EMCOR Group, Inc. Reports First Quarter 2019 Results

– Record First Quarter Revenues of $2.16 billion, 13.6%
Increase Year-over-Year –

– Record First Quarter Diluted EPS from Cont. Operations of $1.28,
36.2% Increase Year-over-Year –

– Total Remaining Performance Obligations of $4.16 billion,
15.3% Increase Year-over-Year –

– Increases 2019 Revenue Guidance Range to $8.5-$8.6 billion
from $8.3-$8.4
 billion –

– Increases 2019 Diluted EPS Guidance Range to $5.00-$5.50 from
$4.70-$5.40 –

NORWALK, Conn.–(BUSINESS WIRE)–EMCOR Group, Inc. (NYSE: EME) today reported results for the first
quarter ended March 31, 2019.

For the first quarter of 2019, net income from continuing operations
attributable to EMCOR was $72.4 million, or $1.28 per diluted share,
compared to $55.7 million, or $0.94 per diluted share, for the first
quarter of 2018. Revenues for the first quarter of 2019 totaled
$2.16 billion, an increase of 13.6%, compared to $1.90 billion for the
first quarter of 2018.

Operating income for the first quarter of 2019 was $102.3 million, or
4.7% of revenues. This compares to $78.0 million, or 4.1% of revenues,
for the first quarter of 2018.

Selling, general and administrative expenses for the first quarter of
2019 totaled $206.2 million, or 9.6% of revenues, compared to
$191.0 million, or 10.1% of revenues, for the first quarter of 2018.

The Company’s income tax rate for the first quarter of 2019 was 27.5%,
compared to an income tax rate of 27.0% in the year ago period.

Remaining performance obligations as of March 31, 2019 were
$4.16 billion compared to $3.60 billion at March 31, 2018. Total U.S.
remaining performance obligations grew $560.6 million year-over-year.

Tony Guzzi, Chairman, President and Chief Executive Officer of EMCOR,
commented, “The Company reported record first quarter revenues,
operating income, operating margin, net income attributable to EMCOR and
diluted earnings per share from continuing operations, building upon our
strong momentum in 2018. We delivered a 13.6% year-over-year increase in
revenues, 11.0% of which was organic, driven by strength in each of our
segments, including double-digit growth in our U.S. Electrical
Construction, U.S. Building Services and U.S. Industrial Services
segments. Consistent execution across our business drove operating
income growth of 31.2% year-over-year and 60 basis points of operating
margin expansion. Additionally, remaining performance obligations
increased 15.3% year-over-year and 4.9% sequentially, underscoring the
value proposition of our services portfolio and the strength we are
seeing in the geographies and end markets in which we operate.”

Mr. Guzzi added, “Our U.S. Electrical Construction and U.S. Mechanical
Construction segments continued to perform exceptionally, posting
revenue increases of 16.1% and 9.9% year-over-year, respectively. Our
U.S. Electrical Construction segment reported a strong 12.1% organic
revenue growth rate, while the segment’s overall growth was further
supported by the contribution from a recent acquisition. Strong project
execution drove solid operating performance, with our U.S. Construction
segments posting a combined 11.2% year-over-year increase in operating
income and a very healthy combined operating margin of 6.6%. Despite
mild winter conditions, our U.S. Building Services segment recorded
double-digit revenue and operating income growth for the first quarter
of 2019, driven by broad based strength across their mobile mechanical
services and commercial site-based services businesses. Our U.S.
Industrial Services segment also had solid performance in the quarter,
driven by much improved spring turnaround activity compared to the year
ago period, resulting in revenue growth of 29.8% year-over-year and 200
basis points of operating margin expansion. Despite significant foreign
exchange headwinds, our U.K. Building Services segment continued to
perform well, driven by new customer wins and strong demand for small-
to mid-sized project activity.”

Based on year-to-date performance, favorable project mix and assuming
the continuation of current market conditions, EMCOR is raising its
full-year 2019 revenue guidance range to $8.5-$8.6 billion, an increase
from the prior guidance range of $8.3-$8.4 billion. The Company now also
expects full-year 2019 diluted earnings per share from continuing
operations to be in the range of $5.00-$5.50, an increase from the prior
guidance range of $4.70-$5.40.

Mr. Guzzi concluded, “We are very pleased with our first quarter results
and believe our growing and diverse project pipeline positions us well
for the remainder of 2019. Our updated guidance reflects our strong
first quarter results, as well as our expectation for sustained growth
in the non-residential construction market moving forward. Looking ahead
and consistent with our strategy, we will continue to leverage our
flexible balance sheet to invest in our business and return capital to
shareholders through share buybacks and dividends.”

EMCOR Group, Inc. is a Fortune 500 leader in mechanical and electrical
construction services, industrial and energy infrastructure and building
services. This press release and other press releases may be viewed at
the Company’s website at www.emcorgroup.com.

EMCOR Group’s first quarter conference call will be available live via
internet broadcast today, Tuesday, April 30, at 10:30 AM Eastern
Daylight Time. The live call may be accessed through the Company’s
website at www.emcorgroup.com.

Forward Looking Statements:

This release contains certain forward-looking statements within the
meaning of the Private Securities Reform Act of 1995. Any such comments
speak only as of this date and EMCOR assumes no obligation to update any
such forward-looking statements. These forward-looking statements may
include statements regarding anticipated future operating and financial
performance, the nature and impact of our remaining performance
obligations, our ability to pursue acquisitions, our ability to return
capital to shareholders, market opportunities, market growth and
customer trends. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from
the forward-looking statements. Accordingly, these statements are no
guarantee of future performance. Such risks and uncertainties include,
but are not limited to, adverse effects of general economic conditions,
changes in the political environment, changes in the specific markets
for EMCOR’s services, adverse business conditions, availability of
adequate levels of surety bonding, increased competition, unfavorable
labor productivity and mix of business. Certain of the risk factors
associated with EMCOR’s business are also discussed in Part I, Item 1A
“Risk Factors,” of the Company’s 2018 Form 10-K and in other reports
filed from time to time with the Securities and Exchange Commission and
available at
www.sec.gov
and
www.emcorgroup.com.
Such risk factors should be taken into account in evaluating any
forward-looking statements.

Non-GAAP Measures:

This release may include certain financial measures that were not
prepared in accordance with U.S. generally accepted accounting
principles (GAAP). The Company uses these non-GAAP measures as key
performance indicators for the purpose of evaluating performance
internally. We also believe that these non-GAAP measures provide
investors with useful information with respect to our historical
operations. Any non-GAAP financial measures presented are not, and
should not be viewed as, substitutes for financial measures required by
GAAP, have no standardized meaning prescribed by GAAP and may not be
comparable to the calculation of similar measures of other companies.

 
EMCOR GROUP, INC.
FINANCIAL HIGHLIGHTS
(In thousands, except share and per share information)
(Unaudited)
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 

For the three months ended
March 31,

2019   2018
Revenues $ 2,158,728 $ 1,900,388
Cost of sales 1,849,974   1,631,269  
Gross profit 308,754 269,119
Selling, general and administrative expenses 206,169 191,025
Restructuring expenses 275   90  
Operating income 102,310 78,004
Net periodic pension (cost) income 406 737
Interest expense, net (2,823 ) (2,452 )
Income from continuing operations before income taxes 99,893 76,289
Income tax provision 27,483   20,633  
Income from continuing operations 72,410 55,656
Loss from discontinued operation, net of income taxes   (282 )
Net income including noncontrolling interests 72,410 55,374
Less: Net income attributable to noncontrolling interests    
Net income attributable to EMCOR Group, Inc. $ 72,410   $ 55,374  
 
Basic earnings (loss) per common share:
From continuing operations $ 1.29   $ 0.95  
From discontinued operation $   $ (0.00 )
 
Diluted earnings (loss) per common share:
From continuing operations $ 1.28   $ 0.94  
From discontinued operation $   $ (0.00 )
 
Weighted average shares of common stock outstanding:
Basic 56,168,356 58,739,115
Diluted 56,424,222 59,064,164
 
Dividends declared per common share $ 0.08   $ 0.08  
 
 
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
   

March 31, 2019

(Unaudited)

December 31,

2018

ASSETS
Current assets:
Cash and cash equivalents $ 252,031 $ 363,907
Accounts receivable, net 1,797,479 1,773,620
Contract assets 178,366 158,243
Inventories 39,443 42,321
Prepaid expenses and other 46,542   48,116
Total current assets 2,313,861 2,386,207
Investments, notes and other long-term receivables 3,638 2,899
Property, plant & equipment, net 145,056 134,351
Operating lease right-of-use assets 228,131
Goodwill 1,004,710 990,887
Identifiable intangible assets, net 491,175 488,286
Other assets 91,753   86,177
Total assets $ 4,278,324   $ 4,088,807
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt and finance lease liabilities $ 18,532 $ 16,013
Accounts payable 577,883 652,091
Contract liabilities 536,363 552,290
Accrued payroll and benefits 293,409 343,069
Other accrued expenses and liabilities 198,220 170,935
Operating lease liabilities, current 48,776  
Total current liabilities 1,673,183 1,734,398
Borrowings under revolving credit facility 25,000 25,000
Long-term debt and finance lease liabilities 255,438 254,764
Operating lease liabilities, long-term 191,226
Other long-term obligations 321,855   333,204
Total liabilities 2,466,702   2,347,366
Equity:
Total EMCOR Group, Inc. stockholders’ equity 1,810,766 1,740,545
Noncontrolling interests 856   896
Total equity 1,811,622   1,741,441
Total liabilities and equity $ 4,278,324   $ 4,088,807
 
 
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2019 and 2018
(In thousands) (Unaudited)
 
  2019   2018
Cash flows – operating activities:
Net income including noncontrolling interests $ 72,410 $ 55,374
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization 10,585 9,711
Amortization of identifiable intangible assets 11,610 10,668
(Recovery of) provision for doubtful accounts (673 ) 1,135
Deferred income taxes 2,496 2,944
Excess tax benefits from share-based compensation (499 ) (716 )
Equity income from unconsolidated entities (26 ) (41 )
Non-cash share-based compensation expense 3,557 3,268
Distributions from unconsolidated entities 80 1,585
Other reconciling items 413 379
Changes in operating assets and liabilities, excluding the effect of
businesses acquired
(157,388 ) (143,394 )
Net cash used in operating activities (57,435 ) (59,087 )
Cash flows – investing activities:
Payments for acquisitions of businesses, net of cash acquired (31,124 ) (2,689 )
Proceeds from sale of property, plant and equipment 1,023 242
Purchase of property, plant and equipment (13,113 ) (6,588 )
Investments in and advances to unconsolidated entities (794 ) (2,804 )
Net cash used in investing activities (44,008 ) (11,839 )
Cash flows – financing activities:
Repayments of long-term debt and debt issuance costs (3,800 ) (3,800 )
Repayments of finance lease liabilities (1,053 ) (372 )
Dividends paid to stockholders (4,480 ) (4,704 )
Repurchase of common stock (34,485 )
Taxes paid related to net share settlements of equity awards (3,735 ) (3,267 )
Issuance of common stock under employee stock purchase plan 1,323 1,337
Payments for contingent consideration arrangements (23 )
Distributions to noncontrolling interests (40 )  
Net cash used in financing activities (11,808 ) (45,291 )
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
1,298   1,733  
Decrease in cash, cash equivalents and restricted cash (111,953 ) (114,484 )
Cash, cash equivalents and restricted cash at beginning of year 366,214   469,388  
Cash, cash equivalents and restricted cash at end of period $ 254,261   $ 354,904  
 
 
EMCOR GROUP, INC.
SEGMENT INFORMATION
(In thousands) (Unaudited)
 
 

For the three months ended
March 31,

2019  

2018

Revenues from unrelated entities:
United States electrical construction and facilities services $ 528,070 $ 454,752
United States mechanical construction and facilities services 752,409 684,750
United States building services 512,079 454,752
United States industrial services 258,645   199,244
Total United States operations 2,051,203 1,793,498
United Kingdom building services 107,525   106,890
Total worldwide operations $ 2,158,728   $ 1,900,388
 
 

For the three months ended
March 31,

2019   2018
Operating income (loss):
United States electrical construction and facilities services $ 42,951 $ 35,851
United States mechanical construction and facilities services 40,985 39,620
United States building services 27,483 17,077
United States industrial services 9,636   3,441  
Total United States operations 121,055 95,989
United Kingdom building services 4,141 3,770
Corporate administration (22,611 ) (21,665 )
Restructuring expenses (275 ) (90 )
Total worldwide operations 102,310 78,004
Other corporate items:
Net periodic pension (cost) income 406 737
Interest expense, net (2,823 ) (2,452 )
Income from continuing operations before income taxes $ 99,893   $ 76,289  
 

Contacts

EMCOR GROUP, INC.

R. Kevin Matz
Executive Vice President
Shared Services
(203)
849-7938

FTI Consulting, Inc.
Investors: Jamie Baird
(212) 850-5659

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