MasTec (MTZ) Boosts Share Buyback Plan By $150 Million

MasTec, Inc. (NYSE:MTZ) continues to reward shareholders through stock buybacks. The company’s board of directors has authorized the addition of up to $150 million of share repurchase to the existing plan of $129 million.

With this, the company now has completed the repurchase of $110 million worth of shares during first-quarter 2020. MasTec expects to fund share repurchases through first-quarter cash flow from operations. José Mas, MasTec's CEO, said, "we currently anticipate ending the first quarter with ample liquidity approximating $900 million."

He added that the company is monitoring the impact of the coronavirus pandemic on the business. Nonetheless, the company believes its diversified business model provides fundamental long-term opportunities for growth.

2020 Business Prospects

MasTec is poised to gain from significant amounts of project awards across multiple segments. It expects solid revenue growth across all segments in 2020 and projects double-digit revenue improvement at the Oil & Gas segment. The company expects margin improvement in Communications, Electric Transmission and Power Generation and a decline in Oil & Gas margins related to project mix.

As of Dec 31, 2019, the company achieved 18-month backlog of $8 billion, up 3.9% from $7.7 billion recorded in 2018. This marks the highest year-end level in MasTec's history and depicts strong demand in end-markets.

Given MasTec’s strong cash flow profile, it will keep evaluating the expected investment return associated with acquisitions and other strategic initiatives to grow operations as well as share repurchase opportunities.

Strong cash flow allows MasTec, which shares space with EMCOR Group, Inc. (NYSE:EME) , Dycom Industries, Inc. (NYSE:DY) and Orion Group Holdings, Inc. (NYSE:ORN) in the Zacks Building Products - Heavy Construction industry, to effectively deploy capital for share repurchases as well as carrying out acquisitions. In 2019, it generated a record level of $550 million in cash flow from operations and ended the year with net debt, defined as total debt less cash, of $1.36 billion, which equates to a book leverage ratio of 1.6.

The year 2020 is expected to shape up well for MasTec, with strong backlog and accelerating growth potential, especially across communications, transmission, and power generation segments.

However, ramp-up in costs due to wireless and wireline fiber initiatives, and volatility in the Oil & Gas segment are pressing concerns for this Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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