NORWALK, CONNECTICUT, October 23, 2008 - EMCOR Group, Inc., (NYSE: EME) today reported results for the third quarter and nine months ended September 30, 2008.
For the third quarter of 2008, the Company reported net income of $48.6 million, or $0.72 per diluted share, an increase of 26.9% over net income of $38.3 million, or $0.57 per diluted share, for the third quarter of 2007. In the 2008 third quarter, revenues were $1.72 billion compared to $1.50 billion in the third quarter of 2007, an increase of 14.6%, of which 8.0% was organic growth which excludes the contribution from businesses acquired during the past year.
Operating income in the third quarter of 2008 was $78.6 million, an increase of 43.2% from operating income of $54.9 million in the same quarter a year ago. As a percentage of revenues, operating income rose to 4.6% from 3.7% in the third quarter of 2007 and was the highest achieved for a third quarter in the Company's history. Selling, general and administrative (SG&A) expenses were $145.7 million in the third quarter of 2008 compared to $114.0 million in the prior year period. The increase in SG&A expenses compared to the comparable year-ago period primarily reflects expenses associated with companies acquired during the past twelve months, as well as with incentive compensation accruals. The Company's income tax rate for the 2008 third quarter was 37.3%, compared with 34.0% in the third quarter of 2007.
Contract backlog as of September 30, 2008 was $4.42 billion, compared to backlog of $4.48 billion as of September 30, 2007 and $4.67 billion at the end of the 2008 second quarter. The decline in backlog was principally attributable to a decrease in work in the commercial and hospitality/gaming sectors, but was largely offset by increases in healthcare, water/waste water, transportation and industrial contract awards.
For the 2008 nine-month period, the Company reported net income of $121.9 million, or $1.82 per diluted share, an increase of 59.4%, compared to net income of $76.5 million, or $1.15 per diluted share, for the first nine months of 2007. Revenues in the 2008 nine-month period rose 22.7% to $5.1 billion from $4.2 billion for the nine months ended September 30, 2007. Organic revenue growth, excluding revenues from companies acquired during the past twelve months, was 12.0% in the first nine months of 2008.
Operating income was $201.6 million, or 4.0% of revenues, in the first nine months of 2008, an increase of 77.3% from operating income of $113.7 million, or 2.7% of revenues, in the same period last year. SG&A expenses were $437.8 million, or 8.6% of revenues, in the 2008 nine-month period, versus $348.7 million, or 8.4% of revenues, in the nine months ended September 30, 2007.
The Company's results for the 2008 nine-month period include a one-time charge, substantially all of which is non-cash, of $7.9 million, or $0.07 per diluted share after-tax, resulting from an adverse jury verdict in a construction contract case in the 2008 second quarter, as previously announced.
Frank T. MacInnis, Chairman and CEO of EMCOR Group, commented, "The 2008 third quarter reflects another quarter of outstanding performance by our Company during which we continued to benefit from the steps we have taken over the last decade to diversify our business across markets, services and geographies. The quarter saw continued margin expansion across most of our business segments, as both our organic and acquired businesses continued to perform strongly, supported by end markets with demand drivers not tied to the current economic cycle and rising demand for higher margin facilities services. Our focus on working capital management enabled EMCOR to continue to generate excellent cash flows with year to date cash flows from operations of $199.7 million, a clear testament to the quality of our earnings and our client relationships."
Mr. MacInnis continued, "The keystone of our long-term strategic growth plan has been the diversification of our business to hedge against construction cyclicality and to provide a solid underlying level of earnings power for the Company through targeted growth of our facilities services businesses. At the same time, we have undertaken strategic acquisitions, such as Ohmstede, S.A. Comunale and a number of mechanical services companies, which have shifted the mix of our business to stable end markets such as refining, fire protection and mechanical services which are less capital intensive and not as vulnerable to economic downturns than construction. As a result, we are a market leader with a broad range of services, substantial reach and financial strength to support our customers through economic cycles."
Mr. MacInnis concluded, "While we are closely watching developments in the financial markets, we are confident that EMCOR is well positioned as we enter the fourth quarter. Although continued uncertainty in the credit markets may ultimately affect the capital budgets of some of our customers, there continues to be a need to maintain and upgrade facilities, and EMCOR is a leading provider of these services. Furthermore, our market diversification provides us with the flexibility to follow demand across sectors as the economic cycle evolves. The strength and liquidity of our balance sheet is a competitive differentiator during these credit-constrained times, and allows us to meet the performance requirements of our clients and will enable us to pursue opportunities in an environment that is favorable for strategic investors."
Based on current market conditions, the Company now expects revenues of between $6.8 billion and $7.0 billion and diluted earnings per share of between $2.48 and $2.58 for the 2008 full-year period.
EMCOR Group, Inc. is a Fortune 500® worldwide leader in mechanical and electrical construction services, energy infrastructure and facilities services.
EMCOR Group's third quarter conference call will be available live via internet broadcast today, Thursday, October 23, 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 third quarter ended September 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 Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Revenues $1,720,349 $1,500,798 $5,104,724 $4,159,519
Cost of sales 1,496,003 1,331,887 4,465,242 3,696,996
Gross profit 224,346 168,911 639,482 462,523
Selling, general and
administrative expenses 145,708 113,996 437,774 348,711
Restructuring expenses -- -- 71 93
Operating income 78,638 54,915 201,637 113,719
Interest (expense) income, net (162) 2,166 (1,595) 7,656
Minority interest (905) (931) (1,258) (2,046)
Income from continuing
operations before income taxes 77,571 56,150 198,784 119,329
Income tax provision 28,936 19,067 76,867 45,370
Income from continuing
operations 48,635 37,083 121,917 73,959
Income from discontinued
operation, net -- 1,253 -- 2,519
Net income $ 48,635 $ 38,336 $ 121,917 $ 76,478
Basic earnings per common share -
From continuing operations $ 0.74 $ 0.57 $ 1.87 $ 1.15
Basic earnings per common share -
From discontinued operation -- 0.02 -- 0.04
$ 0.74 $ 0.59 $ 1.87 $ 1.19
Diluted earnings per common share -
From continuing operations $ 0.72 $ 0.55 $ 1.82 $ 1.11
Diluted earnings per common share -
From discontinued operation -- 0.02 -- 0.04
$ 0.72 $ 0.57 $ 1.82 $ 1.15
Weighted average shares of
common stock outstanding:
Basic 65,404,404 64,591,883 65,331,538 64,208,289
Diluted 67,425,722 66,922,011 67,164,880 66,622,958
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
September 30, 2008 (Unaudited) |
|
December 31, 2007 |
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ 340,849 |
|
$ 251,637 |
|
|
Accounts receivable, net |
1,489,495 |
|
1,435,268 |
|
|
Costs and estimated earnings in excess of billings |
|
|
|
|
|
on uncompleted contracts |
130,808 |
|
144,919 |
|
|
Inventories |
61,570 |
|
52,247 |
|
|
Prepaid expenses and other |
52,841 |
|
56,935 |
|
|
Total current assets
|
2,075,563 |
|
1,941,006 |
|
|
Investments, notes and other long-term receivables |
22,791 |
|
22,669 |
|
|
Property, plant & equipment, net |
90,609 |
|
83,963 |
|
|
Goodwill |
574,363 |
|
563,918 |
|
|
Identifiable intangible assets, net |
270,803 |
|
252,146 |
|
|
Other assets |
12,797 |
|
13,157 |
|
|
Total assets
|
$3,046,926 |
|
$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 |
3,816 |
|
3,791 |
|
|
Accounts payable |
489,099 |
|
537,314 |
|
|
Billings in excess of costs and estimated earnings |
|
|
|
|
|
on uncompleted contracts |
684,597 |
|
572,431 |
|
|
Accrued payroll and benefits |
227,776 |
|
215,554 |
|
|
Other accrued expenses and liabilities |
194,228 |
|
190,349 |
|
|
Total current liabilities
|
1,599,516 |
|
1,519,439 |
|
|
Long-term debt and capital lease obligations |
196,745 |
|
223,453 |
|
|
Other long-term obligations |
239,604 |
|
248,926 |
|
|
Total stockholders' equity |
1,011,061 |
|
885,041 |
|
|
Total liabilities and stockholders' equity |
$3,046,926 |
|
$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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