Summary
EMCOR Group, Inc. reported solid financial results for the second quarter and first half of 2015, demonstrating revenue growth and improved operating income compared to the prior year. Revenues increased by 6.4% for the quarter and 4.1% for the first half, driven by strong performance across most segments, particularly the United States industrial services and building services divisions. Operating income saw a notable increase of 11.5% for the quarter, reaching a record for the second quarter, with an improved operating margin of 4.7%.
Financial Highlights
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Financial Statements
Beta
| Revenue | $1.65B |
| Cost of Revenue | $1.41B |
| Gross Profit | $239.53M |
| SG&A Expenses | $161.39M |
| Operating Income | $77.70M |
| Interest Expense | $2.21M |
| Net Income | $46.85M |
| EPS (Basic) | $0.75 |
| EPS (Diluted) | $0.74 |
| Shares Outstanding (Basic) | 62.81M |
| Shares Outstanding (Diluted) | 63.33M |
Key Highlights
- 1Revenues for the second quarter of 2015 increased to $1.65 billion, up 6.4% from $1.55 billion in the prior year quarter. For the first six months of 2015, revenues grew to $3.24 billion, a 4.1% increase over the same period in 2014.
- 2Operating income for the second quarter of 2015 reached $77.7 million, an increase of 11.5% from $69.7 million in the prior year, setting a new record for a second quarter.
- 3Diluted earnings per common share from continuing operations were $0.74 for the second quarter of 2015, up from $0.61 in the prior year quarter.
- 4Gross profit margin improved to 14.5% for the quarter and 14.1% for the six-month period, compared to 14.2% and 13.9% respectively in the prior year.
- 5The company completed an immaterial acquisition in the second quarter, expanding its mechanical construction services capabilities.
- 6Backlog remained stable at approximately $3.62 billion as of June 30, 2015.
- 7Net cash used in operating activities for the first six months of 2015 was $6.1 million, a decrease compared to $39.6 million provided by operating activities in the prior year, primarily due to an increase in accounts receivable.
Frequently Asked Questions
Revenue growth was primarily driven by increased demand in industrial field services within the United States industrial services segment, increased revenues from mobile mechanical services in the United States building services segment, and growth in both domestic construction segments. Operating income improvement was due to increased gross profit across most segments, with specific gains in United States mechanical construction and facilities services, and United States building services.
EMCOR's primary source of liquidity is cash generated from operations. The company maintains a $750 million revolving credit facility and a $350 million term loan, with no borrowings outstanding under the revolving facility as of June 30, 2015. The term loan balance was $323.8 million. The company believes its cash balances and borrowing capacity are sufficient for its short-term and foreseeable long-term liquidity needs.
The key segments are United States electrical construction and facilities services, United States mechanical construction and facilities services, United States building services, United States industrial services, and United Kingdom building services. While most segments showed growth, the United Kingdom building services segment experienced a decrease in operating income, partly due to the prior year's favorable impact of a reduction in accrued contract costs. The United States industrial services segment faced a temporary setback due to a nationwide refinery strike, affecting turnaround projects with high profit margins.
The company's backlog remained relatively stable at approximately $3.62 billion at the end of the second quarter of 2015. This backlog includes unrecognized revenues from uncompleted construction and services contracts. While the backlog is considered firm, many contracts are subject to customer cancellation. Historically, cancellations have not materially impacted EMCOR.