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MasTec's (MTZ) Q2 Earnings Meet & Revenues Beat Estimates

·5 min read

MasTec, Inc.’s MTZ shares gained by a meager 0.01% during after-hours trading on Aug 4, after it reported second-quarter 2022 results, wherein earnings met the Zacks Consensus Estimate, but revenues surpassed the same.

Elaborating on the performance and looking ahead, Jose Mas, MasTec's CEO, said, "While inflationary cost pressures and select execution issues are making 2022 a challenging year, we strongly believe that 2022 will mark an important inflection point for MasTec with a significant expansion of resources, scale and service capabilities in renewable power generation and power grid infrastructure as the nation transitions its power infrastructure to carbon neutral sources. This opportunity, coupled with infrastructure required to support the 5G wireless network transition and expanding trends in civil and pipeline infrastructure, provide MasTec with unprecedented growth opportunities over the next decade."

MasTec, Inc. Price, Consensus and EPS Surprise

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

MasTec, Inc. price-consensus-eps-surprise-chart | MasTec, Inc. Quote

Inside the Headlines

MasTec reported adjusted earnings of 73 cents per share, in-line with the Zacks Consensus Estimate. In the year-ago period, the reported adjusted earnings were $1.29 per share. Notably, second-quarter results reflect acquisition integration efforts, inflationary pressures, as well as a significant shift in 2022 operations to non-Oil & Gas segments.

Revenues of $2.3 billion surpassed the consensus mark of $2.29 billion by 2.4% and increased 17% year over year. This upside was attributable to $600 million increase in non-Oil & Gas segment revenues, partially offset by $300 million decrease in the Oil & Gas segment revenues.

At June 2022-end, the company had an 18-month backlog of $11 billion, up 20% year over year. It also grew $360 million from the end of first-quarter 2022.

Segment Update

Revenues from Communications grew 30.4% year over year to $822 million. Adjusted EBITDA margin was down 110 basis points (bps) to 10.4%.

Clean Energy and Infrastructure’s revenues increased 2.7% year over year to $494.5 million. Adjusted EBITDA margin was negative 1.1% versus positive 3.2% in the year-ago quarter.

Revenues from the Oil and Gas segment dropped 45.1% from the year-ago figure to $341.2 million. Adjusted EBITDA margin declined 340 bps to 18.8% from 22.2% a year ago.

The Power Delivery (formerly known as Electrical Transmission) segment’s revenues came in at $646.5 million, up 178.1% from $232.5 million in the year-ago quarter. Adjusted EBITDA margin came in at 7.5%, up from 4% in the year-ago period.

Operational Update

The company reported an adjusted EBITDA of $178.5 million, down from $229.2 million in the prior-year period. The adjusted EBITDA margin declined to 7.8% from 11.7% in the year-ago quarter.

Financial Details

As of Jun 30, 2022, MasTec had cash and cash equivalents of $138.9 million, down from $360.7 million at 2021-end. Long-term debt (including finance leases) was $2.12 billion, up from $1.88 billion at 2021-end.

In the first half of 2022, the company provided $1,541 million of cash from operating activities compared with $349.3 million a year ago.

2022 Guidance Updates

The company expects to generate revenues of $9.2 billion for 2022. Adjusted EBITDA is expected to be $750 million versus $850-$875 million of the earlier projection. Adjusted earnings are anticipated to be $3.09 per share versus the earlier expectation of $4.22-$4.47 per share. The estimated figure indicates a decrease from $5.58 reported in 2021. The Zacks Consensus Estimate for 2022 earnings is currently pegged at $3.95 per share.

Third-Quarter 2022 View

MasTec expects third-quarter revenues of $2.55 billion. Adjusted EBITDA is estimated to be $245 million. Adjusted EBITDA margin is expected to be 9.6%. The company expects to report adjusted earnings per share of $1.29 for the quarter. The Zacks Consensus Estimate for the third-quarter 2022 earnings is currently pegged at $1.43 per share.

Zacks Rank & Peer Releases

MasTec currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

KBR, Inc. KBR reported strong results in second-quarter 2022. Quarterly earnings and revenues surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.

KBR expects favorable market tailwinds, good bookings momentum, a strong first half, and work under a contract of more than 90% to deliver 2022 results. As of Jun 30, 2022, the total backlog (including award options) was $19.21 billion.

United Rentals, Inc. URI reported better-than-expected second-quarter 2022 results. Better fleet productivity on broad-based rental demand in construction and industrial verticals, higher total and rental revenues along with stronger pricing helped the company to boost profit.

URI also lifted its full-year guidance for total revenues, adjusted EBITDA and free cash flow, given broad-based end-market activity, contractor backlogs, customer sentiment and our visibility through the balance of the year.

Owens Corning OC reported solid second-quarter 2022 results. Its earnings and net sales surpassed their respective Zacks Consensus Estimate and increased on a year-over-year basis.

OC’s solid quarterly results were backed by strong demand across the markets served, structural improvements and strategic investments.

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