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EMCOR (EME) Q1 Earnings Beat, Revenues Up Y/Y, View Raised
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EMCOR Group, Inc. (EME - Free Report) reported impressive results for the first quarter of 2024. Its earnings surpassed the Zacks Consensus Estimate and increased year over year, backed by its focus on operational excellence.
Revenues also grew from the previous year due to a continued strong mix and pipeline of projects in large and growing market sectors with long-term secular trends, including high-tech and traditional manufacturing and network & communications.
Following the results, shares of EMCOR rose 3.1%, during the trading session on Apr 25.
Despite facing challenges in the operating environment, the company demonstrated resilience and adaptability. A significant year-over-year increase in EME’s remaining performance obligations and a healthy project pipeline provided it with strong visibility into the rest of the year and helped it increase guidance for 2024.
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.
Earnings & Revenues Discussion
The company reported adjusted earnings per share (EPS) of $4.17, handily surpassing the Zacks Consensus Estimate of $2.92 by 42.8%. The metric also increased 79.7% from the year-ago quarter’s figure of $2.32 per share.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
Revenues of $3.43 billion increased 18.7% year over year from $2.89 billion. Strength across the segments helped the company achieve 18.5% 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 27.2% year over year to $2.19 billion. The company witnessed strong demand across many of the markets served. In fact, it had an outstanding performance in some of the most demanding projects for the most sophisticated customers.
The segment’s operating income rose 91.2%, and the margin expanded 370 basis points (bps) year over year to 11.1%.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 18.6% year over year to $764.7 million. Operating income went up 126.1%, and margin expanded 570 bps year over year to 12%. The U.S. Mechanical Construction and Facilities Services segment’s revenues rose 32.4% year over year to $1.43 billion. The company’s operating income rose 74.8%, and its margin expanded 260 bps year over year to 10.6%.
U.S. Building Services: Revenues in the segment were up 7.7% from the prior-year quarter’s levels to $781.2 million. The upside was backed by a strong mechanical services business and solid demand for its energy efficiency, building controls and retrofit projects. Operating income decreased 11.1% year over year, and the margin contracted 90 bps to 4.3%.
U.S. Industrial Services: This segment’s revenues increased 7% year over year to $354 million. EMCOR continues to see improved demand for its services and has completed some of the largest turnarounds in the past five years. Operating income increased 19.6%, and the margin expanded 60 bps to 5.1%.
U.K. Building Services: This segment’s revenues declined 5.6% from the year-ago quarter to $104.7 million. The segment’s operating income fell 0.9%, but the margin rose 30 bps to 5.1% year over year.
Operating Highlights
The gross margin expanded 210 bps year over year to 17.2% in the quarter. Selling, general and administrative expenses — as a percentage of revenues — were 9.6% compared with the prior-year quarter’s levels of 9.7%.
Operating margin in the quarter was 7.6%, up 220 bps from 5.4% year over year.
Liquidity & Cash Flow
As of Mar 31, 2024, EMCOR had cash and cash equivalents of $841 million compared with $789.8 million at 2023-end. Total long-term obligations totaled $640.5 million, up from the 2023-end level of $620.6 million.
In the reported quarter, net cash provided by operating activities was $132.3 million versus net cash used in operating activities of $84.6 million in the year-ago period.
The remaining performance obligations, or RPOs, at the first-quarter end, increased 16.5% to $9.18 billion year over year.
2024 Outlook Revised
The company now expects annual revenues between $14 billion and $14.5 billion compared with $13.5 billion and $14 billion expected earlier. In 2023, it reported $12.58 billion in annual revenues.
EPS is now expected to be within $15.50-$16.50 versus $14.00-$15.00 projected earlier and $13.31 reported in 2023.
Owens Corning (OC - Free Report) reported impressive results in first-quarter 2024, with earnings and net sales surpassing the Zacks Consensus Estimate.
Earnings increased on a year-over-year basis despite a net sales decline. Sales declined due to lower sales volumes in the Insulation and Composites segments.
Masco Corporation (MAS - Free Report) reported mixed results for first-quarter 2024, wherein earnings surpassed the Zacks Consensus Estimate, but net sales lagged the same. On a year-over-year basis earnings increased despite net sales decline. Strong operational efficiency helped it deliver solid earnings.
Masco’s focus on a balanced capital deployment strategy helped it return $212 million to shareholders via dividends and share repurchases.
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in first-quarter 2024, wherein its earnings surpassed the Zacks Consensus Estimate but net sales missed the same. The top and bottom lines grew on a year-over-year basis.
Its quarterly results reflected 14 consecutive quarters of organic sales growth and the results were marked by a high-teens growth in adjusted EPS. Thanks to the strength in modernization, the company witnessed orders growth of more than 10%, leading to mid-teens backlog growth.
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EMCOR (EME) Q1 Earnings Beat, Revenues Up Y/Y, View Raised
EMCOR Group, Inc. (EME - Free Report) reported impressive results for the first quarter of 2024. Its earnings surpassed the Zacks Consensus Estimate and increased year over year, backed by its focus on operational excellence.
Revenues also grew from the previous year due to a continued strong mix and pipeline of projects in large and growing market sectors with long-term secular trends, including high-tech and traditional manufacturing and network & communications.
Following the results, shares of EMCOR rose 3.1%, during the trading session on Apr 25.
Despite facing challenges in the operating environment, the company demonstrated resilience and adaptability. A significant year-over-year increase in EME’s remaining performance obligations and a healthy project pipeline provided it with strong visibility into the rest of the year and helped it increase guidance for 2024.
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.
Earnings & Revenues Discussion
The company reported adjusted earnings per share (EPS) of $4.17, handily surpassing the Zacks Consensus Estimate of $2.92 by 42.8%. The metric also increased 79.7% from the year-ago quarter’s figure of $2.32 per share.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
EMCOR Group, Inc. price-consensus-eps-surprise-chart | EMCOR Group, Inc. Quote
Revenues of $3.43 billion increased 18.7% year over year from $2.89 billion. Strength across the segments helped the company achieve 18.5% 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 27.2% year over year to $2.19 billion. The company witnessed strong demand across many of the markets served. In fact, it had an outstanding performance in some of the most demanding projects for the most sophisticated customers.
The segment’s operating income rose 91.2%, and the margin expanded 370 basis points (bps) year over year to 11.1%.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 18.6% year over year to $764.7 million. Operating income went up 126.1%, and margin expanded 570 bps year over year to 12%. The U.S. Mechanical Construction and Facilities Services segment’s revenues rose 32.4% year over year to $1.43 billion. The company’s operating income rose 74.8%, and its margin expanded 260 bps year over year to 10.6%.
U.S. Building Services: Revenues in the segment were up 7.7% from the prior-year quarter’s levels to $781.2 million. The upside was backed by a strong mechanical services business and solid demand for its energy efficiency, building controls and retrofit projects. Operating income decreased 11.1% year over year, and the margin contracted 90 bps to 4.3%.
U.S. Industrial Services: This segment’s revenues increased 7% year over year to $354 million. EMCOR continues to see improved demand for its services and has completed some of the largest turnarounds in the past five years. Operating income increased 19.6%, and the margin expanded 60 bps to 5.1%.
U.K. Building Services: This segment’s revenues declined 5.6% from the year-ago quarter to $104.7 million. The segment’s operating income fell 0.9%, but the margin rose 30 bps to 5.1% year over year.
Operating Highlights
The gross margin expanded 210 bps year over year to 17.2% in the quarter. Selling, general and administrative expenses — as a percentage of revenues — were 9.6% compared with the prior-year quarter’s levels of 9.7%.
Operating margin in the quarter was 7.6%, up 220 bps from 5.4% year over year.
Liquidity & Cash Flow
As of Mar 31, 2024, EMCOR had cash and cash equivalents of $841 million compared with $789.8 million at 2023-end. Total long-term obligations totaled $640.5 million, up from the 2023-end level of $620.6 million.
In the reported quarter, net cash provided by operating activities was $132.3 million versus net cash used in operating activities of $84.6 million in the year-ago period.
The remaining performance obligations, or RPOs, at the first-quarter end, increased 16.5% to $9.18 billion year over year.
2024 Outlook Revised
The company now expects annual revenues between $14 billion and $14.5 billion compared with $13.5 billion and $14 billion expected earlier. In 2023, it reported $12.58 billion in annual revenues.
EPS is now expected to be within $15.50-$16.50 versus $14.00-$15.00 projected earlier and $13.31 reported in 2023.
Zacks Rank & Recent Construction Releases
EMCOR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Owens Corning (OC - Free Report) reported impressive results in first-quarter 2024, with earnings and net sales surpassing the Zacks Consensus Estimate.
Earnings increased on a year-over-year basis despite a net sales decline. Sales declined due to lower sales volumes in the Insulation and Composites segments.
Masco Corporation (MAS - Free Report) reported mixed results for first-quarter 2024, wherein earnings surpassed the Zacks Consensus Estimate, but net sales lagged the same. On a year-over-year basis earnings increased despite net sales decline. Strong operational efficiency helped it deliver solid earnings.
Masco’s focus on a balanced capital deployment strategy helped it return $212 million to shareholders via dividends and share repurchases.
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in first-quarter 2024, wherein its earnings surpassed the Zacks Consensus Estimate but net sales missed the same. The top and bottom lines grew on a year-over-year basis.
Its quarterly results reflected 14 consecutive quarters of organic sales growth and the results were marked by a high-teens growth in adjusted EPS. Thanks to the strength in modernization, the company witnessed orders growth of more than 10%, leading to mid-teens backlog growth.