10-QPeriod: Q1 FY2008

EMCOR Group, Inc. Quarterly Report for Q1 Ended Mar 31, 2008

Filed April 24, 2008For Securities:EME

Summary

EMCOR Group, Inc. reported a strong first quarter for 2008, demonstrating significant year-over-year growth in revenue and profitability. Revenues increased by 29.1% to $1.66 billion, driven by robust performance across its United States construction and facilities services segments. This growth was further bolstered by strategic acquisitions made within the prior 12 months, which contributed $160.6 million to revenues and $20.6 million to operating income. The company achieved record highs for any first quarter in revenue, operating income, net income, and diluted earnings per share. Operating income more than doubled to $49.7 million, with the operating margin expanding from 1.3% to 3.0%. This improvement was attributed to increased construction work in key markets like hospitality, healthcare, and industrial sectors, as well as enhanced performance from its facilities services operations. EMCOR also reported a healthy increase in its backlog to $4.39 billion, indicating strong future revenue potential.

Key Highlights

  • 1Revenues surged by 29.1% year-over-year to $1.66 billion in Q1 2008, marking a record for any first quarter.
  • 2Operating income more than doubled to $49.7 million, with operating margin improving significantly from 1.3% to 3.0%.
  • 3Net income rose to $29.3 million, leading to record diluted EPS from continuing operations of $0.44.
  • 4The company completed two acquisitions for $18.9 million, integrating them into its facilities services and mechanical construction segments, and these acquisitions contributed significantly to revenue and operating income growth.
  • 5Backlog increased to $4.39 billion as of March 31, 2008, up from $3.84 billion in the prior year, signaling strong future project pipeline.
  • 6Net cash provided by operating activities improved substantially to $24.8 million, up from $8.4 million in the prior year quarter, driven by increased net income.

Frequently Asked Questions

EMCOR's revenues increased significantly by 29.1% to $1.66 billion for the three months ended March 31, 2008, compared to $1.29 billion for the same period in 2007. This growth was driven by increased construction work and contributions from recent acquisitions.

The substantial increase in operating income, from $17.35 million to $49.67 million, and the expansion of operating margin to 3.0% were primarily due to increased revenues from construction projects in the hospitality, healthcare, and industrial sectors, improved performance from U.S. facilities services operations, and the successful integration of acquired businesses.

EMCOR has a $300 million Term Loan entered into in September 2007, used for an acquisition. As of March 31, 2008, $200 million was outstanding. The company made a $24.25 million prepayment on this loan on March 31, 2008. Interest expense increased in Q1 2008 due to this loan not being outstanding in the prior year's comparable quarter.

EMCOR's backlog stood at $4.39 billion as of March 31, 2008, an increase from $3.84 billion in the prior year. This growth is attributed to new awards in hospitality, healthcare, transportation, industrial, and water/wastewater construction projects, suggesting a positive outlook for future revenue generation.