EX-99.1 2 eme-ex992019630xq2.htm SECOND QUARTER 2019 PRESS RELEASE Exhibit

emcorlogo0619a12.jpg
 
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: Jamie Baird
(212) 850-5659


EMCOR GROUP, INC. REPORTS SECOND QUARTER 2019 RESULTS
 
 - Record Quarterly Revenues of $2.32 billion, 19.0% Increase Year-over-Year -
 - Record Quarterly Diluted EPS from Cont. Operations of $1.49, 23.1% Increase Year-over-Year -
 - Total Remaining Performance Obligations of $4.23 billion, 15.1% Increase Year-over-Year -
 - Increases 2019 Revenue Guidance Range to $8.8-$8.9 billion from $8.5-$8.6 billion -
 - Increases 2019 Diluted EPS Guidance Range to $5.50-$5.75 from $5.00-$5.50 -

NORWALK, CONNECTICUT, July 30, 2019 - EMCOR Group, Inc. (NYSE: EME) today reported results for the second quarter ended June 30, 2019.

For the second quarter of 2019, net income from continuing operations attributable to EMCOR was $84.0 million, or $1.49 per diluted share, compared to $71.0 million, or $1.21 per diluted share, for the second quarter of 2018. Excluding an impairment charge in the prior year, non-GAAP net income from continuing operations attributable to EMCOR was $71.9 million, or $1.23 per diluted share, for the second quarter of 2018. Revenues for the second quarter of 2019 totaled $2.32 billion, an increase of 19.0%, compared to $1.95 billion for the second quarter of 2018.

Operating income for the second quarter of 2019 was $120.0 million, or 5.2% of revenues. This compares to $99.7 million, or 5.1% of revenues, for the second quarter of 2018. Included in operating income for the second quarter of 2018 was an impairment charge of $0.9 million. Excluding this charge, non-GAAP operating income for the second quarter of 2018 was $100.6 million or 5.1% of revenues.

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

Selling, general and administrative expenses for the second quarter of 2019 totaled $226.2 million, or 9.7% of revenues, compared to $189.9 million, or 9.7% of revenues, for the second quarter of 2018.

The Company's income tax rate for the second quarter of 2019 was 28.3%, compared to an income tax rate of 27.2% in the year ago period.


 – MORE –

emcorlogo0619a12.jpg

EMCOR Reports Second Quarter Results
 Page 2

Remaining performance obligations as of June 30, 2019 were $4.23 billion compared to $3.67 billion at June 30, 2018. Total U.S. remaining performance obligations grew $558.0 million year-over-year.

Tony Guzzi, Chairman, President and Chief Executive Officer of EMCOR, commented, “The Company reported another record quarter, delivering record quarterly revenues, operating income, net income attributable to EMCOR and diluted earnings per share from continuing operations. We achieved exceptional revenue growth of 19.0% year-over-year, of which 15.2% was organic, driven by excellent results across the business, including double-digit revenue growth in each of our domestic segments. This strong revenue performance coupled with our disciplined project execution drove operating income growth of 20.4% year-over-year. The demand that we are experiencing is broad-based across geographies and end-markets, and we continue to see significant opportunities in the market, as evidenced by growth in our remaining performance obligations of 15.1% year-over-year.”

Mr. Guzzi added, “Our U.S. Construction segments continue to deliver outstanding results, generating combined revenue growth of 15.7% year-over-year and operating income growth of 4.7% year-over-year. U.S. Mechanical Construction delivered revenue growth of 13.7%, all of which was organic, and U.S. Electrical Construction posted organic growth of 9.4%, with the companies we recently acquired contributing to overall growth of 18.7%. Our U.S. Building Services segment performed exceptionally well, posting a third consecutive quarter of double-digit revenue growth and a sixth consecutive quarter of double-digit operating income growth, driven by strong demand in our mechanical services and energy services businesses and supported by continued execution on several large contracts within our commercial site-based business. We continue to see improved performance in our U.S. Industrial Services segment, which posted revenue growth of 60.6% year-over-year, driven by our field services operations, where we completed several large, complex turnarounds, and sustained strength in our shop services business. Finally, our U.K. Building Services segment reported revenue and operating income growth of 6.7% and 19.0%, respectively, as we continue to see strong demand for our services.”

Revenues for the first six months of 2019 totaled $4.48 billion, an increase of 16.3% compared to $3.85 billion for the first six months of 2018. Net income from continuing operations attributable to EMCOR for the first six months of 2019 was $156.4 million, or $2.77 per diluted share, compared to $126.7 million, or $2.15 per diluted share, for the first six months of 2018. Excluding the impairment charge recorded in the second quarter of 2018, non-GAAP net income from continuing operations attributable to EMCOR for the first six months of 2018 was $127.6 million, or $2.17 per diluted share.

Operating income for the first six months of 2019 was $222.3 million, or 5.0% of revenues, compared to $177.7 million, or 4.6% of revenues, for the first six months of 2018. Included in operating income for the first six months of 2018 was an impairment charge of $0.9 million. Excluding this impairment charge, non-GAAP operating income for the first six months of 2018 was $178.6 million, or 4.6% of revenues. SG&A totaled $432.4 million, or 9.6% of revenues, for the first six months of 2019 compared to $380.9 million, or 9.9% of revenues, for the first six months of 2018.

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




 – MORE –

emcorlogo0619a12.jpg

EMCOR Reports Second Quarter Results
 Page 3

Based on year-to-date performance, favorable project mix, and assuming the continuation of current market conditions, EMCOR is raising its full-year 2019 revenue guidance range to $8.8-$8.9 billion, an increase from the prior guidance range of $8.5-$8.6 billion. The Company now also expects full-year 2019 diluted earnings per share from continuing operations to be in the range of $5.50-$5.75, an increase from the prior guidance range of $5.00-$5.50.

Mr. Guzzi concluded, “We delivered a record first half of the year and are optimistic about our additional opportunities for growth in the second half of 2019. Our updated guidance reflects our exceptional performance year-to-date, as well as our expectation for continued strong project execution and cost discipline throughout the remainder of the year. As we look ahead, we will use our healthy balance sheet to invest in our business organically and pursue our robust pipeline of strategic acquisition opportunities, balanced with a return of capital to shareholders through share repurchases and dividends.”

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.

EMCOR Group's second quarter conference call will be available live via internet broadcast today, Tuesday, July 30, at 10:30 AM Eastern Daylight Time. The live call may be accessed through the Company's website at www.emcorgroup.com.

Forward Looking Statements:

This release contains certain forward-looking statements. Any such comments speak only as of this date 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, the nature and impact of our remaining performance obligations, our ability to pursue acquisitions, our ability to return capital to shareholders, market opportunities, market growth and customer trends. 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 risks 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 risk factors associated with EMCOR’s business are also discussed in Part I, Item 1A “Risk Factors,” of the Company’s 2018 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 any forward-looking statements.

Non-GAAP Measures:

This release 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 historical 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.
 



 – MORE –

emcorlogo0619a12.jpg

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
For the three months ended June 30,
 
For the six months ended June 30,
 
 
2019
 
2018
 
2019
 
2018
Revenues
 
$
2,324,202

 
$
1,953,886

 
$
4,482,930

 
$
3,854,274

Cost of sales
 
1,977,822

 
1,663,042

 
3,827,796

 
3,294,311

Gross profit
 
346,380

 
290,844

 
655,134

 
559,963

Selling, general and administrative expenses
 
226,248

 
189,907

 
432,417

 
380,932

Restructuring expenses
 
173

 
374

 
448

 
464

Impairment loss on identifiable intangible assets
 
—

 
907

 
—

 
907

Operating income
 
119,959

 
99,656

 
222,269

 
177,660

Net periodic pension (cost) income
 
400

 
717

 
806

 
1,454

Interest expense, net
 
(3,231
)
 
(2,823
)
 
(6,054
)
 
(5,275
)
Income from continuing operations before income taxes
 
117,128

 
97,550

 
217,021

 
173,839

Income tax provision
 
33,156

 
26,529

 
60,639

 
47,162

Income from continuing operations
 
83,972

 
71,021

 
156,382

 
126,677

Loss from discontinued operation, net of income taxes
 
—

 
(205
)
 
—

 
(487
)
Net income including noncontrolling interests
 
83,972

 
70,816

 
156,382

 
126,190

Less: Net income attributable to noncontrolling interests
 
—

 
—

 
—

 
—

Net income attributable to EMCOR Group, Inc.
 
$
83,972

 
$
70,816

 
$
156,382

 
$
126,190

 
 
 
 
 
 
 
 
 
Basic earnings (loss) per common share:
 
 
 
 
 
 
 
 
From continuing operations
 
$
1.49

 
$
1.22

 
$
2.78

 
$
2.16

From discontinued operation
 
$
—

 
$
(0.00
)
 
$
—

 
$
(0.01
)
 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per common share:
 
 
 
 
 
 
 
 
From continuing operations
 
$
1.49

 
$
1.21

 
$
2.77

 
$
2.15

From discontinued operation
 
$
—

 
$
(0.00
)
 
$
—

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

 
 
 
 
 
 
   Basic
 
56,181,864

 
58,332,934

 
56,175,219

 
58,531,150

   Diluted
 
56,499,514

 
58,670,595

 
56,461,977

 
58,862,505

 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
$
0.08

 
$
0.08

 
$
0.16

 
$
0.16

 
 
 
 
 
 
 
 
 










emcorlogo0619a12.jpg

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

 
 
June 30, 2019
(Unaudited)
 
December 31,
2018
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
213,374

 
$
363,907

Accounts receivable, net
 
1,946,811

 
1,773,620

Contract assets
 
179,439

 
158,243

Inventories
 
39,180

 
42,321

Prepaid expenses and other
 
41,831

 
48,116

Total current assets
 
2,420,635

 
2,386,207

Investments, notes and other long-term receivables
 
1,904

 
2,899

Property, plant & equipment, net
 
145,638

 
134,351

Operating lease right-of-use assets
 
233,173

 
—

Goodwill
 
1,013,822

 
990,887

Identifiable intangible assets, net
 
488,017

 
488,286

Other assets
 
90,389

 
86,177

Total assets
 
$
4,393,578

 
$
4,088,807

LIABILITIES AND EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Current maturities of long-term debt and finance lease liabilities
 
$
18,385

 
$
16,013

Accounts payable
 
579,461

 
652,091

Contract liabilities
 
544,346

 
552,290

Accrued payroll and benefits
 
327,006

 
343,069

Other accrued expenses and liabilities
 
185,398

 
170,935

Operating lease liabilities, current
 
49,970

 
—

Total current liabilities
 
1,704,566

 
1,734,398

Borrowings under revolving credit facility
 
25,000

 
25,000

Long-term debt and finance lease liabilities
 
251,448

 
254,764

Operating lease liabilities, long-term
 
195,149

 
—

Other long-term obligations
 
322,584

 
333,204

Total liabilities
 
2,498,747

 
2,347,366

Equity:
 
 

 
 

Total EMCOR Group, Inc. stockholders’ equity
 
1,894,185

 
1,740,545

Noncontrolling interests
 
646

 
896

Total equity
 
1,894,831

 
1,741,441

Total liabilities and equity
 
$
4,393,578

 
$
4,088,807







emcorlogo0619a12.jpg

EMCOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2019 and 2018
(In thousands) (Unaudited)

 
 
2019
 
2018
Cash flows - operating activities:
 
 
 
 
Net income including noncontrolling interests
 
$
156,382

 
$
126,190

Adjustments to reconcile net income to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
21,391

 
19,233

Amortization of identifiable intangible assets
 
23,169

 
21,352

Provision for doubtful accounts
 
851

 
7

Deferred income taxes
 
(920
)
 
4,855

Excess tax benefits from share-based compensation
 
(593
)
 
(1,065
)
Equity loss (income) from unconsolidated entities
 
835

 
(290
)
Non-cash expense from contingent consideration arrangements
 
1,203

 
186

Non-cash expense for impairment of identifiable intangible assets
 
—

 
907

Non-cash share-based compensation expense
 
6,225

 
5,956

Distributions from unconsolidated entities
 
871

 
1,847

Other reconciling items
 
111

 
389

Changes in operating assets and liabilities, excluding the effect of businesses acquired
 
(251,723
)
 
(212,217
)
Net cash used in operating activities
 
(42,198
)
 
(32,650
)
Cash flows - investing activities:
 
 

 
 

Payments for acquisitions of businesses, net of cash acquired
 
(63,991
)
 
(25,207
)
Proceeds from sale of property, plant and equipment
 
1,326

 
605

Purchase of property, plant and equipment
 
(22,455
)
 
(15,914
)
Investments in and advances to unconsolidated entities
 
(794
)
 
(3,484
)
Distributions from unconsolidated entities
 
84

 
83

Net cash used in investing activities
 
(85,830
)
 
(43,917
)
Cash flows - financing activities:
 
 

 
 

Repayments of long-term debt and debt issuance costs
 
(7,601
)
 
(7,634
)
Repayments of finance lease liabilities
 
(2,151
)
 
(696
)
Dividends paid to stockholders
 
(8,967
)
 
(9,381
)
Repurchase of common stock
 
—

 
(60,508
)
Taxes paid related to net share settlements of equity awards
 
(3,735
)
 
(3,745
)
Issuance of common stock under employee stock purchase plan
 
2,969

 
2,758

Payments for contingent consideration arrangements
 
(2,508
)
 
(3,298
)
Distributions to noncontrolling interests
 
(250
)
 
—

Net cash used in financing activities
 
(22,243
)
 
(82,504
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
(175
)
 
(1,121
)
Decrease in cash, cash equivalents and restricted cash
 
(150,446
)
 
(160,192
)
Cash, cash equivalents and restricted cash at beginning of year
 
366,214

 
469,388

Cash, cash equivalents and restricted cash at end of period
 
$
215,768

 
$
309,196








emcorlogo0619a12.jpg

EMCOR GROUP, INC.
SEGMENT INFORMATION
(In thousands) (Unaudited)

 
 
For the three months ended June 30,
 
 
2019
 
2018
Revenues from unrelated entities:
 
 
 
 
United States electrical construction and facilities services
 
$
569,402

 
$
479,542

United States mechanical construction and facilities services
 
823,086

 
723,882

United States building services
 
523,698

 
461,033

United States industrial services
 
295,460

 
183,922

Total United States operations
 
2,211,646

 
1,848,379

United Kingdom building services
 
112,556

 
105,507

Total worldwide operations
 
$
2,324,202

 
$
1,953,886

 
 
 
 
 

 
 
For the six months ended June 30,
 
 
2019
 
2018
Revenues from unrelated entities:
 
 
 
 
United States electrical construction and facilities services
 
$
1,097,472

 
$
934,294

United States mechanical construction and facilities services
 
1,575,495

 
1,408,632

United States building services
 
1,035,777

 
915,785

United States industrial services
 
554,105

 
383,166

Total United States operations
 
4,262,849

 
3,641,877

United Kingdom building services
 
220,081

 
212,397

Total worldwide operations
 
$
4,482,930

 
$
3,854,274

 
 
 
 
 






















emcorlogo0619a12.jpg

EMCOR GROUP, INC.
SEGMENT INFORMATION
(In thousands) (Unaudited)


 
 
For the three months ended June 30,
 
 
2019
 
2018
Operating income (loss):
 
 
 
 
United States electrical construction and facilities services
 
$
43,799

 
$
35,985

United States mechanical construction and facilities services
 
53,954

 
57,417

United States building services
 
28,001

 
22,430

United States industrial services
 
16,012

 
1,234

Total United States operations
 
141,766

 
117,066

United Kingdom building services
 
5,476

 
4,601

Corporate administration
 
(27,110
)
 
(20,730
)
Restructuring expenses
 
(173
)
 
(374
)
Impairment loss on identifiable intangible assets
 
—

 
(907
)
Total worldwide operations
 
119,959

 
99,656

Other corporate items:
 
 

 
 
Net periodic pension (cost) income
 
400

 
717

Interest expense, net
 
(3,231
)
 
(2,823
)
Income from continuing operations before income taxes
 
$
117,128

 
$
97,550

 
 
 
 
 

 
 
For the six months ended June 30,
 
 
2019
 
2018
Operating income (loss):
 
 
 
 
United States electrical construction and facilities services
 
$
86,750

 
$
71,836

United States mechanical construction and facilities services
 
94,939

 
97,037

United States building services
 
55,484

 
39,507

United States industrial services
 
25,648

 
4,675

Total United States operations
 
262,821

 
213,055

United Kingdom building services
 
9,617

 
8,371

Corporate administration
 
(49,721
)
 
(42,395
)
Restructuring expenses
 
(448
)
 
(464
)
Impairment loss on identifiable intangible assets
 
—

 
(907
)
Total worldwide operations
 
222,269

 
177,660

Other corporate items:
 
 

 
 
Net periodic pension (cost) income
 
806

 
1,454

Interest expense, net
 
(6,054
)
 
(5,275
)
Income from continuing operations before income taxes
 
$
217,021

 
$
173,839

 
 
 
 
 



emcorlogo0619a12.jpg

EMCOR GROUP, INC.
RECONCILIATION OF 2019 AND 2018 OPERATING INCOME
(In thousands) (Unaudited)

In our press release, we provide non-GAAP 2019 and 2018 second quarter and year-to-date June 30, 2019 and 2018 operating income.  The following table provides a reconciliation between 2019 and 2018 operating income based on non-GAAP measures to the most directly comparable GAAP measures.

 
 
For the three months ended June 30,
 
For the six months ended June 30,
 
 
2019
 
2018
 
2019
 
2018
GAAP operating income
 
$
119,959

 
$
99,656

 
$
222,269

 
$
177,660

Impairment loss on identifiable intangible assets
 
—

 
907

 
—

 
907

Non-GAAP operating income, excluding impairment loss on identifiable intangible assets
 
$
119,959

 
$
100,563

 
$
222,269

 
$
178,567



















































emcorlogo0619a12.jpg

EMCOR GROUP, INC.
RECONCILIATION OF 2019 AND 2018 NET INCOME
(In thousands) (Unaudited)

In our press release, we provide non-GAAP 2019 and 2018 second quarter and year-to-date June 30, 2019 and 2018 net income from continuing operations attributable to EMCOR Group, Inc.  The following table provides a reconciliation between 2019 and 2018 net income from continuing operations attributable to EMCOR Group, Inc. based on non-GAAP measures to the most directly comparable GAAP measures.

 
 
For the three months ended June 30,
 
For the six months ended June 30,
 
 
2019
 
2018
 
2019
 
2018
GAAP net income from continuing operations attributable to EMCOR Group, Inc. (1)
 
$
83,972

 
$
71,021

 
$
156,382

 
$
126,677

Impairment loss on identifiable intangible assets (2)
 
—

 
907

 
—

 
907

Non-GAAP net income from continuing operations attributable to EMCOR Group, Inc., excluding impairment loss on identifiable intangible assets
 
$
83,972

 
$
71,928

 
$
156,382

 
$
127,584


(1)  Amount is income from continuing operations less net income attributable to noncontrolling interest.
(2) Amount excludes de minimis income tax benefit.











































emcorlogo0619a12.jpg

EMCOR GROUP, INC.
RECONCILIATION OF 2019 AND 2018 DILUTED EARNINGS PER SHARE FIGURES
(Unaudited)

In our press release, we provide non-GAAP 2019 and 2018 second quarter and year-to-date June 30, 2019 and 2018 diluted earnings per common share from continuing operations.  The following table provides a reconciliation between 2019 and 2018 diluted earnings per common share based on non-GAAP measures to the most directly comparable GAAP measures.

 
 
For the three months ended June 30,
 
For the six months ended June 30,
 
 
2019
 
2018
 
2019
 
2018
GAAP diluted earnings per common share from continuing operations
 
$
1.49

 
$
1.21

 
$
2.77

 
$
2.15

Impairment loss on identifiable intangible assets (1)
 
—

 
0.02

 
—

 
0.02

Non-GAAP diluted earnings per common share from continuing operations, excluding impairment loss on identifiable intangible assets
 
$
1.49

 
$
1.23

 
$
2.77

 
$
2.17


(1) Amount excludes de minimis income tax benefit.




















# # #