EX-99.1 2 eme-ex992019930xq3.htm THIRD QUARTER 2019 PRESS RELEASE Exhibit

emcorlogo0919a13.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 THIRD QUARTER 2019 RESULTS
 
 - Record Third Quarter Revenues of $2.29 billion, 11.8% Increase Year-over-Year -
 - Record Third Quarter Diluted EPS from Cont. Operations of $1.45, 6.6% Increase Year-over-Year -
 - Year-To-Date Operating Cash Flow of $176.9 million, 168.5% Increase Year-over-Year -
 - Total Remaining Performance Obligations of $4.04 billion, 1.6% Increase Year-over-Year -
 - Increases 2019 Revenue Guidance to $9.0 billion from $8.8-$8.9 billion -
 - Increases 2019 Diluted EPS Guidance Range to $5.65-$5.75 from $5.50-$5.75 -


NORWALK, CONNECTICUT, October 29, 2019 - EMCOR Group, Inc. (NYSE: EME) today reported results for the third quarter ended September 30, 2019.

For the third quarter of 2019, net income from continuing operations attributable to EMCOR was $81.8 million, or $1.45 per diluted share, compared to $79.9 million, or $1.36 per diluted share, for the third quarter of 2018. Revenues for the third quarter of 2019 totaled $2.29 billion, an increase of 11.8%, compared to $2.05 billion for the third quarter of 2018.

Operating income for the third quarter of 2019 was $115.7 million, or 5.1% of revenues. This compares to $111.8 million, or 5.5% of revenues, for the third quarter of 2018.

Selling, general and administrative expenses for the third quarter of 2019 totaled $220.1 million, or 9.6% of revenues, compared to $197.3 million, or 9.6% of revenues, for the third quarter of 2018.

The Company's income tax rate for the third quarter of 2019 was 27.9%, compared to an income tax rate of 27.1% in the year ago period.

Remaining performance obligations as of September 30, 2019 were $4.04 billion compared to $3.97 billion at September 30, 2018. Total U.S. remaining performance obligations grew $71.3 million year-over-year.




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EMCOR Reports Third Quarter Results
 Page 2

Tony Guzzi, Chairman, President and Chief Executive Officer of EMCOR, commented, “The Company had another excellent quarter, achieving record third quarter revenues, operating income, net income attributable to EMCOR, and diluted earnings per share from continuing operations. These strong results were driven by solid project execution across our business. Year-over-year revenues increased 11.8% of which 8.1% was organic growth, driven by double-digit revenue growth in our U.S. Construction and U.S. Building Services segments. In addition to our strong revenue performance, we continued to capitalize on the sustained demand that we are seeing in the market, underscored by our year-over-year growth in remaining performance obligations. Additionally, we generated strong operating cash flow in the quarter, delivering $219.1 million, up 122.4% year-over-year.”

Mr. Guzzi added, “Our U.S. Construction segments continue to deliver robust revenue performance, posting a combined 14.3% increase year-over-year, with organic growth of 10.4%, despite our strong performance in the comparative period. Healthy operating margins of 6.1% in our U.S. Electrical Construction segment and 7.0% in our U.S. Mechanical Construction segment reflect solid execution across our portfolio of construction projects. Our U.S. Building Services segment posted its fourth consecutive quarter of double-digit revenue growth with operating margin expansion of 40 basis points as our mechanical services and commercial site-based divisions demonstrated exceptional performance. While we had a difficult comparison in our U.S. Industrial Services segment following the resumption of normalized demand in the third quarter of last year, we are well-positioned with our industrial customers and look to a normal fall turnaround season. Finally, our U.K. Building Services segment continues to take advantage of attractive project opportunities for both new and existing customers, despite facing significant macroeconomic uncertainties.”

Revenues for the first nine months of 2019 totaled $6.77 billion, an increase of 14.7% compared to $5.90 billion for the first nine months of 2018. Net income from continuing operations attributable to EMCOR for the first nine months of 2019 was $238.2 million, or $4.22 per diluted share, compared to $206.6 million, or $3.52 per diluted share, for the first nine months of 2018. Excluding an impairment charge of $0.9 million recorded in the second quarter of 2018, non-GAAP net income from continuing operations attributable to EMCOR for the first nine months of 2018 was $207.5 million, or $3.54 per diluted share.

Operating income for the first nine months of 2019 was $338.0 million, or 5.0% of revenues, compared to $289.4 million, or 4.9% of revenues, for the first nine months of 2018. Excluding the impairment charge referenced above, non-GAAP operating income for the first nine months of 2018 was $290.3 million, or 4.9% of revenues. SG&A totaled $652.5 million, or 9.6% of revenues, for the first nine months of 2019 compared to $578.3 million, or 9.8% of revenues, for the first nine 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.

Based on year-to-date performance and favorable project mix, and assuming the continuation of current market conditions, EMCOR is raising its full-year 2019 revenue guidance to $9.0 billion, an increase from the prior guidance range of $8.8-$8.9 billion. The Company now also expects full-year 2019 diluted earnings per share from continuing operations to be in the range of $5.65-$5.75, an increase from the prior guidance range of $5.50-$5.75.



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EMCOR Reports Third Quarter Results
 Page 3

Mr. Guzzi concluded, “We are very pleased with our performance thus far in 2019 and are poised to close out another record year. For the third time this year, we are raising our guidance for both revenue and diluted earnings per share from continuing operations for the full year to reflect our exceptional results and the expectation of sustained strength across our segments. We remain committed to prudently deploying our capital, primarily through organic investments and strategic acquisitions. Our disciplined acquisition strategy was underscored by our recent announcement of an agreement to acquire Batchelor & Kimball, which we expect will close in the coming weeks. Looking ahead, we are pleased with the solid growth that we continue to see in both our business and the non-residential construction market and firmly believe we are well-positioned for a strong start to 2020.”

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 third quarter conference call will be available live via internet broadcast today, Tuesday, October 29, 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 on-going 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.

 



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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
For the three months ended September 30,
 
For the nine months ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Revenues
 
$
2,287,741

 
$
2,047,049

 
$
6,770,671

 
$
5,901,323

Cost of sales
 
1,951,754

 
1,737,710

 
5,779,550

 
5,032,021

Gross profit
 
335,987

 
309,339

 
991,121

 
869,302

Selling, general and administrative expenses
 
220,119

 
197,334

 
652,536

 
578,266

Restructuring expenses
 
119

 
229

 
567

 
693

Impairment loss on identifiable intangible assets
 
—

 
—

 
—

 
907

Operating income
 
115,749

 
111,776

 
338,018

 
289,436

Net periodic pension (cost) income
 
381

 
615

 
1,187

 
2,069

Interest expense, net
 
(2,678
)
 
(2,736
)
 
(8,732
)
 
(8,011
)
Income from continuing operations before income taxes
 
113,452

 
109,655

 
330,473

 
283,494

Income tax provision
 
31,618

 
29,711

 
92,257

 
76,873

Income from continuing operations
 
81,834

 
79,944

 
238,216

 
206,621

Loss from discontinued operation, net of income taxes
 
—

 
(523
)
 
—

 
(1,010
)
Net income including noncontrolling interests
 
81,834

 
79,421

 
238,216

 
205,611

Less: Net income attributable to noncontrolling interests
 
—

 
(48
)
 
—

 
(48
)
Net income attributable to EMCOR Group, Inc.
 
$
81,834

 
$
79,373

 
$
238,216

 
$
205,563

 
 
 
 
 
 
 
 
 
Basic earnings (loss) per common share:
 
 
 
 
 
 
 
 
From continuing operations
 
$
1.46

 
$
1.37

 
$
4.24

 
$
3.54

From discontinued operation
 
$
—

 
$
(0.01
)
 
$
—

 
$
(0.02
)
 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per common share:
 
 
 
 
 
 
 
 
From continuing operations
 
$
1.45

 
$
1.36

 
$
4.22

 
$
3.52

From discontinued operation
 
$
—

 
$
(0.01
)
 
$
—

 
$
(0.02
)
 
 
 
 
 
 
 
 
 
Weighted average shares of common stock outstanding:
 
 

 
 
 
 
 
 
   Basic
 
56,216,840

 
58,208,203

 
56,189,388

 
58,422,928

   Diluted
 
56,558,450

 
58,541,310

 
56,494,430

 
58,754,867

 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
$
0.08

 
$
0.08

 
$
0.24

 
$
0.24

 
 
 
 
 
 
 
 
 










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

 
 
September 30, 2019
(Unaudited)
 
December 31,
2018
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
368,073

 
$
363,907

Accounts receivable, net
 
1,926,765

 
1,773,620

Contract assets
 
179,005

 
158,243

Inventories
 
38,721

 
42,321

Prepaid expenses and other
 
45,549

 
48,116

Total current assets
 
2,558,113

 
2,386,207

Investments, notes and other long-term receivables
 
1,478

 
2,899

Property, plant & equipment, net
 
149,023

 
134,351

Operating lease right-of-use assets
 
232,996

 
—

Goodwill
 
1,019,590

 
990,887

Identifiable intangible assets, net
 
482,785

 
488,286

Other assets
 
88,736

 
86,177

Total assets
 
$
4,532,721

 
$
4,088,807

LIABILITIES AND EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Current maturities of long-term debt and finance lease liabilities
 
$
18,196

 
$
16,013

Accounts payable
 
584,824

 
652,091

Contract liabilities
 
565,957

 
552,290

Accrued payroll and benefits
 
387,351

 
343,069

Other accrued expenses and liabilities
 
185,414

 
170,935

Operating lease liabilities, current
 
51,632

 
—

Total current liabilities
 
1,793,374

 
1,734,398

Borrowings under revolving credit facility
 
—

 
25,000

Long-term debt and finance lease liabilities
 
247,837

 
254,764

Operating lease liabilities, long-term
 
193,502

 
—

Other long-term obligations
 
322,197

 
333,204

Total liabilities
 
2,556,910

 
2,347,366

Equity:
 
 

 
 

Total EMCOR Group, Inc. stockholders’ equity
 
1,975,165

 
1,740,545

Noncontrolling interests
 
646

 
896

Total equity
 
1,975,811

 
1,741,441

Total liabilities and equity
 
$
4,532,721

 
$
4,088,807







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EMCOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2019 and 2018
(In thousands) (Unaudited)
 
 
2019
 
2018
Cash flows - operating activities:
 
 
 
 
Net income including noncontrolling interests
 
$
238,216

 
$
205,611

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
32,412

 
28,685

Amortization of identifiable intangible assets
 
34,500

 
31,482

Provision for doubtful accounts
 
1,621

 
261

Deferred income taxes
 
(913
)
 
4,685

Excess tax benefits from share-based compensation
 
(601
)
 
(1,065
)
Equity loss (income) from unconsolidated entities
 
1,213

 
(247
)
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
 
8,840

 
8,502

Distributions from unconsolidated entities
 
916

 
2,442

Other reconciling items
 
364

 
446

Changes in operating assets and liabilities, excluding the effect of businesses acquired
 
(140,850
)
 
(216,003
)
Net cash provided by operating activities
 
176,921

 
65,892

Cash flows - investing activities:
 
 

 
 

Payments for acquisitions of businesses, net of cash acquired
 
(79,984
)
 
(25,710
)
Proceeds from sale of property, plant and equipment
 
1,612

 
915

Purchase of property, plant and equipment
 
(35,829
)
 
(28,674
)
Investments in and advances to unconsolidated entities
 
(794
)
 
(3,484
)
Distributions from unconsolidated entities
 
38

 
82

Net cash used in investing activities
 
(114,957
)
 
(56,871
)
Cash flows - financing activities:
 
 

 
 

Repayments of revolving credit facility
 
(25,000
)
 
—

Repayments of long-term debt and debt issuance costs
 
(11,400
)
 
(11,434
)
Repayments of finance lease liabilities
 
(3,357
)
 
(1,050
)
Dividends paid to stockholders
 
(13,458
)
 
(14,036
)
Repurchase of common stock
 
—

 
(90,804
)
Taxes paid related to net share settlements of equity awards
 
(3,771
)
 
(3,745
)
Issuance of common stock under employee stock purchase plan
 
4,501

 
4,286

Payments for contingent consideration arrangements
 
(3,589
)
 
(3,300
)
Distributions to noncontrolling interests
 
(250
)
 
—

Net cash used in financing activities
 
(56,324
)
 
(120,083
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
(2,047
)
 
(1,985
)
Increase (decrease) in cash, cash equivalents and restricted cash
 
3,593

 
(113,047
)
Cash, cash equivalents and restricted cash at beginning of year (1)
 
366,214

 
469,388

Cash, cash equivalents and restricted cash at end of period (2)
 
$
369,807

 
$
356,341


(1)
Includes $2.3 million and $2.0 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of December 31, 2018 and 2017, respectively.
(2)
Includes $1.7 million and $2.4 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of September 30, 2019 and 2018, respectively.


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

 
 
For the three months ended September 30,
 
 
2019
 
2018
Revenues from unrelated entities:
 
 
 
 
United States electrical construction and facilities services
 
$
554,637

 
$
485,974

United States mechanical construction and facilities services
 
869,188

 
759,495

United States building services
 
532,122

 
473,701

United States industrial services
 
234,166

 
227,313

Total United States operations
 
2,190,113

 
1,946,483

United Kingdom building services
 
97,628

 
100,566

Total worldwide operations
 
$
2,287,741

 
$
2,047,049

 
 
 
 
 

 
 
For the nine months ended September 30,
 
 
2019
 
2018
Revenues from unrelated entities:
 
 
 
 
United States electrical construction and facilities services
 
$
1,652,109

 
$
1,420,268

United States mechanical construction and facilities services
 
2,444,683

 
2,168,127

United States building services
 
1,567,899

 
1,389,486

United States industrial services
 
788,271

 
610,479

Total United States operations
 
6,452,962

 
5,588,360

United Kingdom building services
 
317,709

 
312,963

Total worldwide operations
 
$
6,770,671

 
$
5,901,323

 
 
 
 
 






















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


 
 
For the three months ended September 30,
 
 
2019
 
2018
Operating income (loss):
 
 
 
 
United States electrical construction and facilities services
 
$
33,630

 
$
34,473

United States mechanical construction and facilities services
 
61,213

 
59,236

United States building services
 
35,051

 
29,315

United States industrial services
 
5,561

 
7,637

Total United States operations
 
135,455

 
130,661

United Kingdom building services
 
4,754

 
4,457

Corporate administration
 
(24,341
)
 
(23,113
)
Restructuring expenses
 
(119
)
 
(229
)
Total worldwide operations
 
115,749

 
111,776

Other corporate items:
 
 

 
 
Net periodic pension (cost) income
 
381

 
615

Interest expense, net
 
(2,678
)
 
(2,736
)
Income from continuing operations before income taxes
 
$
113,452

 
$
109,655

 
 
 
 
 

 
 
For the nine months ended September 30,
 
 
2019
 
2018
Operating income (loss):
 
 
 
 
United States electrical construction and facilities services
 
$
120,380

 
$
106,309

United States mechanical construction and facilities services
 
156,152

 
156,273

United States building services
 
90,535

 
68,822

United States industrial services
 
31,209

 
12,312

Total United States operations
 
398,276

 
343,716

United Kingdom building services
 
14,371

 
12,828

Corporate administration
 
(74,062
)
 
(65,508
)
Restructuring expenses
 
(567
)
 
(693
)
Impairment loss on identifiable intangible assets
 
—

 
(907
)
Total worldwide operations
 
338,018

 
289,436

Other corporate items:
 
 

 
 
Net periodic pension (cost) income
 
1,187

 
2,069

Interest expense, net
 
(8,732
)
 
(8,011
)
Income from continuing operations before income taxes
 
$
330,473

 
$
283,494

 
 
 
 
 




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

In our press release, we provide non-GAAP 2019 and 2018 third quarter and year-to-date September 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 September 30,
 
For the nine months ended September 30,
 
 
2019
 
2018
 
2019
 
2018
GAAP operating income
 
$
115,749

 
$
111,776

 
$
338,018

 
$
289,436

Impairment loss on identifiable intangible assets
 
—

 
—

 
—

 
907

Non-GAAP operating income, excluding impairment loss on identifiable intangible assets
 
$
115,749

 
$
111,776

 
$
338,018

 
$
290,343



















































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

In our press release, we provide non-GAAP 2019 and 2018 third quarter and year-to-date September 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 September 30,
 
For the nine months ended September 30,
 
 
2019
 
2018
 
2019
 
2018
GAAP net income from continuing operations attributable to EMCOR Group, Inc. (1)
 
$
81,834

 
$
79,896

 
$
238,216

 
$
206,573

Impairment loss on identifiable intangible assets (2)
 
—

 
—

 
—

 
907

Non-GAAP net income from continuing operations attributable to EMCOR Group, Inc., excluding impairment loss on identifiable intangible assets
 
$
81,834

 
$
79,896

 
$
238,216

 
$
207,480


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











































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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 third quarter and year-to-date September 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 September 30,
 
For the nine months ended September 30,
 
 
2019
 
2018
 
2019
 
2018
GAAP diluted earnings per common share from continuing operations
 
$
1.45

 
$
1.36

 
$
4.22

 
$
3.52

Impairment loss on identifiable intangible assets (1)
 
—

 
—

 
—

 
0.02

Non-GAAP diluted earnings per common share from continuing operations, excluding impairment loss on identifiable intangible assets
 
$
1.45

 
$
1.36

 
$
4.22

 
$
3.54


(1) Amount excludes de minimis income tax benefit.




















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