EMCOR Group, Inc. Reports Fourth Quarter and Full-Year 2023 Results

Record Quarterly and Full-Year Revenues of $3.44 billion and $12.58 billion, respectively

Record Quarterly and Full-Year Diluted EPS of $4.47 and $13.31, respectively

Non-GAAP Full-Year Diluted EPS of $13.34

Record Remaining Performance Obligations of $8.85 billion, 18.6% Increase Year-over-Year

2024 Revenues and Diluted EPS Guidance of $13.5 billion - $14.0 billion and $14.00 - $15.00

Board Approves Increase in Quarterly Dividend to $0.25 per share from $0.18 per share

EMCOR Group, Inc. (NYSE: EME) today reported results for the fourth quarter and year ended December 31, 2023.

Fourth Quarter 2023 Results of Operations

For the fourth quarter of 2023, net income was $211.5 million, or $4.47 per diluted share, compared to $126.3 million, or $2.63 per diluted share, for the fourth quarter of 2022. Revenues for the fourth quarter of 2023 totaled $3.44 billion, an increase of 16.6%, compared to $2.95 billion for the fourth quarter of 2022.

Operating income for the fourth quarter of 2023 was $289.2 million, or 8.4% of revenues, compared to $177.2 million, or 6.0% of revenues, for the fourth quarter of 2022. Operating income included depreciation and amortization expense, inclusive of amortization of identifiable intangible assets, of $31.2 million and $28.0 million for the fourth quarter of 2023 and 2022, respectively.

Selling, general and administrative expenses for the fourth quarter of 2023 totaled $328.5 million, or 9.6% of revenues, compared to $277.6 million, or 9.4% of revenues, for the fourth quarter of 2022.

The Company's income tax rate for the fourth quarter of 2023 was 27.5%, compared to 27.4% for the fourth quarter of 2022.

Remaining performance obligations as of December 31, 2023 were a record $8.85 billion compared to $7.46 billion as of December 31, 2022, up approximately $1.39 billion year-over-year.

Full Year 2023 Results of Operations

Revenues for the 2023 full-year period totaled $12.58 billion, an increase of 13.6%, compared to $11.08 billion for the 2022 full-year period. Net income for the 2023 full-year period was $633.0 million, or $13.31 per diluted share, compared to $406.1 million, or $8.10 per diluted share, for the 2022 full-year period. Net income for the 2023 full-year period included a long-lived asset impairment charge of $2.4 million, or $1.7 million after taxes. Excluding this impairment charge, non-GAAP net income for the 2023 full-year period was $634.7 million, or $13.34 per diluted share.

Operating income for the 2023 full-year period was $875.8 million, or 7.0% of revenues, compared to $564.9 million, or 5.1% of revenues, for the 2022 full-year period. Excluding the previously referenced impairment charge, non-GAAP operating income for the 2023 full-year period was $878.1 million, or 7.0% of revenues. Operating income included depreciation and amortization expense, inclusive of amortization of identifiable intangible assets, of $119.0 million and $108.6 million for the 2023 and 2022 full-year periods, respectively.

Refer to the attached tables for a reconciliation of non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP diluted earnings per share to the comparable GAAP measures.

SG&A totaled $1.21 billion, or 9.6% of revenues, for the 2023 full-year period, compared to $1.04 billion, or 9.4% of revenues, for the 2022 full-year period.

The Company's income tax rate for the 2023 full-year period was 27.5%, compared to 27.3% for the 2022 full-year period.

Tony Guzzi, Chairman, President, and Chief Executive Officer of EMCOR, commented, “The Company reported exceptional results for the fourth quarter and full year of 2023, achieving record quarterly and annual revenues, operating income, operating margin, and diluted earnings per share. As we look forward, we continue to expect demand for our services to remain strong, which is reflected in the 18.6% year-over-year increase in our remaining performance obligations.”

Mr. Guzzi added, “Our U.S. Construction segments posted another quarter of exceptional results, concluding an outstanding year. On a combined basis, these segments achieved record revenues and operating income for both the fourth quarter and full year. We remain confident in the future of these businesses given several tailwinds working in our favor, including a strong project pipeline with a solid margin profile. Our U.S. Mechanical Construction segment had a particularly exceptional year with 18.2% annual revenue growth, all of which was organic, driven by strong performance across virtually all end markets. We believe that our investments in building information modeling, prefabrication, digital tools, and robotics have increased our productivity, yielding positive results and enhancing our operational efficiencies across this segment, as evidenced in part by an operating margin of 10.5% for the full year. Our U.S. Electrical Construction segment continued to perform very well as we benefited from consistent strong demand, particularly in the data center market, the energy sector, including several renewable energy projects, and the healthcare market sector, all of which is reflected in the segment’s revenue growth of 14.4% and operating margin of 8.3% for the full year. This segment also benefited from growth within the high-tech manufacturing market sector as demand for our electrical construction services strengthened throughout the year. Our U.S. Building Services segment had another strong year with revenue growth of 13.3% year-over-year. Key end markets remained resilient with energy efficiency and indoor air quality projects driving retrofit demand. Our U.S. Industrial Services segment continued to improve at a measured pace, delivering revenue growth of 4.4% and operating income growth of 79%, year-over-year. Our U.K. Building Services segment reported an operating margin of 5.9% for the full year, despite operating in a challenged macroeconomic environment.”

Full Year 2024 Guidance

Based on expected project mix and our current visibility into the coming year, EMCOR expects full-year 2024 revenues to be between $13.5 billion and $14.0 billion and full-year 2024 diluted earnings per share to be in the range of $14.00 to $15.00.

Mr. Guzzi continued, “2023 was another outstanding year for EMCOR, with record-breaking achievements across virtually every metric. Our revenue and operating income growth was exceptional in 2023, driven by our ability to win and execute well in large, growing market sectors such as high-tech manufacturing, network and communications, manufacturing and industrial, and healthcare, all of which are benefiting from long-term secular trends that require excellence in specialty trade contracting. 2023 was not without its difficulties as the operating environment remained challenging, but we met those challenges with resolve and strong, focused execution, demonstrating the resilience and adaptability of our business as we capitalized on long-term, enduring market trends. Investments in BIM and prefabrication continue to create efficiencies and differentiate us during the bidding process, particularly when coupled with the project-level expertise of our teams in the field and the strength of our balance sheet.”

Mr. Guzzi concluded, “We believe our growth strategy continues to position EMCOR for long-term success, as both our organic and inorganic initiatives are driving record performance. Looking forward, we believe we are positioned in the right market sectors and geographies to continue to win complex projects that allow us an opportunity to perform well for our customers. Our record remaining performance obligations provide solid visibility into 2024, despite some macroeconomic headwinds and other factors that could impact our performance and execution. As always, we will continue to maintain our proven and disciplined approach to capital allocation. We remain focused on returning capital to our shareholders, as evidenced by the latest increase in our dividend, and on investing in the sustainable growth of the Company, both in our existing businesses and through our disciplined acquisition strategy.

We recently signed agreements to acquire several companies that are leaders in their respective offerings and regions, reflecting our strategy of expanding and complementing the capabilities and geographical footprint of our existing businesses to better serve the evolving needs of our customers.”

Dividend Increase

The Company today announced that its Board of Directors has approved an increase to the Company’s regular quarterly dividend to $0.25 per share from $0.18 per share. The Board expects to declare this cash dividend starting in the second quarter of 2024.

Mr. Guzzi said, “This planned dividend increase is a testament to the exceptional execution of our employees, confidence in our business, and solid financial foundation. We believe our strong performance across key end markets positions us for sustained success going into 2024.”

Fourth Quarter Earnings Conference Call Information

EMCOR Group's fourth quarter conference call will be available live via internet broadcast today, Wednesday, February 28, at 10:30 AM Eastern Standard Time. The live call may be accessed through the Company's website at www.emcorgroup.com.

About EMCOR

EMCOR Group, Inc. is a Fortune 500 leader in mechanical and electrical construction services, industrial and energy infrastructure and building services. This press release and other press releases may be viewed at the Company’s website at www.emcorgroup.com. EMCOR routinely posts information that may be important to investors in the “Investor Relations” section of our website at www.emcorgroup.com. Investors and potential investors are encouraged to consult the EMCOR website regularly for important information about EMCOR.

Forward Looking Statements:

This release contains forward-looking statements. Such statements speak only as of February 28, 2024, and EMCOR assumes no obligation to update any such forward-looking statements, unless required by law. These forward-looking statements may include statements regarding anticipated future operating and financial performance, including financial guidance and projections underlying that guidance; the nature and impact of our remaining performance obligations; our ability to be prudent capital allocators; our ability to pursue organic investments and acquisitions; our ability to return capital to shareholders; market opportunities; market growth prospects; customer trends; and project mix. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated (whether expressly or implied) by the forward-looking statements. Accordingly, these statements do not guarantee future performance or events. Applicable risks and uncertainties include, but are not limited to, adverse effects of general economic conditions; domestic and international political developments; changes in the specific markets for EMCOR’s services; adverse business conditions, including labor market tightness and/or disruption, productivity challenges, the nature and extent of supply chain disruptions impacting availability and pricing of materials, and inflationary trends more generally, including fluctuations in energy costs; the impact of legislation and/or government regulations; changes in interest rates; the availability of adequate levels of surety bonding; increased competition; and unfavorable developments in the mix of our business. Certain of the risk factors associated with EMCOR’s business are also discussed in Part I, Item 1A “Risk Factors,” of the Company’s 2023 Form 10-K, and in other reports filed from time to time with the Securities and Exchange Commission and available at www.sec.gov and www.emcorgroup.com. Such risk factors should be taken into account in evaluating our business, including any forward-looking statements.

Non-GAAP Measures:

This release also includes certain financial measures that were not prepared in accordance with U.S. generally accepted accounting principles (GAAP). Reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this release. The Company uses these non-GAAP measures as key performance indicators for the purpose of evaluating performance internally. We also believe that these non-GAAP measures provide investors with useful information with respect to our ongoing operations. Any non-GAAP financial measures presented are not, and should not be viewed as, substitutes for financial measures required by GAAP, have no standardized meaning prescribed by GAAP, and may not be comparable to the calculation of similar measures of other companies.

EMCOR GROUP, INC.

FINANCIAL HIGHLIGHTS



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share information)



 

 

(Unaudited)

 

 

 

 

 

 

For the quarters ended

December 31,

 

For the years ended

December 31,

 

 

2023

 

2022

 

2023

 

2022

Revenues

 

$

3,439,221

 

 

$

2,949,822

 

 

$

12,582,873

 

 

$

11,076,120

 

Cost of sales

 

 

2,821,476

 

 

 

2,495,022

 

 

 

10,493,534

 

 

 

9,472,526

 

Gross profit

 

 

617,745

 

 

 

454,800

 

 

 

2,089,339

 

 

 

1,603,594

 

Selling, general and administrative expenses

 

 

328,549

 

 

 

277,618

 

 

 

1,211,233

 

 

 

1,038,717

 

Impairment loss on long-lived assets

 

 

 

 

 

 

 

 

2,350

 

 

 

 

Operating income

 

 

289,196

 

 

 

177,182

 

 

 

875,756

 

 

 

564,877

 

Net periodic pension (cost) income

 

 

(279

)

 

 

1,023

 

 

 

(1,119

)

 

 

4,311

 

Interest income (expense), net

 

 

2,830

 

 

 

(4,204

)

 

 

(1,784

)

 

 

(10,438

)

Income before income taxes

 

 

291,747

 

 

 

174,001

 

 

 

872,853

 

 

 

558,750

 

Income tax provision

 

 

80,232

 

 

 

47,701

 

 

 

239,524

 

 

 

152,628

 

Net income including noncontrolling interests

 

 

211,515

 

 

 

126,300

 

 

 

633,329

 

 

 

406,122

 

Net (loss) income attributable to noncontrolling interests

 

 

(2

)

 

 

 

 

 

335

 

 

 

 

Net income attributable to EMCOR Group, Inc.

 

$

211,517

 

 

$

126,300

 

 

$

632,994

 

 

$

406,122

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

 

$

4.49

 

 

$

2.65

 

 

$

13.37

 

 

$

8.13

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

$

4.47

 

 

$

2.63

 

 

$

13.31

 

 

$

8.10

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

47,097,762

 

 

 

47,710,479

 

 

 

47,358,467

 

 

 

49,931,940

 

Diluted

 

 

47,331,532

 

 

 

47,936,737

 

 

 

47,564,258

 

 

 

50,136,262

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.18

 

 

$

0.15

 

 

$

0.69

 

 

$

0.54

 

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)



 

 

December 31, 2023

 

December 31, 2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

789,750

 

$

456,439

Accounts receivable, net

 

 

3,203,490

 

 

2,567,371

Contract assets

 

 

269,885

 

 

273,176

Inventories

 

 

110,774

 

 

85,641

Prepaid expenses and other

 

 

73,072

 

 

79,346

Total current assets

 

 

4,446,971

 

 

3,461,973

Property, plant, and equipment, net

 

 

179,378

 

 

157,819

Operating lease right-of-use assets

 

 

310,498

 

 

268,063

Goodwill

 

 

956,549

 

 

919,151

Identifiable intangible assets, net

 

 

586,032

 

 

593,975

Other assets

 

 

130,293

 

 

123,626

Total assets

 

$

6,609,721

 

$

5,524,607

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current maturities of long-term debt and finance lease liabilities

 

$

2,465

 

$

15,567

Accounts payable

 

 

935,967

 

 

849,284

Contract liabilities

 

 

1,595,109

 

 

1,098,263

Accrued payroll and benefits

 

 

596,936

 

 

465,000

Other accrued expenses and liabilities

 

 

312,642

 

 

258,190

Operating lease liabilities, current

 

 

75,236

 

 

67,218

Total current liabilities

 

 

3,518,355

 

 

2,753,522

Long-term debt and finance lease liabilities

 

 

2,838

 

 

231,625

Operating lease liabilities, long-term

 

 

259,430

 

 

220,764

Other long-term obligations

 

 

358,283

 

 

344,405

Total liabilities

 

 

4,138,906

 

 

3,550,316

Equity:

 

 

 

 

Total EMCOR Group, Inc. stockholders’ equity

 

 

2,469,778

 

 

1,973,589

Noncontrolling interests

 

 

1,037

 

 

702

Total equity

 

 

2,470,815

 

 

1,974,291

Total liabilities and equity

 

$

6,609,721

 

$

5,524,607

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2023 and 2022

(In thousands)



 

 

2023

 

2022

Cash flows - operating activities:

 

 

 

 

Net income including noncontrolling interests

 

$

633,329

 

 

$

406,122

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

51,822

 

 

 

47,296

 

Amortization of identifiable intangible assets

 

 

67,143

 

 

 

61,315

 

Provision for credit losses

 

 

7,859

 

 

 

5,166

 

Deferred income taxes

 

 

(16,651

)

 

 

10,483

 

Gain on sale or disposal of property, plant, and equipment

 

 

(2,057

)

 

 

(6,393

)

Non-cash expense for impairment of long-lived assets

 

 

2,350

 

 

 

 

Non-cash share-based compensation expense

 

 

13,739

 

 

 

12,125

 

Other reconciling items

 

 

268

 

 

 

925

 

Changes in operating assets and liabilities, excluding the effect of businesses acquired

 

 

141,853

 

 

 

(39,106

)

Net cash provided by operating activities

 

 

899,655

 

 

 

497,933

 

Cash flows - investing activities:

 

 

 

 

Payments for acquisitions of businesses, net of cash acquired

 

 

(96,491

)

 

 

(98,656

)

Proceeds from sale or disposal of property, plant, and equipment

 

 

13,604

 

 

 

7,145

 

Purchases of property, plant, and equipment

 

 

(78,404

)

 

 

(49,289

)

Net cash used in investing activities

 

 

(161,291

)

 

 

(140,800

)

Cash flows - financing activities:

 

 

 

 

Proceeds from revolving credit facility

 

 

200,000

 

 

 

270,000

 

Repayments of revolving credit facility

 

 

(200,000

)

 

 

(270,000

)

Repayments of long-term debt and debt issuance costs

 

 

(246,171

)

 

 

(13,875

)

Repayments of finance lease liabilities

 

 

(2,776

)

 

 

(3,551

)

Dividends paid to stockholders

 

 

(32,684

)

 

 

(27,187

)

Repurchases of common stock

 

 

(127,713

)

 

 

(660,609

)

Taxes paid related to net share settlements of equity awards

 

 

(6,060

)

 

 

(7,539

)

Issuances of common stock under employee stock purchase plan

 

 

9,189

 

 

 

8,177

 

Payments for contingent consideration arrangements

 

 

(5,839

)

 

 

(5,534

)

Net cash used in financing activities

 

 

(412,054

)

 

 

(710,118

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

 

6,372

 

 

 

(12,515

)

Increase (decrease) in cash, cash equivalents, and restricted cash

 

 

332,682

 

 

 

(365,500

)

Cash, cash equivalents, and restricted cash at beginning of year (1)

 

 

457,068

 

 

 

822,568

 

Cash, cash equivalents, and restricted cash at end of period (1)

 

$

789,750

 

 

$

457,068

 

(1)

 

Includes $0.6 million and $1.2 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of December 31, 2022 and 2021, respectively.

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands)



 

 

(Unaudited)

 

 

For the quarters ended

December 31,

 

 

2023

 

2022

Revenues from unrelated entities:

 

 

 

 

United States electrical construction and facilities services

 

$

763,404

 

$

713,589

United States mechanical construction and facilities services

 

 

1,472,532

 

 

1,133,260

United States building services

 

 

802,029

 

 

713,398

United States industrial services

 

 

292,476

 

 

276,243

Total United States operations

 

 

3,330,441

 

 

2,836,490

United Kingdom building services

 

 

108,780

 

 

113,332

Total operations

 

$

3,439,221

 

$

2,949,822

 

 

 

 

 

 

 

For the years ended

December 31,

 

 

2023

 

2022

Revenues from unrelated entities:

 

 

 

 

United States electrical construction and facilities services

 

$

2,783,723

 

$

2,433,114

United States mechanical construction and facilities services

 

 

5,074,803

 

 

4,292,208

United States building services

 

 

3,120,134

 

 

2,754,953

United States industrial services

 

 

1,167,790

 

 

1,118,767

Total United States operations

 

 

12,146,450

 

 

10,599,042

United Kingdom building services

 

 

436,423

 

 

477,078

Total operations

 

$

12,582,873

 

$

11,076,120

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands)



 

 

(Unaudited)

 

 

For the quarters ended

December 31,

 

 

2023

 

2022

Operating income (loss):

 

 

 

 

United States electrical construction and facilities services

 

$

76,275

 

 

$

58,082

 

United States mechanical construction and facilities services

 

 

186,094

 

 

 

104,780

 

United States building services

 

 

42,052

 

 

 

37,941

 

United States industrial services

 

 

12,642

 

 

 

1,463

 

Total United States operations

 

 

317,063

 

 

 

202,266

 

United Kingdom building services

 

 

5,461

 

 

 

4,466

 

Corporate administration

 

 

(33,328

)

 

 

(29,550

)

Total operations

 

 

289,196

 

 

 

177,182

 

Other items:

 

 

 

 

Net periodic pension (cost) income

 

 

(279

)

 

 

1,023

 

Interest income (expense), net

 

 

2,830

 

 

 

(4,204

)

Income before income taxes

 

$

291,747

 

 

$

174,001

 

 

 

 

 

 

 

 

For the years ended

December 31,

 

 

2023

 

2022

Operating income (loss):

 

 

 

 

United States electrical construction and facilities services

 

$

230,640

 

 

$

148,728

 

United States mechanical construction and facilities services

 

 

530,644

 

 

 

330,325

 

United States building services

 

 

182,995

 

 

 

146,639

 

United States industrial services

 

 

35,375

 

 

 

19,787

 

Total United States operations

 

 

979,654

 

 

 

645,479

 

United Kingdom building services

 

 

25,681

 

 

 

29,838

 

Corporate administration

 

 

(127,229

)

 

 

(110,440

)

Impairment loss on long-lived assets

 

 

(2,350

)

 

 

 

Total operations

 

 

875,756

 

 

 

564,877

 

Other items:

 

 

 

 

Net periodic pension (cost) income

 

 

(1,119

)

 

 

4,311

 

Interest expense, net

 

 

(1,784

)

 

 

(10,438

)

Income before income taxes

 

$

872,853

 

 

$

558,750

 

EMCOR GROUP, INC.

RECONCILIATION OF ORGANIC REVENUE GROWTH

(In thousands, except for percentages) (Unaudited)

The following table provides a reconciliation between organic revenue growth, a non-GAAP measure, and total revenue growth for the quarter and year ended December 31, 2023.

 

 

For the quarter ended December 31, 2023

 

For the year ended December 31, 2023

 

 

$

 

%

 

$

 

%

GAAP revenue growth

 

$

489,399

 

 

16.6

%

 

$

1,506,753

 

 

13.6

%

Incremental revenues from acquisitions

 

 

(10,863

)

 

(0.4

)%

 

 

(107,133

)

 

(1.0

)%

Organic revenue growth, a non-GAAP measure

 

$

478,536

 

 

16.2

%

 

$

1,399,620

 

 

12.6

%

EMCOR GROUP, INC.

RECONCILIATION OF 2023 AND 2022 NON-GAAP MEASURES

(In thousands, except for percentages and per share data) (Unaudited)

In our press release and related presentation, we provide non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP diluted earnings per common share for the years ended December 31, 2023 and 2022. The following tables provide a reconciliation between these amounts determined on a non-GAAP basis and the most directly comparable GAAP measures for such periods.

 

For the years ended

December 31,

 

2023

 

2022

GAAP operating income

$

875,756

 

$

564,877

Impairment loss on long-lived assets

 

2,350

 

 

Non-GAAP operating income

$

878,106

 

$

564,877

 

For the years ended

December 31,

 

2023

 

2022

GAAP operating margin

7.0

%

 

5.1

%

Impairment loss on long-lived assets

0.0

%

 

%

Non-GAAP operating margin

7.0

%

 

5.1

%

 

For the years ended

December 31,

 

2023

 

2022

GAAP net income

$

632,994

 

 

$

406,122

Impairment loss on long-lived assets

 

2,350

 

 

 

Tax effect of impairment loss on long-lived assets

 

(651

)

 

 

Non-GAAP net income

$

634,693

 

 

$

406,122

 

For the years ended

December 31,

 

2023

 

2022

GAAP diluted earnings per common share

$

13.31

 

 

$

8.10

Impairment loss on long-lived assets

 

0.05

 

 

 

Tax effect of impairment loss on long-lived assets

 

(0.01

)

 

 

Non-GAAP diluted earnings per common share

$

13.34

 

 

$

8.10

_________

Amounts presented in this table may not foot due to rounding.

 

Contacts

FOR: EMCOR GROUP, INC.

Andy Backman

Vice President,

Investor Relations

(203) 849-7938

FTI Consulting, Inc.

Investors: Blake Mueller

(718) 578-3706

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