EMCOR Group, Inc. Reports Second Quarter 2013 Results

  EMCOR Group, Inc. Reports Second Quarter 2013 Results

                    - Exiting the UK Construction Market -

   - Domestic Backlog as of June 30, 2013 Increases 9.4% to $3.32 Billion -

                      - Company Updates 2013 Guidance -

Business Wire

NORWALK, Conn. -- July 25, 2013

EMCOR Group, Inc. (NYSE: EME) today reported results for the second quarter
ended June 30, 2013.

For the second quarter of 2013, net income attributable to EMCOR was $21.0
million, or $0.31 per diluted share. Excluding several one-time charges
discussed below, non-GAAP net income was $32.9 million, or $0.48 per diluted
share, compared to non-GAAP net income of $34.0 million, or $0.50 per diluted
share, in the second quarter of 2012. Revenues in the second quarter of 2013
totaled $1.56 billion, compared to revenues of $1.59 billion in the year ago
period.

Operating income for the second quarter of 2013 was $36.1 million, or 2.3% of
revenues, which included operating losses and expenses aggregating
approximately $13.8 million (including restructuring expenses of $5.8 million)
primarily relating to the Company's decision to withdraw from the UK
construction market. Additionally, included in the quarter's operating income
are transaction expenses of $1.4 million associated with the Company's
previously announced agreement to acquire RepconStrickland, Inc. Excluding all
of these losses and expense items, the Company's non-GAAP operating income for
the second quarter of 2013 was $51.3 million, or 3.3% of revenues, compared to
non-GAAP operating income in the 2012 second quarter of $57.1 million, or 3.7%
of revenues, as adjusted for 2012 UK construction operating losses.

Please see the attached tables for a reconciliation of non-GAAP operating
income, non-GAAP net income and non-GAAP diluted earnings per share to the
comparable GAAP figures.

Due to recurring losses over the last several years in the construction
operations of our UK segment and our negative assessment of construction
market conditions in the UK for the foreseeable future, we determined, and
announced during the quarter ended June 30, 2013 our decision, to completely
withdraw from the UK construction market.

Selling, general and administrative expenses were $139.6 million, or 9.0% of
revenues, in the second quarter of 2013, compared to $137.7 million, or 8.7%
of revenues, in the year ago period.

The Company's income tax rate as reported in the 2013 second quarter was
38.5%, compared to an income tax rate of 38.3% in the year ago period.

Backlog as of June 30, 2013 was $3.51 billion, an increase of 6.9% from $3.28
billion at the end of the 2012 second quarter. Continued backlog growth in the
industrial sector combined with backlog growth in the transportation and
hospitality/gaming sectors more than offset backlog declines in the
commercial, institutional and water/wastewater sectors. Total Company
industrial backlog increased $264 million, or 59.9%, from the year ago period
to $705 million, which is an all-time high, while commercial backlog decreased
$35 million, or 3.5%, from year ago levels to $952 million. Backlog growth in
the Company's domestic operations for the quarter of $285 million more than
offset a backlog decline of $58 million related to the Company's decision to
withdraw from the UK construction market. Total backlog increased 4.1% from
$3.37 billion on December 31, 2012.

Tony Guzzi, President and Chief Executive Officer of EMCOR Group commented,
“This was a transformational quarter for the Company. We made significant
progress toward our strategic goals with the announcement of a major
acquisition in RepconStrickland and the decision to withdraw from the UK
construction market and focus only on facilities services there. Domestically,
electrical construction continued to demonstrate strong growth and facilities
services generated solid margin contribution growth driven by better
performance from our mechanical and site-based services business. This
performance was offset by losses incurred by one of our subsidiaries located
in the southeastern U.S. within our U.S. mechanical construction and
facilities services segment. Additionally, the impact of sequestration on our
government-related business has had a greater negative effect than we
originally anticipated. Aside from those issues, we are pleased with the
underlying performance of our businesses, which was in-line with our
expectations and bodes well for the future.”

Mr. Guzzi continued, “On June 17th, we announced a significant transaction to
further strengthen our facilities services business and build on the momentum
we are seeing in the refinery and petrochemical markets through the
acquisition of RepconStrickland. We expect the transaction to close within the
next week. RepconStrickland is a premier provider of turnaround and specialty
services and will enhance our position in industrial services and energy
sectors. We look forward to capitalizing on the significant opportunities this
transaction provides in the second half of 2013 and beyond.”

Mr. Guzzi concluded, “While challenging overall market conditions are expected
to persist and issues related to sequestration will likely continue for the
foreseeable future, we are confident that the strategic moves we've undertaken
in recent years and during this quarter position us well to succeed over the
long-term with improved profitability and growth prospects. Looking ahead to
the second half of 2013, we remain on track to meet our expectations for the
year. It is important to note that the anticipated upturn in the
non-residential cycle has not yet fully occurred, and we will face challenging
comparisons in the second half of the year given the major projects that were
completed in 2012. Despite these headwinds, we are confident about our
prospects for the remainder of the year based on earnings growth exhibited in
both our electrical construction and facilities services businesses, our
history of strong operating cash flows, and the strength of our overall
backlog. Our long-term focus continues to be on areas that we can control,
including prudent cost discipline, opportunistic contract bidding and
investing in growth.”

Revenues for the first six months totaled $3.13 billion, approximately level
compared to $3.13 billion for the first six months of 2012.

Net income attributable to EMCOR for the first half of 2013 was $51.2 million,
or $0.75 per diluted share. Excluding losses associated with the withdrawal
from the UK construction market, transaction expenses associated with the
pending acquisition of RepconStrickland and restructuring expenses in the
second quarter of 2013, non-GAAP net income was $67.1 million, or $0.99 per
diluted share, compared to non-GAAP net income of $62.1 million, or $0.92 per
diluted share, in the year ago period as adjusted for 2012 UK construction
losses.

Operating income in the first half of 2013 was $87.4 million, or 2.8% of
revenues. Excluding the items mentioned in the immediately preceding
paragraph, non-GAAP operating income for the 2013 six-month period was $107.8
million, or 3.5% of revenues, compared to non-GAAP operating income of $104.4
million, or 3.4% of revenues, in the prior year period.

Please see the attached tables for a reconciliation of non-GAAP operating
income, non-GAAP net income and non-GAAP diluted earnings per share to the
comparable GAAP figures

For the first six months of 2013, SG&A totaled $278.1 million, or 8.9% of
revenues, compared to $272.2 million, or 8.7% of revenues, in the first half
of 2012.

The Company noted that, based on the current size and mix of its backlog and
assuming the continuation of current market conditions, it now expects to
generate revenues in 2013 of approximately $6.6 billion, and now expects
non-GAAP diluted earnings per share for 2013 of $2.15 to $2.40, excluding the
above-mentioned expenses associated with the withdrawal from the UK
construction market, transaction expenses from the pending RepconStrickland
acquisition and restructuring expenses. Including these items, the Company
expects to generate GAAP diluted earnings per share of $1.80 to $2.05.

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 25, 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
2012 Form 10-K 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.


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,
                         2013             2012                2013             2012
Revenues                 $ 1,556,753         $ 1,590,035         $ 3,125,154         $ 3,128,556
Cost of sales            1,375,218          1,396,071          2,752,481          2,753,899   
Gross profit             181,535             193,964             372,673             374,657
Selling,
general and              139,623             137,675             278,133             272,179
administrative
expenses
Restructuring            5,813              —                  7,176              —           
expenses
Operating                36,099              56,289              87,364              102,478
income
Interest                 (1,764      )       (1,878      )       (3,626      )       (3,653      )
expense
Interest                 270                368                627                784         
income
Income before            34,605              54,779              84,365              99,609
income taxes
Income tax               13,131             20,799             32,173             37,821      
provision
Net income
including                21,474              33,980              52,192              61,788
noncontrolling
interests
Less: Net
income
attributable             (460        )       (532        )       (1,011      )       (1,195      )
to
noncontrolling
interests
Net income
attributable             $ 21,014           $ 33,448           $ 51,181           $ 60,593    
to EMCOR
Group, Inc.
                                                                                     
Basic earnings
per common               $ 0.31             $ 0.50             $ 0.76             $ 0.91      
share
Diluted
earnings per             $ 0.31             $ 0.49             $ 0.75             $ 0.89      
common share
                                                                                     
Weighted
average shares
of common
stock
outstanding:
Basic                    67,095,447          66,749,115          67,102,530          66,717,873
Diluted                  68,095,577          67,695,536          68,096,989          67,821,214
                                                                                     
Dividends
declared per             $ 0.06             $ 0.10             $ 0.06             $ 0.15      
common share



EMCOR GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

                                              June 30,
                                                                  December 31,
                                         2013            
                                                                  2012
                                              (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                     $ 530,385           $  605,303
Accounts receivable, net                      1,293,160           1,221,956
Costs and estimated earnings in
excess of billings on uncompleted             109,820             93,061
contracts
Inventories                                   44,994              50,512
Prepaid expenses and other                    80,338             73,621
Total current assets                          2,058,697           2,044,453
Investments, notes and other                  4,239               4,959
long-term receivables
Property, plant & equipment, net              113,562             116,631
Goodwill                                      566,709             566,588
Identifiable intangible assets, net           332,046             343,748
Other assets                                  30,083             30,691
Total assets                                  $ 3,105,336        $  3,107,070
LIABILITIES AND EQUITY
Current liabilities:
Borrowings under revolving credit             $ —                 $  —
facility
Current maturities of long-term               1,812               1,787
debt and capital lease obligations
Accounts payable                              488,414             490,621
Billings in excess of costs and
estimated earnings on uncompleted             399,454             383,527
contracts
Accrued payroll and benefits                  205,324             224,555
Other accrued expenses and                    156,621            194,029
liabilities
Total current liabilities                     1,251,625           1,294,519
Borrowings under revolving credit             150,000             150,000
facility
Long-term debt and capital lease              3,369               4,112
obligations
Other long-term obligations                   292,882            301,260
Total liabilities                             1,697,876          1,749,891
Equity:
Total EMCOR Group, Inc.                       1,396,400           1,346,080
stockholders’ equity
Noncontrolling interests                      11,060             11,099
Total equity                                  1,407,460          1,357,179
Total liabilities and equity                  $ 3,105,336        $  3,107,070



EMCOR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2013 and 2012

(In thousands) (Unaudited)

                                            2013           2012
Cash flows - operating activities:
Net income including noncontrolling              $ 52,192          $ 61,788
interests
Depreciation and amortization                    16,895            14,768
Amortization of identifiable                     12,687            14,930
intangible assets
Deferred income taxes                            (436      )       1,479
Excess tax benefits from share-based             (994      )       (5,282    )
compensation
Equity income from unconsolidated                (240      )       (414      )
entities
Other non-cash items                             2,062             4,478
Distributions from unconsolidated                634               866
entities
Changes in operating assets and
liabilities, excluding the effect of             (135,011  )       (103,175  )
businesses acquired
Net cash used in operating activities            (52,211   )       (10,562   )
Cash flows - investing activities:
Payments for acquisitions of
businesses, net of cash acquired, and
related contingent                               (1,050    )       (20,613   )

consideration agreement
Proceeds from sale of property, plant            861               719
and equipment
Purchase of property, plant and                  (14,820   )       (19,012   )
equipment
Purchase of short-term investments               —                 (17,782   )
Maturity of short-term investments               4,616            17,693    
Net cash used in investing activities            (10,393   )       (38,995   )
Cash flows - financing activities:
Repayments of long-term debt                     (4        )       (37       )
Repayments of capital lease                      (786      )       (1,310    )
obligations
Dividends paid to stockholders                   (4,027    )       (6,660    )
Repurchase of common stock                       (4,998    )       (21,189   )
Proceeds from exercise of stock                  1,933             1,909
options
Payments to satisfy minimum tax                  (927      )       (733      )
withholding
Issuance of common stock under                   1,344             1,263
employee stock purchase plan
Payments for contingent consideration            (537      )       (5,748    )
arrangements
Distributions to noncontrolling                  (1,050    )       (1,000    )
interests
Excess tax benefits from share-based             994              5,282     
compensation
Net cash used in financing activities            (8,058    )       (28,223   )
Effect of exchange rate changes on               (4,256    )       730       
cash and cash equivalents
Decrease in cash and cash equivalents            (74,918   )       (77,050   )
Cash and cash equivalents at beginning           605,303          511,322   
of year
Cash and cash equivalents at end of              $ 530,385        $ 434,272 
period



EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands) (Unaudited)

                                               For the three months ended
                                         
                                               June 30,
                                               2013             2012
Revenues from unrelated entities:
United States electrical                       $ 336,330           $ 295,846
construction and facilities services
United States mechanical                       583,963             626,617
construction and facilities services
United States facilities services              527,394            527,733
Total United States operations                 1,447,687           1,450,196
United Kingdom construction and                109,066            139,839
facilities services
Total worldwide operations                     $ 1,556,753        $ 1,590,035
                                                                   
                                               For the six months ended

                                               June 30,
                                               2013                2012
Revenues from unrelated entities:
United States electrical                       $ 643,914           $ 586,383
construction and facilities services
United States mechanical                       1,125,080           1,200,820
construction and facilities services
United States facilities services              1,128,094          1,060,623
Total United States operations                 2,897,088           2,847,826
United Kingdom construction and                228,066            280,730
facilities services
Total worldwide operations                     $ 3,125,154        $ 3,128,556



EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands) (Unaudited)

                                                   For the three months ended
                                             
                                                   June 30,
                                                   2013          2012
Operating income (loss):
United States electrical construction              $ 25,236         $ 22,409
and facilities services
United States mechanical construction              18,248           29,506
and facilities services
United States facilities services                  20,028          16,022   
Total United States operations                     63,512           67,937
United Kingdom construction and                    (4,537   )       3,962
facilities services
Corporate administration                           (17,063  )       (15,610  )
Restructuring expenses                             (5,813   )       —        
Total worldwide operations                         36,099           56,289
Other corporate items:
Interest expense                                   (1,764   )       (1,878   )
Interest income                                    270             368      
Income before income taxes                         $ 34,605        $ 54,779 
                                                                    
                                                   For the six months ended

                                                   June 30,
                                                   2013             2012
Operating income (loss):
United States electrical construction              $ 44,176         $ 45,975
and facilities services
United States mechanical construction              29,388           52,329
and facilities services
United States facilities services                  55,655          27,451   
Total United States operations                     129,219          125,755
United Kingdom construction and                    (3,258   )       7,444
facilities services
Corporate administration                           (31,421  )       (30,721  )
Restructuring expenses                             (7,176   )       —        
Total worldwide operations                         87,364           102,478
Other corporate items:
Interest expense                                   (3,626   )       (3,653   )
Interest income                                    627             784      
Income before income taxes                         $ 84,365        $ 99,609 



EMCOR GROUP, INC.
RECONCILIATION OF 2013 AND 2012 OPERATING INCOME
(In thousands) (Unaudited)

In our press release, we provide actual 2013 and 2012 second quarter and
year-to-date June 30, 2013 and 2012 operating income. The following table
provides a reconciliation between 2013 and 2012 operating income based on
non-GAAP measures to the most direct comparable GAAP measures.


                            For the three months ended        For the six months ended
                                                     
                            June 30,                          June 30,
                            2013          2012             2013           2012
GAAP operating              $ 36,099         $ 56,289         $ 87,364          $ 102,478
income
                                                                                  
Transaction
expenses related
to the pending
                            1,361            —                1,361             —
acquisition of
RepconStrickland,
Inc.
                                                                                
EMCOR UK
construction                8,023            765              11,910            1,946
operating losses
                                                                                
EMCOR UK
restructuring               5,801           —               7,126            —
expenses
                                                                                
Non-GAAP
operating income,
excluding

RepconStrickland
acquisition                 $ 51,284        $ 57,054        $ 107,761        $ 104,424
expenses, UK
losses

and UK
restructuring
expenses



EMCOR GROUP, INC.
RECONCILIATION OF 2013 AND 2012 NET INCOME
(In thousands) (Unaudited)

In our press release, we provide actual 2013 and 2012 second quarter and
year-to-date June 30, 2013 and 2012 net income attributable to EMCOR Group,
Inc. The following table provides a reconciliation between 2013 and 2012 net
income attributable to EMCOR Group, Inc. based on non-GAAP measures to the
most direct comparable GAAP measures.


                            For the three months ended        For the six months ended
                                                     
                            June 30,                          June 30,
                            2013          2012             2013          2012
GAAP net income
attributable to             $ 21,014         $ 33,448         $ 51,181         $ 60,593
EMCOR Group, Inc.
                                                                                 
Transaction
expenses related
to the pending
                            1,301            —                1,301            —
acquisition of
RepconStrickland,
Inc. ^(1)
                                                                               
EMCOR UK
construction                6,158            577              9,141            1,469
losses ^(2)
                                                                               
EMCOR UK
restructuring               4,452           —               5,469           —
expenses ^(3)
                                                                               
Non-GAAP net
income
attributable to
EMCOR Group,

Inc., excluding
RepconStrickland            $ 32,925        $ 34,025        $ 67,092        $ 62,062
transaction

expenses, UK
losses and UK
restructuring
expenses


(1)  Amount is net of tax effect of $0.1 million in the quarter and $0.1
      million in the six-month period.
      
(2)   Amount is net of tax effect of $1.9 million in the 2013 quarter and $2.8
      million in the 2013 six-month period.
      Amount is net of tax effect of $0.2 million in the 2012 quarter and $0.5
      million in the 2012 six-month period.
      
(3)   Amount is net of tax effect of $1.3 million in the quarter and $1.7
      million in the six-month period.
      


EMCOR GROUP, INC.
RECONCILIATION OF 2013 AND 2012 DILUTED EARNINGS PER SHARE FIGURES
(Unaudited)

In our press release, we provide actual 2013 and 2012 second quarter and
year-to-date June 30, 2013 and 2012 diluted earnings per share. The following
table provides a reconciliation between 2013 and 2012 EPS based on non-GAAP
measures to the most direct comparable GAAP measures.


                             For the three months         For the six months
                        ended                     ended

                             June 30,                     June 30,
                             2013        2012          2013       2012
GAAP diluted
earnings per                 $  0.31        $ 0.49        $ 0.75        $ 0.89
common share
                                                                          
Transaction
expenses related
to the pending
                             0.02           —             0.02          —
acquisition of
RepconStrickland,
Inc. ^(1)
                                                                        
EMCOR UK
construction                 0.09           0.01          0.13          0.02
losses ^(2)
                                                                        
EMCOR UK
restructuring                0.07           —             0.08          —
expenses ^(3)
                                                                        
Non-GAAP diluted
earnings per
common share,

excluding
RepconStrickland             $  0.48        $ 0.50        $ 0.99        $ 0.92
transaction
expenses,

UK losses and UK
restructuring
expenses


(1)  Amount is net of tax effect of $0.1 million in the quarter and $0.1
      million in the six-month period.
      
(2)   Amount is net of tax effect of $1.9 million in the 2013 quarter and $2.8
      million in the 2013 six-month period.
      Amount is net of tax effect of $0.2 million in the 2012 quarter and $0.5
      million in the 2012 six-month period.
      
(3)   Amount is net of tax effect of $1.3 million in the quarter and $1.7
      million in the six-month period.

Contact:

EMCOR Group, Inc.
R. Kevin Matz, 203-849-7938
Executive Vice President, Shared Services
or
FTI Consulting, Inc.
Investors:
Nathan Elwell / Matt Steinberg
212-850-5600
or
Linden Alschuler & Kaplan, Inc.
Media:
Lisa Linden / Mollie Fullington
212-575-4545 / 917-346-6123