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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