8-KEarnings & ResultsExhibits & Filings

EMCOR Group, Inc. 8-K Report, Financial Results (Apr 27, 2006)

Filed April 27, 2006For Securities:EME

Summary

EMCOR Group, Inc. (EME) reported robust first-quarter 2006 results, demonstrating significant year-over-year improvements. The company announced a more than 200% increase in income from continuing operations to $7.6 million, or $0.24 per diluted share, compared to $2.0 million, or $0.06 per diluted share, in the prior year. This substantial growth was driven by a 6.2% rise in revenues to $1.15 billion and a notable improvement in operating income, which increased by 115.4% to $12.3 million. Investors will find the strategic shift towards the private sector commercial market particularly encouraging. EMCOR's contract backlog reached $2.82 billion, with the private sector commercial backlog exceeding $1 billion for the first time and representing a larger portion of the total backlog. The company's U.S. facilities services business also showed strong organic growth, with revenues up approximately 20%, reflecting increased demand for outsourced services. EMCOR maintained its full-year 2006 revenue guidance of $4.9 billion to $5.1 billion and EPS guidance of $1.54 to $1.90, despite incurring new expenses related to the adoption of FAS 123(R).

Key Highlights

  • 1First-quarter 2006 income from continuing operations surged by over 200% to $7.6 million ($0.24 per diluted share), compared to $2.0 million ($0.06 per diluted share) in Q1 2005.
  • 2Revenue increased by 6.2% to $1.15 billion in the first quarter of 2006, up from $1.08 billion in the prior year.
  • 3Operating income saw a significant jump of 115.4% to $12.3 million in Q1 2006, with operating margin improving to 1.1% from 0.5%.
  • 4Total contract backlog stood at $2.82 billion as of March 31, 2006, an increase from both prior periods.
  • 5Private sector commercial backlog represented 37% of total backlog, surpassing $1 billion for the first time, indicating a successful strategic focus.
  • 6The U.S. facilities services business reported approximately 20% revenue growth driven by organic demand.
  • 7Full-year 2006 revenue and EPS guidance remain unchanged, with revenues expected between $4.9 billion and $5.1 billion and diluted EPS between $1.54 and $1.90.

Frequently Asked Questions

The substantial increase in income from continuing operations was driven by a combination of higher revenues, improved operating income margins, and a strategic shift towards higher-growth private sector commercial projects. The company also experienced strong performance in its U.S. facilities services division.

EMCOR's total contract backlog increased to $2.82 billion. A key highlight is the growing proportion of private sector commercial backlog, which now represents 37% of the total and exceeded $1 billion for the first time. This indicates a successful strategy to capitalize on private sector demand.

The adoption of FAS 123(R) resulted in expenses of $0.4 million, or $0.01 per diluted share, during the first quarter of 2006. These expenses were not present in the prior year period but are factored into the company's full-year EPS guidance.

Yes, EMCOR anticipates continued strong performance and growth in its U.S. facilities services business. This is driven by the increasing trend of companies outsourcing their facilities management needs, a trend the company is well-positioned to benefit from.