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
EMCOR Group, Inc. Reports First Quarter 2014 Results
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