MasTec names margin growth as highest priority; acquisitions a possibility

By Jennifer Lanning Drey

Portland, Ore., Sept. 20 - MasTec Inc.'s top priority is to further expand its margins, which at 6.3% pretax, hit their highest level in six years during the second quarter, Jose R. Mas, MasTec's chief executive officer, said Thursday during a presentation at the D.A. Davidson 6th Annual Engineering & Construction Conference in San Francisco.

"We feel good about the progress we're making but we continue to believe there's a lot more progress to make and we expect to see that increase as we focus on execution and accountability," Mas said.

MasTec plans to achieve its goal for margin improvements by taking advantage of a currently favorable pricing environment, making safety improvements, reducing legal costs by accelerating the closure of legacy litigation and growing higher-margin business segments faster.

Additionally, the company expects to achieve low double-digit revenue growth for the foreseeable future, which will mostly be organic, although the company will also look at selective acquisitions that would take it into new markets and geographies, he said.

The most likely area for acquisitions would be in the electric industry, both in the distribution and transmission sectors, Mas said.

MasTec executives also said during the presentation that they believe the company is undervalued.

"The progress we've made at MasTec has been quite rapid. The velocity of change or improvement has been quite high, and I don't believe that the market perception or market knowledge of the new and improved MasTec has caught up with reality," chief financial officer Robert Campbell said.

Campbell highlighted the fact that MasTec's net debt-to-capitalization ratio was 52% in December 2005 and is currently down to 9%.

"We believe we have a balance sheet that is as good as, if not better than, anyone in our space today," he said.

MasTec is a Coral Gables, Fla., telecommunications and energy infrastructure company.

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