EMCOR GROUP, INC. REPORTS THIRD QUARTER 2009 RESULTS
- Third Quarter Operating Margin of 4.9% -
- Third Quarter Diluted EPS of $0.59 -
- 2009 Diluted EPS Guidance Increased to $2.20 - $2.35 -
NORWALK, CONNECTICUT, October 29, 2009 —
EMCOR Group, Inc. (NYSE: EME) today reported results for the third quarter ended September 30, 2009.
For the 2009 third quarter, the Company reported net income
(1) of $40.0 million, or $0.59 per diluted
share, compared to net income
(1) of $48.6 million, or $0.72 per diluted share, in the third quarter of 2008. In the 2009 third quarter, revenues were $1.37 billion, compared to $1.72 billion in the third quarter of 2008.
Operating income in the 2009 third quarter was $67.3 million, compared to operating income of $78.6 million in the same quarter a year ago.
As a percentage of revenues, operating income in the third quarter of 2009 rose to 4.9% from 4.6% in the 2008 third quarter.
Selling, general and administrative expenses (SG&A) decreased $7.8 million to $137.9 million, or 10.1% of revenues, in the third quarter of 2009, compared to $145.7 million, or 8.5% of revenues, in the comparable prior year period.
Contract backlog as of September 30, 2009 was $3.39 billion, compared to contract backlog of $4.42 billion as of September 30, 2008 and $3.40 billion as of June 30, 2009. The year-over-year decline in backlog was principally attributable to reduced contract awards in the hospitality/gaming sectors and in the commercial sector, partially offset by backlog growth in the healthcare and institutional sectors.
Net income
(1)
for the first nine months of 2009 was $121.6 million, or $1.81 per diluted share, compared to $121.9 million, or $1.82 per diluted share, a year ago.
Revenues for the first nine months of 2009 totaled $4.19 billion, compared to $5.10 billion for the first nine months of 2008.
For the 2009 nine-month period, operating income was $206.4 million, or 4.9% of revenues, compared to operating income of $201.6 million, or 4.0% of revenues, in the year ago period.
Operating income for the 2009 nine-month period included restructuring expenses of $4.2 million.
SG&A for the first nine months of 2009 was $402.7 million, or 9.6% of revenues, compared to $437.8 million, or 8.6% of revenues, for the first nine months of 2008.
Frank T. MacInnis, Chairman and CEO of EMCOR Group, commented, "We are pleased with our results in the 2009 third quarter, especially in light of the economic conditions in our markets.
Our results for the period were driven by record gross and operating margins due to our focus on execution and project management.
This same operational focus allowed us to convert our outstanding work into cash, which strengthened what was already a strong and highly liquid balance sheet.
This strong financial position gives us flexibility in managing business opportunities and provides us with the liquidity to invest in strategic growth opportunities in the future.
Our strong cash flow points to the strength of our relationships with high-quality clients and the value of the work we do for them."
Mr. MacInnis continued, "Despite challenging conditions in some of our markets, we see trends in the composition of our backlog that indicate a building base of business that has begun to provide stability and that should eventually generate growth opportunities going forward.
The rate of decline in our backlog has steadily decreased over the course of 2009, and excluding the hard hit hospitality and commercial sectors, backlog growth was slightly positive in the third quarter, driven by strong bookings in the healthcare and institutional sectors.
While market evidence has yet to indicate a definitive backlog bottom, our ability to be agile among market sectors allows us to adapt to declining demand in some of the markets we serve by redeploying resources to those markets where there is stronger demand.
We have also begun to see some traction in work stemming from government stimulus spending, which we would expect to continue to grow."
Mr. MacInnis concluded, "As we enter the fourth quarter, we remain cautious given a continued lack of visibility into future demand and into credit markets that continue to impact customers' ability to finance projects.
In addition, while we are operating at excellent levels of efficiency, the ongoing shift in backlog mix will likely result in margins lower than the record levels seen in the third quarter.
Against this backdrop, we remain focused on bidding discipline, strong project execution and maintaining a strong balance sheet that provides us with the flexibility to perform well in today's marketplace and take
advantage of the eventual recovery."
The Company noted that, based on its financial performance in the first nine months of 2009, current market conditions and the composition of its contract backlog, it has updated its full year 2009 guidance to include revenues of $5.5 billion to $5.6 billion and 2009 full year diluted EPS of $2.20 to $2.35.
While a material deterioration in market conditions from current levels could cause the Company's performance to decline, early benefits from the economic stimulus plan, accretive acquisitions, and/or improved credit markets could provide opportunities to exceed these estimates.
EMCOR Group, Inc. is a Fortune 500
®
worldwide leader in mechanical and electrical construction services, energy infrastructure and facilities services.
This press release and other press releases may be viewed at the Company's Web site at
www.emcorgroup.com
.
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. You can access the live call through the Home Page of the Company's Web site at
www.emcorgroup.com.
(1)
EMCOR adopted SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements," effective January 1, 2009, which, among other things, changed the presentation format and certain captions of our Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets.
EMCOR uses the captions recommended by this standard in its condensed consolidated financial statements such as "net income attributable to EMCOR Group, Inc." and "basic and diluted earnings per common share attributable to EMCOR Group, Inc. common stockholders."
However, in the preceding release EMCOR has shortened this language to "net income" and "earnings per share".
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 s
elling, 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 2008 Form 10-K, its Form 10-Q for the third quarter ended September 30, 2009, 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 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,
2009
2008
2009
2008
Revenues $1,371,985 $1,720,349 $4,189,291 $5,104,724
Cost of sales
1,166,740
1,496,003
3,576,003
4,465,242
Gross profit
205,245 224,346
613,288
639,482
Selling, general and administrative
expenses
137,895 145,708 402,664
437,774
Restructuring expenses 90 -- 4,200 71
Operating income 67,260
78 638
206 424
201,637
Interest expense, net
(1,159)
(162
)
(2,224)
(1,595
)
Income before income taxes 66,101 78,476 204,200 200,042
Income tax provision 25,624 28,936 81,124 76,867
Net income including
noncontrolling interests 40,477 49,540 123,076 123,175
Less: Net income attributable to
noncontrolling interests
(491)
(905)
(1,503)
(1,258)
Net income attributable
to EMCOR Group, Inc. (1)
$
39,986
$
48,635
$
121,573
$
121,917
Basic earnings per common
share:
Net income attributable to EMCOR
Group, Inc. common stockholders
$
0.61
$
0.74
$
1.85
$
1.87
Diluted earnings per common
share:
Net income attributable to EMCOR
Group, Inc. common stockholders
$
0.59
$
0.72
$
1.81
$
1.82
Weighted average shares of
common stock outstanding:
Basic 65,897,546 65,404,404 65,864,793 65,331,538
Diluted 67,551,619 67,425,722 67,279,095 67,164,880
(In thousands)
|
|
September 30,
2009
(Unaudited)
|
|
December 31,
2008
|
|
ASSETS |
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
648,231
|
|
$
405,869
|
|
Accounts receivable, net
|
1,182,851
|
|
1,390,973
|
|
Costs and estimated earnings in excess of billings
|
|
|
|
|
on uncompleted contracts
|
86,764
|
|
105,441
|
|
Inventories
|
39,895
|
|
54,601
|
|
Prepaid expenses and other
|
|
|
|
|
Total current assets
|
2,014,296
|
|
2,010,740
|
|
Investments, notes and other long-term receivables
|
21,463
|
|
14,958
|
|
Property, plant & equipment, net
|
92,813
|
|
96,716
|
|
Goodwill
|
587,259
|
|
582,714
|
|
Identifiable intangible assets, net
|
282,623
|
|
292,128
|
|
Other assets
|
|
|
|
|
Total assets
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current liabilities:
|
|
|
|
|
Borrowings under working capital credit line
|
$
--
|
|
$
--
|
|
Current maturities of long-term debt and capital
lease obligations
|
3,332
|
|
3,886
|
|
Accounts payable
|
390,504
|
|
500,881
|
|
Billings in excess of costs and estimated earnings
|
|
|
|
|
on uncompleted contracts
|
613,046
|
|
601,834
|
|
Accrued payroll and benefits
|
202,342
|
|
221,564
|
|
Other accrued expenses and liabilities
|
|
|
|
|
Total current liabilities
|
1,389,611
|
|
1,513,155
|
|
Long-term debt and capital lease obligations
|
192,875
|
|
196,218
|
|
Other long-term obligations
|
|
|
|
|
Total liabilities
|
|
|
|
|
Equity:
|
|
|
|
|
Total EMCOR Group, Inc. stockholders' equity
|
1,179,426
|
|
1,043,345
|
|
Noncontrolling interests
|
|
|
|
|
Total equity
|
|
|
|
|
Total liabilities and equity
|
|
|
|
|
|
|
|
|
CONTACT:
R. Kevin Matz
Executive Vice President
Shared Services
(203) 849-7938
FD Investors:
Eric Boyriven / Alexandra Tramont
(212) 850-5600
Linden Alschuler & Kaplan, Inc.
Media: Suzanne Dawson / Cecile Fradkin
(212) 575-4545
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