EMCOR Group, Inc. Reports Record Second Quarter Results
– Operating Income and Net Income Increase 74.3% and 55.1%, Respectively –
– Contract Backlog Increases 32.3% Year-Over-Year to a Record $4.26 Billion –
– 2007 Full Year Guidance Raised –
NORWALK, CONNECTICUT, July 26, 2007 – EMCOR Group, Inc. (NYSE: EME) today reported results for the second quarter and six months ended June 30, 2007. The Company’s financial results for the prior year periods have been adjusted to reflect its 2-for-1 stock split, effective July 9, 2007.
For the 2007 second quarter, net income increased 55.1% to $26.2 million, or $0.39 per diluted share, compared to net income of $16.9 million, or $0.26 per diluted share, in the 2006 second quarter. Revenues increased 15.2% in the second quarter of 2007 to $1.41 billion from $1.22 billion in the same period last year.
In the second quarter of 2007, operating income rose 74.3% to $44.2 million, or 3.1% of revenues, compared to operating income of $25.3 million, or 2.1% of revenues, a year ago. Selling, general and administrative (SG&A) expenses were $125.3 million in the 2007 second quarter versus $108.2 million in the comparable prior year period, reflecting higher SG&A activity as a result of higher revenues during the period. As a percentage of revenues, SG&A expenses remained flat at 8.9% in both periods.
Emcor continued to generate strong growth in its contract backlog for the quarter, achieving record levels. At June 30, 2007, contract backlog was $4.26 billion, a 32.3% increase over $3.22 billion at June 30, 2006, and 10.9% higher than the previous record of $3.84 billion at March 31, 2007. Private sector commercial and hospitality/gaming contracts represented 56% of total backlog at the end of the second quarter of 2007 compared to 53% and 54%, respectively, at March 31, 2007 and June 30, 2006.
For the 2007 six-month period, the Company reported income from continuing operations of $38.1 million, or $0.57 per diluted share, an increase of 55.7% over income from continuing operations of $24.5 million, or $0.38 per diluted share, for the first six months of 2006. Year-to-date revenues in 2007 totaled $2.72 billion versus revenues of $2.37 billion in the same period last year, an increase of 14.9%.
Operating income for the first half of 2007 was $63.1 million, or 2.3% of revenues, versus operating income of $37.7 million, or 1.6% of revenues, for the first half of 2006. SG&A expenses were $238.5 million in the first half of 2007 compared to $210.7 million in the comparable prior year period. As a percentage of revenues, SG&A expenses declined to 8.8% from 8.9% for the six months ended June 30, 2006.
Frank T. MacInnis, Chairman and CEO of EMCOR Group, commented, “Our record second quarter results reflect the continued strength and demand growth we’ve experienced in our end markets. Organic revenue growth in the quarter was a robust 11.5%, while our commitment to cost management created substantial leverage and increased profits. These results were driven by strong performance across our domestic operations, including excellent results within our U.S. Mechanical and Electrical segments, and continued strong performance in our facilities services segment, which grew in line with our expected rate for this business.”
Mr. MacInnis continued, “While we are very pleased with our financial performance, we are also encouraged by the trajectory of our backlog in recent quarters in terms of both amount and composition. As we have discussed in the past, EMCOR has focused its efforts on leveraging the private sector commercial and hospitality/gaming markets as well as other markets such as healthcare. Not only have these efforts generated strong financial results, they have also served to increase the proportion of our backlog consisting of larger and more complex projects which tend to have longer durations and increasing profit opportunities. More and more clients recognize EMCOR as being uniquely positioned to support the installation and maintenance of their systems-rich facility environments.”
Mr. MacInnis concluded, “As we enter the second half of 2007, we remain confident about the visibility of our markets and our business prospects. The indicators we follow continue to point to strength in our markets, and EMCOR continues to build its reputation for being uniquely positioned to deliver on the most complex, mission critical projects and maintain these types of facilities for our clients. As a result of this visibility and sustained momentum in both our order trends and performance execution, we are increasing our anticipated year-end 2007 diluted earnings per share to $1.48 - $1.60, while increasing and narrowing our 2007 revenues guidance to $5.6B - $5.7B.
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, Thursday, July 26, at 10:30 AM Eastern Daylight Time.
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 2006 Form 10-K, its Form 10-Q for the second quarter ended June 30, 2007, 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,
2007 2006 2007 2006
Revenues $1,406,232 $1,220,423 $2,724,579 $2,371,500
Cost of sales 1,236,756 1,086,895 2,422,880 2,123,139
Gross profit 169,476 133,528 301,699 248,361
Selling, general and
administrative expenses 125,320 108,194 238,519 210,700
Restructuring expenses -- -- 93 --
Operating income 44,156 25,334 63,087 37,661
Interest income, net 2,777 490 5,489 728
Minority interest (2,060) (672) (3,252) (928)
Income from continuing
operations before income taxes 44,873 25,152 65,324 37,461
Income tax provision 18,723 8,291 27,182 12,967
Income from continuing
operations 26,150 16,861 38,142 24,494
Loss from discontinued
operation, net -- -- -- (620)
Net income $ 26,150 $ 16,861 $ 38,142 $ 23,874
Basic earnings per share -
continuing operations $ 0.41 $ 0.27 $ 0.60 $ 0.39
Basic earnings per share -
discontinued operation -- -- -- (0.01)
$ 0.41 $ 0.27 $ 0.60 $ 0.38
Diluted earnings per share -
continuing operations $ 0.39 $ 0.26 $ 0.57 $ 0.38
Diluted earnings per share -
discontinued operation -- -- -- (0.01)
$ 0.39 $ 0.26 $ 0.57 $ 0.37
Weighted average shares of
common stock outstanding:
Basic 64,195,339 63,143,472 64,013,213 62,888,528
Diluted 66,654,674 65,421,764 66,470,154 64,988,108
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
June 30, 2007 (Unaudited) |
|
December 31, 2006 |
|
|
ASSETS |
|
|||
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ 336,335 |
|
$ 273,735 |
|
|
Accounts receivable, net |
1,286,691 |
|
1,184,418 |
|
|
Costs and estimated earnings in excess of billings |
|
|
|
|
|
on uncompleted contracts |
164,628 |
|
147,848 |
|
|
Inventories |
17,089 |
|
18,015 |
|
|
Prepaid expenses and other |
47,864 |
|
38,397 |
|
|
Total current assets
|
1,852,607 |
|
1,662,413 |
|
|
Investments, notes and other long-term receivables |
29,261 |
|
29,630 |
|
|
Property, plant & equipment, net |
52,028 |
|
52,780 |
|
|
Goodwill |
297,058 |
|
288,165 |
|
|
Identifiable intangible assets, net |
27,697 |
|
38,251 |
|
|
Other assets |
17,782 |
|
17,784 |
|
|
Total assets
|
$2,276,433 |
|
$2,089,023 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Borrowings under working capital credit line |
$ -- |
|
$ -- |
|
|
Current maturities of long-term debt and capital lease obligations |
607 |
|
659 |
|
|
Accounts payable |
499,989 |
|
496,407 |
|
|
Billings in excess of costs and estimated earnings |
|
|
|
|
|
on uncompleted contracts |
535,352 |
|
412,069 |
|
|
Accrued payroll and benefits |
181,394 |
|
177,490 |
|
|
Other accrued expenses and liabilities |
103,860 |
|
121,723 |
|
|
Total current liabilities
|
1,321,202 |
|
1,208,348 |
|
|
Long-term debt and capital lease obligations |
1,087 |
|
1,239 |
|
|
Other long-term obligations |
183,575 |
|
169,127 |
|
|
Total stockholders’ equity |
770,569 |
|
710,309 |
|
|
Total liabilities and stockholders' equity |
$2,276,433 |
|
$2,089,023 |
|
|
|
|
|
|
|
# # #
EMCOR GROUP, INC.
CONTACT:
Senior VP, Shared Services
(203) 849-7938
FD Investors:
Eric Boyriven
(212) 850-5600
Linden Alschuler & Kaplan, Inc.
Media: Hannah Arnold
(212) 575-4545
