Impacts to core oil and gas markets generated fourth quarter 2020 revenue of $1.64 billion for MasTec, down from analysts' expectation of $1.81 billion. But the Coral Gables, Fla. specialty contractor still reported net income of $113.1 million for the period.
For the year, the firm reported profit of $322.8 million, or $4.38 per share. Full year revenue fell to $6.32 billion, the firm reported Feb. 25.
The publicly-traded firm (NYSE: MTZ) is a major installer of energy pipelines, including the completed 1,172-mile Dakota Access Pipeline between North Dakota and Illinois, with work still ongoing on the Enbridge Line 3 oil line from Alberta to Wisconsin. MasTec is also heavily involved with electric grid and land-based offshore wind energy construction, as well as expansion and densification of wireless infrastructure, including towers and cell links for fiber optic networks.
Backlog declined 1% over the same quarter last year, with clean energy and communications, but offset by oil & gas and electrical transmission sector increases, said UBS. For 2021, MasTec expects revenue of about $7.8 billion, 4% above analyst consensus.
The firm ranks third on ENR’s Top 600 Specialty Contractors list, reporting $7.2 billion of revenue in 2019, with 43% in industrial and oil and gas markets, 31% in telecom and 23% in power.
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The firm's communications segment had been its largest, making up about half of company revenue from 2012 through most of 2016, said a report by investment firm UBS. "However, given increased demand for pipeline transportation capacity in the Permian Basin," the oil and gas segment became its leading revenue generator, it said.
“Oil & gas margins continued to beat expectations, [related to] project closeouts and change order recoveries,” said UBS construction sector analyst Steven Fisher in a March 1 report.
CEO Jose Mas told analysts that the firm's 2021 guidance "reflects continued diversification, with the firm expecting non-oil and gas business to grow about 20% in revenue and about 45% in EBITDA (earnings before taxes, depreciation and amortization this year. He said since the firm's last quarter results announcement, "we believe the size and the scale of growth opportunities has significantly expanded," adding that "the recent event in Texas demonstrates the need for significant investment in both infrastructure and continued power generation diversification."
Mas noted two acquisitions that closed in the first quarter this year he said are set to contribute about $300 million to this year's revenue. He did not identify the firms but described one as a firm that does "integrity work and maintenance related to gas distribution" and the other as "a fully integrated infrastructure contractor specializing in transportation projects." He said the firm works in Texas, Arizona and New Mexico
"I tthink you could expect MasTec to continue to be active in the M&A front in 2021," he said.
Credit Suisse construction sector analyst Jamie Cook said the MasTec's 2021 guidance "and implied margin performance in communications, electrical transmission as well as clean energy & infrastructure set the company up well" to reach a previously stated "medium term" goal of $10 billion in revenue and double-digit EBITDA margins."
She increased her fiscal 2021 to 2023 earnings-per-share estimates to $5.05, $5.50 and $6.05, respectively.