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| 8-K - FORM 8-K - EMCOR Group, Inc. | eme-20141231x8k.htm |
 | EXHIBIT 99.1 | |
FOR: | EMCOR GROUP, INC. | |
News Release | ||
CONTACT: | R. Kevin Matz Executive Vice President Shared Services (203) 849-7938 | |
FTI Consulting, Inc. Investors: Nathan Elwell / Daniel Haykin (212) 850-5600 | ||
Linden Alschuler & Kaplan, Inc. Media: Lisa Linden / Mollie Fullington 212-575-4545 / 917-346-6123 | ||
EMCOR GROUP, INC. REPORTS FOURTH QUARTER AND FULL YEAR 2014 RESULTS |
- Record Fourth Quarter Revenues of $1.71 Billion - |
- Quarter Four Operating Cash Flow of $138 Million - |
- Announces 2015 Revenue and Diluted EPS Guidance - |
NORWALK, CONNECTICUT, February 26, 2015 - EMCOR Group, Inc. (NYSE: EME) today reported results for the fourth quarter and the year ended December 31, 2014.
For the fourth quarter of 2014, net income from continuing operations attributable to EMCOR was $43.1 million, or $0.66 per diluted share. Excluding impairment charges discussed below, non-GAAP net income from continuing operations was $44.0 million, or $0.68 per diluted share, compared to non-GAAP net income from continuing operations of $51.5 million, or $0.76 per diluted share in the fourth quarter of 2013. Revenues in the fourth quarter of 2014 totaled a record $1.71 billion, compared to revenues of $1.65 billion in the year ago period.
Operating income for the fourth quarter of 2014 was $74.5 million, or 4.3% of revenues, which included impairment charges of approximately $1.5 million. Excluding these charges, the Company's non-GAAP operating income for the fourth quarter of 2014 was $76.0 million, or 4.4% of revenues, compared to non-GAAP operating income in the 2013 fourth quarter of $76.0 million, or 4.6% of revenues.
Please see the attached tables for a reconciliation of non-GAAP operating income, non-GAAP net income from continuing operations and non-GAAP diluted earnings per share from continuing operations to the comparable GAAP figures.
Selling, general and administrative expenses for the 2014 fourth quarter were $172.2 million, or 10.0% of revenues, compared to $161.0 million, or 9.8% of revenues, in the year ago period.
The Company's income tax rate in the 2014 fourth quarter was 39.5%, compared to an income tax rate of 29.7% in the year ago period.
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EMCOR Reports Fourth Quarter Results | Page 2 |
Backlog as of December 31, 2014 was $3.63 billion, an increase of 8.7% from $3.34 billion at the end of the 2013 fourth quarter. Domestic backlog grew $308 million while backlog decreased $18 million in the UK Building Services segment related to the timing of renewals of certain maintenance contracts performed by the UK Building Services segment as well as the negative impact of foreign currency translation. From a market perspective, backlog growth in the commercial, transportation and water/wastewater sectors more than offset the declines in the healthcare, institutional and industrial sectors. Total backlog of $3.63 billion decreased by 1.7% from $3.70 billion as of September 30, 2014.
Tony Guzzi, President and Chief Executive Officer of EMCOR Group commented, “Overall, we delivered excellent operating results in 2014, highlighting the strength of our diverse offerings across various end markets. During 2014, we generated strong operating cash flow of $247 million and expanded operating margins fifty basis points to 4.4% on a pro forma basis.
Our U.S. Industrial Services segment achieved impressive organic growth in the fourth quarter. Our RepconStrickland and Ohmstede subsidiaries are performing well, and we are realizing the benefits we envisioned when we combined these market leaders in 2013. Our U.S. Electrical Construction segment continues to lead the market and perform at a high level, while our U.S. Mechanical Construction segment saw important improvements in 2014 and rebounded well from the two difficult projects that adversely impacted its results in 2013. Despite encountering headwinds that included less favorable weather conditions and unusual legal costs in the fourth quarter of this year, the operations of our U.S. Building Services segment remained stable and expanded their margins on lower revenues led by our Mobile Mechanical Services operations.”
Mr. Guzzi continued, “During the year, we completed several key strategic moves to position the Company for long-term success. Most notably, we completed the wind down of our UK construction operations which allowed us to focus on our more profitable UK building services business and is reflected in the improved performance in our UK business this quarter.”
Mr. Guzzi concluded, “Overall, we are encouraged by our prospects for 2015 and beyond. While growth in non-residential construction has remained somewhat sluggish, our recent performance and backlog growth are indicators that an uptick in the non-residential construction market is gaining traction. We have maintained a strong and flexible balance sheet and have demonstrated a long track record of meaningful cash generation. We will continue to prudently deploy our capital, seeking opportunities to optimize shareholder value through both acquisitions and share repurchases. We are very pleased with the current structure and focus of our business and believe we are well positioned to succeed in the coming years.”
Revenues for the 2014 full-year period increased 1.4% to $6.42 billion compared to $6.33 billion for the 2013 full-year period.
Net income from continuing operations attributable to EMCOR for the 2014 full-year period was $173.4 million, or $2.59 per diluted share. Excluding an after-tax gain associated with the sale of a building owned by one of our subsidiaries and impairment charges, non-GAAP net income from continuing operations was $167.1 million, or $2.49 per diluted share, compared to non-GAAP net income from continuing operations of $151.2 million, or $2.22 per diluted share, in the year ago period, excluding 2013 transaction expenses associated with the acquisition of RepconStrickland.
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EMCOR Reports Fourth Quarter Results | Page 3 |
Operating income in the 2014 full-year period was $289.9 million, or 4.5% of revenues. Excluding the sale of the building and impairment charges mentioned in the immediately preceding paragraph, non-GAAP operating income for the 2014 full-year period was $279.6 million, or 4.4% of revenues, compared to non-GAAP operating income of $246.5 million, or 3.9% of revenues, in 2013.
Please see the attached tables for a reconciliation of non-GAAP operating income, non-GAAP net income from continuing operations and non-GAAP diluted earnings per share from continuing operations to the comparable GAAP figures.
For the 2014 full-year period, SG&A totaled $626.5 million, or 9.8% of revenues, compared to $580.6 million, or 9.2% of revenues, in 2013.
The Company noted that, based on the current size and mix of its backlog and assuming the continuation of current market conditions, it expects 2015 revenues to be approximately $6.6 billion and diluted earnings per share from continuing operations to be between $2.65 and $2.95.
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 fourth quarter conference call will be available live via internet broadcast today, Thursday, February 26, at 10:30 AM Eastern Standard 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 2014 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.
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EMCOR GROUP, INC.
FINANCIAL HIGHLIGHTS
(In thousands, except share and per share information)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) | ||||||||||||||||
For the three months ended December 31, | For the twelve months ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenues | $ | 1,714,796 | $ | 1,649,279 | $ | 6,424,965 | $ | 6,333,527 | ||||||||
Cost of sales | 1,466,223 | 1,412,408 | 5,517,719 | 5,511,881 | ||||||||||||
Gross profit | 248,573 | 236,871 | 907,246 | 821,646 | ||||||||||||
Selling, general and administrative expenses | 172,235 | 160,970 | 626,478 | 580,649 | ||||||||||||
Restructuring expenses | 369 | (5 | ) | 1,168 | 647 | |||||||||||
Impairment loss of identifiable intangible assets | 1,471 | — | 1,471 | — | ||||||||||||
Gain on sale of building | — | — | 11,749 | — | ||||||||||||
Operating income | 74,498 | 75,906 | 289,878 | 240,350 | ||||||||||||
Interest expense | (2,188 | ) | (2,791 | ) | (9,075 | ) | (8,769 | ) | ||||||||
Interest income | 201 | 266 | 842 | 1,128 | ||||||||||||
Income from continuing operations before income taxes | 72,511 | 73,381 | 281,645 | 232,709 | ||||||||||||
Income tax provision | 28,100 | 21,664 | 103,528 | 82,286 | ||||||||||||
Income from continuing operations | 44,411 | 51,717 | 178,117 | 150,423 | ||||||||||||
Loss from discontinued operation, net of income taxes | (603 | ) | (5,448 | ) | (4,690 | ) | (23,069 | ) | ||||||||
Net income including noncontrolling interests | 43,808 | 46,269 | 173,427 | 127,354 | ||||||||||||
Less: Net income attributable to noncontrolling interests | (1,342 | ) | (348 | ) | (4,763 | ) | (3,562 | ) | ||||||||
Net income attributable to EMCOR Group, Inc. | $ | 42,466 | $ | 45,921 | $ | 168,664 | $ | 123,792 | ||||||||
Basic earnings (loss) per common share: | ||||||||||||||||
From continuing operations | $ | 0.67 | $ | 0.77 | $ | 2.61 | $ | 2.19 | ||||||||
From discontinued operation | $ | (0.01 | ) | $ | (0.08 | ) | $ | (0.07 | ) | $ | (0.34 | ) | ||||
Diluted earnings (loss) per common share: | ||||||||||||||||
From continuing operations | $ | 0.66 | $ | 0.76 | $ | 2.59 | $ | 2.16 | ||||||||
From discontinued operation | $ | (0.01 | ) | $ | (0.08 | ) | $ | (0.07 | ) | $ | (0.34 | ) | ||||
Weighted average shares of common stock outstanding: | ||||||||||||||||
Basic | 64,185,026 | 66,966,303 | 66,331,886 | 67,086,299 | ||||||||||||
Diluted | 64,887,897 | 67,950,697 | 67,062,509 | 68,076,841 | ||||||||||||
Dividends declared per common share | $ | 0.08 | $ | 0.06 | $ | 0.32 | $ | 0.18 | ||||||||
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, 2014 | December 31, 2013 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 432,056 | $ | 439,813 | ||||
Accounts receivable, net | 1,234,187 | 1,268,226 | ||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 103,201 | 90,727 | ||||||
Inventories | 46,854 | 52,123 | ||||||
Prepaid expenses and other | 70,305 | 79,216 | ||||||
Total current assets | 1,886,603 | 1,930,105 | ||||||
Investments, notes and other long-term receivables | 9,122 | 6,799 | ||||||
Property, plant & equipment, net | 122,178 | 123,414 | ||||||
Goodwill | 834,102 | 834,825 | ||||||
Identifiable intangible assets, net | 502,060 | 541,497 | ||||||
Other assets | 34,902 | 29,275 | ||||||
Total assets | $ | 3,388,967 | $ | 3,465,915 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Borrowings under revolving credit facility | $ | — | $ | — | ||||
Current maturities of long-term debt and capital lease obligations | 19,041 | 19,332 | ||||||
Accounts payable | 460,478 | 487,738 | ||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 368,555 | 381,295 | ||||||
Accrued payroll and benefits | 245,854 | 237,779 | ||||||
Other accrued expenses and liabilities | 189,489 | 172,599 | ||||||
Total current liabilities | 1,283,417 | 1,298,743 | ||||||
Long-term debt and capital lease obligations | 316,399 | 335,331 | ||||||
Other long-term obligations | 359,764 | 352,215 | ||||||
Total liabilities | 1,959,580 | 1,986,289 | ||||||
Equity: | ||||||||
Total EMCOR Group, Inc. stockholders’ equity | 1,416,013 | 1,466,265 | ||||||
Noncontrolling interests | 13,374 | 13,361 | ||||||
Total equity | 1,429,387 | 1,479,626 | ||||||
Total liabilities and equity | $ | 3,388,967 | $ | 3,465,915 | ||||
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twelve Months Ended December 31, 2014 and 2013
(In thousands)
2014 | 2013 | |||||||
Cash flows - operating activities: | ||||||||
Net income including noncontrolling interests | $ | 173,427 | $ | 127,354 | ||||
Depreciation and amortization | 36,524 | 36,310 | ||||||
Amortization of identifiable intangible assets | 37,966 | 31,028 | ||||||
Deferred income taxes | 5,748 | 11,857 | ||||||
Loss on sale of subsidiary | 608 | — | ||||||
Gain on sale of building | (11,749 | ) | — | |||||
Excess tax benefits from share-based compensation | (8,264 | ) | (4,624 | ) | ||||
Equity income from unconsolidated entities | (1,440 | ) | (1,048 | ) | ||||
Non-cash expense for impairment of identifiable intangible assets | 1,471 | — | ||||||
Other non-cash items | 10,131 | (6,262 | ) | |||||
Distributions from unconsolidated entities | 1,767 | 679 | ||||||
Changes in operating assets and liabilities, excluding the effect of businesses acquired | 468 | (45,225 | ) | |||||
Net cash provided by operating activities | 246,657 | 150,069 | ||||||
Cash flows - investing activities: | ||||||||
Payments for acquisitions of businesses, net of cash acquired | — | (454,671 | ) | |||||
Proceeds from sale of subsidiary | 1,108 | — | ||||||
Proceeds from sale of building | 11,885 | — | ||||||
Proceeds from sale of property, plant and equipment | 7,239 | 2,930 | ||||||
Purchase of property, plant and equipment | (38,035 | ) | (35,497 | ) | ||||
Investments in and advances to unconsolidated entities and joint ventures | (3,865 | ) | (800 | ) | ||||
Maturity of short-term investments | — | 4,616 | ||||||
Net cash used in investing activities | (21,668 | ) | (483,422 | ) | ||||
Cash flows - financing activities: | ||||||||
Proceeds from revolving credit facility | — | 250,000 | ||||||
Repayments of revolving credit facility | — | (400,000 | ) | |||||
Borrowings from long-term debt | — | 350,000 | ||||||
Repayments of long-term debt | (17,454 | ) | (3,013 | ) | ||||
Repayments of capital lease obligations | (1,715 | ) | (1,692 | ) | ||||
Dividends paid to stockholders | (21,293 | ) | (12,080 | ) | ||||
Repurchase of common stock | (201,994 | ) | (26,070 | ) | ||||
Proceeds from exercise of stock options | 6,858 | 5,172 | ||||||
Payments to satisfy minimum tax withholding | (1,481 | ) | (927 | ) | ||||
Issuance of common stock under employee stock purchase plan | 3,615 | 2,854 | ||||||
Payments for contingent consideration arrangements | — | (537 | ) | |||||
Distributions to noncontrolling interests | (4,750 | ) | (1,300 | ) | ||||
Excess tax benefits from share-based compensation | 8,264 | 4,624 | ||||||
Net cash (used in) provided by financing activities | (229,950 | ) | 167,031 | |||||
Effect of exchange rate changes on cash and cash equivalents | (2,796 | ) | 832 | |||||
Decrease in cash and cash equivalents | (7,757 | ) | (165,490 | ) | ||||
Cash and cash equivalents at beginning of year | 439,813 | 605,303 | ||||||
Cash and cash equivalents at end of period | $ | 432,056 | $ | 439,813 | ||||
EMCOR GROUP, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited) | ||||||||
For the three months ended December 31, | ||||||||
2014 | 2013 | |||||||
Revenues from unrelated entities: | ||||||||
United States electrical construction and facilities services | $ | 353,693 | $ | 361,307 | ||||
United States mechanical construction and facilities services | 584,418 | 588,351 | ||||||
United States building services | 427,591 | 433,586 | ||||||
United States industrial services | 258,338 | 184,055 | ||||||
Total United States operations | 1,624,040 | 1,567,299 | ||||||
United Kingdom building services | 90,756 | 81,980 | ||||||
Total worldwide operations | $ | 1,714,796 | $ | 1,649,279 | ||||
For the twelve months ended December 31, | ||||||||
2014 | 2013 | |||||||
Revenues from unrelated entities: | ||||||||
United States electrical construction and facilities services | $ | 1,311,988 | $ | 1,345,750 | ||||
United States mechanical construction and facilities services | 2,201,212 | 2,329,834 | ||||||
United States building services | 1,721,341 | 1,794,978 | ||||||
United States industrial services | 839,980 | 519,413 | ||||||
Total United States operations | 6,074,521 | 5,989,975 | ||||||
United Kingdom building services | 350,444 | 343,552 | ||||||
Total worldwide operations | $ | 6,424,965 | $ | 6,333,527 | ||||
EMCOR GROUP, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited) | ||||||||
For the three months ended December 31, | ||||||||
2014 | 2013 | |||||||
Operating income (loss): | ||||||||
United States electrical construction and facilities services | $ | 23,711 | $ | 29,967 | ||||
United States mechanical construction and facilities services | 36,366 | 36,956 | ||||||
United States building services | 12,279 | 14,297 | ||||||
United States industrial services | 20,004 | 12,443 | ||||||
Total United States operations | 92,360 | 93,663 | ||||||
United Kingdom building services | 2,364 | 1,176 | ||||||
Corporate administration | (18,386 | ) | (18,938 | ) | ||||
Restructuring expenses | (369 | ) | 5 | |||||
Impairment loss on identifiable intangible assets | (1,471 | ) | — | |||||
Gain on sale of building | — | — | ||||||
Total worldwide operations | 74,498 | 75,906 | ||||||
Other corporate items: | ||||||||
Interest expense | (2,188 | ) | (2,791 | ) | ||||
Interest income | 201 | 266 | ||||||
Income from continuing operations before income taxes | $ | 72,511 | $ | 73,381 | ||||
For the twelve months ended December 31, | ||||||||
2014 | 2013 | |||||||
Operating income (loss): | ||||||||
United States electrical construction and facilities services | $ | 90,873 | $ | 98,114 | ||||
United States mechanical construction and facilities services | 114,418 | 93,765 | ||||||
United States building services | 65,885 | 67,225 | ||||||
United States industrial services | 63,159 | 38,763 | ||||||
Total United States operations | 334,335 | 297,867 | ||||||
United Kingdom building services | 15,011 | 13,021 | ||||||
Corporate administration | (68,578 | ) | (69,891 | ) | ||||
Restructuring expenses | (1,168 | ) | (647 | ) | ||||
Impairment loss on identifiable intangible assets | (1,471 | ) | — | |||||
Gain on sale of building | 11,749 | — | ||||||
Total worldwide operations | 289,878 | 240,350 | ||||||
Other corporate items: | ||||||||
Interest expense | (9,075 | ) | (8,769 | ) | ||||
Interest income | 842 | 1,128 | ||||||
Income from continuing operations before income taxes | $ | 281,645 | $ | 232,709 | ||||
EMCOR GROUP, INC.
RECONCILIATION OF 2014 AND 2013 OPERATING INCOME
(In thousands) (Unaudited)
In our press release, we provide actual 2014 and 2013 fourth quarter and year-to-date December 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 December 31, | For the twelve months ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
GAAP operating income | $ | 74,498 | $ | 75,906 | $ | 289,878 | $ | 240,350 | ||||||||
Transaction expenses related to the acquisition of RepconStrickland, Inc. | — | 90 | — | 6,140 | ||||||||||||
Impairment loss on identifiable intangible assets | 1,471 | — | 1,471 | — | ||||||||||||
Gain on sale of building | — | — | (11,749 | ) | — | |||||||||||
Non-GAAP operating income, excluding RepconStrickland transaction expenses, impairment loss and gain on sale of building | $ | 75,969 | $ | 75,996 | $ | 279,600 | $ | 246,490 | ||||||||
EMCOR GROUP, INC.
RECONCILIATION OF 2014 AND 2013 NET INCOME
(In thousands) (Unaudited)
In our press release, we provide actual 2014 and 2013 fourth quarter and year-to-date December 31, 2014 and 2013 net income from continuing operations attributable to EMCOR Group, Inc. The following table provides a reconciliation between 2014 and 2013 net income from continuing operations attributable to EMCOR Group, Inc. based on non-GAAP measures to the most direct comparable GAAP measures.
For the three months ended December 31, | For the twelve months ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
GAAP net income from continuing operations attributable to EMCOR Group, Inc.(1) | $ | 43,069 | $ | 51,369 | $ | 173,354 | $ | 146,861 | ||||||||
Transaction expenses related to the acquisition of RepconStrickland, Inc. (2) | — | 107 | — | 4,363 | ||||||||||||
Impairment loss on identifiable intangible assets (3) | 892 | — | 892 | — | ||||||||||||
Gain on sale of building (4) | — | — | (7,126 | ) | — | |||||||||||
Non-GAAP net income from continuing operations attributable to EMCOR Group, Inc., excluding RepconStrickland transaction expenses, impairment loss and gain on sale of building | $ | 43,961 | $ | 51,476 | $ | 167,120 | $ | 151,224 | ||||||||
(1) Amount is income from continuing operations less net income attributable to noncontrolling interest.
(2) Amount is net of tax effect of $0.0 million in the 2013 quarter and $1.8 million in the 2013 year-to-date period.
(3) Amount is net of tax effect of $0.6 million in the 2014 quarter and year-to-date periods.
(4) Amount is net of tax effect of $4.6 million in the 2014 year-to-date period.
EMCOR GROUP, INC.
RECONCILIATION OF 2014 AND 2013 DILUTED EARNINGS PER SHARE FIGURES
(Unaudited)
In our press release, we provide actual 2014 and 2013 fourth quarter and year-to-date December 31, 2014 and 2013 diluted earnings per share from continuing operations. 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 December 31, | For the twelve months ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
GAAP diluted earnings per common share from continuing operations | $ | 0.66 | $ | 0.76 | $ | 2.59 | $ | 2.16 | ||||||||
Transaction expenses related to the acquisition of RepconStrickland, Inc. (1) | — | 0.00 | — | 0.06 | ||||||||||||
Impairment loss on identifiable intangible assets (2) | 0.01 | — | 0.01 | — | ||||||||||||
Gain on sale of building (3) | — | — | (0.11 | ) | — | |||||||||||
Non-GAAP diluted earnings per common share from continuing operations, excluding RepconStrickland transaction expenses, impairment loss and gain on sale of building | $ | 0.68 | $ | 0.76 | $ | 2.49 | $ | 2.22 | ||||||||
(1) Amount is net of tax effect of $0.0 million in the 2013 quarter and $1.8 million in the 2013 year-to-date period.
(2) Amount is net of tax effect of $0.6 million in the 2014 quarter and year-to-date periods.
(3) Amount is net of tax effect of $4.6 million in the 2014 year-to-date period.
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