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Investors might have done a double-take upon seeing what fueled MasTec's (MTZ +0.02%) strong second-quarter results. While the oil and gas sector has hampered the results of most other companies that touch the industry, it is actually driving results at MasTec. That is due in part to the recent ramp-up of construction on several pipeline projects, which is leading the company to boost its full-year guidance.
Metric |
Q2 2016 Actuals |
Q2 2015 Actuals |
Growth (YOY) |
---|---|---|---|
Revenue |
$1.23 billion |
$1.07 billion |
15.5% |
Adjusted net income |
$29.9 million |
$8.1 million |
269.1% |
Adjusted EPS |
$0.36 |
$0.10 |
260% |
YOY = year over year. Data source: MasTec, Inc.
Oil and gas fueled the expectation-beating earnings results:
CEO Jose Mas commented on the company's results, saying:
Our second quarter results significantly exceeded our expectations, primarily due to improved productivity in our Oil & Gas segment. We expect record levels of Oil & Gas segment revenue during the second half of 2016 as we further ramp execution on large projects initiated at varying times during the 2016 second quarter. Most importantly, we have clear visibility to opportunities in the Oil & Gas segment which we expect will drive continued growth in 2017 and beyond. It is also important to note that in addition to the strong 2016 second quarter performance in our Oil & Gas segment, we also experienced significant growth in our Communications segment, and began to see improvement, as expected, in our Electrical Transmission segment. We expect these positive trends to continue, driving improved revenue and operating margin performance during the second half of 2016.
One of the big drivers during the quarter was the ramp up of construction of two pipelines the company is building near the Mexico border to increase U.S. natural gas exports to that country. These projects are part of a $1.363 billion consortium between MasTec, Mexican billionaire Carlos Slim, and U.S. energy infrastructure giant Energy Transfer Partners (ETP +0.00%). These projects are expected to be in service early next year.
With a pipeline full of projects underway, MasTec is very optimistic about the balance of the year. Because of that, the company is boosting its full-year guidance once again. It now expects full-year revenue to be around $5 billion, which is up from last quarter's range of $4.8 billion to $5 billion and its original range of $4.6 billion to $4.8 billion. Meanwhile, it now projects adjusted earnings to be about $1.57 per share, which is well above the $1.37 to $1.47 per share it expected last quarter and its initial guidance range of $1.35 to $1.45 per share.