EMCOR Group, Inc. Reports First Quarter 2024 Results

Quarterly Revenues of $3.43 billion, 18.7% Increase Year-over-Year

Quarterly Diluted EPS of $4.17, 79.7% Increase Year-over-Year

Record Remaining Performance Obligations of $9.18 billion, 16.5% Increase Year-over-Year

Increases 2024 Revenue Guidance Range to $14.0 billion - $14.5 billion from $13.5 billion - $14.0 billion

Increases 2024 Diluted EPS Guidance Range to $15.50 - $16.50 from $14.00 - $15.00

EMCOR Group, Inc. (NYSE: EME) today reported results for the first quarter ended March 31, 2024.

For the first quarter of 2024, revenues totaled $3.43 billion, an increase of 18.7%, compared to $2.89 billion for the first quarter of 2023. Net income was $197.1 million, or $4.17 per diluted share, compared to $111.5 million, or $2.32 per diluted share, for the first quarter of 2023.

Operating income for the first quarter of 2024 was $260.0 million, or 7.6% of revenues, compared to $154.9 million, or 5.4% of revenues, for the first quarter of 2023. Operating income included depreciation and amortization expense, inclusive of amortization of identifiable intangible assets, of $29.6 million and $28.5 million for the first quarter of 2024 and 2023, respectively.

Selling, general and administrative expenses for the first quarter of 2024 totaled $329.4 million, or 9.6% of revenues, compared to $281.2 million, or 9.7% of revenues, for the first quarter of 2023.

The Company's income tax rate for the first quarter of 2024 was 26.4%, compared to 27.0% for the first quarter of 2023.

Remaining performance obligations as of March 31, 2024 were $9.18 billion compared to $7.87 billion as of March 31, 2023, up approximately $1.30 billion year-over-year.

Tony Guzzi, Chairman, President, and Chief Executive Officer of EMCOR, commented, “The Company had an exceptional start to the year, sustaining momentum throughout the first quarter and setting new records in key financial and operational metrics. Our confidence is reinforced by the significant year-over-year increase in our remaining performance obligations and a healthy project pipeline, all of which provide us with strong visibility into the remainder of the year and is reflected in our increased financial guidance for 2024.”

Mr. Guzzi continued, “Our Electrical and Mechanical Construction segments continue to exceed our already high expectations. Our Electrical Construction segment posted record revenues and operating margin, with revenues growing 18.6% and operating margin coming in at 12.0%. With organic growth of 32.4%, our Mechanical Construction segment generated record first quarter revenues, and achieved a record first quarter operating margin of 10.6%. We executed well with strong demand across many of the market sectors we serve, including high-tech and traditional manufacturing, as well as the network and communications sector. We had outstanding performance on some of the most demanding projects for our most sophisticated customers. Our Industrial Services business reported its best quarter post-pandemic. We continue to see improved demand for our services and completed some of our largest turnarounds in over five years. Within our U.S. Building Services segment, our mechanical services business continues to perform well, with solid high-single digit operating margins, and strong demand persists for our energy efficiency, building controls and retrofit projects.”

Increases Full Year 2024 Guidance

Based on its first quarter 2024 performance, current operating conditions, and near-term visibility, the Company is:

  • Increasing its full-year 2024 revenue guidance range to $14.0 billion - $14.5 billion, an increase from the prior guidance range of $13.5 billion - $14.0 billion.
  • Increasing its full-year 2024 diluted earnings per share guidance range to $15.50 - $16.50, an increase from the prior guidance range of $14.00 - $15.00.

Mr. Guzzi added, “Our continued momentum in the first quarter and our sustained success over the past several years reflects our ability to efficiently deploy exceptionally skilled talent in the field, and our focus on operational excellence. Looking forward, we are well positioned to serve our customers and meet the evolving demands of the markets in which we operate.”

Mr. Guzzi concluded, “We feel confident in raising our guidance and believe we have the right strategy being implemented by a team that can execute very well against the available market opportunities. We will continue to be balanced capital allocators, as evidenced by our year-to-date actions, including four recently disclosed acquisitions, share repurchases, and our increased dividend. Our priority is always to deploy capital to organic growth first, and then expand our capacity and capability through acquisitions to better serve our customers and increase value for our shareholders.”

First Quarter Earnings Conference Call Information

EMCOR Group's first quarter conference call will be broadcast live via internet today, Thursday, April 25, at 10:30 AM Eastern Daylight Time and can be accessed through the Company's website at www.emcorgroup.com.

About EMCOR

EMCOR Group, Inc. is a Fortune 500 leader in mechanical and electrical construction services, industrial and energy infrastructure and building services. This press release and other press releases may be viewed at the Company’s website at www.emcorgroup.com. EMCOR routinely posts information that may be important to investors in the “Investor Relations” section of our website at www.emcorgroup.com. Investors and potential investors are encouraged to consult the EMCOR website regularly for important information about EMCOR.

Forward Looking Statements:

This release and related presentation contain forward-looking statements. Such statements speak only as of April 25, 2024, and EMCOR assumes no obligation to update any such forward-looking statements, unless required by law. These forward-looking statements may include statements regarding anticipated future operating and financial performance, including financial guidance and projections underlying that guidance; the nature and impact of our remaining performance obligations and timing of future projects; our ability to be prudent capital allocators; our ability to pursue organic and strategic investments and acquisitions; our ability to return capital to shareholders, including through share repurchases and dividends; market opportunities; market growth prospects; customer trends; and project mix. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated (whether expressly or implied) by the forward-looking statements. Accordingly, these statements do not guarantee future performance or events. Applicable risks and uncertainties include, but are not limited to, adverse effects of general economic conditions; domestic and international political developments; changes in the specific markets for EMCOR’s services; adverse business conditions, including labor market tightness and/or disruption, productivity challenges, the nature and extent of supply chain disruptions impacting availability and pricing of materials, and inflationary trends more generally, including fluctuations in energy costs; the impact of legislation and/or government regulations; changes in interest rates; the availability of adequate levels of surety bonding; increased competition; and unfavorable developments in the mix of our business. Certain of the risk factors associated with EMCOR’s business are also discussed in Part I, Item 1A “Risk Factors,” of the Company’s 2023 Form 10-K, and in other reports filed from time to time with the Securities and Exchange Commission and available at www.sec.gov and www.emcorgroup.com. Such risk factors should be taken into account in evaluating our business, including any forward-looking statements.

Non-GAAP Measures:

This release and related presentation also include certain financial measures that were not prepared in accordance with U.S. generally accepted accounting principles (GAAP). Reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this release. The Company uses these non-GAAP measures as key performance indicators for the purpose of evaluating performance internally. We also believe that these non-GAAP measures provide investors with useful information with respect to our ongoing operations. Any non-GAAP financial measures presented are not, and should not be viewed as, substitutes for financial measures required by GAAP, have no standardized meaning prescribed by GAAP, and may not be comparable to the calculation of similar measures of other companies.

 

EMCOR GROUP, INC.

FINANCIAL HIGHLIGHTS

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share information)

(Unaudited)

 

 

 

For the quarters ended

March 31,

 

 

 

2024

 

 

2023

 

Revenues

 

$

3,432,276

 

$

2,890,432

 

Cost of sales

 

 

2,842,967

 

 

2,454,370

 

Gross profit

 

 

589,309

 

 

436,062

 

Selling, general and administrative expenses

 

 

329,356

 

 

281,152

 

Operating income

 

 

259,953

 

 

154,910

 

Net periodic pension income (cost)

 

 

222

 

 

(274

)

Interest income (expense), net

 

 

7,541

 

 

(1,832

)

Income before income taxes

 

 

267,716

 

 

152,804

 

Income tax provision

 

 

70,567

 

 

41,331

 

Net income

 

$

197,149

 

$

111,473

 

 

 

 

 

 

Basic earnings per common share

 

$

4.18

 

$

2.33

 

 

 

 

 

 

Diluted earnings per common share

 

$

4.17

 

$

2.32

 

 

 

 

 

 

Weighted average shares of common stock outstanding:

 

 

 

 

Basic

 

 

47,138,185

 

 

47,775,819

 

Diluted

 

 

47,316,497

 

 

47,945,815

 

 

 

 

 

 

Dividends declared per common share

 

$

0.18

 

$

0.15

 

 

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

(Unaudited)

March 31,

2024

 

December 31,

2023

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

840,985

 

$

789,750

Accounts receivable, net

 

 

3,206,131

 

 

3,203,490

Contract assets

 

 

267,611

 

 

269,885

Inventories

 

 

113,751

 

 

110,774

Prepaid expenses and other

 

 

79,651

 

 

73,072

Total current assets

 

 

4,508,129

 

 

4,446,971

Property, plant, and equipment, net

 

 

186,410

 

 

179,378

Operating lease right-of-use assets

 

 

321,505

 

 

310,498

Goodwill

 

 

956,549

 

 

956,549

Identifiable intangible assets, net

 

 

569,781

 

 

586,032

Other assets

 

 

144,953

 

 

130,293

Total assets

 

$

6,687,327

 

$

6,609,721

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

865,059

 

$

935,967

Contract liabilities

 

 

1,649,207

 

 

1,595,109

Accrued payroll and benefits

 

 

477,529

 

 

596,936

Other accrued expenses and liabilities

 

 

363,677

 

 

315,107

Operating lease liabilities, current

 

 

76,013

 

 

75,236

Total current liabilities

 

 

3,431,485

 

 

3,518,355

Operating lease liabilities, long-term

 

 

269,799

 

 

259,430

Other long-term obligations

 

 

370,661

 

 

361,121

Total liabilities

 

 

4,071,945

 

 

4,138,906

Equity:

 

 

 

 

Total EMCOR Group, Inc. stockholders’ equity

 

 

2,614,345

 

 

2,469,778

Noncontrolling interests

 

 

1,037

 

 

1,037

Total equity

 

 

2,615,382

 

 

2,470,815

Total liabilities and equity

 

$

6,687,327

 

$

6,609,721

 

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2024 and 2023

(In thousands) (Unaudited)

 

 

 

 

2024

 

 

 

2023

 

Cash flows - operating activities:

 

 

 

 

Net income

 

$

197,149

 

 

$

111,473

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

Depreciation and amortization

 

 

13,337

 

 

 

12,621

 

Amortization of identifiable intangible assets

 

 

16,251

 

 

 

15,877

 

Provision for (recovery of) credit losses

 

 

9,898

 

 

 

(343

)

Non-cash share-based compensation expense

 

 

6,527

 

 

 

4,087

 

Other reconciling items

 

 

(2,829

)

 

 

505

 

Changes in operating assets and liabilities, excluding the effect of businesses acquired

 

 

(108,069

)

 

 

(228,803

)

Net cash provided by (used in) operating activities

 

 

132,264

 

 

 

(84,583

)

Cash flows - investing activities:

 

 

 

 

Payments for acquisitions of businesses, net of cash acquired

 

 

(100

)

 

 

(11,834

)

Proceeds from sale or disposal of property, plant, and equipment

 

 

939

 

 

 

9,583

 

Purchases of property, plant, and equipment

 

 

(20,278

)

 

 

(23,154

)

Net cash used in investing activities

 

 

(19,439

)

 

 

(25,405

)

Cash flows - financing activities:

 

 

 

 

Proceeds from revolving credit facility

 

 

 

 

 

100,000

 

Repayments of finance lease liabilities

 

 

(773

)

 

 

(780

)

Dividends paid to stockholders

 

 

(8,470

)

 

 

(7,151

)

Repurchases of common stock

 

 

(39,000

)

 

 

(16,033

)

Taxes paid related to net share settlements of equity awards

 

 

(11,648

)

 

 

(5,242

)

Issuances of common stock under employee stock purchase plan

 

 

943

 

 

 

2,168

 

Payments for contingent consideration arrangements

 

 

 

 

 

(1,456

)

Net cash (used in) provided by financing activities

 

 

(58,948

)

 

 

71,506

 

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

 

(1,140

)

 

 

2,239

 

Increase (decrease) in cash, cash equivalents, and restricted cash

 

 

52,737

 

 

 

(36,243

)

Cash, cash equivalents, and restricted cash at beginning of year (1)

 

 

789,750

 

 

 

457,068

 

Cash, cash equivalents, and restricted cash at end of period (2)

 

$

842,487

 

 

$

420,825

 

__________

(1)

Includes $0.6 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of December 31, 2022.

(2)

Includes $1.5 million and $0.8 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of March 31, 2024 and 2023, respectively.

 

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands, except for percentages) (Unaudited)

 

 

 

For the quarters ended March 31,

 

 

 

2024

 

% of

Total

 

 

2023

 

% of

Total

Revenues from unrelated entities:

 

 

 

 

 

 

 

 

United States electrical construction and facilities services

 

$

764,711

 

22

%

 

$

644,746

 

22

%

United States mechanical construction and facilities services

 

 

1,427,665

 

42

%

 

 

1,078,558

 

38

%

United States building services

 

 

781,160

 

23

%

 

 

725,375

 

25

%

United States industrial services

 

 

354,053

 

10

%

 

 

330,883

 

11

%

Total United States operations

 

 

3,327,589

 

97

%

 

 

2,779,562

 

96

%

United Kingdom building services

 

 

104,687

 

3

%

 

 

110,870

 

4

%

Total operations

 

$

3,432,276

 

100

%

 

$

2,890,432

 

100

%

 

 

For the quarters ended March 31,

 

 

 

2024

 

 

% of

Segment Revenues

 

 

2023

 

 

% of

Segment Revenues

Operating income (loss):

 

 

 

 

 

 

 

 

United States electrical construction and facilities services

 

$

91,589

 

 

12.0

%

 

$

40,516

 

 

6.3

%

United States mechanical construction and facilities services

 

 

150,720

 

 

10.6

%

 

 

86,227

 

 

8.0

%

United States building services

 

 

33,459

 

 

4.3

%

 

 

37,650

 

 

5.2

%

United States industrial services

 

 

17,966

 

 

5.1

%

 

 

15,020

 

 

4.5

%

Total United States operations

 

 

293,734

 

 

8.8

%

 

 

179,413

 

 

6.5

%

United Kingdom building services

 

 

5,377

 

 

5.1

%

 

 

5,424

 

 

4.9

%

Corporate administration

 

 

(39,158

)

 

 

 

 

(29,927

)

 

 

Total operations

 

 

259,953

 

 

7.6

%

 

 

154,910

 

 

5.4

%

Other items:

 

 

 

 

 

 

 

 

Net periodic pension income (cost)

 

 

222

 

 

 

 

 

(274

)

 

 

Interest income (expense), net

 

 

7,541

 

 

 

 

 

(1,832

)

 

 

Income before income taxes

 

$

267,716

 

 

 

 

$

152,804

 

 

 

EMCOR GROUP, INC.

RECONCILIATION OF ORGANIC REVENUE GROWTH

(In thousands, except for percentages) (Unaudited)

The following table provides a reconciliation between organic revenue growth, a non-GAAP measure, and total revenue growth for the quarter ended March 31, 2024.

 

 

For the quarter ended

March 31, 2024

 

 

$

 

%

GAAP revenue growth

 

$

541,844

 

 

18.7

%

Incremental revenues from acquisitions

 

 

(7,934

)

 

(0.2

)%

Organic revenue growth, a non-GAAP measure

 

$

533,910

 

 

18.5

%

 

Contacts

EMCOR GROUP, INC.

Andrew G. Backman

Vice President

Investor Relations

(203) 849-7938

FTI Consulting, Inc.

Investors: Blake Mueller

(718) 578-3706

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