10-QPeriod: Q3 FY2022

EMCOR Group, Inc. Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 27, 2022For Securities:EME

Summary

EMCOR Group, Inc. reported a strong third quarter for fiscal year 2022, showcasing record revenues and increased profitability. Revenue growth was observed across most segments, driven by robust demand for specialty construction and facility services, though the UK Building Services segment saw a decline primarily due to unfavorable foreign exchange rates. Despite inflationary pressures and supply chain disruptions, the company managed to improve operating income through effective cost management and leveraging its overhead structure. Significant focus has been placed on managing working capital, evidenced by an increase in operating cash flow. The company also continued its aggressive share repurchase program and announced an increase in its quarterly dividend. While facing macroeconomic headwinds such as rising interest rates and continued supply chain issues, EMCOR's substantial backlog of remaining performance obligations ($7.1 billion) provides a solid foundation for future revenue generation and demonstrates the ongoing demand for its services.

Financial Highlights

48 data points
Beta

Revenue

$2.83B

14.6% Gross Margin

Net Income

$105.77M

3.7% Net Margin

EPS (Diluted)

$2.16

Total Assets

$5.44B

Cash & Equivalents

$403.82M

Free Cash Flow

$257.20M

Financial Statements
Beta
Revenue$2.83B
Cost of Revenue$2.41B
Gross Profit$413.23M
SG&A Expenses$263.14M
Operating Income$150.09M
Net Income$105.77M
EPS (Basic)$2.16
EPS (Diluted)$2.16
Shares Outstanding (Basic)48.87M
Shares Outstanding (Diluted)49.05M

Key Highlights

  • 1Record quarterly revenues of $2.83 billion, up 12.1% year-over-year.
  • 2Operating income increased to $150.1 million from $137.4 million in the prior year period.
  • 3Diluted earnings per share (EPS) rose to $2.16 from $1.85.
  • 4Significant increase in net cash provided by operating activities to $238.4 million for the nine months ended September 30, 2022, from $113.9 million in the prior year.
  • 5Aggressive share repurchase program continued, with approximately $660.6 million spent in the first nine months of 2022.
  • 6Remaining performance obligations (backlog) increased to $7.1 billion as of September 30, 2022, indicating strong future demand.
  • 7Quarterly dividend increased from $0.13 to $0.15 per share, effective with the October 31, 2022 payment.

Frequently Asked Questions

EMCOR reported record revenues of $2.83 billion for the third quarter of 2022, an increase of 12.1% compared to $2.52 billion in the same period of 2021. This growth was broad-based across most segments, with the exception of the UK Building Services segment, which was impacted by foreign exchange rates.

The company acknowledged the impact of inflationary pressures (fuel, materials, wages) and supply chain disruptions, which have led to project delays, scheduling impacts, and reduced labor productivity. EMCOR is implementing strategies such as enhanced labor planning, project scheduling, and price adjustments (where contractually permitted) to mitigate these challenges. While these actions have been effective, the company notes that these disruptions continue to evolve.

EMCOR generated significantly improved operating cash flow of $238.4 million in the first nine months of 2022, up from $113.9 million in the prior year. The company is focused on efficient cash conversion to fund growth through acquisitions and capital expenditures, meet contractual commitments, and return value to shareholders via dividends and share repurchases. They also maintain substantial borrowing capacity under their revolving credit facility.

EMCOR's backlog of remaining performance obligations stood at $7.1 billion as of September 30, 2022, an increase from the prior year. This substantial backlog signifies robust future demand for the company's services across its various segments, providing visibility into future revenue streams.