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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 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate and increasing year over year. Following the results, shares of EMCOR rose 10.1%, during the trading session on Feb 28.
For EMCOR, 2023 marked an exceptional year. The company registered record-breaking results across virtually every metric. Despite facing challenges in the operating environment, the company demonstrated resilience and adaptability. Revenues and operating income saw remarkable growth, driven by success in key sectors such as high-tech manufacturing, network and communications, manufacturing and industrial and healthcare.
EMCOR's growth strategy positions it for long-term success, with organic and inorganic initiatives driving record performance. The company believes it is well-positioned in the right market sectors and geographies to secure complex projects and deliver value to customers. Its record remaining performance obligations offer solid visibility into 2024 despite potential macroeconomic challenges and other factors affecting performance and execution.
Earnings & Revenue Discussion
The company reported adjusted earnings of $4.47 per share, surpassing the Zacks Consensus Estimate of adjusted earnings of $3.51 per share by 27.4%. The metric also increased 70% from the year-ago quarter’s figure of $2.63 per share.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
Revenues were $3.44 billion, surpassing the consensus mark of $3.26 billion by 5.6% and increasing 16.6% year over year. Strength across the segments and market helped the company achieve 16.2% higher organic revenues.
Segment Details
EMCOR currently operates in four reportable segments, which are 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 21.1% year over year to $2.24 billion. Our estimate for the segment's revenues was $2.01 billion. The segment’s reported operating margin expanded by 290 basis points (bps) year over year to 11.7%.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 7% year over year to $763.4 million. Operating income went up 31.3% and margin expanded 190 bps year over year to 10%. The U.S. Mechanical Construction and Facilities Services segment’s revenues rose 29.9% year over year to $1.47 billion. Its operating income rose 77.6%, while its margin expanded 340 bps year over year to 12.6%.
U.S. Building Services: Revenues in the segment were up 12.4% from the prior-year quarter’s levels to $802 million. The upside was backed by strong demand for energy efficiency and retrofit demand driven by indoor air quality projects. Our estimate for this segment’s revenues was $813.8 million, considerably on the upper side of the reported value.
Operating income increased 10.8% year over year and margin contracted 10 bps to 5.2%.
U.S. Industrial Services: This segment’s revenues increased 5.9% year over year to $292.5 million. The reported value was below our model’s expectation of $311.8 million.
Operating income increased by 764.1% to $12.6 million year over year and operating margin expanded 380 bps to 4.3%.
U.K. Building Services: This segment’s revenues declined 4% from the year-ago quarter to $108.8 million. The reported value was below our model’s estimate of $119 million.
Despite a challenging macroeconomic environment, the segment’s operating income increased 22.3% to $5.5 million. The operating margin rose 110 bps to 5% year over year.
Operating Highlights
The gross margin expanded 260 bps year over year to 18% in the quarter. Our estimate for this metric was 16.6%. Selling, general and administrative expenses — as a percentage of revenues — were 9.6% compared with the prior-year quarter’s levels of 9.4%.
Operating income in the quarter amounted to $289.2 million, up 63.2% year over year. The reported figure was above our model’s expectation of $228.3 million.
Despite persistent inflationary and uncertain economic conditions, the operating margin of 8.4% expanded 240 bps from the prior-year quarter’s levels. We expected the metric to be 7%.
Liquidity & Cash Flow
As of Dec 31, 2023, EMCOR had cash and cash equivalents of $789.8 million compared with $456.4 million at 2022 end. Long-term debt and finance lease obligations totaled $2.8 million, marking a significant decline from the 2022-end level of $231.6 million.
In 2023-end, net cash provided by operating activities was $899.7 million, up from $497.9 million in the year-ago period.
The remaining performance obligations at 2023-end increased 18.6% to $8.85 billion year over year.
2023 Highlights
Revenues of the company increased 13.6% from the year-ago level to $12.58 billion. The operating margin increased 190 bps to 7%.
The gross margin improved by 210 bps from the prior year to 16.6% in 2023.
Selling, general and administrative expenses increased 16.6% to $1.2 billion from the previous year.
Earnings per share increased 64.3% from the previous year to $13.31.
2024 Outlook
The company expects annual revenues to range between $13.5 billion and $14 billion.
Earnings per share are expected to be between $14.00 and $15.00.
Quanta Services Inc. (PWR - Free Report) reported better-than-expected results in fourth-quarter 2023, with adjusted earnings and revenues surpassing the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis.
The company continues to experience high demand for its infrastructure solutions that support energy transition initiatives and increase reliability, safety and efficiency. Project activity associated with renewable generation has been going strong and is expected to continue throughout the year.
Martin Marietta Materials, Inc. (MLM - Free Report) reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis. Revenues missed the consensus mark but rose year over year.
MLM anticipates strong demand for infrastructure, large-scale energy and domestic manufacturing projects. This will largely offset weaker residential demand and the anticipated softening in light non-residential activity. With mortgage rates stabilizing and affordability headwinds receding, MLM fully expects single-family residential construction to recover as demand still exceeds supply, particularly in its key markets.
Louisiana-Pacific Corporation (LPX - Free Report) reported impressive fourth-quarter 2023 results. Earnings and net sales beat their respective Zacks Consensus Estimate.
On a year-over-year basis, LPX’s earnings increased on reduced costs and inflationary pressure despite lower net sales.
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EMCOR (EME) Q4 Earnings and Revenues Beat Estimates, Stock Up
EMCOR Group, Inc. (EME - Free Report) reported impressive fourth-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate and increasing year over year. Following the results, shares of EMCOR rose 10.1%, during the trading session on Feb 28.
For EMCOR, 2023 marked an exceptional year. The company registered record-breaking results across virtually every metric. Despite facing challenges in the operating environment, the company demonstrated resilience and adaptability. Revenues and operating income saw remarkable growth, driven by success in key sectors such as high-tech manufacturing, network and communications, manufacturing and industrial and healthcare.
EMCOR's growth strategy positions it for long-term success, with organic and inorganic initiatives driving record performance. The company believes it is well-positioned in the right market sectors and geographies to secure complex projects and deliver value to customers. Its record remaining performance obligations offer solid visibility into 2024 despite potential macroeconomic challenges and other factors affecting performance and execution.
Earnings & Revenue Discussion
The company reported adjusted earnings of $4.47 per share, surpassing the Zacks Consensus Estimate of adjusted earnings of $3.51 per share by 27.4%. The metric also increased 70% from the year-ago quarter’s figure of $2.63 per share.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
EMCOR Group, Inc. price-consensus-eps-surprise-chart | EMCOR Group, Inc. Quote
Revenues were $3.44 billion, surpassing the consensus mark of $3.26 billion by 5.6% and increasing 16.6% year over year. Strength across the segments and market helped the company achieve 16.2% higher organic revenues.
Segment Details
EMCOR currently operates in four reportable segments, which are 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 21.1% year over year to $2.24 billion. Our estimate for the segment's revenues was $2.01 billion. The segment’s reported operating margin expanded by 290 basis points (bps) year over year to 11.7%.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 7% year over year to $763.4 million. Operating income went up 31.3% and margin expanded 190 bps year over year to 10%. The U.S. Mechanical Construction and Facilities Services segment’s revenues rose 29.9% year over year to $1.47 billion. Its operating income rose 77.6%, while its margin expanded 340 bps year over year to 12.6%.
U.S. Building Services: Revenues in the segment were up 12.4% from the prior-year quarter’s levels to $802 million. The upside was backed by strong demand for energy efficiency and retrofit demand driven by indoor air quality projects. Our estimate for this segment’s revenues was $813.8 million, considerably on the upper side of the reported value.
Operating income increased 10.8% year over year and margin contracted 10 bps to 5.2%.
U.S. Industrial Services: This segment’s revenues increased 5.9% year over year to $292.5 million. The reported value was below our model’s expectation of $311.8 million.
Operating income increased by 764.1% to $12.6 million year over year and operating margin expanded 380 bps to 4.3%.
U.K. Building Services: This segment’s revenues declined 4% from the year-ago quarter to $108.8 million. The reported value was below our model’s estimate of $119 million.
Despite a challenging macroeconomic environment, the segment’s operating income increased 22.3% to $5.5 million. The operating margin rose 110 bps to 5% year over year.
Operating Highlights
The gross margin expanded 260 bps year over year to 18% in the quarter. Our estimate for this metric was 16.6%. Selling, general and administrative expenses — as a percentage of revenues — were 9.6% compared with the prior-year quarter’s levels of 9.4%.
Operating income in the quarter amounted to $289.2 million, up 63.2% year over year. The reported figure was above our model’s expectation of $228.3 million.
Despite persistent inflationary and uncertain economic conditions, the operating margin of 8.4% expanded 240 bps from the prior-year quarter’s levels. We expected the metric to be 7%.
Liquidity & Cash Flow
As of Dec 31, 2023, EMCOR had cash and cash equivalents of $789.8 million compared with $456.4 million at 2022 end. Long-term debt and finance lease obligations totaled $2.8 million, marking a significant decline from the 2022-end level of $231.6 million.
In 2023-end, net cash provided by operating activities was $899.7 million, up from $497.9 million in the year-ago period.
The remaining performance obligations at 2023-end increased 18.6% to $8.85 billion year over year.
2023 Highlights
Revenues of the company increased 13.6% from the year-ago level to $12.58 billion. The operating margin increased 190 bps to 7%.
The gross margin improved by 210 bps from the prior year to 16.6% in 2023.
Selling, general and administrative expenses increased 16.6% to $1.2 billion from the previous year.
Earnings per share increased 64.3% from the previous year to $13.31.
2024 Outlook
The company expects annual revenues to range between $13.5 billion and $14 billion.
Earnings per share are expected to be between $14.00 and $15.00.
Zacks Rank
EMCOR currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Construction Releases
Quanta Services Inc. (PWR - Free Report) reported better-than-expected results in fourth-quarter 2023, with adjusted earnings and revenues surpassing the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis.
The company continues to experience high demand for its infrastructure solutions that support energy transition initiatives and increase reliability, safety and efficiency. Project activity associated with renewable generation has been going strong and is expected to continue throughout the year.
Martin Marietta Materials, Inc. (MLM - Free Report) reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis. Revenues missed the consensus mark but rose year over year.
MLM anticipates strong demand for infrastructure, large-scale energy and domestic manufacturing projects. This will largely offset weaker residential demand and the anticipated softening in light non-residential activity. With mortgage rates stabilizing and affordability headwinds receding, MLM fully expects single-family residential construction to recover as demand still exceeds supply, particularly in its key markets.
Louisiana-Pacific Corporation (LPX - Free Report) reported impressive fourth-quarter 2023 results. Earnings and net sales beat their respective Zacks Consensus Estimate.
On a year-over-year basis, LPX’s earnings increased on reduced costs and inflationary pressure despite lower net sales.