10-KPeriod: FY2009

EMCOR Group, Inc. Annual Report, Year Ended Dec 31, 2009

Filed February 25, 2010For Securities:EME

Summary

EMCOR Group, Inc. reported revenues of $5.55 billion for the year ended December 31, 2009, a decrease of 18.2% from $6.79 billion in 2008. This decline was primarily attributed to the economic slowdown impacting construction project demand and tightening credit markets, which affected various segments of the business, including domestic commercial and hospitality projects, and international operations. The company also noted unfavorable exchange rate effects. Despite the revenue decrease, EMCOR managed to improve its gross profit margin to 14.9% in 2009 from 13.1% in 2008, and its operating margin increased to 4.7% from 4.5%. This improvement was driven by better performance in domestic construction segments, favorable project resolutions, and cost control measures. Net income attributable to EMCOR decreased to $160.8 million ($2.38 per diluted share) in 2009 from $182.2 million ($2.71 per diluted share) in 2008. The company incurred a $13.5 million non-cash impairment charge related to trade names and customer relationships. EMCOR ended the year with a strong cash position and a reduced debt load, demonstrating a commitment to financial stability amidst economic challenges. The company's backlog also saw a reduction, signaling continued caution in the construction market.

Financial Highlights

49 data points
Beta

Revenue

$5.23B

15.0% Gross Margin

Net Income

$160.76M

3.1% Net Margin

EPS (Diluted)

$2.38

Total Assets

$2.98B

Cash & Equivalents

$726.98M

Free Cash Flow

$360.77M

Financial Statements
Beta
Revenue$5.23B
Cost of Revenue$4.44B
Gross Profit$784.23M
SG&A Expenses$517.30M
Operating Income$250.12M
Interest Expense$7.87M
Net Income$160.76M
EPS (Basic)$2.44
EPS (Diluted)$2.38
Shares Outstanding (Basic)65.91M
Shares Outstanding (Diluted)67.45M

Key Highlights

  • 1Revenues declined by 18.2% to $5.55 billion in 2009 due to the economic slowdown and credit market tightness.
  • 2Despite lower revenues, gross profit margin improved to 14.9% and operating margin increased to 4.7% in 2009.
  • 3Net income attributable to EMCOR decreased to $160.8 million ($2.38 per diluted share) in 2009 from $182.2 million ($2.71 per diluted share) in 2008.
  • 4The company incurred a $13.5 million non-cash impairment charge related to trade names and customer relationships.
  • 5Backlog decreased to $3.15 billion at December 31, 2009, from $4.00 billion at December 31, 2008.
  • 6EMCOR ended 2009 with a strong cash and cash equivalents balance of $727.0 million and reduced its long-term debt.
  • 7The company's strategy to focus on facilities services provides a buffer against economic downturns due to the nature of its annual and multi-year contracts.

Frequently Asked Questions

EMCOR's revenue declined by 18.2% to $5.55 billion in 2009 compared to 2008. This was primarily driven by the broader economic slowdown and restrictive credit markets, which led to delays and cancellations of construction projects. Specific impacts were seen in domestic commercial and hospitality construction, as well as in the industrial services and mobile mechanical services within the United States facilities services segment. Unfavorable foreign currency exchange rates also contributed to the revenue decrease.

Despite the revenue decline, EMCOR improved its profitability metrics. The gross profit margin increased to 14.9% in 2009 from 13.1% in 2008, and the operating margin rose to 4.7% from 4.5%. This improvement was achieved through better margins in domestic construction segments, favorable resolutions on projects nearing completion, turnaround in performance at a previously loss-making operation, and reduced selling, general, and administrative expenses, including cost-saving measures like staff reductions and decreased discretionary spending.

EMCOR acknowledges the challenges posed by the economic downturn and its impact on the construction market, as evidenced by the reduced backlog. However, the company's strategy includes a focus on its facilities services segment, which offers a more stable revenue stream through annual and multi-year contracts, acting as a buffer against economic volatility. The company ended 2009 with a strong cash position and reduced debt, indicating a focus on financial resilience and operational efficiency to navigate the challenging economic environment.

In 2009, EMCOR recorded a $13.5 million non-cash impairment charge due to a change in the fair value of trade names and customer relationships associated with certain prior acquisitions. This charge was primarily reflected in selling, general, and administrative expenses.