EMCOR Group, Inc. Reports Second Quarter 2015 Results
July 30, 2015 | By Business Wire News
NORWALK, Conn.
EMCOR Group, Inc. (NYSE:EME) today reported results for the second quarter ended June 30, 2015.
Net income from continuing operations attributable to EMCOR was $47.0 million in the second quarter, or $0.74 per diluted share, compared to net income from continuing operations of $41.3 million, or $0.61 per diluted share, in the second quarter of 2014. Revenues in the second quarter of 2015 were $1.65 billion, an increase of 6.4% from revenues of $1.55 billion in the second quarter of 2014.
Operating income for the second quarter of 2015 was $77.7 million, or 4.7% of revenues, compared to operating income of $69.7 million, or 4.5% of revenues, in the second quarter of 2014. Selling, general and administrative expenses for the second quarter of 2015 were $161.4 million, or 9.8% of revenues, compared to $150.4 million, or 9.7% of revenues, in the year ago period.
The Company’s income tax rate in the 2015 second quarter was 38.0%, compared to an income tax rate of 37.7% in the year ago period.
Backlog as of June 30, 2015 was $3.62 billion compared to $3.63 billion at the end of the second quarter of 2014 and $3.74 billion as of March 31, 2015. Domestic backlog was essentially flat on a year-over-year basis in the second quarter of 2015, reflecting backlog growth in the U.S. Electrical and Mechanical Construction segments, offset by declines in backlog in the U.S. Building Services and U.S. Industrial Services segments. Backlog growth in the commercial, water/wastewater and hospitality/gaming sectors was offset by declines in backlog in the healthcare, transportation, industrial and institutional sectors.
Tony Guzzi, President and Chief Executive Officer of EMCOR Group, commented, “A healthy return to organic growth in the second quarter, combined with solid execution, resulted in record second quarter revenue, operating income, and diluted earnings per share and put us back on track for the year. We achieved some recovery from the first quarter’s adverse impact of weather and experienced a slight improvement from refinery turnaround project deferrals related to the first quarter refinery strike. We are very pleased with the mix of projects we are working on and the consistent strength of our backlog going forward.”
Mr. Guzzi added, “Our U.S. Electrical Construction segment continues to produce strong operating margins, and, as the year progresses, we expect continued strong performance within this segment. Our U.S. Mechanical Construction segment generated improved operating margins and returned to organic growth. Our U.S. Building Services segment demonstrated improved performance at our commercial site-based services operations and continued strong performance from our mobile mechanical services operations. Finally, our U.S. Industrial Services segment showed significant improvement in terms of both revenue and operating margins from the year ago quarter.”
Mr. Guzzi concluded, “We are pleased with our performance thus far in 2015 and particularly with the organic growth achieved in the second quarter after a challenging first quarter of the year. With a diverse backlog that we expect to grow in the back half of the year and a non-residential market that continues to improve, we are confident in our ability to meet our 2015 objectives. We also remain focused on maintaining a strong and liquid balance sheet, pursuing opportunities to invest in our future growth, and delivering value to shareholders through share repurchases and dividends.”
Revenues for the first six months of 2015 totaled $3.24 billion, an increase of 3.1% compared to $3.14 billion for the first six months of 2014. Net income from continuing operations attributable to EMCOR for the first six months of 2015 was $80.2 million, or $1.26 per diluted share, compared to net income from continuing operations of $84.7 million, or $1.24 per diluted share, for the first six months of 2014.
Operating income for the first six months of 2015 was $133.0 million, or 4.1% of revenues. For the first six months of 2015, SG&A totaled $323.0 million, or 10.0% of revenues, compared to $294.3 million, or 9.4% of revenues, in the first six months of 2014.
EMCOR continues to expect full year 2015 revenues to be approximately $6.6 billion based on the current size and mix of its backlog and assuming continued improvement in current market conditions. The Company narrowed its full year 2015 guidance for diluted earnings per share from continuing operations to between $2.65 and $2.85 per share.
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 second quarter conference call will be available live via internet broadcast today, Thursday, July 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.
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EMCOR GROUP, INC. |
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FINANCIAL HIGHLIGHTS |
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(In thousands, except share and per share information) |
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(Unaudited) |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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| For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| Revenues | $ | 1,652,585 | $ | 1,552,918 | $ | 3,241,772 | $ | 3,143,457 | |||||||||
| Cost of sales | 1,413,058 | 1,332,677 | 2,785,316 | 2,707,013 | |||||||||||||
| Gross profit | 239,527 | 220,241 | 456,456 | 436,444 | |||||||||||||
| Selling, general and administrative expenses | 161,391 | 150,406 | 322,982 | 294,260 | |||||||||||||
| Restructuring expenses | 433 | 176 | 441 | 401 | |||||||||||||
| Operating income | 77,703 | 69,659 | 133,033 | 141,783 | |||||||||||||
| Interest expense | (2,208 | ) | (2,242 | ) | (4,424 | ) | (4,490 | ) | |||||||||
| Interest income | 182 | 221 | 358 | 455 | |||||||||||||
| Income from continuing operations before income taxes | 75,677 | 67,638 | 128,967 | 137,748 | |||||||||||||
| Income tax provision | 28,727 | 25,203 | 48,952 | 51,430 | |||||||||||||
| Income from continuing operations | 46,950 | 42,435 | 80,015 | 86,318 | |||||||||||||
| Loss from discontinued operation, net of income taxes | (114 | ) | (1,435 | ) | (469 | ) | (3,476 | ) | |||||||||
| Net income including noncontrolling interests | 46,836 | 41,000 | 79,546 | 82,842 | |||||||||||||
| Less: Net loss (income) attributable to noncontrolling interests | 13 | (1,087 | ) | 152 | (1,668 | ) | |||||||||||
| Net income attributable to EMCOR Group, Inc. | $ | 46,849 | $ | 39,913 | $ | 79,698 | $ | 81,174 | |||||||||
| Basic earnings (loss) per common share: | |||||||||||||||||
| From continuing operations | $ | 0.75 | $ | 0.61 | $ | 1.27 | $ | 1.26 | |||||||||
| From discontinued operation | $ | (0.00 | ) | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.05 | ) | |||||
| Diluted earnings (loss) per common share: | |||||||||||||||||
| From continuing operations | $ | 0.74 | $ | 0.61 | $ | 1.26 | $ | 1.24 | |||||||||
| From discontinued operation | $ | (0.00 | ) | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.05 | ) | |||||
| Amounts attributable to EMCOR Group, Inc. common stockholders: | |||||||||||||||||
| Net income from continuing operations attributable to EMCOR Group, Inc. | $ | 46,963 | $ | 41,348 | $ | 80,167 | $ | 84,650 | |||||||||
| Loss from discontinued operation, net of income taxes | (114 | ) | (1,435 | ) | (469 | ) | (3,476 | ) | |||||||||
| Net income attributable to EMCOR Group, Inc. | $ | 46,849 | $ | 39,913 | $ | 79,698 | $ | 81,174 | |||||||||
| Weighted average shares of common stock outstanding: | |||||||||||||||||
| Basic | 62,809,699 | 67,294,498 | 62,932,295 | 67,242,392 | |||||||||||||
| Diluted | 63,330,253 | 68,000,361 | 63,468,622 | 68,000,750 | |||||||||||||
| Dividends declared per common share | $ | 0.08 | $ | 0.08 | $ | 0.16 | $ | 0.16 | |||||||||
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EMCOR GROUP, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In thousands) |
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| June 30, 2015
(Unaudited) |
December 31,
2014 |
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| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 360,849 | $ | 432,056 | ||||
| Accounts receivable, net | 1,309,095 | 1,234,187 | ||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 135,939 | 103,201 | ||||||
| Inventories | 65,123 | 46,854 | ||||||
| Prepaid expenses and other | 66,728 | 70,305 | ||||||
| Total current assets | 1,937,734 | 1,886,603 | ||||||
| Investments, notes and other long-term receivables | 6,570 | 9,122 | ||||||
| Property, plant & equipment, net | 118,529 | 122,178 | ||||||
| Goodwill | 834,628 | 834,102 | ||||||
| Identifiable intangible assets, net | 483,680 | 502,060 | ||||||
| Other assets | 36,645 | 34,902 | ||||||
| Total assets | $ | 3,417,786 | $ | 3,388,967 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Borrowings under revolving credit facility | $ | — | $ | — | ||||
| Current maturities of long-term debt and capital lease obligations | 18,814 | 19,041 | ||||||
| Accounts payable | 428,424 | 460,478 | ||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 384,989 | 368,555 | ||||||
| Accrued payroll and benefits | 229,900 | 245,854 | ||||||
| Other accrued expenses and liabilities | 211,838 | 189,489 | ||||||
| Total current liabilities | 1,273,965 | 1,283,417 | ||||||
| Long-term debt and capital lease obligations | 307,523 | 316,399 | ||||||
| Other long-term obligations | 362,011 | 359,764 | ||||||
| Total liabilities | 1,943,499 | 1,959,580 | ||||||
| Equity: | ||||||||
| Total EMCOR Group, Inc. stockholders’ equity | 1,470,815 | 1,416,013 | ||||||
| Noncontrolling interests | 3,472 | 13,374 | ||||||
| Total equity | 1,474,287 | 1,429,387 | ||||||
| Total liabilities and equity | $ | 3,417,786 | $ | 3,388,967 | ||||
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EMCOR GROUP, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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For the Six Months Ended June 30, 2015 and 2014 |
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(In thousands) (Unaudited) |
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| 2015 | 2014 | ||||||||
| Cash flows – operating activities: | |||||||||
| Net income including noncontrolling interests | $ | 79,546 | $ | 82,842 | |||||
| Depreciation and amortization | 17,942 | 17,956 | |||||||
| Amortization of identifiable intangible assets | 18,951 | 19,005 | |||||||
| Deferred income taxes | 1,406 | 4,648 | |||||||
| Loss on sale of subsidiary | — | 608 | |||||||
| Excess tax benefits from share-based compensation | (1,038 | ) | (5,627 | ) | |||||
| Equity income from unconsolidated entities | (1,034 | ) | (836 | ) | |||||
| Other non-cash items | 5,703 | 3,185 | |||||||
| Distributions from unconsolidated entities | 3,316 | 572 | |||||||
| Changes in operating assets and liabilities | (130,858 | ) | (82,713 | ) | |||||
| Net cash (used in) provided by operating activities | (6,066 | ) | 39,640 | ||||||
| Cash flows – investing activities: | |||||||||
| Payments for acquisitions of businesses, net of cash acquired | (1,176 | ) | — | ||||||
| Proceeds from sale of subsidiary | — | 1,108 | |||||||
| Proceeds from sale of property, plant and equipment | 2,569 | 2,630 | |||||||
| Purchase of property, plant and equipment | (15,793 | ) | (16,579 | ) | |||||
| Investments in and advances to unconsolidated entities and joint ventures | — | (1,590 | ) | ||||||
| Net cash used in investing activities | (14,400 | ) | (14,431 | ) | |||||
| Cash flows – financing activities: | |||||||||
| Repayments of long-term debt | (8,758 | ) | (8,756 | ) | |||||
| Repayments of capital lease obligations | (1,330 | ) | (840 | ) | |||||
| Dividends paid to stockholders | (10,054 | ) | (10,743 | ) | |||||
| Repurchase of common stock | (21,148 | ) | (18,332 | ) | |||||
| Proceeds from exercise of stock options | 1,368 | 4,533 | |||||||
| Payments to satisfy minimum tax withholding | (3,790 | ) | (1,481 | ) | |||||
| Issuance of common stock under employee stock purchase plan | 2,051 | 1,753 | |||||||
| Payments for contingent consideration arrangements | (403 | ) | — | ||||||
| Distributions to noncontrolling interests | (9,750 | ) | (1,400 | ) | |||||
| Excess tax benefits from share-based compensation | 1,038 | 5,627 | |||||||
| Net cash used in financing activities | (50,776 | ) | (29,639 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | 35 | 1,736 | |||||||
| Decrease in cash and cash equivalents | (71,207 | ) | (2,694 | ) | |||||
| Cash and cash equivalents at beginning of year | 432,056 | 439,813 | |||||||
| Cash and cash equivalents at end of period | $ | 360,849 | $ | 437,119 | |||||
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EMCOR GROUP, INC. |
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SEGMENT INFORMATION |
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(In thousands) (Unaudited) |
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| For the three months ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Revenues from unrelated entities: | ||||||||
| United States electrical construction and facilities services | $ | 346,202 | $ | 335,492 | ||||
| United States mechanical construction and facilities services | 554,003 | 538,556 | ||||||
| United States building services | 435,627 | 418,142 | ||||||
| United States industrial services | 225,168 | 177,232 | ||||||
| Total United States operations | 1,561,000 | 1,469,422 | ||||||
| United Kingdom building services | 91,585 | 83,496 | ||||||
| Total worldwide operations | $ | 1,652,585 | $ | 1,552,918 | ||||
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For the six months ended June 30, |
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2015 |
2014 |
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Revenues from unrelated entities: |
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United States electrical construction and facilities services |
$ |
665,196 |
$ |
643,628 |
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United States mechanical construction and facilities services |
1,065,029 |
1,051,567 |
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United States building services |
875,119 |
866,186 |
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United States industrial services |
457,893 |
409,190 |
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Total United States operations |
3,063,237 |
2,970,571 |
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United Kingdom building services |
178,535 |
172,886 |
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Total worldwide operations |
$ |
3,241,772 |
$ |
3,143,457 |
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EMCOR GROUP, INC. |
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SEGMENT INFORMATION |
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(In thousands) (Unaudited) |
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| For the three months ended June 30, | |||||||||
| 2015 | 2014 | ||||||||
| Operating income (loss): | |||||||||
| United States electrical construction and facilities services | $ | 25,277 | $ | 24,841 | |||||
| United States mechanical construction and facilities services | 32,364 | 28,740 | |||||||
| United States building services | 17,939 | 13,920 | |||||||
| United States industrial services | 17,415 | 12,376 | |||||||
| Total United States operations | 92,995 | 79,877 | |||||||
| United Kingdom building services | 2,834 | 6,202 | |||||||
| Corporate administration | (17,693 | ) | (16,244 | ) | |||||
| Restructuring expenses | (433 | ) | (176 | ) | |||||
| Total worldwide operations | 77,703 | 69,659 | |||||||
| Other corporate items: | |||||||||
| Interest expense | (2,208 | ) | (2,242 | ) | |||||
| Interest income | 182 | 221 | |||||||
| Income from continuing operations before income taxes | $ | 75,677 | $ | 67,638 | |||||
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For the six months ended June 30, |
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2015 |
2014 |
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Operating income (loss): |
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United States electrical construction and facilities services |
$ |
41,951 |
$ |
46,496 |
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United States mechanical construction and facilities services |
53,265 |
47,846 |
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United States building services |
38,917 |
34,218 |
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United States industrial services |
30,248 |
35,770 |
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Total United States operations |
164,381 |
164,330 |
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United Kingdom building services |
5,212 |
9,565 |
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Corporate administration |
(36,119 |
) |
(31,711 |
) |
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Restructuring expenses |
(441 |
) |
(401 |
) |
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Total worldwide operations |
133,033 |
141,783 |
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Other corporate items: |
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Interest expense |
(4,424 |
) |
(4,490 |
) |
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Interest income |
358 |
455 |
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Income from continuing operations before income taxes |
$ |
128,967 |
$ |
137,748 |
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View source version on businesswire.com: http://www.businesswire.com/news/home/20150730005478/en/
EMCOR GROUP, INC.
Shared Services
R. Kevin Matz, 203-849-7938
Executive Vice President
or
Investors:
FTI Consulting, Inc.
Michelle Bitman, 212-850-5600
or
Media:
LAK Public Relations, Inc.
Lisa Linden / Mollie Fullington
212-575-4545 / 917-346-6123
