MasTec Q2 Earnings Beat, Revenues Lag, '24 View Revised

MasTec, Inc. MTZ reported mixed results in the second quarter of 2024, with earnings beating the Zacks Consensus Estimate and the revenues missing the same. On the other hand, the bottom and top lines increased year over year.

The company's results reflect solid contributions from its Oil and Gas segment, partially offset by soft contributions from the other reportable segments. The uptick in the Oil and Gas segment was attributable to higher project activity levels on the back of increased demand and project timing-related increases in large-diameter and midstream project activity due to improved market and regulatory conditions. This was partially offset by a reduction in pipeline integrity services.

That said, the company's increased backlog levels across its segments are encouraging for the remainder of 2024 and through 2025, showcasing the increased consumer confidence in its services. MTZ aims to focus on efficiently executing its services to continuously improve its growth prospects. Also, its focus on strategic investments for portfolio diversification positions it well for satiating the increased infrastructure demands, globally.

Inside the Headlines

Adjusted earnings per share of 96 cents topped the Zacks Consensus Estimate of 88 cents by 9.1%. In the year-ago quarter, the company reported an adjusted EPS of 89 cents.

Revenues of $2.96 billion missed the consensus mark of $3.09 billion by 4.2%. On the other hand, the top line grew 3.1% from $2.87 billion a year ago.

Segment Update

Revenues from Communications slipped to $824.6 million from $868.7 million reported a year ago. Adjusted EBITDA margin contracted 90 basis points (bps) to 9.9%.

Clean Energy and Infrastructure's revenues decreased year over year to $942.3 million from $969.7 million. Adjusted EBITDA margin was 5%, down from 5.1% in the year-ago quarter.

Revenues from the Oil and Gas segment increased 67.5% from the year-ago figure of $572.4 million. Adjusted EBITDA margin expanded 110 bps to 23.6%.

The Power Delivery (formerly known as Electrical Transmission) segment's revenues totaled $636.6 million, down from $702.6 million in the year-ago quarter. Adjusted EBITDA margin was 8.1%, down from 8.2% reported in the year-ago period.

Operational Update

MasTec reported an adjusted EBITDA of $267.8 million, up 4.9% from $255.4 million in the prior-year period. Adjusted EBITDA margin increased to 9% from 8.9% in the year-ago quarter.

Financial Details

As of Jun 30, 2024, MasTec had cash and cash equivalents of $297.6 million, down from $529.6 million in 2023-end. Long-term debt (including finance leases) was $2.36 billion, down from $2.89 billion in 2023-end.

At the end of the first six months of 2024, the net cash provided by operating activities was $372.2 million against net cash used in operating activities of $97.9 million a year ago.

Q3 2024 View

MasTec expects revenues of about $3.45 billion compared with $3.26 billion reported in the third quarter of 2023.

Adjusted EBITDA is estimated to be approximately $295 million, up from $271 million a year ago. The adjusted EBITDA margin is expected to be 8.6%, up from 8.3% reported in the prior-year quarter.

The company expects to report adjusted EPS of $1.24, up from the year-ago quarter's figure of 95 cents.

2024 Guidance Revised

The company now expects to generate revenues of approximately $12.4 billion (priorly expected $12.55 billion), up year over year from $12 billion.

Adjusted EBITDA is still expected to be around $975 million, up year over year from $860.3 million. The company raised its adjusted EBITDA margin expectation to 7.9% from 7.8% compared with 7.2% reported in 2023.

Adjusted earnings are now anticipated to be $3.03 per share (priorly expected $2.95 per share), up from $1.97 reported in the prior year.

Zacks Rank & Recent Construction Releases

MasTec currently carries a Zacks Rank #3 (Hold).

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Armstrong World Industries, Inc. AWI reported solid results for second-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.

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