EMCOR Group Inc. EME announced second-quarter 2018 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. In fact, the second-quarter earnings release marked the sixth consecutive earnings beat for the company.
Adjusted earnings came in at $1.23 per share, beating the consensus mark of $1.00. The reported figure also improved 23% from the year-ago adjusted profit level of 95 cents, buoyed by higher productivity and improved margins. The upside was driven by continued strength in U.S. Construction and Building Services segments, along with robust performance of the U.K. Building Services segment.
The company generated a record $1.95 billion in revenues, which edged up 3.1% year over year and surpassed the Zacks Consensus Estimate of $1.89 million.
Segment Details
The U.S. Construction segment (up 2.4% year over year) sustained its robust momentum, delivering strong revenues as well as operating income growth. The segment was driven by solid contribution from the U.S. Electrical Construction segment revenues (up 6.7% year over year), owing to impressive execution on its diverse mix of projects. On the other hand, within the U.S. Construction cohort, the U.S. Mechanical Construction segment’s revenues slightly dropped 0.2% in the quarter.
The company’s U.S. Building Services segment’s revenues inched up 5.2% year over year, driven by strong execution in government and energy services businesses.
The U.S. Industrial Services’ revenues declined 10.8% year over year. The weakness stemmed from typical seasonality, along with impact from Hurricane Harvey’s continued residual effects.
Revenues from total U.S. operations grew 1.7% year over year to $1.85 billion.
The U.K. Building Services segment maintained its growth trajectory, with revenues increasing 33% year over year. The upside was driven by profitable new contracts and solid execution in specialty project activity.
Operating Highlights
EMCOR’s adjusted operating income was $100.6 million, up from $92.4 million in the prior-year quarter. Operating margins were 5.1%, reflecting an expansion of 20 basis points from the prior-year figure of 4.9%.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
EMCOR Group, Inc. Price, Consensus and EPS Surprise | EMCOR Group, Inc. Quote
Liquidity & Cash Flow
EMCOR’s cash and cash equivalents totaled $30.6.6 million as of Jun 30, 2018 compared with $467.4 million on Dec 31, 2017. Total debt and capital lease obligations were $262.5 million, down from $269.8 million recorded on Dec 31, 2017.
In the first six months of 2018, cash flow used in operating activities totaled $32.7 million against cash flow provided by operating activities of 102.7 million in the year-ago period.
2018 Guidance
Buoyed by solid market conditions and favorable project mix, EMCOR raised its expectation for current-year earnings as well as revenues. The company now expects earnings from continuing operations within $4.40-$4.80 per share from $4.10-$4.70 expected earlier.
EMCOR boosted its revenue expectation to approximately $7.8 billion, depicting an increase from the prior guided range of $7.6-$7.7 billion.
Zacks Rank
EMCOR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Releases
Martin Marietta Materials, Inc. MLM reported second-quarter 2018 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate and also improved year over year, given higher shipments, pricing improvements and benefits from growth initiatives. Adjusted earnings per share of $3.25 beat the Zacks Consensus Estimate of $2.84 by 14.4%. Earnings also increased 43.2% from the prior-year quarter.
D.R. Horton, Inc. DHI reported third quarter of fiscal 2018 earnings of $1.18 per share, surpassing the Zacks Consensus Estimate of $1.08 by 9.3%. Earnings increased 55.3% from the year-ago profit level of 76 cents. Total revenues (Homebuilding, Forestar and Financial Services) came in at $4.44 billion. The figure surpassed the Zacks Consensus Estimate of $4.33 billion and also increased 17.4% year over year.
PulteGroup Inc. PHM reported impressive second-quarter 2018 results, with earnings and revenues beating the Zacks Consensus Estimate. Also, the company’s earnings per share came in at 89 cents, beating the consensus mark of 74 cents.
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