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EMCOR's (EME) Q1 Earnings & Revenues Top Estimates, Stock Up
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EMCOR Group, Inc. (EME - Free Report) reported impressive first-quarter 2022 results wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased year over year. Strong demand for its services across several resilient non-residential market sectors and strength in the U.S. segments drove organic revenue growth by 10.1%.
Following the results, shares of the company jumped 8.6% during the trading session on Apr 27.
Tony Guzzi, chairman, president and CEO of EMCOR, said, “Looking forward at the balance of the year, we will continue to execute with discipline and flexibility. We are positioned well as we advance forward through 2023 and, while supply chain challenges and inflationary pressures still exist, we will continue to adapt to these challenges through better planning, estimating, and resource allocation.”
Earnings & Revenue Discussion
The company reported adjusted earnings of $2.32 per share, surpassing the consensus mark of $1.83 by 26.8% and increasing 66.9% from the year-ago quarter’s figure of $1.39.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
Revenues totaled $2.89 billion, surpassing the consensus mark of $2.87 billion by 0.6% and rising 11.5% year over year. Organic revenues were up 10.1%, 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 13.8% year over year to $1.72 billion, year over year. Segment operating margin increased 220 basis points (bps) year over year to 7.4%.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 23.5% year over year to $644.7 million. Operating income went up 102.7% and margin expanded 250 bps year over year. The U.S. Mechanical Construction and Facilities Services segment’s revenues rose 8.7% from a year ago to $1,078.5 million. Its operating income grew 47.6%, while its margin expanded 210 bps year over year.
U.S. Building Services: Revenues in this segment were up 14.1% from the prior-year quarter’s levels to $725.4 million, driven by its mechanical services division, which continued to experience broad-based growth across all service lines. Operating income increased 55.8% year over year and margin improved 140 bps to 5.2%.
U.S. Industrial Services: This unit’s revenues increased 6.5% year over year to $330.9 million. Operating income grew 13.3% year over year and operating margin increased 20 bps to 4.5%. The modest increases in the demand for its services resulted in the growth of this segment.
U.K. Building Services: This segment’s revenues declined 15.7% from the year-ago quarter to $110.9 million. Operating income declined 48.8% and operating margin contracted 320 bps year over year to 4.9%. This decline was due to persisting foreign exchange headwinds and recessionary pressure.
Operating Highlights
Gross margin contracted 150 bps year over year to 15.1% in the quarter. Selling, general and administrative expenses — as a percentage of revenues — were on par with the prior-year quarter’s levels of 9.7%.
Operating income in the quarter amounted to $154.9 million, up 54.9% year over year. The operating margin of 5.4% expanded 150 bps from the prior-year quarter’s levels due to improved operating performance in segments under United States operations.
Liquidity & Cash Flow
As of Mar 31, 2023, EME had cash and cash equivalents of $420.1 million compared with $456.4 million at 2022-end. Long-term debt and finance lease obligations totaled $231.3 million, almost on par with the 2022-end level of $231.6 million.
At the end of first-quarter 2023, net cash used in operating activities was $84.6 million, compared with $95.8 million in the prior-year quarter.
The remaining performance obligations or RPOs at first-quarter 2023-end increased 32.3% to $7.87 billion year over year.
Updated 2023 View
The company maintained annual revenues guidance range between $12 billion and $12.5 billion.
Earnings per share are now expected to be within $9.25-$10.00, up from the previously expected range of $8.75-$9.50. The effective tax rate is likely to be 27.5% for 2023.
KB Home (KBH - Free Report) reported better-than-expected first-quarter fiscal 2023 (ended Feb 28, 2023) results, defying the challenging housing market conditions. Its earnings and revenues beat the Zacks Consensus Estimate.
KBH’s quarterly revenues were at the high end of its guided range. Both operating and gross margins performed better than expected. KBH’s book value per share grew to $44.80, up 27% from a year ago.
RPM International Inc. (RPM - Free Report) reported third-quarter fiscal 2023 (ended Feb 28, 2023) results, wherein its earnings and sales beat the Zacks Consensus Estimate. Although sales increased, earnings declined year over year.
During the quarter, RPM’s net sales benefited from reshoring and infrastructure spending.
Acuity Brands, Inc. (AYI - Free Report) reported mixed results for second-quarter fiscal 2023 (ended Feb 28, 2023), wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus mark for the 11th consecutive quarter. Revenues missed the same for two quarters in a row, following six straight quarters of beat.
On a year-over-year basis, AYI’s earnings and revenues rose as both lighting and spaces businesses’ sales grew. Adjusted operating profit and adjusted earnings per share increased as well.
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EMCOR's (EME) Q1 Earnings & Revenues Top Estimates, Stock Up
EMCOR Group, Inc. (EME - Free Report) reported impressive first-quarter 2022 results wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased year over year. Strong demand for its services across several resilient non-residential market sectors and strength in the U.S. segments drove organic revenue growth by 10.1%.
Following the results, shares of the company jumped 8.6% during the trading session on Apr 27.
Tony Guzzi, chairman, president and CEO of EMCOR, said, “Looking forward at the balance of the year, we will continue to execute with discipline and flexibility. We are positioned well as we advance forward through 2023 and, while supply chain challenges and inflationary pressures still exist, we will continue to adapt to these challenges through better planning, estimating, and resource allocation.”
Earnings & Revenue Discussion
The company reported adjusted earnings of $2.32 per share, surpassing the consensus mark of $1.83 by 26.8% and increasing 66.9% from the year-ago quarter’s figure of $1.39.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
EMCOR Group, Inc. price-consensus-eps-surprise-chart | EMCOR Group, Inc. Quote
Revenues totaled $2.89 billion, surpassing the consensus mark of $2.87 billion by 0.6% and rising 11.5% year over year. Organic revenues were up 10.1%, 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 13.8% year over year to $1.72 billion, year over year. Segment operating margin increased 220 basis points (bps) year over year to 7.4%.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 23.5% year over year to $644.7 million. Operating income went up 102.7% and margin expanded 250 bps year over year. The U.S. Mechanical Construction and Facilities Services segment’s revenues rose 8.7% from a year ago to $1,078.5 million. Its operating income grew 47.6%, while its margin expanded 210 bps year over year.
U.S. Building Services: Revenues in this segment were up 14.1% from the prior-year quarter’s levels to $725.4 million, driven by its mechanical services division, which continued to experience broad-based growth across all service lines. Operating income increased 55.8% year over year and margin improved 140 bps to 5.2%.
U.S. Industrial Services: This unit’s revenues increased 6.5% year over year to $330.9 million. Operating income grew 13.3% year over year and operating margin increased 20 bps to 4.5%. The modest increases in the demand for its services resulted in the growth of this segment.
U.K. Building Services: This segment’s revenues declined 15.7% from the year-ago quarter to $110.9 million. Operating income declined 48.8% and operating margin contracted 320 bps year over year to 4.9%. This decline was due to persisting foreign exchange headwinds and recessionary pressure.
Operating Highlights
Gross margin contracted 150 bps year over year to 15.1% in the quarter. Selling, general and administrative expenses — as a percentage of revenues — were on par with the prior-year quarter’s levels of 9.7%.
Operating income in the quarter amounted to $154.9 million, up 54.9% year over year. The operating margin of 5.4% expanded 150 bps from the prior-year quarter’s levels due to improved operating performance in segments under United States operations.
Liquidity & Cash Flow
As of Mar 31, 2023, EME had cash and cash equivalents of $420.1 million compared with $456.4 million at 2022-end. Long-term debt and finance lease obligations totaled $231.3 million, almost on par with the 2022-end level of $231.6 million.
At the end of first-quarter 2023, net cash used in operating activities was $84.6 million, compared with $95.8 million in the prior-year quarter.
The remaining performance obligations or RPOs at first-quarter 2023-end increased 32.3% to $7.87 billion year over year.
Updated 2023 View
The company maintained annual revenues guidance range between $12 billion and $12.5 billion.
Earnings per share are now expected to be within $9.25-$10.00, up from the previously expected range of $8.75-$9.50. The effective tax rate is likely to be 27.5% for 2023.
Zacks Rank
EME currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Few Recent Construction Releases
KB Home (KBH - Free Report) reported better-than-expected first-quarter fiscal 2023 (ended Feb 28, 2023) results, defying the challenging housing market conditions. Its earnings and revenues beat the Zacks Consensus Estimate.
KBH’s quarterly revenues were at the high end of its guided range. Both operating and gross margins performed better than expected. KBH’s book value per share grew to $44.80, up 27% from a year ago.
RPM International Inc. (RPM - Free Report) reported third-quarter fiscal 2023 (ended Feb 28, 2023) results, wherein its earnings and sales beat the Zacks Consensus Estimate. Although sales increased, earnings declined year over year.
During the quarter, RPM’s net sales benefited from reshoring and infrastructure spending.
Acuity Brands, Inc. (AYI - Free Report) reported mixed results for second-quarter fiscal 2023 (ended Feb 28, 2023), wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus mark for the 11th consecutive quarter. Revenues missed the same for two quarters in a row, following six straight quarters of beat.
On a year-over-year basis, AYI’s earnings and revenues rose as both lighting and spaces businesses’ sales grew. Adjusted operating profit and adjusted earnings per share increased as well.