EMCOR Group Inc.
) reported second-quarter 2014 results with Non-GAAP earnings of 61
cents per share which surpassed the Zacks Consensus Estimate by a
penny. Second-quarter earnings also improved 27% from the year-ago
earnings of 48 cents.
Emcor Group, Inc - Earnings Surprise |
The earnings growth was driven by the company's diversified
business and robust performance of its U.S. electrical
construction, U.S. Mechanical Construction, U.S. Building Services
as well as its U.S. Industrial Services segments. Moreover, the
acquisition of RepconStrickland in 2013 continues to propel
Revenues and Orders
Total revenue in the second quarter was relatively flat year
over year at $1.56 billion. However, revenues fell short of the
Zacks Consensus Estimate of $1.72 billion.
The company's total backlog increased 3.6% year over year to
$3.64 billion. Meanwhile domestic backlog grew by $138 million,
including backlog growth in the U.S. Electrical and Mechanical
Construction segments and the U.S. Industrial Services segment.
This growth was offset by revenue decline in the U.S. Building
Services segment owing to the restructuring of the 2013 service
Further, backlog growth in the commercial, transportation,
healthcare and water/wastewater sectors was offset by deterioration
in the industrial, institutional, hospitality and gaming
Income and Expenses
Gross profit in the quarter came in at $219.6 million compared
with $181.5 million in the prior-year quarter. Gross margins also
increased to 14.1% from 11.7% last year.
GAAP operating income in the second quarter was $67.7 million or
4.3% of revenues. Also, non-GAAP operating income for the quarter
increased 35.8% to $69.7 million or 4.5% of revenues.
The company incurred total selling, general and administrative
(SG&A) expenses of approximately $144.9 million in the quarter,
up from $138.5 million in the prior-year period. Operating margin
also rose to 4.3% from 3.3% in the prior-year quarter.
Exiting the quarter, cash and cash equivalents reached
approximately $437.1 million compared with $439.8 million at the
end of 2013. Long-term debt and capital lease obligations decreased
to $326.1 million from $335.3 million as on Dec 31, 2013.
Shareowners' equity stood at $1.53 billion at the end of the
quarter, up from $1.46 billion at end-2013.
EMCOR Group expects healthy growth in 2014 driven by its recent
acquisitions, strong cash and balance sheet position and the scope
for recovery of non-residential construction markets. Along with
the earnings release, the management altered its guidance for 2014
revenues to around $6.6 billion from $6.8 billion stated
The company increased its earnings per share guidance to a band
of$2.50 to $2.70 up from its previously stated guidance of
$2.45-$2.70 per share. The guidance excludes additional costs due
to withdrawal from the U.K. construction market.
Emcor currently has a Zacks Rank #4 (Sell). Some better ranked
stocks worth considering include The Andersons, Inc. (
), Ashland Inc. (
) and North American Palladium Ltd. (
), each carrying a Zacks Rank #2 (Buy).
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