- Record Quarterly Revenues of $3.21
billion, 13.5% Increase Year-over-Year -
- Record Quarterly Diluted Earnings per
Share of $3.57, Non-GAAP Diluted EPS of $3.61 -
- Record Remaining Performance Obligations
of $8.64 billion, 21.6% Increase Year-over-Year -
- Increases 2023 Non-GAAP Diluted EPS
Guidance Range to $12.25 - $12.65 from $10.75 - $11.25 -
- Increases 2023 Revenue Guidance to
approximately $12.5B from $12.0B - $12.5B -
EMCOR Group, Inc. (NYSE: EME) today reported results for the
third quarter ended September 30, 2023.
For the third quarter of 2023, net income was $169.4 million, or
$3.57 per diluted share, compared to net income of $105.8 million,
or $2.16 per diluted share, for the third quarter of 2022. Net
income for the third quarter of 2023 included a long-lived asset
impairment charge of $2.4 million, or $1.7 million after taxes.
Excluding this impairment charge, non-GAAP net income for the third
quarter of 2023 was $171.1 million, or $3.61 per diluted share.
Revenues for the third quarter of 2023 totaled $3.21 billion, up
13.5% from the third quarter of 2022.
Operating income for the third quarter of 2023 was $235.0
million, or 7.3% of revenues, compared to operating income of
$150.1 million, or 5.3% of revenues, for the third quarter of 2022.
Excluding the previously referenced impairment charge, non-GAAP
operating income for the third quarter of 2023 was $237.3 million,
or 7.4% of revenues. Operating income included depreciation and
amortization expense, inclusive of amortization of identifiable
intangible assets, of $30.3 million and $27.5 million for the third
quarter of 2023 and 2022, respectively.
Refer to the attached tables for a reconciliation of non-GAAP
operating income, non-GAAP operating margin, non-GAAP net income,
and non-GAAP diluted earnings per share to the comparable GAAP
measures.
Selling, general and administrative expenses for the third
quarter of 2023 totaled $308.1 million, or 9.6% of revenues,
compared to $263.1 million, or 9.3% of revenues, for the third
quarter of 2022.
The Company's income tax rate for the third quarter of 2023 was
27.7% compared to an income tax rate of 28.5% for the third quarter
of 2022.
Remaining performance obligations as of September 30, 2023 were
$8.64 billion compared to $7.10 billion as of September 30, 2022.
Remaining performance obligations grew approximately $1.53 billion
year-over-year.
Tony Guzzi, Chairman, President and Chief Executive Officer of
EMCOR, commented, “The Company had another excellent quarter,
resulting in multiple records across our business as we continue to
build on strong momentum. Year-over-year revenues increased 13.5%,
or 12.8% on an organic basis, driven by double-digit revenue growth
in our combined U.S. Construction segments, as well as our U.S.
Building Services segment. Despite ongoing geopolitical tensions
and tightened financing conditions creating a challenging
macroeconomic environment, strong end-market demand, coupled with
excellent execution, have helped drive our success this
quarter.”
Mr. Guzzi added, “Our U.S. Construction segments helped drive
another quarter of solid growth, with revenues increasing 16.4%
year-over-year on a combined basis. Specifically, our U.S
Mechanical Construction segment delivered 19.9% year-over-year
revenue growth, with an operating margin of 10.4% and our U.S.
Electrical Construction segment performed exceptionally well with a
third quarter operating margin of 9.1% and revenue growth of 10.1%
year-over-year. We continue to see resilient demand for our
services especially in semiconductors, data centers, manufacturing
re-shoring, healthcare and across the EV value chain. We also
continue to see strong demand for our nationwide fire & life
safety projects and services. Our industry leading capabilities in
building information modeling, prefabrication, project planning and
labor sourcing have helped us adapt and navigate the ongoing supply
chain and macroeconomic challenges. Our U.S. Building Services
segment continues to perform well, with a strong mix of work across
all service lines, achieving top line growth of 13.7%, and an
operating margin of 7.0%. Contributing to this strength is
continued demand for energy efficiency and retrofit projects,
building automation and controls, IAQ upgrades, as well as
maintenance and repair service projects. While the third quarter is
typically the weakest for our U.S. Industrial Services segment, we
continue to see modest improvement in this segment’s results
year-over-year. Lastly, our U.K. Building Services segment is
executing well with an operating margin of 8.0% despite challenging
market conditions.”
Revenues for the first nine months of 2023 totaled $9.14
billion, an increase of 12.5%, compared to $8.13 billion for the
first nine months of 2022. Net income for the first nine months of
2023 was $421.5 million, or $8.85 per diluted share, compared to
net income of $279.8 million, or $5.50 per diluted share, for the
first nine months of 2022. Excluding the impact of the previously
referenced impairment charge recorded in the third quarter of 2023,
non-GAAP net income for the first nine months of 2023 was $423.2
million, or $8.88 per diluted share.
Operating income for the first nine months of 2023 was $586.6
million, representing an operating margin of 6.4%, compared to
operating income of $387.7 million, representing an operating
margin of 4.8% for the first nine months of 2022. Excluding the
previously referenced impairment charge, non-GAAP operating income
for the first nine months of 2023 was $588.9 million. Operating
income included depreciation and amortization expense, inclusive of
amortization of identifiable intangible assets, of $87.8 million
and $80.6 million for the first nine months of 2023 and 2022,
respectively.
Refer to the attached tables for a reconciliation of non-GAAP
operating income, non-GAAP operating margin, non-GAAP net income,
and non-GAAP diluted earnings per share to the comparable GAAP
measures.
Selling, general and administrative expenses totaled $882.7
million, or 9.7% of revenues, for the first nine months of 2023,
compared to $761.1 million, or 9.4% of revenues, for the first nine
months of 2022.
Based on year-to-date performance, EMCOR is raising its full
year 2023 guidance for revenues and diluted earnings per share. The
Company now expects full year 2023 revenues to be approximately
$12.5 billion, the top end of its prior guidance range of $12.0
billion to $12.5 billion, and currently expects full-year 2023
non-GAAP diluted earnings per share in the range of $12.25 to
$12.65, an increase from its prior guidance range of $10.75 to
$11.25.
Mr. Guzzi concluded, “Given our strong year-to-date results,
record remaining performance obligations, and the continued
resilience of our business, we are raising our full year 2023
guidance for revenues and diluted earnings per share. Our strong
balance sheet is a competitive advantage, and we will continue to
be prudent capital allocators, pursuing both organic investments
and strategic acquisitions, while also returning capital to
shareholders and remaining cognizant of the uncertain macroeconomic
and political landscape. Our team’s proven ability to successfully
navigate challenging environments only bolsters our confidence in
our future.”
EMCOR Group's third quarter conference call will be available
live via internet broadcast today, Thursday, October 26, at 10:30
AM Eastern Daylight Time. The live call may be accessed through the
Company's website at www.emcorgroup.com.
About EMCOR:
EMCOR Group, Inc. is a Fortune 500 leader in mechanical and
electrical construction services, industrial and energy
infrastructure and building services. This press release and other
press releases may be viewed at the Company’s website at
www.emcorgroup.com. EMCOR routinely posts information that may be
important to investors in the “Investor Relations” section of our
website at www.emcorgroup.com. Investors and potential investors
are encouraged to consult the EMCOR website regularly for important
information about EMCOR.
Forward Looking Statements:
This release contains forward-looking statements. Such
statements speak only as of October 26, 2023, and EMCOR assumes no
obligation to update any such forward-looking statements, unless
required by law. These forward-looking statements may include
statements regarding anticipated future operating and financial
performance, including financial guidance and projections
underlying that guidance; the nature and impact of our remaining
performance obligations; our ability to be prudent capital
allocators; our ability to pursue organic investments and
acquisitions; our ability to return capital to shareholders; market
opportunities; market growth prospects; customer trends; project
mix; and projects with varying profit margins and contractual
terms. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those anticipated (whether expressly or implied) by the
forward-looking statements. Accordingly, these statements do not
guarantee future performance or events. Applicable risks and
uncertainties include, but are not limited to, adverse effects of
general economic conditions; changes in interest rates; domestic
and international political developments; changes in the specific
markets for EMCOR’s services; adverse business conditions,
including labor market tightness and/or disruption, productivity
challenges, the nature and extent of supply chain disruptions
impacting availability and pricing of materials, and inflationary
trends more generally, including fluctuations in energy costs; the
impact of legislation and/or government regulations; the
availability of adequate levels of surety bonding; increased
competition; and unfavorable developments in the mix of our
business. Certain of the risk factors associated with EMCOR’s
business are also discussed in Part I, Item 1A “Risk Factors,” of
the Company’s 2022 Form 10-K, and in other reports filed from time
to time with the Securities and Exchange Commission and available
at www.sec.gov and www.emcorgroup.com. Such risk factors should be
taken into account in evaluating our business, including any
forward-looking statements.
Non-GAAP Measures:
This release also includes certain financial measures that were
not prepared in accordance with U.S. generally accepted accounting
principles (GAAP). Reconciliations of those non-GAAP financial
measures to the most directly comparable GAAP financial measures
are included in this release. The Company uses these non-GAAP
measures as key performance indicators for the purpose of
evaluating performance internally. We also believe that these
non-GAAP measures provide investors with useful information with
respect to our ongoing operations. Any non-GAAP financial measures
presented are not, and should not be viewed as, substitutes for
financial measures required by GAAP, have no standardized meaning
prescribed by GAAP, and may not be comparable to the calculation of
similar measures of other companies.
EMCOR GROUP, INC.
FINANCIAL HIGHLIGHTS
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except share and
per share information)
(Unaudited)
For the quarters ended
September 30,
For the nine months ended
September 30,
2023
2022
2023
2022
Revenues
$
3,207,598
$
2,826,361
$
9,143,652
$
8,126,298
Cost of sales
2,662,126
2,413,130
7,672,058
6,977,504
Gross profit
545,472
413,231
1,471,594
1,148,794
Selling, general and administrative
expenses
308,139
263,137
882,684
761,099
Impairment loss on long-lived assets
2,350
—
2,350
—
Operating income
234,983
150,094
586,560
387,695
Net periodic pension (cost) income
(284
)
1,025
(840
)
3,288
Interest expense, net
(90
)
(3,194
)
(4,614
)
(6,234
)
Income before income taxes
234,609
147,925
581,106
384,749
Income tax provision
64,863
42,153
159,292
104,927
Net income including noncontrolling
interests
169,746
105,772
421,814
279,822
Net income attributable to noncontrolling
interests
337
—
337
—
Net income attributable to EMCOR Group,
Inc.
$
169,409
$
105,772
$
421,477
$
279,822
Basic earnings per common share
$
3.59
$
2.16
$
8.88
$
5.52
Diluted earnings per common share
$
3.57
$
2.16
$
8.85
$
5.50
Weighted average shares of common stock
outstanding:
Basic
47,173,974
48,867,420
47,446,298
50,676,365
Diluted
47,398,197
49,050,151
47,642,763
50,873,375
Dividends declared per common share
$
0.18
$
0.13
$
0.51
$
0.39
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited) September
30, 2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
523,632
$
456,439
Accounts receivable, net
3,063,917
2,567,371
Contract assets
308,868
273,176
Inventories
115,466
85,641
Prepaid expenses and other
57,012
79,346
Total current assets
4,068,895
3,461,973
Property, plant and equipment, net
170,693
157,819
Operating lease right-of-use assets
306,112
268,063
Goodwill
953,359
919,151
Identifiable intangible assets, net
600,790
593,975
Other assets
124,344
123,626
Total assets
$
6,224,193
$
5,524,607
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt and
finance lease liabilities
$
6,482
$
15,567
Accounts payable
824,155
849,284
Contract liabilities
1,489,324
1,098,263
Accrued payroll and benefits
553,838
465,000
Other accrued expenses and liabilities
284,275
258,190
Operating lease liabilities, current
74,728
67,218
Total current liabilities
3,232,802
2,753,522
Long-term debt and finance lease
liabilities
97,480
231,625
Operating lease liabilities, long-term
256,306
220,764
Other long-term obligations
357,636
344,405
Total liabilities
3,944,224
3,550,316
Equity:
Total EMCOR Group, Inc. stockholders’
equity
2,278,930
1,973,589
Noncontrolling interests
1,039
702
Total equity
2,279,969
1,974,291
Total liabilities and equity
$
6,224,193
$
5,524,607
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the Nine Months Ended
September 30, 2023 and 2022
(In thousands) (Unaudited)
2023
2022
Cash flows - operating activities:
Net income including noncontrolling
interests
$
421,814
$
279,822
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
38,444
35,168
Amortization of identifiable intangible
assets
49,335
45,465
Non-cash expense for impairment of
long-lived assets
2,350
—
Non-cash share-based compensation
expense
10,703
9,322
Other reconciling items
(3,865
)
(682
)
Changes in operating assets and
liabilities, excluding the effect of businesses acquired
(42,884
)
(130,741
)
Net cash provided by operating
activities
475,897
238,354
Cash flows - investing activities:
Payments for acquisitions of businesses,
net of cash acquired
(89,741
)
(91,078
)
Proceeds from sale or disposal of
property, plant and equipment
12,015
6,897
Purchases of property, plant and
equipment
(56,306
)
(38,717
)
Net cash used in investing
activities
(134,032
)
(122,898
)
Cash flows - financing activities:
Proceeds from revolving credit
facility
100,000
270,000
Repayments of revolving credit
facility
(100,000
)
(100,000
)
Repayments of long-term debt
(142,813
)
—
Repayments of finance lease
liabilities
(2,138
)
(2,741
)
Dividends paid to stockholders
(24,198
)
(20,037
)
Repurchases of common stock
(105,299
)
(656,573
)
Taxes paid related to net share
settlements of equity awards
(5,365
)
(7,295
)
Issuances of common stock under employee
stock purchase plan
6,769
6,097
Payments for contingent consideration
arrangements
(3,113
)
(2,049
)
Net cash used in financing
activities
(276,157
)
(512,598
)
Effect of exchange rate changes on
cash, cash equivalents, and restricted cash
856
(20,540
)
Increase (decrease) in cash, cash
equivalents, and restricted cash
66,564
(417,682
)
Cash, cash equivalents, and restricted
cash at beginning of year (1)
457,068
822,568
Cash, cash equivalents, and restricted
cash at end of period (2)
$
523,632
$
404,886
_________
(1)
Includes $0.6 million and $1.2 million of
restricted cash classified as “Prepaid expenses and other” in the
Consolidated Balance Sheets as of December 31, 2022 and 2021,
respectively.
(2)
Includes $1.1 million of restricted cash
classified as “Prepaid expenses and other” in the Consolidated
Balance Sheets as of September 30, 2022.
EMCOR GROUP, INC.
SEGMENT INFORMATION
(In thousands) (Unaudited)
For the quarters ended
September 30,
2023
2022
Revenues from unrelated
entities:
United States electrical construction and
facilities services
$
697,406
$
633,383
United States mechanical construction and
facilities services
1,329,600
1,108,655
United States building services
817,718
719,383
United States industrial services
252,148
247,239
Total United States operations
3,096,872
2,708,660
United Kingdom building services
110,726
117,701
Total operations
$
3,207,598
$
2,826,361
For the nine months ended
September 30,
2023
2022
Revenues from unrelated
entities:
United States electrical construction and
facilities services
$
2,020,319
$
1,719,525
United States mechanical construction and
facilities services
3,602,271
3,158,948
United States building services
2,318,105
2,041,555
United States industrial services
875,314
842,524
Total United States operations
8,816,009
7,762,552
United Kingdom building services
327,643
363,746
Total operations
$
9,143,652
$
8,126,298
EMCOR GROUP, INC.
SEGMENT INFORMATION
(In thousands) (Unaudited)
For the quarters ended
September 30,
2023
2022
Operating income (loss):
United States electrical construction and
facilities services
$
63,127
$
35,558
United States mechanical construction and
facilities services
138,476
90,500
United States building services
57,156
46,041
United States industrial services
(174
)
(1,392
)
Total United States operations
258,585
170,707
United Kingdom building services
8,869
8,369
Corporate administration
(30,121
)
(28,982
)
Impairment loss on long-lived assets
(2,350
)
—
Total operations
234,983
150,094
Other items:
Net periodic pension (cost) income
(284
)
1,025
Interest expense, net
(90
)
(3,194
)
Income before income taxes
$
234,609
$
147,925
For the nine months ended
September 30,
2023
2022
Operating income (loss):
United States electrical construction and
facilities services
$
154,365
$
90,646
United States mechanical construction and
facilities services
344,550
225,545
United States building services
140,943
108,698
United States industrial services
22,733
18,324
Total United States operations
662,591
443,213
United Kingdom building services
20,220
25,372
Corporate administration
(93,901
)
(80,890
)
Impairment loss on long-lived assets
(2,350
)
—
Total operations
586,560
387,695
Other items:
Net periodic pension (cost) income
(840
)
3,288
Interest expense, net
(4,614
)
(6,234
)
Income before income taxes
$
581,106
$
384,749
EMCOR GROUP, INC.
RECONCILIATION OF ORGANIC
REVENUE GROWTH
(In thousands, except for
percentages) (Unaudited)
The following table provides a
reconciliation between organic revenue growth, a non-GAAP measure,
and total revenue growth for the quarter and nine months ended
September 30, 2023.
For the quarter ended
September 30, 2023
For the nine months ended
September 30, 2023
$
%
$
%
GAAP revenue growth
$
381,237
13.5
%
$
1,017,354
12.5
%
Incremental revenues from acquisitions
(20,431
)
(0.7
)%
(96,269
)
(1.2
)%
Organic revenue growth, a non-GAAP
measure
$
360,806
12.8
%
$
921,085
11.3
%
EMCOR GROUP, INC.
RECONCILIATION OF 2023 AND
2022 NON-GAAP OPERATING INCOME AND
NON-GAAP OPERATING
MARGIN
(In thousands, except for
percentages) (Unaudited)
In our press release and related
presentation, we provide non-GAAP operating income and non-GAAP
operating margin for the quarter and nine months ended September
30, 2023 and 2022. The following table provides a reconciliation
between operating income and operating margin determined on a
non-GAAP basis to the most directly comparable GAAP measures for
such periods.
For the quarter ended
September 30,
For the nine months ended
September 30,
2023
2022
2023
2022
GAAP operating income
$
234,983
$
150,094
$
586,560
$
387,695
Impairment loss on long-lived assets
2,350
—
2,350
—
Non-GAAP operating income
$
237,333
$
150,094
$
588,910
$
387,695
For the quarter ended
September 30,
For the nine months ended
September 30,
2023
2022
2023
2022
GAAP operating margin
7.3
%
5.3
%
6.4
%
4.8
%
Impairment loss on long-lived assets
0.1
%
—
%
0.0
%
—
%
Non-GAAP operating margin
7.4
%
5.3
%
6.4
%
4.8
%
EMCOR GROUP, INC.
RECONCILIATION OF 2023 AND
2022 NON-GAAP NET INCOME
(In thousands) (Unaudited)
In our press release and related
presentation, we provide non-GAAP net income for the quarter and
nine months ended September 30, 2023 and 2022. The following table
provides a reconciliation between net income determined on a
non-GAAP basis to the most directly comparable GAAP measure for
such periods.
For the quarter ended
September 30,
For the nine months
ended
September 30,
2023
2022
2023
2022
GAAP net income
$
169,409
$
105,772
$
421,477
$
279,822
Impairment loss on long-lived assets
2,350
—
2,350
—
Tax effect of impairment loss on
long-lived assets
(651
)
—
(651
)
—
Non-GAAP net income
$
171,108
$
105,772
$
423,176
$
279,822
EMCOR GROUP, INC.
RECONCILIATION OF 2023 AND
2022 NON-GAAP DILUTED EARNINGS PER SHARE
(Unaudited)
In our press release and related
presentation, we provide non-GAAP diluted earnings per common share
for the quarter and nine months ended September 30, 2023 and 2022.
The following table provides a reconciliation between diluted
earnings per common share determined on a non-GAAP basis to the
most directly comparable GAAP measure for such periods.
For the quarter ended
September 30,
For the nine months ended
September 30,
2023
2022
2023
2022
GAAP diluted earnings per common share
$
3.57
$
2.16
$
8.85
$
5.50
Impairment loss on long-lived assets
0.05
—
0.05
—
Tax effect of impairment loss on
long-lived assets
(0.01
)
—
(0.01
)
—
Non-GAAP diluted earnings per common
share
$
3.61
$
2.16
$
8.88
$
5.50
_________
Amounts presented in this table may not
foot due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026199929/en/
FOR: EMCOR GROUP, INC.
Andrew G. Backman Vice President Investor Relations (203)
849-7938
FTI Consulting, Inc. Investors: Blake Mueller (718) 578-3706
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