MasTec, Inc.’s (MTZ) reported fourth-quarter 2014 adjusted earnings (excluding one-time items barring non-cash stock compensation expense) of 37 cents per share, which declined 26% year over year. Earnings, however, beat the Zacks Consensus Estimate of 35 cents.
Including one-time items, earnings fell 34% to 33 cents per share from 50 cents in the prior-year quarter.
Operational Update
MasTec’s net sales increased around 7% year on year to $1.24 billion in the quarter, beating the Zacks Consensus Estimate of $1.20 billion. Sales growth was driven by revenue increase in all segments except Oil and Gas.
Revenues in the Power Generation and Industrial segment improved 64% to $94 million. Sales in Electrical Transmission increased 37% year over year to $146.7 million. Communications segment sales went up 12.6% to $560.7 million. However, revenues in the Oil and Gas segment declined 11.8% to $435.6 million
Cost of sales in the quarter went up 8% year over year to $1.07 billion. Gross profit declined marginally to $170 million from $172 million the year-ago quarter. Gross margin contracted 100 basis points to 13.8% in the quarter.
General and administrative expenses increased 27% year over year to $70.9 million. Operating profit declined 14.6% to $99.4 million in the quarter from $116.4 million in the prior-year quarter. Consequently, operating margin decreased 200 basis points (bps) year over year to 8%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $111.7 million as against $122.6 million in the prior-year quarter.
Financial Details
MasTec had cash and cash equivalents of $24 million at the end of 2014 versus $23 million as of end-2013. The company generated cash flow from operations of $322 million in 2014, up 61% from $200 million in 2013.
Long-term debt was $1.06 billion as of Dec 31, 2014, compared with $765 million as of Dec 31, 2013. MasTec reported 18-month backlog of $4.3 billion as of Dec 31, 2014, which increased 5% from $4.1 billion as of Dec 31, 2013.
On Dec 17, 2014, MasTec announced a $100 million worth of share repurchase program. The company has so far bought back roughly 3 million shares under the program.
2014 Performance
MasTec’s adjusted earnings of $1.46 per share for 2014 decreased 19% from $1.81 a share in 2013 and also came below management’s guidance of $1.55 per share. Earnings, however, beat the Zacks Consensus Estimate of $1.44.
Including special items, earnings declined 18% to $1.42 per share in 2014 compared with $1.74 in 2013.
Revenues for the full year increased 7% year over year to $4.6 billion from $4.3 billion in 2013 and were in line with the Zacks Consensus Estimate as well as the company’s guidance.
Guidance
MasTec slashed its 2015 revenues guidance to the range of around $4.6 to $4.8 billion from $5 billion. Adjusted EBITDA outlook for the full year was also reduced to the band of $450 million to $480 million from $500 million. The company now estimates adjusted earnings in the band of $1.65 to $1.87 per share as against $1.87 per share expected earlier.
For the first quarter of 2015, MasTec expects revenues to be around $1 billion and adjusted EBITDA in the range of $75 million to $80 million. The company guided adjusted earnings per share in the band of 16 cents to 19 cents for the quarter.
Our Take
MasTec remains optimistic about strong bidding opportunities in transmission, wireless, fulfillment services and 1-gigabit expansion. However, volatility in oil prices as well as foreign exchange rates related to Canadian operations remain headwinds for the company.
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 #5 (Strong Sell).
Some better-ranked stocks in the construction sector are Dycom Industries Inc. (DY), Acuity Brands, Inc. (AYI) and Grana y Montero SAA (GRAM). All of these stocks carry a Zacks Rank #1 (Strong Buy).
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
Be the first to comment