projects, Office of the Federal Coordinator: Latest Oil and Gas News by Larry Persily, December 20, 2012 16
Growth Opportunity: Mexican Expansion MasTec has a small presence in Mexico today, providing wireless infrastructure services Due to recent energy regulation reforms in Mexico and the US shale gas boom, oil and gas infrastructure investment is forecasted to expand significantly In December 2013, Mexico s Congress passed legislation allowing both domestic and foreign private investment in the energy sector More than $10 Billion in Mexico pipeline opportunities are forecasted between 2013 and 2018 as part of a broader infrastructure initiative announced by Enrique Peña, Mexico s President, in 2013 Over 2,500 miles of oil and gas pipeline expansions with a capacity of over 10 Bcf/d (1) The demand for natural gas will continue to increase by over 5 Bcf/d as Mexico is projected to add 28 gigawatts of new electric capacity by 2027 Source: (1) CFE, PEMEX, FERC, Company Disclosures 17
Growth Opportunity Through Bolt-On Acquisitions In addition to organic growth opportunities from MasTec s position in each of its key end markets, the Company has a proven track record of growth via M&A Focus has shifted from new market entry acquisitions to tuck-in acquisitions generally within existing key markets Diversify customer base Expand geographic footprint Add new service offerings Historically, MasTec has achieved strong returns on acquisitions and experienced excellent post-acquisition organic growth Have managed transformation and have remarkable growth - while improving liquidity, leverage ratios and capital structure Made $1.2 billion in acquisitions since 2007, while de-leveraging and improving credit ratios 18
Liquidity and Capital Structure MasTec, Inc. Debt Summary - as of June, 2014 Principal Balance Rate Maturity Liquidity and capital structure are in excellent shape today Revolving Credit Facility (LIBOR + 1.75%) $ 398,400 2.64% (1) October 2018 Senior notes 400,000 4.875% March 2023 Senior Convertible notes (2), Convert @ $15.48 100,000 4.25% December 2014 Other Credit Facilities 46,800 4 6 3.75% Varies Capital lease obligations 169,200 2.9% Installments through 2021 Notes payable for equipment and other debt $ 52,500 3.2% Installments through 2018 Total Debt (2) $ 1,166,900 Weighted Average Interest Rate 3.65% Total Equity $ 1,091,314 Total Capital $ 2,258,214 Expanded credit facility in 2014 from $750MM to $1B in Q2 Retired $115MM in senior convertible notes in June of 2014, reducing weighted-average cost of capital Q2-14 Liquidity of $485MM Low cash interest with 4.25% (convertibles) and 4.875% (senior notes) and LIBOR plus 175 bps (revolver) (1) Weighted average rate based on balance of Base Rate loans which had an applicable margin of Prime plus 0.50% and LIBOR loans with a margin of 1.75% (2) Variance to Financial Statements due to Convertible notes listed with original principal value instead of carrying value 19
2014 Growth Catalysts and Expectations Good end-market growth potential in: Despite slowdown in Wireless in second half of 2014, we expect continued deployment of 4G LTE upgrades with multiple customers Wireline/fiber, with new 1-gigabit fiber deployment push with multiple customers Oil & Gas pipeline, with 2015 surge expected in long-haul project awards Electrical Transmission project bidding outlook is strong Install-to-the-home with multiple customers adds home security opportunities Renewables revenue and margins should rebound nicely 2014 Guidance of $4.4-4.5 Billion of revenue with continuing operations adjusted EBITDA of $420-425 million and continuing operations adjusted diluted earnings per share of $1.55-1.58 20
Investment Summary 2013-Significant margin expansion, revenue growth and strong cash flows Well positioned for growth in Oil & Gas, Wireless, Electrical Transmission and Wireline/1 gigabit fiber MasTec s key markets each have billion dollar potential Additional bolt-on, accretive acquisition opportunities within key markets 40% Adjusted EBITDA CAGR over last 6 years while liquidity, leverage ratios and capital structure improved Notes: (1) See Reg. G reconciliation tables in Appendix for Adjusted EBITDA 21
MasTec, Inc. 800 S. Douglas Road, 12th Floor Coral Gables, FL 33134 J. Marc Lewis Vice President-Investor Relations (305) 406-1815 (305) 406-1886 fax marc.lewis@mastec.com www.mastec.com 22
Appendix 23
Gas Pipelines: End-to-End Services 24
Communications: End-to-End Services 25
Power Generation, Electrical, Renewables & Heavy Industrial: End-to-End Services 26
North American Onshore Shale Basins Alberta Shales Bakken Monterrey Niobrara Niobrara Woodford New Albany New Albany Woodford Fayetteville Fayetteville Permian Barnett Permian Barnett Haynesville Antrim Marcellus Utica Eagle Ford 27
Reg. G EBITDA Margin Continuing Operations (1) EBITDA and Adjusted EBITDA Reconciliation 2007 (3) % margin 2008 % margin 2009 % margin 2010 % margin 2011 (4) % margin 2012 (5) % margin 2013 (6) % margin 2014E % margin Revenue $ 932.4 $ 1,250.8 $ 1,482.1 $ 2,143.0 $ 2,831.3 $ 3,726.8 $ 4,324.8 $ 4,400-4,500 Income from continuing operations before noncontrolling interests (13.5) (1.5)% 42.1 3.4% 44.8 3.0% 66.1 3.1% 97.5 3.4% 116.6 3.1% 147.7 3.4% 123-126 2.8% Interest expense, net 9.8 1.0% 15.1 1.2% 24.7 1.7% 29.2 1.4% 34.5 1.2% 37.4 1.0% 46.4 1.1% 50 1.1% Provision for income taxes - 0.0% 0.6 0.0% 5.7 0.4% 47.9 2.2% 61.8 2.2% 76.1 2.0% 92.5 2.1% 76-77 1.7% Depreciation and amortization 17.4 1.9% 27.1 2.2% 48.2 3.3% 56.9 2.7% 74.2 2.6% 92.0 2.5% 140.9 3.3% 156 3.5% EBITDA - Continuing Operations $ 13.7 1.5% $ 84.8 6.8% $ 123.4 8.3% $ 200.1 9.3% $ 267.9 9.5% $ 322.1 8.6% 427.6 9.9% 404-409 9.1-9.2% Non-cash stock compensation expense (2) 5.6 0.6% 3.8 0.3% 3.1 0.2% 3.9 0.2% 3.6 0.1% 4.4 0.1% 12.9 0.3% 16 0.4% Legacy litigation claims and other disputes 39.3 4.2% - - - - - - - - - - - - - 0.0% Sintel litigation settlement expense - - - - - - - - - - 9.6 0.3% 2.8 0.1% - 0.0% Gain from remeasurement of equity interest in acquiree - - - - - - - - (29.0) (1.0)% - - - - - 0.0% Multiemployer pension plan charge - - - - - - - - 6.4 0.2% - - - - - 0.0% Loss from extinguishment of Debt - - - - - - - - - - - - 5.6 0.1% - 0.0% Adjusted EBITDA - Continuing Operations $ 58.6 6.3% $ 88.6 7.1% $ 126.5 8.5% $ 204.0 9.5% $ 248.9 8.8% $ 336.2 9.0% $ 450.0 10.4% $ 420-425 9.5-9.6% Note: (1) Differences due to rounding, $ in millions (2) Additional non-gaap reconciliations are included in Company s SEC filings and press releases. 28