- Record First Quarter Revenues of $2.89
billion, 11.5% Increase Year-over-Year -
- Record First Quarter Diluted EPS of $2.32,
66.9% Increase Year-over-Year -
- Record Remaining Performance Obligations
of $7.87 billion, 32.3% Increase Year-over-Year -
- Increases 2023 Diluted EPS Guidance Range
to $9.25 - $10.00 from $8.75 - $9.50 -
EMCOR Group, Inc. (NYSE: EME) today reported results for the
quarter ended March 31, 2023.
For the first quarter of 2023, net income was $111.5 million, or
$2.32 per diluted share, compared to $73.4 million, or $1.39 per
diluted share, for the first quarter of 2022. Revenues for the
first quarter of 2023 totaled $2.89 billion, an increase of 11.5%
from the year ago period.
Operating income for the first quarter of 2023 was $154.9
million, or 5.4% of revenues, compared to $100.0 million, or 3.9%
of revenues, for the first quarter of 2022.
Selling, general and administrative expenses for the first
quarter of 2023 totaled $281.2 million, or 9.7% of revenues,
compared to $252.6 million, or 9.7% of revenues, for the first
quarter of 2022.
The Company's income tax rate for the first quarter of 2023 was
27.0% compared to an income tax rate of 26.5% for the first quarter
of 2022.
Remaining performance obligations as of March 31, 2023 were
$7.87 billion, compared to $5.95 billion as of March 31, 2022.
Total remaining performance obligations grew approximately $1.92
billion year-over-year.
Tony Guzzi, Chairman, President and Chief Executive Officer of
EMCOR, commented, “The Company posted record first quarter revenues
reflecting solid year-over-year growth despite a challenging
operating environment. Strong demand for our services across
several resilient non-residential market sectors, and from the
majority of our reportable segments, drove revenue growth of 11.5%
during the quarter, 10.1% of which was organic. Our consolidated
operating margin expanded 150 basis points to 5.4% despite
persistent inflationary and supply chain challenges. We continue to
have strong near-term visibility with a healthy project pipeline
reflected by our record remaining performance obligations of $7.87
billion, which grew $1.92 billion, or 32.3%, year-over-year.”
Mr. Guzzi added, “Our U.S. Construction segments drove another
quarter of solid top-line growth, up a combined 13.8%
year-over-year, led by our U.S. Electrical Construction segment,
which delivered revenue growth of 23.5% year-over-year. Our U.S.
Mechanical Construction segment continues to perform exceptionally
well with first quarter operating margin of 8.0% and organic
revenue growth of 8.7% year-over-year. Our U.S. Building Services
segment generated a 14.1% increase in revenues, driven by its
mechanical services division, which continued to experience broad
based growth across all service lines. Operating margin of U.S.
Building services increased to 5.2% as we successfully executed
project work and managed to address some of the supply chain
challenges that negatively impacted our business last year. Our
U.S. Industrial Services segment improved at a steady pace,
delivering solid revenue and operating income results as we
continue to see modest increases in the demand for our services and
we execute work for our customers. Finally, our U.K. Building
Services segment had declines in revenue and operating income as it
faced recessionary pressure and foreign exchange headwinds.”
Based on year-to-date performance, current operating conditions,
and strong near-term visibility, EMCOR is increasing its full-year
2023 diluted earnings per share guidance range to $9.25 to $10.00,
an increase from the prior guidance range of $8.75 to $9.50. The
Company is maintaining its full-year 2023 revenue guidance of $12.0
billion to $12.5 billion.
Mr. Guzzi concluded, “Looking forward at the balance of the
year, we will continue to execute with discipline and flexibility.
We are positioned well as we advance forward through 2023 and,
while supply chain challenges and inflationary pressures still
exist, we will continue to adapt to these challenges through better
planning, estimating, and resource allocation. We expect to
generate strong operating cash flow and remain committed to our
balanced capital allocation strategy, pursuing both organic
investments and strategic acquisitions, as well as returning
capital to shareholders through share repurchases 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 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 first quarter conference call will be available
live via internet broadcast today, Thursday, April 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 certain forward-looking statements. Any
such comments speak only as of April 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; unfavorable developments in the mix of our
business; and the continuing impact of the COVID-19 pandemic, on
our revenue and operations. 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
March 31,
2023
2022
Revenues
$
2,890,432
$
2,592,549
Cost of sales
2,454,370
2,239,994
Gross profit
436,062
352,555
Selling, general and administrative
expenses
281,152
252,598
Operating income
154,910
99,957
Net periodic pension (cost) income
(274
)
1,169
Interest expense, net
(1,832
)
(1,289
)
Income before income taxes
152,804
99,837
Income tax provision
41,331
26,451
Net income
$
111,473
$
73,386
Basic earnings per common share
$
2.33
$
1.39
Diluted earnings per common share
$
2.32
$
1.39
Weighted average shares of common stock
outstanding:
Basic
47,775,819
52,713,005
Diluted
47,945,815
52,916,559
Dividends declared per common share
$
0.15
$
0.13
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
March 31,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
420,075
$
456,439
Accounts receivable, net
2,669,356
2,567,371
Contract assets
302,750
273,176
Inventories
100,405
85,641
Prepaid expenses and other
69,834
79,346
Total current assets
3,562,420
3,461,973
Property, plant and equipment, net
160,417
157,819
Operating lease right-of-use assets
274,917
268,063
Goodwill
923,274
919,151
Identifiable intangible assets, net
584,598
593,975
Other assets
135,284
123,626
Total assets
$
5,640,910
$
5,524,607
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt and
finance lease liabilities
$
15,524
$
15,567
Accounts payable
724,104
849,284
Contract liabilities
1,156,530
1,098,263
Accrued payroll and benefits
385,621
465,000
Other accrued expenses and liabilities
310,793
258,190
Operating lease liabilities, current
68,819
67,218
Total current liabilities
2,661,391
2,753,522
Borrowings under revolving credit
facility
100,000
—
Long-term debt and finance lease
liabilities
231,319
231,625
Operating lease liabilities, long-term
226,288
220,764
Other long-term obligations
355,587
344,405
Total liabilities
3,574,585
3,550,316
Equity:
Total EMCOR Group, Inc. stockholders’
equity
2,065,623
1,973,589
Noncontrolling interests
702
702
Total equity
2,066,325
1,974,291
Total liabilities and equity
$
5,640,910
$
5,524,607
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the Quarters Ended March 31,
2023 and 2022
(In thousands) (Unaudited)
2023
2022
Cash flows - operating activities:
Net income
$
111,473
$
73,386
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization
12,621
11,578
Amortization of identifiable intangible
assets
15,877
15,551
Non-cash share-based compensation
expense
4,087
3,438
Other reconciling items
162
(226
)
Changes in operating assets and
liabilities, excluding the effect of businesses acquired
(228,803
)
(199,541
)
Net cash used in operating
activities
(84,583
)
(95,814
)
Cash flows - investing activities:
Payments for acquisitions of businesses,
net of cash acquired
(11,834
)
(2,914
)
Proceeds from sale or disposal of
property, plant and equipment
9,583
462
Purchases of property, plant and
equipment
(23,154
)
(11,501
)
Net cash used in investing
activities
(25,405
)
(13,953
)
Cash flows - financing activities:
Proceeds from revolving credit
facility
100,000
—
Repayments of finance lease
liabilities
(780
)
(979
)
Dividends paid to stockholders
(7,151
)
(6,930
)
Repurchases of common stock
(16,033
)
(181,810
)
Taxes paid related to net share
settlements of equity awards
(5,242
)
(4,944
)
Issuances of common stock under employee
stock purchase plan
2,168
1,955
Payments for contingent consideration
arrangements
(1,456
)
(805
)
Net cash provided by (used in)
financing activities
71,506
(193,513
)
Effect of exchange rate changes on
cash, cash equivalents, and restricted cash
2,239
(3,419
)
Decrease in cash, cash equivalents, and
restricted cash
(36,243
)
(306,699
)
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)
$
420,825
$
515,869
_________
(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 $0.8 million and $1.4 million of restricted cash
classified as “Prepaid expenses and other” in the Consolidated
Balance Sheets as of March 31, 2023 and March 31, 2022,
respectively.
EMCOR GROUP, INC.
SEGMENT INFORMATION
(In thousands) (Unaudited)
For the quarters ended
March 31,
2023
2022
Revenues from unrelated
entities:
United States electrical construction and
facilities services
$
644,746
$
522,030
United States mechanical construction and
facilities services
1,078,558
992,644
United States building services
725,375
635,627
United States industrial services
330,883
310,751
Total United States operations
2,779,562
2,461,052
United Kingdom building services
110,870
131,497
Total operations
$
2,890,432
$
2,592,549
For the quarters ended
March 31,
2023
2022
Operating income (loss):
United States electrical construction and
facilities services
$
40,516
$
19,993
United States mechanical construction and
facilities services
86,227
58,433
United States building services
37,650
24,163
United States industrial services
15,020
13,258
Total United States operations
179,413
115,847
United Kingdom building services
5,424
10,588
Corporate administration
(29,927
)
(26,478
)
Total operations
154,910
99,957
Other items:
Net periodic pension (cost) income
(274
)
1,169
Interest expense, net
(1,832
)
(1,289
)
Income before income taxes
$
152,804
$
99,837
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 ended March 31, 2023.
For the quarter ended
March 31, 2023
$
%
GAAP revenue growth
$
297,883
11.5
%
Incremental revenues from acquisitions
(35,220
)
(1.4
)%
Organic revenue growth, a non-GAAP
measure
$
262,663
10.1
%
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849-7938
FTI Consulting, Inc. Investors: Blake Mueller (718) 578-3706
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