01—Abstract
Summary
Summary of the 10-K filed February 24, 2022. Cited figures are marked; the original filing is the authoritative source.
EMCOR Group, Inc. reported strong financial performance for the fiscal year ended December 31, 2021, with revenues reaching a new annual record of $9.9 billiona, a 12.6% increase from the previous year.
This growth was driven by a resurgence in project activity across most of its operating segments, particularly in electrical and mechanical construction, and building services, with a notable recovery from COVID-19 related disruptions experienced in 2020. The company also saw a significant improvement in operating income, rising to $530.8 millionb from $256.8 million in 2020, partly due to the absence of significant impairment charges recorded in the prior year, and partly due to operational efficiencies and increased revenue volumes. The company continues to expand its service offerings and geographic reach through strategic acquisitions, acquiring eight companies in 2021.
EMCOR's strong remaining performance obligations of $5.6 billionc indicate a robust backlog for future revenue. Despite some margin compression in certain segments due to supply chain issues and input cost escalations, the overall financial health appears solid, supported by a healthy cash position and available credit facilities. Investors will want to monitor the impact of ongoing supply chain challenges and inflationary pressures on future margins and the company's ability to pass these costs on to customers.
02—Key points
Key Highlights
- Record annual revenues of $9.9 billion in 2021, a 12.6% increase from 2020, driven by recovery and increased project activity.
- Operating income more than doubled to $530.8 million in 2021 from $256.8 million in 2020, aided by the absence of significant prior-year impairment charges.
- The company completed eight acquisitions in 2021, demonstrating an ongoing strategy of growth through inorganic expansion.
- Remaining performance obligations (backlog) stood at a strong $5.6 billion as of December 31, 2021, providing visibility for future revenue.
- While overall gross profit increased, gross profit margins slightly declined to 15.2% in 2021 from 15.9% in 2020, impacted by supply chain disruptions and material cost escalations.
- The company repurchased approximately $195.5 million of its common stock in 2021 and maintained its quarterly dividend payment.
- The United States Industrial Services segment continues to face headwinds due to lingering impacts of the pandemic and adverse market conditions in the oil and gas sector, reporting an operating loss.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, EMCOR Group kept $0.04.
- Revenue$9.90B100.0%
- Cost of revenue−$8.40B84.8%
- Gross profit$1.50B15.2%
- Operating costs−$970.9M9.8%
- Operating income$530.8M5.4%
- Interest, other & tax−$147.3M1.5%
- Net income$383.5M3.9%
Where FY2021 revenue went
$9.90B- Cost of revenue: $8.40B, 85% of revenue
- Net income: $383.5M, 3.9% of revenue
- SG&A: $970.9M, 9.8% of revenue
- Interest, other & tax: $147.3M, 1.5% of revenue
Kept 3.9% as net incomeNet income $383.5M · 3.9%Interest, other & tax $147.3M · 1.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 24, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $9.90B$8.80B | +12.6% |
| Cost of Revenue | $8.40B$7.40B | +13.5% |
| Gross Profit | $1.50B$1.40B | +7.6% |
| SG&A Expenses | $970.94M$903.58M | +7.5% |
| Operating Income | $530.80M$256.83M | +106.7% |
| Interest Expense | $6.07M$9.01M | −32.6% |
| Net Income | $383.53M$132.94M | +188.5% |
| EPS (Basic) | $7.09$2.41 | +194.2% |
| EPS (Diluted) | $7.06$2.40 | +194.2% |
| Shares Outstanding (Basic) | 54.07M55.20M | −2.0% |
| Shares Outstanding (Diluted) | 54.35M55.42M | −1.9% |
05—Questions
Frequently Asked Questions
What was EMCOR's revenue performance in 2021 compared to 2020?
EMCOR Group, Inc. achieved record annual revenues of $9.9 billion in 2021, representing a significant 12.6% increase from $8.8 billion in 2020. This growth was broad-based across most of its operating segments, indicating a strong recovery and expansion in its core markets.
How did EMCOR's profitability change in 2021?
Profitability saw a substantial improvement. Operating income increased to $530.8 million in 2021, up from $256.8 million in 2020. This growth was partly due to a $232.8 million impairment charge in 2020 that did not recur in 2021, but also driven by higher revenues and operational efficiencies across several segments.
What is the outlook for EMCOR's future business based on its backlog?
EMCOR reported strong remaining performance obligations (backlog) of $5.6 billion as of December 31, 2021. This substantial backlog provides good visibility into future revenue streams and indicates continued demand for EMCOR's services across its various segments.
What are the main challenges or risks highlighted by EMCOR in its 2021 filing?
EMCOR highlighted several risks, including the ongoing impact of supply chain disruptions, material shortages, and escalating commodity prices, which have compressed gross profit margins in some areas. They also noted the continued challenges in their United States Industrial Services segment due to adverse market conditions in the oil and gas industry. Additionally, dependence on fixed-price contracts can be a risk if costs escalate beyond estimates.
06—Continue