MasTec (MTZ) Q2 Earnings Beat, Backlog Rises, '23 Views Fall
MasTec, Inc. MTZ reported mixed results for second-quarter 2023, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. However, the top and bottom lines increased on a year-over-year basis on solid improvement across its segments.
MTZ witnessed improved margin performance across its segments. Especially, the Clean Energy and Infrastructure segment showed 400 basis point (bps) sequential improvement and approximately 600 bps growth year over year.
However, the company noted that it begins to see tighter management of CAPEX by a number of customers. Also, revenues from recently acquired IEA are likely to be negatively impacted in the second half of 2023 due to project delays.
MasTec’s shares dipped 9.89% in the after-hours trading session on Aug 3.
Inside the Headlines
Adjusted earnings of 89 cents per share beat the Zacks Consensus Estimate of 86 cents by 3.5%. The bottom line rose 21.9% from the 73 cents reported in the year-ago period. The reported number came ahead of MTZ’s prior expectation of 86 cents.
MasTec, Inc. Price, Consensus and EPS Surprise
MasTec, Inc. price-consensus-eps-surprise-chart | MasTec, Inc. Quote
Revenues of $2.87 billion missed the consensus mark of $3.01 billion by 3.1%. Nonetheless, the top line jumped 25% from $2.30 billion a year ago.
At June-end, it had an 18-month backlog of $13.4 billion, up 22.1% from $11 billion a year ago. The metric, however, slipped 3.2% from $13.89 billion sequentially. The Zacks model suggested the metric to be $15.64 billion for the quarter under discussion.
Segment Update
Revenues from Communications grew 5.7% year over year to $868.7 million. Adjusted EBITDA margin expanded 40 bps to 10.8%.
Clean Energy and Infrastructure’s revenues skyrocketed 96.1% year over year to $969.7 million. Adjusted EBITDA margin was 5.1%, up from negative 1.1% in the year-earlier quarter.
Revenues from the Oil and Gas segment was flat from the year-ago figure of $341.8 million. Adjusted EBITDA margin improved 22.5% from 18.8% a year ago.
The Power Delivery (formerly known as Electrical Transmission) segment’s revenues totaled $702.6 million, gained 8.7% from the year-ago quarter. Adjusted EBITDA margin came in at 8.2%, up 70 bps from the year-ago period.
Operational Update
MasTec reported adjusted EBITDA of $255.4 million, up 43.1% from $178.5 million in the prior-year period. Adjusted EBITDA margin expanded to 8.9% from 7.8% in the year-ago quarter. Our model suggested adjusted EBITDA margin to be 8.3%.
Financial Details
As of June 30, 2023, MasTec had approximately $900 million in liquidity, including cash and cash equivalents of $119.9 million. At the end of 2022, it had cash and cash equivalents of $370.6 million. Long-term debt (including finance leases) was $3.15 billion, slightly up from $3.05 billion at 2022-end.
In first-half 2023, net cash used in operating activities was $97.9 million against net cash provided by operating activities of $1.54 million a year ago.
Q3 View
MasTec expects revenues in the range of $3.8-$3.9 billion, indicating an improvement from $2.5 billion reported in third-quarter 2022.
Adjusted EBITDA is estimated to be between $360 million and $390 million, implying a rise from $246 million a year ago.
Adjusted EBITDA margin is projected in the 9.6-10.1% band. The metric was 9.8% in the prior year.
The company estimates adjusted earnings per share in the range of $1.85-$2.13 for third-quarter 2023, suggesting a jump from the previous year’s figure of $1.34.
2023 Guidance Trim
Management now expects to generate revenues in the range of $12.7-$13.0 billion, down from the earlier guidance of $13-$13.2 billion.
Adjusted EBITDA is now anticipated to be between $1.05 billion and $1.10 billion (prior projection: $1.10-$1.15 billion).
Adjusted EBITDA margin is now projected in the 8.2-8.5% band. MTZ earlier suggested the metric to be 8.5-8.7%.
Adjusted earnings are now anticipated in the range of $3.75-$4.19 per share, down from the previous expectation of $4.35-$4.85.
In 2022, MTZ generated revenues of $9.8 billion. Adjusted EBITDA amounted to $780.6 million. Adjusted EBITDA margin reached 8%. It reported adjusted earnings of $3.05 per share.
Zacks Rank & Peer Releases
MasTec currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
KBR, Inc. KBR reported mixed second-quarter 2023 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus estimate for the seventh straight quarter. Revenues, on the other hand, surpassed the mark in three of the trailing seven quarters and missed on other four occasions.
Although KBR’s quarterly earnings were hurt by losses related to convertible notes and a legacy legal matter, it delivered a strong quarter of financial, and environmental, social and governance or ESG performance, underpinned by its mission focus and operational discipline.
Louisiana-Pacific Corporation LPX or LP, reported unimpressive results for second-quarter 2023. Earnings and net sales missed the Zacks Consensus Estimate and declined year over year.
That said, LP's strategy positions it well for long-term growth as the housing outlook continues to improve.
Weyerhaeuser Company WY reported mixed second-quarter 2023 results, wherein its earnings handily beat the Zacks Consensus Estimate but net sales missed the same marginally. On a year-over-year basis, the top and bottom lines declined.
Meanwhile, in July, Weyerhaeuser made a significant acquisition, purchasing 22,000 acres of timberlands in Mississippi for around $60 million. These timberlands are known for their high productivity and have been strategically chosen due to their proximity to WY's current operations. The acquisition is expected to bring about immediate synergies, and create additional opportunities for real estate and natural climate solutions.
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