EMCOR Group, Inc. Reports Second Quarter 2019 Results

Business Wire 30-Jul-2019 7:30 AM

- 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 -

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.

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.

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.

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.

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.

(1) Amount is income from continuing operations less net income attributable to noncontrolling interest.

(2) Amount excludes de minimis income tax benefit.

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.

(1) Amount excludes de minimis income tax benefit.

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