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) February 22, 2007
EMCOR Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-8267 11-2125338
(Commission File Number) (I.R.S. Employer Identification No.)
301 Merritt Seven, Norwalk, CT 06851
(Address of Principal Executive Offices) (Zip Code)
(203) 849-7800
(Registrant's Telephone Number, Including Area Code)
N/A
(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 February 22, 2007, EMCOR Group, Inc. issued a press release disclosing
results of operations for its fiscal 2006 fourth quarter ended December 31,
2006. 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 February 22, 2007
disclosing results of operations for its fiscal 2006 fourth
quarter ended December 31, 2006.
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: February 22, 2007
EMCOR GROUP, INC. REPORTS RECORD 2006 FOURTH QUARTER RESULTS
- Annual Revenues Increase 6.9% to Record $5.02 Billion -
- Annual Operating Income Rises 45.9%, Net Income Up Over 44% -
- Year End Backlog at Record $3.50 Billion -
NORWALK, CONNECTICUT, February 22, 2007 - EMCOR Group, Inc. (NYSE: EME) today
reported results for the fourth quarter and full year periods ended December 31,
2006. The Company's financial results for the prior year periods have been
adjusted to reflect its 2-for-1 stock split, effective February 10, 2006.
For the 2006 fourth quarter, revenues increased 11.9% to $1.38 billion from
$1.23 billion in the fourth quarter of 2005. Selling, general and administrative
expenses were $126.6 million in the 2006 fourth quarter, compared to $124.9
million in the fourth quarter of 2005. As a percentage of revenues, selling,
general and administrative expense declined to 9.2% of revenues from 10.1% of
revenues in the year ago period. Fourth quarter 2006 operating income rose 40.5%
to $43.8 million, or 3.2% of revenues from $31.2 million, or 2.5% of revenue in
the year ago period.
For the 2006 fourth quarter, net income rose 108.0% to $40.2 million, or $1.22
per diluted share, from $19.3 million, or $0.60 per diluted share, in the fourth
quarter of 2005.
Included in the Company's results for the fourth quarter of 2006 are
restructuring expenses before tax of $1.0 million, or $0.02 per diluted share
after tax, and a $14.2 million income tax benefit resulting from the reversal of
valuation allowances and the reversal of income tax reserves, or $0.44 per
diluted share. Also included in the Company's results for the 2006 fourth
quarter is an after-tax expense related to the adoption of FAS 123(R)
(Share-Based Payment) of $0.3 million, or $0.01 per diluted share which was
absent from the year ago period.
For the year ended December 31, 2006, revenues rose 6.9% to $5.02 billion from
$4.70 billion in 2005. Operating income for the 2006 full year period was $118.0
million, an increase of 45.9% over operating income of $80.9 million in 2005. As
a percentage of revenues, operating income increased to 2.4% from 1.7% of
revenues a year ago.
EMCOR Announces 2006 Fourth Quarter Results Page 2
Net income for the 2006 full year period totaled $86.6 million, or $2.65 per
diluted share. The Company's results for the 2006 full year period include
restructuring expenses of $1.6 million, or $0.03 per diluted share after tax, a
loss from discontinued operations of $0.6 million, or $0.02 per diluted share
after tax, a $14.2 million income tax benefit resulting from the reversal of
valuation allowances and the reversal of income tax reserves, or $0.44 per
diluted share, and after-tax expenses related to the Company's adoption of FAS
123(R) of $2.4 million, or $0.07 per diluted share. The effective income tax
rate, excluding the benefit resulting from income tax reserve adjustments, was
40% for 2006 compared to 38% for 2005.
Net income for the 2005 full year period was $60.0 million, or $1.89 per diluted
share, and included an income tax benefit of $17.6 million, or $0.55 per diluted
share, for income tax reserve adjustments.
When the 2006 income tax benefits of $14.2 million and the 2005 income tax
benefits of $17.6 million are excluded, which the Company believes better
reflects year to year comparability, earnings per diluted share from continuing
operations for the 2006 full year period would have been $2.23 versus $1.37 in
2005, an increase of 62.8%.
As of December 31, 2006, total backlog was a record $3.50 billion, an increase
of 26.7% over backlog of $2.76 billion at the same time last year, and higher
than backlog levels of $3.40 billion reported at the end of the 2006 third
quarter. Private sector commercial and hospitality backlog represented 56% of
total backlog at the end of 2006, versus 40% on December 31, 2005 and 54% at
September 30, 2006, reflecting continued strength in demand for the Company's
services in these markets.
Frank T. MacInnis, Chairman and CEO of EMCOR Group, commented, "Our 2006 fourth
quarter performance was one of the best in EMCOR Group's history and capped an
outstanding year for the Company. Demand for our services continued to be
strong, driving excellent revenue growth and when combined with our commitment
to project selectivity and cost management, the Company achieved our strongest
earnings quarter in nearly four years. Cash flow from operations for the year
was also strong as the Company generated $209.3 million, a testament to the
health of our business and our focus on balance sheet management."
Mr. MacInnis continued, "Performance from our U.S. mechanical and facilities
services business segments was particularly strong during the fourth quarter. In
our U.S. mechanical segment, revenues rose nearly 30% versus last year's fourth
quarter and profitability improved significantly. Our facilities services group
turned in another quarter of strong performance, as it continues to gain
traction in the marketplace. In the fourth quarter of 2006, revenue growth in
this segment accelerated by nearly 24% versus last year's fourth quarter, driven
by demand for both site-based and mobile services and by a company acquired in
the fourth quarter of 2005. As facilities become increasinglycomplex and their
energy demands and related costs continue to grow, companies have an increasing
need to optimize the performance of their assets through outsourced facilities
management. With investments in our service delivery infrastructure, EMCOR has
positioned itself as a leader in the facilities management industry, and has
seen steady growth in revenue and operating margin in this segment since its
inception. The prospects for this business remain as strong as ever, and EMCOR
Group remains at the forefront of this rapidly developing sector."
EMCOR Announces 2006 Fourth Quarter Results Page 3
Mr. MacInnis concluded, "2006 was a year of outstanding achievement for EMCOR
Group. We saw the benefits of our strategy of refocusing our efforts on the
private sector and commercial marketplace result in strong financial
performance. We continued to enhance our position as a leader in facilities
services, and maintained one of the strongest balance sheets in the industry.
For 2007, we expect to continue our strong performance, as demand across our
markets remains high. We will also continue our focus on execution at the
highest levels of efficiency, and utilize our financial strength to enhance the
size and scope of our business. Our record backlog is well balanced across the
industries we service and weighted towards higher margin private sector
commercial work, for which we continue to see robust demand. As a result, based
on current market conditions we currently expect revenues for 2007 of between
$5.3 billion and $5.5 billion, resulting in diluted earnings per share for the
year of between $2.45 and $2.80. This assumes a tax rate for 2007 of 41%,
compared to the 40% rate seen in 2006."
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 fourth quarter conference call will be available live via Internet
broadcast today, Thursday, February 22, at 10:30 AM Eastern Standard 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 2006 Form 10-K 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)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
---- ---- ---- ----
Revenues $1,379,902 $1,233,663 $5,021,036 $4,696,603
Cost of sales 1,208,458 1,077,504 4,453,359 4,198,188
---------- ---------- ---------- ----------
Gross profit 171,444 156,159 567,677 498,415
Selling, general and
administrative expenses 126,597 124,948 448,011 415,771
Restructuring expenses 1,018 22 1,622 1,749
---------- ---------- ---------- ----------
Operating income 43,829 31,189 118,044 80,895
Interest income (expense), net 1,704 (951) 3,895 (5,586)
Minority interest (1,574) (1,149) (4,201) (4,515)
---------- ---------- ---------- ----------
Income from continuing
operations before income taxes 43,959 29,089 117,738 70,794
Income tax provision 3,752 9,623 30,484 9,641
---------- ---------- ---------- ----------
Income from continuing
operations 40,207 19,466 87,254 61,153
Loss from discontinued
operations, net -- (134) (620) (1,111)
---------- ---------- ---------- ----------
Net income $ 40,207 $ 19,332 $ 86,634 $ 60,042
========== ========== ========== ==========
Basic earnings per share -
continuing operations $ 1.26 $ 0.62 $ 2.76 $ 1.96
Basic earnings per share -
discontinued operations -- (0.00) (0.02) (0.03)
---------- ---------- ---------- ----------
$ 1.26 $ 0.62 $ 2.74 $ 1.93
========== ========== ========== ==========
Diluted earnings per share -
continuing operations $ 1.22 $ 0.60 $ 2.67 $ 1.92
Diluted earnings per share -
discontinued operations -- (0.00) (0.02) (0.03)
---------- ---------- ---------- ----------
$ 1.22 $ 0.60 $ 2.65 $ 1.89
========== ========== ========== ==========
Weighted average shares of
Common stock outstanding:
Basic 31,843,244 31,250,577 31,607,715 31,143,363
Diluted 33,083,961 32,176,639 32,740,197 31,834,881
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2006 2005
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 273,735 $ 103,785
Accounts receivable, net 1,184,418 1,046,380
Costs and estimated earnings in excess of billings
on uncompleted contracts 147,848 185,634
Inventories 18,015 10,175
Prepaid expenses and other 38,397 43,829
---------- ----------
Total current assets 1,662,413 1,389,803
Investments, notes, and other long-term receivables 29,630 28,659
Property, plant & equipment, net 52,780 46,443
Goodwill 288,165 283,412
Identifiable intangible assets, net 38,251 16,990
Other assets 17,784 13,634
---------- ----------
Total assets $2,089,023 $1,778,941
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings under working capital credit line $ -- $ --
Current maturities of long-term debt and capital
lease obligations 659 551
Accounts payable 496,407 452,709
Billings in excess of costs and estimated earnings
on uncompleted contracts 412,069 330,235
Accrued payroll and benefits 177,490 154,276
Other accrued expenses and liabilities 121,723 107,545
---------- ----------
Total current liabilities 1,208,348 1,045,316
Long-term debt and capital lease obligations 1,239 1,406
Other long-term obligations 169,127 116,783
Total stockholders' equity 710,309 615,436
---------- ----------
Total liabilities and stockholders' equity $2,089,023 $1,778,941
========== ==========
EMCOR GROUP, INC.
COMPUTATION OF ADJUSTED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share information)
(Unaudited)
For the Year Ended December 31, 2006
------------------------------------------------------------------
Adjustments Adjustments As
As Reported (1) (2) Adjusted
----------- ----------- ----------- --------
Revenues $5,021,036 $5,021,036
Cost of sales 4,453,359 4,453,359
---------- ----------- ----------- ----------
Gross profit 567,677 567,677
Selling, general and administrative expenses 448,011 448,011
Restructuring expenses 1,622 1,622
---------- ----------- ----------- ----------
Operating income 118,044 118,044
Interest income, net 3,895 3,895
Minority interest (4,201) (4,201)
---------- ----------- ----------- ----------
Income from continuing operations
before income taxes 117,738 117,738
Income tax provision 30,484 12,335 1,881 44,700
---------- ----------- ----------- ----------
Income from continuing operations 87,254 (12,335) (1,881) 73,038
Loss from discontinued operations,
net of income taxes (620) (620)
---------- ----------- ----------- ----------
Net income $ 86,634 $ (12,335) $ (1,881) $ 72,418
========== =========== =========== ==========
Diluted earnings per share - continuing
operations $ 2.67 $ 2.23
Diluted earnings per share - discontinued
operations $ (0.02) $ (0.02)
Outstanding shares - diluted 32,740,197 32,740,197
(1) The adjustment represents the exclusion of an income tax benefit related to
the reversal of certain valuation allowances.
(2) The adjustment represents the exclusion of income tax benefits related to
the reversal of tax reserves no longer required.
EMCOR GROUP, INC.
COMPUTATION OF ADJUSTED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share information)
(Unaudited)
For the Year Ended December 31, 2005
-----------------------------------------------
Adjustments As
As Reported (1) Adjusted
----------- ----------- --------
Revenues $4,696,603 $4,696,603
Cost of sales 4,198,188 4,198,188
---------- ----------- ----------
Gross profit 498,415 498,415
Selling, general and administrative expenses 415,771 415,771
Restructuring expenses 1,749 1,749
---------- ----------- ----------
Operating income 80,895 80,895
Interest income, net (5,586) (5,586)
Minority interest (4,515) (4,515)
---------- ----------- ----------
Income from continuing operations
before income taxes 70,794 70,794
Income tax provision 9,641 17,564 27,205
---------- ----------- ----------
Income from continuing operations 61,153 (17,564) 43,589
Loss from discontinued operations,
net of income taxes (1,111) (1,111)
---------- ----------- ----------
Net income $ 60,042 $ (17,564) $ 42,478
========== =========== ==========
Diluted earnings per share - continuing
operations $ 1.92 $ 1.37
Diluted earnings per share - discontinued
operations $ (0.03) $ (0.03)
Outstanding shares - diluted 31,834,881 31,834,881
(1) The adjustment represents the exclusion of an income tax reserve reversal
of $22.7 million and an income tax provision of $5.2 million to record a
valuation allowance to reduce deferred tax assets related to net operating
losses and other temporary differences of our Canadian segment.