EMCOR Group, Inc. Reports First Quarter 2014 Results

  EMCOR Group, Inc. Reports First Quarter 2014 Results

        - Revenues Increase 2.0% to $1.60 Billion for First Quarter -

         - Record First Quarter Diluted Earnings Per Share of $0.61 -

                      - Company Updates 2014 Guidance -

Business Wire

NORWALK, Conn. -- April 29, 2014

EMCOR Group, Inc. (NYSE:EME) today reported results for the first quarter
ended March 31, 2014.

For the first quarter of 2014, net income attributable to EMCOR was $41.3
million, or $0.61 per diluted share, compared to net income of $30.2 million,
or $0.44 per diluted share, in the first quarter of 2013. Excluding one-time
charges discussed below, non-GAAP net income increased by 27.1% to $43.4
million, or $0.64 per diluted share, compared to non-GAAP net income of $34.2
million, or $0.50 per diluted share, in the first quarter of 2013. Revenues in
the first quarter of 2014 totaled $1.60 billion, compared to revenues of $1.57
billion in the year ago period.

Operating income for the first quarter of 2014 was $69.4 million, or 4.3% of
revenues, which included UK operating losses and expenses aggregating
approximately $2.8 million (including UK restructuring expenses of $0.7
million) relating to the Company's decision to withdraw from the UK
construction market. Excluding these losses and expense items, the Company's
non-GAAP operating income for the first quarter of 2014 increased by 27.7% to
$72.1 million, or 4.5% of revenues, compared to non-GAAP operating income in
the 2013 first quarter of $56.5 million, or 3.7% of revenues.

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.

Selling, general and administrative expenses for the 2014 first quarter were
$144.9 million, or 9.1% of revenues, compared to $138.5 million, or 8.8% of
revenues, in the year ago period.

The Company's income tax rate in the 2014 first quarter was 38.2%, compared to
an income tax rate of 38.7% in the year ago period.

Backlog as of March 31, 2014 was $3.37 billion, a decrease of 1.3% from $3.42
billion at the end of the 2013 first quarter as a consequence of a $65 million
backlog decline in the UK segment relating to the Company’s decision to
withdraw from the UK construction market. U.S. backlog grew by $19 million
which included backlog growth in the U.S. Construction and U.S. Industrial
Services segments offset by expected declines in the U.S. Building Services
segment due to 2013 portfolio reshaping. Backlog growth in the commercial,
transportation, healthcare and water/wastewater sectors was offset by declines
in the institutional, industrial and hospitality/gaming sectors. Total backlog
of $3.37 billion as of March 31, 2014 increased by 0.4% from $3.36 billion as
of December 31, 2013.

Tony Guzzi, President and Chief Executive Officer of EMCOR Group commented,
“Our first quarter performance reflected healthy margins across each of our
business segments due to strong performance in a still choppy economy. We
generated the strongest earnings per share for a first quarter in our history,
thanks in part to the 2013 addition of RepconStrickland that contributed
during the quarter.”

Mr. Guzzi added, “We achieved strong first quarter results in our U.S.
Electrical Construction segment and improved performance in our U.S.
Mechanical Construction segment. Additionally, we had a strong quarter in our
U.S. Building Services segment, which was driven by our site-based and mobile
mechanical services operations. Our U.S. Industrial Services segment performed
solidly in the quarter despite comparison to its outstanding 2013 first
quarter.”

Mr. Guzzi concluded, “While growth in non-residential construction has been
sluggish so far this year, our solid and expanding domestic backlog is a
positive indicator that we are gaining traction. We continue to manage through
the challenges in our government business associated with sequestration.
Supported by rigorous cost discipline, a solid and liquid balance sheet,
strong backlog and consistent operational execution, we remain well-positioned
to deliver on our growth objectives for 2014.”

The Company stated that, based on the current size and mix of its backlog and
assuming the continuation of current market conditions, it continues to expect
2014 revenues to be approximately $6.8 billion. Also, the Company now expects
diluted earnings per share to be between $2.45 to $2.70, up from its previous
announced guidance of between $2.40 to $2.70, excluding restructuring and
other costs associated with the withdrawal from the UK construction market.

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 first quarter conference call will be available live via
internet broadcast today, Tuesday, April 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.

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
2013 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
                                               March 31,
                                               2014            2013
Revenues                                       $ 1,599,385       $ 1,568,401
Cost of sales                                  1,384,174        1,377,263   
Gross profit                                   215,211           191,138
Selling, general and administrative            144,928           138,510
expenses
Restructuring expenses                         909              1,363       
Operating income                               69,374            51,265
Interest expense                               (2,248      )     (1,862      )
Interest income                                234              357         
Income before income taxes                     67,360            49,760
Income tax provision                           25,518           19,042      
Net income including noncontrolling            41,842            30,718
interests
Less: Net income attributable to               (581        )     (551        )
noncontrolling interests
Net income attributable to EMCOR Group,        $ 41,261         $ 30,167    
Inc.
                                                                             
Basic earnings per common share                $ 0.61           $ 0.45      
Diluted earnings per common share              $ 0.61           $ 0.44      
                                                                             
Weighted average shares of common stock
outstanding:
Basic                                          67,188,577        67,110,334
Diluted                                        68,001,205        68,099,121
                                                                             
Dividends declared per common share            $ 0.08           $ —         



EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

                                                  March 31,       December 31,
                                                2014          2013
                                                  (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                         $ 406,668       $  439,813
Accounts receivable, net                          1,251,473       1,268,226
Costs and estimated earnings in excess of         105,008         90,727
billings on uncompleted contracts
Inventories                                       50,332          52,123
Prepaid expenses and other                        67,699          79,216
Total current assets                              1,881,180       1,930,105
Investments, notes and other long-term            6,567           6,799
receivables
Property, plant & equipment, net                  122,456         123,414
Goodwill                                          834,102         834,825
Identifiable intangible assets, net               531,994         541,497
Other assets                                      31,217          29,275
Total assets                                      $ 3,407,516     $  3,465,915
LIABILITIES AND EQUITY
Current liabilities:
Borrowings under revolving credit facility        $ —             $  —
Current maturities of long-term debt and          19,227          19,332
capital lease obligations
Accounts payable                                  426,799         487,738
Billings in excess of costs and estimated         371,877         381,295
earnings on uncompleted contracts
Accrued payroll and benefits                      199,887         237,779
Other accrued expenses and liabilities            184,624         172,599
Total current liabilities                         1,202,414       1,298,743
Borrowings under revolving credit facility        —               —
Long-term debt and capital lease obligations      330,639         335,331
Other long-term obligations                       347,949         352,215
Total liabilities                                 1,881,002       1,986,289
Equity:
Total EMCOR Group, Inc. stockholders’ equity      1,513,472       1,466,265
Noncontrolling interests                          13,042          13,361
Total equity                                      1,526,514       1,479,626
Total liabilities and equity                      $ 3,407,516     $  3,465,915



EMCOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2014 and 2013
(In thousands) (Unaudited)

                                                 2014          2013
Cash flows - operating activities:
Net income including noncontrolling interests      $ 41,842        $ 30,718
Depreciation and amortization                      8,867           8,155
Amortization of identifiable intangible assets     9,504           6,336
Deferred income taxes                              4,513           3,487
Loss on sale of subsidiary                         596             —
Excess tax benefits from share-based               (4,869    )     (418      )
compensation
Equity loss (income) from unconsolidated           460             (59       )
entities
Other non-cash items                               1,038           1,779
Distributions from unconsolidated entities         72              600
Changes in operating assets and liabilities,       (86,339   )     (145,700  )
excluding the effect of businesses acquired
Net cash used in operating activities              (24,316   )     (95,102   )
Cash flows - investing activities:
Proceeds from sale of subsidiary                   1,121           —
Proceeds from sale of property, plant and          931             549
equipment
Purchase of property, plant and equipment          (8,073    )     (7,005    )
Investments in and advances to unconsolidated      (300      )     —         
entities and joint ventures
Net cash used in investing activities              (6,321    )     (6,456    )
Cash flows - financing activities:
Repayments of long-term debt                       (4,377    )     (2        )
Repayments of capital lease obligations            (491      )     (390      )
Dividends paid to stockholders                     (5,353    )     —
Proceeds from exercise of stock options            3,974           1,714
Payments to satisfy minimum tax withholding        (1,481    )     (927      )
Issuance of common stock under employee stock      866             671
purchase plan
Payments for contingent consideration              —               (537      )
arrangements
Distributions to noncontrolling interests          (900      )     (1,050    )
Excess tax benefits from share-based               4,869          418       
compensation
Net cash used in financing activities              (2,893    )     (103      )
Effect of exchange rate changes on cash and        385            (4,540    )
cash equivalents
Decrease in cash and cash equivalents              (33,145   )     (106,201  )
Cash and cash equivalents at beginning of year     439,813        605,303   
Cash and cash equivalents at end of period         $ 406,668      $ 499,102 



EMCOR GROUP, INC.
SEGMENT INFORMATION
(In thousands) (Unaudited)

                                                 For the three months ended
                                                   March 31,
                                                   2014          2013
Revenues from unrelated entities:
United States electrical construction and          $ 308,136       $ 307,584
facilities services
United States mechanical construction and          513,011         541,117
facilities services
United States building services                    448,044         455,156
United States industrial services                  231,958         145,544
Total United States operations                     1,501,149       1,449,401
United Kingdom construction and facilities         98,236          119,000
services
Total worldwide operations                         $ 1,599,385     $ 1,568,401



                                                  For the three months ended
                                                    March 31,
                                                    2014          2013
Operating income (loss):
United States electrical construction and           $  21,655       $ 18,940
facilities services
United States mechanical construction and           19,106          11,140
facilities services
United States building services                     20,298          12,880
United States industrial services                   23,394         22,747   
Total United States operations                      84,453          65,707
United Kingdom construction and facilities          1,297           1,279
services
Corporate administration                            (15,467   )     (14,358  )
Restructuring expenses                              (909      )     (1,363   )
Total worldwide operations                          69,374          51,265
Other corporate items:
Interest expense                                    (2,248    )     (1,862   )
Interest income                                     234            357      
Income before income taxes                          $  67,360      $ 49,760 


                              EMCOR GROUP, INC.
               RECONCILIATION OF 2014 AND 2013 OPERATING INCOME
                          (In thousands) (Unaudited)

In our press release, we provide actual 2014 and 2013 first quarter March 31,
2014 and 2013 operating income. The following table provides a reconciliation
between 2014 and 2013 operating income based on non-GAAP measures to the most
direct comparable GAAP measures.


                                                  For the three months ended
                                                    March 31,
                                                    2014           2013
GAAP operating income                               $  69,374        $  51,265
EMCOR UK construction operating losses              2,065            3,887
EMCOR UK restructuring expenses                     685              1,325
Non-GAAP operating income, excluding UK losses      $  72,124        $  56,477
and UK restructuring expenses


                              EMCOR GROUP, INC.
                  RECONCILIATION OF 2014 AND 2013 NET INCOME
                          (In thousands) (Unaudited)

In our press release, we provide actual 2014 and 2013 first quarter March 31,
2014 and 2013 net income attributable to EMCOR Group, Inc. The following table
provides a reconciliation between 2014 and 2013 net income attributable to
EMCOR Group, Inc. based on non-GAAP measures to the most direct comparable
GAAP measures.


                                                  For the three months ended
                                                    March 31,
                                                    2014           2013
GAAP net income attributable to EMCOR Group,        $  41,261        $  30,167
Inc.
EMCOR UK construction losses ^(1)                   1,621            2,983
EMCOR UK restructuring expenses ^(2)                537              1,017
Non-GAAP net income attributable to EMCOR
Group, Inc., excluding UK losses and UK             $  43,419        $  34,167
restructuring expenses

(1)Amount is net of tax effect of $0.4 million in the 2014 quarter and $0.9
million in the 2013 quarter.
(2)Amount is net of tax effect of $0.1 million in the 2014 quarter and $0.3
million in the 2013 quarter.


                              EMCOR GROUP, INC.
      RECONCILIATION OF 2014 AND 2013 DILUTED EARNINGS PER SHARE FIGURES
                                 (Unaudited)

In our press release, we provide actual 2014 and 2013 first quarter March 31,
2014 and 2013 diluted earnings per share. The following table provides a
reconciliation between 2014 and 2013 EPS based on non-GAAP measures to the
most direct comparable GAAP measures.


                                                  For the three months ended
                                                    March 31,
                                                    2014            2013
GAAP diluted earnings per common share              $   0.61          $  0.44
EMCOR UK construction losses ^(1)                   0.02              0.04
EMCOR UK restructuring expenses ^(2)                0.01              0.01
Non-GAAP diluted earnings per common share,
excluding UK losses and UK restructuring            $   0.64          $  0.50
expenses

(1)Amount is net of tax effect of $0.4 million in the 2014 quarter and $0.9
million in the 2013 quarter.
(2)Amount is net of tax effect of $0.1 million in the 2014 quarter and $0.3
million in the 2013 quarter.


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
LAK Public Relations, Inc.
Media:
Lisa Linden / Mollie Fullington
212-575-4545 / 917-346-6123
 
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