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MasTec (MTZ) Stock Down Despite Q3 Earnings & Revenue Beat

MasTec (MTZ) posts Q3 results, which reflect lower margins across its three segments. Yet, it has solid end-market opportunities across non-Oil & Gas segments.

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This story originally appeared on Zacks

MasTec, Inc.’s MTZ shares dropped 1.16% in after-hours trading on Nov 4, after it reported third-quarter 2021 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. The company’s earnings surpassed the consensus mark for the 24th consecutive quarter. However, earnings declined from the year-ago period despite reporting solid revenues due to lower margins across businesses (except Electrical Transmission).

Elaborating on the quarterly performance, Jose Mas, MasTec's CEO, said, “End-market opportunities across our non-Oil & Gas segments continue to develop and provide us significant growth opportunities as evidenced by our record non-Oil & Gas segment backlog. We remain confident that our diversified end-market portfolio provides us a near-term path toward reaching our $10 billion revenue goal with strong adjusted EBITDA margin and cash flow performance."

- Zacks

Inside the Headlines

MasTec reported adjusted earnings of $1.81 per share, which surpassed the Zacks Consensus Estimate of $1.69 by 7.1%. The metric, however, dropped from $1.83 reported in the prior-year quarter.

Revenues of $2.40 billion topped the consensus mark of $2.29 billion by 5.2% but increased 41.6% year over year. At quarter-end, the company had an 18-month backlog of $8.5 billion (with record third-quarter backlog across all non-Oil & Gas segments), up $821 million year over year.

MasTec, Inc. Price, Consensus and EPS Surprise

MasTec, Inc. Price, Consensus and EPS Surprise

 

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

 

Segment Update

Revenues from Communications grew 3.9% year over year to $670.3 million. However, adjusted EBITDA margin was down 160 basis points (bps) to 10.7%.

The Electrical Transmission segment’s revenues came in at $365.3 million, up 184.2% from the year-ago quarter. Adjusted EBITDA margin came in at 9.5%, up 240 bps from the year-ago period.

Clean Energy and Infrastructure’s revenues increased 10.6% year over year to $518.4 million. However, adjusted EBITDA margin of 2.7% declined 460 bps from the year-ago figure.

Revenues from the Oil and Gas segment rose 85.6% from the year-ago figure to $858.4 million. Adjusted EBITDA margin declined 1,480 bps to 19.9%.

Operational Update

The company reported adjusted EBITDA of $277.9 million, up 13.1% from the prior-year period. However, adjusted EBITDA margin also declined 400 bps to 11.6%.

Financial Details

As of Sep 30, 2021, MasTec had cash and cash equivalents of $239.9 million compared with $238.2 million a year ago. In the first nine months of 2021, the company provided $499.1 million of cash from operating activities compared with $683.2 million a year ago.

Updates 2021 Guidance

The company now expects to generate record revenues of $8 billion in 2021, down from the previous projection of $8.1 billion. Adjusted EBITDA is expected to be $930 million (suggesting growth from $810 million in 2020). Adjusted EBITDA margin is expected to be 11.6%, depicting a decrease from 12.8% a year ago. Adjusted earnings are anticipated to be $5.55 per share, increasing from the prior projection of $5.45. The estimated figure indicates an increase from $5.11 reported in 2020.

Fourth-Quarter View

MasTec expects fourth-quarter revenues of $1.9 billion. Adjusted EBITDA is estimated to be $218 million, suggesting growth from $261.5 million reported a year ago. Adjusted EBITDA margin is expected to be 11.7%, indicating a decline from 16% a year ago. Adjusted earnings per share for the quarter are expected to be $1.33, suggesting a decline from $1.75 in the prior-year period.

Zacks Rank

MasTec currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3 Robust Construction Picks

Some better-ranked stocks in the Zacks Building Products - Heavy Construction industry include Sterling Construction STRL, EMCOR Group, Inc. (EME) and North American Construction Group Ltd. NOA, each carrying a Zacks Rank #2 (Buy).

Earnings for Sterling, EMCOR and North American Construction are expected to grow 31.6%, 10.2% and 24.8%, respectively, for the current year.



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