EME - Earnings call transcript Q1 2018

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Operator

Good morning. My name is Adam and I'll be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group, First Quarter 2018 Earnings 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. Mr. Instructions] [Operator FTI with may begin. Bradley consulting, Vitou you

Bradley Vitou

everyone. you, EMCOR the and morning Adam good Welcome Group to Thank conference call.

We reported would discuss results call will are the company's Services of Matz, go ahead. introduce Kevin XXXX to here Executive who first over Vice to which this to like were I morning. turn the management. Shared please today President quarter Kevin,

Kevin Matz

earnings and of conference morning to call XXXX. the Brad everybody. good you, EMCOR's Thank quarter for first Welcome

Senior to both me our encourage to I with are conjunction quarter's X, our accessing accompanying you and discussion describes the discuss information are will slides. website, and Tony and of President with are Mark Page via accompany and This Chief at For the as Executive our the discussion our X President advance results. President and Chief our statements Marketing Executive Financial Vice those Mauricio who Maxine General Pompa and the presentation of X. disclosures. Counsel; beginning detail and financial President review Slide call presentation contains forward-looking welcome the our non-GAAP information. the who today. Mava well our Officer; Slide They Internet you everyone in Communications. Heffler depicts Vice executives of and Officer; financial that Guzzi statements the Vice slide our remarks and and have you disclosures to and Please to we hope arrived in forward-looking certain non-GAAP

our slides will Investor in participants this the the including For Relations website the internet, Presentations. the not call via archived under accessing call section of conference be presentation

the let to now said, please emcorgroup.com. call Tony? find with can me it at And over You Tony. that turn

Tony Guzzi

XX We strong our We everybody performance Industrial performance And Kevin. $X.XX. improvement performance year. ago margins period. call. In Construction joining our and segment our Building segment operations year share the construction about year start Strong record thanks of operating income continued Electrical $X.X had income for still in per and through by the the a strong and especially Yes, diluted driven out performance Services struggling first our on continuing the by by and gross with improvement market. and by in billion basis to execution had revenues started to in from business a X points XX.X% UK segment's improved in good and the Also solid transportation in Mechanical better had was good quarter our tight operating segment. expected. segment, our income improved I'm earnings control. We of from margins Construction in segments, start execution overhead our X driven versus pages we Electrical very how Operating thanks Electrical going

We and projects. for also and very strong had our healthcare results customers executing our commercial

year segment Mechanical income well XX the ago quarter. performed dispute aided a period. We Our had slightly. headwind and that margins settlement of also operating Operating points basis income Construction declined income operating by margins percentages the in in the

backlog the this businesses site-based successful by in several site-based on points business. have Our Services commercial our return XX decent mix. Building organic had had energy commercial and growth quarter government improved to and in our contracts had and the Services We segment segment of basis operating improved record government driven implementation in performance margins large Mechanical and of business. We had services our

had quarter and first we discussed and difficult our tough that sharp that in And into have later periods we into rework Industrial tough turnaround that turnarounds volume were from XXXX. some and the year businesses scheduled which Harvey driven for We improve performance our in competitor pushed Services for and XXXX. resumption XXXX. has the outstanding I expected. fourth We quarter [indiscernible] suffered XXXX. than We a in were we did of quarter. don't our do maintenance the demand performance in segment a the of schedule first the previously had by Hurricane quarter Our fourth expect in had that We versus a planned believe altered I expect to the quarter a of quarter very competitor scheduling of until of customers expect very did issues. third XXXX normal lack in and

the have resources, and team, to capability We perform.

and we again. have will We

growth X.X% segment Building of XXX%. very Services UK operating operating income of margins income and Our had a of strong performance

exchange conversion about strong organic organic of very but better driven this the growth, by better growth. remainder The very better this and of was improvement, Foreign we strong had mix. execution XX% helped on a improvement

to remains balance weak, and the cash at flow for quarter. flow cash Our sheet to weak was and to liquid improve was strong year. net the expected seasonally income equal We but this expect do and be year to least be thorough

year discussion of and changes period. backlog, previously but turn comparable to ago close a backlog the full Mark. had a have backlog and XXXX growth With that, I'll flat will to We over year the end the we versus on to basis to the reported discussion versus

Mark Pompa

Thank you, the good everyone morning participating today. Tony and to on call

on either presentation now this accessing we those of Slide webcasts X. For are

first earlier commentary slides other reportable key as segments, well and and will quarter with financial Securities cover data performance, Commission Exchange augment from several Form morning. opening next and as the each filed statements Over consolidated the our XX-Q of operating this financial our I Tony's derived

So performance. to attributable percent half our by quarter Services revenues one time our period last impacted of businesses EMCOR quarter our of are revisit and first revenues quarter first Incremental XXXX. acquired or that U.S. one positively $XX.X to were a businesses of year's Consolidated the million Mechanical $X.X and pertaining over billion segments. not such Construction let's up of million U.S. owned $X.X Building

in $XX.X Industrial revenues from X.X% reportable XXXX. Electrical quarter Services quarter our was increased primarily from revenues revenues million healthcare $XX.X driven of increased revenue $XXX.X project first and than due Excluding within construction certain million quarter-over-quarter construction quarter-to-quarter our U.S. were construction million Quarterly growth acquisition or segment. projects X.X%. or other one declined sectors All completions. by revenues revenues experienced transportation the such Mechanical revenue organically by market $XXX.X project X.X%. declines partially million institutional segments U.S. activity to growth offset

offset acquisition healthcare primarily in Excluding commercial quarter-over-quarter. revenue domestic project generated $XX.X revenues a million construction increased activity revenues business institutional of total X.X% was organically revenues by of activities. within from X.X% sectors this building increased grew of manufacturing segments of growth higher billion decrease X.X% $XX.X This or $X.XX services X.X%. revenues organic million EMCOR's the segment's partially million million projects. or construction U.S. of by and which quarter first $XX.X $XXX.X growth was from revenues such driven

filed field acquisition and Excluding X.X% XX-Q a and in in versus basis of increased services our fact project XXXX we to first increase see reported earlier in reduction incentive of Services some increase XX% of X. activity. and as The levels comparability primarily not provided well the than grew as current as $X.X due revenues gains services of EMCOR's as revenues first impact decreased slight the in of consolidated to the percentage $X.X administrative the XXX, intangible to annual also as benefits current customers incremental $XX.X regard This SG&A organic increased quarter footnote to we impact of Full and that and the financial in in quarterly represents due statements our includes pursuant accruals revenues today. opportunities site-based million contract well from segment's new compensation Hurricane were overall million of foreign SG&A of removal season. X% we of the notes of reduction performance year's were is the first to $XXX.X large $XX.X and their to certain Please that the as more somewhat or favorably higher building number million activities increased seasonal to consolidated method for to million weather our to approximately services $XXX.X $XXX,XXX services in during contracts the recognition a renewed in result were winter These at and movement. revenues million, financial project The shop quarter turn construction growth scheduled approximately standard, repair SG&A segments Standards to year's spring related is to revenues awards our general service to both XXXX. Topic somewhat revenues continue to condense on impacted concert reflected Revenue impacted level the earnings increased as $XXX.X service. repair currently Industrial favorable quarter United segment's long-term residual $X.X organically new million and with service with turnarounds quarter-over-quarter. increase within previously the modified gains percentage. have services increase higher activity by Harvey. executed quarterly higher point still an typically which full-year of this and $X.X organic on and in of Selling, the first services necessitates of a included due revenues the in expense. by revenues distorted company's energy altered the This division Codification division disclosure due snow resulting adoption million within is from early of as as XX.X% quarter-over-quarter amortization complemented headcount the businesses from XX.X% revenues maintenance within incentive our acquired within Services only commercial With of within which resumption to was million three activities the expenses impacted XXXX were a Slide represent the Accounting project revenue approximately normal quarter which our retrospective due higher million of the transitioning The quarter. due in Services quarter result utilizing revenues also negatively expenses support during asset This by $XX.X operating XX Form Mechanical XXXX million. inclusive costs we're offerings increase in quarter offset reporting Building segment one rebid a of adopt loss exchange revenue activities U.S. turnaround of due employment as well expectations reduction or revenues. XXXX. less geographies add-on to which compensation revenue of elected Kingdom due

quarter the of to Industrial Services turnaround was to $XX.X of our represents overhead within revenues SG&A $XX.X Reported revenues first our operating income due X.X% a In for negatively significant addition, segment costs lack million XXXX compares as of percentage unabsorbed and quarter. by impacted the million of in or X.X% activity.

year's had volumes margin improved market U.S. from XXXX lower operating strong to basis which most quarterly $XXX,XXX this operating Construction income due over activity XX.X% quarter $XX.X from The operating or represents Despite quarter. U.S. million healthcare Electrical reduction last X.X% the $X.X Reported a improvement operating segment segment million execution. basis increased operating $XX.X operating is is margin in XXXX's Our XXXX or year's commercial increased million and quarter. segment period. sectors increase the both of is either points gross segment's Construction quarter. income the first of from transportation, and quarter-over-quarter served. XX of represents margin, increased last profits comparable first income project X.X% operating performance market sectors first across than an due Services income services this in within Mechanical to project decrease XX point Reported

recovery year However, last well. quarter we a as from XXXX costs first incurred this at time point which recovery of benefited were mentioned quarter disputed. XXXX's The were on obviously segment's such that of had this previously previously this and contract that Tony XX first basis costs margin the in XXXX certain impact favorable disclosed operating

of normalized Operating X.X% last last services operating to Our is reporting winter increased total the $XX points combination the quarter-over-quarter. $X.X as $X.X mix, first for quarter. resulted driving activities performance XX with is percentage in which year-over-year somewhat operating The with project compared year's operating and quarter improvement margin government from income segment margin million and of energy, operating site-based, improved Services year's of snow increase due increased improvements. A improved pattern, commercial removal business first in divisions. for income by to X.X% the while reported basis U.S. Building quarter U.S. million factors quarter-over-quarter a weather margin a represented construction operating from

segment. conditions $XX.X Harvey, of UK due Our potentially services continuation due therefore opportunities reduced Services a point as and well planned schedules. a the repair operating turnaround costs by to customer's last through of X.X% million exasperated reduction year's income is can of revenues services pull first which decrease revenues $X.X and Building X.X% to million The benefit approximately which of is U.S. $X.X which the was industrial quarter-over-quarter operations This our quarter. services impact XXX income work segment in activity an our as represents maintenance both absorb challenging of within first increase altered this sharp Industrial which from improvement within has fixed operating quarter. overhead of basis from services impacted market performance is over some has XXXX million the the represents million $X.X of our of our Hurricane field of

Our to base, executing to and small good job some contract UK do quarter. capital the seeing maintenance new the and activity a historical relationships within continues first securing of resumed service while team augment project

on of million from represents and X, by slides previous the are gross key financial million as of profit points XXXX revenues improved are addressed $XXX.X the quarter Slide one basis not margin. quarter quarter XX.X% We data gross which on of $X.X additional XX for follows; has the comparable now

the to quarterly continuing share Services a across ending previously represents $X.XX increase. our March This quarter-over-quarter due segments Industrial per is XX, gross all operations quarter is U.S. and Diluted common improvement was discussed. than gross other down compares $X.XX earnings margin substantially which and XXXX from reportable for which of higher per profit reasons X.X%

of to first recognized quarter. within Our tax items expected rate well discrete favorable the due for the quarter XX% is within

XX.X%. Our by February state rate to will current enacted finalized commentary in we position of interpretations of the expectation not federal XX.X% in which be are consistent a the for our range. full-year my now to range tax between provided operate taxing remains jurisdiction estimate law with a we various tax Until

cash quarter XXXX occurring slide, this funding and one million of on March, first each in prior Lastly operations incentive a compensation historically we our weak years of awards the in represents quarter $XX.X of flow used of quarter February with during year. cash

demonstrated million our are XX.X%. We Slide liquid approximately XX. remains leverage modest as now balance to represented EMCOR's debt of and sufficiently sheet $XXX ratio on as by cash by capitalization

have $XXX due to quarter, the million activities as is cash in low cash of assets made due Identifiable to funding the intangible decreased have of for has quarterly the XXXX. acquisition our loan. is quarter with to share previously and Our cash due referenced reduced since $XX.X as million in as December to reduction completed approximately current from used year-end during the Total the during liabilities repayments prior-year of from benefits XXXX in Working due levels reduced amortization million in obligations. mandatory result the expense XXXX approximately debt that both $XX.X operations used of financing slightly $XX.X payroll term Goodwill million. which payments levels is. accounts of repurchases principal capital increased price true million accrued the of of included outstanding the of and to an a purchase to of approximately XX, $XX.X reduction payable late a end due the made million $X.X solely increased quarterly of of due

time would presentation this my the strong be happy our to cycle. with to return are of for slides available this positioned where to capitalize we market balance opportunities continue concluded, during future portion like the is Tony? sheet Tony. this and well of to on With I We year continuing

Tony Guzzi

sector. backlog was the I'm market up by page the of at quarter backlog billion $XXX the and Total first XXXX. December end Thanks XXXX which XX, flat is against $X.XX about of on just from fourth and Mark, quarter million

EMCOR year. what in nice late backlog said companies. market February, given grow high opportunities range the we revenue quarter. levels fairly Nonresidential X% generating the remained will and we X% for most our think for to this construction in across to geographies Our sectors nonresidential the positive Similar remained performance strong

sectors. year-over-year active and sector judged the as little are Demand front XXXX backlog increased focus commercial of for be associated grew by since represents think across widespread is us to and bidding water bit Let should be on of and the strong. now backlog continue project backlog a we with company December. opportunities total the continues backlog me and also XX% we and seeing. water Commercial market year-over-year Project Commercial into to both the projects waste year-to-date. currently both

the greater has five in wastewater really Poole waste of well in parts really our be Florida the around projects infrastructure historically Miami positioned & specifically many subsidiary significant against years. water the the with in consent over are and investing Dade Kent We is will country water this but South in greater decree performed water heavily its Miami, area. the Miami and next

a of and the more we work We have and already large awarded. expect be to comes out for the is won running projects as number in

participate this becomes in other be EMCOR have will Page there advantage push, is as part we active We XX. I'm subsidiaries in Florida, and if it it. of now our at to on that broader of it as South market take infrastructure

good you win. up with flat market down good year-over-year some was sectors As for graph with market basically and growth in opportunities marked but the us sector backlog some overall saw very to

note increases segments interesting XXXX. every XX, here, backlog from an our one December of had However

was For or the $XXX up X.X%. domestic first backlog three million months

$XX to million X%. Site Our backlog backlog Services close Mechanical in the million both our domestic $XX increased while businesses. segment's grew and Commercial Building backlog Services Segment's Building or Construction also Services grew

now the level of million. first at three $XXX at each Services In backlog XXXX in months and highest approximately fact its Mechanical is increased of

would much commercial projects this of you comprised expect, backlog. As

able Mark be On on FASB's remaining of and now the Page will new going to we're disclosure back he this, requires turn We to impact now amount to new adopted unsatisfied Page EMCOR of Page It make I'm turn recognition to the the standard, on know now presentation I'm Mark. going covered and him Mark right and XX. ought that its standard through on to over presentation back talked up obligations. about XX and is January X, our the be XX-Q. and walk You have on of we Mark the accurate XX. which revenue performance to

Mark Pompa

Tony. you, Thank

XXX not earlier report are have by as mentioned and if if obligations and period, yet through standards identify change our required the I accounting end standard management of we us ASC revenue have not ASC a all material to Even a financial did how of the allocating first on impact under so, our As contract it unsatisfied we a those codification accounting performance of the topic our principles at or extent and have we remaining performance January the identify under accounting future to quantify not standard obligations customers. performance XXX reporting obligations customer such contract. X. accepted referred disclose now To price fulfilled new performance then during commentary, operating with activity contractual transaction generally obligations or to a portion the in adopted of review EMCOR have to my contractual quarter recognition has this as to completed. requires we estimate a performance, our to quantify related XXX we contractual new necessitated

any remaining it EMCOR quantification backlog our the between performance remaining like evaluation base by within obligations the project historical Although reported contract gives XX right other reporting, a terminate scope contract unperformed the determination for accounting potential industry the the our the of relative unilateral this historically sounds backlog in backlog guidance, remaining primary quite increases standard and without is if figure. to in of and maintenance each notice contracts. were defined to new without We limited Under previous success periods. required Under the contract term or of to level for a the remaining multiyear broader executed service not varying and for to the other service transitionary that same. related definitely quantification had party performance services honestly convenience The months the this opportunities. and Most companies forceable compensating with contain is the such clauses is the unrecognized disclosure, as our for termination lot unsatisfied in party, quantified our the amount of of obligations unilateral conservative the revenue notification termination. be difference of period contracts we

condensed million course business As our of XX-Q obligations ordinary contract disclosure information within was as to services statements and on analysis a mentioned our U.S. clauses management's This filed result, the from related both building of to unexecuted the was million This earlier termination disclosed incremental within offset consideration impact contracts remaining and footnote notes unrecognized as of performance approximately as variable contracts we operations had segment. financial in within financial certain our item to of we by is pertaining predominantly form exclude which X obligations to fully in our as performance $XXX today. partially X, revenues well executed fully expect consolidated documents I of reduction approximately $XXX discussion that condition of items. and results to as well for

exhaustive a concluded, our slides. quantitative that unsatisfied closing a to I future speak a calls required a sequential generally GAAP and performance perspective to quarters and history. term disclosure, is not now and our accepted obligations have performance so remaining under a explanation Tony reporting accounting principles, narrative during qualitative let will is With we provide remaining from backlog of will and full now obligations four only Tony? earnings As defined we return

Tony Guzzi

our guidance tax guidance from incorporates Yes, share thanks tax in Mark, comments earnings to post estimated diluted XX% We're $X.XX earnings will Pages on an of of and share per operations. continuing and XX $X.XX closing This my rate to reiterate going reform. be XX. per

a $X.X small commercial energy market continued strong demand projects downstream and government drivers revenues billion. least expect to for growth and quarter site-based we market first guidance choppy our respect construction we with what initial services, for we billion mostly At we due less and decent our in nonresidential to with the and of a set retrofit gave especially $X.X We our consistent our When expect market, guidance. our market, the to when petrochemical through are Harvey. predictable believe refinery those initial underlying

and XXXX approach We the XXXX markets we from gain fall fall believe mid as refinery up we expect and more the both turnaround clarity schedules turnaround and seasons. petrochemical in turnarounds will the spring XXXX the season clarity and we better XXXX as firm from downstream still

As high always in these continue calls, we provide the We of a view to end of so move we they end what those we our guidance headwind needs to our from to need call. mid discussed as perform range, second our XX-K have and claim happen in year for here us dispute U.S. overall level in the in We and to segments. top the settlements at quarter significant are. to do a XXXX in to XXXX some benefited and Construction

Construction continue high at very the in first have the we a segments. perform to in we quarter, and as level Mechanical However, Electrical shown

strong income remind margin have to something. everybody want to continue performance. We operating of I just

in in have K We the was very we year. and was significant from our fully million versus second and quarter dispute settlement and second $XX Mechanical our XXXX XXXX both Q in the quarter in had and segment tough our disclosed almost last quarter of in a a Construction the second all that compare

Mechanical budgets expect and as business for now are we Building these were well we customers in that. agency contract several the benefit impacted site-based organic be growing margin they’re repaired quarter implementing And expansion to we and income first U.S. have they and federal segment had and other expect we operating to execute our repair, from that We're of Building year. and we shape. Department in for wins. Services Our to the some facilities Services be finally new of going by first Services growth were and in should sequester Defense and money strong you need They bad the priorities had they in quarter

first waited much segment year do but the as in quarters the us decimated quarter report as improve of very three progresses segment more in and then. We has to opportunities will until see Industrial XXXX, comparisons fourth versus quarters two We ’XX had we the our for weak and Our a are really four. and third Harvey easier XXXX quarter.

of move turnarounds of at end to that also we top the past will times year, event to more we that us For that the years. planned for us need the few scope some today, some the increased over these as a and is of XX unplanned certainly don't end range, unplanned happened but events are but have the on the than possible

performance had the strong improve. business first U.K. and a Our quarter segment's continues to

We expect should income. to net have at to year decent cash equal flows be least this and they

and to and of through will capital organically look grow We acquisitions balance cash to and invest we use our will acquisition sheet segments. in any our domestic

We we quarter for this cash through with to cash dividends shareholders of and year first buybacks dividends. XX% incremental deliver we executed summary turn of in about buybacks. and million and We in like any how the to through prefer it our cash return for versus buybacks Adam returned In XXXX. that, performed returned well And to buybacks $XX expect We will shareholders first in of to continue return are shareholders. positioned. dividends to through shareholders to our with the for We our questions. I’ll quarter that cash businesses

Operator

of the Markets. your question line Afzal comes with And Instructions] first KeyBanc from Tahira [Operator Capital

Tahira Afzal

folks. Hi

Tony Guzzi

Good morning, Tahi.

Tahira Afzal

morning. Good

bode are on the Petrochem of maintenance of but a and lot So seems some of Industrial small movement see that of not these E&Cs the some us on on downstream cover to segment these Tony, LNG, focused got projects should CapEx is, commented we've that be aspects, moving I well? bigger in question first started know for forward your these terms they again. there you've some I because suddenly as guess but of to I well

Tony Guzzi

through and think I and true work the that's segment. move think LNG in of I new especially midstream for I Petrochem. ’XX ’XX perform build and also, a true that's on as Electrical Yes, you don't think lot our We

we they something to Christi a in that's they work most We And about mechanical do will when on and a unplanned be talked EPCs especially is sell of. some that's when of until that Corpus get tends the work the to involved that we work can't especially will side also try now the resources. perform of I the events got in area, to perform lot can't you've the of electrically not could that but mechanically – remember lot finish sell when that

Tahira Afzal

planned are mean upside to probability? I you all could to was provide typically seems like maybe model some that's was mover? electrical or maintenance the that look at there's the some if and think I the events unplanned around my and CapEx Okay probability really look the could conservatisms which bigger that of still if be mechanical happen you high know work of say Small the or you at would is way really it ones the of

Tony Guzzi

two Yes, think places. I

got segments unplanned little up very the forces on is it's different. there we significantly against project facility, have events unplanned time say to some debottlenecked customer that work that of a it things lot Building maintenance liquidated the or roost which Unplanned this period flood happen also in bottleneck and is a the time, on maintenance rare from those - Mechanical quickly, hit we go events in fixed lot where of those turnaround. segment of where had where to the projects event earlier it to we've to with right maintenance in a significant like, the on in usually segment, mobilized a going those the facility women and reacting flood from us have for that and damages or dissolve can get happen, it's and coming that to or can And part performed with IDIQ a happen have and very plant comes before the happen usually this jump think down something planning specific we a do work things large capital to up work to markets facility the of the a material has be a shut needs in short come to I it Electrical performance we in wasn't of event because deferred play of to and basis and can running like because would an significant planned Services or into it. some very complete could because wrong have a had can I a in ready take But now home to and help right, of work. of usually happen and a a and Industrial men lot part

Tahira Afzal

helpful That's last labor I years. know to has several been but doing Tony, okay. tightening, we going the late economy you are And where Got forward? something well if that's are point the I or guess little seeing know. a a is you is pricing question, think it, cycle, for more getting you're concern

Tony Guzzi

of price, have, execution. Well, look and ago years we guys we're but three core on further side because the we than we're winning now I were, curve the we’re the because price so clearly, not we're core way us. better winning was out work our folks is of labor say for that right beyond would on margin it than

more Labor And that's is thing, important, screening are where coming the is so good training a back coming workforce. tightening, more more the is people important. into workforce, into are but more is people important, more selection

We’re of think destination will labor a for know people. craft still be always skilled trades choice and I you

both union likely is in actually the Pricing is to workforces. available not to okay, non-union labor other has that available to So and people. be us been

We a the the side beyond X% and multiyear quite been around. you'd reasonable negotiate haven’t we year increases on X% this quite time have seen contract and agreements union expect frankly what people really sizable negotiations or

Tahira Afzal

Tony. you, Thank it. Got

Operator

Noelle question from with And of line your Dilts Stifel. comes next

Tony Guzzi

Good morning, Noelle.

Noelle Dilts

morning. good Hi,

on the So out just these focusing years. kind business of competitors your push we've or of obviously turnaround of of sort deferrals of over the at a bitm, some work some seen

a You kind guys period. of lucky were for

Now you for a I shouldn't but that some definitely couple say year period. guys lucky, of didn't of see

just what into confidence gives some and general is deferrals? dig of what the of Harvey you're other kind to factors you to sort that related now seeing want just related versus I So

Tony Guzzi

Let’s a drop a level.

advantage them. luck turnaround short and of themselves decreases present came They to plan activity some lot the take scale very to in that the think on will handle to could having time of those believe we be projects very I again there weather us we'll from resources. great and frames opportunities large and

things right years the eight five I think are versus there turnaround some or have changed in in that business. maybe ago

seven, things was in are Texas of the put of to going crappy five, figure maintenance when result that was West go mix Arabia, and trying a more based these and facilities that in, of to Canada. one shift mid Permian the as is what in to less on and eight exchangers [indiscernible] It's sour, equipment them is crude. all heat a when and four, running of really that crude five, of think I were they basis still That mix. right and there out six, out shift West and the of capital lot Texas less required. outfitted and mix other There it's of is they Venezuela Saudi with viscous

are and facilities Mark, doing that day that but see of thes belief the maintenance some to you’re the not probably turn to not or Maxine's believe, and have down things. people as unexpected cycle in that refiners Tony, edges around enough extended Our starting their and that in other every Kevin, they're

big able the is got has out are way right, of look make optimize bought their a contracts assets. meet second been business, Instead lot their better that think take to the consolidation. the majors bigger others of is can The their their to to their thing a broader swapped of has they parts fleet out. of on one of shift fleet a they facilities some refineries now refining problem I contracts there's And at

say, the all of by the Well, is petrochemical that, we least petrochemical shifted thing have Harvey for three part affected what's more two do say patterns other are so big has, you'd markets, and demand how those was maybe going the at think what's in probably petrochemical things feel on you but discount this and this that I you'd underlying it. about is yes, talked in has you though case, can't in result plants fairly same some the business refinery with the And or in refineries. have our the of significant with I has the think become not last market. turnarounds of refiners. about that been characteristics done happened That years a business larger business the that over a doesn't then as us EMCOR

the then that's demand. have to have of react I think have and to some to customers you happened be able we capability that your So to

and you be. very for the if or all even the those that fact do have do to be, and you what would it's get had lose the us first that like lose we did you not resources, doesn’t we them did have us have planned some and resources. XXXX to to allow someone in XXXX Because Superintendents us allow in we And though may first act we half of those doesn't And and because very as what then to once dinner not some a back. valuable don't back. keep of may liked get So you as the of valuable may that, plan them foreman those in we resources be balancing not busy quarter been to to

P&L that if $X time absorbing we're everything and $X.X right Noelle? be might given those there overhead. million the so the resources in fully because of a about help million So or not any deployed, Mark, at drag aren't does

Noelle Dilts

there? that guess M&A you're opportunities a lot seeing in terms shifting general M&A? the for about In steep. appetite just of market bit right you're you and you've now about a valuations past targets talked seeing Can the make. and kind talk that what in of being my to little kind of your points actually Yes, out those great, you just question, are potential of that's second And I just good

Tony Guzzi

We're think right, good three capability is what which we Look, has pretty and culture appetites market a acquires. fit, selective before look and at we our buy acquires, in all jump company. we're been things

fairly word, expect year call a decent like work. is M&A. better year for this that life's I of lack to We at What somebody's

in want work. want very build see mid new that They're to decent many to transactions they still North XXXX. a Stars, XXs So and with in the but company. they sell comes CCIs, great great We of and company, pipeline a their here built do of the their type those The now we well they transactions those companies.

Now don't how done, when of what’s the know. get get timing they those, done, I they

obviously from strong, years they've right management fixer people things they're as in we oh we coach lot collectively of XX about larger In you'll them those make companies some of what paper a of helped of how that a would to to back at the five resources and and and their pretty thought been that the hired deal when well professionalize really equity outlook they've behind project your it we at and strong, it people to guys get going can't have good have for recovered of we've to couple away We is on do the doubt put of their versus would actually a conversations making yet, these could valuation That I do some the with you their going or somebody us those but of them do we geez couple some assets be a assets. category market deals. and just we got more XX to talk take particular that what looked have positions. as Private time over pencil and the years. may uppers. we how they little create the know get advise things significant we we Pricing in years Some that we stuff. team. to they for a and below level People well what may which is next to work of are get and to knows and this it do year still those crazy, you, from put we are sheets don't the But rebuilt to that than XX% selling some is, cases making. had recession, do we've they performance get home they're balance

market. people to we the would more Look all for fit to a data as we’re we acquisitions because quite center move They've to certainly happen didn't So positioned the year Gulf past in the we well good certainly what be side of ’XX? then first loan do. don’t. we'll and Is if a second that Last in in that And you and of continue responsible. have as the geography million in of shareholders really think be of ago especially XXXX, the have couple we we'll to electrical to have commercial acquisition things about a see well. there. going going like $XXX about, advantage had still we Audit it year, we talk rough geography, [indiscernible] We we partnered year comes happened but are really what could on we're to took cyclical Petrochem happy always cash going with right be could talk and candidates. did we we're Coast, fill do and a back fit all as all So audit decent I we doing on A year worth side they're the whether Christi, well, get, happens acquisitions. what Corpus had to upstream years return progresses. make

Noelle Dilts

Thanks. That's really helpful.

Operator

the And next your of question with Sidoti. line comes Sullivan from Tate

Tate Sullivan

Good did more usually think businesses didn’t you like do acquire looks about quarter, there's than was Mark, you flow about looks your payments like mean more flow some operations line a for larger previous you from it items outflow the talk said first cash the but so anything. cash just all. pay morning. you you bit in Hi, you it payables statement of also outflow, the I acquired, can I and thank really it was than

Mark Pompa

the backwards. take last walk question I’ll Tate, and I'll then first

closed last year were or that that year businesses so for for of this the payments first contingent recorded arrangements. consideration months in to two three related not transactions in the the So are were arrangements

that two during There in really prior through So and because March payables All Industrial segment, then customer activity any one we quarter resolving ’XX quarter side, of of were had commentary, in versus and with happened inflow no volume the biggest in outflow ’XX things all. the was That cash XXXX rendered there successful first was variation that not new was his the our a that actually additionally, companies continuation two. significant first first continued of a XX. the at received payments as are dispute flow to in money within and to larger had Services in transactions XXXX. fourth quarter, foremost just customer quarter mentioned but to Tony of operating regards there the contractual and XXXX this of the in quarter reduction just no on

So fall turnaround impacted. because of hurricane Harvey was significantly

into in those to there. out both ’XX of that the So segment have have quarter we first would first good typically billings December weren't gone billings just and quarter obviously quite prior the ’XX been XX half stronger we of first of back in because happen not calendar in would much quarter it And the the in XXXX. were year, the of did that

been typically We're confident the to year. to to we So the million a a artificially the slow time have day honest with the backward. long good It's we're be months our nothing start it's just number the off as to unfortunate in through $XX and significant three ’XX concerned took situation, quarter going relative but we we're to flow of of history first was you, an be if quite in first be the of of range you end a actually look for XXXX negative that years. about very generator it's cash at got to

Tate Sullivan

because about you about I X% margin the mechanical comp calculate great at in I Tony and XQ for mechanical with mean that are a poor thanks that business? having ‘XX settlement. talked Okay, settlement, was of what looking you in XQ,

Tony Guzzi

sustainable higher - is a margin quarterly I didn’t projections, point. said comp, that said I Look year said it’s a that it say Well, and give at margin tough a last I don't comp. but I X% poor think I was

in us those X%. very do to still of margins second million quarter for up we'll get $XX that I think to for difficult make the Mechanical, helped well settlement and

Tate Sullivan

it was that's million right. Okay, $XX

very much. you Okay, well thank

Tony Guzzi

welcome. You're

Operator

Thompson next of Adam your from Davis. And the with Thalhimer question line comes

Adam Thalhimer

good guys. on Good quarter. Congrats morning a

Tony Guzzi

Yes, thank you.

Adam Thalhimer

the Tony, about is for straight concerned how your that? backlog was second you are domestic quarter, construction down

Tony Guzzi

it's versus expect we and opportunities in not, all. okay and have lot We're concern well no construction of business do a bidding our fairly year, year at end its to this we

Adam Thalhimer

then X% you guidance you of domestic a like revenue but bit, you just looks comps. do the maybe in little and down to of goes said, underperform even tough think think construction forecasting market with flattish, through it you the your so this Okay I kind just to year trying X%, kind mean overall parse market you're

Tony Guzzi

rebound to for us a I really rest really but the well industrial good year, Now, had construction than and the think we start will did I last I in with get I a year. mix the XX think okay pretty And have good we think needed be for right XX, of think more we to we now.

Adam Thalhimer

X the See X. the kind to construction could grow of with industry that

Tony Guzzi

mean fourth I had Yes, the year, year quarter this We by year, more but the really last how in know much right. made revenue. time off it good don't revenues of next we acceleration

Mark Pompa

due couple the of was that in quarter we and Yes work suspended. XXXX actually of a actually had to projects first then weather

but might actually going just of some the calendar think yet. don't to we're end tail So with caught to the like into up the quarter we before year of that would get ’XX first work of that

Tony Guzzi

$XX in in picked as and to those issue pretty the go… biggest mechanical. and project the you that's of is construction quarters mean profit up a comp with I million have about revenue we talked big we've what almost Between no two

Mark Pompa

of Pretty you've big chunk go... revenue got to

Tony Guzzi

go strong. I well go is of when quarter. I no underlying very up business so million The that And good construction all the you about even revenue told had very got biggest all year is of us it the to to better right? back this mean business and you that we in news in you that that the behind told the fact like a We it, is first there's that $X.X looks performed last find is mean surprises right, and year. underlying got performing to make than You've chunk you've pretty year. big in this for issue one

Mark Pompa

to the were this sector clearly Adam, thing in when a Mark. backlog, lot basis into add of would with things I And those added or types of contracts is The on backlog those continuing are to quarterly projects annual the an are of to a multi-year large only burn that basis. light question transportation which your on

good thing they and unfortunately had how thing that the The was them. good smaller opposed we're increments as burn, we So executing big gets to well gets typically is in chunks. replaced, as replaced

Tony Guzzi

then didn't know million ready and later. to happens. big this million, added a when is you is on and we mode jump there see business they process sooner a see a when just the rather putting underlying get backlog thing kind our it our there of They it finished running food see big have then side typically we of happen than in with significant we get think our are working say, they're producing million, now that's things $X in million, it we we don't backlog in there, $X through I lot into that of some chunk some and accelerate And running last is folks the that is that on because are million, revenue but actually $X first there, working quarter work executing our We're our that customers they'll in projects ready it we're cooperatives to we're get time there us a they big $XX boards right that. projects, projects And some we us, to we you'll with the capital be talk and actually in all network. like a you We can ask those be but food it, lot the when business very $XX approved. had backlog the year. projects see jump to million at process they awarded jump, awarded with year you're work will time multi-year accelerated mean execute project would so And the we the of plans put get go. $XX to and fourth been different typically right there investments and that when same day-to-day nice in half backlog thought backlog there. big you I this finishing when accelerate in about same jump it's significant you means, the And customers means

average million average size the here. still of the I $X.X a our bucks, think million size what were more That's goes on is in project of EMCOR. like still

Adam Thalhimer

Okay, talked I I'm to to just from that have the a make maybe X growth some still of non-res, ? follow X rate could in you're growth people we moderation down about curious that, or going like just something but

Tony Guzzi

where of cycle more something as or It in we the related are. be the to civil could front opposed

Mark Pompa

path. were we down further Yes, this

Tony Guzzi

coming could us cycle others. more late some be That or for and

Kevin Matz

of of backlog. you all are were have building market, market, what Kevin some they other is hotter the numbers look the markets largest that part and and educational running market, Adam, this And inside than we commercial the some the if that's our of other talking guys those the

Tony Guzzi

much market our on year-over-year and turned that down of see wouldn’t us. that impact really have could you Yes, an

Adam Thalhimer

turn Okay, Guys. it I'll Thanks over.

Tony Guzzi

Thank you.

Operator

it turn And I’ll remarks. to back management for now over closing

Tony Guzzi

and start. to We're a We and XX think to better the about and is, I’d Page going stake away going thank from excited to performance This I everybody think the be read Thank We shape you. will There call about the future to to recover And of over a industrial we XX of to months. which talk a is talk to and hope market it's go good move GAAP so about ask put from surely next the business of final XX the very GAAP you to all the talk you will in in just refocus and on obligations, Okay, much there. better ground backlog. our it's back Page remaining in thing be safe. were took We're are historical you the things instead really X it couple Q. need the number. number. the

Operator

today's call. for conference concludes participation. you your this Thank And

now may You disconnect.

EMCOR (EME) 26 Apr 182018 Q1 Earnings call transcript