10-KPeriod: FY2002

EMCOR Group, Inc. Annual Report, Year Ended Dec 31, 2002

Filed February 26, 2003For Securities:EME

Summary

EMCOR Group, Inc. reported strong revenue growth and improved profitability for the fiscal year ended December 31, 2002. Revenues increased by 16.0% to $3.97 billion, driven by strategic acquisitions and organic growth across its key segments, particularly in U.S. mechanical construction and facilities services. Net income saw a significant rise of 25.8% to $62.9 million, translating to a diluted EPS of $4.07, up from $3.40 in the prior year. The company's strategic focus on diversifying its service offerings and geographic presence, including the recent acquisitions of Acquired Comfort Companies and CES, positions it well for continued expansion. The company's backlog also grew to $2.9 billion, indicating a healthy pipeline of future work. EMCOR continues to emphasize its integrated approach, offering both mechanical and electrical construction alongside facilities services, which provides a competitive advantage and a more stable, less cyclical revenue stream. While facing some legal proceedings and market competition, EMCOR appears financially sound, with a strengthened balance sheet and robust operating cash flow supporting its growth initiatives.

Key Highlights

  • 1Revenues grew 16.0% to $3.97 billion in 2002, driven by acquisitions and organic growth.
  • 2Net income increased by 25.8% to $62.9 million, with diluted EPS rising to $4.07 from $3.40 in 2001.
  • 3The company completed two significant acquisitions in 2002: Acquired Comfort Companies and Consolidated Engineering Services (CES), significantly expanding its capabilities and geographic reach.
  • 4Contract backlog increased to $2.9 billion as of December 31, 2002, up from $2.4 billion in the prior year.
  • 5Gross profit margin improved to 12.2% in 2002, up from 11.5% in 2001, reflecting improved project execution and the profitability of acquired businesses.
  • 6Net cash provided by operating activities increased significantly to $154.7 million in 2002.
  • 7Goodwill increased substantially to $290.4 million as a result of the 2002 acquisitions.

Frequently Asked Questions

EMCOR's revenue growth in 2002 was primarily driven by the acquisitions of the Acquired Comfort Companies and Consolidated Engineering Services (CES), which contributed significantly to the company's top line. Organic growth across various segments, particularly in U.S. mechanical construction and facilities services, also played a key role.

EMCOR experienced a substantial improvement in profitability in 2002. Net income increased by 25.8% to $62.9 million, and diluted earnings per share rose to $4.07 from $3.40 in 2001. This improvement was supported by increased revenues, improved gross profit margins, and the benefits of acquisitions.

EMCOR views acquisitions as a key strategy for market and geographic diversification, expansion of its facilities services operations, and broadening its service offerings. The acquisitions in 2002, particularly of Acquired Comfort Companies and CES, significantly increased goodwill on the balance sheet and are expected to contribute to future growth and operational synergies. The company aims to integrate these businesses effectively to enhance its competitive position.

The filing mentions several risks and uncertainties, including adverse changes in general economic conditions, fluctuations in specific markets for EMCOR's services, increased competition, pricing pressures, and risks associated with foreign operations. Additionally, the company is involved in legal proceedings where adverse outcomes could materially affect its financial position or results of operations.