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EMCOR (EME) Beats on Q2 Earnings & Revenues, Raises View
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EMCOR Group Inc. (EME - Free Report) reported better-than-expected results for second-quarter 2021. Its earnings and revenues surpassed the Zacks Consensus Estimate as well as increased from the prior-year levels. While earnings beat the consensus estimate in nine of the trailing 10 quarters, revenues outpaced the same for four consecutive quarters. The results were mainly driven by solid top-line growth in the U.S. Mechanical Construction and U.S. Building Services segments.
However, following the earnings announcement, shares of the company declined 0.3% during the trading session on Jul 29.
Chairman, president and CEO of EMCOR, Tony Guzzi, said, " The Company once again delivered exceptional performance, with record second quarter revenues, gross profit, operating income, net income, and diluted earnings per share, building upon an already strong start to the year. We achieved outstanding revenue growth of 21.0% year-over-year, 18.4% of which was organic, and our continued operational execution enabled us to deliver a healthy operating income margin of 5.5%."
Earnings & Revenues
EMCOR reported adjusted earnings per share of $1.78 per share, which topped the consensus mark of $1.59 by 11.9% and increased 23.6% from $1.44 in the year-ago level.
Revenues totaled $2,437.7 million, which beat the consensus mark by 6.8%. Revenues surged 21% year over year, mainly on solid performances across its segments.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
For second-quarter 2021, the U.S. Construction segment’s revenues increased 20.6% year over year to $1,448.2 million. Segment operating margin improved 20 basis points (bps) year over year to 8.4%. The upside was primarily driven by driven by broad-based business growth across trade offerings, end market sectors, and a vast geographic footprint.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment revenues increased 19.3% year over year to $489.5 million. Operating margin expanded 100 bps year over year. The U.S. Mechanical Construction and Facilities Services segment revenues grew 21.3% from the prior-year quarter to $958.7 million. However, its operating margin contracted 20 bps.
For the quarter, revenues at the U.S. Building Services segment grew 30.4% year over year to $624.4 million. The upside was primarily driven by commercial site-based and HVAC retrofits, particularly energy efficiency and IAQ projects. Meanwhile, operating margin of 4.9% was down 70 bps from the prior-year level.
The U.S. Industrial Services unit’s second-quarter revenues plunged 2.5% year over year to $235.2 million. This business reported operating margin of (0.1%) against 1.4% a year ago.
The U.K. Building Services segment’s revenues for the quarter increased 39.5% year over year to $129.9 million. The upside was backed by the company’s continuous customer growth and was partially aided by favorable foreign exchange rate movement. However, the business’s operating margin contracted 30 bps to 5.4% from the prior-year level.
Operating Highlights
Selling, general and administrative expenses — as a percentage of revenues — were 10%, down 20 bps from the prior-year quarter.
Adjusted operating margin came in at 5.5%. It was in line with the reported figure in the year-ago quarter.
Liquidity & Cash Flow
As of Jun 30, 2021, the company had cash and cash equivalents of $668.9 million, down from $902.9 million at 2020-end. Long-term debt and finance lease obligations totaled $259.7 million, which remained unchanged from 2020-end.
In the second quarter, EMCOR used $6.9-million cash for operating activities compared with $276.7 million cash provided by operations in the year-ago period.
2021 Guidance Raised
Buoyed by favorable project mix and the assumption that current market conditions will improve, EMCOR lifted its 2021 earnings guidance.
The company now expects earnings per share within $6.65-$7.05 versus 6.35-$6.75 projected earlier. The Zacks Consensus Estimate for the same is currently pegged at $6.73.
EMCOR raised its revenue guidance to nearly $9.5 billion for 2021 from the prior range of $9.2-$9.4 billion. The consensus estimate for 2021 revenues is currently pegged at $9.36 billion.
Image: Bigstock
EMCOR (EME) Beats on Q2 Earnings & Revenues, Raises View
EMCOR Group Inc. (EME - Free Report) reported better-than-expected results for second-quarter 2021. Its earnings and revenues surpassed the Zacks Consensus Estimate as well as increased from the prior-year levels. While earnings beat the consensus estimate in nine of the trailing 10 quarters, revenues outpaced the same for four consecutive quarters. The results were mainly driven by solid top-line growth in the U.S. Mechanical Construction and U.S. Building Services segments.
However, following the earnings announcement, shares of the company declined 0.3% during the trading session on Jul 29.
Chairman, president and CEO of EMCOR, Tony Guzzi, said, " The Company once again delivered exceptional performance, with record second quarter revenues, gross profit, operating income, net income, and diluted earnings per share, building upon an already strong start to the year. We achieved outstanding revenue growth of 21.0% year-over-year, 18.4% of which was organic, and our continued operational execution enabled us to deliver a healthy operating income margin of 5.5%."
Earnings & Revenues
EMCOR reported adjusted earnings per share of $1.78 per share, which topped the consensus mark of $1.59 by 11.9% and increased 23.6% from $1.44 in the year-ago level.
Revenues totaled $2,437.7 million, which beat the consensus mark by 6.8%. Revenues surged 21% year over year, mainly on solid performances across its segments.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
EMCOR Group, Inc. price-consensus-eps-surprise-chart | EMCOR Group, Inc. Quote
Segment Details
For second-quarter 2021, the U.S. Construction segment’s revenues increased 20.6% year over year to $1,448.2 million. Segment operating margin improved 20 basis points (bps) year over year to 8.4%. The upside was primarily driven by driven by broad-based business growth across trade offerings, end market sectors, and a vast geographic footprint.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment revenues increased 19.3% year over year to $489.5 million. Operating margin expanded 100 bps year over year. The U.S. Mechanical Construction and Facilities Services segment revenues grew 21.3% from the prior-year quarter to $958.7 million. However, its operating margin contracted 20 bps.
For the quarter, revenues at the U.S. Building Services segment grew 30.4% year over year to $624.4 million. The upside was primarily driven by commercial site-based and HVAC retrofits, particularly energy efficiency and IAQ projects. Meanwhile, operating margin of 4.9% was down 70 bps from the prior-year level.
The U.S. Industrial Services unit’s second-quarter revenues plunged 2.5% year over year to $235.2 million. This business reported operating margin of (0.1%) against 1.4% a year ago.
The U.K. Building Services segment’s revenues for the quarter increased 39.5% year over year to $129.9 million. The upside was backed by the company’s continuous customer growth and was partially aided by favorable foreign exchange rate movement. However, the business’s operating margin contracted 30 bps to 5.4% from the prior-year level.
Operating Highlights
Selling, general and administrative expenses — as a percentage of revenues — were 10%, down 20 bps from the prior-year quarter.
Adjusted operating margin came in at 5.5%. It was in line with the reported figure in the year-ago quarter.
Liquidity & Cash Flow
As of Jun 30, 2021, the company had cash and cash equivalents of $668.9 million, down from $902.9 million at 2020-end. Long-term debt and finance lease obligations totaled $259.7 million, which remained unchanged from 2020-end.
In the second quarter, EMCOR used $6.9-million cash for operating activities compared with $276.7 million cash provided by operations in the year-ago period.
2021 Guidance Raised
Buoyed by favorable project mix and the assumption that current market conditions will improve, EMCOR lifted its 2021 earnings guidance.
The company now expects earnings per share within $6.65-$7.05 versus 6.35-$6.75 projected earlier. The Zacks Consensus Estimate for the same is currently pegged at $6.73.
EMCOR raised its revenue guidance to nearly $9.5 billion for 2021 from the prior range of $9.2-$9.4 billion. The consensus estimate for 2021 revenues is currently pegged at $9.36 billion.
Zacks Rank
EMCOR — which shares space with Dycom Industries, Inc. (DY - Free Report) , MasTec, Inc. (MTZ - Free Report) and Great Lakes Dredge & Dock Corporation (GLDD - Free Report) in the Zacks Building Products - Heavy Construction industry — currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.