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EMCOR (EME) Q4 Earnings Beat Estimates, Up Y/Y, Shares Rise

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EMCOR Group Inc. (EME - Free Report) reported fourth-quarter 2018 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. In fact, this quarter marked the eighth consecutive earnings beat for the company. Notably, the stock gained nearly 2.5% during yesterday’s trading session, after it provided encouraging guidance for 2019. The company remains optimistic about the opportunities to drive continued growth across business, going forward.

Adjusted earnings during the quarter came in at $1.38 per share, beating the consensus mark of $1.36 by 1.5%. Also, the reported figure increased 53.3% from the year-ago quarter. The improvement was driven by continued strength in U.S. Industrial segments along with improved segmental margins.

EMCOR Group, Inc. Price, Consensus and EPS Surprise

The company generated a record $2.23 billion in revenues, which surpassed the Zacks Consensus Estimate of $2.06 billion by 8.5% and grew 10.8% year over year. The positive performance mainly stemmed from robust revenue performance in U.S. Construction segments.

Segment Details

The U.S. Construction segment maintained its robust momentum on strong revenues. The U.S. Electrical Construction and facilities services segment revenues rose 11.4% year over year. Also, the U.S. Mechanical Construction and facilities services segment revenues increased 2.2% from a year ago during the quarter.

The U.S. Building Services segment revenues grew 10.9% year over year on the back of strong execution in mechanical, energy and commercial site-based services businesses.

The U.S. Industrial Services revenues also increased 44.1% year over year, given improvement in both shop and field services operations, which include turnaround project activity.

Importantly, revenues from total U.S. operations grew 11% year over year to $2.13 billion.

The U.K. Building Services segment also maintained its growth trajectory, with 5.4% year-over-year revenue improvement on continued project activity.

Operating Highlights

Selling, general and administrative expenses, as a percentage of revenues, decreased 30 basis points (bps) to 9.9% from the prior-year figure of 10.2%.

The company’s operating income was $113.6 million during the quarter, significantly higher than $48.1 million in the prior-year period. Operating margin was 5.1%, up 270 bps from the prior-year figure of 2.4%. The upside was mainly driven by exceptional execution of cost-control measures.

Liquidity & Cash Flow

EMCOR’s cash and cash equivalents totaled $363.9 million as of Dec 31, 2018 compared with $467.4 million in the corresponding period of 2017. Long-term debt and capital lease obligations came in at $254.8 million, down from $269.8 million recorded on Dec 31, 2017.

As of Dec 31, 2018, net cash provided by operating activities totaled $271 million compared with $366 million in the comparable year-ago period.

Full-Year 2018 Highlights

In full-year 2018, EMCOR reported adjusted earnings of $4.91 per share, surpassing the Zacks Consensus Estimate of $4.88 by 0.6%. Revenues of $8.13 billion also surpassed the consensus mark of $7.96 billion by 2.1%. On a year-over-year basis, both the top and bottom lines grew 5.8% and 20.9%, respectively. Adjusted operating margins were in line with the prior-year figure of 5%.

2019 Guidance

Buoyed by solid market conditions and favorable project mix, EMCOR has provided its view for full-year 2019 earnings as well as revenues.

The company expects earnings from continuing operations within $4.70-$5.40 a share. EMCOR projects revenues between $8.3 billion and $8.4 billion in 2019.

Zacks Rank & Peer Releases

Currently, EMCOR holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

KB Home (KBH - Free Report) reported fourth-quarter 2018 earnings of 96 cents per share, surpassing the Zacks Consensus Estimate of 93 cents by 3.2%. The reported earnings also increased 14% from the year-ago level of 84 cents.

Lennar Corporation (LEN - Free Report) reported fourth-quarter 2018 earnings of $1.96 per share, surpassing the Zacks Consensus Estimate of $1.93 by 1.6%. Moreover, total revenues increased 70.6% from the prior-year quarter to $6.46 billion.

NVR, Inc. (NVR - Free Report) reported fourth-quarter 2018 earnings of $58.57 per share, beating the consensus mark of $48.46 by 20.9%. The bottom line also improved an impressive 103% on a year-over-year basis. Moreover, total revenues (Homebuilding & Mortgage Banking fees combined) of $1.99 billion increased 10% from the prior-year quarter.

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