EMCOR Group, Inc. Reports Third Quarter 2020 Results

Nachrichtenquelle: Business Wire (engl.)
29.10.2020, 12:30  |  118   |   |   

EMCOR Group, Inc. (NYSE: EME) today reported results for the third quarter ended September 30, 2020.

For the third quarter of 2020, net income was $61.2 million, or $1.11 per diluted share, compared to $81.8 million, or $1.45 per diluted share, for the third quarter of 2019. Net income for the third quarter of 2020 was negatively impacted by the tax effect of the goodwill, identifiable intangible asset, and other long-lived asset impairment charges recorded in the second quarter of 2020, primarily related to our U.S. Industrial Services segment. Excluding such tax effect, non-GAAP net income for the third quarter of 2020 was $97.0 million, or $1.76 per diluted share. Revenues for the third quarter of 2020 totaled $2.20 billion, a decrease of 3.8%, compared to $2.29 billion for the third quarter of 2019.

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

Operating income for the third quarter of 2020 was $135.9 million, or 6.2% of revenues. This compares to $115.7 million, or 5.1% of revenues, for the third quarter of 2019.

Selling, general and administrative expenses for the third quarter of 2020 totaled $226.8 million, or 10.3% of revenues, compared to $220.1 million, or 9.6% of revenues, for the third quarter of 2019.

The Company's income tax rate for the third quarter of 2020 was 54.7%, which compares to an income tax rate of 27.9% for the third quarter of 2019. The Company’s tax rate for the third quarter of 2020 was impacted by the previously referenced tax effect of the impairment charges recorded in the second quarter of 2020.

Remaining performance obligations as of September 30, 2020 were $4.53 billion compared to $4.04 billion as of September 30, 2019. Total remaining performance obligations grew approximately $495.1 million year-over-year.

Tony Guzzi, Chairman, President and Chief Executive Officer of EMCOR, commented, “We continue to execute with a high level of focus, discipline, and precision, demonstrating our ability to perform exceptionally well in an uncertain environment. As a result, the Company delivered an excellent third quarter, achieving all-time record operating income of $135.9 million, record third quarter operating margin of 6.2%, and record non-GAAP diluted earnings per share of $1.76 despite a 3.8% decline in revenues year-over-year. Our initiatives to fundamentally realign our cost structure combined with our disciplined working capital management drove robust operating cash flow generation in the quarter, up 23% compared to the prior year period. While impacts related to the COVID-19 pandemic are ongoing, we are cautiously optimistic about demand recovery as our remaining performance obligations increased 12.3% year-over-year, underscoring the resiliency of our business and the markets in which we operate.”

Mr. Guzzi added, “Our U.S. Construction segments posted combined operating income growth of 34.0% and record third quarter operating margin of 9.1%, expanding an outstanding 240 basis points year-over-year, as we leveraged our cost structure and maintained exceptional field performance and productivity levels. Our U.S. Building Services segment reported revenue and operating income growth of 3.7% and 9.0% year-over-year, respectively, driven by strong performance in our commercial and government site-based services businesses and sustained strength in our mobile mechanical services business. The headwinds related to COVID-19 are most prominent in our U.S. Industrial Services segment. However, we are pleased with our efforts to strategically reposition the business through extensive measures to control costs and improve efficiency, and we believe we are well-equipped to succeed when customer demand rebounds. Finally, our U.K. Building Services segment continues to expand its strong competitive position and grow its customer relationships, which drove impressive, double-digit revenue and operating income growth of 12.7% and 12.1% year-over-year, respectively.”

Revenues for the first nine months of 2020 totaled $6.52 billion, a decrease of 3.8%, compared to $6.77 billion for the first nine months of 2019. Net income for the first nine months of 2020 was $53.2 million, or $0.96 per diluted share, compared to $238.2 million, or $4.22 per diluted share, for the first nine months of 2019. Excluding the previously referenced impairment charges recorded in the second quarter of 2020 and the related tax effect, non-GAAP net income for the first nine months of 2020 was $251.8 million, or $4.54 per diluted share.

Operating income for the first nine months of 2020 was $119.2 million, or 1.8% of revenues, compared to $338.0 million, or 5.0% of revenues, for the first nine months of 2019. Excluding the $232.8 million of non-cash impairment charges recorded in the second quarter of 2020, non-GAAP operating income for the first nine months of 2020 was $352.0 million, or 5.4% of revenues. SG&A totaled $659.0 million, or 10.1% of revenues, for the first nine months of 2020, compared to $652.5 million, or 9.6% of revenues, for the first nine months of 2019.

Please see 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.

Based on year-to-date performance, visibility into the remainder of the year and assuming the continuation of current market conditions, EMCOR is raising its full-year 2020 revenue guidance to approximately $8.7 billion, an increase from the prior guidance range of $8.6 billion to $8.7 billion. The Company now also expects full-year 2020 non-GAAP diluted earnings per share in the range of $5.90 to $6.10, an increase from the prior guidance range of $5.00 to $5.50.

Mr. Guzzi concluded, “As we continue to navigate through these unprecedented times, we are focused on the elements of our business in our control, following strict safety protocols for our employees and adjusting our operations, as appropriate. We are very pleased by our year-to-date performance, which speaks to the incredible hard work and dedication across our organization. We have raised our full-year guidance to reflect our solid results in this challenging environment, as well as our expectations for strong and productive execution throughout the remainder of the year. Looking ahead, while visibility remains low, we are encouraged by the growth of our remaining performance obligations and firmly believe the actions we’ve taken to maintain our strong financial position will allow us to continue to deliver long-term value for our shareholders in 2020 and beyond.”

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, Thursday, 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 October 29, 2020 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 those anticipated (whether expressly or implied) by 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, mix of business, the impact of the 2020 ransomware attack, and the impact of the COVID-19 pandemic on our revenue and operations, including employees, construction activity, and facilities utilization, and the risk factors associated with EMCOR’s business discussed in Part I, Item 1A “Risk Factors,” of the Company’s 2019 Form 10-K, in Part II, Item 1A “Risk Factors,” of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, 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.

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 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.

In addition, forecast non-GAAP diluted earnings per share for full-year 2020 is a forward-looking non-GAAP financial measure. The Company does not provide a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP on a forward-looking basis because it is unable to provide such reconciliations without unreasonable effort, due to the uncertainty and inherent difficulty of predicting the occurrence and the financial impact of items such as impairment charges that impact comparability and the periods in which such items may be recognized. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

EMCOR GROUP, INC.

FINANCIAL HIGHLIGHTS


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share information)

(Unaudited)

 

 

 

For the three months ended
September 30,

 

For the nine months ended
September 30,

 

 

2020

 

2019

 

2020

 

2019

Revenues

 

$

2,201,714

 

 

$

2,287,741

 

 

$

6,515,567

 

 

$

6,770,671

 

Cost of sales

 

1,838,530

 

 

1,951,754

 

 

5,504,036

 

 

5,779,550

 

Gross profit

 

363,184

 

 

335,987

 

 

1,011,531

 

 

991,121

 

Selling, general and administrative expenses

 

226,793

 

 

220,119

 

 

658,964

 

 

652,536

 

Restructuring expenses

 

536

 

 

119

 

 

605

 

 

567

 

Impairment loss on goodwill, identifiable intangible assets,
and other long-lived assets

 

 

 

 

 

232,750

 

 

 

Operating income

 

135,855

 

 

115,749

 

 

119,212

 

 

338,018

 

Net periodic pension (cost) income

 

751

 

 

381

 

 

2,211

 

 

1,187

 

Interest expense, net

 

(1,484)

 

 

(2,678)

 

 

(6,082)

 

 

(8,732)

 

Income before income taxes

 

135,122

 

 

113,452

 

 

115,341

 

 

330,473

 

Income tax provision

 

73,936

 

 

31,618

 

 

62,179

 

 

92,257

 

Net income

 

$

61,186

 

 

$

81,834

 

 

$

53,162

 

 

$

238,216

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

1.11

 

 

$

1.46

 

 

$

0.96

 

 

$

4.24

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

1.11

 

 

$

1.45

 

 

$

0.96

 

 

$

4.22

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

 

Basic

 

54,979,310

 

 

56,216,840

 

 

55,302,385

 

 

56,189,388

 

Diluted

 

55,200,245

 

 

56,558,450

 

 

55,509,722

 

 

56,494,430

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.08

 

 

$

0.08

 

 

$

0.24

 

 

$

0.24

 

 

 

 

 

 

 

 

 

 

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

September 30,
2020

(Unaudited)

 

December 31,
2019

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

679,342

 

 

$

358,818

 

Accounts receivable, net

 

1,942,341

 

 

2,030,813

 

Contract assets

 

187,313

 

 

177,830

 

Inventories

 

39,253

 

 

40,446

 

Prepaid expenses and other

 

48,841

 

 

51,976

 

Total current assets

 

2,897,090

 

 

2,659,883

 

Property, plant and equipment, net

 

155,161

 

 

156,187

 

Operating lease right-of-use assets

 

236,297

 

 

245,471

 

Goodwill

 

846,908

 

 

1,063,911

 

Identifiable intangible assets, net

 

596,679

 

 

611,444

 

Other assets

 

97,850

 

 

93,462

 

Total assets

 

$

4,829,985

 

 

$

4,830,358

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current maturities of long-term debt and finance lease liabilities

 

$

9,693

 

 

$

18,092

 

Accounts payable

 

596,093

 

 

665,402

 

Contract liabilities

 

714,686

 

 

623,642

 

Accrued payroll and benefits

 

385,752

 

 

382,573

 

Other accrued expenses and liabilities

 

219,858

 

 

195,757

 

Operating lease liabilities, current

 

52,766

 

 

53,144

 

Total current liabilities

 

1,978,848

 

 

1,938,610

 

Borrowings under revolving credit facility

 

 

 

50,000

 

Long-term debt and finance lease liabilities

 

272,243

 

 

244,139

 

Operating lease liabilities, long-term

 

199,967

 

 

204,950

 

Other long-term obligations

 

371,062

 

 

334,879

 

Total liabilities

 

2,822,120

 

 

2,772,578

 

Equity:

 

 

 

 

Total EMCOR Group, Inc. stockholders’ equity

 

2,007,289

 

 

2,057,134

 

Noncontrolling interests

 

576

 

 

646

 

Total equity

 

2,007,865

 

 

2,057,780

 

Total liabilities and equity

 

$

4,829,985

 

 

$

4,830,358

 

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2020 and 2019

(In thousands) (Unaudited)

 

 

2020

 

2019

Cash flows - operating activities:

 

 

 

 

Net income

 

$

53,162

 

 

$

238,216

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

34,881

 

 

32,412

 

Amortization of identifiable intangible assets

 

44,765

 

 

34,500

 

Provision for credit losses

 

3,409

 

 

1,621

 

Deferred income taxes

 

(28,104)

 

 

(913)

 

Excess tax benefits from share-based compensation

 

(192)

 

 

(601)

 

Non-cash expense for impairment of goodwill, identifiable intangible assets,
and other long-lived assets

 

232,750

 

 

 

Non-cash share-based compensation expense

 

8,510

 

 

8,840

 

Other reconciling items

 

1,361

 

 

3,696

 

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

 

196,292

 

 

(140,850)

 

Net cash provided by operating activities

 

546,834

 

 

176,921

 

Cash flows - investing activities:

 

 

 

 

Payments for acquisitions of businesses, net of cash acquired

 

(44,930)

 

 

(79,984)

 

Proceeds from sale or disposal of property, plant and equipment

 

1,891

 

 

1,612

 

Purchase of property, plant and equipment

 

(34,180)

 

 

(35,829)

 

Investments in and advances to unconsolidated entities

 

 

 

(794)

 

Distributions from unconsolidated entities

 

 

 

38

 

Net cash used in investing activities

 

(77,219)

 

 

(114,957)

 

Cash flows - financing activities:

 

 

 

 

Proceeds from revolving credit facility

 

200,000

 

 

 

Repayments of revolving credit facility

 

(250,000)

 

 

(25,000)

 

Proceeds from long-term debt

 

300,000

 

 

 

Repayments of long-term debt and debt issuance costs

 

(280,049)

 

 

(11,400)

 

Repayments of finance lease liabilities

 

(3,390)

 

 

(3,357)

 

Dividends paid to stockholders

 

(13,280)

 

 

(13,458)

 

Repurchase of common stock

 

(99,048)

 

 

 

Taxes paid related to net share settlements of equity awards

 

(2,574)

 

 

(3,771)

 

Issuance of common stock under employee stock purchase plan

 

4,887

 

 

4,501

 

Payments for contingent consideration arrangements

 

(4,070)

 

 

(3,589)

 

Distributions to noncontrolling interests

 

(70)

 

 

(250)

 

Net cash used in financing activities

 

(147,594)

 

 

(56,324)

 

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

(1,304)

 

 

(2,047)

 

Increase in cash, cash equivalents, and restricted cash

 

320,717

 

 

3,593

 

Cash, cash equivalents, and restricted cash at beginning of year (1)

 

359,920

 

 

366,214

 

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

 

$

680,637

 

 

$

369,807

 

(1)

  Includes $1.1 million and $2.3 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of December 31, 2019 and 2018, respectively.

(2)

  Includes $1.3 million and $1.7 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of September 30, 2020 and 2019, respectively.

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands) (Unaudited)

 

 

For the three months ended
September 30,

 

 

2020

 

2019

Revenues from unrelated entities:

 

 

 

 

United States electrical construction and facilities services

 

$

508,863

 

 

$

554,637

 

United States mechanical construction and facilities services

 

891,509

 

 

869,188

 

United States building services

 

551,555

 

 

532,122

 

United States industrial services

 

139,712

 

 

234,166

 

Total United States operations

 

2,091,639

 

 

2,190,113

 

United Kingdom building services

 

110,075

 

 

97,628

 

Total worldwide operations

 

$

2,201,714

 

 

$

2,287,741

 

 

 

 

 

 

 

 

For the nine months ended
September 30,

 

 

2020

 

2019

Revenues from unrelated entities:

 

 

 

 

United States electrical construction and facilities services

 

$

1,479,973

 

 

$

1,652,109

 

United States mechanical construction and facilities services

 

2,516,062

 

 

2,444,683

 

United States building services

 

1,542,054

 

 

1,567,899

 

United States industrial services

 

661,909

 

 

788,271

 

Total United States operations

 

6,199,998

 

 

6,452,962

 

United Kingdom building services

 

315,569

 

 

317,709

 

Total worldwide operations

 

$

6,515,567

 

 

$

6,770,671

 

 

 

 

 

 

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands) (Unaudited)

 

 

For the three months ended
September 30,

 

 

2020

 

2019

Operating income (loss):

 

 

 

 

United States electrical construction and facilities services

 

$

47,059

 

 

$

33,630

 

United States mechanical construction and facilities services

 

80,048

 

 

61,213

 

United States building services

 

38,205

 

 

35,051

 

United States industrial services

 

(9,794)

 

 

5,561

 

Total United States operations

 

155,518

 

 

135,455

 

United Kingdom building services

 

5,327

 

 

4,754

 

Corporate administration

 

(24,454)

 

 

(24,341)

 

Restructuring expenses

 

(536)

 

 

(119)

 

Total worldwide operations

 

135,855

 

 

115,749

 

Other corporate items:

 

 

 

 

Net periodic pension (cost) income

 

751

 

 

381

 

Interest expense, net

 

(1,484)

 

 

(2,678)

 

Income before income taxes

 

$

135,122

 

 

$

113,452

 

 

 

 

 

 

 

 

For the nine months ended
September 30,

 

 

2020

 

2019

Operating income (loss):

 

 

 

 

United States electrical construction and facilities services

 

$

123,146

 

 

$

120,380

 

United States mechanical construction and facilities services

 

192,156

 

 

156,152

 

United States building services

 

85,421

 

 

90,535

 

United States industrial services

 

5,424

 

 

31,209

 

Total United States operations

 

406,147

 

 

398,276

 

United Kingdom building services

 

16,442

 

 

14,371

 

Corporate administration

 

(70,022)

 

 

(74,062)

 

Restructuring expenses

 

(605)

 

 

(567)

 

Impairment loss on goodwill, identifiable intangible assets, and other long-lived assets

 

(232,750)

 

 

 

Total worldwide operations

 

119,212

 

 

338,018

 

Other corporate items:

 

 

 

 

Net periodic pension (cost) income

 

2,211

 

 

1,187

 

Interest expense, net

 

(6,082)

 

 

(8,732)

 

Income before income taxes

 

$

115,341

 

 

$

330,473

 

 

 

 

 

 

EMCOR GROUP, INC.
RECONCILIATION OF 2020 AND 2019 NON-GAAP OPERATING INCOME AND
NON-GAAP OPERATING MARGIN
(In thousands) (Unaudited)

In our press release, we provide non-GAAP operating income and non-GAAP operating margin for the three and nine months ended September 30, 2020 and 2019. 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 three months ended
September 30,

 

For the nine months ended
September 30,

 

 

2020

 

2019

 

2020

 

2019

GAAP operating income

 

$

135,855

 

 

$

115,749

 

 

$

119,212

 

 

$

338,018

 

Impairment loss on goodwill, identifiable intangible assets,
and other long-lived assets

 

 

 

 

 

232,750

 

 

 

Non-GAAP operating income

 

$

135,855

 

 

$

115,749

 

 

$

351,962

 

 

$

338,018

 

 

 

For the three months ended
September 30,

 

For the nine months ended
September 30,

 

 

2020

 

2019

 

2020

 

2019

GAAP operating margin

 

6.2

%

 

5.1

%

 

1.8

%

 

5.0

%

Impairment loss on goodwill, identifiable intangible assets,
and other long-lived assets

 

%

 

%

 

3.6

%

 

%

Non-GAAP operating margin

 

6.2

%

 

5.1

%

 

5.4

%

 

5.0

%

EMCOR GROUP, INC.
RECONCILIATION OF 2020 AND 2019 NON-GAAP NET INCOME
(In thousands) (Unaudited)

In our press release, we provide non-GAAP net income for the three and nine months ended September 30, 2020 and 2019. 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 three months ended
September 30,

 

For the nine months ended
September 30,

 

 

2020

 

2019

 

2020

 

2019

GAAP net income

 

$

61,186

 

 

$

81,834

 

 

$

53,162

 

 

$

238,216

 

Impairment loss on goodwill, identifiable intangible assets,
and other long-lived assets

 

 

 

 

 

232,750

 

 

 

Tax effect of impairment loss on goodwill, identifiable
intangible assets, and other long-lived assets

 

35,776

 

 

 

 

(34,089)

 

 

 

Non-GAAP net income

 

$

96,962

 

 

$

81,834

 

 

$

251,823

 

 

$

238,216

 

EMCOR GROUP, INC.
RECONCILIATION OF 2020 AND 2019 NON-GAAP DILUTED EARNINGS PER SHARE
(In thousands) (Unaudited)

In our press release, we provide non-GAAP diluted earnings per common share for the three and nine months ended September 30, 2020 and 2019. 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 three months ended
September 30,

 

For the nine months ended
September 30,

 

 

2020

 

2019

 

2020

 

2019

GAAP diluted earnings per common share

 

$

1.11

 

 

$

1.45

 

 

$

0.96

 

 

$

4.22

 

Impairment loss on goodwill, identifiable intangible assets,
and other long-lived assets

 

 

 

 

 

4.19

 

 

 

Tax effect of impairment loss on goodwill, identifiable
intangible assets, and other long-lived assets

 

0.65

 

 

 

 

(0.61)

 

 

 

Non-GAAP diluted earnings per common share

 

$

1.76

 

 

$

1.45

 

 

$

4.54

 

 

$

4.22

 

 

Emcor Group Aktie jetzt über den Testsieger (Finanztest 11/2020) handeln, ab 0 € auf Smartbroker.de



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Disclaimer

EMCOR Group, Inc. Reports Third Quarter 2020 Results EMCOR Group, Inc. (NYSE: EME) today reported results for the third quarter ended September 30, 2020. For the third quarter of 2020, net income was $61.2 million, or $1.11 per diluted share, compared to $81.8 million, or $1.45 per diluted share, for …

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