MRO Magazine

EMCOR Group, Inc. Reports First Quarter 2015 Results


April 30, 2015
By Business Wire News

NORWALK, Conn.

EMCOR Group, Inc. (NYSE:EME) today reported results for the first quarter ended March 31, 2015.

For the first quarter of 2015, net income from continuing operations attributable to EMCOR was $33.2 million, or $0.52 per diluted share, compared to net income from continuing operations of $43.3 million, or $0.64 per diluted share, in the first quarter of 2014. Revenues in the first quarter of 2015 were $1.59 billion, approximately the same as revenues in the year ago period.

Operating income for the first quarter of 2015 was $55.3 million, or 3.5% of revenues. Operating income for the first quarter of 2014 was $72.1 million, or 4.5% of revenues. Selling, general and administrative expenses for the 2015 first quarter were $161.6 million, or 10.2% of revenues, compared to $143.9 million, or 9.0% of revenues, in the year ago period.

The Company’s income tax rate in the 2015 first quarter was 37.9%, compared to an income tax rate of 37.7% in the year ago period.

Backlog as of March 31, 2015 was $3.74 billion, an increase of 11.0% from $3.37 billion at the end of the 2014 first quarter. Domestic backlog grew by $380 million, reflecting backlog growth in our U.S. Electrical and Mechanical Construction segments, slightly offset by declines in backlog in our U.S. Building Services and U.S. Industrial Services segments. Backlog growth in the commercial, transportation, industrial, water/wastewater and hospitality/gaming sectors was offset by declines in backlog in the healthcare and institutional sectors. Total backlog of $3.74 billion as of March 31, 2015 increased by 2.8% from $3.63 billion as of December 31, 2014.

Tony Guzzi, President and Chief Executive Officer of EMCOR Group commented, “The first quarter proved to be more challenging than we had originally anticipated as we encountered two external factors beyond our control: refinery turnaround project deferrals in our U.S. Industrial Services segment, as a result of the refinery operators’ strike, and the extreme cold weather which caused reduced work days in certain areas of the country in our U.S. Electrical Construction, Mechanical Construction and Building Services segments. Moving forward, the outlook for our businesses remains very positive as we generated impressive backlog growth and a strong book to bill in the quarter. As most end markets we serve steadily improve, we remain optimistic about increased revenues and profits as the year progresses.”

Mr. Guzzi added, “Our U.S. Building Services segment had a strong quarter, despite a tough comparison to the first quarter last year, led by improved performance in our Mobile Mechanical Services operations. Our U.S. Mechanical Construction segment performed well, increasing operating income while growing backlog in the quarter. Our U.S. Electrical Construction segment had a weaker quarter compared to last year’s first quarter but based on its increased backlog, we expect its performance to improve as the year advances.”

Mr. Guzzi concluded, “Our diverse backlog grew in most of our market sectors and is a strong indicator that our businesses are strengthening. We are confident in our ability to achieve our 2015 financial objectives, which should be favorably impacted by anticipated accelerated construction revenue growth, by margin expansion in our U.S. Building Services segment, and by our overall strong backlog. We remain focused on pursuing opportunities to invest in our future growth, maintaining a liquid and strong balance sheet, and delivering value to shareholders through share repurchases and dividends.”

The Company stated that, based on the current size and mix of its backlog and assuming improvement in current market conditions, it continues to expect 2015 revenues to be approximately $6.6 billion. Also, the Company continues to expect diluted earnings per share from continuing operations to be between $2.65 to $2.95.

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 Web site at www.emcorgroup.com.

EMCOR Group’s first quarter conference call will be available live via internet broadcast today, Thursday, April 30, at 10:30 AM Eastern Daylight Time. You can access the live call through the Home Page of the Company’s Web site at www.emcorgroup.com.

This release may contain certain forward-looking statements within the meaning of the Private Securities Reform Act of 1995. Any such comments are based upon information available to EMCOR management and its perception thereof, as of this date, and EMCOR assumes no obligation to update any such forward-looking statements. These forward-looking statements may include statements regarding market opportunities, market share growth, gross profit, backlog mix, projects with varying profit margins, and selling, general and administrative expenses. 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 risk 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 risks and factors associated with EMCOR’s business are also discussed in the Company’s 2014 Form 10-K and in other reports filed from time to time with the Securities and Exchange Commission. All these risks and factors should be taken into account in evaluating any forward-looking statements.

   

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,

2015    2014
Revenues $ 1,589,187 $ 1,590,539
Cost of sales 1,372,258   1,374,336  
Gross profit 216,929 216,203
Selling, general and administrative expenses 161,591 143,854
Restructuring expenses 8   225  
Operating income 55,330 72,124
Interest expense (2,216 ) (2,248 )
Interest income 176   234  
Income from continuing operations before income taxes 53,290 70,110
Income tax provision 20,225   26,227  
Income from continuing operations 33,065 43,883
Loss from discontinued operation, net of income taxes (355 ) (2,041 )
Net income including noncontrolling interests 32,710 41,842
Less: Net loss (income) attributable to noncontrolling interests 139   (581 )
Net income attributable to EMCOR Group, Inc. $ 32,849   $ 41,261  
 
Basic earnings (loss) per common share:
From continuing operations $ 0.53   $ 0.64  
From discontinued operation $ (0.01 ) $ (0.03 )
 
Diluted earnings (loss) per common share:
From continuing operations $ 0.52   $ 0.64  
From discontinued operation $ (0.00 ) $ (0.03 )
 
Amounts attributable to EMCOR Group, Inc. common stockholders:
Net income from continuing operations attributable to EMCOR Group, Inc. $ 33,204 $ 43,302
Loss from discontinued operation, net of income taxes (355 ) (2,041 )
Net income attributable to EMCOR Group, Inc. $ 32,849   $ 41,261  
 
Weighted average shares of common stock outstanding:
Basic 63,058,911 67,188,577
Diluted 63,611,011 68,001,205
 
Dividends declared per common share $ 0.08   $ 0.08  
 
       

EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

 

March 31, 2015
(Unaudited)

December 31,
2014

ASSETS
Current assets:
Cash and cash equivalents $ 368,894 $ 432,056
Accounts receivable, net 1,230,581 1,234,187
Costs and estimated earnings in excess of billings on uncompleted contracts 119,139 103,201
Inventories 46,346 46,854
Prepaid expenses and other 62,333   70,305
Total current assets 1,827,293 1,886,603
Investments, notes and other long-term receivables 6,029 9,122
Property, plant & equipment, net 118,274 122,178
Goodwill 834,102 834,102
Identifiable intangible assets, net 492,599 502,060
Other assets 37,285   34,902
Total assets $ 3,315,582   $ 3,388,967
LIABILITIES AND EQUITY
Current liabilities:
Borrowings under revolving credit facility $ $
Current maturities of long-term debt and capital lease obligations 18,680 19,041
Accounts payable 410,566 460,478
Billings in excess of costs and estimated earnings on uncompleted contracts 368,766 368,555
Accrued payroll and benefits 217,454 245,854
Other accrued expenses and liabilities 197,412   189,489
Total current liabilities 1,212,878 1,283,417
Long-term debt and capital lease obligations 311,302 316,399
Other long-term obligations 357,928   359,764
Total liabilities 1,882,108   1,959,580
Equity:
Total EMCOR Group, Inc. stockholders’ equity 1,427,739 1,416,013
Noncontrolling interests 5,735   13,374
Total equity 1,433,474   1,429,387
Total liabilities and equity $ 3,315,582   $ 3,388,967
 
       

EMCOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2015 and 2014
(In thousands) (Unaudited)

 

2015

2014
Cash flows – operating activities:
Net income including noncontrolling interests $ 32,710 $ 41,842
Depreciation and amortization 8,762 8,867
Amortization of identifiable intangible assets 9,461 9,504
Deferred income taxes 732 4,513
Loss on sale of subsidiary 596
Excess tax benefits from share-based compensation (955 ) (4,869 )
Equity (income) loss from unconsolidated entities (470 ) 460
Other non-cash items 3,259 1,038
Distributions from unconsolidated entities 3,316 72
Changes in operating assets and liabilities (74,636 ) (86,339 )
Net cash used in operating activities (17,821 ) (24,316 )
Cash flows – investing activities:
Proceeds from sale of subsidiary 1,121
Proceeds from sale of property, plant and equipment 1,571 931
Purchase of property, plant and equipment (6,936 ) (8,073 )
Investments in and advances to unconsolidated entities and joint ventures   (300 )
Net cash used in investing activities (5,365 ) (6,321 )
Cash flows – financing activities:
Repayments of long-term debt (4,380 ) (4,377 )
Repayments of capital lease obligations (985 ) (491 )
Dividends paid to stockholders (5,039 ) (5,353 )
Repurchase of common stock (21,148 )
Proceeds from exercise of stock options 1,368 3,974
Payments to satisfy minimum tax withholding (1,959 ) (1,481 )
Issuance of common stock under employee stock purchase plan 1,018 866
Payments for contingent consideration arrangements (121 )
Distributions to noncontrolling interests (7,500 ) (900 )
Excess tax benefits from share-based compensation 955   4,869  
Net cash used in financing activities (37,791 ) (2,893 )
Effect of exchange rate changes on cash and cash equivalents (2,185 ) 385  
Decrease in cash and cash equivalents (63,162 ) (33,145 )
Cash and cash equivalents at beginning of year 432,056   439,813  
Cash and cash equivalents at end of period $ 368,894   $ 406,668  
 
 

EMCOR GROUP, INC.
SEGMENT INFORMATION

(In thousands) (Unaudited)

 
     

For the three months ended
March 31,

2015    2014
Revenues from unrelated entities:
United States electrical construction and facilities services $ 318,994 $ 308,136
United States mechanical construction and facilities services 511,026 513,011
United States building services 439,492 448,044
United States industrial services 232,725   231,958  
Total United States operations 1,502,237 1,501,149
United Kingdom building services 86,950   89,390  
Total worldwide operations $ 1,589,187   $ 1,590,539  
 
 

For the three months ended
March 31,

20152014
Operating income (loss):
United States electrical construction and facilities services $ 16,674 $ 21,655
United States mechanical construction and facilities services 20,901 19,106
United States building services 20,978 20,298
United States industrial services 12,833   23,394  
Total United States operations 71,386 84,453
United Kingdom building services 2,378 3,363
Corporate administration (18,426 ) (15,467 )
Restructuring expenses (8 ) (225 )
Total worldwide operations 55,330 72,124
Other corporate items:
Interest expense (2,216 ) (2,248 )
Interest income 176   234  
Income from continuing operations before income taxes $ 53,290   $ 70,110  
 

For EMCOR Group, Inc.
Shared Services
R. Kevin Matz, 203-849-7938
Executive Vice President
or
FTI Consulting, Inc.
Investors:
Nathan Elwell / Daniel Haykin, 212-850-5600
or
LAK Public Relations, Inc.
Media:
Lisa Linden / Mollie Fullington,
212-575-4545 / 917-346-6123