Summary
EMCOR Group, Inc. (EME) filed an 8-K on November 3, 2010, reporting its third-quarter 2010 financial results. The company reported a significant net loss of $175.6 million ($2.64 per diluted share) for the quarter. This loss was primarily driven by a substantial $226.2 million non-cash impairment charge related to its United States facilities services segment, specifically impacting industrial services operations due to recessionary trends in the refining industry. Excluding this charge, adjusted net income was $30.9 million ($0.45 per diluted share), a decrease from the prior year's quarter. Revenues for the quarter declined to $1.28 billion from $1.37 billion in the same period of 2009.
Key Highlights
- 1Reported a Q3 2010 net loss of $175.6 million ($2.64 per diluted share), largely due to a $226.2 million non-cash impairment charge.
- 2Adjusted net income (excluding the impairment charge) was $30.9 million ($0.45 per diluted share), down from $39.9 million ($0.59 per diluted share) in Q3 2009.
- 3Quarterly revenues decreased to $1.28 billion from $1.37 billion year-over-year.
- 4The non-cash impairment charge was related to the United States facilities services segment, specifically industrial services operations, impacted by the refining industry downturn.
- 5EMCOR increased its full-year 2010 adjusted EPS guidance to a range of $1.78 to $1.90.
- 6Contract backlog remained stable at $3.14 billion as of September 30, 2010, with growth noted in healthcare, industrial, and institutional sectors offsetting declines elsewhere.
- 7Selling, general, and administrative (SG&A) expenses decreased by 13.4% year-over-year as a percentage of revenue.
Frequently Asked Questions
The company reported a net loss of $175.6 million ($2.64 per diluted share) primarily due to a $226.2 million non-cash impairment charge. This charge was taken on goodwill and identifiable intangible assets within the United States facilities services segment, specifically impacting industrial services operations due to adverse conditions in the refining industry.
Excluding the $226.2 million non-cash impairment charge, EMCOR reported adjusted net income of $30.9 million, or $0.45 per diluted share, for the third quarter of 2010. This is a decrease compared to the adjusted net income of $39.9 million, or $0.59 per diluted share, reported in the third quarter of 2009.
Yes, EMCOR has increased its full-year 2010 adjusted earnings per share guidance. The company now expects adjusted EPS to be in the range of $1.78 to $1.90, excluding impairment charges and the gain on sale of an equity investment. This reflects better-than-anticipated margin performance.
As of September 30, 2010, EMCOR's contract backlog was $3.14 billion, which is largely unchanged from previous periods. The company noted growth in its healthcare, industrial, and institutional sectors, which helped to offset declines in other markets.