10-KPeriod: FY2015

EMCOR Group, Inc. Annual Report, Year Ended Dec 31, 2015

Filed February 25, 2016For Securities:EME

Summary

EMCOR Group, Inc.'s 2015 10-K filing highlights a year of record revenues, reaching $6.7 billion, 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.

Financial Highlights

51 data points
Beta

Revenue

$6.72B

14.1% Gross Margin

Net Income

$172.29M

2.6% Net Margin

EPS (Diluted)

$2.72

Total Assets

$3.51B

Cash & Equivalents

$486.83M

Free Cash Flow

$266.67M

Financial Statements
Beta
Revenue$6.72B
Cost of Revenue$5.77B
Gross Profit$944.48M
SG&A Expenses$656.57M
Operating Income$287.08M
Interest Expense$8.93M
Net Income$172.29M
EPS (Basic)$2.74
EPS (Diluted)$2.72
Shares Outstanding (Basic)62.79M
Shares Outstanding (Diluted)63.31M

Key Highlights

  • 1EMCOR 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.
  • 2Diluted 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.
  • 3The company maintained a stable gross profit margin of 14.1% in 2015, consistent with 2014, despite varied segment performance.
  • 4EMCOR'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.
  • 5The United States mechanical construction and facilities services segment showed significant operating income growth, driven by improved performance and a favorable claim settlement.
  • 6The 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.
  • 7EMCOR 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.
  • 8The company continued to pay a regular quarterly dividend of $0.08 per share, indicating financial stability and a focus on shareholder returns.

Frequently Asked Questions

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.

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.

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.

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.