EMCOR Group, Inc. Reports Fourth Quarter and Full-Year 2022 Results

- Record Quarterly and Full-Year Revenues of $2.95 billion and $11.08 billion, respectively -

- Record Quarterly and Full-Year Diluted EPS of $2.63 and $8.10, respectively -

- Record Remaining Performance Obligations of $7.46 billion, 33.2% Increase Year-over-Year -

- Announces 2023 Revenues and Diluted EPS Guidance of $12.0B - $12.5B and $8.75 - $9.50, respectively -

- Board Approves Increase in Quarterly Dividend to $0.18 per share from $0.15 per share -

EMCOR Group, Inc. (NYSE: EME) today reported results for the fourth quarter and year ended December 31, 2022.

For the fourth quarter of 2022, net income was $126.3 million, or $2.63 per diluted share, compared to $101.7 million, or $1.89 per diluted share, for the fourth quarter of 2021. Revenues for the fourth quarter of 2022 totaled $2.95 billion, an increase of 11.7%, compared to $2.64 billion for the fourth quarter of 2021.

Operating income for the fourth quarter of 2022 was $177.2 million, or 6.0% of revenues, compared to $143.0 million, or 5.4% of revenues, for the fourth quarter of 2021. Operating income included depreciation and amortization expense, inclusive of amortization of identifiable intangible assets, of $28.0 million and $28.2 million for the fourth quarter of 2022 and 2021, respectively.

Selling, general and administrative expenses for the fourth quarter of 2022 totaled $277.6 million, or 9.4% of revenues, compared to $260.0 million, or 9.8% of revenues, for the fourth quarter of 2021.

The Company's income tax rate for the fourth quarter of 2022 was 27.4%, compared to an income tax rate of 28.8% for the fourth quarter of 2021.

Remaining performance obligations as of December 31, 2022 were $7.46 billion compared to $5.60 billion as of December 31, 2021. Remaining performance obligations grew approximately $1.86 billion year-over-year.

Tony Guzzi, Chairman, President and Chief Executive Officer of EMCOR, commented, “The results that we reported today were exceptional, setting a record for quarterly and full year revenues, operating income, and EPS, despite a challenging operating environment. As we look forward, we expect demand for our services to continue to be strong with remaining performance obligations increasing 33.2% year-over-year to a record of $7.46 billion, underscoring the strength of our project pipeline.”

Mr. Guzzi added, “Our U.S. Construction segments posted another quarter of strong results and an outstanding year overall, achieving combined record revenues in the fourth quarter. Notably, our U.S. Mechanical Construction segment had an exceptional year with 9.5% revenue growth, all of which was organic, and operating margins of 7.7% driven by strong execution on various semiconductor, data center, water and wastewater, and healthcare projects. Our utilization of BIM and continued enhancements in our prefabrication capabilities allowed us to deliver our services to customers in a safer and more efficient manner and helped counteract supply chain and inflationary challenges. Our U.S. Electrical Construction segment’s performance strengthened through the year as expected, and we finished the year more in line with our historical performance and expectations. Our U.S. Building Services segment had another excellent year, driven by outstanding performance across the majority of our service lines including repair service, site-based services, building controls, and HVAC projects. Driving much of this work is the demand for improved energy efficiency as energy prices remain volatile and customers' desire to extend the life of their HVAC equipment due to both long equipment lead times and availability issues. In our U.S. Industrial Services segment, revenue grew 13.4% year-over-year all on an organic basis as we continued to experience a resumption in the demand for our services. Our U.K. Building Services segment continues to perform well delivering an operating margin of 6.3% for the year, despite substantial foreign exchange headwinds.”

Revenues for the 2022 full-year period totaled $11.08 billion, an increase of 11.8%, compared to $9.90 billion for the 2021 full-year period. Net income for the 2022 full-year period was $406.1 million, or $8.10 per diluted share, compared to $383.5 million, or $7.06 per diluted share for the 2021 full-year period.

Operating income for the 2022 full-year period was $564.9 million, or 5.1% of revenues, compared to $530.8 million, or 5.4% of revenues, for the 2021 full-year period. Operating income included depreciation and amortization expense, inclusive of amortization of identifiable intangible assets, of $108.6 million and $112.4 million for the 2022 and 2021 full-year periods, respectively.

SG&A totaled $1.04 billion, or 9.4% of revenues, for the 2022 full-year period, compared to $970.9 million, or 9.8% of revenues, for the 2021 full-year period.

Based on expected project mix and our current visibility into the coming year, EMCOR expects full-year 2023 revenues to be between $12.0 billion and $12.5 billion and full-year 2023 diluted earnings per share in the range of $8.75 to $9.50.

Mr. Guzzi concluded, “Our strong operating performance in 2022 was a clear indication of our team’s ability to perform well in a challenging environment. We managed through the significant supply chain disruptions and inflationary pressures that negatively impacted us in 2022. Our field leaders' tenacity and nimbleness coupled with our employees’ technical skill and flexibility drove our record performance. We expect to continue to build on the momentum that we have created over the last few years, with strong demand experienced across important end markets such as semiconductor, healthcare, biotech, pharma, data centers, and energy efficiency retrofits. Notably, our record remaining performance obligations provide us the visibility and confidence that we can achieve another successful year in 2023. Looking ahead, we will continue to execute our balanced capital allocation strategy, utilize our strong balance sheet to make organic investments, pursue strategic acquisition opportunities, and return cash to shareholders through dividends and repurchases.”

Dividend Increase

The Company today announced that its Board of Directors has approved an increase to the Company’s regular quarterly dividend to $0.18 per share from $0.15 per share. The Board expects to declare this cash dividend starting in the second quarter of 2023.

Mr. Guzzi said, "Increasing our dividend is a testament to our very successful fiscal year, our long-term confidence in our business and our solid financial position. We are excited about what the future holds for EMCOR and remain committed to creating long term value for our shareholders.”

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.

EMCOR Group's fourth quarter conference call will be available live via internet broadcast today, Thursday, February 23, at 10:30 AM Eastern Standard Time. The live call may be accessed through the Company's website at www.emcorgroup.com.

Forward Looking Statements:

This release contains certain forward-looking statements. Any such comments speak only as of February 23, 2023 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; our ability to pursue acquisitions; our ability to return capital to shareholders; market opportunities; market growth prospects; and customer trends. 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; changes in interest rates; domestic and international political developments; changes in the specific markets for EMCOR’s services; adverse business conditions, including labor market tightness, 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; the availability of adequate levels of surety bonding; increased competition; unfavorable developments in the mix of our business; and the continuing impact of the COVID-19 pandemic, including the nature, extent, and impact of future variant surges, as well as other health emergencies, and government orders and mandates related thereto, on our revenue and operations. Certain of the risk factors associated with EMCOR’s business are also discussed in Part I, Item 1A “Risk Factors,” of the Company’s 2022 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 any forward-looking statements.

Non-GAAP Measures:

This release may 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

December 31,

 

For the years ended

December 31,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues

 

$

2,949,822

 

 

$

2,640,193

 

 

$

11,076,120

 

 

$

9,903,580

 

Cost of sales

 

 

2,495,022

 

 

 

2,237,151

 

 

 

9,472,526

 

 

 

8,401,843

 

Gross profit

 

 

454,800

 

 

 

403,042

 

 

 

1,603,594

 

 

 

1,501,737

 

Selling, general and administrative expenses

 

 

277,618

 

 

 

260,025

 

 

 

1,038,717

 

 

 

970,937

 

Operating income

 

 

177,182

 

 

 

143,017

 

 

 

564,877

 

 

 

530,800

 

Net periodic pension (cost) income

 

 

1,023

 

 

 

887

 

 

 

4,311

 

 

 

3,625

 

Interest expense, net

 

 

(4,204

)

 

 

(1,157

)

 

 

(10,438

)

 

 

(5,122

)

Income before income taxes

 

 

174,001

 

 

 

142,747

 

 

 

558,750

 

 

 

529,303

 

Income tax provision

 

 

47,701

 

 

 

41,079

 

 

 

152,628

 

 

 

145,602

 

Net income including noncontrolling interests

 

 

126,300

 

 

 

101,668

 

 

 

406,122

 

 

 

383,701

 

Net income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

169

 

Net income attributable to EMCOR Group, Inc.

 

$

126,300

 

 

$

101,668

 

 

$

406,122

 

 

$

383,532

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

 

$

2.65

 

 

$

1.90

 

 

$

8.13

 

 

$

7.09

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

$

2.63

 

 

$

1.89

 

 

$

8.10

 

 

$

7.06

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

47,710,479

 

 

 

53,419,752

 

 

 

49,931,940

 

 

 

54,068,982

 

Diluted

 

 

47,936,737

 

 

 

53,724,800

 

 

 

50,136,262

 

 

 

54,347,534

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.15

 

 

$

0.13

 

 

$

0.54

 

 

$

0.52

 

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

December 31, 2022

 

December 31, 2021

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

456,439

 

$

821,345

Accounts receivable, net

 

 

2,567,371

 

 

2,204,519

Contract assets

 

 

273,176

 

 

230,143

Inventories

 

 

85,641

 

 

54,098

Prepaid expenses and other

 

 

79,346

 

 

80,889

Total current assets

 

 

3,461,973

 

 

3,390,994

Property, plant & equipment, net

 

 

157,819

 

 

152,066

Operating lease right-of-use assets

 

 

268,063

 

 

260,778

Goodwill

 

 

919,151

 

 

890,268

Identifiable intangible assets, net

 

 

593,975

 

 

589,365

Other assets

 

 

123,626

 

 

157,975

Total assets

 

$

5,524,607

 

$

5,441,446

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current maturities of long-term debt and finance lease liabilities

 

$

15,567

 

$

16,235

Accounts payable

 

 

849,284

 

 

734,275

Contract liabilities

 

 

1,098,263

 

 

788,134

Accrued payroll and benefits

 

 

465,000

 

 

490,867

Other accrued expenses and liabilities

 

 

258,190

 

 

274,406

Operating lease liabilities, current

 

 

67,218

 

 

57,814

Total current liabilities

 

 

2,753,522

 

 

2,361,731

Long-term debt and finance lease liabilities

 

 

231,625

 

 

245,450

Operating lease liabilities, long-term

 

 

220,764

 

 

220,836

Other long-term obligations

 

 

344,405

 

 

360,340

Total liabilities

 

 

3,550,316

 

 

3,188,357

Equity:

 

 

 

 

Total EMCOR Group, Inc. stockholders’ equity

 

 

1,973,589

 

 

2,252,387

Noncontrolling interests

 

 

702

 

 

702

Total equity

 

 

1,974,291

 

 

2,253,089

Total liabilities and equity

 

$

5,524,607

 

$

5,441,446

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2022 and 2021

(In thousands)

 

 

 

 

2022

 

 

 

2021

 

Cash flows - operating activities:

 

 

 

 

Net income including noncontrolling interests

 

$

406,122

 

 

$

383,701

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

47,296

 

 

 

48,347

 

Amortization of identifiable intangible assets

 

 

61,315

 

 

 

64,089

 

Provision for credit losses

 

 

5,166

 

 

 

8,041

 

Deferred income taxes

 

 

10,483

 

 

 

9,517

 

Gain on sale or disposal of property, plant and equipment

 

 

(6,393

)

 

 

(782

)

Non-cash share-based compensation expense

 

 

12,125

 

 

 

11,107

 

Other reconciling items

 

 

925

 

 

 

3,156

 

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

 

 

(39,106

)

 

 

(208,359

)

Net cash provided by operating activities

 

 

497,933

 

 

 

318,817

 

Cash flows - investing activities:

 

 

 

 

Payments for acquisitions of businesses, net of cash acquired

 

 

(98,656

)

 

 

(118,239

)

Proceeds from sale or disposal of property, plant and equipment

 

 

7,145

 

 

 

2,754

 

Purchases of property, plant and equipment

 

 

(49,289

)

 

 

(36,192

)

Investments in and advances to unconsolidated entities

 

 

 

 

 

(1,595

)

Distributions from unconsolidated entities

 

 

 

 

 

196

 

Net cash used in investing activities

 

 

(140,800

)

 

 

(153,076

)

Cash flows - financing activities:

 

 

 

 

Proceeds from revolving credit facility

 

 

270,000

 

 

 

 

Repayments of revolving credit facility

 

 

(270,000

)

 

 

 

Repayments of long-term debt

 

 

(13,875

)

 

 

(13,875

)

Repayments of finance lease liabilities

 

 

(3,551

)

 

 

(4,189

)

Dividends paid to stockholders

 

 

(27,187

)

 

 

(28,163

)

Repurchases of common stock

 

 

(660,609

)

 

 

(195,546

)

Taxes paid related to net share settlements of equity awards

 

 

(7,539

)

 

 

(4,210

)

Issuances of common stock under employee stock purchase plan

 

 

8,177

 

 

 

7,328

 

Payments for contingent consideration arrangements

 

 

(5,534

)

 

 

(6,758

)

Distributions to noncontrolling interests

 

 

 

 

 

(43

)

Net cash used in financing activities

 

 

(710,118

)

 

 

(245,456

)

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

 

 

(12,515

)

 

 

(1,279

)

Decrease in cash, cash equivalents, and restricted cash

 

 

(365,500

)

 

 

(80,994

)

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

 

 

822,568

 

 

 

903,562

 

Cash, cash equivalents, and restricted cash at end of period (1)

 

$

457,068

 

 

$

822,568

 

(1)

Includes $0.6 million, $1.2 million, and $0.7 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of December 31, 2022, 2021, and 2020, respectively.

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands)

 

 

 

(Unaudited)

 

 

For the quarters ended

December 31,

 

 

 

2022

 

 

2021

Revenues from unrelated entities:

 

 

 

 

United States electrical construction and facilities services

 

$

713,589

 

$

547,418

United States mechanical construction and facilities services

 

 

1,142,469

 

 

1,065,014

United States building services

 

 

704,189

 

 

620,255

United States industrial services

 

 

276,243

 

 

283,644

Total United States operations

 

 

2,836,490

 

 

2,516,331

United Kingdom building services

 

 

113,332

 

 

123,862

Total operations

 

$

2,949,822

 

$

2,640,193

 

 

 

 

 

 

 

For the years ended

December 31,

 

 

 

2022

 

 

2021

Revenues from unrelated entities:

 

 

 

 

United States electrical construction and facilities services

 

$

2,433,114

 

$

2,029,893

United States mechanical construction and facilities services

 

 

4,326,674

 

 

3,952,586

United States building services

 

 

2,720,487

 

 

2,424,743

United States industrial services

 

 

1,118,767

 

 

986,407

Total United States operations

 

 

10,599,042

 

 

9,393,629

United Kingdom building services

 

 

477,078

 

 

509,951

Total operations

 

$

11,076,120

 

$

9,903,580

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands)

 

 

 

(Unaudited)

 

 

For the quarters ended

December 31,

 

 

 

2022

 

 

 

2021

 

Operating income (loss):

 

 

 

 

United States electrical construction and facilities services

 

$

58,082

 

 

$

41,807

 

United States mechanical construction and facilities services

 

 

105,723

 

 

 

93,723

 

United States building services

 

 

36,998

 

 

 

26,201

 

United States industrial services

 

 

1,463

 

 

 

3,997

 

Total United States operations

 

 

202,266

 

 

 

165,728

 

United Kingdom building services

 

 

4,466

 

 

 

4,958

 

Corporate administration

 

 

(29,550

)

 

 

(27,669

)

Total operations

 

 

177,182

 

 

 

143,017

 

Other items:

 

 

 

 

Net periodic pension (cost) income

 

 

1,023

 

 

 

887

 

Interest expense, net

 

 

(4,204

)

 

 

(1,157

)

Income before income taxes

 

$

174,001

 

 

$

142,747

 

 

 

 

 

 

 

 

For the years ended

December 31,

 

 

 

2022

 

 

 

2021

 

Operating income (loss):

 

 

 

 

United States electrical construction and facilities services

 

$

148,728

 

 

$

169,355

 

United States mechanical construction and facilities services

 

 

332,294

 

 

 

314,420

 

United States building services

 

 

144,670

 

 

 

122,724

 

United States industrial services

 

 

19,787

 

 

 

(1,666

)

Total United States operations

 

 

645,479

 

 

 

604,833

 

United Kingdom building services

 

 

29,838

 

 

 

27,998

 

Corporate administration

 

 

(110,440

)

 

 

(102,031

)

Total operations

 

 

564,877

 

 

 

530,800

 

Other items:

 

 

 

 

Net periodic pension (cost) income

 

 

4,311

 

 

 

3,625

 

Interest expense, net

 

 

(10,438

)

 

 

(5,122

)

Income before income taxes

 

$

558,750

 

 

$

529,303

 

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 year ended December 31, 2022.

 

 

For the quarter ended December 31, 2022

 

For the year ended December 31, 2022

 

 

$

 

%

 

$

 

%

GAAP revenue growth

 

$309,629

 

11.7 %

 

$1,172,540

 

11.8 %

Incremental revenues from acquisitions

 

(33,709)

 

(1.2)%

 

(149,729)

 

(1.5)%

Organic revenue growth, a non-GAAP measure

 

$275,920

 

10.5 %

 

$1,022,811

 

10.3 %

 

Contacts

R. Kevin Matz

Executive Vice President

Shared Services

(203) 849-7938

FTI Consulting, Inc.

Investors: Blake Mueller

(718) 578-3706

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