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MasTec's (MTZ) Q4 Earnings Surpass Estimates, Shares Up

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MasTec, Inc. (MTZ - Free Report) reported mixed results in the fourth quarter of 2018, wherein earnings surpassed the Zacks Consensus Estimate, while revenues missed the same. Meanwhile, shares of the company increased 2.5% in after-hour trading on Feb 28, as the company provided encouraging 2019 guidance.

Adjusted earnings of $1.07 per share surpassed the consensus estimate of $1.06 by 0.9%. Also, the reported figure jumped an impressive 128% from prior-year figure of 47 cents.

Revenues of $1,918 million marginally missed the consensus mark of $1,922 million. Nonetheless, the reported figure increased 19.6% on a year-over-year basis, primarily driven by higher revenues from Power Generation and Industrial, as well as Oil and Gas.

MasTec, Inc. Price, Consensus and EPS Surprise

The company’s 18-month backlog as of Dec 31, 2018 was $7.7 billion, up 9% from $7.1 billion in the corresponding period of 2017.

Segment Update

Revenues at Communications declined 1.9% year over year to $649.3 million. Adjusted EBITDA margin also contracted 200 basis points (bps) to 9.2%.

Electrical Transmission segment’s revenues came in at $99.7 million, down 1.3% from the year-ago quarter. Adjusted EBITDA margin declined 70 bps to 5.6%.

Nevertheless, Power Generation and Industrial’s revenues surged 131.7% year over year to $221.7 million. However, adjusted EBITDA margin fell 80 bps from the prior-year quarter to 7.3%.

Revenues at the Oil and Gas segment increased 28% from a year ago to $947.1 million. In addition, adjusted EBITDA margin improved an impressive 860 bps to 14.8%.

Operational Update

Cost of revenues (excluding depreciation and amortization) increased 16.3% from the year-ago period to $1.65 billion. General and administrative expenses rose 3.6% to $75.7 million.

The company’s adjusted EBITDA came in at $195.8 million in the reported quarter compared with $128.9 million in the prior-year period. Adjusted EBITDA margin also surged 220 bps to 10.2%.

Financial Details

MasTec reported cash and cash equivalents of $27.4 million at the end of 2018 compared with $40.3 million at 2017-end. Long-term debt was $1.32 billion as of Dec 31, 2018 compared with $1.28 million in the comparable year-ago period.

Net cash flow provided by operations was $53 million as of Dec 31, 2018 compared with $144.1 million recorded at the end of 2017. Moreover, the company repurchased 2.9 million shares in the fourth quarter and 7.2 million shares for approximately $319 million in 2018.

2018 Highlights

In 2018, the company’s adjusted earnings per share came in at $3.77, up 29.1% from the year-ago figure of $2.92. Revenues of $6.9 billion also increased 4.6% year over year. Its adjusted EBITDA was $721 million in 2018 compared with $645.6 million a year ago. Adjusted EBITDA margin also grew 60 bps to 10.4%.

Guidance

Full-Year 2019

For 2019, the company expects revenues of roughly $7.6 billion. Adjusted EBITDA is projected at $780 million, with adjusted EBITDA margin of 10.3%. Adjusted earnings per share are anticipated at around $4.34. The Zacks Consensus Estimate for 2019 earnings is currently pegged at $4.23 per share, which is likely to witness upward revisions in the upcoming periods.

First-Quarter 2019

For first-quarter 2019, MasTec expects revenues to be $1.4 billion. Adjusted EBITDA is expected at $126 million, reflecting an increase of 16.9% from the comparable year-ago period. Adjusted EBITDA margin is likely to be about 9%, up 130 bps from the year-ago level. Adjusted earnings per share are anticipated at 43 cents. The Zacks Consensus Estimate for the quarter is currently pegged at 55 cents.

Zacks Rank & Peer Releases

Currently, MasTec carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

KB Home (KBH - Free Report) reported fourth-quarter 2018 earnings of 96 cents per share, surpassing the Zacks Consensus Estimate of 93 cents by 3.2%. The reported earnings also increased 14% from the year-ago level of 84 cents.

Lennar Corporation (LEN - Free Report) reported fourth-quarter 2018 earnings of $1.96 per share, surpassing the Zacks Consensus Estimate of $1.93 by 1.6%. Moreover, total revenues increased 70.6% from the prior-year quarter to $6.46 billion.

NVR, Inc. (NVR - Free Report) reported fourth-quarter 2018 earnings of $58.57 per share, beating the consensus mark of $48.46 by 20.9%. The bottom line also improved an impressive 103% on a year-over-year basis. Moreover, total revenues (Homebuilding & Mortgage Banking fees combined) of $1.99 billion increased 10% from the prior-year quarter.

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