MasTec Earnings Beat Ests but Down Y/Y - Analyst Blog


MasTec, Inc. ( MTZ ) reported adjusted earnings from continuing operations at 21 cents per share for the first quarter of 2014, down 27.6% from 29 cents in the year-ago quarter. The results were adversely affected by a severe winter, which caused disruptions in business. However, the reported figure surpassed the Zacks Consensus Estimate of 18 cents per share as well the management's expected earnings per share of 20 cents.

Including one-time items, earnings fell 17.4% to 19 cents per share from 23 cents in the prior-year quarter.

Operational Update

MasTec's net sales increased 5% year on year to $964 million in the quarter, surpassing the Zacks Consensus Estimate of $921 million.

Sales in the Oil and Gas segment increased 19% year over year to $379.8 million. Revenues in the Communications segment were up 5.2% to $447 million. However, Electrical Transmission revenues decreased 5.3% year over year to $80 million. Revenues at the Power Generation and Industrial segment also declined 39% to $54.2 million.

Cost of sales in the quarter went up 6.3% year over year to $841 million. Gross profit declined 3.3% to $122.9 million from the year-ago quarter. Gross margin contracted 100 basis points to 12.8% in the quarter.

General and administrative expenses increased 9.1% year over year to $53 million. Operating profit declined 22% to $36 million in the quarter from $46.5 million in the prior-year quarter. Consequently, operating margin decreased 130 basis points (bps) year over year to 3.8%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $75 million as against $81.4 million in the prior-year quarter.

Financial Details

As of Mar 31, 2014, MasTec reported cash and cash equivalents of $9 million versus $109 million as of Dec 31, 2013. Cash used in operating activities was $20.4 million as of Mar 31, 2014, compared with cash provided by operating activities of $26 million as of Dec 31, 2013. Decreased productivity and delay in the billing and collection process caused the year-over-year decline in cash flow.

Long-term debt amounted to $841 million as of Mar 31, 2014, compared with $765 million as of Dec 31, 2013. The debt-to-capitalization ratio rose to 44.8% as of Mar 31, 2014, from 42.8% as of Dec 31, 2013.

Backlog was $4.2 billion at the quarter-end, marking a 22% increase from the end of the year-ago quarter.


For 2014, MasTec raised its revenue guidance range from $4.65-$4.7 billion to around $4.7-$4.8 billion. Adjusted EBITDA was reiterated at $520-$525 million for the full year. The company also maintained its adjusted earnings guidance of $2.27 to $2.30 per share.

For the second quarter of 2014, the company projects revenues in the range of around $1.15 billion to $1.20 billion. EBITDA is estimated to be $124 million while earnings per share from continuing operations is expected to be around 53 cents.

MasTec is witnessing strong momentum in its end markets. Going forward, the company expects to benefit from growth opportunities, which will help to improve its revenues and margins in wireless, oil and gas pipeline and fiber deployment.

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.

At present, MasTec has a Zacks Rank #3 (Hold). However, some better-ranked stocks in the same sector include Orion Marine Group, Inc ( ORN ), Simpson Manufacturing Co., Inc. ( SSD ) and EMCOR Group Inc. ( EME ). While Orion Marine and Simpson Manufacturing carry a Zacks Rank #1 (Strong Buy), EMCOR has a Zacks Rank #2 (Buy).

EMCOR GROUP INC (EME): Free Stock Analysis Report

MASTEC INC (MTZ): Free Stock Analysis Report

ORION MARINE GP (ORN): Free Stock Analysis Report

SIMPSON MFG INC (SSD): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: EME , MTZ , ORN , SSD

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