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) November 2, 2010
EMCOR Group, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8267 11-2125338
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(Commission File Number) (I.R.S. Employer Identification No.)
301 Merritt Seven, Norwalk, CT 06851-1092
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(Address of Principal Executive Offices) (Zip Code)
(203) 849-7800
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(Registrant's Telephone Number, Including Area Code)
N/A
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(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 November 2, 2010, EMCOR Group, Inc. issued a press release disclosing
results of operations for its fiscal 2010 third quarter ended September 30,
2010. 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
(d) Exhibits
Exhibit Number Description
-------------- ---------------------------------------------------------------
99.1 Press Release issued by EMCOR Group, Inc. on November 2, 2010
disclosing results of operations for its fiscal 2010 third
quarter ended September 30, 2010.
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.
Dated: November 3, 2010 By: /s/ Frank T. MacInnis
---------------------------
Frank T. MacInnis
Chairman of the Board of
Directors and Chief
Executive Officer
Exhibit 99.1
FOR: EMCOR GROUP, INC.
CONTACT: R. Kevin Matz
Executive Vice President
Shared Services
(203) 849-7938
FD
Investors: Eric Boyriven / Alexandra Tramont
(212) 850-5600
Linden Alschuler & Kaplan, Inc.
Media: Suzanne Dawson / Cecile Fradkin
212-575-4545
EMCOR GROUP, INC. REPORTS THIRD QUARTER 2010 RESULTS
- Adjusted EPS of $0.45 excluding non-cash impairment charge; loss of $(2.64)
including $226 million non-cash impairment charge -
- Company increases 2010 adjusted EPS guidance to $1.78 to $1.90;
$(1.36) to $(1.24) including non-cash impairment charges
and Qtr. 2 gain on sale -
NORWALK, CONNECTICUT, November 2, 2010 - EMCOR Group, Inc. (NYSE: EME) today
reported results for the third quarter ended September 30, 2010.
The Company recorded a net loss for the 2010 third quarter of $175.6 million, or
$(2.64) per diluted share. Excluding a non-cash impairment charge discussed
below, adjusted net income was $30.9 million, or $0.45 per diluted share,
compared to net income of $40.0 million, or $0.59 per diluted share, in the
third quarter of 2009. Revenues in the third quarter of 2010 totaled $1.28
billion, compared to $1.37 billion in the third quarter a year ago.
During the third quarter of 2010, the Company concluded that impairment
indicators existed within its United States facilities services segment based
upon year to date results and recent forecasts. As a result, the Company
performed applicable tests as prescribed by the accounting literature and
recognized a pre-tax, non-cash impairment charge of $226.2 million, or $3.09 per
diluted share after-tax. The impairment charge results primarily from the
negative impact of recessionary trends in the refining industry on the revenues
and operating margins of the industrial services operations in the Company's
facilities services business, as well as continuing uncertainty about the pace
and timing of improved demand for refined products. The impairment did not have
any impact on the Company's compliance with its debt covenants or on its cash
flows.
EMCOR Reports Third Quarter Results Page 2
Including the above-mentioned non-cash impairment charge and restructuring
expenses of $1.7 million, the operating loss for the third quarter of 2010 was
$174.4 million. Excluding the non-cash impairment charge, the Company's non-GAAP
operating income for the third quarter of 2010 was $51.8 million, or 4.1% of
revenues. Operating income in the 2009 third quarter was $67.3 million, or 4.9%
of revenues, which included restructuring expenses of $0.1 million.
For the third quarter of 2010, the Company's Canadian construction subsidiary
recorded an operating loss of $4.6 million primarily due to a write-down on a
construction project. Excluding the impact of the write-down, operating income
of the Canadian subsidiary was $4.1 million for the third quarter of 2010,
compared to operating income of $4.5 million in the same period last year,
reflecting good performance especially in the nuclear energy and healthcare
sectors.
Please see the attached tables for a reconciliation of non-GAAP operating
income, non-GAAP net income and non-GAAP diluted earnings per share to the
comparable GAAP figures.
Selling, general and administrative expenses (SG&A) decreased 13.4% to $119.5
million, or 9.4% of revenues, in the 2010 third quarter, from $137.9 million, or
10.1% of revenues, in the year-ago period.
For the third quarter of 2010, net interest expense was $2.5 million, compared
to $1.2 million in the third quarter of 2009, reflecting higher borrowing costs
under the Company's new revolving credit facility.
Contract backlog as of September 30, 2010 was $3.14 billion, largely unchanged
from contract backlog of $3.15 billion as of December 31, 2009 and June 30,
2010. Compared to 2009 year-end backlog, the Company's current backlog reflects
growth in the healthcare, industrial and institutional sectors, which offset
declines in the commercial, hospitality/gaming and transportation markets.
Frank T. MacInnis, Chairman and CEO of EMCOR Group, commented, "We continue to
be encouraged by the underlying results of our businesses through the third
quarter, which largely reflected steady performance and solid operational
execution. While the impairment charge taken during the quarter was required, it
is the result of weak industry-wide conditions in the refining sector and not
something specific to our operations, which we believe remain well positioned to
take advantage of an upturn in that marketplace when it occurs."
Mr. MacInnis concluded, "While we continue to operate in a challenging economic
environment, overall demand remains stable, driven by our strong backlog in the
government and healthcare markets. We are committed to growing both organically
through disciplined project bidding and solid execution, and through the
continued pursuit of attractive acquisition targets, as evidenced by our recent
acquisition of Harry Pepper & Associates. Although the pace of the eventual
recovery in our markets is uncertain, our diverse business model provides a
stable base through this economic slowdown while giving us the flexibility and
confidence to take advantage of improving market conditions when they occur."
EMCOR Reports Third Quarter Results Page 3
For the first nine months of 2010, the Company reported a net loss of $126.7
million, or $(1.91) per diluted share. The net loss included the above-mentioned
charges, as well as a $19.9 million, or $0.18 per diluted share after-tax,
non-cash impairment charge in the 2010 second quarter, a pre-tax gain of $7.9
million, or $0.12 per diluted share after-tax, in the 2010 second quarter from
the gain on the sale of the Company's equity interest in its Middle East venture
to its venture partner, and restructuring expenses of $2.5 million.
Excluding all non-cash impairment charges and the gain on sale, net income for
the first nine months of 2010 was $83.9 million, or $1.23 per diluted share,
compared to net income of $121.6 million, or $1.81 per diluted share for the
first nine months of 2009. Net income for the first nine months of 2009 included
$4.2 million in restructuring expenses.
Revenues for the first nine months of 2010 were $3.77 billion, compared to $4.19
billion for the first nine months of 2009.
For the first nine months of 2010, the Company reported an operating loss of
$97.1 million, or (2.6)% of revenues. Excluding the non-cash impairment charges,
the Company's non-GAAP operating income for the first nine months of 2010 was
$149.0 million, or 4.0% of revenues, compared to $206.4 million, or 4.9% of
revenues, in the comparable 2009 period. SG&A for the first nine months of 2010
was $363.0 million, or 9.6% of revenues, compared to $402.7 million, or 9.6% of
revenues for the first nine months of 2009.
For the 2010 nine-month period, net interest expense was $7.3 million, compared
to $2.2 million in the same year ago period, and as previously announced
reflects the acceleration of expense for debt issuance costs associated with the
repayment and termination of a term loan and the Company's 2005 revolving credit
facility, increased borrowing costs under the Company's new revolving credit
facility and decreased interest income on invested cash balances.
The Company noted that, based on the current size and mix of its contract
backlog and assuming a continuation of existing market conditions, it continues
to expect to generate revenues in 2010 of approximately $5 billion and now
expects adjusted earnings per share for 2010 of $1.78 to $1.90, before the
above-mentioned impairments and gain on sale items, reflecting better than
previously anticipated margin performance. Including the impairment charges and
gain on sale items, the Company expects to generate diluted earnings per share
of $(1.36) to $(1.24). Please see the attached tables for a reconciliation of
non-GAAP diluted earnings per share to the comparable GAAP figures.
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 Reports Third Quarter Results Page 4
EMCOR Group's third quarter conference call will be available live via internet
broadcast today, Tuesday, November 2, at 10:30 AM Eastern Daylight 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 and its 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, backlog 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 and mix of business. Certain of the risks and factors associated
with EMCOR's business are also discussed in the Company's 2009 Form 10-K, its
Form 10-Q for the third quarter ended September 30, 2010, 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)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------- ---------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
Revenues $ 1,277,277 $ 1,371,985 $ 3,765,138 $ 4,189,291
Cost of sales 1,104,349 1,166,740 3,250,695 3,576,003
----------- ----------- ----------- -----------
Gross profit 172,928 205,245 514,443 613,288
Selling, general and administrative
expenses 119,450 137,895 362,972 402,664
Restructuring expenses 1,715 90 2,512 4,200
Impairment loss on goodwill and
identifiable intangible assets 226,152 -- 246,081 --
----------- ----------- ----------- -----------
Operating (loss) income (174,389) 67,260 (97,122) 206,424
Interest expense, net 2,537 1,159 7,301 2,224
Gain on sale of
equity investment -- -- 7,900 --
----------- ----------- ----------- -----------
(Loss) income before income taxes (176,926) 66,101 (96,523) 204,200
Income tax (benefit) provision (2,362) 25,624 27,068 81,124
----------- ----------- ----------- -----------
Net (loss) income including
noncontrolling interests (174,564) 40,477 (123,591) 123,076
Less: Net income attributable to
noncontrolling interests 1,061 491 3,076 1,503
----------- ----------- ----------- -----------
Net (loss) income attributable
to EMCOR Group, Inc. $ (175,625) $ 39,986 $ (126,667) $ 121,573
=========== =========== =========== ===========
Basic (loss) earnings per
common share: $ (2.64) $ 0.61 $ (1.91) $ 1.85
=========== =========== =========== ===========
Diluted (loss) earnings per
common share: $ (2.64) $ 0.59 $ (1.91) $ 1.81
=========== =========== =========== ===========
Weighted average shares of common
stock outstanding:
Basic 66,400,105 65,897,546 66,344,180 65,864,793
Diluted 66,400,105 67,551,619 66,344,180 67,279,095
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2010 2009
(Unaudited)
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 641,111 $ 726,975
Accounts receivable, net 1,053,355 1,057,171
Costs and estimated earnings in excess of billings
on uncompleted contracts 114,592 90,049
Inventories 27,789 34,468
Prepaid expenses and other 52,623 68,702
---------- ----------
Total current assets 1,889,470 1,977,365
Investments, notes and other long-term receivables 5,749 19,287
Property, plant & equipment, net 87,478 92,057
Goodwill 388,673 593,628
Identifiable intangible assets, net 223,995 264,522
Other assets 32,139 35,035
---------- ----------
Total assets $2,627,504 $2,981,894
========== ==========
LIABILITIES AND EQUITY
Current liabilities:
Borrowings under working capital credit line $ -- $ --
Current maturities of long-term debt and capital
lease obligations 305 45,100
Accounts payable 347,158 379,764
Billings in excess of costs and estimated earnings
on uncompleted contracts 500,014 526,241
Accrued payroll and benefits 169,456 215,967
Other accrued expenses and liabilities 141,295 167,533
---------- ----------
Total current liabilities 1,158,228 1,334,605
Borrowings under working capital credit line 150,000 --
Long-term debt and capital lease obligations 53 150,251
Other long-term obligations 201,112 270,572
---------- ----------
Total liabilities 1,509,393 1,755,428
---------- ----------
Equity:
Total EMCOR Group, Inc. stockholders' equity 1,108,340 1,218,071
Noncontrolling interests 9,771 8,395
---------- ----------
Total equity 1,118,111 1,226,466
---------- ----------
Total liabilities and equity $2,627,504 $2,981,894
========== ==========
EMCOR GROUP, INC.
RECONCILIATION OF 2010 OPERATING (LOSS) INCOME
(In thousands) (Unaudited)
In our press release, we provide actual 2010 third quarter and year-to-date
September 30, 2010 operating (loss) income. The following table provides a
reconciliation between 2010 operating income based on non-GAAP measures to the
most direct comparable GAAP measures.
For the Three Months For the Nine Months
Ended Ended
September 30, 2010 September 30, 2010
-------------------- -------------------
GAAP operating loss $(174,389) $ (97,122)
Impairment loss: 226,152 246,081
--------- ---------
Non-GAAP operating income, excluding impairment loss
on goodwill and identifiable intangible assets $ 51,763 $ 148,959
========= =========
EMCOR GROUP, INC.
RECONCILIATION OF 2010 NET (LOSS) INCOME
(In thousands) (Unaudited)
In our press release, we provide actual 2010 third quarter and year-to-date
September 30, 2010 net (loss) income attributable to EMCOR Group, Inc. The
following table provides a reconciliation between 2010 net income attributable
to EMCOR Group, Inc. based on non-GAAP measures to the most direct comparable
GAAP measures.
For the Three Months For the Nine Months
Ended Ended
September 30, 2010 September 30, 2010
-------------------- -------------------
GAAP net loss attributable to EMCOR
Group, Inc. $(175,625) $(126,667)
Impairment loss: (1) 206,539 218,495
Qtr. 2 gain on sale of equity investment (2) -- (7,900)
--------- ---------
Non-GAAP net income attributable to EMCOR
Group, Inc., excluding impairment loss on
goodwill, identifiable intangible assets
and gain on sale of equity investment $ 30,914 $ 83,928
========= =========
(1) Amount is net of tax effect of $19.6 million
in the quarter and $27.6 million in the nine-month
period
(2) Amount is net of tax effect which is zero due to the
release of a valuation allowance related to capital
loss carryforwards
EMCOR GROUP, INC.
RECONCILIATION OF THREE AND NINE MONTH 2010 DILUTED (LOSS)
EARNINGS PER SHARE FIGURES
(Unaudited)
In our press release, we provide actual 2010 third quarter and year-to-date
September 30, 2010 diluted (loss) earnings per share. The following table
provides a reconciliation between 2010 EPS based on non-GAAP measures to the
most direct comparable GAAP measures.
For the Three Months For the Nine Months
Ended Ended
September 30, 2010 September 30, 2010
-------------------- -------------------
GAAP diluted loss per common share $(2.64) $(1.91)
Impairment loss: (1) 3.09 3.26
Qtr. 2 gain on sale of equity investment (2) -- (0.12)
------ ------
Non-GAAP diluted earnings per common share,
excluding impairment loss on goodwill,
identifiable intangible assets and
gain on sale of equity investment $ 0.45 $ 1.23
====== ======
EMCOR GROUP, INC.
RECONCILIATION OF 2010 DILUTED (LOSS) EARNINGS PER SHARE GUIDANCE
(Unaudited)
In our press release, we provide 2010 diluted (loss) earnings per share range
guidance with GAAP and non-GAAP measures. The following table provides a
reconciliation between 2010 guidance based on non-GAAP measures to the most
direct comparable GAAP measures.
GAAP 2010 diluted EPS GAAP guidance range $(1.36) - $(1.24)
2010 year impairment loss (1) 3.26 - 3.26
2010 year gain on sale of equity investment (2) (0.12) - (0.12)
------ ------
Non-GAAP 2010 diluted EPS guidance range, excluding
impairment loss on goodwill, identifiable intangible
assets and gain on sale of equity investment $ 1.78 - $ 1.90
====== ======
(1) Amount is net of tax effect of $19.6 million
in the quarter and $27.6 million in the nine-month
period
(2) Amount is net of tax effect which is zero due to the
release of a valuation allowance related to capital
loss carryforwards