Mastec Earnings 2019-09-30

MTZ 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
SBS	5,386	43,565	24,013	0	0	0	0	5,354			0%
MTZ	3,716	4,797	3,246	7,352	1,071	316	614	5,015	15%	8.2	7%
AWR	2,732	1,567	988	462	110	76	162	3,012	24%	18.6	5%
CWT	2,617	2,965	2,241	654	0	15	120	3,375	0%	28.1	1%
SJW	1,706	2,004	1,110	403	0	44	156	1,795	0%	11.5	2%
DY	1,672	2,328	1,475	3,315	572	60	290	2,603	17%	9.0	3%
MSEX	1,048	808		136	0	34	60	1,219	0%	20.3	4%
PRIM	1,024	1,825	1,204	3,238	343	90	231	1,382	11%	6.0	5%
CTWS	845	981	292	127	0	21	34	1,118	0%	32.9	2%
MYRG	605	807	468	1,831	179	33	91	707	10%	7.8	4%

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________

Form 10-Q

_____________________________________________

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __ to __

Commission File Number 001-08106

_____________________________________________

MasTec, Inc.

(Exact name of registrant as specified in its charter)



Florida		65-0829355
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

800 S. Douglas Road, 12th Floor
Coral Gables,	Florida	33134
(Address of principal executive offices)		(Zip Code)

(305) 599-1800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 Par Value	MTZ	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No ☑

As of October 28, 2019, MasTec, Inc. had 76,332,198 shares of common stock outstanding.

MASTEC, INC.

FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2019

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS

MASTEC, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited - in thousands, except per share information)



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Revenue	$	2,016,618		$	1,977,227		$	5,473,965		$	4,991,865
Costs of revenue, excluding depreciation and amortization	1,690,558			1,681,438			4,636,006			4,285,320
Depreciation and amortization	55,196			54,863			174,171			156,478
General and administrative expenses	77,146			80,311			220,581			211,535
Interest expense, net	19,297			22,330			58,178			60,183
Equity in earnings of unconsolidated affiliates	(6,966		)	(7,671		)	(19,778		)	(19,080		)
Other expense (income), net	8,002			323			16,323			(1,976		)
Income before income taxes	$	173,385		$	145,633		$	388,484		$	299,405
Provision for income taxes	(43,303		)	(25,091		)	(95,073		)	(71,999		)
Net income	$	130,082		$	120,542		$	293,411		$	227,406
Net income (loss) attributable to non-controlling interests	1,486			(124		)	1,993			(312		)
Net income attributable to MasTec, Inc.	$	128,596		$	120,666		$	291,418		$	227,718

Earnings per share (Note 2):
Basic earnings per share	$	1.71		$	1.55		$	3.88		$	2.87
Basic weighted average common shares outstanding	75,217			78,096			75,131			79,399

Diluted earnings per share	$	1.69		$	1.52		$	3.85		$	2.83
Diluted weighted average common shares outstanding	75,934			79,201			75,760			80,484

The accompanying notes are an integral part of these consolidated financial statements.

MASTEC, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited - in thousands)



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Net income	$	130,082		$	120,542		$	293,411		$	227,406
Other comprehensive (loss) income:
Foreign currency translation (losses) gains, net of tax	(334		)	1,230			(321		)	(945		)
Unrealized (losses) gains on equity investee activity, net of tax	(7,108		)	3,137			(21,302		)	13,790
Comprehensive income	$	122,640		$	124,909		$	271,788		$	240,251
Comprehensive income (loss) attributable to non-controlling interests	1,486			(124		)	1,993			(312		)
Comprehensive income attributable to MasTec, Inc.	$	121,154		$	125,033		$	269,795		$	240,563

The accompanying notes are an integral part of these consolidated financial statements.

MASTEC, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited - in thousands, except share information)



	September 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	43,095		$	27,422
Accounts receivable, net (Note 5)	1,953,340			1,923,970
Inventories, net	106,690			113,709
Prepaid expenses	40,502			56,558
Other current assets	55,069			47,330
Total current assets	$	2,198,696		$	2,168,989
Property and equipment, net	862,923			747,808
Operating lease assets	233,423			—
Goodwill, net	1,140,874			1,100,350
Other intangible assets, net	184,938			169,370
Other long-term assets	237,798			253,436
Total assets	$	4,858,652		$	4,439,953
Liabilities and equity
Current liabilities:
Current portion of long-term debt, including finance leases	$	99,513		$	82,655
Current portion of operating lease liabilities	79,150			—
Accounts payable	625,008			669,712
Accrued salaries and wages	133,482			90,218
Other accrued expenses	139,883			133,033
Billings in excess of costs and earnings	156,929			227,056
Other current liabilities	100,541			80,937
Total current liabilities	$	1,334,506		$	1,283,611
Long-term debt, including finance leases	1,221,127			1,324,223
Long-term operating lease liabilities	159,283			—
Deferred income taxes	277,439			263,687
Other long-term liabilities	186,993			176,408
Total liabilities	$	3,179,348		$	3,047,929
Commitments and contingencies (Note 14)
Equity
Preferred stock, $1.00 par value: authorized shares - 5,000,000; issued and outstanding shares – none	$	—		$	—
Common stock, $0.10 par value: authorized shares - 145,000,000; issued shares - 91,654,158 and 91,327,009 (including 1,148,043 and 1,251,533 of unvested stock awards) as of September 30, 2019 and December 31, 2018, respectively	9,165			9,133
Capital surplus	804,487			789,009
Retained earnings	1,409,793			1,118,375
Accumulated other comprehensive loss	(82,117		)	(60,494		)
Treasury stock, at cost: 15,344,917 and 15,329,817 shares as of September 30, 2019 and December 31, 2018, respectively	(466,727		)	(466,125		)
Total MasTec, Inc. shareholders’ equity	$	1,674,601		$	1,389,898
Non-controlling interests	$	4,703		$	2,126
Total equity	$	1,679,304		$	1,392,024
Total liabilities and equity	$	4,858,652		$	4,439,953

The accompanying notes are an integral part of these consolidated financial statements.

MASTEC, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited - in thousands, except share information)



	Common Stock					Treasury Stock					Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Loss			Total MasTec, Inc. Shareholders’ Equity			Non-Controlling Interests			Total Equity
	Shares		Amount			Shares		Amount			Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Loss			Total MasTec, Inc. Shareholders’ Equity			Non-Controlling Interests			Total Equity
For the Three Months Ended September 30, 2019
Balance as of June 30, 2019	91,626,986		$	9,163		(15,344,917	)	$	(466,727	)	$	799,162	$	1,281,198	$	(74,675	)	$	1,548,121		$	3,217		$	1,551,338
Net income													128,596					128,596			1,486			130,082
Other comprehensive loss															(7,442		)	(7,442		)				(7,442		)
Non-cash stock-based compensation											4,192							4,192						4,192
Forfeiture of restricted shares, net	(920	)	—								—							—						—
Other stock issuances, net of shares withheld for taxes	28,092		2								1,133							1,135						1,135
Balance as of September 30, 2019	91,654,158		$	9,165		(15,344,917	)	$	(466,727	)	$	804,487	$	1,409,793	$	(82,117	)	$	1,674,601		$	4,703		$	1,679,304

For the Three Months Ended September 30, 2018
Balance as of June 30, 2018	91,080,280		$	9,108		(10,835,749	)	$	(275,435	)	$	783,825	$	965,768	$	(55,234	)	$	1,428,032		$	2,366		$	1,430,398
Net income (loss)													120,666					120,666			(124		)	120,542
Other comprehensive income															4,367			4,367						4,367
Non-cash stock-based compensation											3,515							3,515						3,515
Forfeiture of restricted shares, net	(5,211	)	(1		)						1							—						—
Other stock issuances, net of shares withheld for taxes	29,002		3								1,132							1,135						1,135
Acquisition of treasury stock, at cost						(1,604,359	)	(70,137		)								(70,137		)				(70,137		)
Balance as of September 30, 2018	91,104,071		$	9,110		(12,440,108	)	$	(345,572	)	$	788,473	$	1,086,434	$	(50,867	)	$	1,487,578		$	2,242		$	1,489,820

The accompanying notes are an integral part of these consolidated financial statements.

MASTEC, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited - in thousands, except share information)



	Common Stock			Treasury Stock					Capital Surplus			Retained Earnings		Accumulated Other Comprehensive Loss			Total MasTec, Inc. Shareholders’ Equity			Non-Controlling Interests			Total Equity
	Shares	Amount		Shares		Amount			Capital Surplus			Retained Earnings		Accumulated Other Comprehensive Loss			Total MasTec, Inc. Shareholders’ Equity			Non-Controlling Interests			Total Equity
For the Nine Months Ended September 30, 2019
Balance as of December 31, 2018	91,327,009	$	9,133	(15,329,817	)	$	(466,125	)	$	789,009		$	1,118,375	$	(60,494	)	$	1,389,898		$	2,126		$	1,392,024
Net income												291,418					291,418			1,993			293,411
Other comprehensive loss														(21,623		)	(21,623		)				(21,623		)
Non-cash stock-based compensation									12,132								12,132						12,132
Issuance of restricted shares, net	232,499	23							(23		)						—						—
Other stock issuances, net of shares withheld for taxes	94,650	9							3,369								3,378						3,378
Acquisition of treasury stock, at cost				(15,100	)	(602		)									(602		)				(602		)
Contributions from non-controlling interests																	—			584			584
Balance as of September 30, 2019	91,654,158	$	9,165	(15,344,917	)	$	(466,727	)	$	804,487		$	1,409,793	$	(82,117	)	$	1,674,601		$	4,703		$	1,679,304

For the Nine Months Ended September 30, 2018
Balance as of December 31, 2017	90,935,584	$	9,094	(8,132,811	)	$	(147,124	)	$	775,387		$	857,154	$	(63,712	)	$	1,430,799		$	2,554		$	1,433,353
Cumulative effect of adoption, Topic 606												1,562					1,562						1,562
Net income (loss)												227,718					227,718			(312		)	227,406
Other comprehensive income														12,845			12,845						12,845
Non-cash stock-based compensation									10,086								10,086						10,086
Issuance of restricted shares, net	90,807	9							(9		)						—						—
Other stock issuances, net of shares withheld for taxes	77,680	7							3,009								3,016						3,016
Acquisition of treasury stock, at cost				(4,307,297	)	(198,448		)									(198,448		)				(198,448		)
Balance as of September 30, 2018	91,104,071	$	9,110	(12,440,108	)	$	(345,572	)	$	788,473		$	1,086,434	$	(50,867	)	$	1,487,578		$	2,242		$	1,489,820

The accompanying notes are an integral part of these consolidated financial statements.

MASTEC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited - in thousands)



	For the Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities:
Net income	$	293,411		$	227,406
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	174,171			156,478
Non-cash interest expense, net	1,691			1,836
Non-cash stock-based compensation expense	12,132			10,086
Provision for deferred income taxes	8,546			51,405
Equity in earnings of unconsolidated affiliates	(19,778		)	(19,080		)
Gains on sales of assets, net, including fixed assets held-for-sale	(9,627		)	(12,021		)
Other non-cash items, net	(1,515		)	5,055
Changes in assets and liabilities, net of acquisitions:
Accounts receivable, net	731			(763,893		)
Inventories	21,293			(37,025		)
Other assets, current and long-term portion	16,641			34,495
Accounts payable and accrued expenses	(30,641		)	367,938
Billings in excess of costs and earnings	(73,231		)	(9,432		)
Other liabilities, current and long-term portion	47,570			13,522
Net cash provided by operating activities	$	441,394		$	26,770
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired	(94,647		)	(6,684		)
Capital expenditures	(85,095		)	(134,214		)
Proceeds from sale of property and equipment	27,102			29,676
Payments for other investments	(5,589		)	(36,330		)
Proceeds from other investments	14,705			5,415
Net cash used in investing activities	$	(143,524	)	$	(142,137	)
Cash flows from financing activities:
Proceeds from credit facilities	2,185,714			2,422,556
Repayments of credit facilities	(2,371,965		)	(1,997,392		)
Repayments of other borrowings, net	(333		)	(15,830		)
Payments of finance lease obligations	(59,045		)	(54,560		)
Payments of acquisition-related contingent consideration	(29,267		)	(15,929		)
Proceeds from (distributions to) non-controlling interests	584			(559		)
Proceeds from stock-based awards, net	3,380

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	76	$3,716

10-Q	2019-10-31	Quarter: 2019-09-30
10-Q	2019-08-01	Quarter: 2019-06-30
10-Q	2019-05-02	Quarter: 2019-03-31
10-K	2019-02-28	Annual: 2018-12-31
10-Q	2018-11-01	Quarter: 2018-09-30
10-Q	2018-08-02	Quarter: 2018-06-30
10-Q	2018-04-30	Quarter: 2018-03-31
10-K	2018-02-27	Annual: 2017-12-31
10-Q	2017-11-02	Quarter: 2017-09-30
10-Q	2017-08-03	Quarter: 2017-06-30
10-Q	2017-05-04	Quarter: 2017-03-31
10-K	2017-02-24	Annual: 2016-12-31
10-Q	2016-11-03	Quarter: 2016-09-30
10-Q	2016-08-04	Quarter: 2016-06-30
10-Q	2016-05-05	Quarter: 2016-03-31
10-K	2016-02-26	Annual: 2015-12-31
10-Q	2015-11-03	Quarter: 2015-09-30
10-Q	2015-08-17	Quarter: 2015-06-30
10-Q	2015-08-07	Quarter: 2015-03-31
10-K	2015-07-31	Annual: 2014-12-31
10-Q	2014-10-30	Quarter: 2014-09-30
10-Q	2014-08-11	Quarter: 2014-06-30
10-Q	2014-05-01	Quarter: 2014-03-31
10-K	2014-02-27	Annual: 2013-12-31
10-Q	2013-10-31	Quarter: 2013-09-30
10-Q	2013-08-01	Quarter: 2013-06-30
10-Q	2013-05-02	Quarter: 2013-03-31
10-K	2013-02-28	Annual: 2012-12-31
10-Q	2012-11-01	Quarter: 2012-09-30
10-Q	2012-08-02	Quarter: 2012-06-30
10-Q	2012-05-03	Quarter: 2012-03-31
10-K	2012-02-29	Annual: 2011-12-31
10-Q	2011-11-03	Quarter: 2011-09-30
10-Q	2011-08-03	Quarter: 2011-06-30
10-Q	2011-05-04	Quarter: 2011-03-31
10-K	2011-02-23	Annual: 2010-12-31
10-Q	2010-11-03	Quarter: 2010-09-30
10-Q	2010-08-04	Quarter: 2010-06-30
10-Q	2010-05-05	Quarter: 2010-03-31
10-K	2010-02-25	Annual: 2009-12-31

8-K	2019-10-31	Earnings, Regulation FD, Exhibits
8-K	2019-09-19	Enter Agreement
8-K	2019-08-01	Earnings, Regulation FD, Exhibits
8-K	2019-05-23	Shareholder Vote
8-K	2019-05-02	Earnings, Regulation FD, Exhibits
8-K	2019-02-28	Earnings, Regulation FD, Exhibits
8-K	2018-11-01	Earnings, Regulation FD, Exhibits
8-K	2018-08-02	Earnings, Regulation FD, Exhibits
8-K	2018-05-22	Shareholder Vote
8-K	2018-04-30	Earnings, Regulation FD, Exhibits
8-K	2018-02-27	Earnings, Regulation FD, Exhibits

EX-10.1	mtz9301910-qex101.htm
EX-31.1	mtz9301910-qex311.htm
EX-31.2	mtz9301910-qex312.htm
EX-32.1	mtz9301910-qex321.htm
EX-32.2	mtz9301910-qex322.htm



		Page
Part I. FINANCIAL INFORMATION		3
Item 1	Financial Statements	3
	Consolidated Statements of Operations (Unaudited)	3
	Consolidated Statements of Comprehensive Income (Unaudited)	4
	Consolidated Balance Sheets (Unaudited)	5
	Consolidated Statements of Equity (Unaudited)	6
	Consolidated Statements of Cash Flows (Unaudited)	8
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4	Controls and Procedures	42
Part II. OTHER INFORMATION		42
Item 1	Legal Proceedings	42
Item 1A	Risk Factors	42
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 4	Mine Safety Disclosures	43
Item 6	Exhibits	43
SIGNATURES		44