EMCOR GROUP, INC. REPORTS 2006 SECOND QUARTER RESULTS
Second Quarter Operating Income and Net Income Increase 72.6% and 112.5%, respectively
Contract Backlog Grows 18.2% to a Record $3.22 Billion –
2006 Full Year Guidance Raised
NORWALK, CONNECTICUT, July 27, 2006 – EMCOR Group, Inc. (NYSE: EME) today reported results for the second quarter and six months ended June 30, 2006. The Company’s financial results for the prior year periods have been adjusted to reflect its 2-for-1 stock split, effective February 10, 2006.
For the 2006 second quarter, net income increased 112.5% to $16.9 million, or $0.52 per diluted share, versus net income of $7.9 million, or $0.25 per diluted share, in the second quarter of 2005. Second quarter 2006 revenues totaled $1.22 billion compared to $1.17 billion in the second quarter of 2005, an increase of 4.4%. The Company’s results for the 2006 second quarter included after-tax expenses related to the adoption of FAS 123(R) (Accounting for Stock-Based Compensation) of $1.3 million, equating to $0.04 per diluted share, which were not present in the second quarter of 2005. Results for the second quarter of 2005 included restructuring expenses of $0.3 million.
Operating income for the 2006 second quarter increased 72.6% to $25.3 million from $14.7 million in the second quarter of 2005. As a percentage of revenues, operating income improved to 2.1% from 1.3% in the year-ago period. Selling, general and administrative expenses in the second quarter of 2006 increased to $108.2 million, or 8.9% of revenues, from $97.0 million, or 8.3% of revenues in the second quarter of 2005.
The Company reported record contract backlog of $3.22 billion as of June 30, 2006, compared to $2.72 billion a year ago and $2.82 billion at March 31, 2006. Private sector commercial and hospitality backlog represented 54% of total backlog at June 30, 2006, versus 34% at June 30, 2005.
For the 2006 six-month period, net income was $23.9 million, or $0.73 per diluted share, an increase of 142.5% over net income of $9.8 million, or $0.31 per diluted share, for the first half of 2005. 2006 year-to-date revenues totaled $2.37 billion versus revenues of $2.25 billion in the same period last year, an increase of 5.3%.
Operating income for the first half of 2006 was $37.7 million, or 1.6% of revenues, versus operating income of $20.4 million, or 0.9% of revenues, for the first half of 2005. The Company’s results for the first half of 2006 include a loss from discontinued operations of $0.6 million, amounting to $0.02 per diluted share, as well as expenses related to the Company’s adoption of FAS 123(R) of $1.7 million, or $0.05 per diluted share, which were not present in the year-ago period. Included in the Company’s 2005 six-month results were restructuring expenses of $1.5 million and income from discontinued operations of $0.2 million.
Frank T. MacInnis, Chairman and CEO of EMCOR Group, commented, “We are very pleased with our strong performance during the second quarter, which built upon the excellent start we had to 2006. Our success was driven by solid performance across all of our businesses, including improved results within our UK and Canadian operations. The second quarter also saw the continued successful growth of our facilities services business, reflecting over 20% revenue growth for both the second quarter and six-month period. Facilities services reported enhanced profitability due to strong market demand and our ability to leverage that business’ existing infrastructure.”
Mr. MacInnis added, “Over the past few years, EMCOR Group has executed on a strategy of reducing our exposure to certain public sector markets and reserving capacity for an expected recovery within the more profitable private and commercial sectors. We have seen this recovery over the past few quarters, and today over half of our contract backlog is represented by the commercial and hospitality sectors, while maintaining strong backlog positions in other attractive sectors of the marketplace. We believe the actions we have taken have resulted in a stronger, better balanced backlog that positions us well for continued performance in the future.”
Mr. MacInnis concluded, “We continue to see strong demand within our targeted markets, including additional growth in the small-task projects that are typical of our facilities services business. At the same time, we remain in an excellent position financially to invest in the future growth of our business. Based on current market conditions, we now expect revenues for 2006 of between $5.0 billion and $5.2 billion, resulting in diluted earnings per share for the year of between $1.90 and $2.10, which includes approximately $0.07 per diluted share in expenses related to the Company’s adoption of FAS 123(R).”
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 second quarter conference call will be available live via Internet broadcast today, Thursday, July 27, 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’s 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, project 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, mix of business, and risks associated with foreign operations. Certain of the risks and factors associated with EMCOR’s business are also discussed in the Company’s 2005 Form 10-K, its Form 10-Q for the second quarter ended June 30, 2006, 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,
2006 2005 2006 2005
Revenues $1,220,423 $1,168,831 $2,371,500 $2,252,586
Cost of sales 1,086,895 1,056,860 2,123,139 2,041,413
Gross profit 133,528 111,971 248,361 211,173
Selling, general and
administrative expenses 108,194 96,994 210,700 189,301
Restructuring expenses -- 301 -- 1,472
Operating income 25,334 14,676 37,661 20,400
Interest income (expense), net 490 (1,637) 728 (3,277)
Minority interest (672) (987) (928) (1,852
Income from continuing
operations before taxes 25,152 12,052 37,461 15,271
Income tax provision 8,291 4,413 12,967 5,598
Income from continuing
operations 16,861 7,639 24,494 9,673
Income (loss) from discontinued
operations, net -- 294 (620) 173
Net income $ 16,861 $ 7,933 $ 23,874 $ 9,846
Basic earnings per share -
continuing operations $ 0.53 $ 0.24 $ 0.78 $ 0.31
Basic earnings per share -
discontinued operations -- $ 0.01 $ (0.02) $ 0.01
$ 0.53 $ 0.25 $ 0.76 $ 0.32
Diluted earnings per share -
continuing operations $ 0.52 $ 0.24 $ 0.75 $ 0.31
Diluted earnings per share -
discontinued operations -- $ 0.01 $ (0.02) $ 0.00
$ 0.52 $ 0.25 $ 0.73 $ 0.31
Weighted average shares of
Common stock outstanding:
Basic 31,571,736 31,281,690 31,444,264 30,997,812
Diluted 32,710,882 31,777,160 32,494,054 31,591,804
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
June 30, 2006 (Unaudited) |
|
December 31, 2005 |
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ 180,900 |
|
$ 103,785 |
|
|
Accounts receivable, net |
1,078,615 |
|
1,046,380 |
|
|
Costs and estimated earnings in excess of billings |
|
|
|
|
|
on uncompleted contracts |
158,922 |
|
185,634 |
|
|
Inventories |
13,112 |
|
10,175 |
|
|
Prepaid expenses and other |
47,514 |
|
43,829 |
|
|
Total current assets
|
1,479,063 |
|
1,389,803 |
|
|
Investments, notes, and other long-term receivables |
25,453 |
|
28,659 |
|
|
Property, plant & equipment, net |
47,070 |
|
46,443 |
|
|
Goodwill |
283,039 |
|
283,412 |
|
|
Identifiable intangible assets, net |
15,429 |
|
16,990 |
|
|
Other assets |
9,925 |
|
13,634 |
|
|
Total assets
|
$1,859,979 |
|
$1,778,941 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Borrowings under working capital credit line |
$ - |
|
$ - |
|
|
Current maturities of long-term debt and capital lease obligations |
659 |
|
551 |
|
|
Accounts payable |
452,860 |
|
452,709 |
|
|
Billings in excess of costs and estimated earnings |
|
|
|
|
|
on uncompleted contracts |
388,146 |
|
330,235 |
|
|
Accrued payroll and benefits |
128,427 |
|
154,276 |
|
|
Other accrued expenses and liabilities |
96,108 |
|
107,545 |
|
|
Total current liabilities
|
1,066,200 |
|
1,045,316 |
|
|
Long-term debt and capital lease obligations |
1,377 |
|
1,406 |
|
|
Other long-term obligations |
133,628 |
|
116,783 |
|
|
Total stockholders’ equity |
658,774 |
|
615,436 |
|
|
Total liabilities and stockholders' equity |
$1,859,979 |
|
$1,778,941 |
|
|
|
|
|
|
|
CONTACT:
R. Kevin Matz
Senior Vice President
Shared Services
(203) 849-7938
Financial Dynamics
Investors: Eric Boyriven – 212-850-5600
Linden Alschuler & Kaplan, Inc.
Media: Hannah Arnold – 212-575-4545
