CORAL GABLES, Fla., Nov. 3 /PRNewswire-FirstCall/ -- MasTec, Inc. (NYSE: MTZ)
today announced that it has signed a definitive agreement to acquire Precision
Pipeline, LLC, a leading natural gas, crude oil and refined products
transmission pipeline infrastructure services provider in North America for a
purchase consideration of $150 million, subject to certain purchase price
adjustments and an earnout. The transaction is contingent on financing
availability on terms and conditions acceptable to MasTec, in its sole
discretion, and there is no break-up fee if such financing is not available.
Based in Eau Claire, Wisconsin, Precision is a leading energy infrastructure
services provider, specializing in the construction and maintenance of large
diameter pipelines. Precision's experience in the long-haul, interstate
pipeline industry will complement MasTec's existing energy infrastructure
service offerings, which include natural gas gathering systems, processing
plants and compression stations and mid-stream pipelines. Precision employs a
team of highly-skilled unionized workers and tradesmen which it deploys
throughout North America and utilizes a significant pool of specialized
pipeline construction equipment. With the acquisition of Precision, MasTec
will become one of the leading pipeline contractors in the country, capable of
providing a full array of construction services to oil and gas producers, as
well as mid-stream and interstate pipeline operators.
Precision has experienced significant growth over the past several years.
Precision generated $303 million of revenue and $37 million in EBITDA in 2007
and $507 million of revenue and $93 million in EBITDA in 2008. For the full
year of 2009, Precision estimates revenue of slightly less than $300 million
and EBITDA of about $60 million. The reduction in earnings in 2009 as
compared to 2008 is primarily due to lower revenue as the result of a softer
natural gas and petroleum pipeline construction market amidst a global
economic downturn. Precision had over $500 million in backlog as of September
30, 2009. The acquisition is expected to be accretive for MasTec in 2010 by
at least $0.08 earnings per share, before amortization of acquisition-related
intangibles.
Jose Mas, MasTec's President and CEO noted, "We are very pleased with the
acquisition of Precision. The Company has an excellent and motivated
management team that will remain in place to continue its growth. With the
acquisition of Precision, we will significantly expand our capabilities in the
natural gas, crude oil and refined petroleum product pipeline industries,
which we believe will be solid areas of growth for years to come. Over the
last few years, we have invested heavily in positioning MasTec in industries
that we believe will have significant growth opportunities. This acquisition
complements our recent growth in renewables, electric transmission line
construction and wireless infrastructure services."
Mr. Mas concluded, "MasTec continues to generate significant cash flow from
its existing operations and management is often asked about our expected uses
of the cash flow. We believe the acquisition of a well managed company with a
proven track record, strong management team, and solid backlog that exposes
MasTec to new geographies, customers and service offerings at an attractive
multiple is one of the best ways to deploy capital and increase shareholder
value."
MasTec believes that U.S. energy policy goals will continue to favor clean,
domestic sources of energy and the Company expects to be a leading player in
that effort in both renewable energy and natural gas pipeline construction.
With recent developments in drilling and completion technologies for oil and
gas, particularly the new shale gas fields, MasTec expects new production
fields to be developed and old fields to be expanded significantly. MasTec
expects that the resulting incremental production will provide continuing
construction opportunities as oil and gas producers and pipeline operators
move this oil, gas and refined products to markets via pipelines. With oil
prices currently close to $80 per barrel and natural gas futures prices
improving, MasTec believes that this market will continue to grow with
excellent margin opportunities. As evidence of this expected growth, as of
October 15, 2009, the Federal Energy Regulatory Commission had over 5,000
miles of pending major pipeline projects on file.
Bob Campbell, MasTec's Executive Vice President of Finance and CFO, noted,
"Our purchase agreement includes a requirement to obtain at least $75 million
in financing and we are currently reviewing our financing options. Our
current capital structure, liquidity and cash flows are all in excellent shape
today which enables us to do this very attractive acquisition. MasTec's
liquidity as of September 30, 2009 was $183 million, with liquidity defined as
cash plus availability on its senior credit facility. Cash flow from
operations for September year-to-date 2009 was $86 million which was double
the cash flow for the same period last year."
In addition to the availability of financing, the transaction is subject to
MasTec obtaining all necessary consents from MasTec's lenders under its credit
facility, Hart-Scott-Rodino Act approval and normal closing conditions and
timelines and MasTec expects to close the transaction sometime before the end
of the fourth quarter. Definitive details of the transaction, along with
historical financial information, are included in the 8-K which is being filed
with the SEC.
Management will also hold a conference call to discuss this transaction on
Wednesday, November 4, 2009 at 8:30 a.m. Eastern time. Accompanying slides
will be posted on the investor relations section of the Company's website at
www.mastec.com. The dial-in number for the conference call is (719) 325-4894
and the replay number is (719) 457-0820, with a pass code of 1432517. 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.
Reconciliation of Non-GAAP Disclosures-Unaudited
(In millions)
2009 2008 2007
(Estimated)
-----------
Net income $44 $83.3 $32.2
Depreciation &
amortization 10 8.7 4.3
Interest expense, net 2 0.8 0.7
Taxes 4 0.0 0.0
--- --- ---
EBITDA $60 $92.9 $37.1
===== ===== =====
Tables may contain slight summation differences due to rounding.
This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act. These statements are based on
our current expectations and are subject to risks, uncertainties, and other
factors, some of which are beyond our control, that are difficult to predict,
and could cause actual results to differ materially from those expressed or
forecasted in the forward-looking statements. Important factors that could
cause actual results to differ materially from those in forward-looking
statements include; our ability to obtain Hart-Scott Rodino Act approval for
our Precision acquisition, or termination of the applicable waiting period;
our ability to consummate the Precision acquisition on a timely basis or at
all; our ability to retain qualified personnel and key management, integrate
Precision with MasTec within the expected timeframes and achieve the revenue,
cost savings and earnings levels from the acquisition at or above the levels
projected; our ability to maintain and grow the customer relationship with
Precision's two principal customers and/or replace such contracts or otherwise
obtain new business; delays associated with any of Precision's projects; the
demand for oil and natural gas; the timing and extent of fluctuations in
geographic, weather, equipment and operational factors affecting the oil and
gas industry; the impact of any Precision liabilities that are unknown to us;
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 prices paid for services on short or no notice under our
contracts; the impact of Precision's unionized workforce on our operations,
including labor availability and relations; liabilities associated with
Precision's multiemployer union pension plans, including underfunding
liabilities; further or continued economic downturns, reduced capital
expenditures, reduced financing availability, customer consolidation and
technological and regulatory changes in the industries we serve; market
conditions, technical and regulatory changes that affect our customers'
industries; our ability to retain qualified personnel and key management from
acquired businesses, 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;
the impact of the American Recovery and Reinvestment Act of 2009 and any
similar local or state regulations affecting renewable energy, transmission,
broadband and related projects and expenditures; the effect of state and
federal regulatory initiatives, including costs of compliance with existing
and future environmental requirements; our ability to attract and retain
qualified managers and skilled employees; increases in fuel, maintenance,
materials, labor and other costs; any liquidity issues related to our
securities held for sale; any adverse determination of any claim, lawsuit or
proceeding; the highly competitive nature of our industry; the adequacy of our
insurance, legal and other reserves and allowances for doubtful accounts; any
exposure related to our divested state Department of Transportation projects
and assets; restrictions imposed by our credit facility, senior notes and any
future loans or securities; any dilution or stock price volatility which
shareholders may experience in connection with shares we may issue as
consideration for earn-out obligations in connection with past or future
acquisitions, including in connection with our acquisition of Precision, or
conversions of convertible notes or other stock issuances; the outcome of our
plans for future operations, growth, and services, including backlog and
acquisitions; and the other factors referenced in the reports we furnish to
and file with the SEC. We do not undertake any obligation to update
forward-looking statements.
SOURCE MasTec, Inc.
J. Marc Lewis, Vice President-Investor Relations, +1-305-406-1815,
+1-305-406-1886 fax, marc.lewis@mastec.com
