EMCOR Group, Inc. (EME)

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EMCOR Group Inc. (EME)

Q1 2008 Earnings Call

April 24, 2008 10:30 am ET


Eric Boyriven - FD

Kevin Matz - EVP of Shared Services

Frank MacInnis - Chairman and CEO

Tony Guzzi - President and COO


Alex Rygiel - FBR Capital

Rich Wesolowski - Sidoti & Company

Tahira Afzal - Keybanc Capital Markets

John Rogers - D.A. Davidson

Richard Paget - Morgan Joseph



Good morning. My name is Casey and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group's first quarter 2008 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

I will now turn the conference over to Mr. Eric Boyriven of FD.

Eric Boyriven

Thank you and good morning, everyone. I'd like to welcome you to the EMCOR Group conference call. We're here to discuss the company's 2008 first quarter results, which were reported this morning.

I'd now like to turn the call over to Kevin Matz, Executive Vice President of Shared Services, who will introduce management. Please go ahead, Kevin.

Kevin Matz

Thank you, Eric and good morning, everyone. Welcome to EMCOR Group's earnings conference call for the first quarter of 2008. For those of you who are accessing the call via the Internet at our website, welcome and we hope you have arrived at the beginning of a slide presentation that will accompany our remarks today.

Currently everyone accessing the slides should be on slide one, which is the EMCOR title slide. During the call, instructions will be given for you to advance to the next slide. This is one of those times, so please advance to slide two.

Please advance to slide two. Slide two depicts the executives who are with me to discuss the quarter. They are Frank MacInnis, our Chairman and Chief Executive Officer; Tony Guzzi, President and Chief Operating Officer; Mark Pompa, our Chief Financial Officer; Mava Heffler, our Vice President, Marketing and Communication; and our Executive Vice President and General Counsel, Sheldon Cammaker.

For call participants who are not accessing the conference call via the internet, this presentation, including the slides, will be archived in the Investor Relations section of our website under Presentations. You can find us at emcorgroup.com

Before we begin, I want to remind you that this discussion may contain certain forward-looking statements. Such statements are based upon information available to EMCOR's management perception as of this date, and EMCOR assumes no obligation to update any such forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the statements. Accordingly, these statements are no guarantee of future performance.

Such risks 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 services, adverse business conditions, increased competition, 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 2007 Form 10-K, it's 10-Q filed this morning for the first quarter ended March 31, 2008, and in other reports filed from time-to-time with the Securities and Exchange Commission.

With that said, please let me now turn the call over to Frank MacInnis. Frank.

Frank MacInnis

Thank you, Kevin. Our telephone listeners can't see this I know, but, Kevin, I actually did that entire performance without moving my lips.

Good morning, everyone and welcome to our 53rd regular quarterly conference call for investors, analysts, and other friends of EMCOR Group. Today's call is being conducted as usual, by telephone and by simultaneous webcast. And I'll be referring from time-to-time to a slide number to identify the relevant slide for webcast participants. Right now, we're still on slide number two.

The focus of today's call would be on the 2008 first quarter earnings press release and Form 10-Q that we issued and filed earlier this morning. We'll conduct this call in our customary way. First, a discussion of the highlights of those operating results including our breakdown by segment and my comments on our quarter end balance sheet. Then, I'll discuss the evolution and the current status of our contract backlog portfolio with special emphasis on those factors that we think will be the most important to EMCOR's performance during 2008 and into 2009.

Then I'll turn the call over to Tony Guzzi, our President and COO, for his views on some notable recent contract awards around our broad and diverse company followed by some additional comments on EMCOR's role in meeting America's energy challenges.

Finally, I'll talk about some of the major factors that are expected to influence EMCOR's performance during remainder of this year and into the next, including our progress towards some of our growth and performance objectives.

At that point there will be an opportunity for our listeners to make comments or to ask us questions. And you can see from slide two that a number of our senior officers are here to help with the answers.

So let's begin please move to slide three.

EMCOR had an excellent first quarter, the best in our history by a significant margin. A year ago in the first quarter of 2007, we proudly announced the record first quarter revenues and operating income and commented the 2007 had gotten off to a very good start.

Our 2008 first quarter revenues grew 29% over last year's to a new record $1.66 billion, and operating income more than doubled compared to 2007 to $49.7 million. Certainly, another very good start.

On slide four, we discussed some of the highlights of our first quarter performance. Continued strong demand in both our construction and facility services divisions led to revenue growth completely across our company. 2007 acquisitions in refinery services and mobile services led to remarkable 63% revenue growth in our U.S. Facility Services segment. But EMCOR's organic revenue growth was also very strong at 17% overall.

Our Canadian subsidiaries stood out with organic year-over-year revenue growth of 78% based on improved demand especially in the industrial, power and healthcare sectors.

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