UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) October 27, 2005
EMCOR Group, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8267 11-2125338
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(Commission File Number) (I.R.S. Employer Identification No.)
301 Merritt Seven, Norwalk, CT 06851
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(Address of Principal Executive Offices) (Zip Code)
(203) 849-7800
(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
__ Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
__ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
__ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
__ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On October 27, 2005, EMCOR Group, Inc. issued a press release disclosing
results of operations for the fiscal 2005 third quarter ended September 30,
2005. A copy of such press release is furnished as Exhibit 99.1 to this Current
Report on Form 8-K.
The information contained in this Current Report on Form 8-K shall not be
deemed to be "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that
Section, nor shall it be incorporated by reference into a filing under the
Securities Act of 1933, or the Exchange Act, except as shall be expressly set
forth by specific reference in such a filing.
Item. 9.01 Financial Statements and Exhibits
(c) Exhibits
Exhibit Number Description
-------------- ---------------------------------------------------------------
99.1 Press Release issued by EMCOR Group, Inc. on October 27, 2005
disclosing results of operations for the fiscal 2005 third
quarter ended September 30, 2005.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EMCOR Group, Inc.
By: /s/ Frank T. MacInnis
-----------------------------
Frank T. MacInnis
Chairman of the Board of
Directors and Chief
Executive Officer
Dated: October 27, 2005
Exhibit 99.1
EMCOR GROUP, INC. REPORTS 2005 THIRD QUARTER RESULTS
- Operating Income increases 40.6% -
- 2005 Revenue and EPS Guidance Increased-
NORWALK, CONNECTICUT, October 27, 2005 - EMCOR Group, Inc. (NYSE: EME) today
reported results for the third quarter and nine months ended September 30, 2005.
For the third quarter of 2005, income from continuing operations increased over
100% to $32.1 million, or $2.01 per diluted share, compared with $15.9 million,
or $1.02 per diluted share, in the third quarter of 2004.
On September 30, 2005, the company disposed of a subsidiary in EMCOR's domestic
facilities services segment at a small after-tax loss for the quarter. The
Company's results of operations for the 2005 third quarter and prior periods
were restated to reflect discontinued operations accounting. Net income for the
2005 third quarter (which includes a loss from discontinued operations of $1.2
million, or $0.08 per diluted share) was $30.9 million, or $1.93 per diluted
share, approximately twice the level of net income of $15.5 million, or $0.99
per diluted share (which included a loss from discontinued operations of $0.4
million, or $0.03 per diluted share) in the year ago quarter.
Revenues in the third quarter of 2005 totaled $1.22 billion, slightly higher
than revenues of $1.21 billion in the year ago period.
For the third quarter of 2005, gross profit was $131.4 million, an increase of
13.9% over gross profit of $115.4 million in the third quarter of 2004. As a
percentage of revenues, gross profit in the 2005 third quarter rose to 10.8%
compared to 9.5% in the year ago period.
Operating income for the 2005 third quarter rose 40.6% to $29.4 million, or 2.4%
of sales, from $20.9 million, or 1.7% of sales in the third quarter of last
year, reflecting the continued improvement in market conditions and the benefit
of restructuring actions previously undertaken by the Company. For the 2005
third quarter, selling, general and administrative expenses ("SG&A") were $101.7
million compared to $96.6 million in the year ago period.
The Company's results for the 2005 third quarter included an income tax benefit
of $17.5 million for income tax reserve adjustments. The effective income tax
rate applicable to pre-tax earnings for the 2005 third quarter was 45.0%
compared to 42.0% for the 2004 third quarter.
The Company's results for the 2004 third quarter included approximately $0.6
million in restructuring expenses, primarily related to its previously announced
management realignment and related initiatives, and a $4.3 million income tax
benefit for income tax reserve adjustments. The Company's 2004 third quarter
results also included a pre-tax gain of $2.8 million on the sale of certain
assets of the equipment rental division of the Company's United Kingdom
subsidiary and a pre-tax gain of $1.8 million on the sale of the UK subsidiary's
interest in a South African facilities management joint venture.
Contract backlog at September 30, 2005 was $2.75 billion, versus $2.96 billion a
year ago, and reflects a continuation of the Company's planned reduction of
public sector construction projects undertaken as it conserves capacity to
participate in the recovery of its private sector markets. Overall backlog grew
slightly in the third quarter of 2005 compared to the previous quarter,
including a $135 million increase in private sector commercial backlog.
For the 2005 nine-month period, income from continuing operations increased
81.8% to $41.8 million, or $2.64 per diluted share, compared to $23.0 million,
or $1.48 per diluted share, in the first nine months of 2004. Including a loss
from discontinued operations of $1.1 million, or $0.07 per diluted share, net
income for the 2005 nine-month period increased 79.9% to $40.7 million, or $2.57
per diluted share, compared to net income of $22.6 million, or $1.46 per diluted
share (which included a loss from discontinued operations of $0.4 million, or
$0.02 per diluted share) in the year ago period.
For the 2005 nine-month period, the company reported revenues of $3.48 billion
versus revenues of $3.49 billion a year ago.
For the first nine months of 2005, operating income more than doubled to $49.9
million, or 1.4% of sales, from $21.0 million, or 0.6% of sales, in the 2004
nine-month period.
Results for the 2005 nine-month period included restructuring expenses of $1.7
million, related to the Company's Canadian and UK operations, as previously
announced, as well as a net $17.5 million income tax benefit for income tax
reserve adjustments.
The Company's results for the 2004 nine-month period included approximately $5.9
million in restructuring expenses, primarily related to its previously announced
management realignment and related initiatives, and a $13.9 million income tax
benefit for reserve adjustments. The Company's 2004 nine-month results also
included pre-tax gains of $2.8 million and $1.8 million as discussed earlier.
Frank T. MacInnis, Chairman and CEO of EMCOR Group, commented, "The third
quarter continued the momentum we have seen in our business throughout 2005.
Performance in most of our operations improved significantly, driven by the
actions we have taken to restructure and refocus our business, as well as the
ongoing recovery we've seen in the markets we serve. The quarter also saw a
continued rebound in demand for higher-margin, discretionary project work that
had been largely absent from the year-ago cycle. These factors, combined with
improved bidding discipline and a shift in revenue mix to include more private
sector projects, led to significant improvements in profitability, most notably
within our U.S. Mechanical, Facilities Services and UK segments."
Mr. MacInnis continued, "A cornerstone of EMCOR's strategy has always been the
maintenance of a strong and liquid balance sheet, and this tradition has
continued in the 2005 third quarter. We ended the period with $68 million in
cash on hand and virtually no debt, having generated $96.8 million in cash flow
from operating activities through the third quarter. As a result, we were able
to successfully renew our $350 million revolving line of credit on improved
terms and with the capability to expand the line to $500 million should the need
arise. We were also successful in replacing a portion of our surety bonding with
a new line of surety credit from Safeco Surety, representing 20% of our surety
bond requirements. Overall, we are in an excellent financial position from which
to continue executing on our strategy."
Mr. MacInnis concluded, "Going forward, we are seeing signs that the broad-based
improvement we've experienced to date should continue. In keeping with our
strategy, the private sector portion of our backlog continues to grow. This,
combined with an ongoing recovery of small task work orders, should result in
continued profitability improvements. Given current market conditions, we now
expect revenues for the 2005 full-year period of approximately $4.7 billion,
compared to the previous guidance range of $4.4 - $4.6 billion, and earnings per
share from continuing operations on a diluted basis for the year of between
$3.45 and $3.60. This increase in anticipated earnings from continuing
operations reflects the net $17.5 million income tax adjustments reported this
quarter; restructuring charges of $1.7 million; and improved expectations for
the financial results from operations for the year as a whole."
EMCOR Group, Inc. is a worldwide leader in mechanical and electrical
construction services and facilities services. This press release and other
press releases may be viewed at the Company's Web site at www.emcorgroup.com.
EMCOR Group's third quarter conference call will be available live via Internet
broadcast today, Thursday, October 27, at 10:30 AM Eastern Daylight Time. You
can access the live call through the Home Page of the Company's Web site at
www.emcorgroup.com.
This release may contain certain forward-looking statements within the meaning
of the Private Securities Reform Act of 1995. Any such comments are based upon
information available to EMCOR management's perception thereof, as of this date,
and EMCOR assumes no obligation to update any such forward-looking statements.
These forward-looking statements may include statements regarding market
opportunities, market share growth, gross profit, project mix, projects with
varying profit margins, and selling, general and administrative expenses. These
forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from the forward-looking statements.
Accordingly these statements are no guarantee of future performance. Such risk
and uncertainties include, but are not limited to, adverse effects of general
economic conditions, changes in the political environment, changes in the
specific markets for EMCOR's services, adverse business conditions, availability
of adequate levels of surety bonding, increased competition, unfavorable labor
productivity, mix of business, and risks associated with foreign operations.
Certain of the risks and factors associated with EMCOR's business are also
discussed in the Company's 2004 Form 10-K, its Form 10-Q for the third quarter
ended September 30, 2005, and in other reports filed from time to time with the
Securities and Exchange Commission. All these risks and factors should be taken
into account in evaluating any forward-looking statements.
-FINANCIAL TABLES FOLLOW-
EMCOR GROUP, INC.
FINANCIAL HIGHLIGHTS
(In thousands, except share and per share information)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
----------------------------- --------------------------------
2005 2004 2005 2004
---- ---- ---- ----
Revenues $1,215,415 $1,211,982 $3,476,661 $3,494,386
Cost of sales 1,084,002 1,096,628 3,133,341 3,178,160
---------- ---------- ---------- ----------
Gross profit 131,413 115,354 343,320 316,226
Selling, general and
administrative expenses 101,708 96,630 291,660 292,133
Restructuring expenses 256 617 1,728 5,936
Gain on sale of assets - 2,839 - 2,839
---------- ---------- ---------- ----------
Operating income 29,449 20,946 49,932 20,996
Interest expense, net (1,358) (2,132) (4,635) (5,550)
Gain on sale of equity investment - 1,844 - 1,844
Minority interest (1,514) (671) (3,366) (1,590)
---------- ---------- ---------- ----------
Income from continuing operations
before income taxes 26,577 19,987 41,931 15,700
Income tax (benefit) provision (5,522) 4,093 111 (7,305)
---------- ---------- ---------- ----------
Income from continuing
operations 32,099 15,894 41,820 23,005
Loss from discontinued operations,
net of income tax effect (1,235) (428) (1,110) (377)
---------- ---------- ---------- ----------
Net income $ 30,864 $ 15,466 $ 40,710 $ 22,628
========== ========== ========== ==========
Basic earnings per share -
continuing operations $ 2.05 $ 1.05 $ 2.69 $ 1.52
Basic earnings per share -
discontinued operations (0.08) (0.03) (0.07) (0.03)
---------- ---------- ---------- ----------
$ 1.97 $ 1.02 $ 2.62 $ 1.49
========== ========== ========== ==========
Diluted earnings per share -
continuing operations $ 2.01 $ 1.02 $ 2.64 $ 1.48
Diluted earnings per share -
discontinued operations (0.08) (0.03) (0.07) (0.02)
---------- ---------- ---------- ----------
$ 1.93 $ 0.99 $ 2.57 $ 1.46
========== ========== ========== ==========
Weighted average shares of Common stock outstanding:
Basic 15,662,585 15,202,938 15,553,948 15,178,938
Diluted 15,988,597 15,562,604 15,860,616 15,551,636
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2005 2004
(Unaudited)
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ASSETS
Current assets:
Cash and cash equivalents $ 67,999 $ 59,109
Accounts receivable, net 1,078,995 1,073,454
Costs and estimated earnings in excess of billings
on uncompleted contracts 218,655 240,716
Inventories 8,747 10,580
Prepaid expenses and other 27,561 41,712
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Total current assets 1,401,957 1,425,571
Investments, notes, and other long-term receivables 30,209 26,472
Property, plant & equipment, net 49,588 56,468
Goodwill 278,907 279,432
Identifiable intangible assets, net 16,262 18,782
Other assets 8,534 11,244
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Total assets $1,785,457 $1,817,969
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings under working capital credit line $ - $ 80,000
Current maturities of long-term debt and capital
lease obligations 739 806
Accounts payable 438,120 467,415
Billings in excess of costs and estimated earnings
on uncompleted contracts 406,350 359,667
Accrued payroll and benefits 134,543 138,771
Other accrued expenses and liabilities 100,808 115,714
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Total current liabilities 1,080,560 1,162,373
Long-term debt and capital lease obligations 1,420 1,332
Other long-term obligations 96,745 91,903
Total stockholders' equity 606,732 562,361
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Total liabilities and stockholders' equity $1,785,457 $1,817,969
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