Dive Brief:
- After underestimating just how big data center demand would get last year, Coral Gables, Florida-based builder MasTec is looking to surge in the sector and establish a strong pipeline of work, the company told investors during its first quarter earnings call on May 3.
- To date, the company has completed $150 million in data center infrastructure work, with another $200 million in backlog, said José Mas, MasTec’s CEO, during the call. It also expects to bid on $1 billion worth of data center RFPs throughout the year.
- While Mas conceded that the company may not win every bid, he believes that the firm is uniquely positioned to assist data center builders with connecting to the power grid, infrastructure required for communications and site and civil work on the front end of their build-outs.
Dive Insight:
MasTec, which specializes in the engineering, installation and maintenance of communications, energy and utility infrastructure, didn’t foresee how much data center demand would balloon this year.
“I don't think as an organization we truly understood what was coming,” Mas said in response to an analyst question about the demand. “I think it became a lot clearer earlier this year as we began to see and read about what all the hyperscalers were saying and a lot of the data center builders were saying.”
Indeed, the boom is reverberating all across the commercial construction industry. Irving, Texas-based Fluor has also identified the sector as a cash cow for its business, it revealed during its own Q1 earnings on May 3.
Despite the pipeline of work weakening last fall, hyperscalers such as Oracle, Google and Meta have led a massive surge in growth that’s culminated in a 46% year-over-year increase in data center construction in the second half of 2023.
The finances
Despite Mas’s bullish outlook, the company posted a loss of $41.2 million in the first quarter, narrower than last year’s $80.5 million loss during the same period.
The firm’s revenue rose to $2.69 billion, a 4% increase year over year from $2.58 billion in the first quarter of 2023.
Backlog, which the company measures in terms of the revenue it expects from future work over the next 18 months, grew to $12.83 billion. That was up $430 million sequentially from the fourth quarter of 2023, a 3.5% increase, but was 7.6% lower than the $13.89 billion it reported in the same period last year.
Despite the lack of profitability in the quarter, MasTec raised its financial guidance for the year. Now, the business expects to haul in $12.55 billion in revenue, and become profitable with $121 million in net income, per the earnings release. Its previous guidance, issued during its full-year 2023 earnings call, was $12.5 billion on the year, with net income of $105 million.
"Our first quarter results significantly exceeded our expectations, and I expect 2024 to begin the validation of our investment and diversification strategy over the last few years,” Mas said in the release.
