10-QPeriod: Q1 FY2021

EMCOR Group, Inc. Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 29, 2021For Securities:EME

Summary

EMCOR Group, Inc. reported solid first-quarter 2021 results, marking new company records for revenue, operating income, operating margin, net income, and diluted earnings per share for the period. Revenues remained relatively stable year-over-year at $2.3 billion, supported by growth in mechanical construction, building services in the U.S., and U.K. building services, which offset a significant decline in the industrial services segment due to ongoing challenges in the oil and gas industry. Profitability saw a notable improvement, with operating income increasing by 10.5% to $117 million and operating margin expanding to 5.1% from 4.6% in the prior year, driven by stronger performance across most segments and effective cost management. The company continues to navigate the impacts of the COVID-19 pandemic, noting disruptions and reduced labor efficiency, particularly in its industrial services segment. However, EMCOR has demonstrated resilience, with a strong backlog of remaining performance obligations totaling $4.78 billion at the end of the quarter, providing visibility into future revenue. The company also executed strategic acquisitions, adding two businesses to bolster its mechanical and electrical construction services.

Financial Highlights

50 data points
Beta

Revenue

$2.30B

14.8% Gross Margin

Net Income

$84.77M

3.7% Net Margin

EPS (Diluted)

$1.54

Total Assets

$5.06B

Cash & Equivalents

$758.83M

Free Cash Flow

-$88.99M

Financial Statements
Beta
Revenue$2.30B
Cost of Revenue$1.96B
Gross Profit$341.07M
SG&A Expenses$224.07M
Operating Income$117.00M
Net Income$84.77M
EPS (Basic)$1.54
EPS (Diluted)$1.54
Shares Outstanding (Basic)54.90M
Shares Outstanding (Diluted)55.14M

Key Highlights

  • 1Achieved record first-quarter revenue of $2.304 billion, up 0.2% year-over-year.
  • 2Reported record first-quarter operating income of $117.0 million, a 10.5% increase from $106.0 million in Q1 2020.
  • 3Operating margin improved to 5.1% from 4.6% in the prior year, reflecting improved operational efficiencies and segment performance.
  • 4Net income attributable to EMCOR Group, Inc. increased by 11.9% to $84.8 million, resulting in record diluted EPS of $1.54.
  • 5The U.S. Industrial Services segment experienced a significant revenue decline of 35.3% ($128.5 million) due to adverse market conditions in the oil and gas industry.
  • 6Total remaining performance obligations (backlog) grew to $4.78 billion, indicating strong future revenue visibility.
  • 7Acquired two companies in Q1 2021 for $24.0 million to expand mechanical and electrical construction services.

Frequently Asked Questions

EMCOR Group demonstrated strong performance in Q1 2021, setting new company records for a first quarter in revenue, operating income, operating margin, net income, and diluted earnings per share. Revenues were slightly up year-over-year to $2.304 billion, while operating income saw a substantial increase of 10.5% to $117.0 million, leading to an improved operating margin of 5.1%. Diluted EPS also increased to $1.54.

Revenue growth was driven by the United States mechanical construction and facilities services segment, the United States building services segment, and the United Kingdom building services segment. However, the United States industrial services segment experienced a significant revenue decline of 35.3% ($128.5 million) due to adverse market conditions in the oil and gas industry, largely a result of the COVID-19 pandemic's impact on demand for refined products. The company also noted ongoing operational disruptions and reduced labor efficiency across segments due to COVID-19 safety protocols.

EMCOR Group reported a strong backlog of remaining performance obligations, totaling $4.78 billion as of March 31, 2021. This represents a significant increase from the prior year and provides good visibility into future revenue streams, suggesting continued business activity across its diverse service offerings.

EMCOR Group continues to pursue strategic growth through acquisitions, having completed two acquisitions in Q1 2021 for $24.0 million, aimed at expanding its mechanical and electrical construction capabilities. The company also repurchased approximately $12.9 million of its common stock and paid $7.1 million in dividends during the quarter, indicating a balanced approach to capital allocation.