01—Abstract
Summary
Summary of the 10-K filed February 23, 2017. Cited figures are marked; the original filing is the authoritative source.
EMCOR Group, Inc. reported a strong performance in its 2016 fiscal year, achieving record revenues of approximately $7.6 billiona, a 12.4% increase from 2015.
This growth was driven by broad-based increases across its domestic segments, particularly in electrical and mechanical construction, alongside a robust performance in its industrial services segment. The company also saw improvements in its building services operations. Despite increased revenues, operating income as a percentage of revenues slightly declined from 4.3%b in 2015 to 4.1% in 2016.
This was primarily due to significant losses incurred on three specific construction projects within the mechanical and electrical construction segments, which negatively impacted the overall operating margin. Looking ahead, EMCOR maintained a healthy backlog of $3.9 billionc at the end of 2016, up from $3.77 billion in the prior year, indicating continued demand for its services.
The company's strategic acquisitions in 2016, notably Ardent Services, L.L.C., contributed to revenue growth and expanded its capabilities, particularly in the electrical and instrumentation services sector. EMCOR also continued its commitment to shareholder returns through consistent quarterly dividend payments and ongoing share repurchases.
02—Key points
Key Highlights
- Record revenues of $7.55 billion in 2016, an increase of 12.4% year-over-year, driven by strong performance across most segments.
- Backlog increased to $3.9 billion at year-end 2016 from $3.77 billion in 2015, signaling sustained demand.
- Acquisition of Ardent Services in 2016 strengthened the United States electrical construction and facilities services segment, contributing $158.5 million in revenues.
- Despite revenue growth, operating income margin slightly decreased to 4.1% in 2016 from 4.3% in 2015, impacted by $47.3 million in losses on three specific construction projects.
- The company continued its capital return program, repurchasing approximately $88.6 million of common stock in 2016 and paying a consistent quarterly dividend of $0.08 per share.
- All segments, except for the UK building services segment, showed revenue growth, with the UK segment impacted by unfavorable exchange rates.
- The company's credit facility was amended and restated in August 2016, increasing the revolving credit facility to $900 million and the term loan to $400 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, EMCOR Group kept $0.02.
- Revenue$7.55B100.0%
- Cost of revenue−$6.51B86.3%
- Gross profit$1.04B13.7%
- Operating costs−$730.9M9.7%
- Operating income$306.9M4.1%
- Interest, other & tax−$125.0M1.7%
- Net income$181.9M2.4%
Where FY2016 revenue went
$7.55B- Cost of revenue: $6.51B, 86% of revenue
- Net income: $181.9M, 2.4% of revenue
- SG&A: $727.1M, 9.6% of revenue
- Interest, other & tax: $125.0M, 1.7% of revenue
Kept 2.4% as net incomeNet income $181.9M · 2.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 23, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $7.55B$6.72B | +12.4% |
| Cost of Revenue | $6.51B$5.77B | +12.8% |
| Gross Profit | $1.04B$944.48M | +9.9% |
| SG&A Expenses | $727.07M$656.57M | +10.7% |
| Operating Income | $306.93M$287.08M | +6.9% |
| Interest Expense | $12.63M$8.93M | +41.4% |
| Net Income | $181.94M$172.29M | +5.6% |
| EPS (Basic) | $3.00$2.74 | +9.5% |
| EPS (Diluted) | $2.97$2.72 | +9.2% |
| Shares Outstanding (Basic) | 60.77M62.79M | −3.2% |
| Shares Outstanding (Diluted) | 61.21M63.31M | −3.3% |
05—Questions
Frequently Asked Questions
What were EMCOR's key financial performance indicators for 2016?
In 2016, EMCOR Group, Inc. achieved record revenues of approximately $7.55 billion, a 12.4% increase from $6.72 billion in 2015. Operating income was $308.5 million, and net income attributable to EMCOR Group, Inc. was $181.9 million. Diluted earnings per share from continuing operations were $3.02. The company's backlog stood at $3.9 billion at the end of 2016.
What drove the revenue growth in 2016?
Revenue growth was driven by increased activity in EMCOR's domestic construction segments (electrical and mechanical), strong demand for specialty services in the United States industrial services segment, and higher volume in its United States building services segment. Acquisitions completed in 2015 and 2016 also contributed significantly to the revenue increase.
What factors impacted EMCOR's profitability in 2016, leading to a slight decrease in operating margin?
While revenues increased, EMCOR's operating margin saw a slight decrease from 4.3% in 2015 to 4.1% in 2016. This was primarily due to $47.3 million in losses incurred on three specific construction projects within the United States mechanical and electrical construction segments. These project-specific issues, stemming from productivity issues, unfavorable job-site conditions, and contract disputes, negatively impacted the overall gross profit margin and operating margin.
How did EMCOR manage its debt and capital structure in 2016?
EMCOR amended and restated its credit agreement in August 2016, establishing a $900 million revolving credit facility and a $400 million term loan. The proceeds from the term loan were used to repay existing debt. The company remained in compliance with its covenants and maintained a strong liquidity position, funding its operations and share repurchases primarily through cash generated from operations.
06—Continue