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EMCOR's (EME) Q3 Earnings & Revenues Surpass Estimates, Up Y/Y
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EMCOR Group, Inc. (EME - Free Report) reported third-quarter 2022 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased year over year.
Given the solid momentum of the business activity amid a challenging macroeconomic environment, the company has lifted its revenues and earnings per share guidance for 2022.
Shares of the company jumped 4.1% during the trading session but dropped 3% during the after-hour trading session on Oct 27, 2022.
Tony Guzzi, chairman, president and CEO of EMCOR, said, “Our U.S. Construction segments helped drive another quarter of solid top-line growth, up 14% year-over-year on a combined basis. Data center, semiconductor, and fire protection project awards continued to be very strong in the quarter. The supply chain environment remains very challenging and has not improved substantially over recent months.”
EMCOR Group, Inc. Price, Consensus and EPS Surprise
The company reported adjusted earnings of $2.16 per share, surpassing the consensus mark of $2.11 by 2.4% and increasing 16.8% from the year-ago quarter’s figure of $1.85.
Revenues totaled $2.83 billion, surpassing the consensus mark of $2.71 billion by 4.2% and rising 12.1% year over year. Organic revenues were up 10.8%, driven by double-digit revenue growth across the U.S. Construction and U.S. Building Services segments.
Segment Details
The U.S. Construction segment revenues were up 14% year over year to $1.75 billion. Segment operating margin fell 90 basis points (bps) year over year to 7.2%.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 19.3% year over year to $633.4 million. Operating income fell 19.7% and margin contracted 270 bps year over year. The U.S. Mechanical Construction and Facilities Services segment’s revenues rose 11.2% from a year ago to $1,117.4 million. Its operating income grew 12.6%, and its margin expanded 10 bps year over year.
Revenues in the U.S. Building Services segment were up 13.8% from the prior-year quarter’s levels to $710.7 million, driven by solid growth in the HVAC projects, repair service, and energy efficiency projects. Operating income increased 38.7% year over year, and the margin improved 110 bps to 6.4%.
The U.S. Industrial Services unit’s revenues increased 6.5% year over year to $247.2 million. Operating income surged $1.6 million year over year and the operating margin was negative 0.6% against a negative 1.3% a year ago. The segment witnessed delayed turnaround projects as its customers pushed some work into the fourth quarter. Also, the third quarter is typically a seasonally weak quarter in the Industrial Services segment.
The U.K. Building Services segment’s revenues declined 9.1% from the year-ago quarter to $117.7 million. Operating income grew 27.1%, but the operating margin rose 200 bps year over year to 7.1%.
Operating Highlights
Gross margins contracted 50 bps to 14.6% for the quarter. Selling, general and administrative expenses — as a percentage of revenues — of 9.3% improved 40 bps from the prior-year quarter’s levels.
Operating income in the quarter amounted to $150.1 million, up 9.2% year over year. The operating margin of 5.3% contracted 10 bps from the prior-year quarter’s levels due to ongoing supply-chain disruptions and inflationary pressures.
Liquidity & Cash Flow
As of Sep 30, 2022, EME had cash and cash equivalents of $403.8 million compared with $821.3 million at the 2021-end. Long-term debt and finance lease obligations totaled $245.1 million, marking a slight decline from the 2021-end level of $245.45 million.
For the first nine months of 2022, net cash provided by operating activities was $238.4 million, up from $113.9 million in the year-ago period.
The remaining performance obligations at September-end were $7.1 billion, up $1.72 year over year.
2022 Guidance Increased
EMCOR now expects earnings per share within $7.60-$7.85, up from the $7.30-$7.80 projected earlier. It anticipates revenues of approximately $11 billion (up from a prior projection of $10.8 billion). The consensus estimate for earnings is currently pegged at $7.73 per share, and that for revenues is currently estimated at $10.81 billion.
United Rentals, Inc. (URI - Free Report) reported third-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company has been gaining from the sustained demand in its end markets and the strength of its core rental business.
URI also lifted its full-year guidance for total revenues and adjusted EBITDA, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility.
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in third-quarter 2022. Its earnings surpassed the Zacks Consensus Estimate and rose on a year-over-year basis. However, sales declined from the year-ago quarter’s figure and lagged the consensus mark.
For 2022, OTIS expects adjusted net sales to be within $13.4-$13.5 billion, lower than the $13.6-$13.8 billion projected earlier. Adjusted earnings per share are anticipated to be $3.11-$3.15, suggesting 5-7% year-over-year growth. This is down from the prior projection of $3.17-$3.21 per share.
PulteGroup Inc. (PHM - Free Report) reported unimpressive results in third-quarter 2022. Quarterly earnings and revenues missed their respective Zacks Consensus Estimate thanks to prevailing industry headwinds. Nonetheless, the metrics increased on a year-over-year basis.
For fourth-quarter 2022, PHM expects ASP within $560,000-$570,000, indicating an increase from $490,000 registered a year ago. It expects home deliveries to be 8,000, indicating a decline from 8,611 homes delivered a year ago. The decrease reflects the challenging sales environment, higher cancelation rates and the ongoing impact of Hurricane Ian on Florida operations.
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EMCOR's (EME) Q3 Earnings & Revenues Surpass Estimates, Up Y/Y
EMCOR Group, Inc. (EME - Free Report) reported third-quarter 2022 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased year over year.
Given the solid momentum of the business activity amid a challenging macroeconomic environment, the company has lifted its revenues and earnings per share guidance for 2022.
Shares of the company jumped 4.1% during the trading session but dropped 3% during the after-hour trading session on Oct 27, 2022.
Tony Guzzi, chairman, president and CEO of EMCOR, said, “Our U.S. Construction segments helped drive another quarter of solid top-line growth, up 14% year-over-year on a combined basis. Data center, semiconductor, and fire protection project awards continued to be very strong in the quarter. The supply chain environment remains very challenging and has not improved substantially over recent months.”
EMCOR Group, Inc. Price, Consensus and EPS Surprise
EMCOR Group, Inc. price-consensus-eps-surprise-chart | EMCOR Group, Inc. Quote
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Earnings & Revenues Discussion
The company reported adjusted earnings of $2.16 per share, surpassing the consensus mark of $2.11 by 2.4% and increasing 16.8% from the year-ago quarter’s figure of $1.85.
Revenues totaled $2.83 billion, surpassing the consensus mark of $2.71 billion by 4.2% and rising 12.1% year over year. Organic revenues were up 10.8%, driven by double-digit revenue growth across the U.S. Construction and U.S. Building Services segments.
Segment Details
The U.S. Construction segment revenues were up 14% year over year to $1.75 billion. Segment operating margin fell 90 basis points (bps) year over year to 7.2%.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 19.3% year over year to $633.4 million. Operating income fell 19.7% and margin contracted 270 bps year over year. The U.S. Mechanical Construction and Facilities Services segment’s revenues rose 11.2% from a year ago to $1,117.4 million. Its operating income grew 12.6%, and its margin expanded 10 bps year over year.
Revenues in the U.S. Building Services segment were up 13.8% from the prior-year quarter’s levels to $710.7 million, driven by solid growth in the HVAC projects, repair service, and energy efficiency projects. Operating income increased 38.7% year over year, and the margin improved 110 bps to 6.4%.
The U.S. Industrial Services unit’s revenues increased 6.5% year over year to $247.2 million. Operating income surged $1.6 million year over year and the operating margin was negative 0.6% against a negative 1.3% a year ago. The segment witnessed delayed turnaround projects as its customers pushed some work into the fourth quarter. Also, the third quarter is typically a seasonally weak quarter in the Industrial Services segment.
The U.K. Building Services segment’s revenues declined 9.1% from the year-ago quarter to $117.7 million. Operating income grew 27.1%, but the operating margin rose 200 bps year over year to 7.1%.
Operating Highlights
Gross margins contracted 50 bps to 14.6% for the quarter. Selling, general and administrative expenses — as a percentage of revenues — of 9.3% improved 40 bps from the prior-year quarter’s levels.
Operating income in the quarter amounted to $150.1 million, up 9.2% year over year. The operating margin of 5.3% contracted 10 bps from the prior-year quarter’s levels due to ongoing supply-chain disruptions and inflationary pressures.
Liquidity & Cash Flow
As of Sep 30, 2022, EME had cash and cash equivalents of $403.8 million compared with $821.3 million at the 2021-end. Long-term debt and finance lease obligations totaled $245.1 million, marking a slight decline from the 2021-end level of $245.45 million.
For the first nine months of 2022, net cash provided by operating activities was $238.4 million, up from $113.9 million in the year-ago period.
The remaining performance obligations at September-end were $7.1 billion, up $1.72 year over year.
2022 Guidance Increased
EMCOR now expects earnings per share within $7.60-$7.85, up from the $7.30-$7.80 projected earlier. It anticipates revenues of approximately $11 billion (up from a prior projection of $10.8 billion). The consensus estimate for earnings is currently pegged at $7.73 per share, and that for revenues is currently estimated at $10.81 billion.
Zacks Rank & Recent Construction Releases
EMCOR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
United Rentals, Inc. (URI - Free Report) reported third-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company has been gaining from the sustained demand in its end markets and the strength of its core rental business.
URI also lifted its full-year guidance for total revenues and adjusted EBITDA, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility.
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in third-quarter 2022. Its earnings surpassed the Zacks Consensus Estimate and rose on a year-over-year basis. However, sales declined from the year-ago quarter’s figure and lagged the consensus mark.
For 2022, OTIS expects adjusted net sales to be within $13.4-$13.5 billion, lower than the $13.6-$13.8 billion projected earlier. Adjusted earnings per share are anticipated to be $3.11-$3.15, suggesting 5-7% year-over-year growth. This is down from the prior projection of $3.17-$3.21 per share.
PulteGroup Inc. (PHM - Free Report) reported unimpressive results in third-quarter 2022. Quarterly earnings and revenues missed their respective Zacks Consensus Estimate thanks to prevailing industry headwinds. Nonetheless, the metrics increased on a year-over-year basis.
For fourth-quarter 2022, PHM expects ASP within $560,000-$570,000, indicating an increase from $490,000 registered a year ago. It expects home deliveries to be 8,000, indicating a decline from 8,611 homes delivered a year ago. The decrease reflects the challenging sales environment, higher cancelation rates and the ongoing impact of Hurricane Ian on Florida operations.