Construction activity tends to be cyclical, and that creates challenges for the companies that provide services and support for construction projects. In particular, MasTec (NYSE:MTZ) has considerable exposure to the oil and gas industry, and the big oscillations in crude oil prices during the 2010s has led to considerable volatility for MasTec in the amount and types of business it brings in.

Coming into Thursday's second-quarter financial report, MasTec investors were prepared to see stagnant earnings and falling revenue due to project-specific timing issues, but they hoped that the company would show signs of accelerating growth in the future. MasTec's numbers confirmed those hopes, as the company posted its biggest backlog figures ever and raised the chance of dramatic top-line gains in the near future.

Rows of black oil barrels lined up neatly in a white room.

Image source: Getty Images.

How MasTec fared

MasTec's second-quarter results fell back from some of the more encouraging performance from the company in recent quarters. Sales were down 14% to $1.62 billion, which was a bigger drop than the 5% pullback that most investors had expected to see. Similarly, adjusted net income fell almost 4% to $83.5 million. However, a substantial drop in outstanding share counts led to adjusted earnings of $1.04 per share, topping the consensus forecast among those following the stock by $0.01.

The big culprit for MasTec remained the oil and gas segment. There, revenue was down by a third, and segment adjusted pre-tax operating profit was down by more than 20%. That offset gains in the communications segment, which saw a modest top-line gain produce a 24% boost to segment profits, and the power generational and industrial unit, where revenue and earnings more than doubled. The electrical transmission segment also weighed on MasTec's results, with more modest declines in sales and a loss for the quarter.

Yet where MasTec produced reason for hope was in its backlog figures. Total 18-month backlog jumped to a record $7.7 billion, up by nearly half in the past 12 months.

It's those backlog numbers that CEO Jose Mas emphasized in his comments on the quarter. "As reflected by our record backlog levels," Mas said, "we have strong visilibity for continued growth in 2019 and beyond." He also noted that stronger performance in communications and in oil and gas helped to produce the better bottom-line results for the company.

Can MasTec move ahead more quickly?

More specifically, MasTec has reason to believe that better growth is likely to come soon. As CFO George Pita explained, "We expect improved third quarter 2018 cash flow from operations as we normalize working capital requirements on recently completed large oil & gas project activity."

In addition, with expectations for record cash flow for the full year, MasTec should be able to keep its balance sheet in good shape. That will give the construction specialist the ability to take advantage of strategic opportunities for consolidation, including potential acquisitions that could help it boost its growth significantly in the years to come.

In light of those projections, MasTec once again increased its guidance for the year. The company now sees earnings coming in at $3.67 per share on an adjusted basis, higher by $0.02 compared to its previous estimate. Third-quarter revenue of $2 billion and adjusted earnings of $1.26 per share should help support MasTec's full-year outlook.

MasTec shareholders seemed less willing to look that far forward, instead focusing on the short-term shortfalls, and the stock was down 3% at midday on Friday following the Thursday afternoon announcement. Yet if the company can start translating its record backlog figures into revenue, then the hiccups that we've seen lately from MasTec should finally start giving way to sustained growth.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends MasTec. The Motley Fool has a disclosure policy.