10-QPeriod: Q3 FY2019

EMCOR Group, Inc. Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 29, 2019For Securities:EME

Summary

EMCOR Group, Inc. reported solid financial results for the third quarter and the first nine months of 2019, demonstrating strong revenue growth and improved profitability. Total revenues increased significantly year-over-year, driven by robust performance across most of its operating segments, particularly in United States electrical and mechanical construction and facilities services, as well as building services. The company showcased record third-quarter performance, highlighting increased operating income and diluted earnings per share. While the United Kingdom building services segment saw a revenue dip due to unfavorable exchange rates, overall operational efficiency and strategic acquisitions contributed to the positive financial trajectory. EMCOR also maintained a strong backlog of remaining performance obligations, indicating continued future revenue potential.

Financial Highlights

50 data points
Beta

Revenue

$2.29B

14.7% Gross Margin

Net Income

$81.83M

3.6% Net Margin

EPS (Diluted)

$1.45

Total Assets

$4.53B

Cash & Equivalents

$368.07M

Free Cash Flow

$219.12M

Financial Statements
Beta
Revenue$2.29B
Cost of Revenue$1.95B
Gross Profit$335.99M
SG&A Expenses$220.12M
Operating Income$115.75M
Net Income$81.83M
EPS (Basic)$1.46
EPS (Diluted)$1.45
Shares Outstanding (Basic)56.22M
Shares Outstanding (Diluted)56.56M

Key Highlights

  • 1Revenues for the third quarter of 2019 increased by 11.8% to $2.29 billion compared to $2.05 billion in Q3 2018.
  • 2Net income attributable to EMCOR Group, Inc. increased to $81.8 million for Q3 2019 from $79.4 million in Q3 2018.
  • 3Diluted earnings per common share from continuing operations rose to $1.45 in Q3 2019 from $1.36 in Q3 2018.
  • 4Total backlog (remaining performance obligations) stood at $4.04 billion as of September 30, 2019, indicating strong future revenue visibility.
  • 5The company continued its acquisition strategy, adding five companies in the first nine months of 2019 across various segments.
  • 6Operating margin for Q3 2019 was 5.1%, a slight decrease from 5.5% in Q3 2018, primarily due to a change in revenue mix within domestic construction segments.
  • 7EMCOR maintained compliance with its debt covenants and had no borrowings outstanding under its revolving credit facility as of September 30, 2019.

Frequently Asked Questions

Revenue growth was primarily driven by increased activity across most of EMCOR's reportable segments, including significant contributions from the United States electrical construction and facilities services, United States mechanical construction and facilities services, and United States building services segments. Growth was fueled by strong performance in commercial and manufacturing market sectors, new contract awards, and incremental revenues from recent acquisitions.

Profitability saw an improvement, with operating income increasing by approximately $4.0 million to $115.7 million in the third quarter of 2019, and net income attributable to EMCOR Group, Inc. rising to $81.8 million. Diluted earnings per share from continuing operations also saw a healthy increase. While gross profit margins saw a slight decrease, overall revenue growth and operational efficiencies supported the improved net income.

The remaining performance obligations, or backlog, of $4.04 billion as of September 30, 2019, represents the total amount of revenue expected to be recognized from uncompleted contracts. This substantial backlog provides strong visibility into future revenues and indicates continued demand for EMCOR's services across its various segments.

Acquisitions played a notable role in EMCOR's growth during the period. In the first nine months of 2019, the company acquired five businesses, contributing incremental revenues of $75.6 million and operating income of $4.8 million for the third quarter. These acquisitions have been integrated into various segments, expanding the company's service offerings and geographic reach.