) reported adjusted earnings from continuing operations at 37 cents
per share for the second quarter of 2014, down 18% from 45 cents in
the year-ago quarter. The results were in line with the Zacks
Consensus Estimate. Results were affected by slowdown in revenue
growth of wireless projects. Including one-time items, earnings
fell 12% to 37 cents per share from 42 cents in the prior-year
Mastec, Inc - Earnings Surprise |
MasTec's net sales increased 13% year on year to $1.104
billion in the quarter, in line with management's guidance but
short of the Zacks Consensus Estimate of $1.11 billion.
Revenues at the Power Generation and Industrial segment
incresaed 49% ti $95 million. Sales in the Oil and Gas segment
increased 23% year over year to $366 million. Revenues in the
Communication segment were up 6% to $528 million, affected by lower
wireless project revenue growth levels. However, Electrical
Transmission revenues decreased 3% year over year to $114
Cost of sales in the quarter went up 16% year over year to $951
million. Gross profit declined 1% to $154 million from the year-ago
quarter. Gross margin contracted 200 basis points to 13.9% in the
General and administrative expenses increased 5% year over year
to $54 million. Operating profit declined 4% to $99 million in the
quarter from $103 million in the prior-year quarter. Consequently,
operating margin decreased 150 basis points (bps) year over year to
9%. Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) was $106 million as against $110 million in
the prior-year quarter.
As of Jun 30, 2014, MasTec reported cash and cash equivalents of
$16 million versus $14 million as of Jun 30, 2013. Cash flow from
operating activities was $55 million in the six month period ended
Jun 30, 2014, compared with $23 million in the prior-year
Long-term debt amounted to $1.09 billion as of Jun 30, 2014,
compared with $765 million as of Dec 31, 2013. The
debt-to-capitalization ratio rose to 50% as of Jun 30, 2014, from
43% as of Dec 31, 2013.
During the quarter, MasTec retired $115 million principal amount
of senior convertible notes that matured in June and expanded its
senior credit facility to $1 billion, while adding the capability
to borrow in Mexican pesos.
For the third quarter, MasTec expects revenue of approximately
$1.30-$1.35 billion. EBITDA is estimated at $132 million, while
adjusted earnings per share are projected at 56 cents.
For 2014, MasTec expects revenue of $4.4 to $4.5 billion.
Adjusted EBITDA was projected at $420-$425 million for the full
year. The company expects adjusted earnings to lie within $1.55 to
$1.58 per share.
MasTec's guidance reflects reduced levels of expected wireless
project revenue in the second half of 2014, compared with the prior
year. The company however anticipates returning to a more
normalized level of wireless project revenue in 2015.
MasTec foresees excellent growth opportunities in oil & gas,
electrical transmission, wireless, power generation and 1-gigabit
fiber expansion. The company added that subsequent to quarter end,
it was awarded a contract for approximately a quarter of a billion
dollars of 1-gigabit fiber deployment work. The company stated that
it is well positioned for growth in numerous markets throughout
North America and expects 2015 to be a strong year both in terms of
revenue growth and profit expansion.
MasTec's recent acquisition of Pacer Construction will be help
the company to expand in the growing Canadian energy infrastructure
market, including oil sands, oil and gas, high-voltage electrical
infrastructure and LNG markets. The expansion of MasTec's senior
credit facility, backed by the company's strong cash flow, will
provide it with financial flexibility to engage in strategic growth
opportunities across North America. However, unexpected delays in
wireless project spending, which affected the second quarter
results, are expected to adversely impact the rest of the year as
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
At present, MasTec has a Zacks Rank #4 (Sell).
Among MasTec's peers, Chicago Bridge & Iron (
) posted second-quarter 2014 adjusted earnings of $1.36 per share,
surpassing the Zacks Consensus Estimate of $1.27 per share by 7.1%.
The adjusted earnings marked an increase of 30.8% from $1.04 a
share reported in the prior-year quarter.
Primoris Services Corporation's (
) second-quarter 2014 earnings increased 3.3% year over year to 31
cents per share from 30 cents in the year-ago quarter. The results
were in line with the Zacks Consensus Estimate.
Granite Construction Incorporated (
) reported earnings per share of 34 cents in the second quarter of
2014, increasing more than eight fold from the 4 cents earned in
the year-ago quarter. Earnings per share also outperformed the
Zacks Consensus Estimate of 24 cents.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
CHICAGO BRIDGE (CBI): Free Stock Analysis
PRIMORIS SERVCS (PRIM): Free Stock Analysis
MASTEC INC (MTZ): Free Stock Analysis Report
GRANITE CONSTRU (GVA): Free Stock Analysis
To read this article on Zacks.com click here.