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) July 29, 2010
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 06851-1092
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(Address of Principal Executive Offices) (Zip Code)
(203) 849-7800
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(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 July 29, 2010, EMCOR Group, Inc. issued a press release disclosing
results of operations for its fiscal 2010 second quarter ended June 30, 2010. 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
(d) Exhibits
Exhibit Number Description
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99.1 Press Release issued by EMCOR Group, Inc. on July 29, 2010
disclosing results of operations for its fiscal 2010 second
quarter ended June 30, 2010.
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.
Dated: July 30, 2010 By: /s/ Frank T. MacInnis
---------------------------
Frank T. MacInnis
Chairman of the Board of
Directors and Chief
Executive Officer
Exhibit 99.1
FOR: EMCOR GROUP, INC.
CONTACT: R. Kevin Matz
Executive Vice President
Shared Services
(203) 849-7938
FD
Investors: Eric Boyriven / Alexandra Tramont
(212) 850-5600
Linden Alschuler & Kaplan, Inc.
Media: Suzanne Dawson / Cecile Fradkin
212-575-4545
EMCOR GROUP, INC. REPORTS SECOND QUARTER 2010 RESULTS
- Non-GAAP diluted EPS of $0.46 excluding certain
items; $0.40 including certain items -
- Company updates 2010 Non-GAAP diluted EPS guidance to $1.60 to $1.85
excluding certain items; $1.54 to $1.79 including certain items -
NORWALK, CONNECTICUT, July 29, 2010 - EMCOR Group, Inc. (NYSE: EME) today
reported results for the second quarter ended June 30, 2010.
Net income for the second quarter of 2010 was $27.1 million, or $0.40 per
diluted share, compared to net income of $44.8 million, or $0.67 per diluted
share, in the second quarter of 2009. Revenues in the second quarter of 2010
totaled $1.28 billion, compared to $1.42 billion in the second quarter a year
ago.
Including a non-cash impairment charge of $19.9 million, or $0.18 per diluted
share after-tax, resulting from a change in the fair value of trade names
associated with certain prior acquisitions, and restructuring expenses of $0.8
million, operating income for the second quarter of 2010 was $34.9 million, or
2.7% of revenues. Excluding the non-cash impairment charge, the Company's
non-GAAP operating income for the second quarter of 2010 was $54.9 million, or
4.3% of revenues. Operating income in the 2009 second quarter was $74.9 million,
or 5.3% of revenues, which included restructuring expenses of $3.1 million.
Selling, general and administrative expenses (SG&A) decreased 11.9% to $120.7
million, or 9.5% of revenues, in the 2010 second quarter, from $137.0 million,
or 9.6% of revenues, in the same year-ago period.
The Company's results for the 2010 second quarter also included a pretax gain of
$7.9 million, or $0.12 per diluted share from the gain on the sale of the
Company's equity interest in its Middle East venture to its venture partner.
Excluding the non-cash impairment charge and the gain on sale described above,
the Company's non-GAAP net income for the 2010 second quarter was $31.2 million,
or $0.46 per diluted share. Please see the attached tables for a reconciliation
of non-GAAP operating income, non-GAAP net income and non-GAAP diluted earnings
per share to the comparable GAAP figures.
EMCOR Reports Second Quarter Results Page 2
For the second quarter of 2010, net interest expense was $2.4 million, compared
to $0.8 million in the second quarter of 2009, reflecting higher borrowing costs
under the Company's new revolving credit facility.
Inclusive of discrete items, the income tax rate as reported for the second
quarter of 2010 was 30.5%, compared to an income tax rate of 39.1% in the second
quarter of 2009.
Contract backlog as of June 30, 2010 was $3.15 billion, essentially flat when
compared to contract backlog of $3.15 billion as of December 31, 2009 and down
slightly from backlog as of March 31, 2010. Relative to 2009 year-end backlog,
the Company's current backlog reflects growth in the healthcare, industrial and
institutional sectors, which offset declines in the commercial,
hospitality/gaming and transportation markets.
For the first half of 2010, the Company reported net income of $49.0 million, or
$0.72 per diluted share, compared to net income of $81.6 million, or $1.22 per
diluted share in the first half of 2009. Revenues for the first half of 2010
were $2.49 billion, compared to $2.82 billion for the first six months of 2009.
For the first six months of 2010, operating income was $77.3 million, or 3.1% of
revenues, compared to $139.2 million, or 4.9% of revenues, in the comparable
2009 period. Operating income for the 2010 six-month period included the $19.9
million non-cash impairment charge discussed above, as well as restructuring
expenses of $0.8 million. Excluding the non-cash impairment charge, the
Company's non-GAAP operating income for the first half of 2010 was $97.2
million, or 3.9% of revenues. Operating income for the 2009 six-month period
included restructuring expenses of $4.1 million. SG&A for the first half of 2010
was $243.5 million, or 9.8% of revenues, compared to $264.8 million, or 9.4% of
revenues for the first half of 2009.
The Company's results for the first half of 2010 also included the $7.9 million
gain on sale discussed above.
Excluding the non-cash impairment charge and the gain on sale, the Company's
non-GAAP net income for the first half of 2010 was $53.0 million, or $0.78 per
diluted share. Please see the attached tables for a reconciliation of non-GAAP
operating income, non-GAAP net income and non-GAAP diluted earnings per share to
the comparable GAAP figures.
For the 2010 six-month period, net interest expense was $4.8 million, compared
to $1.1 million in the same year ago period, and reflects the acceleration of
expense for debt issuance costs associated with the repayment and termination of
a term loan and the Company's 2005 revolving credit facility, as previously
announced, as well as increased borrowing costs under the Company's new
revolving credit facility.
Inclusive of discrete items, the actual income tax rate for the first half of
2010 was 37.5%, compared to an income tax rate of 40.5% in the first half of
2009. For the 2010 full-year period, the Company anticipates an income tax rate
of approximately 38.0% before consideration of discrete items.
EMCOR Reports Second Quarter Results Page 3
Frank T. MacInnis, Chairman and CEO of EMCOR Group, commented, "The second
quarter reflects continued good performance amid gradually improving market
conditions. As we have done throughout the downturn and recent stabilization, we
remain selective and disciplined in our project bidding efforts and focused on
our operational execution and cost control initiatives. Continued success in
these areas will be essential to margin improvements during these early stages
of recovery."
Mr. MacInnis continued, "We are pleased to see consistently good performance
across our business segments, with our UK operations delivering a particularly
strong improvement in profitability during the period. Portions of our
facilities services segment face a very difficult refining sector market and
this is reflected in their results. Offsetting this, however, was improvement
across the rest of our facilities services segment, as customers begin to
re-visit deferred projects and the unusually hot summer weather began to put
stress on HVAC systems driving higher demand for this segment's services."
Mr. MacInnis concluded, "On balance, 2010 continues to track as expected and the
market dynamics we've seen to date remain in place. We remain committed to
disciplined bidding and strong execution of quality projects that afford
attractive returns. Demand, as evidenced by our backlog, remains largely stable,
reflecting the benefits of the breadth of our operations across both sectors and
geographies, and we expect the bulk of the weather-related benefit in our
facilities services and mechanical segments to be reflected in the third
quarter. We remain well positioned to perform across the market cycle with the
financial strength and flexibility to take advantage of opportunities in the
market as they arise."
The Company noted that, based on the current size and mix of its contract
backlog and assuming a continuation of existing market conditions, it continues
to expect to generate revenues in 2010 of approximately $5 billion and now
expects non-GAAP diluted earnings per share for 2010 of $1.60 to $1.85, before
the above-mentioned impairment and gain on sale items. Including those two
items, the Company expects to generate diluted earnings per share of $1.54 to
$1.79. Please see the attached tables for a reconciliation of non-GAAP diluted
earnings per share to the comparable GAAP figures.
EMCOR Group, Inc. is a Fortune 500(R) worldwide leader in mechanical and
electrical construction services, energy infrastructure 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 second quarter conference call will be available live via internet
broadcast today, Thursday, July 29, 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.
EMCOR Reports Second Quarter Results Page 4
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 and its 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, backlog 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 and mix of business. Certain of the risks and factors associated
with EMCOR's business are also discussed in the Company's 2009 Form 10-K, its
Form 10-Q for the second quarter ended June 30, 2010, 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 Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2010 2009 2010 2009
----------- ----------- ----------- ------------
Revenues $ 1,275,649 $ 1,422,670 $ 2,487,861 $ 2,817,306
Cost of sales 1,099,250 1,207,786 2,146,346 2,409,263
----------- ----------- ----------- ------------
Gross profit 176,399 214,884 341,515 408,043
Selling, general and
administrative expenses 120,725 136,974 243,522 264,769
Restructuring expenses 797 3,050 797 4,110
Impairment loss on identifiable
intangible assets 19,929 -- 19,929 --
----------- ----------- ----------- ------------
Operating income 34,948 74,860 77,267 139,164
Interest expense, net 2,373 814 4,764 1,065
Gain on sale of
equity investment 7,900 -- 7,900 --
----------- ----------- ----------- ------------
Income before income taxes 40,475 74,046 80,403 138,099
Income tax provision 11,919 28,818 29,430 55,500
----------- ----------- ----------- ------------
Net income including
noncontrolling interests 28,556 45,228 50,973 82,599
Less: Net income attributable
to noncontrolling interests 1,415 409 2,015 1,012
----------- ----------- ----------- ------------
Net income attributable
to EMCOR Group, Inc. $ 27,141 $ 44,819 $ 48,958 $ 81,587
=========== =========== =========== ============
Basic earnings per common
share: $ 0.41 $ 0.68 $ 0.74 $ 1.24
=========== =========== =========== ============
Diluted earnings per common
share: $ 0.40 $ 0.67 $ 0.72 $ 1.22
=========== =========== =========== ============
Weighted average shares of
common stock outstanding:
Basic 66,314,596 65,835,298 66,315,338 65,847,911
Diluted 67,971,567 67,262,113 67,934,883 67,142,328
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2010 2009
(Unaudited)
----------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 599,941 $ 726,975
Accounts receivable, net 1,050,509 1,057,171
Costs and estimated earnings in excess of billings
on uncompleted contracts 108,356 90,049
Inventories 31,738 34,468
Prepaid expenses and other 68,818 68,702
---------- ----------
Total current assets 1,859,362 1,977,365
Investments, notes and other long-term receivables 5,698 19,287
Property, plant & equipment, net 87,459 92,057
Goodwill 594,432 593,628
Identifiable intangible assets, net 246,487 264,522
Other assets 22,921 35,035
---------- ----------
Total assets $2,816,359 $2,981,894
========== ==========
LIABILITIES AND EQUITY
Current liabilities:
Borrowings under working capital credit line $ -- $ --
Current maturities of long-term debt and capital
lease obligations 348 45,100
Accounts payable 333,810 379,764
Billings in excess of costs and estimated earnings
on uncompleted contracts 516,247 526,241
Accrued payroll and benefits 157,659 215,967
Other accrued expenses and liabilities 142,233 167,533
---------- ----------
Total current liabilities 1,150,297 1,334,605
Borrowings under working capital credit line 150,000 --
Long-term debt and capital lease obligations 96 150,251
227,503 270,572
---------- ----------
Total liabilities 1,527,896 1,755,428
---------- ----------
Equity:
Total EMCOR Group, Inc. stockholders' equity 1,278,653 1,218,071
Noncontrolling interests 9,810 8,395
---------- ----------
Total equity 1,288,463 1,226,466
---------- ----------
Total liabilities and equity $2,816,359 $2,981,894
========== ==========
EMCOR GROUP, INC.
RECONCILIATION OF 2010 OPERATING INCOME
(In thousands) (Unaudited)
In our press release, we provide actual 2010 second quarter and year-to-date
June 30, 2010 operating income. The following table provides a reconciliation
between 2010 operating income based on non-GAAP measures to the most direct
comparable GAAP measures.
For the Three Months For the Six Months
Ended Ended
June 30, 2010 June 30, 2010
-------------------- ------------------
GAAP Operating income $34,948 $77,267
Impairment loss on identifiable intangible
assets 19,929 19,929
------- -------
Non-GAAP operating income, excluding
impairment loss on identifiable intangible
assets $54,877 $97,196
======= =======
EMCOR GROUP, INC.
RECONCILIATION OF 2010 NET INCOME
(In thousands) (Unaudited)
In our press release, we provide actual 2010 second quarter and year-to-date
June 30, 2010 net income attributable to EMCOR Group, Inc. The following table
provides a reconciliation between 2010 net income attributable to EMCOR Group,
Inc. based on non-GAAP measures to the most direct comparable GAAP measures.
For the Three Months For the Six Months
Ended Ended
June 30, 2010 June 30, 2010
-------------------- ------------------
GAAP net income attributable to EMCOR
Group, Inc. $27,141 $48,958
Qtr.2 impairment loss on identifiable
intangible assets (1) 11,957 11,957
Qtr. 2 gain on sale of equity investment (2) (7,900) (7,900)
------- -------
Non-GAAP net income attributable to EMCOR
Group, Inc., excluding impairment loss on
identifiable intangible assets and gain on sale
of equity investment $31,198 $53,015
======= =======
(1) Amount is net of tax effect of $8.0 million
(2) Amount is net of tax effect which is zero due to
the release of a valuation allowance related to
capital loss carryforwards
EMCOR GROUP, INC.
RECONCILIATION OF THREE AND SIX MONTH 2010 DILUTED
EARNINGS PER SHARE FIGURES
(Unaudited)
In our press release, we provide actual 2010 second quarter and year-to-date
June 30, 2010 diluted earnings per share. The following table provides a
reconciliation between 2010 EPS based on non-GAAP measures to the most direct
comparable GAAP measures.
For the Three Months For the Six Months
Ended Ended
June 30, 2010 June 30, 2010
-------------------- ------------------
GAAP Diluted earnings per common share $0.40 $0.72
Qtr. 2 impairment loss on identifiable
intangible assets (1) $0.18 $0.18
Qtr. 2 gain on sale of equity investment (2) ($0.12) ($0.12)
----- -----
Non-GAAP diluted earnings per common share,
excluding impairment loss on identifiable
intangible assets and gain on sale of
equity investment $0.46 $0.78
===== =====
EMCOR GROUP, INC.
RECONCILIATION OF 2010 DILUTED EARNINGS PER SHARE GUIDANCE
(Unaudited)
In our press release, we provide 2010 diluted earnings per share range guidance
with GAAP and non-GAAP measures. The following table provides a reconciliation
between 2010 guidance based on non-GAAP measures to the most direct comparable
GAAP measures.
GAAP 2010 diluted EPS GAAP guidance range $1.54 - $1.79
2010 year impairment loss on identifiable
intangible assets (1) $0.18 - $0.18
2010 year gain on sale of equity investment (2) ($0.12) - ($0.12)
----- -----
Non-GAAP 2010 diluted EPS guidance range, excluding
impairment loss on identifiable intangible assets and
gain on sale of equity investment $1.60 - $1.85
===== =====
(1) Amount is net of tax effect of $8.0 million
(2) Amount is net of tax effect which is zero due to
the release of a valuation allowance related to
capital loss carryforwards