01—Abstract
Summary
Summary of the 10-K filed February 26, 2013. Cited figures are marked; the original filing is the authoritative source.
EMCOR Group, Inc. reported revenues of $6.35 billiona for the fiscal year ending December 31, 2012, a notable increase from $5.61 billion in 2011.
This growth was driven by strong performance across its U.S. operations, particularly in mechanical and facilities services, bolstered by strategic acquisitions made in prior years. The company's diversified business model, encompassing both electrical and mechanical construction and extensive facilities services, provides resilience. While the company experienced increased operating income and improved operating margins, it noted continued market competition and a disciplined approach to bidding on projects, prioritizing profitability.
Looking ahead, EMCOR's backlog remained stable at $3.37 billionb, indicating a solid pipeline of future work. The company's financial position appears stable, supported by positive net cash from operations and a revolving credit facility.
Investors should note EMCOR's commitment to returning capital to shareholders, evidenced by its increased quarterly dividend. Key areas for investor focus include managing the inherent cyclicality of the construction market, navigating competitive pressures, and integrating recent acquisitions to drive future growth and profitability.
02—Key points
Key Highlights
- EMCOR reported a significant year-over-year revenue increase to $6.35 billion in 2012 from $5.61 billion in 2011, driven by growth across its U.S. segments and acquisitions.
- Operating income increased to $250.0 million in 2012 from $210.8 million in 2011, with operating margins improving slightly to 3.9% from 3.8%.
- The company's backlog remained strong at $3.37 billion as of December 31, 2012, largely consistent with the prior year, indicating continued business activity.
- EMCOR has been actively managing its capital structure, including expanding its revolving credit facility to $750 million and initiating dividend payments, which were increased to $0.06 per share.
- The company's operations are geographically diversified, with approximately 92% of revenues generated in the United States and 8% in the United Kingdom.
- Revenues are derived from a mix of new construction (39%), renovation/retrofit (17%), and facilities services (44%), providing a balanced revenue stream.
- Despite improved results, EMCOR acknowledges a highly competitive marketplace and a commitment to disciplined bidding to ensure profitable project execution.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, EMCOR Group kept $0.02.
- Revenue$6.20B100.0%
- Cost of revenue−$5.39B87.0%
- Gross profit$804.0M13.0%
- Operating costs−$543.7M8.8%
- Operating income$260.3M4.2%
- Interest, other & tax−$113.7M1.8%
- Net income$146.6M2.4%
Where FY2012 revenue went
$6.20B- Cost of revenue: $5.39B, 87% of revenue
- Net income: $146.6M, 2.4% of revenue
- SG&A: $543.5M, 8.8% of revenue
- Interest, other & tax: $113.7M, 1.8% of revenue
Kept 2.4% as net incomeNet income $146.6M · 2.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 26, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $6.20B$5.61B | +10.4% |
| Cost of Revenue | $5.39B$4.88B | +10.5% |
| Gross Profit | $803.98M$733.95M | +9.5% |
| SG&A Expenses | $543.53M$518.12M | +4.9% |
| Operating Income | $260.30M$210.79M | +23.5% |
| Interest Expense | $7.28M$11.26M | −35.4% |
| Net Income | $146.58M$130.83M | +12.0% |
| EPS (Basic) | $2.20$1.96 | +12.2% |
| EPS (Diluted) | $2.16$1.91 | +13.1% |
| Shares Outstanding (Basic) | 66.70M66.78M | −0.1% |
| Shares Outstanding (Diluted) | 67.74M68.38M | −0.9% |
05—Questions
Frequently Asked Questions
What is EMCOR's primary business and revenue generation strategy?
EMCOR is a leading provider of electrical and mechanical construction and facilities services. Its revenue is generated through a diversified model that includes new construction projects, renovation and retrofit work on existing facilities, and ongoing facilities services, which encompass operation, maintenance, and management of various building systems. The company operates through distinct segments, primarily in the United States and the United Kingdom.
How did EMCOR perform financially in 2012 compared to 2011?
In 2012, EMCOR saw a significant increase in revenue, reaching $6.35 billion compared to $5.61 billion in 2011. This growth was attributed to higher volumes across its operating segments and the contribution of recent acquisitions. Operating income also increased to $250 million from $210.8 million, with operating margins showing a slight improvement. The company generated positive net cash from operating activities, demonstrating solid cash flow generation.
What is the outlook for EMCOR's business given its backlog and market conditions?
EMCOR's backlog remained stable at $3.37 billion at the end of 2012, suggesting a healthy pipeline of work. While the company operates in a competitive environment with potential economic headwinds impacting client spending, its diversified service offerings and geographic presence provide some resilience. Management expressed cautious optimism, highlighting strong execution on large projects and increased demand in certain industrial sectors, while emphasizing a continued focus on disciplined, profitable project selection.
How is EMCOR returning value to its shareholders?
EMCOR has demonstrated a commitment to returning value to shareholders through its dividend policy. Having initiated quarterly dividends in late 2011, the company announced in December 2012 its intention to increase the regular quarterly dividend to $0.06 per share. Additionally, the company had an active share repurchase program in place, with approximately $48.6 million remaining authorization at the end of 2012, funded from its operations.
06—Continue