10-QPeriod: Q3 FY2015

EMCOR Group, Inc. Quarterly Report for Q3 Ended Sep 30, 2015

Filed October 29, 2015For Securities:EME

Summary

EMCOR Group, Inc. reported a solid third quarter for 2015, with revenues growing 8.5% year-over-year to $1.7 billion, marking a new company record for the quarter. This growth was driven by strong performance across most segments, particularly the United States industrial services and electrical construction segments. Net income attributable to EMCOR Group, Inc. was $41.5 million, or $0.66 per diluted share, compared to $45.0 million, or $0.67 per diluted share, in the prior year quarter. While revenue growth was robust, a slight decrease in net income was primarily due to the absence of a significant building sale gain that boosted the prior year's results. The company maintains a strong backlog of $3.77 billion, up from $3.63 billion at the end of 2014, indicating continued business momentum. EMCOR also continued its share repurchase program, underscoring a commitment to returning value to shareholders. The company's financial position remains healthy, with a cash balance of $445.4 million and ample liquidity. Management expressed confidence in the company's ability to meet its short-term and long-term liquidity needs, supported by operating cash flows and an available revolving credit facility.

Financial Highlights

51 data points
Beta

Revenue

$1.70B

13.9% Gross Margin

Net Income

$41.52M

2.4% Net Margin

EPS (Diluted)

$0.66

Total Assets

$3.48B

Cash & Equivalents

$445.40M

Free Cash Flow

$101.65M

Financial Statements
Beta
Revenue$1.70B
Cost of Revenue$1.46B
Gross Profit$235.40M
SG&A Expenses$165.13M
Operating Income$69.97M
Interest Expense$2.23M
Net Income$41.52M
EPS (Basic)$0.66
EPS (Diluted)$0.66
Shares Outstanding (Basic)62.90M
Shares Outstanding (Diluted)63.39M

Key Highlights

  • 1Revenues increased by 8.5% year-over-year to a record $1.7 billion for the third quarter, driven by broad-based segment performance.
  • 2Net income attributable to EMCOR Group, Inc. was $41.5 million, or $0.66 per diluted share, down slightly from $45.0 million ($0.67 per share) in Q3 2014, impacted by the prior year's gain on sale of a building.
  • 3The company's backlog stood at $3.77 billion as of September 30, 2015, an increase from $3.63 billion at the end of 2014, signaling strong future revenue potential.
  • 4Operating income of $70.0 million was impacted by a $11.7 million gain on the sale of a building recognized in the prior year's quarter.
  • 5Cash and cash equivalents increased to $445.4 million from $432.1 million at the end of 2014, reflecting positive cash flow generation.
  • 6The company continued its share repurchase program, with approximately $143.5 million of authorization remaining as of September 30, 2015, demonstrating a commitment to shareholder returns.
  • 7Discontinued operations, primarily from the UK construction market withdrawal, had a minor impact, with a net loss of $0.3 million in the quarter.

Frequently Asked Questions

EMCOR's revenue growth of 8.5% was primarily driven by increased demand in its United States industrial services segment due to large capital and maintenance project activity, growth in its United States electrical construction and facilities services segment from commercial and healthcare projects, and increased mobile mechanical and energy services within its United States building services segment.

While revenues increased, net income attributable to EMCOR Group, Inc. saw a slight decrease to $41.5 million ($0.66 per diluted share) in Q3 2015 from $45.0 million ($0.67 per diluted share) in Q3 2014. This was largely due to the absence of a $11.7 million gain on the sale of a building that had boosted the prior year's results. Operating income also decreased due to this gain, although operational improvements were noted in segments like industrial services and electrical construction.

EMCOR reported a backlog of $3.77 billion as of September 30, 2015, which is an increase from $3.63 billion at the end of 2014. This growing backlog suggests continued business momentum and provides visibility into future revenue streams, particularly with strength in the United States mechanical construction and facilities services segment.

EMCOR maintained a healthy cash position of $445.4 million at the end of the quarter. The company continued to execute its share repurchase program, with $143.5 million remaining authorization, indicating a focus on returning capital to shareholders. They also noted compliance with debt covenants and expressed confidence in their liquidity to fund operations and potential growth opportunities.