MasTec(MTZ) - 2024 Q2 - Quarterly Results

Financial Highlights and Management Commentary Second Quarter 2024 Financial Performance MasTec reported record Q2 2024 revenue of $2.96 billion (up 3%), with GAAP net income surging 161% to $43.8 million and Adjusted EBITDA reaching $267.8 million, exceeding expectations Q2 2024 Key Financial Metrics vs. Q2 2023 | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $2.96 billion | $2.87 billion | +3% | | GAAP Net Income | $43.8 million | $16.8 million | +161% | | GAAP Diluted EPS | $0.43 | $0.20 | +115% | | Adjusted Net Income | $85.6 million | $70.7 million | +21% | | Adjusted Diluted EPS | $0.96 | $0.89 | +8% | | Adjusted EBITDA | $267.8 million | $255.4 million | +5% | - Adjusted Diluted Earnings Per Share of $0.96 exceeded expectations by $0.08[1] - Adjusted EBITDA of $267.8 million was $7.8 million above expectations[1] Backlog Analysis The company's 18-month backlog reached a record $13.3 billion as of June 30, 2024, driven by a major transmission project and strong Clean Energy & Infrastructure bookings - The 18-month backlog as of June 30, 2024, was $13.3 billion, a sequential increase of $501 million from Q1 2024[3] - Backlog growth was primarily driven by a multi-year transmission and substation project and strong bookings in the Clean Energy & Infrastructure segment[3] Management Commentary Management expressed satisfaction with solid Q2 performance, highlighting a new 700-mile high voltage transmission project and strong cash flow generation of $264 million that reduced net debt leverage below 2.5x - MasTec was awarded an approximately 700-mile high voltage transmission project expected to commence in early 2025[4] - The company generated $264 million of cash flow from operations, exceeding expectations[4] - Net debt leverage was reduced below 2.5x, enhancing capital structure flexibility[4] Financial Guidance Full Year 2024 Guidance MasTec updated its full-year 2024 guidance, projecting revenue of approximately $12.4 billion, GAAP net income of $131 million, and Adjusted EBITDA of $975 million Full Year 2024 Guidance | Metric | Full Year 2024 Guidance | | :--- | :--- | | Revenue | ~$12.4 billion | | GAAP Net Income | ~$131 million | | GAAP Diluted EPS | $1.25 | | Adjusted EBITDA | $975 million | | Adjusted Diluted EPS | $3.03 | Third Quarter 2024 Guidance For Q3 2024, the company anticipates revenue of approximately $3.45 billion, GAAP net income of $72 million, and Adjusted EBITDA of $295 million Third Quarter 2024 Guidance | Metric | Q3 2024 Guidance | | :--- | :--- | | Revenue | ~$3.45 billion | | GAAP Net Income | ~$72 million | | GAAP Diluted EPS | $0.78 | | Adjusted EBITDA | ~$295 million | | Adjusted Diluted EPS | $1.24 | Consolidated Financial Statements Consolidated Statements of Operations Q2 2024 revenue increased to $2.96 billion from $2.87 billion in Q2 2023, with net income attributable to MasTec, Inc. rising to $34.0 million Consolidated Statements of Operations Highlights (in thousands) | Line Item | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Revenue | $2,961,086 | $2,874,115 | | Income before income taxes | $63,112 | $19,688 | | Net income | $43,768 | $16,754 | | Net income attributable to MasTec, Inc. | $33,988 | $15,542 | | Diluted earnings per share | $0.43 | $0.20 | Consolidated Balance Sheets As of June 30, 2024, total assets were $8.68 billion (down from $9.37 billion), with long-term debt decreasing to $2.36 billion and total equity stable at $2.73 billion Consolidated Balance Sheet Highlights (in thousands) | Line Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total assets | $8,678,986 | $9,373,511 | | Total current liabilities | $2,747,909 | $2,837,219 | | Long-term debt, including finance leases | $2,359,637 | $2,888,058 | | Total equity | $2,734,107 | $2,721,261 | | Total liabilities and equity | $8,678,986 | $9,373,511 | Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash provided by operating activities was $372.2 million, a significant improvement from the prior year, resulting in a net decrease in cash of $232.0 million Consolidated Statements of Cash Flows Highlights (in thousands) | Line Item | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $372,199 | $(97,910) | | Net cash used in investing activities | $(24,470) | $(141,460) | | Net cash used in financing activities | $(579,078) | $(12,155) | | Net decrease in cash and cash equivalents | $(231,975) | $(250,687) | | Cash and cash equivalents - end of period | $297,586 | $119,905 | Segment Performance and Backlog Revenue by Segment In Q2 2024, Oil and Gas revenue surged 67% to $572.4 million, while Clean Energy and Infrastructure was the largest contributor at $942.3 million, and Communications and Power Delivery segments saw declines Revenue by Segment - Q2 2024 vs Q2 2023 (in millions) | Segment | Q2 2024 Revenue | Q2 2023 Revenue | YoY Change | | :--- | :--- | :--- | :--- | | Communications | $824.6 | $868.7 | -5.1% | | Clean Energy and Infrastructure | $942.3 | $969.7 | -2.8% | | Power Delivery | $636.6 | $702.6 | -9.4% | | Oil and Gas | $572.4 | $341.8 | +67.5% | | Consolidated Revenue | $2,961.1 | $2,874.1 | +3.0% | Adjusted EBITDA by Segment Oil and Gas segment's Adjusted EBITDA surged to $135.1 million in Q2 2024, with its margin expanding to 23.6%, while Communications remained a significant contributor at $81.9 million Adjusted EBITDA by Segment - Q2 2024 vs Q2 2023 (in millions) | Segment | Q2 2024 Adj. EBITDA | Q2 2023 Adj. EBITDA | YoY Change | | :--- | :--- | :--- | :--- | | Communications | $81.9 | $94.1 | -13.0% | | Clean Energy and Infrastructure | $47.4 | $49.7 | -4.6% | | Power Delivery | $51.4 | $57.4 | -10.5% | | Oil and Gas | $135.1 | $77.0 | +75.5% | | Segment Total | $318.6 | $284.9 | +11.8% | - The Oil and Gas segment's Adjusted EBITDA margin increased to 23.6% in Q2 2024 from 22.5% in Q2 2023[11] Backlog by Segment As of June 30, 2024, the total 18-month backlog was $13.34 billion, with Communications holding the largest share and Power Delivery seeing a 20% sequential increase 18-Month Backlog by Segment (in millions) | Segment | June 30, 2024 | March 31, 2024 | June 30, 2023 | | :--- | :--- | :--- | :--- | | Communications | $5,898 | $5,797 | $5,420 | | Clean Energy and Infrastructure | $3,666 | $3,504 | $3,324 | | Power Delivery | $2,974 | $2,479 | $2,656 | | Oil and Gas | $800 | $1,057 | $2,042 | | Total Backlog | $13,338 | $12,837 | $13,442 | Reconciliation of Non-GAAP Financial Measures Reconciliation of EBITDA and Adjusted EBITDA Q2 2024 GAAP Net Income of $43.8 million was reconciled to Adjusted EBITDA of $267.8 million by adding back depreciation, amortization, interest, taxes, debt extinguishment loss, and stock-based compensation Q2 2024 EBITDA and Adjusted EBITDA Reconciliation (in millions) | Line Item | Q2 2024 | | :--- | :--- | | Net income | $43.8 | | Interest expense, net | $50.6 | | Provision for income taxes | $19.3 | | Depreciation | $102.1 | | Amortization of intangible assets | $33.6 | | EBITDA | $249.4 | | Non-cash stock-based compensation expense | $7.0 | | Loss on extinguishment of debt | $11.3 | | Adjusted EBITDA | $267.8 | Reconciliation of Adjusted Net Income and EPS Q2 2024 GAAP Net Income of $43.8 million was reconciled to Adjusted Net Income of $85.6 million, primarily adjusted for amortization of intangible assets and loss on debt extinguishment Q2 2024 Adjusted Net Income Reconciliation (in millions) | Line Item | Q2 2024 | | :--- | :--- | | Net income | $43.8 | | Non-cash stock-based compensation expense | $7.0 | | Amortization of intangible assets | $33.6 | | Loss on extinguishment of debt | $11.3 | | Income tax effect of adjustments | $(10.1) | | Adjusted net income | $85.6 | Q2 2024 Adjusted Diluted EPS Reconciliation | Line Item | Q2 2024 | | :--- | :--- | | Diluted earnings per share | $0.43 | | Non-cash stock-based compensation expense | $0.09 | | Amortization of intangible assets | $0.43 | | Loss on extinguishment of debt | $0.14 | | Income tax effect of adjustments | $(0.13) | | Adjusted diluted earnings per share | $0.96 | Net Debt Calculation The company's Net Debt decreased by $272.2 million to $2.26 billion as of June 30, 2024, driven by a reduction in total debt Net Debt Calculation (in millions) | Line Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Debt | $2,561.1 | $3,065.3 | | Less: cash and cash equivalents | $(297.6) | $(529.6) | | Net Debt | $2,263.5 | $2,535.7 | Guidance Reconciliation The report provides detailed reconciliations for full-year and Q3 2024 guidance, adjusting GAAP Net Income to Adjusted Net Income for non-cash items like amortization and stock-based compensation - Full-year 2024 GAAP Diluted EPS of $1.25 is reconciled to Adjusted Diluted EPS of $3.03, primarily by adding back amortization of intangible assets ($1.71) and non-cash stock-based compensation ($0.42)[17] - Third-quarter 2024 GAAP Diluted EPS of $0.78 is reconciled to Adjusted Diluted EPS of $1.24, primarily by adding back amortization of intangible assets ($0.43) and non-cash stock-based compensation ($0.11)[19] Company Information and Disclosures About MasTec, Inc. MasTec, Inc. is a leading North American infrastructure construction company specializing in engineering, building, installation, maintenance, and upgrades across various sectors - MasTec is a leading infrastructure construction company operating primarily throughout North America across diverse industries[22] - The company's primary activities include engineering, building, installation, maintenance, and upgrading communications, energy, utility, and other infrastructure[22] Forward-Looking Statements This section contains standard legal disclaimers regarding forward-looking statements, cautioning that future performance is subject to significant risks and uncertainties that could cause actual results to differ materially - The press release contains forward-looking statements based on currently available information, subject to significant risks and uncertainties[23] - Key risks include market conditions (inflation, interest rates), regulatory or policy changes, supply chain issues, project delays, and changes in customer capital expenditures[23]