01—Abstract
Summary
Summary of the 10-K filed February 21, 2019. Cited figures are marked; the original filing is the authoritative source.
EMCOR Group, Inc. reported robust financial performance for the fiscal year ended December 31, 2018, achieving record revenues, operating income, and diluted earnings per share from continuing operations.
The company experienced revenue growth across all its reportable segments, driven by increased activity in various market sectors and contributions from strategic acquisitions. Key operational improvements were noted in the United States industrial services and building services segments, which benefited from recovery from prior-year impacts and strong project execution, respectively. The company's financial health appears solid, supported by strong operating cash flow and a significant backlog of remaining performance obligations totaling $3.96 billiona as of year-end 2018, providing visibility into future revenue.
EMCOR also demonstrated a commitment to shareholder returns through consistent dividend payments and active share repurchases. Despite economic sensitivities inherent in the construction and facilities services industries, EMCOR's diversified service offerings and broad customer base position it to navigate market fluctuations. The company continues to focus on strategic growth through acquisitions while managing operational efficiencies.
02—Key points
Key Highlights
- Achieved record revenues of $8.13 billion for the fiscal year ended December 31, 2018, a 5.8% increase year-over-year.
- Reported record operating income of $403.1 million and an operating margin of 5.0%, an improvement from 4.3% in the prior year.
- Diluted earnings per share from continuing operations reached $4.89, marking a significant increase from $3.83 in the previous year.
- Maintained a strong backlog of remaining performance obligations totaling $3.96 billion at December 31, 2018, indicating future revenue potential.
- Successfully integrated four acquisitions in 2018, contributing $90.1 million in incremental revenues and $5.8 million in incremental operating income.
- Repurchased approximately 3.1 million shares of common stock for $216.2 million during 2018 as part of its ongoing share repurchase program.
- The company paid a consistent quarterly dividend of $0.08 per share.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, EMCOR Group kept $0.03.
- Revenue$8.13B100.0%
- Cost of revenue−$6.93B85.2%
- Gross profit$1.21B14.8%
- Operating costs−$802.4M9.9%
- Operating income$403.1M5.0%
- Interest, other & tax−$119.6M1.5%
- Net income$283.5M3.5%
Where FY2018 revenue went
$8.13B- Cost of revenue: $6.93B, 85% of revenue
- Net income: $283.5M, 3.5% of revenue
- SG&A: $799.2M, 9.8% of revenue
- Interest, other & tax: $119.6M, 1.5% of revenue
Kept 3.5% as net incomeNet income $283.5M · 3.5%Interest, other & tax $119.6M · 1.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 21, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $8.13B$7.69B | +5.8% |
| Cost of Revenue | $6.93B$6.54B | +5.9% |
| Gross Profit | $1.21B$1.15B | +5.1% |
| SG&A Expenses | $799.16M$758.71M | +5.3% |
| Operating Income | $403.08M$328.90M | +22.6% |
| Interest Expense | $13.54M$12.77M | +6.1% |
| Net Income | $283.53M$227.20M | +24.8% |
| EPS (Basic) | $4.88$3.84 | +27.1% |
| EPS (Diluted) | $4.85$3.82 | +27.0% |
| Shares Outstanding (Basic) | 58.11M59.25M | −1.9% |
| Shares Outstanding (Diluted) | 58.44M59.62M | −2.0% |
05—Questions
Frequently Asked Questions
What were EMCOR's key financial performance indicators for the fiscal year 2018?
For the fiscal year ended December 31, 2018, EMCOR Group, Inc. achieved record revenues of $8.13 billion, a 5.8% increase year-over-year. Operating income also reached a record $403.1 million, with an operating margin of 5.0%. Diluted earnings per share from continuing operations were $4.89, up from $3.83 in 2017. The company's strong performance was attributed to revenue growth across all segments and improved operating income in most segments.
How did EMCOR's different business segments perform in 2018?
All of EMCOR's reportable segments saw revenue increases. The United States Industrial Services segment saw a significant revenue boost due to increased turnaround project activity and recovery from Hurricane Harvey impacts in the prior year. The United States Building Services segment also performed well, driven by increased project and repair activities, large project work in energy services, and growth in government site-based operations. The United States Electrical Construction segment experienced some headwinds due to project completion in the transportation sector and losses on a specific project, but overall market activity increased.
What is EMCOR's outlook regarding its future business based on its backlog?
EMCOR had $3.96 billion in remaining unsatisfied performance obligations (backlog) as of December 31, 2018. This substantial backlog provides visibility into future revenues and indicates a healthy demand for EMCOR's services across its various segments, particularly in mechanical and electrical construction.
What is EMCOR's capital allocation strategy, particularly regarding shareholder returns?
EMCOR demonstrates a balanced approach to capital allocation. The company has consistently paid a quarterly dividend of $0.08 per share, indicating a commitment to returning value to shareholders. Additionally, EMCOR actively repurchased its common stock in 2018, spending approximately $216.2 million on these repurchases, which can enhance shareholder value by reducing the number of outstanding shares.
06—Continue