NORWALK, CONNECTICUT, July 29, 2008 - EMCOR Group, Inc. (NYSE: EME) today reported results for the second quarter and six months ended June 30, 2008.
Net income for the second quarter of 2008 increased 68.1% to $44.0 million, or $0.65 per diluted share, from $26.2 million, or $0.39 per diluted share, for the second quarter of 2007. Revenues for the 2008 second quarter rose 25.6% to $1.72 billion from $1.37 billion in the year ago period. The increase in revenues in the period reflects strong organic growth of 12%, as well as contributions from recent acquisitions.
Operating income rose 76.9% to $73.3 million, or 4.3% of revenues, for the second quarter of 2008, from $41.5 million, or 3.0% of revenues, for the year ago period. Selling, general and administrative (SG&A) expenses in the 2008 second quarter were $151.8 million, compared with $123.1 million in the same period a year ago. The increase in SG&A during the period primarily reflects expenses associated with companies acquired during the last twelve months. As a percentage of revenues, SG&A declined to 8.8% in the current year period from 9.0% a year ago. The Company's tax rate for the 2008 second quarter was 39%, compared to 42% for the prior year comparable period.
The Company's results for the second quarter of 2008 include a one-time charge, substantially all of which is non-cash, of $7.9 million, or $0.07 per share after-tax, resulting from an adverse jury verdict in a construction contract case. This charge is included in cost of sales for the period.
EMCOR achieved record contract backlog as of the end of the 2008 second quarter. Contract backlog reached $4.67 billion at June 30, 2008, an increase of 9.7% over a year ago, and an increase of 6.5% over contract backlog as of March 31, 2008. Organic backlog growth, excluding companies acquired during the last 12 months, was approximately 5.0% versus the year ago figure.
Net income for the first half of 2008 was $73.3 million, or $1.09 per diluted share, an increase of 92.1% over net income of $38.1 million, or $0.57 per diluted share, for the prior year period. Revenues for the first half of 2008 totaled $3.38 billion compared to $2.66 billion, an increase of 27.3%, of which 14.3% represented organic growth.
For the 2008 six-month period, operating income increased 109.2% to $123.0 million, or 3.6% of revenues, from $58.8 million, or 2.2% of revenues, for the year ago period. SG&A expenses for the first half of 2008 were $292.1 million, or 8.6% of revenues, compared to $234.7 million, or 8.8% of revenues for the first half of 2007.
Frank T. MacInnis, Chairman and CEO of EMCOR Group, commented, "The 2008 second quarter represented another exceptional period for EMCOR Group that continued the momentum of prior periods and demonstrated strong performance across the key indicators of our business: orders, revenues, margins and cash flow. Excellent execution and performance was evidenced across all of our business segments, driven by our focus on sectors that can grow through the current economic cycle such as healthcare, industrial, transportation and water and wastewater treatment. In addition, our facilities services business continues to increase its profitability while growing both organically and through acquisitions. We also realized substantially improved results in our Canadian operations, and our U.K. company returned to profitability."
Mr. MacInnis continued, "Our record performance, profit momentum, and strength of our order intake are bolstering our confidence about future periods. Additionally, we continue to see increased demand for our mission-critical facilities services business which adds a source of higher-margin, recurring revenues to our business not totally reflected in contract backlog."
Mr. MacInnis concluded, "EMCOR remains in an excellent position to continue its strong performance in the second half of 2008 and into 2009. Despite a challenging macroeconomic environment, our markets continue to be strong and balanced evidenced by the continued demand for our services. Our goal going forward is to continue executing at the high level that is reflected in our excellent performance to date and to meet the developing needs of our clients."
The Company noted that, based on current market conditions and the makeup of its backlog, it expects to generate revenues for the 2008 full-year period of between $6.8 billion and $7.0 billion and diluted earnings per share for 2008 of $2.32 to $2.47.
EMCOR Group, Inc. is a Fortune 500® worldwide leader in mechanical and electrical construction services, energy infrastructure and facilities services.
EMCOR Group's second quarter conference call will be available live via internet broadcast today, Tuesday, July 29, at 10:30 AM Eastern Daylight Time. You can access the live call through the Home Page of the Company's Web site at www.emcorgroup.com.
This release may contain certain forward-looking statements within the meaning of the Private Securities Reform Act of 1995. Any such comments are based upon information available to EMCOR management and its perception thereof, as of this date, and EMCOR assumes no obligation to update any such forward-looking statements. These forward-looking statements may include statements regarding market opportunities, market share growth, gross profit, backlog mix, projects with varying profit margins, and selling, general and administrative expenses. 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 risk 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 risks and factors associated with EMCOR's business are also discussed in the Company's 2007 Form 10-K, its Form 10-Q for the second quarter ended June 30, 2008, and in other reports filed from time to time with the Securities and Exchange Commission. All these risks and factors should be taken into account in evaluating any forward-looking statements.
- FINANCIAL TABLES FOLLOW -
EMCOR GROUP, INC.
FINANCIAL HIGHLIGHTS
(In thousands, except share and per share information)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenues $1,722,972 $1,371,954 $3,384,375 $2,658,721
Cost of sales 1,497,761 1,207,355 2,969,239 2,365,109
Gross profit 225,211 164,599 415,136 293,612
Selling, general and
administrative expenses 151,824 123,148 292,066 234,715
Restructuring expenses 57 -- 71 93
Operating income 73,330 41,451 122,999 58,804
Interest (expense) income, net (579) 2,779 (1,433) 5,490
Minority interest (277) (711) (353) (1,115)
Income from continuing
operations before income taxes 72,474 43,519 121,213 63,179
Income tax provision 28,520 18,168 47,931 26,303
Income from continuing
operations 43,954 25,351 73,282 36,876
Income from discontinued
operation, net -- 799 -- 1,266
Net income $ 43,954 $ 26,150 $ 73,282 $ 38,142
Basic earnings per share -
continuing operations $ 0.67 $ 0.40 $ 1.12 $ 0.58
Basic earnings per share -
discontinued operation -- 0.01 -- 0.02
$ 0.67 $ 0.41 $ 1.12 $ 0.60
Diluted earnings per share -
continuing operations $ 0.65 $ 0.38 $ 1.09 $ 0.55
Diluted earnings per share -
discontinued operation -- 0.01 -- 0.02
$ 0.65 $ 0.39 $ 1.09 $ 0.57
Weighted average shares of
common stock outstanding:
Basic 65,322,768 64,195,339 65,294,160 64,013,213
Diluted 67,301,117 66,654,674 67,137,110 66,470,154
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
June 30, 2008 (Unaudited) |
|
December 31, 2007 |
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ 275,511 |
|
$ 251,637 |
|
|
Accounts receivable, net |
1,496,411 |
|
1,435,268 |
|
|
Costs and estimated earnings in excess of billings |
|
|
|
|
|
on uncompleted contracts |
117,085 |
|
144,919 |
|
|
Inventories |
56,526 |
|
52,247 |
|
|
Prepaid expenses and other |
56,872 |
|
56,935 |
|
|
Total current assets
|
2,002,405 |
|
1,941,006 |
|
|
Investments, notes and other long-term receivables |
22,329 |
|
22,669 |
|
|
Property, plant & equipment, net |
88,807 |
|
83,963 |
|
|
Goodwill |
569,327 |
|
563,918 |
|
|
Identifiable intangible assets, net |
271,315 |
|
252,146 |
|
|
Other assets |
13,189 |
|
13,157 |
|
|
Total assets
|
$2,967,372 |
|
$2,876,859 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Borrowings under working capital credit line |
$ -- |
|
$ -- |
|
|
Current maturities of long-term debt and capital lease obligations |
3,838 |
|
3,791 |
|
|
Accounts payable |
509,190 |
|
537,314 |
|
|
Billings in excess of costs and estimated earnings |
|
|
|
|
|
on uncompleted contracts |
644,679 |
|
572,431 |
|
|
Accrued payroll and benefits |
203,364 |
|
215,554 |
|
|
Other accrued expenses and liabilities |
200,418 |
|
190,349 |
|
|
Total current liabilities
|
1,561,489 |
|
1,519,439 |
|
|
Long-term debt and capital lease obligations |
197,600 |
|
223,453 |
|
|
Other long-term obligations |
245,302 |
|
248,926 |
|
|
Total stockholders' equity |
962,981 |
|
885,041 |
|
|
Total liabilities and stockholders' equity |
$2,967,372 |
|
$2,876,859 |
|
|
|
|
|
|
|
FOR:
EMCOR GROUP, INC.
CONTACT:
R. Kevin Matz
Executive Vice President
Shared Services
(203) 849-7938
FD Investors:
Eric Boyriven - (212) 850-5600
Linden Alschuler & Kaplan, Inc.Media:
Suzanne Dawson / Cecile Fradkin
212-575-4545
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