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EMCOR Group, Inc. Reports Second Quarter 2022 Results

- Record Quarterly Revenues of $2.71 billion, 11.1% Increase Year-over-Year -

- Record Quarterly Diluted EPS of $1.99 -

- Record Remaining Performance Obligations of $6.46 billion, 26.5% Increase Year-over-Year -

- Increases 2022 Revenue Guidance to approximately $10.8 billion, up from $10.4 – $10.7 billion -

- Updates 2022 Diluted EPS Guidance Range to $7.30 – $7.80 from $7.15 – $7.85 -

- Board Authorizes Additional $500 Million Share Repurchase Program -

- Board Approves Increase in Quarterly Dividend to $0.15 per share from $0.13 per share -

EMCOR Group, Inc. (NYSE: EME) today reported results for the second quarter ended June 30, 2022.

For the second quarter of 2022, net income was $100.7 million, or $1.99 per diluted share, compared to $97.4 million, or $1.78 per diluted share, for the second quarter of 2021. Revenues for the second quarter of 2022 totaled $2.71 billion, up 11.1% from the year ago period.

Operating income for the second quarter of 2022 was $137.6 million, or 5.1% of revenues. This compares to $133.4 million, or 5.5% of revenues, for the second quarter of 2021.

Selling, general and administrative expenses for the second quarter of 2022 totaled $245.4 million, or 9.1% of revenues, compared to $242.9 million, or 10.0% of revenues, for the second quarter of 2021.

The Company's income tax rate for the second quarter of 2022 was 26.5% compared to an income tax rate of 26.8% for the second quarter of 2021.

Remaining performance obligations as of June 30, 2022 were $6.46 billion compared to $5.11 billion as of June 30, 2021. Total remaining performance obligations grew $1.35 billion, or 26.5%, year-over-year.

Tony Guzzi, Chairman, President and Chief Executive Officer of EMCOR, commented, “The Company posted another exceptional quarter, reflecting record quarterly revenues, up 11.1% year-over-year, 9.7% of which was organic, driven by double-digit growth across our U.S. Construction, U.S. Building Services and U.S. Industrial Services segments. Additionally, our continued focus on our customers and solid execution allowed us to deliver a healthy operating income margin of 5.1%, a strong sequential improvement from the first quarter of 2022. Finally, we continue to win in the marketplace, growing our remaining performance obligations to a record $6.46 billion, up 26.5% year-over-year.”

Mr. Guzzi added, “Our U.S. Construction segments delivered a strong second quarter, achieving combined 11.6% year-over-year top-line growth and operating income margin of 6.9%, driven by strong demand for our specialty contracting construction services across many market sectors. Our U.S. Building Services segment continued its momentum, posting its sixth consecutive quarter of double-digit revenue growth led by solid growth in our HVAC repair service and commercial site-based services division. While we continue to manage through supply chain challenges, partially impacting results in our U.S. Construction and U.S. Building Services segments, our scale, effective planning, and workforce scheduling positions us well to navigate the volatile operating environment heading into the back half of the year. Our U.S. Industrial Services segment is delivering as expected, with double-digit revenue growth resulting from extraordinarily high utilization rates from our downstream customers. Finally, our U.K. Building Services segment continues to deliver steady performance, generating operating margin of 5.6%, up 20 basis points year-over-year.”

Revenues for the first six months of 2022 totaled $5.30 billion, an increase of 11.8%, compared to $4.74 billion for the first six months of 2021. Net income for the first six months of 2022 was $174.1 million, or $3.36 per diluted share, compared to net income of $182.1 million, or $3.32 per diluted share, for the first six months of 2021.

Operating income for the first six months of 2022 was $237.6 million, representing an operating margin of 4.5%, compared to operating income of $250.4 million, representing an operating margin of 5.3%, for the first six months of 2021.

Selling, general and administrative expenses totaled $498.0 million, or 9.4% of revenues, for the first six months of 2022, compared to $467.0 million, or 9.8% of revenues, for the first six months of 2021.

Based on year-to-date performance, current operating conditions, and visibility into the remainder of the year, EMCOR is increasing its full-year 2022 revenue guidance to approximately $10.8 billion, an increase from the prior guidance range of $10.4 billion to $10.7 billion. The Company now also expects full-year 2022 diluted earnings per share in the range of $7.30 to $7.80 versus the prior guidance range of $7.15 to $7.85.

Mr. Guzzi concluded, “Heading into the back half of the year, we are pleased with our results to-date and are well positioned to build on our momentum despite ongoing supply chain challenges, potential COVID-related disruptions, and an uncertain macroenvironment. Our confidence is based on our expectations for strong project demand across key market sectors, favorable SG&A leverage, and a more normalized fall turnaround season for our U.S. Industrial Services segment. We also remain committed to pursuing a balanced approach to capital allocation, including maintaining a strong balance sheet, investing in organic growth and strategic acquisitions, and returning cash to shareholders through share repurchases and dividends.”

Dividend Increase and Additional Share Repurchase Program

The Company today announced that its Board of Directors has approved an increase to the Company’s regular quarterly dividend to $0.15 per share from $0.13 per share. The Board expects to declare this cash dividend starting in the third quarter of 2022, payable on October 31, 2022 to stockholders of record as of October 18, 2022.

The Company also announced today that its Board of Directors has authorized a new share repurchase program for the Company to repurchase up to an additional $500 million of its outstanding common stock.

Mr. Guzzi said, “Our long-term confidence in our business, strong free cash flow, solid financial position, and commitment to our shareholders is reflected by this new share repurchase program and dividend increase. We are excited about the opportunities within our resilient and growing end markets and remain committed to creating long-term value for our shareholders.”

As of July 22, 2022, the Company had approximately $93.7 million remaining under previous share repurchase authorizations. The new share repurchase program will be funded from cash on hand, cash generated from operations, or borrowings under the Company’s revolving credit facility. The shares will be repurchased from time to time in the open market or through privately negotiated transactions at the Company’s discretion, subject to market conditions, and in accordance with applicable regulatory requirements. The repurchase program does not obligate the Company to acquire any particular amount of common stock and may be suspended, recommenced, or discontinued at any time or from time to time without prior notice.

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, Thursday, July 28, 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 July 28, 2022 and EMCOR assumes no obligation to update any such forward-looking statements, unless required by law. These forward-looking statements may include statements regarding anticipated future operating and financial performance, including financial guidance and projections underlying that guidance; the nature and impact of our remaining performance obligations; our ability to pursue acquisitions; our ability to return capital to shareholders; market opportunities; market growth prospects; customer trends; and our ability to maintain a strong safety record. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated (whether expressly or implied) by the forward-looking statements. Accordingly, these statements do not guarantee future performance or events. Applicable risks and uncertainties include, but are not limited to, adverse effects of general economic conditions; changes in interest rates; domestic and international political developments; changes in the specific markets for EMCOR’s services; adverse business conditions, including labor market tightness, productivity challenges, the nature and extent of supply chain disruptions impacting availability and pricing of materials, and inflationary trends more generally, including fluctuations in energy costs; the availability of adequate levels of surety bonding; increased competition; unfavorable developments in the mix of our business; and the continuing impact of the COVID-19 pandemic, including the nature, extent, and impact of future variant surges, as well as other health emergencies, and government orders and mandates related thereto, on our revenue and operations. Certain of the risk factors associated with EMCOR’s business are also discussed in Part I, Item 1A “Risk Factors,” of the Company’s 2021 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 may include certain financial measures that were not prepared in accordance with U.S. generally accepted accounting principles (GAAP). The Company uses these non-GAAP measures as key performance indicators for the purpose of evaluating performance internally. We also believe that these non-GAAP measures provide investors with useful information with respect to our ongoing operations. Any non-GAAP financial measures presented are not, and should not be viewed as, substitutes for financial measures required by GAAP, have no standardized meaning prescribed by GAAP, and may not be comparable to the calculation of similar measures of other companies.

 

EMCOR GROUP, INC.

FINANCIAL HIGHLIGHTS



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share information)

(Unaudited)

 

 

 

For the three months ended

June 30,

 

For the six months ended

June 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues

 

$

2,707,388

 

 

$

2,437,666

 

 

$

5,299,937

 

 

$

4,741,715

 

Cost of sales

 

 

2,324,380

 

 

 

2,061,387

 

 

 

4,564,374

 

 

 

4,024,363

 

Gross profit

 

 

383,008

 

 

 

376,279

 

 

 

735,563

 

 

 

717,352

 

Selling, general and administrative expenses

 

 

245,364

 

 

 

242,921

 

 

 

497,962

 

 

 

466,990

 

Operating income

 

 

137,644

 

 

 

133,358

 

 

 

237,601

 

 

 

250,362

 

Net periodic pension (cost) income

 

 

1,094

 

 

 

922

 

 

 

2,263

 

 

 

1,830

 

Interest expense, net

 

 

(1,751

)

 

 

(1,316

)

 

 

(3,040

)

 

 

(2,679

)

Income before income taxes

 

 

136,987

 

 

 

132,964

 

 

 

236,824

 

 

 

249,513

 

Income tax provision

 

 

36,323

 

 

 

35,616

 

 

 

62,774

 

 

 

67,220

 

Net income including noncontrolling interests

 

 

100,664

 

 

 

97,348

 

 

 

174,050

 

 

 

182,293

 

Net (loss) income attributable to noncontrolling interests

 

 

 

 

 

(2

)

 

 

 

 

 

169

 

Net income attributable to EMCOR Group, Inc.

 

$

100,664

 

 

$

97,350

 

 

$

174,050

 

 

$

182,124

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

1.99

 

 

$

1.79

 

 

$

3.37

 

 

$

3.34

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

1.99

 

 

$

1.78

 

 

$

3.36

 

 

$

3.32

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

50,507,024

 

 

 

54,301,466

 

 

 

51,610,014

 

 

 

54,594,208

 

Diluted

 

 

50,711,770

 

 

 

54,587,813

 

 

 

51,814,164

 

 

 

54,856,759

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.13

 

 

$

0.13

 

 

$

0.26

 

 

$

0.26

 

 

 

 

 

 

 

 

 

 

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

(Unaudited)

June 30, 2022

 

December 31,

2021

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

262,370

 

$

821,345

Accounts receivable, net

 

 

2,439,594

 

 

2,204,519

Contract assets

 

 

264,764

 

 

230,143

Inventories

 

 

93,464

 

 

54,098

Prepaid expenses and other

 

 

65,348

 

 

80,889

Total current assets

 

 

3,125,540

 

 

3,390,994

Property, plant and equipment, net

 

 

155,411

 

 

152,066

Operating lease right-of-use assets

 

 

271,084

 

 

260,778

Goodwill

 

 

901,208

 

 

890,268

Identifiable intangible assets, net

 

 

577,284

 

 

589,365

Other assets

 

 

115,917

 

 

157,975

Total assets

 

$

5,146,444

 

$

5,441,446

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current maturities of long-term debt and finance lease liabilities

 

$

15,635

 

$

16,235

Accounts payable

 

 

722,924

 

 

734,275

Contract liabilities

 

 

925,733

 

 

788,134

Accrued payroll and benefits

 

 

439,319

 

 

490,867

Other accrued expenses and liabilities

 

 

236,908

 

 

274,406

Operating lease liabilities, current

 

 

62,416

 

 

57,814

Total current liabilities

 

 

2,402,935

 

 

2,361,731

Long-term debt and finance lease liabilities

 

 

245,004

 

 

245,450

Operating lease liabilities, long-term

 

 

227,719

 

 

220,836

Other long-term obligations

 

 

317,995

 

 

360,340

Total liabilities

 

 

3,193,653

 

 

3,188,357

Equity:

 

 

 

 

Total EMCOR Group, Inc. stockholders’ equity

 

 

1,952,089

 

 

2,252,387

Noncontrolling interests

 

 

702

 

 

702

Total equity

 

 

1,952,791

 

 

2,253,089

Total liabilities and equity

 

$

5,146,444

 

$

5,441,446

 

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2022 and 2021

(In thousands) (Unaudited)

 

 

 

 

2022

 

 

 

2021

 

Cash flows - operating activities:

 

 

 

 

Net income including noncontrolling interests

 

$

174,050

 

 

$

182,293

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

Depreciation and amortization

 

 

23,106

 

 

 

24,110

 

Amortization of identifiable intangible assets

 

 

30,031

 

 

 

30,996

 

Non-cash share-based compensation expense

 

 

6,463

 

 

 

5,850

 

Other reconciling items

 

 

2,290

 

 

 

3,784

 

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

 

 

(254,791

)

 

 

(254,005

)

Net cash used in operating activities

 

 

(18,851

)

 

 

(6,972

)

Cash flows - investing activities:

 

 

 

 

Payments for acquisitions of businesses, net of cash acquired

 

 

(26,614

)

 

 

(55,846

)

Proceeds from sale or disposal of property, plant and equipment

 

 

1,033

 

 

 

1,445

 

Purchases of property, plant and equipment

 

 

(27,747

)

 

 

(16,734

)

Distributions from unconsolidated entities

 

 

 

 

 

196

 

Net cash used in investing activities

 

 

(53,328

)

 

 

(70,939

)

Cash flows - financing activities:

 

 

 

 

Proceeds from revolving credit facility

 

 

100,000

 

 

 

 

Repayments of revolving credit facility

 

 

(100,000

)

 

 

 

Repayments of finance lease liabilities

 

 

(1,889

)

 

 

(2,228

)

Dividends paid to stockholders

 

 

(13,619

)

 

 

(14,236

)

Repurchases of common stock

 

 

(454,317

)

 

 

(138,030

)

Taxes paid related to net share settlements of equity awards

 

 

(7,239

)

 

 

(3,771

)

Issuances of common stock under employee stock purchase plan

 

 

4,023

 

 

 

3,561

 

Payments for contingent consideration arrangements

 

 

(2,049

)

 

 

(2,338

)

Distributions to noncontrolling interests

 

 

 

 

 

(43

)

Net cash used in financing activities

 

 

(475,090

)

 

 

(157,085

)

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

 

 

(11,757

)

 

 

1,222

 

Decrease in cash, cash equivalents, and restricted cash

 

 

(559,026

)

 

 

(233,774

)

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

 

 

822,568

 

 

 

903,562

 

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

 

$

263,542

 

 

$

669,788

 

___________
(1)

Includes $1.2 million and $0.7 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of December 31, 2021 and 2020, respectively.

(2)

Includes $1.2 million and $0.9 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of June 30, 2022 and 2021, respectively.

 

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands) (Unaudited)

 

 

 

For the three months ended

June 30,

 

 

2022

 

2021

Revenues from unrelated entities:

 

 

 

 

United States electrical construction and facilities services

 

$

564,112

 

$

492,130

United States mechanical construction and facilities services

 

 

1,066,347

 

 

968,664

United States building services

 

 

677,847

 

 

611,835

United States industrial services

 

 

284,534

 

 

235,163

Total United States operations

 

 

2,592,840

 

 

2,307,792

United Kingdom building services

 

 

114,548

 

 

129,874

Total operations

 

$

2,707,388

 

$

2,437,666

 

 

 

 

 

 

 

 

For the six months ended

J
une 30,

 

 

2022

 

2021

Revenues from unrelated entities:

 

 

 

 

United States electrical construction and facilities services

 

$

1,086,142

 

$

951,525

United States mechanical construction and facilities services

 

 

2,066,817

 

 

1,883,165

United States building services

 

 

1,305,648

 

 

1,179,871

United States industrial services

 

 

595,285

 

 

470,545

Total United States operations

 

 

5,053,892

 

 

4,485,106

United Kingdom building services

 

 

246,045

 

 

256,609

Total operations

 

$

5,299,937

 

$

4,741,715

 

 

 

 

 

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands) (Unaudited)

 

 

 

For the three months ended

June 30,

 

 

 

2022

 

 

 

2021

 

Operating income (loss):

 

 

 

 

United States electrical construction and facilities services

 

$

35,095

 

 

$

43,012

 

United States mechanical construction and facilities services

 

 

76,945

 

 

 

76,724

 

United States building services

 

 

38,161

 

 

 

32,538

 

United States industrial services

 

 

6,458

 

 

 

(208

)

Total United States operations

 

 

156,659

 

 

 

152,066

 

United Kingdom building services

 

 

6,415

 

 

 

7,047

 

Corporate administration

 

 

(25,430

)

 

 

(25,755

)

Total operations

 

 

137,644

 

 

 

133,358

 

Other items:

 

 

 

 

Net periodic pension (cost) income

 

 

1,094

 

 

 

922

 

Interest expense, net

 

 

(1,751

)

 

 

(1,316

)

Income before income taxes

 

$

136,987

 

 

$

132,964

 

 

 

 

 

 

 

 

For the six months ended

June 30,

 

 

 

2022

 

 

 

2021

 

Operating income (loss):

 

 

 

 

United States electrical construction and facilities services

 

$

55,088

 

 

$

83,264

 

United States mechanical construction and facilities services

 

 

135,619

 

 

 

139,900

 

United States building services

 

 

62,083

 

 

 

63,658

 

United States industrial services

 

 

19,716

 

 

 

(2,651

)

Total United States operations

 

 

272,506

 

 

 

284,171

 

United Kingdom building services

 

 

17,003

 

 

 

16,458

 

Corporate administration

 

 

(51,908

)

 

 

(50,267

)

Total operations

 

 

237,601

 

 

 

250,362

 

Other items:

 

 

 

 

Net periodic pension (cost) income

 

 

2,263

 

 

 

1,830

 

Interest expense, net

 

 

(3,040

)

 

 

(2,679

)

Income before income taxes

 

$

236,824

 

 

$

249,513

 

 

 

 

 

 

 

Contacts

EMCOR GROUP, INC.



R. Kevin Matz

Executive Vice President

Shared Services

(203) 849-7938



FTI Consulting, Inc.

Investors: Brad Newman

(212) 850-5646

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