Summary
EMCOR Group, Inc. reported mixed results for the nine months ended September 30, 2020. While overall revenues decreased year-over-year, the company saw an improvement in gross profit margin and operating income for the third quarter of 2020, reaching new company records. However, net income and diluted earnings per share declined compared to the prior year, largely due to a significant non-cash goodwill impairment charge recorded in the second quarter related to the United States industrial services segment. This impairment, coupled with other charges, impacted profitability, especially for the nine-month period. The company's balance sheet reflects a substantial increase in cash and cash equivalents, driven by strong operating cash flow. EMCOR also maintained a robust backlog of remaining performance obligations, indicating future revenue potential, though the company acknowledged ongoing uncertainties related to the COVID-19 pandemic's impact on demand and project execution. The company's credit facilities were also amended and restated, providing increased borrowing capacity.
Financial Highlights
50 data points| Revenue | $2.20B |
| Cost of Revenue | $1.84B |
| Gross Profit | $363.18M |
| SG&A Expenses | $226.79M |
| Operating Income | $135.85M |
| Net Income | $61.19M |
| EPS (Basic) | $1.11 |
| EPS (Diluted) | $1.11 |
| Shares Outstanding (Basic) | 54.98M |
| Shares Outstanding (Diluted) | 55.20M |
Key Highlights
- 1Revenues decreased by 3.8% to $2.20 billion for the third quarter and by 3.8% to $6.52 billion for the first nine months of 2020 compared to the same periods in 2019.
- 2Operating income for Q3 2020 increased by 17.4% to $135.9 million, with an operating margin of 6.2%, a record for the third quarter.
- 3Net income for Q3 2020 decreased to $61.2 million ($1.11 per diluted share) from $81.8 million ($1.45 per diluted share) in Q3 2019, primarily due to a $232.8 million non-cash impairment charge recorded in Q2 2020.
- 4The company recorded a significant $225.5 million goodwill impairment charge related to its United States industrial services segment due to adverse market conditions in the oil and gas industry.
- 5Cash and cash equivalents increased substantially to $680.6 million as of September 30, 2020, up from $359.9 million at December 31, 2019, driven by strong operating cash flow.
- 6Remaining performance obligations (backlog) stood at $4.53 billion as of September 30, 2020, an increase from the prior year.
- 7EMCOR amended and restated its credit agreement in March 2020, increasing its revolving credit facility to $1.3 billion and its term loan to $300 million.