01—Abstract
Summary
Summary of the 10-K filed February 25, 2016. Cited figures are marked; the original filing is the authoritative source.
EMCOR Group, Inc.'s 2015 10-K filing highlights a year of record revenues, reaching $6.7 billiona, and strong earnings per share growth, indicating operational resilience and effective management in a dynamic market.
The company's diversified business model, encompassing electrical and mechanical construction, building services, and industrial services, largely contributed to this performance. While the overall financial health appears robust, investors should note segment-specific challenges, particularly in the United States industrial services segment impacted by refinery strikes and volatility in oil prices, and the United States electrical construction segment facing losses on transportation projects.
EMCOR continues to focus on strategic growth through acquisitions, as evidenced by three acquisitions in 2015, while also managing its backlog and operational efficiency. The company maintained its quarterly dividend, signaling confidence in its financial stability and commitment to shareholder returns.
02—Key points
Key Highlights
- EMCOR Group reported record revenues of $6.7 billion for the fiscal year 2015, marking a 4.6% increase from the previous year, demonstrating top-line growth.
- Diluted earnings per share from continuing operations reached $2.72, a new company record, up from $2.59 in 2014, indicating improved profitability and operational efficiency.
- The company maintained a stable gross profit margin of 14.1% in 2015, consistent with 2014, despite varied segment performance.
- EMCOR's backlog grew to $3.77 billion at the end of 2015, up from $3.63 billion in 2014, suggesting a strong pipeline of future work.
- The United States mechanical construction and facilities services segment showed significant operating income growth, driven by improved performance and a favorable claim settlement.
- The United States industrial services segment experienced a decrease in operating income and margin due to a nationwide refinery strike and competitive market conditions affecting heat exchanger services.
- EMCOR continued its share repurchase program, with approximately $254.1 million remaining authorization as of December 31, 2015, signaling a commitment to returning capital to shareholders.
- The company continued to pay a regular quarterly dividend of $0.08 per share, indicating financial stability and a focus on shareholder returns.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, EMCOR Group kept $0.03.
- Revenue$6.72B100.0%
- Cost of revenue−$5.77B85.9%
- Gross profit$944.5M14.1%
- Operating costs−$657.4M9.8%
- Operating income$287.1M4.3%
- Interest, other & tax−$114.8M1.7%
- Net income$172.3M2.6%
Where FY2015 revenue went
$6.72B- Cost of revenue: $5.77B, 86% of revenue
- Net income: $172.3M, 2.6% of revenue
- SG&A: $656.6M, 9.8% of revenue
- Interest, other & tax: $114.8M, 1.7% of revenue
Kept 2.6% as net incomeNet income $172.3M · 2.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 25, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $6.72B$6.42B | +4.6% |
| Cost of Revenue | $5.77B$5.52B | +4.6% |
| Gross Profit | $944.48M$907.25M | +4.1% |
| SG&A Expenses | $656.57M$626.48M | +4.8% |
| Operating Income | $287.08M$289.88M | −1.0% |
| Interest Expense | $8.93M$9.07M | −1.6% |
| Net Income | $172.29M$168.66M | +2.1% |
| EPS (Basic) | $2.74$2.54 | +7.9% |
| EPS (Diluted) | $2.72$2.52 | +7.9% |
| Shares Outstanding (Basic) | 62.79M66.33M | −5.3% |
| Shares Outstanding (Diluted) | 63.31M67.06M | −5.6% |
05—Questions
Frequently Asked Questions
What were EMCOR's key revenue drivers in 2015?
EMCOR's revenues in 2015 were driven by increased activity across most of its reportable segments, including higher revenues from domestic construction segments (electrical and mechanical), increased demand for industrial field services, and growth in mobile mechanical services within the building services segment. Approximately 94% of revenues were generated in the United States.
How did the company's industrial services segment perform, and what factors impacted it?
The United States industrial services segment saw revenue increases but experienced a decrease in operating income and margin. This was primarily due to a nationwide strike at major oil refineries in early 2015, which caused project deferrals and losses, as well as decreased billing rates and margins in shop services due to lower demand for heat exchangers amid oil price volatility.
What is EMCOR's strategy regarding acquisitions and shareholder returns?
EMCOR acquired three companies in 2015 to expand its service capabilities, demonstrating an ongoing acquisition strategy. The company also continued its share repurchase program, with significant authorization remaining, and maintained its quarterly dividend payments, reflecting confidence in its financial position and a commitment to shareholder value.
What are the main risks and challenges highlighted in the filing?
Key risks include economic downturns affecting demand for services, competition, dependence on government contracts, fluctuations in commodity and energy prices, potential liabilities from self-insured risks, and the cyclical nature of the construction industry. The company also noted specific segment challenges like the impact of the refinery strike and losses on transportation projects.
06—Continue