EMCOR Group, Inc. Reports Second Quarter 2024 Results

Rhea-AI Summary

EMCOR Group (NYSE: EME) reported record second quarter 2024 results, with revenues of $3.67 billion, up 20.4% year-over-year. Net income rose to $247.6 million, or $5.25 per diluted share, a 78.0% increase from Q2 2023. The company's remaining performance obligations reached $9.0 billion, up 8.6% year-over-year. EMCOR increased its 2024 revenue guidance to $14.5-$15.0 billion and diluted EPS guidance to $19.00-$20.00. Strong performance was noted across segments, particularly in Mechanical and Electrical Construction. The company's CEO, Tony Guzzi, expressed confidence in EMCOR's trajectory, citing high demand for specialty contracting services and a robust pipeline.

Positive

• Record quarterly revenues of $3.67 billion, up 20.4% year-over-year
• Record quarterly diluted EPS of $5.25, up 78.0% year-over-year
• Remaining performance obligations increased 8.6% to $9.0 billion
• Increased 2024 revenue guidance to $14.5-$15.0 billion
• Raised 2024 diluted EPS guidance to $19.00-$20.00
• Mechanical Construction segment achieved record 12.9% operating margin for Q2
• Electrical Construction segment posted record revenues with 18% growth
• Strong demand across various sectors including high-tech manufacturing and healthcare

Negative

• None.

Insights

Financial Analyst

EMCOR Group's Q2 2024 results are exceptionally strong, showcasing remarkable growth and profitability. The company reported record quarterly revenues of $3.67 billion, a 20.4% increase year-over-year. This substantial growth is complemented by an even more impressive jump in diluted EPS to $5.25, representing a 78.0% increase from the same period last year.

The company's performance is particularly noteworthy in its core segments. The Mechanical Construction segment achieved over 35% revenue growth and a record 12.9% operating margin for the quarter. Similarly, the Electrical Construction segment posted an 18% revenue increase and maintained a strong 11% operating margin.

EMCOR's financial health is further underscored by its growing backlog, with remaining performance obligations reaching $9.0 billion, an 8.6% increase year-over-year. This robust pipeline suggests continued strong performance in the coming quarters.

The company's confidence in its future performance is evident in the significant upward revision of its full-year guidance. The new revenue guidance range of $14.5 billion to $15.0 billion and EPS guidance of $19.00 to $20.00 represent substantial increases from previous forecasts.

Overall, EMCOR's Q2 results and improved outlook paint a picture of a company firing on all cylinders, capitalizing on strong demand across multiple sectors and demonstrating impressive operational efficiency.

Market Research Analyst

EMCOR's stellar Q2 performance reflects broader trends in the construction and building services sectors. The company's success in high-tech and traditional manufacturing, network and communications, institutional and healthcare sectors indicates robust demand across diverse market segments.

Particularly noteworthy is the strong performance in energy efficiency services, building controls installations and retrofit projects within the U.S. Building Services segment. This aligns with the growing emphasis on sustainability and energy efficiency in the built environment, a trend likely to continue driving demand for EMCOR's services.

The company's record-setting performance in Mechanical and Electrical Construction segments, with revenue growth exceeding 35% and 18% respectively, suggests a booming market for specialized construction services. This could be indicative of increased investment in infrastructure and facility upgrades across various industries.

The Industrial Services segment's best post-pandemic Q2 performance points to a recovery in industrial activity, which could be a positive sign for the broader economy. Improved demand for both shop and field services in this segment may indicate increased production and maintenance activities in industrial sectors.

EMCOR's strong pipeline and increased guidance suggest that the company expects these favorable market conditions to persist. This optimistic outlook could be a positive indicator for the construction and industrial services sectors as a whole, potentially signaling continued economic growth and investment in infrastructure and facilities.

Record Quarterly Revenues of $3.67 billion, 20.4% Increase Year-over-Year

Record Quarterly Diluted EPS of $5.25, 78.0% Increase Year-over-Year

Remaining Performance Obligations of $9.0 billion, 8.6% Increase Year-over-Year

Increases 2024 Revenue Guidance Range to $14.5 billion - $15.0 billion from $14.0 billion - $14.5 billion

Increases 2024 Diluted EPS Guidance Range to $19.00 - $20.00 from $15.50 - $16.50

NORWALK, Conn.--(BUSINESS WIRE)-- EMCOR Group, Inc. (NYSE: EME) today reported results for the quarter ended June 30, 2024.

Second Quarter 2024 Results of Operations

For the second quarter of 2024, revenues totaled $3.67 billion, an increase of 20.4%, compared to $3.05 billion for the second quarter of 2023. Net income for the second quarter of 2024 was $247.6 million, or $5.25 per diluted share, compared to $140.6 million, or $2.95 per diluted share, for the second quarter of 2023.

Operating income for the second quarter of 2024 was $332.8 million, or 9.1% of revenues, compared to $196.7 million, or 6.5% of revenues, for the second quarter of 2023. Operating income included depreciation and amortization expense, inclusive of amortization of identifiable intangible assets, of $34.2 million and $29.0 million for the second quarter of 2024 and 2023, respectively.

Selling, general and administrative expenses for the second quarter of 2024 totaled $351.2 million, or 9.6% of revenues, compared to $293.4 million, or 9.6% of revenues, for the second quarter of 2023.

The Company's income tax rate for the second quarter of 2024 was 27.0%, compared to 27.4% for the second quarter of 2023.

Remaining performance obligations as of June 30, 2024 were $9.0 billion compared to $8.3 billion as of June 30, 2023, up $713.1 million year-over-year.

Tony Guzzi, Chairman, President, and Chief Executive Officer of EMCOR, commented, “We had an exceptional first half of the year, the Company maintained its excellent momentum in the second quarter and again set new records across key financial and operational metrics. Demand for EMCOR’s specialty contracting services remains high, further reinforcing our confidence in the trajectory of the business. Our Remaining Performance Obligations are at near record levels, and our pipeline continues to be robust, all supporting our positive outlook for the rest of the year and gives us confidence to increase financial guidance for 2024.”

First Six Months 2024 Results of Operations

Revenues for the first six months of 2024 totaled $7.10 billion, an increase of 19.6%, compared to $5.94 billion for the first six months of 2023. Net income for the first six months of 2024 was $444.7 million, or $9.41 per diluted share, compared to net income of $252.1 million, or $5.28 per diluted share, for the first six months of 2023.

Operating income for the first six months of 2024 was $592.8 million, or 8.3% of revenues, compared to operating income of $351.6 million, or 5.9% of revenues, for the first six months of 2023. Operating income included depreciation and amortization expense, inclusive of amortization of identifiable intangible assets, of $63.8 million and $57.5 million for the first six months of 2024 and 2023, respectively.

Selling, general and administrative expenses totaled $680.5 million, or 9.6% of revenues, for the first six months of 2024, compared $574.5 million, or 9.7% of revenues, for the first six months of 2023.

Mr. Guzzi continued, “Our Electrical and Mechanical Construction segments continued to perform exceptionally well, driving our overall strong performance. With quarterly and year-to-date revenue growth of over 35%, our Mechanical Construction segment generated record revenues and operating income, and a record operating margin of 12.9% for the quarter and 11.8% on a year-to-date basis. Our Electrical Construction segment posted record revenues, with growth of 18% on both a quarterly and year-to-date basis and achieved a record second quarter operating margin, earning over 11% in both the quarter and year-to-date periods. We continue to perform exceptionally well against strong demand across the majority of the sectors we serve, including high-tech and traditional manufacturing, network and communications, institutional, and healthcare. Within our U.S. Building Services segment, which is executing as expected, our mechanical services business continued to deliver exceptional performance with high-single digit operating margins, and low-double digit revenue growth, as strong demand continues for our energy efficiency services, building controls installations and upgrades, and retrofit projects. Our Industrial Services segment reported its best second quarter post-pandemic as improved demand continued for both shop and field services.”

Increases Full Year 2024 Guidance

Based on year-to-date 2024 performance, current operating conditions, and near-term visibility, the Company is:

1. Increasing its full-year 2024 revenue guidance range to $14.5 billion - $15.0 billion, from the prior guidance range of $14.0 billion - $14.5 billion.
2. Increasing its full-year 2024 diluted earnings per share guidance range to $19.00 - $20.00, from the prior guidance range of $15.50 - $16.50.

Mr. Guzzi concluded, “With our strong first half performance, we are again raising our 2024 guidance. We continue to execute well by deploying our resources to serve our customers and believe we are positioned in the right geographies and sectors that have long-term growth prospects. We also continue to deliver for our shareholders by maintaining our focus on operational excellence and balanced capital allocation.”

Second Quarter Earnings Conference Call Information

EMCOR Group's second quarter conference call will be broadcast live via internet today, Thursday, July 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 July 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 impact of claims and litigation, the nature and extent of supply chain disruptions impacting availability and pricing of materials, global conflicts, 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 June 30,							For the six months ended June 30,
			2024			2023				2024			2023
Revenues		$	3,666,897		$	3,045,622			$	7,099,173		$	5,936,054
Cost of sales			2,982,896			2,555,562				5,825,863			5,009,932
Gross profit			684,001			490,060				1,273,310			926,122
Selling, general and administrative expenses			351,193			293,393				680,549			574,545
Operating income			332,808			196,667				592,761			351,577
Net periodic pension income (cost)			221			(282	)			443			(556	)
Interest income (expense), net			6,106			(2,692	)			13,647			(4,524	)
Income before income taxes			339,135			193,693				606,851			346,497
Income tax provision			91,563			53,098				162,130			94,429
Net income		$	247,572		$	140,595			$	444,721		$	252,068
Basic earnings per common share		$	5.27		$	2.97			$	9.45		$	5.30
Diluted earnings per common share		$	5.25		$	2.95			$	9.41		$	5.28
Weighted average shares of common stock outstanding:
Basic			46,972,032			47,393,493				47,053,768			47,584,656
Diluted			47,159,660			47,588,669				47,236,738			47,767,242
Dividends declared per common share		$	0.25		$	0.18			$	0.43		$	0.33

EMCOR GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
		(Unaudited) June 30, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents		$	807,318		$	789,750
Accounts receivable, net			3,459,270			3,203,490
Contract assets			293,677			269,885
Inventories			103,896			110,774
Prepaid expenses and other			76,628			73,072
Total current assets			4,740,789			4,446,971
Property, plant, and equipment, net			201,168			179,378
Operating lease right-of-use assets			331,313			310,498
Goodwill			998,571			956,549
Identifiable intangible assets, net			661,920			586,032
Other assets			138,788			130,293
Total assets		$	7,072,549		$	6,609,721
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	922,002		$	935,967
Contract liabilities			1,783,909			1,595,109
Accrued payroll and benefits			584,113			596,936
Other accrued expenses and liabilities			304,482			315,107
Operating lease liabilities, current			78,726			75,236
Total current liabilities			3,673,232			3,518,355
Operating lease liabilities, long-term			279,465			259,430
Other long-term obligations			374,255			361,121
Total liabilities			4,326,952			4,138,906
Equity:
Total EMCOR Group, Inc. stockholders’ equity			2,744,560			2,469,778
Noncontrolling interests			1,037			1,037
Total equity			2,745,597			2,470,815
Total liabilities and equity		$	7,072,549		$	6,609,721

EMCOR GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2024 and 2023 (In thousands) (Unaudited)
			2024				2023
Cash flows - operating activities:
Net income		$	444,721			$	252,068
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			27,408				25,393
Amortization of identifiable intangible assets			36,412				32,100
Provision for credit losses			12,251				3,115
Non-cash share-based compensation expense			11,371				7,535
Other reconciling items			(5,240	)			(6,800	)
Changes in operating assets and liabilities, excluding the effect of businesses acquired			(114,965	)			(98,479	)
Net cash provided by operating activities			411,958				214,932
Cash flows - investing activities:
Payments for acquisitions of businesses, net of cash acquired			(173,265	)			(22,384	)
Proceeds from sale or disposal of property, plant, and equipment			1,655				10,514
Purchases of property, plant, and equipment			(39,529	)			(36,564	)
Net cash used in investing activities			(211,139	)			(48,434	)
Cash flows - financing activities:
Proceeds from revolving credit facility			—				100,000
Repayments of revolving credit facility			—				(100,000	)
Repayments of finance lease liabilities			(1,393	)			(1,477	)
Dividends paid to stockholders			(20,219	)			(15,714	)
Repurchases of common stock			(149,009	)			(105,299	)
Taxes paid related to net share settlements of equity awards			(11,766	)			(5,295	)
Issuances of common stock under employee stock purchase plan			943				4,441
Payments for contingent consideration arrangements			—				(3,026	)
Net cash used in financing activities			(181,444	)			(126,370	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash			(927	)			5,856
Increase in cash, cash equivalents, and restricted cash			18,448				45,984
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)		$	808,198			$	503,052

_________

(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 $0.9 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of June 30, 2024.

EMCOR GROUP, INC. SEGMENT INFORMATION (In thousands, except for percentages) (Unaudited)
		For the quarters ended June 30,
			2024		% of Total				2023		% of Total
Revenues from unrelated entities:
United States electrical construction and facilities services		$	799,994		22	%		$	678,167		22	%
United States mechanical construction and facilities services			1,655,181		45	%			1,194,113		39	%
United States building services			781,108		21	%			775,012		26	%
United States industrial services			324,047		9	%			292,283		10	%
Total United States operations			3,560,330		97	%			2,939,575		97	%
United Kingdom building services			106,567		3	%			106,047		3	%
Total operations		$	3,666,897		100	%		$	3,045,622		100	%

		For the six months ended June 30,
			2024		% of Total				2023		% of Total
Revenues from unrelated entities:
United States electrical construction and facilities services		$	1,564,705		22	%		$	1,322,913		22	%
United States mechanical construction and facilities services			3,082,846		43	%			2,272,671		38	%
United States building services			1,562,268		22	%			1,500,387		25	%
United States industrial services			678,100		10	%			623,166		11	%
Total United States operations			6,887,919		97	%			5,719,137		96	%
United Kingdom building services			211,254		3	%			216,917		4	%
Total operations		$	7,099,173		100	%		$	5,936,054		100	%

EMCOR GROUP, INC. SEGMENT INFORMATION (In thousands, except for percentages) (Unaudited)
		For the quarters ended June 30,
			2024			% of Segment Revenues				2023			% of Segment Revenues
Operating income (loss):
United States electrical construction and facilities services		$	88,577			11.1	%		$	50,722			7.5	%
United States mechanical construction and facilities services			213,440			12.9	%			119,847			10.0	%
United States building services			46,839			6.0	%			46,137			6.0	%
United States industrial services			12,746			3.9	%			7,887			2.7	%
Total United States operations			361,602			10.2	%			224,593			7.6	%
United Kingdom building services			5,777			5.4	%			5,927			5.6	%
Corporate administration			(34,571	)		—				(33,853	)		—
Total operations			332,808			9.1	%			196,667			6.5	%
Other items:
Net periodic pension income (cost)			221							(282	)
Interest income (expense), net			6,106							(2,692	)
Income before income taxes		$	339,135						$	193,693

		For the six months ended June 30,
			2024			% of Segment Revenues				2023			% of Segment Revenues
Operating income (loss):
United States electrical construction and facilities services		$	180,166			11.5	%		$	91,238			6.9	%
United States mechanical construction and facilities services			364,160			11.8	%			206,074			9.1	%
United States building services			80,298			5.1	%			83,787			5.6	%
United States industrial services			30,712			4.5	%			22,907			3.7	%
Total United States operations			655,336			9.5	%			404,006			7.1	%
United Kingdom building services			11,154			5.3	%			11,351			5.2	%
Corporate administration			(73,729	)		—				(63,780	)		—
Total operations			592,761			8.3	%			351,577			5.9	%
Other items:
Net periodic pension income (cost)			443							(556	)
Interest income (expense), net			13,647							(4,524	)
Income before income taxes		$	606,851						$	346,497

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 and six months ended June 30, 2024.
		For the quarter ended June 30, 2024							For the six months ended June 30, 2024
		$				%			$				%
GAAP revenue growth		$	621,275			20.4	%		$	1,163,119			19.6	%
Incremental revenues from acquisitions			(80,869	)		(2.7	)%			(88,803	)		(1.5	)%
Organic revenue growth, a non-GAAP measure		$	540,406			17.7	%		$	1,074,316			18.1	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725280306/en/

Andrew G. Backman

Vice President

Investor Relations

(203) 849-7938



FTI Consulting, Inc.

Investors: Blake Mueller

(718) 578-3706

Source: EMCOR Group, Inc.

FAQ

What were EMCOR's (EME) key financial results for Q2 2024?

EMCOR reported record quarterly revenues of $3.67 billion, up 20.4% year-over-year, and record quarterly diluted EPS of $5.25, up 78.0% year-over-year for Q2 2024.

How did EMCOR (EME) revise its 2024 financial guidance?

EMCOR increased its 2024 revenue guidance to $14.5-$15.0 billion from $14.0-$14.5 billion, and raised its diluted EPS guidance to $19.00-$20.00 from $15.50-$16.50.

What was EMCOR's (EME) remaining performance obligations value as of June 30, 2024?

EMCOR's remaining performance obligations as of June 30, 2024, were $9.0 billion, an increase of 8.6% compared to $8.3 billion as of June 30, 2023.

Which segments performed particularly well for EMCOR (EME) in Q2 2024?

EMCOR's Mechanical Construction and Electrical Construction segments performed exceptionally well, with Mechanical Construction achieving a record 12.9% operating margin and Electrical Construction posting record revenues with 18% growth.