EMCOR Group, Inc. Reports Second Quarter 2009 Results
- Second Quarter Operating Income Increases to $74.9 Million -
- Second Quarter Diluted EPS Increases to $0.67 -
NORWALK, CONNECTICUT, July 30, 2009 – EMCOR Group, Inc. (NYSE: EME) today reported record results for the second quarter ended June 30, 2009.
For the 2009 second quarter, the Company reported net income (1) of $44.8 million, or $0.67 per diluted share, an increase of 2.0% over net income (1) of $44.0 million, or $0.65 per diluted share, in the second quarter of 2008. In the 2009 second quarter, revenues were $1.42 billion compared to $1.72 billion in the second quarter of 2008.
Including restructuring expenses of $3.0 million, operating income in the 2009 second quarter was $74.9 million, an increase of 2.1% from operating income of $73.3 million in the same quarter a year ago. As a percentage of revenues, operating income in the quarter rose to 5.3% from 4.3% in the 2008 second quarter. Selling, general and administrative expenses (SG&A) decreased $14.9 million to $137.0 million, or 9.6% of revenues, in the second quarter of 2009, compared to $151.8 million, or 8.8% of revenues, in the comparable prior year period.
Contract backlog as of June 30, 2009 was $3.40 billion, compared to contract backlog of $4.67 billion as of June 30, 2008 and $3.67 billion as of March 31, 2009. The decline in backlog was principally attributable to reduced contract awards in the hospitality / gaming sectors, particularly in Las Vegas, and in the commercial sector, which was partially offset by backlog growth in the institutional sector.
Compared to the first quarter of 2009, revenues increased 2.0%, operating income increased 16.4% and net income increased 21.9%. This performance reflects the Company’s solid operational execution and aggressive cost cutting initiatives.
Net income (1) for the first half of 2009 was $81.6 million, or $1.22 per diluted share, an increase of 11.3% over net income (1) of $73.3 million, or $1.09 per diluted share, for the prior year comparable period. Revenues for the first half of 2009 totaled $2.82 billion compared to $3.38 billion for the first six months of 2008, a decrease of 16.8%.
For the 2009 six-month period, operating income increased 13.1% to $139.2 million, or 4.9% of revenues, from $123.0 million, or 3.6% of revenues, in the same year ago period. Operating income for the 2009 six-month period included restructuring expenses of $4.1 million. SG&A for the first half of 2009 was $264.8 million, or 9.4% of revenues, compared to $292.1 million, or 8.6% of revenues for the first half of 2008.
Frank T. MacInnis, Chairman and CEO of EMCOR Group, commented, “We are very pleased with our performance in the 2009 second quarter, which exceeded our expectations in the face of a weak economic environment, and was driven by outstanding execution. We saw solid performance across the majority of our segments that drove profitability improvements in spite of lower demand. These results are a testament to the work we have done over the past few years to strengthen and diversify our business mix and to develop recurring sources of revenue, in addition to our swift response to the global economic downturn.”
Mr. MacInnis continued, “Our performance during the first half of 2009 is also the result of our long-term efforts to reposition EMCOR to perform across the economic cycle. Leveraging the expertise of one of the most talented management teams in the industry, we have diversified our business to include a significant presence in more profitable market segments in our industry whose demand drivers are less directly tied to the overall economy. We have done this while maintaining the expense discipline and liquidity required to manage through economic cycles. As a result, we are a more balanced and profitable company than ever before, and while we are not immune to the current pressures on our industry, we believe EMCOR is better positioned to weather this cycle than at any other time in our history. We continue to be supported by a strong balance sheet and growing cash position, which benefits us in a difficult market where financial strength and liquidity are key competitive differentiators.”
Mr. MacInnis concluded, “Although we are extremely pleased with our performance to date, visibility in the face of challenging market conditions remains limited. We continue to see softness in the commercial and hospitality / gaming sectors, and the prospect for sequential growth in our facilities services operations, while possible, remains unclear. However, we continue to win key projects and expect that our financial strength, geographic reach and experience will position us well to participate in government stimulus projects as they become available, which we expect will begin to occur near the end of 2009 and into 2010. Given the unpredictability of the overall market, our focus remains on controlling costs, superior execution and positioning our business for the eventual economic rebound.”
The Company noted that, based on its financial performance in the first half of 2009, current market conditions and the scope of its contract backlog, it has updated its full year 2009 guidance to include revenues of $5.5 billion to $5.7 billion and 2009 full year diluted EPS of $2.00 to $2.20. While a material deterioration in market conditions from current levels could cause the Company’s performance to decline, early benefits from the economic stimulus plan, accretive acquisitions, and/or improved credit markets could provide opportunities to exceed these estimates.
EMCOR Group, Inc. is a Fortune 500® worldwide leader in mechanical and electrical construction services, energy infrastructure and facilities services. This press release and other press releases may be viewed at the Company’s Web site at www.emcorgroup.com.
EMCOR Group's second quarter conference call will be available live via internet broadcast today, Thursday, July 30, at 10:30 AM Eastern Daylight Time. You can access the live call through the Home Page of the Company’s Web site at www.emcorgroup.com.
(1) EMCOR adopted SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” effective January 1, 2009, which, among other things, changed the presentation format and certain captions of our Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets. EMCOR uses the captions recommended by this standard in its condensed consolidated financial statements such as “net income attributable to EMCOR Group, Inc.” and “basic and diluted earnings per common share attributable to EMCOR Group, Inc. common stockholders.” However, in the preceding release EMCOR has shortened this language to “net income” and “earnings per share”.
This release may contain certain forward-looking statements within the meaning of the Private Securities Reform Act of 1995. Any such comments are based upon information available to EMCOR management and its perception thereof, as of this date, and EMCOR assumes no obligation to update any such forward-looking statements. These forward-looking statements may include statements regarding market opportunities, market share growth, gross profit, backlog mix, projects with varying profit margins, and selling, general and administrative expenses. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Accordingly these statements are no guarantee of future performance. Such risk and uncertainties include, but are not limited to, adverse effects of general economic conditions, changes in the political environment, changes in the specific markets for EMCOR’s services, adverse business conditions, availability of adequate levels of surety bonding, increased competition, unfavorable labor productivity and mix of business. Certain of the risks and factors associated with EMCOR’s business are also discussed in the Company’s 2008 Form 10-K, its Form 10-Q for the second quarter ended June 30, 2009, and in other reports filed from time to time with the Securities and Exchange Commission. All these risks and factors should be taken into account in evaluating any forward-looking statements.
EMCOR GROUP, INC.
FINANCIAL HIGHLIGHTS
(In thousands, except share and per share information)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
For the Three Months Ended |
For the Six Months Ended |
||
|
2009 |
2008 |
2009 |
2008 |
Revenues |
$1,422,670 |
$1,722,972 |
$2,817,306 |
$3,384,375 |
Cost of sales |
1,207,786 |
1,497,761 |
2,409,263 |
2,969,239 |
Gross profit |
214,884 |
225,211 |
408,043 |
415,136 |
Selling, general and administrative expenses |
136,974 |
151,824 |
264,769 |
292,066 |
Restructuring expenses |
3,050 |
57 |
4,110 |
71 |
|
|
|
|
|
Operating income |
74,860 |
73,330 |
139,164 |
122,999 |
Interest expense, net |
(814) |
(579) |
(1,065) |
(1,433) |
|
||||
Income before income taxes |
74,046 |
72,751 |
138,099 |
121,566 |
Income tax provision |
28,818 |
28,520 |
55,500 |
47,931 |
|
|
|
|
|
Net income including noncontrolling interests |
45,228 |
44,231 |
82,599 |
73,635 |
Less: Net income attributable to noncontrolling interests |
(409) |
(277) |
(1,012) |
(353) |
|
|
|
|
|
Net income attributable to EMCOR Group, Inc. (1) |
$44,819 |
$43,954 |
$81,587 |
$73,282 |
|
|
|
|
|
Basic earnings per common share: |
|
|
|
|
|
|
|
|
|
Net income attributable to EMCOR Group, Inc. common stockholders |
$0.68 |
$0.67 |
$1.24 |
$1.12 |
|
|
|
|
|
Diluted earnings per common share: |
|
|
|
|
|
|
|
|
|
Net income attributable to EMCOR Group, Inc. common stockholders |
$ 0.67 |
$ 0.65 |
$ 1.22 |
$ 1.09 |
|
|
|
|
|
Weighted average shares of common stock outstanding: |
|
|
|
|
Basic |
65,835,298 |
65,322,768 |
65,847,911 |
65,294,160 |
Diluted |
67,262,113 |
67,301,117 |
67,142,328 |
67,137,110 |
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
June 30,
(Unaudited)
|
|
December 31,
2008
|
|
ASSETS |
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
521,471
|
|
$
405,869
|
|
Accounts receivable, net
|
1,249,020
|
|
1,390,973
|
|
Costs and estimated earnings in excess of billings
|
|
|
|
|
on uncompleted contracts
|
89,062
|
|
105,441
|
|
Inventories
|
45,924
|
|
54,601
|
|
Prepaid expenses and other
|
|
|
|
|
Total current assets
|
1,965,097
|
|
2,010,740
|
|
Investments, notes and other long-term receivables
|
22,668
|
|
14,958
|
|
Property, plant & equipment, net
|
94,802
|
|
96,716
|
|
Goodwill
|
586,127
|
|
582,714
|
|
Identifiable intangible assets, net
|
287,211
|
|
292,128
|
|
Other assets
|
|
|
|
|
Total assets
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Borrowings under working capital credit line
|
$
--
|
|
$
--
|
|
Current maturities of long-term debt and capital
lease obligations
|
3,405
|
|
3,886
|
|
Accounts payable
|
405,791
|
|
500,881
|
|
Billings in excess of costs and estimated earnings
|
|
|
|
|
on uncompleted contracts
|
629,758
|
|
601,834
|
|
Accrued payroll and benefits
|
184,447
|
|
221,564
|
|
Other accrued expenses and liabilities
|
|
|
|
|
Total current liabilities
|
1,395,768
|
|
1,513,155
|
|
Long-term debt and capital lease obligations
|
193,729
|
|
196,218
|
|
Other long-term obligations
|
|
|
|
|
Total liabilities
|
|
|
|
|
Equity:
|
|
|
|
|
Total EMCOR Group, Inc. stockholders’ equity
|
1,132,155
|
|
1,043,345
|
|
Noncontrolling interests
|
|
|
|
|
Total equity
|
|
|
|
|
Total liabilities and equity
|
|
|
|
|
|
|
|
|
FOR: EMCOR GROUP, INC.
CONTACT:
R. Kevin Matz
Executive Vice President
Shared Services
(203) 849-7938
FD Investors:
Eric Boyriven/Alexandra Tramont
(212) 850-5600
Linden Alschuler & Kaplan, Inc.
Media: Suzanne Dawson /Cecile Fradkin
(212) 575-4545