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MasTec Announces Better Than Expected Second Quarter 2020 Results and Record Second Quarter Backlog

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- Second Quarter 2020 Results include GAAP Net Income of $56.8 Million , Adjusted EBITDA of $165.7 Million , Diluted Earnings Per Share of $0.78 , and Adjusted Diluted Earnings of $0.95 per Share, Exceeding Guidance Expectations

- Strong Second Quarter Cash Flow from Operations of $293 Million , and Record Level $497 Million in Cash Flow from Operations During the First Half of 2020

- Continued Strong Balance Sheet as of June 30, 2020, with Comfortable Leverage Metrics and Ample Liquidity

- Record Second Quarter Backlog as of June 30, 2020 of $8.2 Billion

CORAL GABLES, Fla. , July 30, 2020 /PRNewswire/ -- MasTec, Inc. (NYSE: MTZ) today announced better than expected second quarter 2020 financial results and updated its guidance for the remainder of 2020.

Second quarter 2020 revenue was $1.57 billion , with second quarter cash flow from operations of $293 million , enabling a $177 million reduction in total debt levels. First half 2020 revenue was $2.99 billion , with first half 2020 cash flow from operations at a record level of $497 million , a $145 million increase over cash flow from operations during the first half of last year, enabling a $190 million reduction in total debt levels. As of June 30, 2020 , the Company had net debt, defined as total debt less cash, of $1.19 billion .

Second quarter GAAP net income and earnings per diluted share exceeded the Company's expectations at $56.8 million , or $0.78 , respectively. Second quarter 2020 adjusted net income and adjusted diluted earnings per share, both non-GAAP measures, were $69.0 million and $0.95 , respectively, with adjusted diluted earnings per share exceeding the high end of the Company's previously announced expectation by $0.06 . Second quarter 2020 adjusted EBITDA, also a non-GAAP measure, was $165.7 million also exceeding the high end of the Company's guidance expectation by approximately $6 million .

Second quarter 18-month backlog as of June 30, 2020 was a record $8.2 billion , a $398 million increase compared to the same quarter last year.

Adjusted net income, adjusted diluted earnings per share and adjusted EBITDA, which are all non-GAAP measures, exclude certain items which are detailed and reconciled to the most comparable GAAP-reported measures in the attached Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures.

Jose Mas , MasTec's Chief Executive Officer, commented, "The resilience, dedication and focus of the men and women of MasTec resulted in strong second quarter results that exceeded our expectation during these unprecedented times. We are actively monitoring potential volatility caused by the pandemic, while continuing the focus on ensuring the safety of our employees as they provide critical power, communications and other services."

Mr. Mas continued, "Our diversified business model has proven highly resilient, with record first half 2020 cash flow from operations performance of approximately $500 million and record second quarter backlog as of June 30, 2020 . Our strong liquidity and balance sheet give us full flexibility to capitalize on opportunities to maximize shareholder value and to support our customers."

George Pita , MasTec's Executive Vice President and Chief Financial Officer noted, "We opportunistically took advantage of market conditions shortly after the end of the second quarter to further strengthen our capital structure by offering $600 million in new senior unsecured notes with a favorable 4.50% coupon, which is expected to close on August 4, 2020 subject to customary conditions. The new notes, maturing in 2028, will allow us to redeem our existing $400 million 4.875% senior unsecured notes at a lower rate, extend our maturity profile and will increase our overall liquidity by approximately $200 million , to approximately $1.3 billion . We continue to monitor current conditions and prudently manage our cash flow and liquidity, and our strong first half 2020 cash flow performance supports our expectations that annual 2020 cash flow from operations will reach new record levels, further strengthening our capital structure, liquidity levels and leverage profile."

Most of MasTec's construction services have been deemed essential under state and local pandemic mitigation orders, and all its business segments have continued to operate. The COVID-19 pandemic has had a negative impact on the Company's operations and the Company expects some continued negative impact for the remainder of 2020. Negative effects include lost productivity from governmental permitting delays, reduced crew productivity due to social distancing and other mitigation measures, lower levels of overhead cost absorption, and/or delayed project start dates, project shutdowns or cancellations that may be imposed on the Company, or its customers. Inclusive of currently expected COVID-19 impacts, the Company estimates 2020 annual revenue of approximately $7.0 billion , with 2020 annual GAAP net income and diluted earnings per share expected to approximate $314 million and $4.27 , respectively. 2020 annual adjusted EBITDA, a non-GAAP measure, is expected to be $800 million , or 11.4% of revenue, and 2020 annual adjusted diluted earnings per share, a non-GAAP measure, is expected at $4.93 . The Company's 2020 annual revenue expectation includes the impact of lower than expected third and fourth quarter Oil & Gas segment revenue, as regulatory delays on two large projects is expected to cause lower 2020 project activity, shifting awarded project activity into 2021.

For the third quarter of 2020, the Company expects revenue of approximately $1.9 billion . Third quarter 2020 GAAP net income is expected to approximate $106 million with GAAP diluted earnings per share expected to approximate $1.45 . Third quarter 2020 adjusted EBITDA, a non-GAAP measure, is expected to approximate to $254 million , or 13.4% of revenue, with adjusted diluted earnings per share, a non-GAAP measure, expected to approximate $1.67 .

Senior Management will hold a conference call to discuss these results on Friday, July 31, 2020 , at 9:00 a.m. Eastern time . The call-in number for the conference call is (323) 794-2094 or (800) 263-0877 and the replay number is (719) 457-0820, with a pass code of 5797259.  The replay will run for 30 days.  Additionally, the call will be broadcast live over the Internet and can be accessed and replayed through the Investors section of the Company's website at www.mastec.com .

The following tables set forth the financial results for the periods ended June 30, 2020 and 2019:

 

Consolidated Statements of Operations

(unaudited - in thousands, except per share information)






For the Three Months Ended
June 30,


For the Six Months Ended
June 30,


2020


2019


2020


2019









Revenue

$

1,569,297



$

1,939,006



$

2,985,901



$

3,457,346


Costs of revenue, excluding depreciation and amortization

1,341,825



1,633,400



2,568,122



2,945,448


Depreciation

57,687



55,279



110,776



109,504


Amortization of intangible assets

9,793



4,665



17,184



9,471


General and administrative expenses

84,959



70,819



170,473



143,436


Interest expense, net

14,808



16,623



31,812



38,881


Equity in earnings of unconsolidated affiliates

(6,813)



(6,551)



(14,647)



(12,811)


Other (income) expense, net

(10,527)



4,812



(11,869)



8,317


Income before income taxes

$

77,565



$

159,959



$

114,050



$

215,100


Provision for income taxes

(20,738)



(39,736)



(21,161)



(51,770)


Net income

$

56,827



$

120,223



$

92,889



$

163,330


Net (loss) income attributable to non-controlling interests

(178)



513



(346)



507


Net income attributable to MasTec, Inc.

$

57,005



$

119,710



$

93,235



$

162,823










Earnings per share:








Basic earnings per share

$

0.79



$

1.59



$

1.27



$

2.17


Basic weighted average common shares outstanding

72,045



75,183



73,392



75,088










Diluted earnings per share

$

0.78



$

1.58



$

1.26



$

2.15


Diluted weighted average common shares outstanding

72,777



75,747



74,135



75,661



 

Consolidated Balance Sheets

(unaudited - in thousands)






June 30,
 2020


December 31,
 2019

Assets




Current assets

$

2,137,048



$

2,173,559


Property and equipment, net

972,177



905,835


Operating lease assets

198,844



229,903


Goodwill, net

1,227,405



1,221,440


Other intangible assets, net

202,165



211,528


Other long-term assets

252,346



254,741


Total assets

$

4,989,985



$

4,997,006






Liabilities and Equity




Current liabilities

$

1,523,391



$

1,219,126


Long-term debt, including finance leases

1,115,839



1,314,030


Long-term operating lease liabilities

133,535



154,553


Deferred income taxes

267,525



296,326


Other long-term liabilities

198,859



221,280


Total equity

1,750,836



1,791,691


Total liabilities and equity

$

4,989,985



$

4,997,006


 

Consolidated Statements of Cash Flows

(unaudited - in thousands)




For the Six Months Ended June 30,


2020


2019





Net cash provided by operating activities

$

496,502



$

351,461


Net cash used in investing activities

(136,673)



(122,802)


Net cash used in financing activities

(383,832)



(196,825)


Effect of currency translation on cash

1,214



(80)


Net (decrease) increase in cash and cash equivalents

(22,789)



31,754


Cash and cash equivalents - beginning of period

$

71,427



$

27,422


Cash and cash equivalents - end of period

$

48,638



$

59,176



 

Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures

(unaudited - in millions, except for percentages and per share information)






For the Three Months Ended
June 30,


For the Six Months Ended
June 30,

Segment Information

2020


2019


2020


2019

Revenue by Reportable Segment








Communications

$

654.3



$

652.6



$

1,298.4



$

1,265.4


Oil and Gas

368.5



936.8



727.6



1,558.1


Electrical Transmission

124.1



100.4



252.2



195.3


Clean Energy and Infrastructure (a)

426.1



250.2



712.4



439.6


Other

0.1



0.0



0.1



0.1


Eliminations

(3.8)



(1.0)



(4.8)



(1.2)


Corporate








Consolidated revenue

$

1,569.3



$

1,939.0



$

2,985.9



$

3,457.3











For the Three Months Ended
June 30,


For the Six Months Ended
June 30,


2020


2019


2020


2019

Adjusted EBITDA by Reportable Segment








EBITDA

$

159.9



$

236.5



$

273.8



$

373.0


Non-cash stock-based compensation expense

5.8



4.2



9.9



7.9


Adjusted EBITDA

$

165.7



$

240.7



$

283.7



$

380.9


Reportable Segment:








Communications

$

76.4



$

52.4



$

127.2



$

97.8


Oil and Gas

80.1



179.3



154.5



286.7


Electrical Transmission

(3.2)



8.7



5.1



12.4


Clean Energy and Infrastructure (a)

30.1



8.9



35.0



12.1


Other

7.5



6.4



14.9



12.7


Corporate

(25.2)



(15.0)



(53.0)



(40.8)


Adjusted EBITDA

$

165.7



$

240.7



$

283.7



$

380.9




















For the Three Months Ended
June 30,



For the Six Months Ended
June 30,



2020



2019



2020



2019

Adjusted EBITDA Margin by Reportable Segment












EBITDA Margin


10.2

%



12.2

%



9.2

%



10.8

%

Non-cash stock-based compensation expense


0.4

%



0.2

%



0.3

%



0.2

%

Adjusted EBITDA margin


10.6

%



12.4

%



9.5

%



11.0

%

Reportable Segment:












Communications


11.7

%



8.0

%



9.8

%



7.7

%

Oil and Gas


21.7

%



19.1

%



21.2

%



18.4

%

Electrical Transmission


(2.6)

%



8.6

%



2.0

%



6.4

%

Clean Energy and Infrastructure (a)


7.1

%



3.5

%



4.9

%



2.8

%

Other


NM




NM




NM




NM


Corporate












Adjusted EBITDA margin


10.6

%



12.4

%



9.5

%



11.0

%


(a) During the second quarter of 2020, the Company renamed its Power Generation and Industrial segment as the Clean Energy and Infrastructure segment to better represent the nature of the segment's operations, end markets and customer characteristics. There was no change to the composition of the segment or its historical results.

NM - Percentage is not meaningful

 

Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures

(unaudited - in millions, except for percentages and per share information)



For the Three Months Ended
June 30, (a)


For the Six Months Ended
June 30, (a)


2020


2019


2020


2019

EBITDA and Adjusted EBITDA Reconciliation








Net income

$

56.8



$

120.2



$

92.9



$

163.3


Interest expense, net

14.8



16.6



31.8



38.9


Provision for income taxes

20.7



39.7



21.2



51.8


Depreciation

57.7



55.3



110.8



109.5


Amortization of intangible assets

9.8



4.7



17.2



9.5


EBITDA

$

159.9



$

236.5



$

273.8



$

373.0


Non-cash stock-based compensation expense

5.8



4.2



9.9



7.9


Adjusted EBITDA

$

165.7



$

240.7



$

283.7



$

380.9





















 


For the Three Months Ended
June 30, (a)


For the Six Months Ended
June 30, (a)


2020


2019


2020


2019

EBITDA and Adjusted EBITDA Margin Reconciliation








Net income

3.6

%


6.2

%


3.1

%


4.7

%

Interest expense, net

0.9

%


0.9

%


1.1

%


...