10-QPeriod: Q1 FY2020

EMCOR Group, Inc. Quarterly Report for Q1 Ended Mar 31, 2020

Filed April 30, 2020For Securities:EME

Summary

EMCOR Group, Inc. reported solid financial results for the first quarter of 2020, exceeding prior year records for revenues, operating income, net income, and diluted earnings per share. Revenues increased by 6.5% to $2.30 billion, driven by growth across most segments, with notable strength in United States mechanical construction and industrial services. The company successfully managed operating expenses, resulting in improved gross profit margins and a slight increase in overall operating income, despite higher selling, general, and administrative expenses. Despite the backdrop of the emerging COVID-19 pandemic, EMCOR demonstrated resilience, with management indicating that the ongoing disruptions had not yet materially impacted its results of operations for the quarter. The company also secured an updated and expanded credit facility, increasing its financial flexibility. Looking ahead, EMCOR faces uncertainties related to the pandemic's duration and its economic impact, but the company's substantial backlog of remaining performance obligations provides a degree of visibility and stability.

Financial Highlights

50 data points
Beta

Revenue

$2.30B

14.5% Gross Margin

Net Income

$75.67M

3.3% Net Margin

EPS (Diluted)

$1.35

Total Assets

$4.84B

Cash & Equivalents

$347.09M

Free Cash Flow

-$78.81M

Financial Statements
Beta
Revenue$2.30B
Cost of Revenue$1.97B
Gross Profit$333.06M
SG&A Expenses$227.00M
Operating Income$106.00M
Net Income$75.67M
EPS (Basic)$1.35
EPS (Diluted)$1.35
Shares Outstanding (Basic)56.01M
Shares Outstanding (Diluted)56.21M

Key Highlights

  • 1Revenues increased 6.5% year-over-year to $2.30 billion, reaching a first-quarter record.
  • 2Net income grew to $75.7 million, and diluted EPS rose to $1.35, both setting first-quarter records.
  • 3Operating income increased by 3.7% to $106.0 million, with a slight decline in operating margin to 4.6% from 4.7%.
  • 4The company entered into a new, larger credit agreement totaling $1.3 billion for its revolving credit facility and $300 million for its term loan, enhancing liquidity.
  • 5Total backlog (remaining performance obligations) stood at $4.42 billion as of March 31, 2020, providing significant revenue visibility.
  • 6The company repurchased approximately $99.0 million of its common stock during the quarter.
  • 7EMCOR explicitly notes the uncertainty and potential adverse impact of the COVID-19 pandemic on future operations, although it had not materially impacted Q1 2020 results.

Frequently Asked Questions

EMCOR's revenues increased by 6.5% to $2.30 billion in the first quarter of 2020, up from $2.16 billion in the same period of 2019. This growth was broad-based across most of its operating segments, with notable increases in United States mechanical construction and industrial services.

Gross profit increased by $24.3 million and the gross profit margin improved to 14.5% from 14.3%. However, selling, general, and administrative expenses increased by $20.8 million, leading to a slight decrease in the operating margin to 4.6% from 4.7% in the prior year's quarter. Despite this, net income and diluted EPS reached record levels for the first quarter.

As of March 31, 2020, EMCOR had $347.1 million in cash and cash equivalents. The company also entered into a new $1.6 billion credit facility on March 2, 2020, comprising a $1.3 billion revolving credit facility and a $300 million term loan, significantly enhancing its liquidity and financial flexibility. Total debt stood at $504.5 million.

EMCOR ended the quarter with a strong backlog of remaining unsatisfied performance obligations totaling $4.42 billion. This represents future revenue to be recognized and provides visibility into future business activity. The company acknowledges the significant uncertainty introduced by the COVID-19 pandemic on future demand and project execution but has not yet seen material impacts on its Q1 results.