EMCOR Group, Inc. Reports First Quarter 2010 Results
- Revenues of $1.21 Billion -
- Operating Income of $42.3 Million -
- Backlog Improved 4.6% Over Year End -
NORWALK, CONNECTICUT, April 29, 2010 – EMCOR Group, Inc. (NYSE: EME) today reported results for the first quarter ended March 31, 2010.
For the 2010 first quarter, the Company reported net income of $21.8 million, or $0.32 per diluted share, compared to net income of $36.8 million, or $0.55 per diluted share, in the first quarter of 2009. In the 2010 first quarter, revenues were $1.21 billion, compared to $1.39 billion in the first quarter of 2009.
Operating income in the 2010 first quarter was $42.3 million, compared to operating income of $64.3 million in the same quarter a year ago. As a percentage of revenues, operating income in the first quarter of 2010 was 3.5%, compared with 4.6% in the 2009 first quarter. Selling, general and administrative expenses (SG&A) decreased $5.0 million to $122.8 million, or 10.1% of revenues, in the first quarter of 2010, compared to $127.8 million, or 9.2% of revenues, in the comparable prior year period.
Net interest expense for the first quarter of 2010 was $2.4 million, compared with $0.3 million in the comparable prior year period, and reflected the inclusion of expenses attributable to the acceleration of expense for debt issuance costs associated with the repayment and termination of a term loan and revolving credit facility. As previously announced, the Company closed on a new, $550 million revolving credit facility during the quarter that replaced the Company’s former $375 million facility.
Inclusive of discrete items, the actual income tax rate for the three months ended March 31, 2010 was 44.5%, compared to an income tax rate of 42.1% in the first quarter of 2009. For the 2010 full-year period, the Company anticipates an income tax rate of 39%.
Contract backlog as of March 31, 2010 was $3.29 billion, compared to contract backlog of $3.67 billion as of March 31, 2009 and $3.15 billion as of December 31, 2009. The $140 million sequential backlog improvement was principally attributable to increased contract awards in the commercial, healthcare, industrial and institutional sectors.
Frank T. MacInnis, Chairman and CEO of EMCOR Group, commented, “I am pleased with the direction and performance of our business in the first quarter of 2010, even though revenues and earnings declined compared to our record first quarter a year ago. Despite an environment that continues to be challenging, our businesses performed well and, thanks to our continued cost and capital management discipline, we generated solid profitability at a challenging point in the business cycle.”
Mr. MacInnis continued, “We are encouraged by the trends in our contract backlog in the first quarter. We saw sequential improvements in all of our markets, with the exception of the depressed hospitality and gaming construction market. We are particularly pleased to see improvements in our commercial and industrial backlog, each of which increased sequentially, as well as a substantial sequential increase in backlog in our facilities services business. We continue to benefit from our broad and diverse market exposure, and going forward we will remain focused on obtaining an optimal balance of work that affords both revenue stability and attractive growth opportunities.”
Mr. MacInnis concluded, “The 2010 first quarter provides a foundation upon which to build for the rest of the year, as the initiatives we have undertaken throughout the economic downturn have positioned us to capitalize on opportunities in our end markets. We are encouraged by the improvement in our backlog as our customers are slowly beginning to spend again. While these trends are encouraging, we will continue to manage our business for operational efficiency and will adhere to the same fiscal discipline that has served us so well in the past. We have successfully managed our expenses to levels that we are comfortable will support our growth going forward without significant additional cost increases, and, with the recently completed refinancing of our revolving credit facility, we have the liquidity to take advantage of strategic opportunities in the marketplace.”
The Company noted that, based on the current size and mix of its contract backlog and assuming a continuation of existing market conditions, it continues to expect to generate revenues in 2010 of approximately $5 billion and diluted earnings per share for 2010 of $1.45 to $1.85.
EMCOR Group, Inc. is a Fortune 500â 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 first quarter conference call will be available live via internet broadcast today, Thursday, April 29, 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.
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 2009 Form 10-K, its Form 10-Q for the first quarter ended March 31, 2010, 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 |
|
|
2010 |
2009 |
Revenues |
$1,212,212 |
$1,394,636 |
Cost of sales |
1,047,096 |
1,201,477 |
Gross profit |
165,116 |
193,159 |
Selling, general and administrative expenses |
122,797 |
127,795 |
Restructuring expenses |
-- |
1,060 |
|
|
|
Operating income |
42,319 |
64,053 |
Interest expense, net |
2,391 |
251 |
|
||
Income before income taxes |
39,928 |
64,053 |
Income tax provision |
17,511 |
26,682 |
|
|
|
Net income including noncontrolling interests |
22,417 |
37,371 |
Less: Net income attributable to noncontrolling interests |
600 |
603 |
|
|
|
Net income attributable to EMCOR Group, Inc. |
$21,817 |
$36,768 |
|
|
|
Basic earnings per common share: |
|
|
|
|
|
Net income attributable to EMCOR Group, Inc. common stockholders |
$0.33 |
$0.56 |
|
|
|
Diluted earnings per common share: |
|
|
|
|
|
Net income attributable to EMCOR Group, Inc. common stockholders |
$ 0.32 |
$ 0.55 |
|
|
|
Weighted average shares of common stock outstanding: |
|
|
Basic |
66,316,105 |
65,860,938 |
Diluted |
67,898,224 |
67,022,957 |
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
(Unaudited)
|
|
December 31,
2009
|
|
ASSETS |
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
600,561
|
|
$
726,975
|
|
Accounts receivable, net
|
1,043,570
|
|
1,057,171
|
|
Costs and estimated earnings in excess of billings
|
|
|
|
|
on uncompleted contracts
|
94,343
|
|
90,049
|
|
Inventories
|
32,816
|
|
34,468
|
|
Prepaid expenses and other
|
|
|
|
|
Total current assets
|
1,839,659
|
|
1,977,365
|
|
Investments, notes and other long-term receivables
|
5,550
|
|
19,287
|
|
Property, plant & equipment, net
|
89,793
|
|
92,057
|
|
Goodwill
|
594,426
|
|
593,628
|
|
Identifiable intangible assets, net
|
270,315
|
|
264,522
|
|
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
|
376
|
|
45,100
|
|
Accounts payable
|
341,666
|
|
379,764
|
|
Billings in excess of costs and estimated earnings
|
|
|
|
|
on uncompleted contracts
|
522,515
|
|
526,241
|
|
Accrued payroll and benefits
|
147,659
|
|
215,967
|
|
Other accrued expenses and liabilities
|
|
|
|
|
Total current liabilities
|
1,157,623
|
|
1,334,605
|
Borrowings under working capital credit line
|
150,000
|
|
--
|
|
Long-term debt and capital lease obligations
|
157
|
|
150,251
|
|
Other long-term obligations
|
|
|
|
|
Total liabilities
|
|
|
|
|
Equity:
|
|
|
|
|
Total EMCOR Group, Inc. stockholders’ equity
|
1,243,737
|
|
1,218,071
|
|
Noncontrolling interests
|
|
|
|
|
Total equity
|
|
|
|
|
Total liabilities and equity
|
|
|
|
|
|
|
|
|
FOR: EMCOR GROUP, INC.
CONTACT:
Paul Barnard
t: 0113 201 8260 m: 07753 829098
e: paul.barnard@trimediauk.com
R. Kevin Matz
Executive Vice President
Shared Services
+1 (203) 849-7938
FD Investors:
Eric Boyriven/Alexandra Tramont
+1 (212) 850-5600