MasTec (MTZ) Q2 Earnings Top Estimates, View Up, Shares Rise

MasTec, Inc.’s (NYSE:MTZ) shares gained 10.2% in the after-hour trading session on Aug 1, after the company came up with better-than-expected results in second-quarter 2019. Encouragingly, MasTec lifted its view for 2019.

MasTec reported adjusted earnings per share (EPS) of $1.60, surpassing the Zacks Consensus Estimate of $1.12 by an impressive 42.9%. Also, the reported figure exceeded the company’s expectation by 49 cents and increased an impressive 54% from the prior-year figure of $1.04.

Revenues of $1,939 million topped the consensus mark of $1,809 million by 7.2%. The reported figure also increased 19.9% on a year-over-year basis, primarily driven by higher contribution from Power Generation and Industrial, Electrical Transmission, as well as Oil and Gas businesses.

Its 18-month backlog as of Jun 30, 2019 was a record $7.8 billion, up $51 million from the corresponding period of last year.

Segment Update

Revenues from Communications improved 5.5% year over year to $652.6 million. Adjusted EBITDA margin, however, contracted 380 basis points (bps) to 8%.

Electrical Transmission segment’s revenues came in at $100.4 million, up 18.8% from the year-ago quarter. Adjusted EBITDA margin came in at 8.6% versus negative margin of 3.2% a year ago.

Power Generation and Industrial’s revenues surged 71.4% year over year to $250.2 million. However, adjusted EBITDA margin fell 320 bps from the prior-year quarter to 3.5%.

Revenues from the Oil and Gas segment increased 21.8% from a year ago to $936.8 million. In addition, adjusted EBITDA margin improved an impressive 320 bps to 19.1%.

MasTec, Inc. Price, Consensus and EPS Surprise

MasTec, Inc. price-consensus-eps-surprise-chart | MasTec, Inc. Quote

Operational Update

General and administrative expenses rose 4.8% from the prior-year quarter to $70.8 million.

The company’s adjusted EBITDA came in at $240.7 million in the reported quarter, up 26% from $191.1 million in the prior-year period. Adjusted EBITDA margin also surged 60 bps to 12.4%.

Financial Details

MasTec reported cash and cash equivalents of $59.2 million as of Jun 30, 2019 compared with $27.4 million at 2018-end. Long-term debt was $1.25 billion as of Jun 30, 2019 compared with $1.32 billion on Dec 31, 2018.

The company provided $351.5 million of cash from operating activities in the first six months of 2019 compared with $23.2 million in the year-ago period.

2019 Guidance Lifted

Full-Year 2019

MasTec upwardly revised revenue expectation to roughly $7.7 billion from prior projection of $7.6 billion. Adjusted EBITDA is now projected at $836 million versus $795 million expected earlier, with adjusted EBITDA margin of 10.9%. Adjusted earnings per share are now anticipated at around $5.04 ($3.77 in 2018) versus $4.55 expected earlier.

Third-Quarter 2019

For the quarter, MasTec expects revenues to be $2.15 billion. Adjusted EBITDA is expected to be $246 million, with margin of 11.4%. Adjusted earnings per share are anticipated at $1.62, indicating growth from $1.33 reported in 2018.

Zacks Rank & Other Stocks to Consider

Currently, MasTec carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the Zacks Construction sector include Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) , Dycom Industries, Inc. (NYSE:DY) and EMCOR Group, Inc. (NYSE:EME) . While Great Lakes carries a Zacks Rank #1 (Strong Buy), Dycom and EMCOR both carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Great Lakes’ EPS growth is expected to be 300% this year.

Dycom’s three-five year expected EPS growth rate is projected at 7.5%.

EMCOR’s EPS is expected to increase 14.5% in 2019.

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