MasTec (MTZ) Q1 Earnings Top Estimates, View Up, Shares Rise

Zacks Equity Research

MasTec, Inc.’s MTZ shares gained 6.7% in the after-hour trading session on May 2, after the company came up with better-than-expected results in first-quarter 2019. Encouragingly, MasTec also lifted its view for 2019.

MasTec reported adjusted earnings of 58 cents per share, surpassing the Zacks Consensus Estimate of 43 cents by an impressive 34.9%. Also, the reported figure exceeded the company’s expectation by 15 cents and increased by an impressive 65.7% from the prior-year figure of 35 cents.

Revenues of $1,518.3 million topped the consensus mark of $1,431 million. The reported figure increased 8.7% on a year-over-year basis, primarily driven by higher contribution from Power Generation and Industrial, as well as Oil and Gas businesses.

MasTec, Inc. Price, Consensus and EPS Surprise

MasTec, Inc. Price, Consensus and EPS Surprise | MasTec, Inc. Quote

The company’s 18-month backlog as of Mar 31, 2019 was a record $8 billion, up $310 million sequentially and $449 million year over year.

Segment Update

Revenues at Communications declined 2.3% year over year to $612.8 million. Adjusted EBITDA margin also contracted 570 basis points (bps) to 7.4%.

Electrical Transmission segment’s revenues came in at $94.9 million, down 16.8% from the year-ago quarter. Adjusted EBITDA margin remained flat with the prior-year figure at 4%.

Nevertheless, Power Generation and Industrial’s revenues surged 61.5% year over year to $189.4 million. However, adjusted EBITDA margin fell 240 bps from the prior-year quarter to 1.7%.

Revenues at the Oil and Gas segment increased 15.8% from a year ago to $621.3 million. In addition, adjusted EBITDA margin improved an impressive 1110 bps to 17.3%.

Operational Update

General and administrative expenses rose 14.1% to $72.6 million.

The company’s adjusted EBITDA came in at $140.1 million in the reported quarter compared with $107.8 million in the prior-year period. Adjusted EBITDA margin also surged 150 bps to 9.2%.

Financial Details

MasTec reported cash and cash equivalents of $43.2 million as of Mar 31, 2019 compared with $27.4 million at 2018-end. Long-term debt was $1.54 billion as of Mar 31, 2019 compared with $1.32 billion on Dec 31, 2018.

The company used $46.8 million of cash from operating activities in the quarter compared with $83.5 million cash provided by operating activities in the year-ago period.

2019 Guidance Lifted

Full-Year 2019

MasTec maintained its revenue expectation of roughly $7.6 billion. Adjusted EBITDA is now projected at $795 million versus $780 million expected earlier, with adjusted EBITDA margin of 10.5%. Adjusted earnings per share are now anticipated at around $4.55 versus $4.34 expected earlier.

Second-Quarter 2019

For the quarter, MasTec expects revenues to be $1.8 billion. Adjusted EBITDA is expected at $200 million. Adjusted earnings per share are anticipated at $1.11.

Zacks Rank & Stocks to Consider

Currently, MasTec carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Zacks Construction sector include Apergy Corporation APY, Jacobs Engineering Group Inc. JEC and AECOM ACM. While Apergy and Jacobs sport a Zacks Rank #1 (Strong Buy), AECOM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Apergy and Jacobs’ three-five year expected EPS growth rate is projected at 24.2% and 10.1%, respectively.

AECOM surpassed earnings estimates in all the trailing four quarters, with the average being 3.7%.

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