10-KPeriod: FY2008

EMCOR Group, Inc. Annual Report, Year Ended Dec 31, 2008

Filed February 26, 2009For Securities:EME

Summary

EMCOR Group, Inc. filed its 2008 annual report on Form 10-K on February 26, 2009. The report details the company's performance and financial condition as of December 31, 2008. EMCOR, a leading provider of electrical and mechanical construction and facilities services, reported a significant increase in revenues and profitability in 2008 compared to the previous year. This growth was driven by a combination of organic growth in key markets like healthcare and hospitality, successful integration of recent acquisitions, and strong performance in its U.S. facilities services segment, particularly with government contracts. Despite the overall positive financial performance, the report highlights several risk factors, including the ongoing economic downturn's impact on construction demand and potential credit market instability. The company also experienced some negative impacts in 2008, such as losses at a specific subsidiary, legal settlement expenses, and an impairment charge on an investment. However, EMCOR's diversified business model, with a substantial facilities services component that is less cyclical than construction, provides a degree of resilience. The company ended the year with a strong cash position and a manageable debt level, indicating a solid financial footing despite prevailing economic headwinds.

Financial Highlights

24 data points
Beta

Revenue

$6.79B

13.1% Gross Margin

Net Income

$182.20M

2.7% Net Margin

EPS (Diluted)

$2.71

Cash & Equivalents

$405.87M

Free Cash Flow

$335.03M

Financial Statements
Beta
Revenue$6.79B
Cost of Revenue$5.90B
Gross Profit$886.65M
SG&A Expenses$582.32M
Operating Income$302.58M
Interest Expense$11.76M
Net Income$182.20M
EPS (Basic)$2.79
EPS (Diluted)$2.71

Key Highlights

  • 1EMCOR reported record revenues of $6.8 billion and net income of $182.2 million for the fiscal year 2008, demonstrating significant year-over-year growth.
  • 2The company's operating income increased by over 50% to $302.6 million, with the operating margin improving to 4.5%, reflecting enhanced operational efficiency and profitability.
  • 3Acquisitions played a key role in EMCOR's growth, contributing to increased revenues and diversification across various markets and geographies.
  • 4The U.S. Facilities Services segment showed particularly strong performance, driven by site-based government contracts and mobile mechanical services.
  • 5Despite strong overall performance, the company acknowledged the negative impact of the economic downturn on construction demand and faced specific challenges including losses at one subsidiary and legal expenses.
  • 6EMCOR ended the year with a robust cash and cash equivalents balance of $405.9 million, up from $251.6 million in the prior year, indicating strong liquidity.
  • 7The company's backlog stood at $4.0 billion at the end of 2008, a decrease from $4.49 billion in 2007, reflecting a cautious outlook for new construction awards in certain sectors.

Frequently Asked Questions

EMCOR Group, Inc. experienced a strong financial year in 2008, achieving record revenues of $6.8 billion and net income of $182.2 million. Operating income also saw substantial growth, increasing to $302.6 million with an improved operating margin of 4.5%. This performance was driven by growth in key markets, successful acquisitions, and strong results in its U.S. facilities services segment.

Revenue growth was primarily fueled by increased construction work in the healthcare and hospitality sectors within the U.S., robust performance in the U.S. facilities services segment (especially government contracts), and contributions from companies acquired in 2007 and 2008. The company also benefited from a turnaround in its United Kingdom operations.

EMCOR identified several key risks, including the adverse impact of the economic downturn on construction services demand, potential credit market instability affecting customer financing, fluctuations in material and energy prices, and the highly competitive nature of its industry. The company also noted specific challenges such as losses at one subsidiary, legal expenses, and an impairment charge on an investment.

EMCOR significantly improved its liquidity position, with cash and cash equivalents increasing by $154.2 million to $405.9 million. This was primarily due to strong cash flow from operations. The company also managed its debt effectively, with a term loan balance of $197.75 million at year-end after making substantial prepayments. EMCOR maintained access to a $375 million revolving credit facility.