10-QPeriod: Q1 FY2014

EMCOR Group, Inc. Quarterly Report for Q1 Ended Mar 31, 2014

Filed April 29, 2014For Securities:EME

Summary

EMCOR Group, Inc. reported solid first-quarter results for 2014, demonstrating revenue growth and a significant improvement in operating income and margins compared to the prior year. Revenues increased by 2.0% to $1.60 billion, driven by contributions from recent acquisitions, particularly in the United States industrial services segment. The company also saw organic revenue increases in its electrical construction and facilities services segment. This top-line growth, combined with improved profitability across most segments and disciplined cost management, led to a substantial increase in operating income, which rose to $69.4 million from $51.3 million in the same period last year, with the operating margin expanding to 4.3% from 3.3%. Net income attributable to EMCOR Group, Inc. shareholders also saw a healthy increase, reaching $41.3 million, or $0.61 per diluted share, up from $30.2 million, or $0.44 per diluted share, in the first quarter of 2013. The company maintained a strong backlog of $3.37 billion at the end of the quarter, indicating continued demand for its services. EMCOR also continued its commitment to returning capital to shareholders through a regular quarterly dividend and an active share repurchase program, signaling confidence in its ongoing financial health and future prospects.

Financial Highlights

49 data points
Beta

Revenue

$1.59B

13.6% Gross Margin

Net Income

$41.26M

2.6% Net Margin

EPS (Diluted)

$0.61

Total Assets

$3.41B

Cash & Equivalents

$406.67M

Free Cash Flow

-$24.32M

Financial Statements
Beta
Revenue$1.59B
Cost of Revenue$1.37B
Gross Profit$216.20M
SG&A Expenses$143.85M
Operating Income$72.12M
Interest Expense$2.25M
Net Income$41.26M
EPS (Basic)$0.61
EPS (Diluted)$0.61
Shares Outstanding (Basic)67.19M
Shares Outstanding (Diluted)68.00M

Key Highlights

  • 1Revenue increased by 2.0% to $1.60 billion in Q1 2014, driven by $119.0 million in incremental revenue from 2013 acquisitions.
  • 2Operating income significantly improved by 35.3% to $69.4 million, with the operating margin expanding to 4.3% from 3.3% in the prior year.
  • 3Net income attributable to EMCOR Group, Inc. increased to $41.3 million ($0.61 per diluted share) from $30.2 million ($0.44 per diluted share) in Q1 2013.
  • 4The company maintained a solid backlog of $3.37 billion as of March 31, 2014.
  • 5EMCOR declared and paid a quarterly dividend of $0.08 per share.
  • 6The company had $122.5 million available for share repurchases under its authorized programs as of March 31, 2014.
  • 7Costs and estimated earnings in excess of billings on uncompleted contracts stood at $371.9 million, indicating a robust pipeline of ongoing projects.

Frequently Asked Questions

EMCOR's revenue increased by 2.0% to $1.60 billion in the first quarter of 2014 compared to $1.57 billion in the first quarter of 2013. This growth was primarily driven by recent acquisitions. Profitability saw a significant improvement, with operating income rising by 35.3% to $69.4 million, and the operating margin expanding to 4.3% from 3.3% in the prior year. Net income attributable to EMCOR Group, Inc. also increased to $41.3 million ($0.61 per diluted share) from $30.2 million ($0.44 per diluted share).

Acquisitions made in 2013, particularly RepconStrickland, Inc. (RSI) within the United States industrial services segment and other businesses in the United States mechanical construction and facilities services segment, contributed $119.0 million to total revenues and $7.3 million to operating income in the first quarter of 2014. While these acquisitions boosted top-line results, they also included $3.5 million in amortization expense related to identifiable intangible assets.

EMCOR reported a backlog of $3.37 billion as of March 31, 2014. This figure represents unrecognized revenues from uncompleted contracts and anticipated revenues from services contracts, indicating a strong pipeline of future work. While slightly down from the previous year's $3.42 billion, the backlog demonstrates continued demand for EMCOR's services across its various segments.

As of March 31, 2014, EMCOR had a Term Loan balance of $345.6 million with no outstanding borrowings under its revolving credit facility. The company declared and paid a quarterly dividend of $0.08 per share and had approximately $122.5 million available for share repurchases under its authorized programs, indicating a commitment to shareholder returns funded by operations.