MasTec cuts FY23 adjusted EPS view to $1.75 from $3.75-$4.19, consensus $3.76

Cuts FY23 revenue view to approximately $12B from $12.7B-$13.0B, consensus $12.72B. MasTec’s third quarter 2023 results were impacted by continued delays on certain Clean Energy and Infrastructure segment project start dates. Margins in this segment remain pressured by the costs to maintain resources for the anticipated ramp in activity. MasTec also expects a lower level of this segment’s activity in the fourth quarter of 2023, further impacted by the recent announcement by Li-Cycle Holdings, Corp., indicating a pause in construction on their Rochester Hub project for which MasTec was providing construction management services on a cost-plus basis. Over the course of 2023 clean energy projects have been delayed due to various factors, including interconnect agreement lead times, supply chain issues, permitting delays and tax equity funding uncertainty. The market and MasTec’s visibility on project timing are improving, as evidenced by approximately $500M of new contract awards in the segment since the end of the third quarter. MasTec expects significant backlog growth by yearend as projects continue to move towards full notice to proceed. MasTec’s Oil and Gas segment had a slower than anticipated ramp in construction of the Mountain Valley Pipeline project, as hiring the approximately 3,700 crew members took longer than initial estimates while the project faced ongoing legal challenges in the third quarter. All project activity planned for the fourth quarter is now progressing as scheduled and the company’s full year $2B segment revenue outlook remains intact. MasTec now expects to complete the project in the first half of 2024. Lastly, the company experienced lower than anticipated revenue in its Communications and Power Delivery segments due to certain customers’ deferral of previously planned activity. These delays were driven by higher financing costs and annual budgetary limitations. MasTec expects the reduced activity to continue through the fourth quarter until annual budget cycles are replenished. Both segments have seen significant awards in the fourth quarter, over $300M dollars respectively, comprised of territory expansion, new services or new customers, that will flow into backlog at yearend.