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MasTec (MTZ) PPL Unit Inks Deal for Keystone XL Construction

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MasTec, Inc.’s (MTZ - Free Report) Precision Pipeline, LLC or PPL unit has received a contract for the Keystone XL Pipeline construction in Montana and South Dakota.

The unit has received the contract from TC Energy Corporation for one of the most diversified infrastructure projects in this country. Keystone XL is an infrastructure project that has evolved significantly over the past few years. The PPL unit will be hiring about 1,600 union workers over the two-year construction period.

President of PPL, Bobby Poteete said, "As a Wisconsin business, we're proud to be awarded such a large contract for a significant North American infrastructure project and we look forward to working with TC Energy, local communities and businesses to bring Keystone XL to life."

In November 2009, MasTec acquired Precision Pipeline, LLC and its related affiliate, which is a Wisconsin company that provides infrastructure for natural gas and petroleum pipelines. This buyout has extended MasTec’s pipeline geographical coverage.

Notably, MasTec’s Oil & Gas pipeline segment’s revenues declined to 463 million in the third quarter of 2020 from 973 million a year ago. Revenues were impacted by the effects of the COVID pandemic, and its impact on the demand for both oil and gas. Large project activity represented a very small portion of revenues. Over the past three years, only 6% of its revenues have come from oil pipelines, with the majority of the business being tied to natural gas. Nonetheless, it continues to see strong demand for integrity services, gas distribution and line replacement activity, and remains focused on diversifying revenues in this segment.

Moreover, continuous contract flow like the latest one will act as a major boost for the company’s Oil & Gas segment. MasTec ended the third quarter with backlog of just more than $2.4 billion, and expects oil and gas revenues to increase in 2021.

Share Price Performance

Shares of MasTec have gained 57.6% over the past six months, outperforming the Zacks Building Products - Heavy Construction industry’s 49.8% rally. Despite uncertain market conditions, its performance in 2021 is expected to be resilient, given strong backlog and accelerating growth potential, especially across communications, transmission, and power generation as well as renewable portfolios.

MasTec — which shares space with EMCOR Group, Inc. (EME - Free Report) , Dycom Industries Inc. (DY - Free Report) and Great Lakes Dredge & Dock Corporation (GLDD - Free Report) in the same industry — currently carries a Zacks Rank #3 (Hold).

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