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MasTec, Inc. (MTZ - Free Report) reported mixed results in the second quarter of 2018, wherein earnings surpassed analysts’ expectations while revenues lagged the same.
Adjusted earnings of $1.04 per share surpassed both the Zacks Consensus Estimate and prior-year quarter’s figure of $1.03 by 1%. The improvement in earnings is attributed to lower costs and expenses.
Quarterly revenues of $1.6 billion missed the consensus estimate of $1.8 billion by 9.5%. Revenues also declined 14% year over year, primarily due to anticipated timing variances in large project activity in the Oil & Gas segment.
Operational Update
Cost of revenues in the quarter decreased 16% year over year to $1.4 billion. General and administrative expenses declined 4.5% to $67.6 million.
Adjusted EBITDA was $191.1 million in the reported quarter compared with $202.3 million in the prior-year quarter. Adjusted EBITDA margin increased 110 basis points (bps) to 11.8% from the year-ago quarter. This was backed by improved performance in its Oil & Gas and Communications segments.
Backlog Details
The company’s backlog as of Jun 30, 2018 was $7.7 billion, which increased from $168 million sequentially and 47% or $2.5 billion from a year ago.
The Power Generation and Industrial’s revenues surged 140.5% year over year to $146 million. However, adjusted EBITDA margin decreased 110 bps to 6.7% from the prior-year quarter.
Also, the Communications revenues grew 4.5% to $618.6 million year over year. Adjusted EBITDA margin increased 180 bps to 11.9%.
However, revenues from the Oil and Gas segment dropped 32.5% year over year to $769.3. Adjusted EBITDA margin increased 240 bps to 15.9%.
Electrical Transmission segment recorded a 12.5% decline in revenues to $84.5 million in the reported quarter.
Financial Details
MasTec reported cash and cash equivalents of $20.7 million at the end of the current quarter compared with $18.2 million at the end of the prior-year quarter. Long-term debt was $1.5 billion as of Jun 30, 2018 compared with $1.3 million on Dec 31, 2017.
Net cash flow provided by operations was $23.2 million in the first half of 2018 compared with $100.2 million recorded a year ago.
Guidance
For full-year 2018, the company retained its revenue guidance of approximately $6.9 billion.
Coming to non-GAAP measures, adjusted EBITDA is expected to be approximately $708 million or 10.3% of the revenues compared with $700 million or 10.2% of the revenues expected earlier. Adjusted earnings are expected at $3.67 from prior expectation of $3.65.
For the third quarter of 2018, based on updated scheduled projects for large Oil & Gas project activity, the company expects revenues of roughly $2.0 billion. Adjusted EBITDA is expected to be approximately $220 million, with adjusted earnings likely to come in at $1.26 per share.
Share Price Performance
MasTec has outperformed its industry so far this year. The stock has gained around 3.3% against its industry’s decline of 10.8 % in the said period.
Granite Construction has an expected current-year earnings growth rate of 111.1%.
Orion Group’s expected 2018 earnings growth rate is 321.43%.
EMCOR is expected to register an EPS growth rate of 15% this year.
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MasTec (MTZ) Beats Q2 Earnings Estimates, Raises Guidance
MasTec, Inc. (MTZ - Free Report) reported mixed results in the second quarter of 2018, wherein earnings surpassed analysts’ expectations while revenues lagged the same.
Adjusted earnings of $1.04 per share surpassed both the Zacks Consensus Estimate and prior-year quarter’s figure of $1.03 by 1%. The improvement in earnings is attributed to lower costs and expenses.
Quarterly revenues of $1.6 billion missed the consensus estimate of $1.8 billion by 9.5%. Revenues also declined 14% year over year, primarily due to anticipated timing variances in large project activity in the Oil & Gas segment.
Operational Update
Cost of revenues in the quarter decreased 16% year over year to $1.4 billion. General and administrative expenses declined 4.5% to $67.6 million.
Adjusted EBITDA was $191.1 million in the reported quarter compared with $202.3 million in the prior-year quarter. Adjusted EBITDA margin increased 110 basis points (bps) to 11.8% from the year-ago quarter. This was backed by improved performance in its Oil & Gas and Communications segments.
Backlog Details
The company’s backlog as of Jun 30, 2018 was $7.7 billion, which increased from $168 million sequentially and 47% or $2.5 billion from a year ago.
MasTec, Inc. Price, Consensus and EPS Surprise
MasTec, Inc. Price, Consensus and EPS Surprise | MasTec, Inc. Quote
Segment Update
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The Power Generation and Industrial’s revenues surged 140.5% year over year to $146 million. However, adjusted EBITDA margin decreased 110 bps to 6.7% from the prior-year quarter.
Also, the Communications revenues grew 4.5% to $618.6 million year over year. Adjusted EBITDA margin increased 180 bps to 11.9%.
However, revenues from the Oil and Gas segment dropped 32.5% year over year to $769.3. Adjusted EBITDA margin increased 240 bps to 15.9%.
Electrical Transmission segment recorded a 12.5% decline in revenues to $84.5 million in the reported quarter.
Financial Details
MasTec reported cash and cash equivalents of $20.7 million at the end of the current quarter compared with $18.2 million at the end of the prior-year quarter. Long-term debt was $1.5 billion as of Jun 30, 2018 compared with $1.3 million on Dec 31, 2017.
Net cash flow provided by operations was $23.2 million in the first half of 2018 compared with $100.2 million recorded a year ago.
Guidance
For full-year 2018, the company retained its revenue guidance of approximately $6.9 billion.
Coming to non-GAAP measures, adjusted EBITDA is expected to be approximately $708 million or 10.3% of the revenues compared with $700 million or 10.2% of the revenues expected earlier. Adjusted earnings are expected at $3.67 from prior expectation of $3.65.
For the third quarter of 2018, based on updated scheduled projects for large Oil & Gas project activity, the company expects revenues of roughly $2.0 billion. Adjusted EBITDA is expected to be approximately $220 million, with adjusted earnings likely to come in at $1.26 per share.
Share Price Performance
MasTec has outperformed its industry so far this year. The stock has gained around 3.3% against its industry’s decline of 10.8 % in the said period.
Zacks Rank & Key Picks
MasTec currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same space are Granite Construction Incorporated (GVA - Free Report) , Orion Group Holdings, Inc. (ORN - Free Report) and EMCOR Group, Inc. (EME - Free Report) . While Granite Construction sports a Zacks Rank #1 (Strong Buy), both Orion Group and EMCOR carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Granite Construction has an expected current-year earnings growth rate of 111.1%.
Orion Group’s expected 2018 earnings growth rate is 321.43%.
EMCOR is expected to register an EPS growth rate of 15% this year.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
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