MasTec, Inc. (MTZ) Bundle
Understanding MasTec, Inc. (MTZ) Revenue Streams
Understanding MasTec, Inc.’s Revenue Streams
MasTec, Inc. operates across various segments, each contributing distinctively to its overall revenue. The primary revenue sources include:
- Communications Segment
- Clean Energy and Infrastructure Segment
- Power Delivery Segment
- Oil and Gas Segment
Revenue Breakdown by Segment
| Segment | Revenue (2024) | Revenue (2023) | Change (Amount) | Change (%) |
|---|---|---|---|---|
| Communications | $2,485 million | $2,500 million | $(15) million | -1% |
| Clean Energy and Infrastructure | $2,834 million | $2,895 million | $(60) million | -2% |
| Power Delivery | $1,920 million | $2,077 million | $(157) million | -8% |
| Oil and Gas | $1,704 million | $1,271 million | $433 million | 34% |
| Total Revenue | $8,900 million | $8,716 million | $185 million | 2% |
Year-Over-Year Revenue Growth Rate
The year-over-year revenue growth for the nine-month period ended September 30, 2024, compared to the same period in 2023, shows a consolidated revenue increase of approximately 2% from $8,716 million to $8,900 million.
Segment Contributions to Overall Revenue
In the nine months ending September 30, 2024, the contributions to overall revenue from different segments were:
- Communications: 28%
- Clean Energy and Infrastructure: 32%
- Power Delivery: 22%
- Oil and Gas: 19%
Significant Changes in Revenue Streams
The most significant change in revenue streams was observed in the Oil and Gas segment, which experienced a strong growth of 34% year-over-year. This increase was attributed to higher project activity and favorable market conditions. In contrast, the Power Delivery and Clean Energy and Infrastructure segments saw declines of 8% and 2%, respectively, primarily due to reduced project activity and timing issues affecting renewable project work.
Overall, the company’s revenue dynamics reflect a diversified portfolio with varying performance across its segments, highlighting the importance of strategic focus on growth areas such as Oil and Gas while addressing challenges in other sectors.
A Deep Dive into MasTec, Inc. (MTZ) Profitability
A Deep Dive into MasTec, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was 13.4%, compared to 11.6% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 8.8%, up from 4.7% in 2023.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, stood at 1.3%, compared to a net loss margin of (0.6%) in 2023.
Below is a table summarizing the profitability metrics over the last two years:
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit Margin | 13.4% | 11.6% | 1.8% |
| Operating Profit Margin | 8.8% | 4.7% | 4.1% |
| Net Profit Margin | 1.3% | (0.6%) | 1.9% |
Trends in Profitability Over Time: The company's profitability has shown significant improvement from 2023 to 2024, with margins increasing across all categories. This trend reflects better cost management and operational efficiencies.
Comparison of Profitability Ratios with Industry Averages: As of 2024, the company's gross profit margin of 13.4% exceeds the industry average of 10%. The operating profit margin of 8.8% is also above the industry average of 6%, while the net profit margin of 1.3% aligns closely with the industry average of 1.5%.
Analysis of Operational Efficiency: The company has effectively managed costs, as evidenced by a decrease in general and administrative expenses, which accounted for 5.6% of revenue in the nine months ended September 30, 2024, down from 6.0% in 2023. This improvement contributes to the enhanced gross margin trend, indicating a focus on operational efficiency.
Depreciation and amortization costs have also been optimized, totaling $391.4 million for the nine months ended September 30, 2024, compared to $451.6 million in 2023.
Overall, the profitability metrics indicate a strong financial position, with improvements across all critical profitability measures, positioning the company favorably within the industry.
Debt vs. Equity: How MasTec, Inc. (MTZ) Finances Its Growth
Debt vs. Equity: How MasTec, Inc. Finances Its Growth
As of September 30, 2024, MasTec, Inc. reported total debt of approximately $1,630.0 million, which includes both short-term and long-term liabilities. The breakdown of this debt is as follows:
| Debt Type | Amount (in millions) |
|---|---|
| Revolving Loans | $145.0 |
| Term Loan | $334.7 |
| 4.500% Senior Notes | $600.0 |
| 5.900% Senior Notes | $550.0 |
The company's debt-to-equity ratio stands at approximately 0.58 as of the same date, which is below the industry average of 1.0. This indicates a relatively conservative approach to leveraging, positioning the company favorably in comparison to its peers in the infrastructure sector.
In terms of recent debt activity, MasTec has engaged in refinancing and issuance of new debt instruments. Notably, the company issued $549.8 million in 5.900% senior notes in 2024, alongside repayments of existing obligations, including $224.0 million of 6.625% senior notes.
MasTec's credit ratings, as assessed by major agencies, reflect a stable outlook. As of September 2024, the company holds a credit rating of Baa3 from Moody's and BBB- from S&P Global Ratings, indicating a moderate level of credit risk.
To maintain a balance between debt financing and equity funding, MasTec has utilized a mix of retained earnings and capital surplus alongside its debt instruments. As of September 30, 2024, the equity structure is detailed below:
| Equity Component | Amount (in millions) |
|---|---|
| Common Stock | $9.9 |
| Capital Surplus | $1,284.6 |
| Retained Earnings | $2,233.8 |
| Accumulated Other Comprehensive Loss | ($58.8) | Total Shareholders’ Equity | $2,809.7 |
This blend of financing strategies allows MasTec to support its growth initiatives while managing financial risk effectively. The company continues to monitor market conditions to optimize its capital structure in alignment with its strategic objectives.
Assessing MasTec, Inc. (MTZ) Liquidity
Assessing MasTec, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.24, calculated from current assets of $3,572,895 and current liabilities of $2,887,751.
Quick Ratio: The quick ratio is approximately 0.91, derived from the quick assets (current assets minus inventories) of $3,471,737 and the same current liabilities of $2,887,751.
Analysis of Working Capital Trends
As of September 30, 2024, working capital is approximately $685 million, a decrease from $1,137 million as of December 31, 2023, indicating a decline of $452 million in working capital over the period.
Cash Flow Statements Overview
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Cash Provided by Operating Activities | $649.9 | $196.6 |
| Net Cash Used in Investing Activities | ($80.8) | ($171.7) |
| Net Cash Used in Financing Activities | ($916.5) | ($181.6) |
Potential Liquidity Concerns or Strengths
Cash and cash equivalents totaled $181,225 as of September 30, 2024, down from $529,561 as of December 31, 2023. This represents a decrease of $348,336.
Accounts receivable, net of allowance, stood at $1,453,579 as of September 30, 2024, compared to $1,370,074 as of December 31, 2023, reflecting an increase in receivables of $83,505.
Days Sales Outstanding (DSO) improved to 68 days as of September 30, 2024, compared to 74 days at the end of 2023, indicating more efficient collection of receivables.
Overall, while current liquidity ratios remain above 1, the significant decrease in working capital and cash reserves may indicate potential liquidity concerns moving forward.
Is MasTec, Inc. (MTZ) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio: As of September 30, 2024, the P/E ratio is approximately 25.7, based on a diluted earnings per share of $1.21 and a stock price of about $31.09.
Price-to-Book (P/B) Ratio: The P/B ratio is approximately 1.43, determined from a book value per share of $21.67 based on total equity of $2,809,666 and 99,030,346 shares outstanding.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV is calculated at approximately $3.5 billion, leading to an EV/EBITDA ratio of 5.04, based on an EBITDA of $693 million for the nine months ended September 30, 2024.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $24.20 and a high of $34.50. As of September 30, 2024, the stock closed at $31.09, representing an increase of approximately 14.7% from the previous year.
Dividend Yield and Payout Ratios
The company currently does not pay a dividend, resulting in a dividend yield of 0%. The payout ratio is similarly 0%, as there are no dividends declared against earnings.
Analyst Consensus
As of October 2024, the consensus among analysts is a Hold rating, with a target price of $32.50, reflecting an upside potential of approximately 6.0% based on the current stock price.
| Metric | Value |
|---|---|
| P/E Ratio | 25.7 |
| P/B Ratio | 1.43 |
| EV/EBITDA Ratio | 5.04 |
| Stock Price (Sept 30, 2024) | $31.09 |
| 52-Week Low | $24.20 |
| 52-Week High | $34.50 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus | Hold |
| Target Price | $32.50 |
Key Risks Facing MasTec, Inc. (MTZ)
Key Risks Facing MasTec, Inc.
MasTec, Inc. operates in a dynamic environment that presents various internal and external risks affecting its financial health. Key risk factors include:
Industry Competition
The construction and engineering sectors are highly competitive. MasTec faces competition from both large multinational firms and smaller regional companies. This pressure can lead to pricing wars, affecting margins. For instance, in the nine months ended September 30, 2024, consolidated revenue totaled $8,900 million, a modest increase compared to $8,716 million in the same period of 2023, indicating competitive pressures in maintaining revenue growth.
Regulatory Changes
Changes in regulations can significantly impact operational costs and project timelines. For example, the Power Delivery segment reported a revenue decline of 8% year-over-year, primarily due to regulatory effects on distribution-related project work.
Market Conditions
Fluctuations in market demand, particularly in the Oil and Gas segment, can lead to volatility in revenues. The Oil and Gas revenue increased to $1,704 million for the nine months ended September 30, 2024, a significant rise from $1,271 million in 2023, driven by improved market conditions. However, a decrease of 26% was noted in the third quarter of 2024 compared to the same quarter in 2023.
Operational Risks
Operational risks include project execution challenges, delays, and cost overruns. For instance, the Clean Energy and Infrastructure segment saw a revenue decrease of $60 million, or 2%, in the nine months of 2024 compared to 2023, mainly due to lower renewable project work. Additionally, corporate expenses increased by approximately $29 million due to various operational factors.
Financial Risks
Financial risks stem from high levels of debt and interest obligations. As of September 30, 2024, the company had $288.8 million outstanding under a five-year term loan with an interest rate of 6.25%. Interest expense for the nine months ended September 30, 2024, was reported at $149.7 million.
Strategic Risks
Strategic risks involve the potential failure to successfully integrate acquisitions or to adapt to changing market conditions. Acquisition-related costs affected net income, with adjustments totaling $11.3 million for the loss on extinguishment of debt.
Mitigation Strategies
To address these risks, MasTec employs various mitigation strategies, including diversifying its project portfolio and maintaining compliance with regulatory requirements. The company also focuses on cost management and operational efficiency to enhance margins.
| Risk Factor | Description | Impact on Financials |
|---|---|---|
| Industry Competition | High competition leading to pricing pressure | Revenue growth of $8,900 million in 2024 vs. $8,716 million in 2023 |
| Regulatory Changes | Changes affecting operational costs and timelines | Power Delivery revenue decreased by 8% |
| Market Conditions | Fluctuations in demand impacting revenues | Oil and Gas revenue increased to $1,704 million but decreased by 26% in Q3 2024 |
| Operational Risks | Challenges in project execution and delays | Clean Energy and Infrastructure revenue decreased by $60 million |
| Financial Risks | High debt levels and interest obligations | $288.8 million under five-year term loan, interest expense of $149.7 million |
| Strategic Risks | Failure to integrate acquisitions | Adjustments of $11.3 million for extinguishment of debt |
Future Growth Prospects for MasTec, Inc. (MTZ)
Future Growth Prospects for MasTec, Inc. (MTZ)
The growth opportunities for MasTec, Inc. are shaped by several key drivers, including market expansions, product innovations, and strategic acquisitions.
Key Growth Drivers
- Market Expansions: The company is actively expanding its footprint in the Oil and Gas sector, which saw a revenue increase of $433 million, or 34%, for the nine months ended September 30, 2024, compared to the same period in 2023, resulting in total revenue of $1,704 million.
- Product Innovations: Investments in clean energy infrastructure continue to drive growth, though revenue in this segment decreased by $60 million, or 2%, for the same period.
- Strategic Acquisitions: MasTec's Power Delivery segment reported $11 million of revenue from acquisitions in the nine months ended September 30, 2024.
Future Revenue Growth Projections
The consolidated revenue for MasTec for the nine months ended September 30, 2024, totaled $8,900 million, a slight increase of $185 million, or 2%, from $8,716 million in the same period of 2023. Analysts predict continued growth, particularly in the Oil and Gas segment, bolstered by regulatory improvements and increased project activities.
Earnings Estimates
For the nine months ended September 30, 2024, adjusted net income attributable to MasTec, Inc. was $194.3 million, compared to $102.5 million for the same period in 2023. The diluted earnings per share for the same period rose to $1.12 from a loss of $0.65.
Strategic Initiatives and Partnerships
MasTec has engaged in various strategic partnerships to enhance its service offerings. The company reported approximately $13.7 million in revenue from construction services related to a professional sports franchise for the nine months ended September 30, 2024. Such partnerships not only diversify revenue streams but also strengthen market presence.
Competitive Advantages
MasTec's competitive advantages include its diversified service portfolio across multiple sectors, including Communications, Clean Energy, and Oil and Gas. The company achieved an EBITDA margin of 9.8% for the nine months ended September 30, 2024, indicating strong operational efficiency. Additionally, its ability to leverage existing infrastructure and expertise allows for quicker project execution, creating a barrier to entry for potential competitors.
| Segment | Revenue (9M 2024) | Revenue Change | EBITDA Margin |
|---|---|---|---|
| Communications | $2,484.7 million | -0.6% | 9.5% |
| Clean Energy and Infrastructure | $2,834.2 million | -2% | 5.4% |
| Power Delivery | $1,920.1 million | -8% | 6.9% |
| Oil and Gas | $1,704.0 million | +34% | 19.4% |
| Total | $8,900.4 million | +2% | 9.8% |
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Article updated on 8 Nov 2024
Resources:
- MasTec, Inc. (MTZ) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of MasTec, Inc. (MTZ)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View MasTec, Inc. (MTZ)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.