EX-99.1 2 eme-ex99_20151231xq4.htm FOURTH QUARTER 2015 PRESS RELEASE Exhibit

 
EXHIBIT 99.1

FOR:
 
EMCOR GROUP, INC.
News Release
 
 
CONTACT:
 
R. Kevin Matz
Executive Vice President
Shared Services
(203) 849-7938
 
 
 
 
 
FTI Consulting, Inc.
Investors: Effie Veres
(212) 850-5600
 
 
 
 
 
LAK Public Relations, Inc.
Media: Lisa Linden / Mollie Fullington
(212) 575-4545 / (917) 346-6123
EMCOR GROUP, INC. REPORTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS
 
 - Record Fourth Quarter Revenues of $1.78 Billion -
 - Record Fourth Quarter Operating Cash Flow of $171.1 Million -
 - Total Backlog of $3.77 Billion; 3.8% Increase Year-over-Year -
 - Announces 2016 Revenues and Diluted EPS Guidance -

NORWALK, CONNECTICUT, February 25, 2016 - EMCOR Group, Inc. (NYSE: EME) today reported results for the fourth quarter and the year ended December 31, 2015.

For the fourth quarter of 2015, net income from continuing operations attributable to EMCOR was $50.4 million, or $0.80 per diluted share, compared to $43.1 million, or $0.66 per diluted share, in the fourth quarter of 2014. Included in net income from continuing operations attributable to EMCOR for the fourth quarter of 2014 were after-tax impairment charges of $0.9 million, or $0.01 per diluted share. Excluding the impairment charges, non-GAAP net income attributable to EMCOR in the fourth quarter of 2014 was $44.0 million, or $0.68 per diluted share. Net income attributable to EMCOR in the fourth quarter of 2015 increased by 14.6% and diluted earnings per share increased by 17.6% as compared to non-GAAP results in the fourth quarter of 2014. Revenues in the fourth quarter of 2015 were $1.78 billion, an increase of 3.7% compared to revenues of $1.71 billion in the fourth quarter of 2014.

Operating income for the fourth quarter of 2015 was $84.1 million, or 4.7% of revenues, compared to operating income of $74.5 million, or 4.3% of revenues, in the fourth quarter of 2014. Included in operating income for the fourth quarter of 2014 were the pre-tax impairment charges of $1.5 million. Excluding the impairment charges, non-GAAP operating income in the fourth quarter of 2014 was $76.0 million. Operating income in the fourth quarter of 2015 increased by 10.7% and operating margin expanded by 30 basis points as compared to non-GAAP results in the fourth quarter of 2014.

Selling, general and administrative expenses for the fourth quarter of 2015 were $168.5 million, or 9.5% of revenues, compared to $172.2 million, or 10.0% of revenues, in the year ago period.

The Company's income tax rate in the fourth quarter of 2015 was 38.5%, compared to an income tax rate of 39.5% in the year ago period.



 – MORE –


EMCOR Reports Fourth Quarter Results
 Page 2

Backlog as of December 31, 2015 was $3.77 billion, representing the highest level of backlog since 2008, and a 3.8% increase compared to $3.63 billion at the end of the fourth quarter of 2014. Domestic backlog grew $163 million year-over-year, while backlog in the UK Building Services segment decreased by $25 million year-over-year primarily driven by the negative impact of foreign currency translation. Growth in backlog in the U.S. Mechanical Construction and U.S. Building Services segments more than offset declines in the U.S. Industrial Services and U.S. Electrical Construction segments. From an end market perspective, backlog growth in the hospitality/gaming, water & wastewater, institutional and industrial sectors was partially offset by declines in the healthcare, transportation and commercial sectors.

Tony Guzzi, President and Chief Executive Officer of EMCOR Group, commented, “The Company delivered record revenues and diluted earnings per share from continuing operations in 2015 despite a challenging start to the year. This reflects a continued focus on operational execution and the ongoing recovery in the non-residential construction sector. Our annual performance was underscored by positive organic revenue growth in every segment of our business. We also continued to generate strong operating cash flow, delivering $267 million in 2015, an 8% increase year-over-year.”

Mr. Guzzi added, “In the fourth quarter of 2015, our U.S. Mechanical Construction segment had strong topline and profit growth, reflecting increased demand across several end markets as well as a settlement of a claim. Results in our U.S. Electrical Construction segment were negatively impacted by losses on several transportation projects due to productivity issues and schedule delays. Our U.S. Building Services segment posted solid results due to increased profitability within our mobile mechanical and commercial site-based services operations. In our Industrial Services segment, both revenue and operating income were negatively affected by decreased demand for new heat exchangers as a result of competitive market conditions resulting from volatility in crude oil prices and decreased turnaround activities. In the UK, we delivered strong organic revenue growth and operating income even with significant foreign exchange headwinds.”

Mr. Guzzi concluded, “After a solid close to 2015, we are encouraged by our prospects for continued growth as we look to 2016 and beyond. Despite low levels of anticipated capital spending in the oil and gas sector, our diverse and growing backlog remains a source of strength, and we are optimistic that the non-residential construction sector will continue to improve in 2016. Our strong cash flow and healthy balance sheet continue to provide us with the flexibility to pursue strategic acquisitions in order to support the long-term growth of the Company, as well as to return capital to shareholders through share repurchases and dividends.”

Revenues for the 2015 full-year period totaled $6.72 billion, an increase of 4.6% compared to $6.42 billion for the 2014 full-year period.

Net income from continuing operations attributable to EMCOR for the 2015 full-year period was $172.3 million, or $2.72 per diluted share, compared to $173.4 million, or $2.59 per diluted share, for the 2014 full-year period. Included in net income from continuing operations attributable to EMCOR for the 2014 full-year period were the aforementioned after-tax impairment charges of $0.9 million, or $0.01 per diluted share, and an after-tax gain of $7.1 million, or $0.11 per diluted share, associated with the sale of a building. Excluding these adjustments, non-GAAP net income attributable to EMCOR for the 2014 full-year period was $167.1 million, or $2.49 per diluted share.



 – MORE –


EMCOR Reports Fourth Quarter Results
 Page 3

Operating income for the 2015 full-year period was $287.1 million, or 4.3% of revenues, compared to $289.9 million, or 4.5% of revenues, for the 2014 full-year period. Included in operating income for the 2014 full-year period were the aforementioned pre-tax impairment charges of $1.5 million and a pre-tax gain of $11.7 million from the sale of a building. Excluding these adjustments, non-GAAP operating income for the 2014 full-year period was $279.6 million.

For the 2015 full-year period, selling, general and administrative expenses totaled $656.6 million, or 9.8% of revenues, compared to $626.5 million, or 9.8% of revenues, in the 2014 full-year period.

The Company noted that based on the current size and mix of its backlog and assuming continued improvement in market conditions, EMCOR expects full year 2016 revenues to be between $6.9 billion and $7.0 billion and full year 2016 diluted earnings per share from continuing operations to be in the range of $2.70 to $3.00.

Please see the attached tables for a reconciliation of non-GAAP operating income, non-GAAP net income and non-GAAP diluted earnings per share to the comparable GAAP figures.

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 Group's fourth quarter conference call will be available live via internet broadcast today, Thursday, February 25, at 10:30 AM Eastern Standard Time. You can access the live call through the Company's website 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 2015 Form 10-K 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.





 – MORE –


EMCOR GROUP, INC.
FINANCIAL HIGHLIGHTS
(In thousands, except share and per share information)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
 
(Unaudited)
 
 
 
 
 
 
For the three months ended December 31,
 
For the twelve months ended December 31,
 
 
2015
 
2014
 
2015
 
2014
Revenues
 
$
1,777,826

 
$
1,714,796

 
$
6,718,726

 
$
6,424,965

Cost of sales
 
1,525,205

 
1,466,223

 
5,774,247

 
5,517,719

Gross profit
 
252,621

 
248,573

 
944,479

 
907,246

Selling, general and administrative expenses
 
168,456

 
172,235

 
656,573

 
626,478

Restructuring expenses
 
82

 
369

 
824

 
1,168

Impairment loss of identifiable intangible assets
 
—

 
1,471

 
—

 
1,471

Gain on sale of building
 
—

 
—

 
—

 
11,749

Operating income
 
84,083

 
74,498

 
287,082

 
289,878

Interest expense
 
(2,282
)
 
(2,188
)
 
(8,932
)
 
(9,075
)
Interest income
 
158

 
201

 
673

 
842

Income from continuing operations before income taxes
 
81,959

 
72,511

 
278,823

 
281,645

Income tax provision
 
31,584

 
28,100

 
106,256

 
103,528

Income from continuing operations
 
50,375

 
44,411

 
172,567

 
178,117

Income (loss) from discontinued operation, net of income taxes
 
679

 
(603
)
 
(60
)
 
(4,690
)
Net income including noncontrolling interests
 
51,054

 
43,808

 
172,507

 
173,427

Less: Net loss (income) attributable to noncontrolling interests
 
12

 
(1,342
)
 
(221
)
 
(4,763
)
Net income attributable to EMCOR Group, Inc.
 
$
51,066

 
$
42,466

 
$
172,286

 
$
168,664

 
 
 
 
 
 
 
 
 
Basic earnings (loss) per common share:
 
 
 
 
 
 
 
 
From continuing operations
 
$
0.81

 
$
0.67

 
$
2.74

 
$
2.61

From discontinued operation
 
$
0.01

 
$
(0.01
)
 
$
(0.00
)
 
$
(0.07
)
 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per common share:
 
 
 
 
 
 
 
 
From continuing operations
 
$
0.80

 
$
0.66

 
$
2.72

 
$
2.59

From discontinued operation
 
$
0.01

 
$
(0.01
)
 
$
(0.00
)
 
$
(0.07
)
 
 
 
 
 
 
 
 
 
Weighted average shares of common stock outstanding:
 
 

 
 
 
 
 
 
   Basic
 
62,398,915

 
64,185,026

 
62,789,120

 
66,331,886

   Diluted
 
62,909,269

 
64,887,897

 
63,307,512

 
67,062,509

 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
$
0.08

 
$
0.08

 
$
0.32

 
$
0.32








EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

 
 
December 31,
2015
 
December 31,
2014
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
486,831

 
$
432,056

Accounts receivable, net
 
1,359,862

 
1,234,187

Costs and estimated earnings in excess of billings on uncompleted contracts
 
117,734

 
103,201

Inventories
 
37,545

 
46,854

Prepaid expenses and other
 
65,447

 
70,305

Total current assets
 
2,067,419

 
1,886,603

Investments, notes and other long-term receivables
 
8,359

 
9,122

Property, plant & equipment, net
 
122,018

 
122,178

Goodwill
 
843,170

 
834,102

Identifiable intangible assets, net
 
472,834

 
502,060

Other assets
 
32,670

 
34,902

Total assets
 
$
3,546,470

 
$
3,388,967

LIABILITIES AND EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Borrowings under revolving credit facility
 
$
—

 
$
—

Current maturities of long-term debt and capital lease obligations
 
18,848

 
19,041

Accounts payable
 
488,251

 
460,478

Billings in excess of costs and estimated earnings on uncompleted contracts
 
429,235

 
368,555

Accrued payroll and benefits
 
268,033

 
245,854

Other accrued expenses and liabilities
 
209,361

 
189,489

Total current liabilities
 
1,413,728

 
1,283,417

Long-term debt and capital lease obligations
 
300,065

 
316,399

Other long-term obligations
 
352,621

 
359,764

Total liabilities
 
2,066,414

 
1,959,580

Equity:
 
 

 
 

Total EMCOR Group, Inc. stockholders’ equity
 
1,476,711

 
1,416,013

Noncontrolling interests
 
3,345

 
13,374

Total equity
 
1,480,056

 
1,429,387

Total liabilities and equity
 
$
3,546,470

 
$
3,388,967














EMCOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twelve Months Ended December 31, 2015 and 2014
(In thousands)
 
 
2015
 
2014
Cash flows - operating activities:
 
 
 
 
Net income including noncontrolling interests
 
$
172,507

 
$
173,427

Depreciation and amortization
 
36,294

 
36,524

Amortization of identifiable intangible assets
 
37,895

 
37,966

Deferred income taxes
 
(10,300
)
 
5,748

Loss on sale of subsidiary
 
—

 
608

Gain on sale of building
 
—

 
(11,749
)
Excess tax benefits from share-based compensation
 
(1,663
)
 
(8,264
)
Equity income from unconsolidated entities
 
(2,883
)
 
(1,440
)
Non-cash expense for impairment of identifiable intangible assets
 
—

 
1,471

Other non-cash items
 
11,932

 
10,175

Distributions from unconsolidated entities
 
3,352

 
1,767

Changes in operating assets and liabilities, excluding the effect of businesses acquired
 
19,532

 
424

Net cash provided by operating activities
 
266,666

 
246,657

Cash flows - investing activities:
 
 

 
 

Payments for acquisitions of businesses, net of cash acquired
 
(28,195
)
 
—

Proceeds from sale of subsidiary
 
—

 
1,108

Proceeds from sale of building
 
—

 
11,885

Proceeds from sale of property, plant and equipment
 
3,847

 
7,239

Purchase of property, plant and equipment
 
(35,460
)
 
(38,035
)
Investments in and advances to unconsolidated entities and joint ventures
 
—

 
(3,865
)
Net cash used in investing activities
 
(59,808
)
 
(21,668
)
Cash flows - financing activities:
 
 

 
 

Repayments of long-term debt
 
(17,514
)
 
(17,454
)
Repayments of capital lease obligations
 
(2,737
)
 
(1,715
)
Dividends paid to stockholders
 
(20,095
)
 
(21,293
)
Repurchase of common stock
 
(104,330
)
 
(201,994
)
Proceeds from exercise of stock options
 
3,836

 
6,858

Payments to satisfy minimum tax withholding
 
(3,866
)
 
(1,481
)
Issuance of common stock under employee stock purchase plan
 
4,223

 
3,615

Payments for contingent consideration arrangements
 
(403
)
 
—

Distributions to noncontrolling interests
 
(10,250
)
 
(4,750
)
Excess tax benefits from share-based compensation
 
1,663

 
8,264

Net cash used in financing activities
 
(149,473
)
 
(229,950
)
Effect of exchange rate changes on cash and cash equivalents
 
(2,610
)
 
(2,796
)
Increase (decrease) in cash and cash equivalents
 
54,775

 
(7,757
)
Cash and cash equivalents at beginning of year
 
432,056

 
439,813

Cash and cash equivalents at end of period
 
$
486,831

 
$
432,056









EMCOR GROUP, INC.
SEGMENT INFORMATION
(In thousands)

 
 
(Unaudited)
 
 
For the three months ended December 31,
 
 
2015
 
2014
Revenues from unrelated entities:
 
 
 
 
United States electrical construction and facilities services
 
$
357,557

 
$
353,693

United States mechanical construction and facilities services
 
660,212

 
584,418

United States building services
 
435,870

 
427,591

United States industrial services
 
222,246

 
258,338

Total United States operations
 
1,675,885

 
1,624,040

United Kingdom building services
 
101,941

 
90,756

Total worldwide operations
 
$
1,777,826

 
$
1,714,796

 
 
 
 
 
 
 
For the twelve months ended December 31,
 
 
2015
 
2014
Revenues from unrelated entities:
 
 

 
 

United States electrical construction and facilities services
 
$
1,367,142

 
$
1,311,988

United States mechanical construction and facilities services
 
2,312,763

 
2,201,212

United States building services
 
1,739,259

 
1,721,341

United States industrial services
 
922,085

 
839,980

Total United States operations
 
6,341,249

 
6,074,521

United Kingdom building services
 
377,477

 
350,444

Total worldwide operations
 
$
6,718,726

 
$
6,424,965

























EMCOR GROUP, INC.
SEGMENT INFORMATION
(In thousands)
 
 
 
(Unaudited)
 
 
For the three months ended December 31,
 
 
2015
 
2014
Operating income (loss):
 
 
 
 
United States electrical construction and facilities services
 
$
14,746

 
$
23,711

United States mechanical construction and facilities services
 
58,497

 
36,366

United States building services
 
15,588

 
12,279

United States industrial services
 
11,881

 
20,004

Total United States operations
 
100,712

 
92,360

United Kingdom building services
 
3,064

 
2,364

Corporate administration
 
(19,611
)
 
(18,386
)
Restructuring expenses
 
(82
)
 
(369
)
Impairment loss on identifiable intangible assets
 
—

 
(1,471
)
Gain on sale of building
 
—

 
—

Total worldwide operations
 
84,083

 
74,498

Other corporate items:
 
 

 
 
Interest expense
 
(2,282
)
 
(2,188
)
Interest income
 
158

 
201

Income from continuing operations before income taxes
 
$
81,959

 
$
72,511

 
 
 
 
 
 
 
For the twelve months ended December 31,
 
 
2015
 
2014
Operating income (loss):
 
 

 
 

United States electrical construction and facilities services
 
$
82,225

 
$
90,873

United States mechanical construction and facilities services
 
138,688

 
114,418

United States building services
 
70,532

 
65,885

United States industrial services
 
56,469

 
63,159

Total United States operations
 
347,914

 
334,335

United Kingdom building services
 
11,634

 
15,011

Corporate administration
 
(71,642
)
 
(68,578
)
Restructuring expenses
 
(824
)
 
(1,168
)
Impairment loss on identifiable intangible assets
 
—

 
(1,471
)
Gain on sale of building
 
—

 
11,749

Total worldwide operations
 
287,082

 
289,878

Other corporate items:
 
 
 
 
Interest expense
 
(8,932
)
 
(9,075
)
Interest income
 
673

 
842

Income from continuing operations before income taxes
 
$
278,823

 
$
281,645





EMCOR GROUP, INC.
RECONCILIATION OF 2015 AND 2014 OPERATING INCOME
(In thousands) (Unaudited)

In our press release, we provide actual 2015 and 2014 fourth quarter and year-to-date December 31, 2015 and 2014 operating income.  The following table provides a reconciliation between 2015 and 2014 operating income based on non-GAAP measures to the most direct comparable GAAP measures.


 
 
For the three months ended December 31,
 
For the twelve months ended December 31,
 
 
2015
 
2014
 
2015
 
2014
GAAP operating income
 
$
84,083

 
$
74,498

 
$
287,082

 
$
289,878

Impairment loss on identifiable intangible assets
 
—

 
1,471

 
—

 
1,471

Gain on sale of building
 
—

 
—

 
—

 
(11,749
)
Non-GAAP operating income, excluding impairment loss and gain on sale of building
 
$
84,083

 
$
75,969

 
$
287,082

 
$
279,600








































EMCOR GROUP, INC.
RECONCILIATION OF 2015 AND 2014 NET INCOME
(In thousands) (Unaudited)

In our press release, we provide actual 2015 and 2014 fourth quarter and year-to-date December 31, 2015 and 2014 net income from continuing operations attributable to EMCOR Group, Inc.  The following table provides a reconciliation between 2015 and 2014 net income from continuing operations attributable to EMCOR Group, Inc. based on non-GAAP measures to the most direct comparable GAAP measures.

 
 
For the three months ended December 31,
 
For the twelve months ended December 31,
 
 
2015
 
2014
 
2015
 
2014
GAAP net income from continuing operations attributable to EMCOR Group, Inc.(1)
 
$
50,387

 
$
43,069

 
$
172,346

 
$
173,354

Impairment loss on identifiable intangible assets (2)
 
—

 
892

 
—

 
892

Gain on sale of building (3)
 
—

 
—

 
—

 
(7,126
)
Non-GAAP net income attributable to EMCOR Group, Inc., excluding impairment loss and gain on sale of building
 
$
50,387

 
$
43,961

 
$
172,346

 
$
167,120


(1) Amount is income from continuing operations less net income attributable to noncontrolling interest.
(2) Amount is net of tax effect of $0.6 million in the 2014 quarter and year-to-date periods.
(3) Amount is net of tax effect of $4.6 million in the 2014 year-to-date period.

































EMCOR GROUP, INC.
RECONCILIATION OF 2015 AND 2014 DILUTED EARNINGS PER SHARE FIGURES
(Unaudited)

In our press release, we provide actual 2015 and 2014 fourth quarter and year-to-date December 31, 2015 and 2014 diluted earnings per share from continuing operations.  The following table provides a reconciliation between 2015 and 2014 EPS based on non-GAAP measures to the most direct comparable GAAP measures.


 
 
For the three months ended December 31,
 
For the twelve months ended December 31,
 
 
2015
 
2014
 
2015
 
2014
GAAP diluted earnings per common share from continuing operations
 
$
0.80

 
$
0.66

 
$
2.72

 
$
2.59

Impairment loss on identifiable intangible assets (1)
 
—

 
0.01

 
—

 
0.01

Gain on sale of building (2)
 
—

 
—

 
—

 
(0.11
)
Non-GAAP diluted earnings per common share, excluding impairment loss and gain on sale of building
 
$
0.80

 
$
0.68

 
$
2.72

 
$
2.49


(1) Amount is net of tax effect of $0.6 million in the 2014 quarter and year-to-date periods.
(2) Amount is net of tax effect of $4.6 million in the 2014 year-to-date period.







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