MasTec Inc (MTZ) 2013 Q4 法說會逐字稿

Welcome to the MasTec fourth-quarter 2013 earnings conference call, initially broadcast on February 28, 2014. Let me remind participants that today's call is being recorded. At this time, I would like to turn the call over to Marc Lewis, MasTec's Vice President of Investor Relations. Marc?

Thank you, Lisa. Good morning, everyone. Welcome to MasTec's fourth-quarter and 2013 year-end conference call.

The following statement is made pursuant to the Safe Harbor for forward-looking statements, pursuant to 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 and anticipated trends in industries where we operate.

These forward-looking statements reflect the Company's expectations on the date of the initial broadcast of this call. And the Company undertakes no obligation to update these expectations based on subsequent events or knowledge.

Various risks, uncertainties and assumptions are detailed in our press releases and filings with the SEC. 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 today's remarks by management, we will be discussing continued operations adjusted financial metrics as discussed and reconciled in yesterday's press release and supporting schedules. In addition, we may make use of certain non-GAAP financial measures in this conference call. A reconciliation of any non-GAAP financial measures not reconciled in these comments to the most comparable GAAP measure can be found in our earnings press release, our 10-K, or in the Investors and News sections of our website, located at MasTec.com.

With us today we have Jose Mas, our CEO; and George Pita, our new 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 George. These discussions will be followed by a Q&A period., and we expect the call to last about 60 minutes.

We had another great quarter and year, and have a lot of good things to talk about today. So I will turn it over to Jose. Jose?

Thanks, Marc. Good morning, and welcome to MasTec's 2013 year-end call. Today I will be reviewing our fourth-quarter and full-year results, as well as providing my outlook for 2014 and the markets we serve.

Before getting into details, I would like to take a step back and make some observations. A few years ago, we publicly set out to diversify our business and put ourselves in a position to have greater growth opportunities, with improved margins.

Since 2007, we have grown revenue from under $1 billion to over $4.3 billion. And during that same period, adjusted EBITDA has grown from approximately $60 million to $449 million in 2013.

While these are impressive financial results and we are very proud of them, our greatest accomplishment is how we positioned ourselves across a number of growth industries that offer us expanding opportunities for both continued growth and better margins. I know I've said it before, but I truly believe that we have never been in a better position to take advantage of the opportunities our different markets are affording us.

We are blessed to be in incredibly healthy markets. And opportunities for long-term growth are as good as we've ever seen.

Now for some full-year highlights. 2013 revenue was up 16% to $4.3 billion. 2013 continuing operations adjusted EBITDA was up 34% to $449 million, from $336 million in 2012. Full-year cash flow from operations was $200 million. And 2013 full-year continuing operations adjusted diluted EPS was up 24% to $1.90.

And for the fourth quarter, revenue was up 24% to $1.2 billion. Fourth-quarter continuing operations adjusted EBITDA was up 23% to $123 million. And fourth-quarter continuing operations adjusted diluted EPS was up 13% to $0.53.

In summary, we had an excellent quarter and a great year. With the exception of our power generation business, all of our segments had double-digit revenue growth for the year.

Our oil and gas business was up 70% year over year. Our transmission business was up 37%. And our wireless business was up 38% year over year. Again, we had a great year.

More importantly, the prospects for our business are actually getting better. While the oil and gas, transmission and wireless markets have been our main growth drivers and we expect that to continue, we are seeing an improving landscape for the balance of our business.

Our power generation group is experiencing a solid uptick in wind-related business. Our installation business is beginning to see increased activity around our security initiatives, and there has been a significant amount of dialogue and announcements related to 1-gigabit high-speed connectivity for residential customers. The fiber deployment required for that initiative is a significant opportunity for MasTec.

Now I would like to cover some industry specifics. Our communication revenue for 2013 was $1.96 billion, a 10.7% increase over 2012. In addition, EBITDA margins in this segment improved 180 basis points year over year.

Our install-to-the-home revenue was flat versus 2012. DirecTV revenues were down about 3%, offset by our entry into the security market. We now perform security installation in 28 markets across the country.

We believe security is a natural extension of our capabilities, and we are bullish on its long-term prospects. Security, coupled with in-home automation and energy efficiency, is a fragmented market. Our national reach and scale gives us a strong competitive advantage.

While we haven't commented on our wireline business in the number of quarters, future prospects for that business are as good as we've seen in a long time. As a reminder, the wireline business is where MasTec actually began.

Recent announcements from multiple carriers about 1-gigabit speeds to residential customers will require a significant fiber expansion. Our history, experience and geographic coverage make this a sizable opportunity for us.

Our wireless revenue was up 38% in 2013 versus 2012. This growth was driven by continued growth with our largest customer, as well as our ability to diversify our customer base.

We are benefiting from significant investments in our customers' networks. Technology enhancements like LTE, DAS and small cells, coupled with network densification, creates growing opportunities for our business, both for short- and long-term growth.

We have invested and will continue to invest in the opening of new world-class training facilities, the hiring and training of personnel. And the equipment and systems necessary to provide our customers with the resources they will need to complete their deployments and they're growing maintenance needs in a cost-effective, timely and safe manner. Having these resources will be a key to the continued growth in our wireless business.

During the fourth quarter, we signed a new contract with our largest customer. This new three-year contract is in addition to our current work.

The contract requires us to provide 212 dedicated tower crews throughout the East Coast. Of these, 152 will be located across the Northeast in expansion markets for MasTec. We began providing crews late in the fourth quarter, and expect to ramp throughout 2014.

We are also excited about our future opportunities with Sprint. In 2013, we did a significant amount of work for Samsung on behalf of Sprint. Samsung was actually our 10th largest customer for the year. In 2014, Sprint will be direct-contracting work, and we feel we are well-positioned with them.

Revenue in our electrical transmission business was $429 million versus $312 million in 2012, an increase of 37%. 2013 was a very successful year for our efforts in transmission. We had a number of large wins.

In 2013, we were actually awarded one of the largest EPC transmission contracts in the nation and the largest in our history. That project should start late in the second quarter.

Our competitive position improved throughout the year, and we believe we are well-positioned for continued growth and success. We are currently enjoying a very healthy market, with an acceleration of opportunities going into 2015.

With our recent success and our relative size, we expect solid revenue growth for years to come. For 2014, we expect double-digit revenue growth and an improvement in margins approaching 2012 levels.

Our power generation and industrial business had revenues of $294 million in 2013, versus $668 million in 2012. As expected, this was our most challenging business in 2013.

EBITDA margins for the year were a negative 5.5%, but did have considerable improvement in the fourth quarter. We are expecting a much-improved 2014 and 2015.

We expect revenues in 2014 to be approximately $400 million, with EBITDA margins returning to 2012 levels. This implies an EBITDA swing of about $35 million for 2014.

Included in our year-end backlog was about $200 million of new awards. And since year-end, we have either signed or been verbally awarded an additional $200 million in new awards, some of which go into 2015.

Our oil and gas pipeline revenue was $1.6 billion for 2013, compared to $959 million in 2012, an increase of 70%. For the quarter, revenues were $494 million, compared to $244 million in 2012, a 103% increase.

During 2013, we were an early beneficiary of the uptick in long-haul pipeline construction, which helped to increase EBITDA margins by nearly 300 basis points for the year. As a result of the tremendous growth in 2013, we are modeling modest growth in 2014.

With that said, the reality is that planned project activity for 2015 through 2018 far exceeds what we have seen in the past. With an increased number of planned US pipelines; a market in Canada that is accelerating and probably a year or two behind the US in terms of activity; and a Mexican market that is going to see an unprecedented expansion of pipeline construction; the activity levels in North America create a perfect opportunity for us to enjoy strong growth rates well into the future.

We expect a number of these opportunities to be awarded late in 2014, and a significant tightening of the market going into 2015. We also expect that demand will challenge capacity and create opportunities for both increased utilization and improved pricing.

To recap, 2013 was another record year for MasTec. But more importantly, we continued to improve our competitive position across a number of high-growth markets. I am extremely proud of MasTec's accomplishment.

I would like to take this opportunity to congratulate and thank the men and women of MasTec for their commitment to safety, their hard work and their sacrifices in making 2013 another great year. Our people are our most important asset. And it's truly an honor to get to present to you, quarter after quarter, the results of their fine work.

Today I would also like to welcome George Pita to his first conference call as CFO. As many of you know, George started with us about a year ago as CFO of Operations. We are excited to have him onboard. And I'm very pleased to turn the call over to our new CFO for our financial review. George?

Thank you, Jose, and good morning, everyone. Before I start with the financials, I want to say how excited I am to take over the MasTec CFO role. And I want to publicly thank Jose and the Board for the opportunity.

I also want to thank Bob Campbell, who did such a great job in bringing financial stability to MasTec over the years, in helping set the stage for our coming growth. I inherited a strong balance sheet, and during the last year I had the privilege of spending a significant amount of time in the field working closely with our top-notch operational and financial staff.

Bob has been and continues to be very helpful to me in the transition. Finally, let me also say that I look forward to getting out on the road and meeting with our shareholders at upcoming conferences and investor meetings.

Today I'm going to cover fourth-quarter and 2013 full-year financial results, as well is our 2014 guidance. I will also cover our cash flow, liquidity and capital structure.

As in our previous calls, when we discuss our financial results and guidance, we will be discussing non-GAAP continuing operations adjusted EBITDA and earnings. Full reconciliations from GAAP results to adjusted results are included in our Form 10-K and press release tables.

Consistent with prior quarters, our 2013 continuing operations adjusted results exclude the first-quarter loss on extinguishment of debt related to refinancing our senior notes, the second quarter final Sintel Spanish litigation charge. And they also exclude non-cash stock-based compensation expense for all periods.

Before I get into detailed remarks, let me share a quick overview of 2013 headlines. This is the fourth consecutive year of record financial results for MasTec, with record full-year revenue, EBITDA, net income and diluted earnings per share.

Full-year continuing operations adjusted diluted earnings per share were $1.90, a 24% increase over last year's $1.53 per share level. Full-year 2013 continuing operations adjusted EBITDA margin showed a 140-basis point improvement to 10.4% of revenue, led by significant EBITDA margin improvement in our Oil and Gas, and Communications segments.

Full-year 2013 cash flow from operations grew 16% to $200 million. And during 2013, we further strengthened our capital structure with the issuance of $400 million in 10-year senior unsecured bonds at favorable rates, as well as the extension and expansion of our revolving credit facility. Additionally, during the first half of 2013, our credit rating was upgraded by Moody's to Ba2.

In summary, our capital structure, credit ratios and liquidity are in excellent shape as we enter 2014. And our balance sheet is well-positioned to take advantage of all foreseeable growth opportunities in the markets we serve.

Now let me get into some detail regarding fourth-quarter results. Fourth-quarter 2013 revenue was $1.159 billion, up $227 million or 24% from last year. And that is in spite of an $84 million decline in our Power Generation and Industrial segment. To offset the power gen decline, our other major segments all had impressive growth.

Oil and Gas was up 103%. Electric Transmission was up 27%. And Communications was up 8%, driven by a 40% increase in wireless projects. Oil and Gas, Electric Transmission and Communications on a combined basis were up 22% organically without acquisitions.

Fourth-quarter cost of revenue, excluding depreciation and amortization as a percent of revenue, was flat to last year at 85.2% of revenue. Depreciation and amortization expense was 3.3% of revenue in Q4, compared to 2.9% last year, primarily reflecting the impact of higher levels of capital expenditures in our Oil and Gas, and Electric Transmission segments. As we have stated throughout the year, we have increased our investment levels in these segments in anticipation of greater amounts of work this year, next year and beyond.

Fourth-quarter G&A expenses as a percent of revenue on a GAAP basis were up from 4.2% a year ago, to 4.8% this year. Fourth-quarter G&A includes $3 million in non-cash stock-based compensation expense. And the year-over-year increase was approximately $2 million.

The majority of the increase is due to the incentive compensation plan for our EC Source transmission business that we discussed during our second-quarter call. The other areas of increase were approximately $9 million of G&A related to acquisitions, payroll information technology and other cost increases to support our growth, higher bonus accruals given our 34% increase in 2013 continuing operations adjusted EBITDA.

Fourth-quarter continuing operations adjusted EBITDA increased 23% to $123 million, from $100 million in 2012. On a rate basis, fourth-quarter continuing operations EBITDA margin of 10.6% was equal to last quarter, and was a 10-basis point decline compared to last year.

Highlights during the quarter include EBITDA margin improvement, both sequentially and over last year, in Communications and Electric Transmission segments. As well as a 450-basis point sequential improvement in our Power Generation segment.

Fourth-quarter continuing operations adjusted diluted earnings per share was $0.53, compared with $0.47 a year ago. That's a 13% improvement over last year.

Now I will discuss a summary of our top 10 largest customers for the full-year 2013. Enbridge was 18% of total revenue. AT&T was 18% of total revenues. DirecTV was 14%. MidAmerican Energy was 4%. Enterprise Products, DCP Midstream and Chesapeake Midstream were all approximately 3% of revenues each. TransCanada was also 3% of revenues. PPL was 2% of revenues. And lastly, Samsung was also 2% of revenue.

Regarding diversification, our top 10 customers in 2013 included three customers in the Communications segment, four Oil and Gas segment customers, two Electric Transmission segment customers and one Power Generation segment customer.

Our revenue is split between one-time individual construction projects and what we call master service agreements, and other similar contracts for generally recurring services, and therefore, recurring revenue. For full-year 2013, 45% of our revenue came from master service agreements or similar contracts. And 55% came from one-time individual construction projects.

Also it should be noted that with many of our customers, we do a significant number of repeat follow-on individual projects. I just wanted to highlight that, even though our one-time project revenue is growing nicely, we do enjoy a large and stable revenue base from master service agreements.

At year-end 2013, our 18-month backlog from continuing operations was approximately $4.1 billion, up $160 million on a sequential basis over Q3. With increases as expected in our Power Generation segment due to the awarding of several wind projects during the quarter.

The comparable number from Q4 last year was $3.4 billion. So year-over-year backlog growth exceeded 23%.

As my good friend Bob Campbell has repeatedly indicated over the years, be careful not to over-analyze changes in our quarter-end backlog numbers. Backlog numbers can be lumpy and bounce around some. And we do not believe that 90-day swings in backlog are necessarily indicative of the longer-term trends in our overall business or within each of our segments.

Please keep in mind that our backlog amounts can fluctuate just due to the timing of when contracts gets signed. We do not count contracts signed after quarter-end in our reported backlog. And of course, we do not count verbal assurances.

Also, especially in our Oil and Gas segment, we have significant amounts of book and burn work. And therefore, our backlog amounts in that segment are not really indicative of our future revenue.

Also please note that our backlog numbers are only for 18 months in the future. And that means that some significant and longer-duration projects may not be fully reflected in backlog. Also our longer term master service agreement work is reflected in backlog at only its 18 months value, even if the MSA contract runs beyond 18-month period.

Now let me talk about our fiscal year cash flow, liquidity and capital structure. Full-year 2013 cash flow from operations was $200 million compared to $173 million in 2012, a 16% increase. Cash flow from operations during the fourth quarter was $73 million.

We indicated earlier in 2013 that second-half cash flow would improve compared to the first half of 2013. And we are pleased to report today, that is in fact what has happened, with a second half of the year reduction in net debt of approximately $95 million, as adjusted to exclude the impact of two small investments made during the second half of 2013.

Liquidity at December 31, calculated as cash plus availability on our bank credit line, was $585 million. As we discussed during our last call, we closed and improved and upsized bank senior credit facility in Q3, in which the revolver was upsized from a maximum amount of $600 million to $750 million. With a two-year extension until 2018 and lower rates on both outstanding and undrawn amounts.

Also we have a $250-million accordion feature, which under certain circumstances will allow us to upsize the credit facility to $1 billion. We believe that the actions taken in 2013 will positioned our capital structure for the multiple future organic and other growth opportunities in 2014 and beyond.

Regarding our capital structure, at year-end, we had $1.021 billion in total equity, $794 million in net debt, and continuing operations adjusted EBITDA of $449 million for 2013. Therefore, all of our credit ratios are in great shape.

Our Q4 accounts receivable days outstanding, or DSOs, were 80 days, compared to 81 days for Q3, a 1-day improvement. Remember that as this is a single-point calculation, DSOs can bounce around based on individual big project payment terms, and the ups and downs of job start-ups and job close-outs.

That said, we anticipate that DSOs should range in most periods between the high-70s and mid-80s. And this range generally put us lower than our peers.

Regarding our spending on equipment, full-year 2013 cash CapEx, net of equipment disposals, was $110 million, compared to $72 million in 2012. In addition, we added about $111 million in capital leases and other financed equipment purchases during 2013, compared to $67 million in 2012. The total of our full-year cash, CapEx and capital leases, net of equipment disposals, was $221 million in 2013, compared to $139 million in 2012.

As we have previously said, we have invested to support what we expect to be high-levels of growth in oil and gas, and electric transmission for the next few years. As our project awards have increased and our confidence level regarding sustainable growth has risen, we have increased our investment in equipment to support our anticipated growth. We see a great window of opportunity for the next few years, and we are getting ready for it.

Looking forward to 2014, our full-year guidance revenue estimate is $4.65 billion to $4.7 billion. Continuing operation adjusted EBITDA of $520 million to $525 million. And continuing operations adjusted diluted earnings per share of $2.27 to $2.30.

The 2014 revenue estimate represents approximately 7.5% to 9% increase over 2013. With a 16% to 17% increase in continuing operations adjusted EBITDA, and a 20% to 21% increase in continuing operations adjusted earnings per share.

Implicit in this guidance is an 80-basis point improvement in our 2014 continuing operations adjusted EBITDA margins to 11.2% of revenue, compared to 10.4% of revenue in 2013. To put this in perspective, our projected 2014 continuing operations adjusted EBITDA margin rate of 11.2% would be a 220-basis point improvement since 2012.

A significant driver of adjusted EBITDA margin rate expansion in 2014 is the expectation that the Power Generation segment should return to a profitable level in 2014, as wind project activity has escalated. As a result, we don't expect a $16 million in EBITDA losses incurred in this segment in 2013 to re-occur.

Included in our 2014 annual guidance is a drag of approximately $30 million in revenue, $4 million in EBITDA and $0.02 per share, due to the negative impact of a stronger US dollar versus the Canadian dollar on our Canadian operations. During 2013, our Canadian operations were translated to US dollars at close to parity. And our current 2014 expectation, and the current rate, is that Canadian operations will translate into US dollars at about $0.90.

In 2014, our Canadian pipeline operations are expected to generate approximately $400 million in Canadian local currency, at an EBIT margin that approximates our overall Oil and Gas segment average. Due to the year-over-year change in rates, Canadian dollar operations will translate into less US dollars in 2014. And this negative impact is included in our current 2014 guidance levels.

Our 2014 full-year guidance assumes a tax rate of about 38%. We expect 2014 interest expense levels to approximate 2013 levels at about $46.5 million, reflecting a full year of interest carrying costs on the $400 million senior unsecured notes issued early in 2013. With interest expense decreasing in the back half of 2014 as the convertible notes mature and we take advantage of the interest rate arbitrage of refinancing these notes with cash flow and/or a revolver.

We currently expect 2014 depreciation and amortization expense will grow at a slightly higher pace than overall revenue. And our rate basis will approximate 2013 levels.

We also expect that 2014 CapEx levels will moderate down some from 2013, with cash CapEx expected at approximately $100 million, and another $90 million to $100 million of capital lease and equipment financing. For a total CapEx of $190 million to $200 million.

Our estimate for the full-year share count per diluted EPS is about 87 million shares, and 86.7 million for Q1. Remember that our share count for EPS purposes can fluctuate up and down with our stock price because of the accounting for our $215 million in convertible notes.

Approximately $115 million of the convertible notes will mature in June, with the balance maturing in December. The vast majority of these convertible notes can be settled at MasTec's option in either all cash, all stock, or a combination of cash and stock.

We have accounted for these notes based on the intent that we will retire the principal amounts of these notes, which is approximately $200 million, in cash. And we will issue shares for the premium value of the conversion feature of these notes.

Accordingly, we have included approximately 7.2 million shares in our weighted-average share count as of 2013 year-end. And thus, shares issued in 2014 to retire the premium value of these notes should not have any significant dilutive effect to 2014 earnings per share. We will continue to evaluate our options for the settlement of these notes in 2014 based on our stock price, potential uses of cash for CapEx and any M&A transactions.

Given the strong cash flow expected in 2014, coupled with our ample liquidity position, we expect that we can easily repay the principal amount on these notes utilizing 2014 expected cash flow and our existing revolver. Which would result in lower overall interest expense levels in the back half of 2014. Further interest expense reduction is expected into 2015 as a result of a full year's benefit from lower average interest rates associated with this settlement.

We currently estimate Q1 revenue of $920 million, essentially flat to last year. We estimate continuing operations adjusted EBITDA of $74 million, compared to $81 million during the first quarter of last year. Which would equate to roughly an 80-basis point decline in adjusted EBITDA margins. Lastly, we expect Q1 continuing operations adjusted earnings per share at $0.20 per share.

As many of you are aware, our first quarter is seasonally our lowest quarter in terms of revenue and overall profit levels. Our guidance reflects that normal seasonality. And also includes the expectation of a decreased top-line revenue and a break-even EBITDA performance at our Power Generation segment, as wind project activity is expected to ramp up in the second, third and fourth quarters of 2014.

Q1 guidance also includes the expected impact on revenue and profitability of severe winter weather that has broadly impacted the US in January and February. This reduced our productivity in several segments, some of which will be recaptured in the upcoming quarters as we work to catch up on existing MSA requirements. And some of which results in profit margin pressure as a result of project and overhead inefficiencies. We expect to make up the majority of winter weather profit impacts in our upcoming quarters.

Our expectation for the first half of 2014 would be that revenue will grow at a high single-digit to low double-digit level. And that EBITDA margins will approximate last year's first half as we make up the first-quarter profit impact.

If you do the math, that means that broadly speaking, we expect a strong EBITDA margin rate growth approximating 150 basis points in the back half of 2014. Driven by margin improvements in our Power Generation segment as wind productivity hits its stride, continued with incremental margin rate improvement in all of our other segments.

In the summary, 2013 was a record year. We are fortunate to be well-positioned in multiple growing markets, and expect 2014 will be another record year.

Now, that concludes my remarks. And now I'll turn the call over to the operator for Q&A. Operator?

Thank you, sir.

(Operator Instructions)

Alex Rygiel, FBR.

Congrats on another great year.

Thank you, Alex.

A couple of questions around the wireless business. First, Jose, you mentioned a new three-year contract with your largest customer. Is that for macro sites or for small cells or something else?

Also on that topic of the wireline business, when you discussed the 1G opportunity, have you won any specific mandates yet associated with 1G? Or is it just actions that you are seeing out in the marketplace that get you excited? And I have a follow-up.

All right. So that's Alex's way of getting as many questions in as you can. The wireless award -- and just to cover it in a little more detail. It is the new contract in addition to the work that we currently have. And it's basically a dedicated tower crew contract.

So we're providing 212 dedicated tower crews along the East Coast, of which the majority will be in the Northeast, which are new markets for us. Those tower crews will be doing tower crew-type work. So it's not for micro cells or DAS or anything like that.

This is mostly LTE-driven, tower-top work. And it is really important for a couple of reasons.

One, it is a dramatic increase to the number of total tower crews that we're going to have as an entity. Two, when we look at the business -- and we have been saying this for quarters -- the future of this business is around tower crew capabilities.

Because of the changes with LTE and what that means to networks, the amount of maintenance on the top of towers in the future is going to be substantial. And this positions us incredibly well, not just for the short-term, but for a very long time.

So it was a very important win for us. We think it is a demonstration of how we have performed for this customer and their trust in us, to give us such a good and solid opportunity.

With that said, we are just really into it at a very small level. We've provided a very small percentage of those crews to this point. That project will ramp as the year goes on. I expect it to be close to fully ramped by the end of the year.

And we are investing today. It's costing us some dollars in the first half of the year that we think we are going to more than make up for in the second half of the year.

As we move to wireline -- and as you know, Alex, that is where I started in the business a long time ago. I have been fortunate enough in my career to go through what I thought were two incredible cycles in the wireline business.

One was the 1998 Telecom Act, which led to the C-Light craze. And I was very involved personally in the beginning of fiber to the home, which happened in the early 2000s.

I can tell you that what we are seeing today -- if this goes through -- and obviously everything that everybody reads about it, about 1-gigabit -- this has the potential to be as good as either one of those two cycles. And I think that is a very bullish statement.

I cannot comment on what we have done to date on that. But I can tell you that we are a significant player in that business. It is a sizable opportunity, and we absolutely expect to be a part of it.

And the follow-up. As it relates to communications margins, which were outstanding -- 13% in the quarter -- congrats on that. How might we think about directionally where that margin goes as the wireline business picks back up?

That is a good question. And without a doubt, those margins should improve. The wireline business has been -- has seen deteriorated margins for a number of years.

That is a business that was largely predicated on new subdivision starts. So when a new subdivision got built, you were extending plant into those subdivisions. That was the bread and butter of that business.

We saw significant declines in both revenue and margins in that 2008 to 2010 timeframe. It has recovered a little bit. But this gives it the first opportunity in a very long time to get back to the levels of what that business enjoyed in the early 2000s. Which was back then, as good as anything we had.

So from that perspective, the margins are going to improve. We have said for a long time that we think our wireless margins will improve over time.

Now, with all that said, we are making a significant investment in our wireless business, as we have for the last couple of years. A lot of the investments that we're making today -- especially around these tower crews -- will take time to materialize. We're spending money today to make more in the future.

So that is going to hold margin appreciation back from 2014. But as the year goes on and the year progresses, I do think you're going to see additional margin pick-up, and additional margin pick-up going into 2015.

So again, we had a fantastic 2013 relative to 2012 from a margin perspective in that business. We saw strong growth. I think we are going to see strong growth again. But I think it happens later in 2014.

Very helpful. Thank you.

Thank you, Alex.

Tahira Afzal, KeyBanc.

It's actually Saagar on for Tahira. First question on your pipeline business. And to go a little bit where the last question was in relation to margins. Your pipeline margins were a bit weaker than what we saw earlier in 2013 in the fourth quarter.

Can you just give us some color on where you see pipeline margins going in 2014? You did make a comment on utilization pricing potentially into 2015. Where you really see the potential of your pipeline margins going over the next 18 to 24 months?

Sure. So we had -- again, we thought we had an amazing year in our pipeline business. Revenues far exceeded where we thought we would be at the beginning of the year.

We saw strong margin performance on a year-over-year basis. If you look at the last five quarters, we had two quarters where we actually performed north of 17%. And then we've had quarters where we have performed in that 12%, 13% range.

So there's been a wide swing of margins. And I think that has a lot to do with job mix in a particular quarter, what is happening on particular jobs.

There's two things that have affected our oil and gas margins, both in Q4 and in Q1, and unfortunately it is weather. December did see some weather challenges as well, that kept margins specifically in that business down slightly.

And we're seeing a -- in the first quarter, we are being highly affected in that business for weather. We've got a couple of a very large jobs in areas that have been more affected that by weather than others.

With that said, I can't overly-express how optimistic we are about that business going forward and the activity levels that we are seeing. That we think start hitting at the back end of 2014 in multiple markets. We think when that happens and the market tightens the way we think it is going to tighten, that we will have the ability over time to consistently hit the best quarters that we've hit over the last five.

So I do think that when you think about EBITDA margins going forward longer-term, that 17% that we have been able to deliver in a couple of quarters, we think we will be able to more consistently deliver over time as the markets tightens. Until then, product mix, job mix and the types of work that we're doing -- I think you're going to see margins consistent in 2014 and the ones that we saw in 2013.

Perfect, thank you. And then one quick follow-up on Alex's question related to AT&T and the tower crews. That new contract you mentioned was 212 new tower crews.

Can you give us an idea of how many tower crews you guys have right now? Or how many were doing work in 2013, so we can get a better idea of the revenue opportunity from the new contract?

A couple of things. When we think about the wireless business, there's a lot of different types of crews. Obviously tower crews is one type of crew. And again, for all the reasons I talked about earlier, are a very important type, because that's where we think that it's headed.

So for a lot of competitive reasons, I don't want to give you an answer to that question. And the only thing I will say is that it is a significant and dramatic increase of the total number of tower crews that we currently have.

All right, great. Thank you very much.

Thank you.

Dan Mannes, Avondale.

So a couple of just follow-ups on the power gen industrial business. Clearly, you're looking at a bit of a turnaround in 2014. All the commentary so far has really focused on the wind side.

Can you talk about any other work that you are either currently doing or pursuing? And opportunities to diversify that a little bit away from wind, given some of the challenges, or at least ups and downs in wind that we have witnessed?

Sure. So if we look at 2013, very little of our work was actually wind-related. We had a lot of wind in 2012. 2013 came. We were doing a lot of different type of work, a lot of power generation-driven work.

When we look at 2014 and 2015, the bigger opportunity for us has been on the wind side as that market recovers and comes back, especially in those two years. We had a very challenging year in 2013 from a margin perspective.

We know how to do wind very well. It is our bread and butter. I think that's why we are so confident about the turnaround.

But as we look longer-term, there is no question that we need to diversity that business. What we did in 2013, while not economically what we wanted, was really important for our future growth for that business.

So I think that we really built our resume. We had some good projects. We learned a lot. And we are pursuing other work, although the majority of our work in 2014 and 2015 right now will be wind -- at least in 2014.

And as we continue to look out into 2015, we are currently bidding a lot of the same similar type of work that we did in 2013. We are a lot more disciplined around it.

So I do think that over the next 18 months or so, you will see that part of the business grow. And we think that part of the business will be the predominant part of our power generation business in 2016.

Great. And then real quick, since you have highlighted the wireline work, and for those of us a little newer to the story. Can you give us a little bit of a context, number one, of how relevant wireline is in the context of your Communication segment? And just to give us a little bit of framework to think about where it can go from here.

Sure. In total, it's about 10% of revenues -- a little bit under 10% of revenues. And again, if you go back in our history, it was by far the majority of what we did years ago.

We did de-emphasize away from it, because we didn't think the opportunities were there. But again, with the talk from multiple carriers about what they are considering doing, it is sizable opportunity that could have a dramatic effect on that particular business's growth for us for a long time.

Great. Thank you very much.

Thank you, Dan.

Michael Novak, Frontier Capital.

Well, thanks for the multiple years of strong performance. We appreciate it.

So my question is, in the past, you have said that the wireless business is MasTec's most misunderstood growth opportunity. If you look out three or four years, could you give us a sense of how big this business could be for MasTec?

Sure. So what we really love about this business and one of the reasons think it's misunderstood is, you look at what's happened in the course of the last few years. And it's been highly driven by technology change-ups. Whether it was going from 2G to 3G, 4G, LTE.

And I think the business has become much more broad-based than that -- obviously upgrade to the portion of the business, and it's going to continue to be. And I think that there's going to be another technology that comes in over time and replaces LTE.

But then you have all the periphery things that are happening around that business, be it small cell, DAS, network densification, the construction of new towers. The business is much broader-based than I think people give it credit for being.

So as we look at the business -- and we started that business from almost nothing, right? And what's really changed that business is the handset, and what you're capable of doing with the handsets.

We see so much potential in that business. We see so much opportunity for growth. We think that our growth is really just getting started in that business.

We've said in the past that our objectives are to get our businesses to $1 billion. We think that this year, we obviously passed it. I know oil and gas are -- we have talked about in the past of our next goal in oil and gas being $2 billion. And I think wireless is there with it.

I think wireless will ultimately be -- has the potential of being a $2 billion business for us over time. The market is there. The market is healthy enough.

And I think, while we have gotten a lot of visibility on the other parts of our business, I think that is one that has not gotten the recognition that it deserves. I think we are absolutely a market leader in it, with great opportunities for further growth. And it is one that we are extremely bullish about.

Thanks. And as a follow-up question, could you discuss the recent acquisition, as well as the prospects for future M&A in this space?

Yes. So we made a small acquisition in the fourth quarter of a company called Dynis. Dynis was a -- it had a couple different things. It was a turf-bender in the Mid-Atlantic for our largest customer. And almost more importantly than that, they were a founding member of something called the Warriors 4 Wireless.

When we talk about having to add the amount of people that we are having to add, we obviously have to be very creative on how we get people into the space. We almost feel like we are changing the industry in what we're trying to do in terms of adding bodies.

Warriors 4 Wireless is a program with the US military where we're trying to get active servicemen as they come off duty, into the wireless space. There's a lot of functions within the military that require tower climbing.

So we made a commitment to hire up to 1,500 servicemen coming off of active duty, into the wireless space. We have opened training facilities to support that effort.

So that was a key ingredient of the acquisition that we made late in the year. It was a smaller acquisition.

In addition to that, they come with a sizable book of business. It's a very active space. There is a lot of room for consolidation in that market. And quite frankly, not just in wireless. We are seeing a lot of activity in almost every single one of our segments that's M&A related.

We have a lot of good opportunities. So while it is not imperative to what it is that we're trying to accomplish at the Company, our M&A activity is strong, and will probably be a piece of our growth story going forward, as well.

And how many people are on a tower crew?

Three or four.

Thank you.

Thank you, Mike.

Noelle Dilts, Stifel Nicolaus.

The first question -- let's just stick with wireless. Can you talk a little bit about your current mix of self-perform versus outsourced, and where you see that going now with this extended contract? And also, just what you see as the right level?

Well, this will obviously significantly increase the amount of self-perform that we do, because all of this will be self-perform. We still have a nice mix. We still do a considerable amount of contracting of vendors within the space.

Again, there's a lot of different types of functionality in the work that we do for wireless. Some we do now and some we don't. But obviously with this, I think the bulk of what we do will be in-house.

Okay. And then, it was nice to hear that you are seeing some traction on the security side. Can you talk a little bit about how you big you expect that market to be in 2014 for you, and over the next few years?

Sure. So we're obviously in support of two customers that we have talked about. One is AT&T with their program called Digital Life. The other will be DirecTV, as they begin to roll out LifeShield, which is an entity that they bought in 2013 and a product that they will be rolling out in 2014.

We've entered a number of markets. We are very excited about what our customers are telling us about their expected ramp, and where they expect those businesses to go.

It is still a small percentage of what we do. In 2013, it made up for with the 3% decline in DirecTV. So you can almost back into the numbers.

We are modeling some growth. But again, it is a small number. And as it materializes, as it plays out, as we get better visibility, I think we will adjust that, and will hopefully adjust that upward as the year goes on.

Okay. And then finally, just looking at the weather impact in the first quarter. Can you give us any sense of how many lost work days you are facing? And then, just a little bit more on the businesses that will be most impacted from a profitability standpoint by the weather issues in the first quarter?

Sure. So it was interesting. This is one of the few times where most of our businesses, if not all of them, were affected. I think the only part in the country that has not been seriously affected is the West Coast. And unfortunately, we do not have a big presence in the West Coast.

So all of our businesses, from our DirecTV business to our wireline business, our wireless business, our oil and gas business -- we saw the effect of weather, especially in January. We have had some projects, especially in our oil and gas business -- which is actually a positive -- but they are projects that got deferred to later in the quarter, where we decided not to start because of weather. It would have actually been worse for us had we started and not really gotten a lot done.

So we've had some revenue push-out, there is no question about that. And as we have thought about it, we think that number is probably close to 10% of total revenues of what we are guiding in Q1.

We thought that had everything -- had it not been as severe as it was, we could have made up 5% to 10% of that. So that is a sizable number. We thought margins would be slightly better than they were last year.

So when you put all that together, it is a sizable hit to both revenue and profitability. Some we will make back, because it is revenue deferral. And then some is obviously increased in cost, in terms of just slugging through it and getting jobs done. But that is how we're thinking about it.

Thanks.

Thank you, Noelle.

William Bremer, Maxim Group.

On the new contract, the three-year contract, has that started? Or will that start this year?

Yes, we said in the commentary that we started providing crews in the fourth quarter.

Okay, great. And going into the oil and gas. Can you give us an idea of -- when you mentioned it is a quicker book and burn, and some of the projects don't necessarily hit the backlog, can you give us a sense of the magnitude of that?

If you think about our oil and gas business, we are in three almost distinct businesses -- almost four, right? You've got gathering lines, you have midstream, you have integrity work and you have long-haul pipe construction, or bigger projects. The bulk of our backlog is around bigger projects.

When we think about gathering lines, midstreams and even integrity, those are projects that you're only capturing a portion of that work in backlog at any given period of time. Because those projects usually are three- to six-month projects.

So you could win and book and burn that entire business within a quarter. Or you can book and burn 50% of it, or 70% of it. You're only ever capturing a portion of it quarter to quarter.

So the majority of our backlog is driven by bigger projects. Which is why -- and I don't know if we look at that differently. A lot of those customers to us -- it's is recurring work. It almost looks and feels like an MSA, although we do not value them that way.

We only put in backlog project-specific work. So it is mainly driven by larger projects.

Okay. And then one for you, George. I'm not sure if I missed this or not. Fully shares outstanding for, not just the first quarter, but also for 2014, given the convert?

Yes, we said for the first quarter, it was 86.7 million. For the year, it's about 87 million. I think for the entire year, the majority of the impact of the converted shares already included in our share count -- because the way we are accounting for it, we've already put that -- the premium value is already included. So for 2014, first quarter, 86.7 million.

And it rolls up to 87 million for the year, on an average. And a little bit higher than that in the latter part of the year, maybe 87 million and change in the latter part of the year. To average out 87 million for the year.

Okay, great. Thank you, gentlemen.

Thank you.

Josh Wangler, Wunderlich Securities.

This is Jason, but we're close. Jose, just curious. You have done a great job on the pipeline side, talking about as you see these contracts starting to roll up in the next couple of years.

This year is supposed to be a big year for [LifeCorp] transmission, as far as contract awards. Is there any color you can give around the timing that you guys are seeing that? Is that of first-half, second-half type of the year? And when you would go to work on some of that stuff?

If we take a step back, we have had a great couple of years in that business. Our revenue growth rates there have been off the chart. We grew 37% from 2012 to 2013.

We're talking about, again, a strong double-digit growth year in revenues for 2014. We are actively pursuing either bidding, or in line to bid on more work than we have ever bid in that market. So we think the pipeline is absolutely fantastic.

We do think there will be a number of awards this year that has the potential of setting us up extremely well for coming years. So there is really nothing different about our story.

We have talked about wanting to grow that business substantially over the next couple of years. We have talked about all of our businesses trying to reach that $1 billion mark.

We think we can get there in transmission over time. That is our goal. We think the work in the market supports that goal. And obviously our job is to get there as fast as we can.

I appreciate it. Thank you.

Andrew Caplowitz, Barclays.

This is Vlad Vastriki on for Andy. Maybe just a quick follow-up on the earlier question about weather.

We understand the headwinds here in the first quarter. But can you talk about your confidence that you will be able to offset those headwinds or make up for some of the work you're not able to do in 1Q as the year progresses?

Well, whatever gets deferred from a revenue perspective, you are going to pick up in a subsequent quarter. The reality is that we are not talking about significantly making up the losses that we have in Q1 related to efficiency. We are not going to make that up.

If you had to burn more money to get something done, you don't ever really make that up. You can only make of what is revenue-deferred.

With that said, we feel really comfortable about the balance of our quarters, our year. Quite frankly, if the first quarter wouldn't be the way that it was, our year probably would be better.

Okay, that's helpful. And then just as a follow-up, with the growth you see in your end-markets and with all the work you are winning, especially in oil and gas and wireless, can you talk about your overall capacity to meet demand?

And specifically, your confidence that you have the resources to meet the demand growth? And how you maintain quality and execution as you ramp with new people?

I think we have demonstrated in wireless where it's not just about hoping that you win the work and manning it, but it's about the investments that you're making today to support growth in the future. So when we talk about opening world-class training facilities, it's something that we are very serious about.

It's not -- we are not just saying it. We actually did it. We spent a lot of money opening training facilities unlike, we think, anything else in the industry, to prepare tower crews. Because we know how important that's going to be longer-term. And that goes at an expense.

So it's not -- we're not hoping that we win the work and people show up to work. We know we need to build those resources. When you look at what we did in 2013 relative to our CapEx spend in both the transmission and the oil and gas markets, we were preparing for what we thought was going to be a long-term opportunity.

As those opportunities play out, hopefully, we think those decisions will prove their worth over time. But when you look at the amount of CapEx that we spent in 2013, that was not for 2013. That was supporting what it is that we're seeing for the future.

So I think we're making and have made significant investments in preparing this organization to have the ability to grow over time. What we have talked about is the training classes, what we have talked about is the CapEx. But just as importantly, we have made those investments in people.

And we have been hiring a lot of people over the course of the last two years. We have added people when the work was not necessarily there. And we think over time, again, that the results of that will show.

Okay, great. That's very helpful. Thanks.

All right. Thanks, Vlad.

Veny Aleksandrov, FIG Partners.

My first question is on the power generation. I know that you guys have already done some work for natural gas power plants. But when do you think -- when do you see the major uptick coming from that side? 2014, or probably 2015?

You know, again, we are a very niche player in that business. We had a tough 2013. It was an important year for us. We are going to build off of that.

The opportunity in front of us right now for the next two years where we think we can maximize our financial -- both revenues and profitability -- is around what we do really well, which is the wind business. So we are somewhat capacity-constrained. We cannot do everything in that business.

So we're absolutely more emphasized on working within the wind business and executing on that. We understand the importance of diversification in that market, so we are going to work hard at it. We are bidding stuff. But we think we are a lot more intelligent and better about what we are pursuing.

So the good thing is, we are not under pressure to have to do that. We've got a solid book of business that's going to carry us for a long time. And were going to slowly build back into that business in a more profitable manner, and that's our plan.

So you are not going to see a giant uptick in that market for us in the next 12 months. You might see a couple projects here and there. But were going to build that over time.

Thank you. And just a follow-up, again for the power generation. Now we are going to be working on the wind business. So your people will be utilized.

But how about if we go to another year of downturn like 2013? Can you move people easily, let's say, from the power generation to the communication and wireless business where you need them?

Well, we did it last year. We had a huge wind year in 2012. And part of the enhancement of the wireless crews was our ability to meet -- to move people out of renewable that are used to climbing towers, that are used to putting wind turbines on the top of poles, and to climbing in the wireless.

So there is differently some crossover in utilization of personnel. But quite frankly, for the next couple of years, that group is going to be pretty busy on wind-related projects.

All right. Thank you so much.

All right. Thank you.

Adam Thalhimer, BB&T Capital Markets.

Jose, great quarter, good outlook for 2014. Just had a quick question on the wireless contract. I missed your comments. Was it -- you picked up a couple of states from somebody who was previously doing it before you?

No, Adam. We picked up a new contract for dedicated tower crews. So we are providing to our largest customer a number of dedicated tower crews throughout the East Coast of the United States, with the bulk of that -- over 152 crews -- being in the Northeast, which are pretty much expansion markets for MasTec.

So these weren't necessarily your turf states. It was over and above your turf agreements?

That is correct. It was for both. It was for the entire East Coast. So obviously we have some turfs in the East Coast. But it was for the entire East Coast, of which -- we didn't have a lot in the Northeast. So that's why those are the expansion markets for us.

I guess you're not going to comment on this, but was it a situation where they -- they're going to pay you a premium to the normal cost of a tower crew, just because they're having trouble getting crews?

I think that the challenge in the industry is the availability of tower crews. Because very few people have them, very few people have made the investments in building that part of their business.

So I think obviously it is a need that not just one wireless carrier have, but all of the wireless carriers have the need for tower crews. And this was a method for them to kind of guarantee tower crews when they need them, where they need them.

Okay. And then just lastly, I wanted to ask you about Canada. What would be your appetite for getting bigger in Canada in terms of mainline pipe or transmission?

We view the Canadian market as a fantastic growth opportunity. Obviously we've built us a much bigger presence there in 2013. A lot of room for expansion.

We said in our commentary that we think that while the Canadian market is good, it is probably a couple of years behind the US. We see a market that will accelerate over time.

We are happy with where we are at. But we know that we can get a lot bigger there. So M&A activity related to Canada is something that absolutely could make sense for us.

Okay. Thanks, Jose.

Thanks, Adam.

Will Gabrielski, Stephens.

Can you talk about 1-gigabit market opportunity set? How quickly can that become material? How competitive is it?

And depending on which end-market you are serving, do you have the ability to go out and service the cable market, as well, as they roll fiber out? Is there an opportunity there?

And would you look to do acquisitions in that market? Or do you think you have what you need?

You got a lot of questions in there, but the -- so let's start with the last one. We think we have what we need. But obviously if we thought we needed to make an acquisition to improve our competitive position in any one geography or with any one customer, we would consider doing it.

Again, what I will say about it is, it's a very sizable opportunity. It's one that we think will have more impact over time. It absolutely has the opportunity to impact 2014. But it will impact further years out in, we think, a much greater manner.

So it's a real opportunity that's here. It is here today, it is here now. And obviously the size of the ultimate opportunity will depend on how far everybody gets behind it. Although we think it's a reality. We think it's something that is going to happen.

We've been more focused on wireline customers, wireline communication telephone companies, in the past. We used to do a lot of work for the cable companies. I don't know if that's necessarily the place where we have immediate opportunities.

But over time, if what we think happens, happens, everybody is going to be constrained. And the cream rises to the top.

Okay. Every one of your end-markets has become -- obviously they are all growing quite quickly. And the projects are getting bigger and the customers are relying on the contractors for more and better service, and more timely service.

Are you seeing the bid lists on some of your competitive work get bigger or smaller right now, given that dynamic? And how are they customers thinking about that also?

I think it depends on the end-market. And I think there's two big drivers. One is, I think customers understand the importance of having solid vendors with strong financial backing that can support their needs, especially when they're trying to deploy something in a quick and safe manner.

I do think that -- so in some cases, you have a shrinking vendor list. In other cases, you have customers that are more cost-conscious, that are trying to open up that list to keep competition very active. So it kind of depends.

Safety plays a big role in all of this. It definitely plays a big role in the wireless market. And I think you're going to continue to see that.

Unfortunately the wireless industry had a number of deaths last year. I think you're going to see a lot more regulation come around that. And that's going to only be good for companies like ours that really focus on safety and really work hard to make that a significant part of their everyday culture.

Okay. And then just lastly, on the industrial market, you're talking about a $35 million swing in EBITDA year on year in 2014 versus 2013. Your conviction around that -- how much of that is just utilization-driven and better absorption of your fixed costs versus profitability improving on the work you're bidding?

So we are going from about $300 million in 2013 to $400 million 2014 in that business. The challenges -- the work we did in 2013 wasn't work that we had traditionally done. It was in a lot of markets that were new to us, so we struggled.

We know the wind business well, so my conviction around that is very high. Obviously utilization helps to the extent of that additional $100 million in revs. But it is also our ability to do that work and know that work a lot better than some of the stuff we did in the past, and our confidence around that.

All right, great. Thank you very much.

Thank you.

Vishal Shah, Deutsche Bank.

This is Jeremiah on for Vishal. I think you mentioned Mexico being in the unprecedented opportunity pipeline. Just wondering if you could expand on the timeline there and the total opportunity.

Well, the opportunity is surprising us in terms of the size, scale. I can tell you that while we have been talking about it on and off for the course of the last six months, we have been actively engaged in learning about it, positioning ourselves to try to be a part of it.

I can tell you that today we are going after multiple opportunities currently. And while we still believe it is a longer-term opportunity, there is a chance that it affects revenues as early as 2014.

Okay, that's great. And obviously you're doing a great job on cash generation in 2013, and it seems like that will continue. So just wondering where the capital allocation priorities are for the year.

Well, we expect continued improvement in our cash flow in 2014. When you look at the growth that we are expecting in EBITDA, we expect at least that level of growth in cash flow from operations, if not a little bit more.

We also indicated that our capital expenditure program for 2014 will moderate down some from what we spent in 2013. So all that bodes well for cash flow.

Our use of cash flow will be for the best opportunity. We know we have the converts during the year, which we will refinance. And then we will continue to re-invest excess cash flow for a combination of debt pay down and any other M&A or other opportunities that pop up.

All right. Thanks, guys.

Thank you.

Liam Burke, Janney.

When I look at your CapEx investment this year vis a vis what you would look at as your normal maintenance CapEx, it's a significant incremental investment there. You've got good visibility on most of your markets on the demand side.

In terms of a return on that investment, how are you looking at the trends for margins? Are you looking at them being stable or moving up?

Well, I think we talked about it earlier. When we look at our communications business, our oil and gas business, our transmission business -- which is really where we are making the bulk of our investments -- long-term, we expect all of the margins in those businesses to go up.

Again, in oil and gas, we have two quarters in our last five where we hit 17%. We think over time that is a sustainable number.

When we get through some of this tower hiring for the wireless business, we think -- and the improvement with the opportunities in our wireline business -- we think the communication margins are going to drive up, as well. And we are expecting a nice pick-up in transmission margins this year. So I think those investments will -- and again, over time -- will prove that we are well worth the investment.

Great. And then on MSA versus project revenue on the communication side, is there still a significant gap there?

The bulk of what we do in communications is MSA-driven, yes.

Okay, thank you.

Thank you.

Noelle Dilts, Stifel Nicolaus.

I had a follow-up question. I think this is for George. On non-cash stock-based comps that you are forecasting for 2014 at $16 million, up from $12.9 million in 2013 and $4.4 million in 2012.

I thought that 2013 was a little bit elevated because of the EC Source agreement that went through. Can you just help me understand what's behind that $16 million number?

Noelle, that level continues into 2014.

Okay.

So we had a profitable year on that same agreement. Of course, that was a partial impact you saw in 2013, and it continues into 2014, as (multiple speakers)

Perfect, thanks.

All right.

And this does conclude today's question-and-answer session. Mr. Mas, at this time I will turn the conference back over to you for any additional comments.

I would just like to thank everybody for participating on today's call. And we look forward to updating you in a couple of months. So thank you for joining us today.

And that does conclude today's Q4 and 2013 year-end conference. Once again, we want to thank all who have supported us during the year. And thank you for participating in today's conference.