MasTec(MTZ) - 2024 Q3 - Quarterly Results

Q3 2024 Financial Performance MasTec reported strong Q3 2024 results with stable revenue, significant margin expansion, and substantial growth in net income and EPS Financial Highlights MasTec announced strong third-quarter 2024 results, with revenue holding steady at $3.3 billion year-over-year, but with significant margin expansion Q3 2024 vs Q3 2023 Key Financial Metrics | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $3.3 billion | $3.3 billion | Flat | | GAAP Net Income | $105.4 million | $15.3 million | +589% | | GAAP Diluted EPS | $1.21 | $0.18 | +572% | | Adjusted Net Income | $138.7 million | $75.9 million | +83% | | Adjusted Diluted EPS | $1.63 | $0.95 | +71% | | Adjusted EBITDA | $305.9 million | $271.1 million | +13% | - The company achieved a record 18-month backlog of $13.9 billion as of September 30, 2024, marking a $1.4 billion increase from the third quarter of 2023[1][4] - Year-to-date cash flow from operating activities was strong at $650 million, with Days Sales Outstanding (DSO) at 68 days[1] Management Commentary CEO Jose Mas highlighted the excellent bottom-line performance driven by margin expansion and noted that record backlog provides good visibility for 2025 and beyond - CEO Jose Mas credited margin expansion for the strong bottom-line performance and emphasized that the record backlog across multiple segments provides good visibility for future performance[5] - CFO Paul DiMarco noted that the company generated $278 million in cash flow from operations during the quarter, driving net debt leverage down to 2.2x[6] Financial Guidance MasTec increased its full-year 2024 bottom-line guidance, projecting annual revenue of approximately $12.225 billion, Adjusted EBITDA of $990 million, and Adjusted Diluted EPS of $3.75 Full Year 2024 Guidance | Metric | Full Year 2024 Guidance | | :--- | :--- | | Revenue | ~$12.225 billion | | GAAP Net Income | ~$187 million | | GAAP Diluted EPS | $1.98 | | Adjusted EBITDA | ~$990 million (8.1% of revenue) | | Adjusted Diluted EPS | $3.75 | Fourth Quarter 2024 Guidance | Metric | Q4 2024 Guidance | | :--- | :--- | | Revenue | ~$3.325 billion | | GAAP Net Income | ~$72 million | | GAAP Diluted EPS | $0.86 | | Adjusted EBITDA | ~$259 million (7.8% of revenue) | | Adjusted Diluted EPS | $1.29 | Consolidated Financial Statements MasTec's Q3 2024 financial statements show stable revenue, significant net income growth, reduced long-term debt, and strong operating cash flow Consolidated Statements of Operations For the third quarter of 2024, revenue was stable at $3.25 billion compared to Q3 2023, with income before taxes increasing significantly to $137.0 million, resulting in a net income of $105.4 million Q3 2024 Statement of Operations Highlights (in thousands) | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Revenue | $3,252,427 | $3,257,077 | | Costs of revenue | $2,789,274 | $2,857,118 | | Income before income taxes | $136,958 | $22,874 | | Net income | $105,410 | $15,305 | | Diluted earnings per share | $1.21 | $0.18 | Consolidated Balance Sheets As of September 30, 2024, MasTec's total assets were $8.76 billion, down from $9.37 billion at the end of 2023, primarily due to a reduction in long-term debt Balance Sheet Summary (in thousands) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $8,762,972 | $9,373,511 | | Total Liabilities | $5,934,260 | $6,652,250 | | Long-term debt | $2,138,697 | $2,888,058 | | Total Equity | $2,828,712 | $2,721,261 | Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, net cash provided by operating activities was a robust $649.9 million, a significant improvement from the prior year, with substantial debt repayment Nine Months Ended Sep 30 Cash Flow Summary (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $649,926 | $196,572 | | Net cash used in investing activities | ($80,798) | ($171,683) | | Net cash used in financing activities | ($916,513) | ($181,587) | | Cash and cash equivalents - end of period | $181,225 | $214,174 | Segment Performance and Backlog MasTec's total 18-month backlog reached a record $13.9 billion, driven by growth in Clean Energy and Power Delivery, while consolidated revenue remained flat due to declines in Oil and Gas Backlog by Segment Total 18-month backlog reached a record $13.9 billion as of September 30, 2024, up from $12.5 billion a year prior, driven by significant increases in Clean Energy and Power Delivery 18-Month Backlog by Segment (in millions) | Segment | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Communications | $5,855 | $5,898 | $5,299 | +10.5% | | Clean Energy & Infrastructure | $4,141 | $3,666 | $3,073 | +34.8% | | Power Delivery | $3,160 | $2,974 | $2,437 | +29.7% | | Oil and Gas | $702 | $800 | $1,681 | -58.2% | | Total | $13,858 | $13,338 | $12,490 | +11.0% | Revenue by Segment In Q3 2024, consolidated revenue was flat at $3.25 billion, with growth in Communications, Clean Energy & Infrastructure, and Power Delivery offset by a significant decline in the Oil and Gas segment Q3 Revenue by Segment (in millions) | Segment | Q3 2024 | Q3 2023 | YoY Change | | :--- | :--- | :--- | | Communications | $927.2 | $824.4 | +12.5% | | Clean Energy & Infrastructure | $1,138.4 | $1,099.9 | +3.5% | | Power Delivery | $712.5 | $665.0 | +7.1% | | Oil and Gas | $497.8 | $672.3 | -26.0% | | Consolidated Revenue | $3,252.4 | $3,257.1 | -0.1% | Adjusted EBITDA by Segment Consolidated Adjusted EBITDA for Q3 2024 increased to $305.9 million with a margin of 9.4%, with all segments except Power Delivery showing year-over-year growth Q3 Adjusted EBITDA by Segment (in millions) | Segment | Q3 2024 Adj. EBITDA | Q3 2024 Margin | Q3 2023 Adj. EBITDA | Q3 2023 Margin | | :--- | :--- | :--- | :--- | :--- | | Communications | $106.6 | 11.5% | $78.2 | 9.5% | | Clean Energy & Infrastructure | $85.0 | 7.5% | $57.6 | 5.2% | | Power Delivery | $54.5 | 7.6% | $57.0 | 8.6% | | Oil and Gas | $103.1 | 20.7% | $97.3 | 14.5% | | Consolidated Adj. EBITDA | $305.9 | 9.4% | $271.1 | 8.3% | Reconciliation of Non-GAAP Financial Measures MasTec provides reconciliations for non-GAAP measures like Adjusted EBITDA, Adjusted Net Income, and Net Debt to offer a clearer view of core operating performance and financial position Reconciliation of EBITDA and Adjusted EBITDA For Q3 2024, MasTec reconciled its GAAP Net Income of $105.4 million to an Adjusted EBITDA of $305.9 million, primarily due to higher net income and the absence of prior-year acquisition costs Q3 Reconciliation from Net Income to Adjusted EBITDA (in millions) | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net income (loss) | $105.4 | $15.3 | | Interest expense, net | $47.0 | $62.6 | | Provision for income taxes | $31.5 | $7.6 | | Depreciation | $80.2 | $115.0 | | Amortization of intangible assets | $34.4 | $42.3 | | EBITDA | $298.6 | $242.7 | | Non-cash stock-based compensation | $7.3 | $7.2 | | Acquisition and integration costs | — | $21.1 | | Adjusted EBITDA | $305.9 | $271.1 | Reconciliation of Adjusted Net Income and Adjusted Diluted EPS The company's Q3 2024 GAAP Diluted EPS of $1.21 was adjusted to $1.63, representing a 71% increase from Q3 2023, primarily due to non-cash adjustments Q3 Reconciliation from Diluted EPS to Adjusted Diluted EPS | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Diluted earnings (loss) per share | $1.21 | $0.18 | | Non-cash stock-based compensation | $0.09 | $0.09 | | Amortization of intangible assets | $0.44 | $0.54 | | Acquisition and integration costs | — | $0.27 | | Income tax effect of adjustments | ($0.11) | ($0.13) | | Adjusted diluted earnings per share | $1.63 | $0.95 | Calculation of Net Debt MasTec's Net Debt decreased to $2.14 billion as of September 30, 2024, from $2.54 billion at the end of 2023, driven by a reduction in total debt Net Debt Calculation (in millions) | Line Item | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Debt | $2,323.8 | $3,065.3 | | Less: cash and cash equivalents | ($181.2) | ($529.6) | | Net Debt | $2,142.6 | $2,535.7 | About MasTec and Forward-Looking Statements This section provides an overview of MasTec's business, explains the use of non-GAAP financial measures, and outlines the nature of forward-looking statements Company Overview MasTec, Inc. is a leading North American infrastructure construction company specializing in engineering, building, installation, maintenance, and upgrade services across various sectors - MasTec's primary business activities include engineering, building, installation, and maintenance for infrastructure in sectors such as communications (wireless/fiber), power delivery, clean energy generation, and pipelines[24] Use of Non-GAAP Financial Measures MasTec utilizes non-GAAP measures like EBITDA, Adjusted EBITDA, Adjusted Net Income, and Net Debt to evaluate performance, believing these metrics provide a clearer view of core operating results - The company uses non-GAAP financial measures to evaluate performance internally and against peers, as they exclude items that may not be indicative of core operating results[23] Forward-Looking Statements This press release contains forward-looking statements regarding future financial performance and business outlook, which are subject to significant risks and uncertainties that could cause actual results to differ materially - The report includes forward-looking statements concerning future financial performance and business outlook, which are subject to risks such as market conditions, inflation, interest rates, regulatory changes, and supply chain issues[25]