EME EMCOR Group Inc

- Record Quarterly Revenues of $3.05 billion, 12.5% Increase Year-over-Year -

- Record Quarterly Diluted EPS of $2.95, 48.2% Increase Year-over-Year -

- Record Remaining Performance Obligations of $8.29 billion, 28.2% Increase Year-over-Year -

- Increases 2023 Diluted EPS Guidance Range to $10.75 - $11.25 from $9.25 - $10.00 -

EMCOR Group, Inc. (NYSE: EME) today reported results for the quarter ended June 30, 2023.

For the second quarter of 2023, net income was $140.6 million, or $2.95 per diluted share, compared to $100.7 million, or $1.99 per diluted share, for the second quarter of 2022. Revenues for the second quarter of 2023 totaled $3.05 billion, an increase of 12.5% from the year ago period.

Operating income for the second quarter of 2023 was $196.7 million, or 6.5% of revenues, compared to $137.6 million, or 5.1% of revenues, for the second quarter of 2022. Operating income included depreciation and amortization expense, inclusive of amortization of identifiable intangible assets, of $29.0 million and $26.0 million for the second quarter of 2023 and 2022, respectively.

Selling, general and administrative expenses for the second quarter of 2023 totaled $293.4 million, or 9.6% of revenues, compared to $245.4 million, or 9.1% of revenues, for the second quarter of 2022.

The Company's income tax rate for the second quarter of 2023 was 27.4% compared to an income tax rate of 26.5% for the second quarter of 2022.

Remaining performance obligations as of June 30, 2023 were $8.29 billion, compared to $6.46 billion as of June 30, 2022. Remaining performance obligations grew approximately $1.83 billion year-over-year.

Tony Guzzi, Chairman, President and Chief Executive Officer of EMCOR, commented, “The Company posted record quarterly revenues, reflecting ongoing strength across nearly all segments and market sectors. Our ability to win and execute on large and sophisticated projects through our diverse capabilities drove revenue growth of 12.5% during the quarter, or 11.0% on an organic basis. Our consolidated operating margin expanded 140 basis points to a record 6.5% despite persistent inflationary and supply chain challenges. We continue to build on our healthy project pipeline as reflected by our record remaining performance obligations of $8.29 billion, which grew 28.2%, year-over-year. The most significant increases in RPOs were within the high-tech manufacturing and network and communications market sectors as we continue to experience strong demand for semiconductor and data center construction projects as well as throughout the EV value chain.”

Mr. Guzzi added, “Our U.S. Construction segments delivered another quarter of solid top-line growth, up a combined 15.4% year-over-year, led by our U.S. Electrical Construction segment, which had revenue growth of 20.2% year-over-year and operating margin of 7.5%. Our U.S. Mechanical Construction segment continued to perform exceptionally well with second quarter operating margin of 10.0% and organic revenue growth of 12.9% year-over-year. Our U.S. Building Services segment generated a 12.9% increase in revenues with operating margin increasing to 6.0% due to strong demand for retrofit projects, building automation and controls, and maintenance and service repair work. Our U.S. Industrial Services segment also delivered revenue and operating income growth as we continued to see a steady increase in demand, led by greater new build heat exchanger orders. Finally, operating margin of our U.K. Building Services segment remained steady despite continued revenue headwinds from a challenging market.”

Revenues for the first six months of 2023 totaled $5.94 billion, an increase of 12.0%, compared to $5.30 billion for the first six months of 2022. Net income for the first six months of 2023 was $252.1 million, or $5.28 per diluted share, compared to net income of $174.1 million, or $3.36 per diluted share, for the first six months of 2022.

Operating income for the first six months of 2023 was $351.6 million, or 5.9% of revenues, compared to operating income of $237.6 million, or 4.5% of revenues, for the first six months of 2022. Operating income included depreciation and amortization expense, inclusive of amortization of identifiable intangible assets, of $57.5 million and $53.1 million for the first six months of 2023 and 2022, respectively.

Selling, general and administrative expenses totaled $574.5 million, or 9.7% of revenues, for the first six months of 2023, compared to $498.0 million, or 9.4% of revenues, for the first six months of 2022.

Based on year-to-date performance, current operating conditions, and near-term visibility, EMCOR is increasing its full-year 2023 diluted earnings per share guidance range to $10.75 to $11.25, an increase from the prior guidance range of $9.25 to $10.00. The Company is maintaining its full-year 2023 revenue guidance of $12.0 billion to $12.5 billion.

Mr. Guzzi concluded, “We are executing with discipline and flexibility. Our investments over the past few years continue to position us well as we advance forward through 2023. While supply chain challenges have persisted, we have learned to mitigate these obstacles and operate with greater efficiency, helping us achieve all time quarterly records for revenues, operating income, operating margin, and diluted EPS. We remain committed to our balanced capital allocation strategy of pursuing both organic investments and strategic acquisitions, while returning capital to shareholders through share repurchases and dividends. Our robust balance sheet is a differentiator as we serve sophisticated customers on large, complex, and technologically advanced projects.”

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 routinely posts information that may be important to investors in the “Investor Relations” section of our website at www.emcorgroup.com. Investors and potential investors are encouraged to consult the EMCOR website regularly for important information about EMCOR.

EMCOR Group's second quarter conference call will be available live via internet broadcast today, Thursday, July 27, 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 forward-looking statements. Such statements speak only as of July 27, 2023, and EMCOR assumes no obligation to update any such forward-looking statements, unless required by law. These forward-looking statements may include statements regarding anticipated future operating and financial performance, including financial guidance and projections underlying that guidance; 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 prospects; customer trends; project mix; and projects with varying profit margins and contractual terms. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated (whether expressly or implied) by the forward-looking statements. Accordingly, these statements do not guarantee future performance or events. Applicable risks and uncertainties include, but are not limited to, adverse effects of general economic conditions; changes in interest rates; domestic and international political developments; changes in the specific markets for EMCOR’s services; adverse business conditions, including labor market tightness, productivity challenges, the nature and extent of supply chain disruptions impacting availability and pricing of materials, and inflationary trends more generally, including fluctuations in energy costs; the impact of legislation and/or government regulations; the availability of adequate levels of surety bonding; increased competition; and unfavorable developments in the mix of our 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 2022 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). Reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this release. 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 ongoing 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

    

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share information)

(Unaudited)

 

 

 

For the quarters ended June 30,

 

For the six months ended June 30,

 

 

2023

 

2022

 

2023

 

2022

Revenues

 

$

3,045,622

 

 

$

2,707,388

 

 

$

5,936,054

 

 

$

5,299,937

 

Cost of sales

 

 

2,555,562

 

 

 

2,324,380

 

 

 

5,009,932

 

 

 

4,564,374

 

Gross profit

 

 

490,060

 

 

 

383,008

 

 

 

926,122

 

 

 

735,563

 

Selling, general and administrative expenses

 

 

293,393

 

 

 

245,364

 

 

 

574,545

 

 

 

497,962

 

Operating income

 

 

196,667

 

 

 

137,644

 

 

 

351,577

 

 

 

237,601

 

Net periodic pension (cost) income

 

 

(282

)

 

 

1,094

 

 

 

(556

)

 

 

2,263

 

Interest expense, net

 

 

(2,692

)

 

 

(1,751

)

 

 

(4,524

)

 

 

(3,040

)

Income before income taxes

 

 

193,693

 

 

 

136,987

 

 

 

346,497

 

 

 

236,824

 

Income tax provision

 

 

53,098

 

 

 

36,323

 

 

 

94,429

 

 

 

62,774

 

Net income

 

$

140,595

 

 

$

100,664

 

 

$

252,068

 

 

$

174,050

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

2.97

 

 

$

1.99

 

 

$

5.30

 

 

$

3.37

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

2.95

 

 

$

1.99

 

 

$

5.28

 

 

$

3.36

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

47,393,493

 

 

 

50,507,024

 

 

 

47,584,656

 

 

 

51,610,014

 

Diluted

 

 

47,588,669

 

 

 

50,711,770

 

 

 

47,767,242

 

 

 

51,814,164

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.18

 

 

$

0.13

 

 

$

0.33

 

 

$

0.26

 

 

 

 

 

 

 

 

 

 

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

(Unaudited) June 30, 2023

 

December 31, 2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

503,052

 

$

456,439

Accounts receivable, net

 

 

2,852,103

 

 

2,567,371

Contract assets

 

 

289,368

 

 

273,176

Inventories

 

 

106,080

 

 

85,641

Prepaid expenses and other

 

 

59,018

 

 

79,346

Total current assets

 

 

3,809,621

 

 

3,461,973

Property, plant and equipment, net

 

 

162,594

 

 

157,819

Operating lease right-of-use assets

 

 

299,672

 

 

268,063

Goodwill

 

 

927,485

 

 

919,151

Identifiable intangible assets, net

 

 

574,475

 

 

593,975

Other assets

 

 

133,822

 

 

123,626

Total assets

 

$

5,907,669

 

$

5,524,607

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current maturities of long-term debt and finance lease liabilities

 

$

15,399

 

$

15,567

Accounts payable

 

 

790,158

 

 

849,284

Contract liabilities

 

 

1,357,740

 

 

1,098,263

Accrued payroll and benefits

 

 

444,143

 

 

465,000

Other accrued expenses and liabilities

 

 

270,837

 

 

258,190

Operating lease liabilities, current

 

 

71,185

 

 

67,218

Total current liabilities

 

 

2,949,462

 

 

2,753,522

Long-term debt and finance lease liabilities

 

 

231,454

 

 

231,625

Operating lease liabilities, long-term

 

 

250,926

 

 

220,764

Other long-term obligations

 

 

357,740

 

 

344,405

Total liabilities

 

 

3,789,582

 

 

3,550,316

Equity:

 

 

 

 

Total EMCOR Group, Inc. stockholders’ equity

 

 

2,117,385

 

 

1,973,589

Noncontrolling interests

 

 

702

 

 

702

Total equity

 

 

2,118,087

 

 

1,974,291

Total liabilities and equity

 

$

5,907,669

 

$

5,524,607

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2023 and 2022

(In thousands) (Unaudited)

 

 

 

2023

 

2022

Cash flows - operating activities:

 

 

 

 

Net income

 

$

252,068

 

 

$

174,050

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

Depreciation and amortization

 

 

25,393

 

 

 

23,106

 

Amortization of identifiable intangible assets

 

 

32,100

 

 

 

30,031

 

Non-cash share-based compensation expense

 

 

7,535

 

 

 

6,463

 

Other reconciling items

 

 

(3,685

)

 

 

2,290

 

Changes in operating assets and liabilities, excluding the effect of businesses acquired

 

 

(98,479

)

 

 

(254,791

)

Net cash provided by (used in) operating activities

 

 

214,932

 

 

 

(18,851

)

Cash flows - investing activities:

 

 

 

 

Payments for acquisitions of businesses, net of cash acquired

 

 

(22,384

)

 

 

(26,614

)

Proceeds from sale or disposal of property, plant and equipment

 

 

10,514

 

 

 

1,033

 

Purchases of property, plant and equipment

 

 

(36,564

)

 

 

(27,747

)

Net cash used in investing activities

 

 

(48,434

)

 

 

(53,328

)

Cash flows - financing activities:

 

 

 

 

Proceeds from revolving credit facility

 

 

100,000

 

 

 

100,000

 

Repayments of revolving credit facility

 

 

(100,000

)

 

 

(100,000

)

Repayments of finance lease liabilities

 

 

(1,477

)

 

 

(1,889

)

Dividends paid to stockholders

 

 

(15,714

)

 

 

(13,619

)

Repurchases of common stock

 

 

(105,299

)

 

 

(454,317

)

Taxes paid related to net share settlements of equity awards

 

 

(5,295

)

 

 

(7,239

)

Issuances of common stock under employee stock purchase plan

 

 

4,441

 

 

 

4,023

 

Payments for contingent consideration arrangements

 

 

(3,026

)

 

 

(2,049

)

Net cash used in financing activities

 

 

(126,370

)

 

 

(475,090

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

 

5,856

 

 

 

(11,757

)

Increase (decrease) in cash, cash equivalents, and restricted cash

 

 

45,984

 

 

 

(559,026

)

Cash, cash equivalents, and restricted cash at beginning of year (1)

 

 

457,068

 

 

 

822,568

 

Cash, cash equivalents, and restricted cash at end of period (2)

 

$

503,052

 

 

$

263,542

 

_________

(1)

Includes $0.6 million and $1.2 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of December 31, 2022 and 2021, respectively.

(2)

Includes $1.2 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of June 30, 2022.

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands) (Unaudited)

 

 

 

For the quarters ended

June 30,

 

 

2023

 

2022

Revenues from unrelated entities:

 

 

 

 

United States electrical construction and facilities services

 

$

678,167

 

$

564,112

United States mechanical construction and facilities services

 

 

1,194,113

 

 

1,057,649

United States building services

 

 

775,012

 

 

686,545

United States industrial services

 

 

292,283

 

 

284,534

Total United States operations

 

 

2,939,575

 

 

2,592,840

United Kingdom building services

 

 

106,047

 

 

114,548

Total operations

 

$

3,045,622

 

$

2,707,388

 

 

 

 

 

 

 

For the six months ended

June 30,

 

 

2023

 

2022

Revenues from unrelated entities:

 

 

 

 

United States electrical construction and facilities services

 

$

1,322,913

 

$

1,086,142

United States mechanical construction and facilities services

 

 

2,272,671

 

 

2,050,293

United States building services

 

 

1,500,387

 

 

1,322,172

United States industrial services

 

 

623,166

 

 

595,285

Total United States operations

 

 

5,719,137

 

 

5,053,892

United Kingdom building services

 

 

216,917

 

 

246,045

Total operations

 

$

5,936,054

 

$

5,299,937

 

 

 

 

 

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands) (Unaudited)

 

 

 

For the quarters ended

June 30,

 

 

2023

 

2022

Operating income (loss):

 

 

 

 

United States electrical construction and facilities services

 

$

50,722

 

 

$

35,095

 

United States mechanical construction and facilities services

 

 

119,847

 

 

 

76,612

 

United States building services

 

 

46,137

 

 

 

38,494

 

United States industrial services

 

 

7,887

 

 

 

6,458

 

Total United States operations

 

 

224,593

 

 

 

156,659

 

United Kingdom building services

 

 

5,927

 

 

 

6,415

 

Corporate administration

 

 

(33,853

)

 

 

(25,430

)

Total operations

 

 

196,667

 

 

 

137,644

 

Other items:

 

 

 

 

Net periodic pension (cost) income

 

 

(282

)

 

 

1,094

 

Interest expense, net

 

 

(2,692

)

 

 

(1,751

)

Income before income taxes

 

$

193,693

 

 

$

136,987

 

 

 

 

 

 

 

 

For the six months ended

June 30,

 

 

2023

 

2022

Operating income (loss):

 

 

 

 

United States electrical construction and facilities services

 

$

91,238

 

 

$

55,088

 

United States mechanical construction and facilities services

 

 

206,074

 

 

 

135,045

 

United States building services

 

 

83,787

 

 

 

62,657

 

United States industrial services

 

 

22,907

 

 

 

19,716

 

Total United States operations

 

 

404,006

 

 

 

272,506

 

United Kingdom building services

 

 

11,351

 

 

 

17,003

 

Corporate administration

 

 

(63,780

)

 

 

(51,908

)

Total operations

 

 

351,577

 

 

 

237,601

 

Other items:

 

 

 

 

Net periodic pension (cost) income

 

 

(556

)

 

 

2,263

 

Interest expense, net

 

 

(4,524

)

 

 

(3,040

)

Income before income taxes

 

$

346,497

 

 

$

236,824

 

EMCOR GROUP, INC.

RECONCILIATION OF ORGANIC REVENUE GROWTH

(In thousands, except for percentages) (Unaudited)

    

The following table provides a reconciliation between organic revenue growth, a non-GAAP measure, and total revenue growth for the quarter and six months ended June 30, 2023.

 

 

 

For the quarter ended June 30, 2023

 

For the six months ended June 30, 2023

 

 

$

 

%

 

$

 

%

GAAP revenue growth

 

$

338,234

 

 

12.5

%

 

$

636,117

 

 

12.0

%

Incremental revenues from acquisitions

 

 

(40,618

)

 

(1.5

)%

 

 

(75,838

)

 

(1.4

)%

Organic revenue growth, a non-GAAP measure

 

$

297,616

 

 

11.0

%

 

$

560,279

 

 

10.6

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230727792689/en/

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

FTI Consulting, Inc. Investors: Blake Mueller (718) 578-3706