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MasTec Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 29, 2012 11:26PM
MasTec Inc. (MTZ) filed Annual Report for the period ended 2011-12-31. Mastec Inc has a market cap of $1.52 billion; its shares were traded at around $17.59 with a P/E ratio of 13.1 and P/S ratio of 0.7. Mastec Inc had an annual average earning growth of 29.8% over the past 5 years.
Highlight of Business Operations:For the year ended December 31, 2011, we derived approximately 23%, 23% and 8% of our revenue from DIRECTV®, AT&T and El Paso Corporation, respectively. For the year ended December 31, 2010, we derived approximately 24%, 20% and 9% of our revenue from DIRECTV®, AT&T and El Paso Corporation, respectively, and for the year ended December 31, 2009, we derived approximately 30%, 16%, 7% and 5% of our revenue from DIRECTV®, AT&T, Enbridge and Verizon, respectively. In addition, our ten largest customers accounted for approximately 71%, 72% and 72% of our revenue in each of the three years ended December 31, 2011, 2010 and 2009, respectively. Because our business is concentrated among relatively few major customers, and certain of our services are provided on a non-recurring, project by project basis, we could experience a reduction in our results of operations, cash flows and liquidity if the amount of business we obtain from these customers is reduced, or if we complete the required work on our projects and cannot replace them with similar projects. Just over 40% of our revenues were derived from non-recurring project specific work for the year ended December 31, 2011, which may further increase this risk if we are not able to replace completed project work with new work. In addition, many of the contracts with our largest customers may be canceled on short or no advance notice. Any of these factors could negatively impact our results of operations, cash flows and liquidity.
Revenue. Our revenue was $3.0 billion for year ended December 31, 2011, compared to $2.3 billion in 2010, representing an increase of $700.9 million, or 30.4%. Of this increase, $265.3 million, or approximately 38%, was attributable to businesses acquired during 2011. Revenues were favorably impacted by demand for our wireless, pipeline, install-to-the-home and energy transmission services. Key customers driving growth during 2011 included AT&T, DIRECTV® and Energy Transfer Company. Continuing investments in new infrastructure for wireless technology, in addition to expansion of the geographic areas in which we do project work, yielded approximately $237 million of higher revenues from wireless projects in 2011 as compared with 2010. Of this increase, approximately $27 million was from acquired businesses. Pipeline revenues increased approximately $212 million for the year ended December 31, 2011, driven by acquisition revenues of $83 million, as well as an increase of approximately $90 million from our pipeline projects in the various natural gas shale basins. Pipeline revenues were also favorably impacted by approximately $37 million of higher year-over-year revenues from a large pipeline project with El Paso Corporation. Install-to-the-home and energy transmission project activity was also strong in 2011, increasing by approximately $146 million and $138 million, respectively, including approximately $155 million of revenues from acquired businesses. Otherwise strong revenue growth was partially offset by approximately $118 million in lower levels of activity on renewable energy projects versus 2010 as a result of tightened access of our customers to project financing and delays resulting from changes to our customers capital spending projects.
Revenue. Our revenue was approximately $2.3 billion for the year ended December 31, 2010, compared to $1.6 billion in 2009, representing an increase of approximately $685 million or 42.2%. Of the total increase, approximately $294.0 million resulted from acquisitions. The remaining increase of $390.5 million, or 24%, was attributable to organic growth, primarily from our wireless, pipeline, renewables and install to the home customers. Versus the prior year, wireless project revenues increased by over $200 million, pipeline revenues increased by over $90 million, and renewables and install-to-the-home project revenues each increased by approximately $80 million, respectively. Key customers driving growth in 2010 included AT&T, El Paso Corporation, DIRECTV®, Tenaska Energy, Edison Mission Energy and Talisman Energy. Our organic revenue growth was partially offset by the impact of economic and competitive pressures, which negatively impacted pricing and growth in certain components of our business. We actively monitor economic and industry trends and any related impact on our business, including certain wireline projects, which decreased by approximately $40 million versus the prior year.
Interest expense, net. Interest expense, net of interest income, was $29.1 million, or 1.3% of revenue in 2010, compared to $24.7 million, or 1.5% of revenue in 2009, representing an increase of $4.4 million. This increase was primarily attributable to $215 million of Original Convertible Notes issued in 2009, partially offset by a reduction in interest expense from the repayment of our $55 million 8% convertible note in June 2009 and the October 2010 refinancing of $13.4 million of a 7.05% equipment note with a new equipment note, bearing interest at 3.5267%. Because we have higher average debt balances in 2010, our interest expense increased versus the prior year.
Other expense (income), net. Other expense, net, was $1.3 million in 2010 compared to other income, net, of $2.8 million in 2009. The reduction in other income of $4.1 million as compared with 2009 was partially attributable to credit and other losses, net, of $0.8 million recognized during 2010 on our auction rate securities, versus the impact in 2009 of a $7.0 million settlement on litigation related to our auction rate securities, which was partially offset by $6.1 million of credit losses. Other expense was also impacted by a $0.9 million decrease in gains on sales of assets as compared with 2009. In addition, in 2010, we incurred $0.3 million in lease termination costs, $0.3 million of losses on equity method investments and $0.5 million of expense related to changes in the estimated fair value of acquisition-related contingent consideration. See Note 3 Acquisitions and Other Investments in the notes to the consolidated financial statements.
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