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EMCOR (EME) Q4 Earnings and Revenues Beat Estimates, Stock Up
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EMCOR Group, Inc. (EME - Free Report) reported impressive fourth-quarter 2022 results wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased year over year. Following the results, shares of the company jumped 10.6% during the trading session on Feb 23.
Tony Guzzi, chairman, president and CEO of EMCOR, said, “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.”
Earnings & Revenue Discussion
The company reported adjusted earnings of $2.63 per share, surpassing the consensus mark of $2.28 by 15.4% and increasing 39.2% from the year-ago quarter’s figure.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
Revenues totaled $2.95 billion, surpassing the consensus mark of $2.87 billion by 2.8% and rising 11.7% year over year. Organic revenues were up 10.5%, driven by double-digit revenue growth across the U.S. Construction and U.S. Building Services segments.
Segment Details
EMCOR currently operates in four reportable segments — U.S. Construction Services (Electrical and Mechanical Construction and Facilities Services), U.S. Building Services, U.S. Industrial Services and U.K. Building Services.
U.S. Construction Services: This segment's revenues were up 15.1% year over year to $1.86 billion. Segment operating margin increased 40 basis points (bps) year over year to 8.8%.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 30.4% year over year to $713.6 million. Operating income went up 38.9% and margin expanded 50 bps year over year. The U.S. Mechanical Construction and Facilities Services segment’s revenues rose 7.3% from a year ago to $1,142.5 million. Its operating income grew 12.8% and its margin expanded 50 bps year over year.
U.S. Building Services: Revenues in this segment were up 13.5% from the prior-year quarter’s levels to $704.2 million, driven by solid growth in the HVAC projects, repair service, site-based services and building controls. Operating income increased 41.2% year over year and margin improved 110 bps to 5.3%.
U.S. Industrial Services: This unit’s revenues decreased 2.6% year over year to $276.2 million. Operating income plunged 63.4% year over year and operating margin declined 90 bps to 0.5%. The persistent delay in the resumption of the projects caused the decline in this segment.
U.K. Building Services: This segment’s revenues declined 8.5% from the year-ago quarter to $113.3 million. Operating income declined 9.9% and operating margin fell 10 bps year over year to 3.9%. This decline was due to persisting foreign exchange headwinds.
Operating Highlights
Gross margin contracted 10 bps to 15.4% for the quarter compared to the prior-year quarter. Selling, general and administrative expenses — as a percentage of revenues — were 9.4%, down 40 bps from the prior-year quarter’s levels.
Operating income in the quarter amounted to $177.2 million, up 23.9% year over year. The operating margin of 6% expanded 60 bps from the prior-year quarter’s levels due to ongoing supply-chain disruptions and inflationary pressure.
Liquidity & Cash Flow
As of 2022-end, EME had cash and cash equivalents of $456.4 million compared with $821.3 million at 2021-end. Long-term debt and finance lease obligations totaled $231.6 million, marking a significant decline from the 2021-end level of $245.5 million.
In 2022-end, net cash provided by operating activities was $497.9 million, up from $318.8 million in the year-ago period.
The remaining performance obligations at 2022-end increased 33.2% to $7.5 billion year over year.
2022 Highlights
Revenues of the company increased 11.9% from the year-ago level to $11.1 billion. The operating margin declined 30 bps to 5.1%.
Gross margin declined 70 bps from the prior year to 14.5% in 2022.
Selling, general and administrative expenses increased 7% to $1 billion from the previous year.
Earnings per share increased 14.7% from the previous year to $8.10.
2023 Outlook
The company expects annual revenues to range between $12 billion and $12.5 billion.
Earnings per share are expected to be within $8.75-$9.50.
Some better-ranked stocks in the Zacks Construction sector are:
United Rentals, Inc. (URI - Free Report) currently carries a Zacks Rank #2. Shares of URI have gained 39.8% in the past six months. The long-term earnings growth rate of the company is 16.3%.
The Zacks Consensus Estimate for URI’s 2023 sales and EPS suggests growth of 20.3% and 28.3%, respectively, from the year-ago period’s reported levels.
Sterling Infrastructure, Inc. (STRL - Free Report) currently carries a Zacks Rank #2. STRL has a trailing four-quarter earnings surprise of 20%, on average. Shares of the company have gained 38.2% in the past six months.
The Zacks Consensus Estimate for STRL’s 2023 sales and EPS suggests growth of 0.6% and 9.9%, respectively.
Skyline Champion Corporation (SKY - Free Report) currently carries a Zacks Rank #2 (Buy). SKY has a trailing four-quarter earnings surprise of 43.2%, on average. Its shares have rallied 34.7% in the past three months.
The Zacks Consensus Estimate for SKY’s fiscal 2024 sales and EPS suggests decline of 11.7% and 37.9%, respectively, from the year-ago levels.
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EMCOR (EME) Q4 Earnings and Revenues Beat Estimates, Stock Up
EMCOR Group, Inc. (EME - Free Report) reported impressive fourth-quarter 2022 results wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased year over year. Following the results, shares of the company jumped 10.6% during the trading session on Feb 23.
Tony Guzzi, chairman, president and CEO of EMCOR, said, “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.”
Earnings & Revenue Discussion
The company reported adjusted earnings of $2.63 per share, surpassing the consensus mark of $2.28 by 15.4% and increasing 39.2% from the year-ago quarter’s figure.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
EMCOR Group, Inc. price-consensus-eps-surprise-chart | EMCOR Group, Inc. Quote
Revenues totaled $2.95 billion, surpassing the consensus mark of $2.87 billion by 2.8% and rising 11.7% year over year. Organic revenues were up 10.5%, driven by double-digit revenue growth across the U.S. Construction and U.S. Building Services segments.
Segment Details
EMCOR currently operates in four reportable segments — U.S. Construction Services (Electrical and Mechanical Construction and Facilities Services), U.S. Building Services, U.S. Industrial Services and U.K. Building Services.
U.S. Construction Services: This segment's revenues were up 15.1% year over year to $1.86 billion. Segment operating margin increased 40 basis points (bps) year over year to 8.8%.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 30.4% year over year to $713.6 million. Operating income went up 38.9% and margin expanded 50 bps year over year. The U.S. Mechanical Construction and Facilities Services segment’s revenues rose 7.3% from a year ago to $1,142.5 million. Its operating income grew 12.8% and its margin expanded 50 bps year over year.
U.S. Building Services: Revenues in this segment were up 13.5% from the prior-year quarter’s levels to $704.2 million, driven by solid growth in the HVAC projects, repair service, site-based services and building controls. Operating income increased 41.2% year over year and margin improved 110 bps to 5.3%.
U.S. Industrial Services: This unit’s revenues decreased 2.6% year over year to $276.2 million. Operating income plunged 63.4% year over year and operating margin declined 90 bps to 0.5%. The persistent delay in the resumption of the projects caused the decline in this segment.
U.K. Building Services: This segment’s revenues declined 8.5% from the year-ago quarter to $113.3 million. Operating income declined 9.9% and operating margin fell 10 bps year over year to 3.9%. This decline was due to persisting foreign exchange headwinds.
Operating Highlights
Gross margin contracted 10 bps to 15.4% for the quarter compared to the prior-year quarter. Selling, general and administrative expenses — as a percentage of revenues — were 9.4%, down 40 bps from the prior-year quarter’s levels.
Operating income in the quarter amounted to $177.2 million, up 23.9% year over year. The operating margin of 6% expanded 60 bps from the prior-year quarter’s levels due to ongoing supply-chain disruptions and inflationary pressure.
Liquidity & Cash Flow
As of 2022-end, EME had cash and cash equivalents of $456.4 million compared with $821.3 million at 2021-end. Long-term debt and finance lease obligations totaled $231.6 million, marking a significant decline from the 2021-end level of $245.5 million.
In 2022-end, net cash provided by operating activities was $497.9 million, up from $318.8 million in the year-ago period.
The remaining performance obligations at 2022-end increased 33.2% to $7.5 billion year over year.
2022 Highlights
Revenues of the company increased 11.9% from the year-ago level to $11.1 billion. The operating margin declined 30 bps to 5.1%.
Gross margin declined 70 bps from the prior year to 14.5% in 2022.
Selling, general and administrative expenses increased 7% to $1 billion from the previous year.
Earnings per share increased 14.7% from the previous year to $8.10.
2023 Outlook
The company expects annual revenues to range between $12 billion and $12.5 billion.
Earnings per share are expected to be within $8.75-$9.50.
Zacks Rank & Key Picks
EME currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Construction sector are:
United Rentals, Inc. (URI - Free Report) currently carries a Zacks Rank #2. Shares of URI have gained 39.8% in the past six months. The long-term earnings growth rate of the company is 16.3%.
The Zacks Consensus Estimate for URI’s 2023 sales and EPS suggests growth of 20.3% and 28.3%, respectively, from the year-ago period’s reported levels.
Sterling Infrastructure, Inc. (STRL - Free Report) currently carries a Zacks Rank #2. STRL has a trailing four-quarter earnings surprise of 20%, on average. Shares of the company have gained 38.2% in the past six months.
The Zacks Consensus Estimate for STRL’s 2023 sales and EPS suggests growth of 0.6% and 9.9%, respectively.
Skyline Champion Corporation (SKY - Free Report) currently carries a Zacks Rank #2 (Buy). SKY has a trailing four-quarter earnings surprise of 43.2%, on average. Its shares have rallied 34.7% in the past three months.
The Zacks Consensus Estimate for SKY’s fiscal 2024 sales and EPS suggests decline of 11.7% and 37.9%, respectively, from the year-ago levels.