01—Abstract
Summary
Summary of the 10-K filed February 28, 2024. Cited figures are marked; the original filing is the authoritative source.
EMCOR Group, Inc. reported a strong fiscal year 2023, marked by record revenues of $12.6 billiona, a 13.6% increase year-over-year.
This growth was driven by robust demand across most of its service sectors, particularly in its United States construction segments (electrical and mechanical), which account for the majority of its revenue. The company demonstrated improved profitability, with operating income reaching $875.8 millionb (7.0% operating margin), up significantly from $564.9 million (5.1% operating margin) in 2022, attributed to better project execution, a favorable work mix, and reduced commodity price pressures. The company's backlog, represented by remaining performance obligations, grew to $8.85 billion, signaling continued demand for its services in the near term.
EMCOR also continues its growth strategy through targeted acquisitions, having acquired eight companies in 2023. The company maintained a strong balance sheet, ending the year with $789.8 millionc in cash and cash equivalents, and has a $1.3 billion revolving credit facility with substantial available capacity. Management announced an intention to increase its quarterly dividend, reflecting confidence in its financial stability and future performance.
02—Key points
Key Highlights
- Record Revenues: EMCOR achieved record revenues of $12.6 billion in 2023, a 13.6% increase from the prior year, driven by strong demand across its segments.
- Improved Profitability: Operating income rose to $875.8 million from $564.9 million, with the operating margin expanding by 190 basis points to 7.0%, reaching new annual records.
- Growing Backlog: Remaining performance obligations (backlog) increased to $8.85 billion, indicating strong future revenue potential.
- Segment Strength: United States electrical and mechanical construction segments, the largest revenue generators, showed significant year-over-year revenue and operating income growth.
- Strategic Acquisitions: The company acquired eight companies in 2023 to expand its service offerings and geographic reach.
- Strong Financial Position: Ended the year with $789.8 million in cash and cash equivalents and a significant revolving credit facility with ample availability.
- Shareholder Returns: Announced an intention to increase the quarterly dividend, signaling confidence in financial performance and commitment to shareholder value.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, EMCOR Group kept $0.05.
- Revenue$12.58B100.0%
- Cost of revenue−$10.49B83.4%
- Gross profit$2.09B16.6%
- Operating costs−$1.21B9.6%
- Operating income$875.8M7.0%
- Interest, other & tax−$242.8M1.9%
- Net income$633.0M5.0%
Where FY2023 revenue went
$12.58B- Cost of revenue: $10.49B, 83% of revenue
- Net income: $633.0M, 5.0% of revenue
- SG&A: $1.21B, 9.6% of revenue
- Interest, other & tax: $242.8M, 1.9% of revenue
Kept 5.0% as net incomeNet income $633.0M · 5.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 28, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $12.58B$11.08B | +13.6% |
| Cost of Revenue | $10.49B$9.47B | +10.8% |
| Gross Profit | $2.09B$1.60B | +30.3% |
| SG&A Expenses | $1.21B$1.04B | +16.6% |
| Operating Income | $875.76M$564.88M | +55.0% |
| Interest Expense | $17.20M$13.20M | +30.3% |
| Net Income | $632.99M$406.12M | +55.9% |
| EPS (Basic) | $13.37$8.13 | +64.5% |
| EPS (Diluted) | $13.31$8.10 | +64.3% |
| Shares Outstanding (Basic) | 47.36M49.93M | −5.2% |
| Shares Outstanding (Diluted) | 47.56M50.14M | −5.1% |
05—Questions
Frequently Asked Questions
What were the key drivers of EMCOR's revenue growth in 2023?
EMCOR's revenue growth in 2023 was primarily driven by strong demand across most of its market sectors, particularly in its United States construction segments. Key contributing factors included increased activity in data centers, high-tech manufacturing (semiconductors, EV, biotech), healthcare, and the manufacturing/industrial sector, supported by trends like supply chain re-shoring and energy transition initiatives.
How did EMCOR manage the inflationary environment and supply chain challenges in 2023?
While EMCOR continued to experience supply chain pressures and inflation, it effectively managed these challenges through diligent contract negotiations, enhanced labor planning, improved project execution, and strategic supplier engagement. The company also sought pricing increases where possible to offset cost escalations and benefited from moderating commodity prices compared to the prior year.
What is the outlook for EMCOR's business based on the backlog (remaining performance obligations)?
The company's backlog increased to $8.85 billion at the end of 2023, up from $7.46 billion in the prior year. This substantial backlog, particularly in high-growth sectors like high-tech manufacturing and network/communications (data centers), indicates a strong demand for EMCOR's services and provides a positive outlook for continued revenue generation in the near term.
How is EMCOR returning value to shareholders?
EMCOR pays a regular quarterly dividend and announced an intention to increase it from $0.18 to $0.25 per share starting in April 2024. The company also has an active share repurchase program, having repurchased approximately $128.7 million of its common stock in 2023.
06—Continue