Back to top

Image: Bigstock

MasTec (MTZ) Beats on Q3 Earnings & Revenues, Lifts View

Read MoreHide Full Article

MasTec, Inc. (MTZ - Free Report) reported third-quarter 2016 adjusted earnings per share of 78 cents (excluding one-time items barring non-cash stock compensation expense), a substantial improvement of 225% from the prior-year quarter’s adjusted earnings of 24 cents. Further, earnings beat the Zacks Consensus Estimate of 67 cents by a comfortable margin of 14% and came ahead of management's guidance of 69 cents per share. The better-than-expected earnings in the quarter was primarily driven by strength in the company’s Oil & Gas segment.

Including one-time items, MasTec reported earnings of 69 cents per share compared with 9 cents reported in the prior-year quarter.

Operational Update

MasTec’s net sales improved 43% year over year to $1586 million in the quarter, coming ahead of the Zacks Consensus Estimate of $1496 million as well as management’s guidance of $1.5 billion. The better-than-expected performance came on the back of increase in revenues across all segments, particularly led by the Oil and Gas segment which recorded a surge of 81% year over year to $736 million. The Electrical Transmission segment followed with a 34% rise to $101.7 million in revenues. The Communication segment witnessed 34% growth in revenues to $624.3 million while revenues in Power Generation and Industrial segment increased 7% to $123.6 million.

Cost of sales in the quarter advanced 41% year over year to $1,369 million. Gross profit improved 57% to $217.2 million from $138 million in the year-ago quarter. Gross margin expanded 130 basis points to 13.7% in the quarter.

General and administrative expenses increased 5% to $67 million. MasTec reported operating profit of $107.5 million in the quarter, a 233% jump from $32.3 million in the prior-year quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $165 million, compared with $91 million in the prior-year quarter.

Financial Details

MasTec ended the third quarter with cash and cash equivalents of $9.4 million, up from $7.1 million at the end of the prior-year quarter. The company generated cash flow from operations of $127 million in the nine month period ended Sept 30, 2016, compared with $260 million in the prior-year quarter. Long-term debt was $951 million as of Sep 30, 2016, compared with $933 million as of Dec 31, 2015. MasTec’s board has authorized the repurchase of up to $100 million worth of shares.

MASTEC INC Price, Consensus and EPS Surprise
 

MASTEC INC Price, Consensus and EPS Surprise | MASTEC INC Quote

Guidance

For full-year 2016, MasTec has raised its adjusted earnings per share guidance to approximate $1.73 from the prior guidance range of $1.57. Revenues are now projected at $5.1 billion, revised upward from the previous projected target of $5.0 billion. Additionally, the company expects its adjusted EBITDA of $455 million, higher than the previous expectation of $440 million.

Additionally, for fourth-quarter 2016, MasTec guided revenues to be roughly $1.3 billion. The company anticipates adjusted EBITDA of around $132 million and adjusted earnings per share of 54 cents. The company stated that opportunities in the Oil & Gas segment are expected to drive continued growth in 2017 and beyond.

Coral Gables, FL-based MasTec is a leading infrastructure construction company that operates primarily in North America and caters to a range of industries. Its services include engineering, building, installation, maintenance and upgrade of energy, utility and communications infrastructure as well as industrial infrastructure.

Zacks Rank

At present, MasTec sports a Zacks Rank #1 (Strong Buy).

Some similarly-ranked stocks in the construction sector are EMCOR Group Inc. (EME - Free Report) , Simpson Manufacturing Co., Inc. (SSD - Free Report) and Gibraltar Industries, Inc. (ROCK - Free Report) . All these stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

EMCOR group has witnessed a 1% increase in its earnings estimate to $3.20 per share for 2016 over the last seven days. Simpson Manufacturing has seen upward estimate revisions, over the last seven days and the Zacks Consensus Estimate is pegged at $1.89 per share. The Zacks Consensus Estimate for Gibraltar Industries has also moved up 9% over the last seven days to $1.58 per share.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>


Zacks' 7 Best Strong Buy Stocks (New Research Report)


Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.


Click Here, It's Really Free