Marc Lewis - VP of IR Jose Mas - President and CEO Bob Campbell - EVP and CFO

Alex Rygiel - FBR Simon Leopold - Morgan Keegan Eric Kainer - ThinkEquity

Welcome to MasTec's 2007 fourth quarter earnings results conference call. (Operator Instructions) At this time, I would like to turn the call over to Marc Lewis, MasTec's Vice President of Investor Relations. Marc, please go ahead.

Thank you, Debbie, and good morning, everyone. Welcome to MasTec's Earnings Call for the quarter and year-ended December 31, 2007. The following statement is made pursuant to the Safe Harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. In these communications, we may make certain statements that are forward-looking such as statements regarding MasTec's future results, plans, anticipated trends in the industries where we operate. These forward-looking statements were the company's expectations on the day of the initial broadcast of this conference call, February 28, 2008, and the company will make no effort to update these expectations based on subsequent events or knowledge. Various risks, uncertainties, and assumptions are detailed in our filings with the Securities & Exchange Commission. Should one or more of these risks or uncertainties materialize or should any of our underlying assumptions prove incorrect, actual results may differ significantly from results expressed or implied in these communications. In addition, we may use certain non-GAAP financial measures in the conference call. A reconciliation of these GAAP or non-GAAP financial measures to the most comparable GAAP financial measure can be found in our earnings release which is posted on mastec.com in the Investor Relations section. With us today we have Jose Mas, our President and Chief Executive Officer and Bob Campbell, Executive Vice President and Chief Financial Officer. The format of the call will be opening remarks and analysis by Jose, followed by a financial review from Bob. These discussions will be followed by a Q&A session and we expect the call to last approximately 45 minutes. I would now like to turn the call over to Jose Mas. Jose?

Thank you, Marc. Good morning and welcome to MasTec's fourth quarter and year-end 2007 conference call. First, some fourth quarter financial highlights. Revenue for the quarter was $274 million, our highest revenue quarter since 2001 and up 14% from the fourth quarter of 2006. Revenue for 2007 was $1.38 billion, a 10.4% increase over full year 2006. Income from continuing operations was $10 million or $0.15 per share for the fourth quarter versus $0.14 in the fourth quarter of 2006. Operating cash flow was $24.6 million for the quarter, an 11.3% increase over the fourth quarter last year. And operating cash flow for the year was $68.7 million, an increase of 49% over the prior year. I would first like to focus on some of 2007's important accomplishments. In 2007, we addressed many legacy issues including the sale of our discontinued ITS business, which had substantial losses and negative cash flow. We sold our underperforming Canadian operations. We accelerated the closure of legacy legal issues, which have had a significant financial and human capital drain in the company. We exited a number of contracts that were not meeting our margin expectations and we have increased management accountability across the Board. We also accomplished some important things related to our future. We extended our DirecTV agreement for an additional four years. We grew a number of important strategic customer relationships. We acquired the remaining interest in our two joint ventures, which have performed very well over the last couple of years. We finalized our senior note offering, solidifying our balance sheet to meet our future opportunities and needs, something which we believe is a competitive advantage given the current state of the credit markets. And we refocused our efforts on our electrical utility business and built a solid foundation heading into 2008 including two strategic acquisitions which I will cover later. I strongly believe that we took the appropriate steps in 2007 to deal with legacy issues, improve the operations and position the company for a very successful future. 2008 should be an excellent year for MasTec. We announced full-year guidance yesterday and expect 2008 revenues to range between $1.125 billion and $1.160 billion and diluted earnings per share from continuing operations to be between $0.85 and $0.90, a 27% to 34% increase over pro forma 2007. The growth in revenue and earnings in 2008 will be driven by our performance in our core markets. Our communication business continues to deliver strong results as our customers continue to upgrade their networks and invest in their infrastructure. In 2007, Verizon accounted for $95 million in revenue, up 22% year-over-year. Verizon continues to be committed to their deployment of fiber and our involvement in this effort continues to be strong. For the fourth quarter, AT&T accounted for approximately $20 million in revenue, a sequential increase and an increase of 13% over the same period last year. Embarq and Qwest were also both up fourth quarter of '07 versus fourth quarter of '06. Despite the housing slowdown, many of our customers are upgrading their networks and facilities which continue to create growth opportunities for MasTec in both new and existing geographical areas. Our install-to-the-home business had a challenging fourth quarter. As previously disclosed the company went through a dramatic ramp-up of resource in the third quarter and worked hard to remove alternate service providers that were brought into our area, negatively impacting our business until late in the fourth quarter. Today, we have reclaimed our territories, demand is strong and we have increased our workforce by over 30% since first facing these challenges early in the third quarter. We are now positioned to better serve our customer and expect our technician headcount to stay steady for the foreseeable future. Revenues for the quarter were $120 million compared to $99 million in the fourth quarter last year, an increase of 21%. DirecTV recently announced approximately $1 million new growth subscribers for the fourth quarter, continued strong demand for their services and an increased demand for advanced product as the cost of high-definition boxes continues to drop. DirecTV currently offers about a 100 channels in high-definition, making them the clear market leader. We expect to see continued strong demand from this customer and have worked hard to refine our forecasting and planning tools to meet their growing demand. In our energy utility business, we saw strong activity in the fourth quarter, driven by growth in both our traditional markets as well as increased services to our natural gas customers, where we are building lines for field-gathering systems. Revenues for the quarter were $63 million compared to $48 million in the prior year, a 31% increase and a sequential increase over the third quarter of 20%. In 2007, we exited a number of underperforming contracts, made significant investments in both people and equipment and executed on our plan of making strategic acquisitions to position the company for success as our customers continue to make significant investments in their infrastructure. While new housing starts have had a significant impact on new subdivision build-outs, our diversification plan within our energy business has paid off, as we expect to see growth in this business in 2008. We expect this growth to be driven by both our transmission business and our entry into the renewable energy space. As previously disclosed in October, MasTec acquired three phase line construction, a transmission line construction and maintenance provider based in the Northeast, along with our in-house capabilities, we expect a solid 2008 in this area. In December, we acquired certain assets of Power Partners LLC. Power Partners specializes in the construction of collections systems, transmission lines and substations for wind farm projects throughout the country. With their experience and our resources, we expect the wind farm business to be an important part of our growth strategy in 2008 and beyond. We welcome the Power Partners team to MasTec. In all, while disappointed with our financial results for 2007, we made significant progress in positioning the company for a successful future. In spite of the overall market condition, the industries we serve are well positioned to deliver solid results in 2008. Our customers are investing in their infrastructure and activity remains strong. We are very optimistic about 2008. We are off to a good start and expect this to be an excellent year for our shareholders, stakeholders and employees. I will now turn over the call to our CFO, Bob Campbell. Bob?

Thank you, Jose, and good morning. As Jose mentioned 2007 was a very active year at MasTec and the activities have positioned us well for 2008. Let me give you a high-level recap of 2007, and then I will provide details for both 2007 and for the fourth quarter. My 2007 highlights are as follows. We had a successful CEO succession with Jose taking over as CEO on April 1st. We sold our money-losing DOT and Canadian businesses. We made four acquisitions. The two new businesses that Jose mentioned and we bought out our partners in two others. We completed our recapitalization, with new bonds and an improved bank deal to go with the new equity we sold in 2006. We have no significant debt maturities until 2017. Cash flow and liquidity were strong, with cash flow from operations up 49% and we reached our goal of getting our accounts receivable DSOs under 60 days. We changed our strategy to accelerate closure of our legacy litigation, took a $39 million charge and are getting the old litigation behind us at a rapid rate. We worked hard to improve margins and exit some contracts with our energy, communications and cable TV customers. And we improved our capability to meet demand on behalf of our install-to-the-home customer, DirecTV. All of these efforts and costs will help us in 2008. And finally, despite these challenges, we improved operating earnings and grew revenue at 10%. Continuing operations diluted EPS on a pro forma basis before the $39 million legacy litigation charge was $0.67 a share versus $0.62 in 2006. Now let me take you through more detailed information about 2007, the fourth quarter and our 2008 guidance. As I mentioned, revenue grew at 10% for the full year of 2007. We grew revenue by almost a $100 million from $940 million to $1.38 million. We had good growth with DirecTV and Verizon and added some important new electrical utility customers. On the other side of the ledger, we exited some energy, communications and cable TV contracts that did not have acceptable margins, which hurt revenue. Our revenue growth was without the benefit of storm revenue. That was minimal in 2007. Continuing operations net income for 2007 was $6.3 million versus $40 million last year. The net income for 2007 included the $39 million charge we took in Q3 to reflect our shift in strategy to accelerate closure of our legacy litigation claims and disputes. On a pro forma basis, without the $39 million legacy litigation charge, 2007 continuing operations net income was $45.5 million, compared to $40 million in 2006. That's an increase of 14%. Continuing operations diluted EPS for the full year of 2007 was $0.09, compared to $0.62 a year ago. On a pro forma basis, again without the $39 million Q3 legacy charges, continuing operations diluted EPS was $0.67, compared to $0.62. Gross profit margin for 2007 was 14.1% of revenue, which was flat with 2006. While we made real progress in improvement in the first half of 2007, we gave it back in Q3 and Q4 with the cost and productivity issues that we had in meeting increased demand in our DirecTV operations. We also took some margin hits from exiting and cleaning up some energy and cable TV contracts. G&A expense for 2007 was 11.1% of revenue, compared with 7.8% last year. The increase was entirely due to the $39 million Q3 charge for legacy litigation claims and other disputes. Without the Q3 charge, on a pro forma basis, G&A expense was 7.3% of revenue, actually down 5/10th from 7.8% last year. The biggest contributor to the G&A decrease was outside legal fees, which were down about $6 million. With accelerating closure of legacy litigation claims and other disputes, we believe that there should be additional reduction in outside legal costs, especially in the second half of 2008 and beyond. Regarding our legacy litigation, we have got pretty comprehensive disclosure in our 10-K. While I don't want to comment on individual cases, we are generally pleased with the progress in accelerating the closure of our legacy litigation claims and other disputes. We remain optimistic that the majority of our big cases will be behind us by mid-year. That concludes my remarks about the full year of 2007. Now I will cover Q4. For Q4 2007, revenue was up 14% and income from continuing operations was up 7%, Income from continuing operations was $9.9 million or $0.15 diluted earnings per share on revenue of $274 million. This compares favorably with income from continuing operations of $9.3 million or $0.14 per diluted share on revenue of $240 million in Q4 2006. Q4 results were pretty much as we had expected and were consistent with our guidance. But we did have a negative P&L impact that we have previously talked about regarding meeting increased DirecTV demand. The DirecTV issues had a detrimental fourth quarter impact on cost, productivity and revenue. Also it is important to note that our Q4 results included a $700,000 hit for lease residual values. Switching back to full year numbers. Cash flow from operations for 2007 was up 49%, growing from $46 million to $69 million. The improved cash flow is the result of improved operating earnings, the sale of our cash-draining DOT business and better collections. It is also helped by not having tax payments due to our $176 million federal NOL carry forward. As a point of information, we believe we should not have any significant tax payment until at least 2010. Our collections continue to improve as our accounts receivable day sales outstanding, or DSOs, dropped from 59 days at Q3 to 54 days at year-end 2007. The 54 days at year-end 2007 compares to 66 days at year-end 2006. If you will remember, we set a long-term goal back in 2005 of getting below 60 days in DSOs and we feel terrific about hitting this goal in 2007. Our financial condition and liquidity remains strong. At year end, we had a $145 million in cash, cash equivalents, securities available for sale, and availability on our bank revolving line of credit. As I mentioned we replaced our 7.75% bonds with new 10-year bonds at 7.625% interest and we do not have any significant debt maturities until 2017. The recapitalization of MasTec is now complete. I should know that at year end, we had approximately $44 million of securities available for sale, which are auction rate securities. We've reclassified the auction rate securities out of cash and cash equivalents and reflected them on the balance sheet as securities available for sale. Also we have recorded an unrealized loss of $4.8 million against equity to record a temporary impairment on $16 million of these securities that it failed auction at year end. Since year end, we have sold $8 million of our auction rate securities at par. We are monitoring the market for auction rate securities very closely and reviewing our options. With the credit markets in there current condition, we are fortunate that with their improved financial condition, we do not need to liquify our auction rate securities near-term. For the 2007 full year, our 10 largest customers were DirecTV 44%; Verizon 9%; AT&T 7%; Embarq/Sprint 5%; Progress Energy and TXU 3% each; FPNL, Quest and XTO Energy were all at 2%; and South Florida Water Management District was at 1.4%. Today, backlog is at roughly the $1.3 billion level and that's an 18-month backlog number. Even though we believe that fiber deployment work will last for years, our backlog number includes only the specific work for which we have this ability. Now moving on to 2008 guidance. We expect 2008 revenue of $1.125 billion to $1.160 billion and expect diluted earnings per share to be between $0.85 and $0.90. That's about a 10% in revenue. It's a 27% to 34% year-over-year increase in diluted EPS. And that's compared to our 2007 pro forma EPS without the Q3 $39 million legacy litigation charge. The big year-over-year increase in earnings comes from both revenue growth and margin expansion. The pre-tax margin related to our guidance is 5% to 5.5% and that compares to 4.4% in 2007. The 4.4% pre-tax profit margin for 2007 is pro forma, excluding the Q3 $39 million charge for legacy litigation. The margin expansion reflects our efforts to improve our productivity and to exit contracts with unacceptable margins. As we have said before, margin improvement remains the number one priority at MasTec. For your information, our short-term pre-tax profit margin goal is 6% and the upper end of our '08 guidance is approaching that. Our best years historically have been well above 6%, but we will get closer to our 6% short-term goal before going public with our longer-term aspirations. Note that I am talking about pre-tax margins. With our large NOL carry forward, we are not accruing book taxes or paying cash taxes. We believe that we will not be accruing any significant book taxes until the second half of 2009 or paying significant amounts of cash taxes until at least 2010. While we don't normally give quarterly guidance, we are electing this year to provide you with Q1 guidance. We are giving Q1 guidance this year because we know some of you struggle with how to gauge the normally slow low volume first quarter. And also they help you gauge the impact of our return to normality with DirecTV. Revenue for the first quarter of 2008 is expected to be between $250 million and $260 million, with diluted earnings per shares of $0.11 to $0.12. The revenue compares to $241 million in Q1 last year. The $0.11 to $0.12 diluted EPS guidance compares to $0.11 in 2006. However, last year's $0.11 includes $0.04 for the gain on the sale of one of our facilities. Therefore, the $0.11 to $0.12 for Q1 2008 compares to last year's $0.07 of actual operating profits. With a strong first half of 2007, followed by a challenging second half for 2007, we are excited about regaining our earnings momentum in Q1 and for 2008. The annual and quarterly guidance does not include the impact of our previously disclosed legacy litigation, either positive or negative. That concludes my remarks. Now let me turn the call back to the conference operator for the Q&A session.

(Operator Instructions) Our first question will come from Alex Rygiel with FBR. Alex Rygiel - FBR: Thank you. Nice quarter gentlemen.

Thank you, Alex. Alex Rygiel - FBR: Jose, could you talk a little bit about some of the acquisitions that you've made, particularly the Power Partners acquisition, and what your long-term opportunity is within the wind farm market? And also talk about the developments of your transmission business over the last 12 months and what do you anticipate in 2008?

Sure. Power Partners, we think is an important acquisition for us. Power Partners was actually involved in a joint venture previously, where they were doing wind farm projects with the financial backer, and that joint venture ended and we purchased the operating unit of that joint venture, which was Power Partners and are beginning to build a new wind farm business. So we're really excited about that and the prospects in 2008. There is a lot of activity currently in that market and we're involved with it, and hopefully over the next few quarters we'll be able to announce some contract wins and a little bit more about what we plan to do in that industry. From the transmission side of the business, I think our acquisition of three-phase line is very important as it gave us a new geography to really go after. I think we've been somewhat successful in 2007, although it's been probably at a slower pace than we would have liked. We've got a lot of new accounts, a lot of new customers and I think activity is going to be very strong in that market for a long period of time. So we expected to be a very positive market for MasTec as well. Alex Rygiel - FBR: And one of the challenges obviously was DirecTV in the second half of 2007. Can you update us on how many techs you actually have out in the field now, and what sort of growth you anticipate from that customer throughout 2008?

We've got just over 4000 employees today working for DirecTV. It's within the count that we expected towards the second half of our third quarter. We are excited Q1 started off strong. There is obviously a lot of noise out there from the overall economy and DirecTV recently had their earnings announcement where they were very positive on what their expectations are for 2008. So we actually are expecting Q1 and Q2 to be slower like they typically are, again with the normalized pickup in Q3 due to the NFL package and really going into the retail season in Q4. So we kind of expect the same trends that we typically had on a year-over-year basis, probably with a little less growth this year than we have traditionally had with them. But again activity strong and we did a great job at growing our resource base there, getting our technicians productive, continuing to make our technicians more efficient which we think will ultimately improve our profit margins in that business. So we think we are doing all the right things. We think 2008 is going to be an excellent year for us and more importantly a much more predictable year for us than we have had over the two years. So I think that's probably the important takeaway that we really don't expect to have the big ebbs and flows that we've had in the past. Alex Rygiel - FBR: Jose, I'm little bit confused, so I believe you can help me. At the end of June of '07, you had about 2800 techs, today you've got about 4000 employees, so that would imply that your employee growth rate is up 43%. Why won't your revenues track that type of employee growth?

Well, I think we said that late in the fourth quarter we didn't have all of our markets back, so we didn't get all of our markets back until late in the fourth quarter. So, you wouldn't have seen a lot of that growth through Q4. I think that the opportunity is there, if the volume continues for DirecTV, for us to have an excellent year. I think we've also got to be realistic as to what's happening in the overall market and understand that we would rather be conservative going into 2008. So our employee count is up. Rather than working our guys six days a week, part of the plan is to put our guys on normal five days schedules and rotate. So, we've got the resources there to dramatically ramp and we've the resources there to hold steady, if volume isn't the strong as we expected. Alex Rygiel - FBR: Very helpful. Thank you.

Thanks, Alex.

And our next question will come from Simon Leopold with Morgan Keegan. Simon Leopold - Morgan Keegan: Thank you. I wanted to see if we could talk a little bit about your proportion of business and the outlook, particularly for the first quarter coming off of a very strong utilities quarter here, their seasonality. What assumptions are built into the guidance in terms of mix?

I think the mix is historically similar. I think you're going to continue to see our energy utility business ramp versus previous year. I think that when you look at 2007, the challenges that we had in that industry over the first three quarters were the difficult comps that we had over 2006, because we exited a number of contracts early in 2007, which made comparables difficult for the first three quarters. That trend kind of reversed itself because our fourth quarter of '06 was a little bit slower and our fourth quarter of '07 was a lot stronger. So for the year, we are expecting significant growth in that group of customers. We think it will probably be our highest growth rate customer base that we have, as it rolls out the quarter we'll see that enhance as the year goes on. So we will probably see greater growth going into Q2, Q3 and Q4. But I think it's a trend that you can expect for the rest of the year. Simon Leopold - Morgan Keegan: And is it fair to think of normal seasonality then as may be a decline sequentially of about 10%?

If you look at overall guidance, we've got about an 8% upswing from on our high end of our guidance versus where we were last year. So I think if you look at last year's numbers and you take similar growth rates, I think that's probably an appropriate breakdown of where we will be. Simon Leopold - Morgan Keegan: Okay. Next is shifting over to your business with AT&T. It looks like that was up sequentially by quite a bit, almost I guess 29%, 30% sequential wise and I understand you are involved in some of the U verse. If you could give us a sense of how much of your business with AT&T is tied to maintenance activities and how much of it is related to their access upgrade initiatives?

Sure. Just to clarify we were up about 19% on a sequential basis, not the 30%. Simon Leopold - Morgan Keegan: Okay.

I think two things, I think, A, we are seeing the normal maintenance markets within AT&T struggle. There is no question that the impact on our housing is having an effect on your new subdivision growth. However, I do see an increase spend on their U verse activities and we think that's going to continue. So as we look at 2008, for the full year we expect considerable U verse growth, which I think will ultimately lead to overall growth of the customer even though there is market segments within that customer are struggling. Simon Leopold - Morgan Keegan: Great. And just sort of the classic housekeeping if you could round out on a quarterly basis the top 10 customers?

For the fourth quarter, the top 10 customers DirecTV 44; Verizon 8; AT&T 20; Embarq 11; Progress Energy 7; Qwest 6.2; Kahuna 6%; TXU, I am sorry, I gave you a couple that were the dollar amounts. Verizon was 7%, I apologize, Embarq was 4%; Progress Energy 2.6%; Qwest 2.3%; Kahuna 2.2%; TXU 2%; American Electric Power 2%; Florida Power & Light 1.4%; XTO Energy 1.3% and Dominion Virginia Power 1.3% Simon Leopold - Morgan Keegan: Okay. And the other question on housekeeping is, where do you see your D&A line going, it did step up, I assume related to some of the acquisitions. Wondering what we should model for at least the depreciation in the March quarter or for 2008?

If you look at our CapEx, we actually spent a little bit more in CapEx in Q4 than we traditionally had. Part of that is for the anticipated growth in some of our markets. We do believe that there would be somewhat of a shift, and you will see that number grow a little bit through 2008. So you can probably expect that number to be somewhere around 2% or in the very low 2s for the full year of '08. Simon Leopold - Morgan Keegan: And depreciation on the dollar basis in the March quarter, what are you thinking?

Somewhere close to the same percentage. Simon Leopold - Morgan Keegan: Okay.

Maybe a little bit less just because we are ramping. Simon Leopold - Morgan Keegan: Okay, great. Thank you very much.

Thank you, Simon.

(Operator Instructions) And we'll go next to Eric Kainer with ThinkEquity. Eric Kainer - ThinkEquity: Thank you and congratulations on a solid quarter.

Thank you, Eric. Eric Kainer - ThinkEquity: I would like to go to the energy business, obviously that did very well sequentially. I wondered if you could tell us how much of the sequential jump came from the acquisitions obviously Power Partners is kind of late in the quarter? And then how big relatively speaking is Power Partners? What have they done historically for revenues?

Sure. From the acquisition perspective, it was a very small number in the fourth quarter. We have always said the three-phase is not a large company. It's a smaller company, but what we love about it is that we think it opens up a new geographic area for us that we will ultimately be able to grow substantially. From Power Partners perspective, they probably were involved in somewhere around $50 million in projects in 2007. We don't have them forecasted at anywhere near that number, partly because we basically bought the assets and the operating individuals. We're going to be starting that work within MasTec somewhat from scratch. So, we really got to build up our backlog. So we've got a more modest number in our 2008 numbers. But with that said, the opportunity is there to do that and more. Eric Kainer - ThinkEquity: Okay. That's very helpful. Let's see. The next question is about the DirecTV staff. I mean obviously there had been a problem there specifically about the training and then the retention. I wonder if you can kind of give us some color about what the retention patterns that you're seeing, given the new incentives that you implemented there?

Eric, we believe it improved, although it continues to be an issue. We probably hired at our peak about 17,000 employees. And as you can see from the numbers, we probably ended up somewhere at close to net of 1000. So there was significant leakage. A lot of it is when you go through a ramp in such a short period of time, you end up having fallout. I think from the overall base of the business when you look at employees that have been here for a period of time, I think we've made dramatic improvements in our retention of those employees and have shifted a lot of the retention from being guys that -- the older guys, the guys that had been here long time that are more efficient. The churn has gone way down and we still haven't a way to control churn at the entry level. We continue to work at it, but again we expect this year to be much more consistent without the dramatic hiring peaks, which we think will really help us manage that business a lot better. Eric Kainer - ThinkEquity: That's great. And obviously, we're hopefully of that you're able to achieve just that. And just last question and this is also on DirecTV. You mentioned that you extended your contract there for an additional four years. I wondered if there are any material changes as far as SLAs or anything along those lines that maybe you would be useful to bring up here?

There wasn't, Eric it's pretty much, we've got a standard agreement that we've used for a long time. There were a lot of changes, none that we thought were really that important to be honest in terms of having to disclose. So for us, it's four new years with them and what we think it's been a great relationship and from a financial perspective and the metrics perspective everything is pretty much very similar. Eric Kainer - ThinkEquity: Okay, great. Thank you and good luck.

Thank you, Eric.

And having no other questions in queue, at this time I will turn the call back to Jose Mas for closing remarks.

I would like to thank the men and women of MasTec for their hard work and dedication in 2007. And I'd like to thank you for your participation on MasTec's 2007 fourth quarter and year-end call. We look forward to our first quarter call in a couple of months. Thank you.

Ladies and gentlemen, thank you for your participation. This does conclude today's conference, and you may now disconnect your phone line.