10-QPeriod: Q1 FY2017

EMCOR Group, Inc. Quarterly Report for Q1 Ended Mar 31, 2017

Filed April 27, 2017For Securities:EME

Summary

EMCOR Group, Inc. reported a strong first quarter for 2017, demonstrating significant year-over-year growth in key financial metrics. Revenues increased by 8.4% to $1.89 billion, driven by robust performance in its domestic construction segments, particularly within the commercial and telecommunications sectors, as well as contributions from recent acquisitions. The company also achieved record operating income of $82.8 million and net income attributable to EMCOR of $52.6 million, with diluted earnings per share from continuing operations rising to $0.88. This performance reflects successful strategic initiatives, including growth from acquisitions and improved operational efficiency, leading to a notable expansion in operating margin to 4.4%. The company also maintained a healthy backlog of $3.97 billion, providing visibility for future revenue. EMCOR's balance sheet remains solid, with substantial liquidity and a well-managed debt structure, positioning it favorably for continued growth and shareholder returns.

Financial Highlights

49 data points
Beta

Revenue

$1.89B

14.1% Gross Margin

Net Income

$52.64M

2.8% Net Margin

EPS (Diluted)

$0.87

Total Assets

$3.81B

Cash & Equivalents

$302.75M

Free Cash Flow

-$3.90M

Financial Statements
Beta
Revenue$1.89B
Cost of Revenue$1.63B
Gross Profit$266.34M
SG&A Expenses$183.00M
Operating Income$82.77M
Interest Expense$3.07M
Net Income$52.64M
EPS (Basic)$0.88
EPS (Diluted)$0.87
Shares Outstanding (Basic)59.77M
Shares Outstanding (Diluted)60.11M

Key Highlights

  • 1Revenue increased by 8.4% to $1.89 billion in Q1 2017 compared to Q1 2016, driven by domestic construction segments and acquisitions.
  • 2Operating income surged by 49% to $82.8 million, with operating margin expanding to 4.4% from 3.2% in the prior year period.
  • 3Net income attributable to EMCOR Group, Inc. grew by 53.2% to $52.6 million.
  • 4Diluted earnings per share from continuing operations increased to $0.88, up from $0.56 in the prior year.
  • 5The company completed two acquisitions in early 2017, totaling $84.8 million, further bolstering its market presence.
  • 6Backlog remained strong at $3.97 billion as of March 31, 2017, indicating solid future revenue prospects.
  • 7EMCOR repurchased approximately $53.3 million of its common stock during the first quarter of 2017 as part of its ongoing share repurchase program.

Frequently Asked Questions

Revenue growth was primarily driven by increased activity in EMCOR's domestic construction segments, particularly in the commercial and telecommunications sectors. Additionally, revenues from businesses acquired in 2016 and early 2017 contributed significantly to the overall increase.

Profitability improved due to a combination of factors, including higher gross profit margins in domestic construction segments, the recovery of previously disputed contract costs on a project, and improved operating performance in the electrical construction and facilities services segment. Acquisitions also contributed to increased operating income, although some incurred amortization expenses.

The company's backlog of $3.97 billion at the end of the first quarter of 2017 indicates strong future revenue visibility. The recent acquisitions, totaling $84.8 million in early 2017, are expected to further strengthen EMCOR's market position and contribute to ongoing growth across its service offerings.

EMCOR utilizes a $900 million revolving credit facility and a $400 million term loan. The company maintained compliance with its debt covenants and has a strong cash balance of $302.8 million at the end of the quarter. Its primary source of liquidity remains cash generated from operations, supplemented by its credit facilities.