10-QPeriod: Q3 FY2002

EMCOR Group, Inc. Quarterly Report for Q3 Ended Sep 30, 2002

Filed October 23, 2002For Securities:EME

Summary

EMCOR Group, Inc. reported a significant increase in revenues and net income for the third quarter and first nine months of 2002 compared to the prior year. This growth was largely driven by the acquisition of nineteen subsidiaries from Comfort Systems USA, Inc. on March 1, 2002. The integration of these businesses has expanded EMCOR's geographic reach and service offerings, particularly in mechanical construction and facilities services. While overall revenue and profitability improved, the company saw a decline in its U.S. electrical construction segment, primarily due to a reduction in "fast-track" telecom projects. However, this was offset by strong performance in its U.S. mechanical construction and facilities services segment, as well as growth in its Canada and United Kingdom operations. EMCOR's financial position remains solid, supported by a new, larger revolving credit facility and sufficient cash flow generation to meet its obligations and capital expenditure needs.

Key Highlights

  • 1Revenues increased by 24.6% to $1,052.3 million for the three months ended September 30, 2002, compared to $848.6 million in the prior year.
  • 2Net income rose by 27.4% to $19.5 million for the three months ended September 30, 2002, compared to $15.3 million in the prior year.
  • 3Diluted Earnings Per Share (EPS) grew to $1.26 for the three months ended September 30, 2002, up from $1.00 in the same period last year.
  • 4The acquisition of Comfort Systems USA, Inc. subsidiaries on March 1, 2002, significantly contributed to revenue growth, particularly in the U.S. mechanical construction and facilities services segment.
  • 5Gross profit margin improved to 12.3% for the three months ended September 30, 2002, from 11.9% in the prior year, driven partly by the acquired businesses.
  • 6Operating income increased by 36.7% to $35.9 million for the three months ended September 30, 2002, compared to $26.2 million in the prior year.
  • 7EMCOR secured a new $275 million five-year revolving credit agreement on September 26, 2002, enhancing its liquidity and financial flexibility.

Frequently Asked Questions

The primary driver of EMCOR's revenue and net income growth in this quarter was the acquisition of nineteen subsidiaries from Comfort Systems USA, Inc. on March 1, 2002. These acquired businesses significantly contributed to the company's top-line growth and profitability, particularly within the U.S. mechanical construction and facilities services segment.

The acquisition of Comfort Systems USA substantially increased EMCOR's revenues and gross profit. While it also led to higher selling, general, and administrative expenses due to the integration of new operations, the overall impact was positive, driving significant growth in net income and operating income. The acquisition also expanded EMCOR's geographic presence and service diversification.

EMCOR's U.S. mechanical construction and facilities services segment showed strong growth, benefiting from the Comfort acquisition. The Canada and United Kingdom segments also reported increased revenues. However, the U.S. electrical construction segment experienced a revenue decline due to a reduction in 'fast-track' telecom projects. The company is focusing on longer-duration projects and facility services to mitigate cyclicality in the construction market.

Yes, EMCOR entered into a new $275 million five-year revolving credit agreement on September 26, 2002, replacing its previous $150 million facility. This provides enhanced liquidity and financial flexibility to support ongoing operations and potential future growth opportunities.