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EMCOR Beats on Q2 Earnings and Revenues, Shares Up - Analyst Blog

EMCOR Group Inc.’s EME second-quarter 2015 earnings from continuing operations came in at 74 cents per share, which surpassed the Zacks Consensus Estimate of 67 cents by about 11% and the year-ago figure of 61 cents by around 21%.

 

Emcor Group Inc. - Earnings Surprise | FindTheBest

 

Strong results were attributable to improved operational performance across segments. Encouragingly, shares of the company cumulatively increased by about 3% since its earnings release, to close at $47.83 on Jul 31.

Inside the Headlines

EMCOR’s second-quarter 2015 revenues rose 5.6% to $1.65 billion from the year-ago figure and also came above the Zacks Consensus Estimate of $1.62 billion. In the quarter under review, the company witnessed some recovery to the problems faced in the first quarter related to refinery operators’ strike in the U.S. Industrial Services segment causing project deferrals; and cold weather.  This apart, EMCOR’s U.S. Electrical Construction segment is going strong, with U.S. Mechanical Construction and U.S. Building Services segments posting a notable improvement. These factors collectively led to a year-over-year rise in revenues.

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As per geographies, revenues from the U.S. operations increased 6.2% to $1.56 billion. Also, revenues from the United Kingdom building services jumped 9.7% year over year to $91.6 million.

As of Jun 30, 2015, EMCOR’s backlog stood at $3.62 billion, recording a marginal decrease of 0.3% from the prior-year period. This was due to a dip in backlogs in healthcare, transportation, industrial and institutional sectors, which offset the rise in the commercial, water/wastewater industrial and hospitality/gaming sectors. Also, backlog growth in U.S. Electrical and Mechanical Construction segments were more than offset by the decline in backlog in the U.S. Building Services and U.S. Industrial Services Segments.

EMCOR’s operating income in the second quarter jumped about 11.5% year over year to $77.7 million. Operating margin rose 20 basis points to 4.7%. 

Liquidity & Cash Flow

EMCOR’s cash and cash equivalents totaled $360.8 million as of Jun 30, 2015, versus $432.1 million as of Dec 31, 2014. Long-term debt and capital lease obligations were $307.5 million, declining from the prior-year value of $316.4 million.

The company’s total cash utilized in operating activities for the three-month period ended Jun 30, 2015 came in at $6.1 million, compared with cash provided by operating activities of $39.6 million in the year-ago period.

Outlook

Impressed with its quarterly performance to-date in 2015, EMCOR narrowed its earnings from continuing operations to the range of $2.65–$2.85 per share, from $2.65–$2.95 guided earlier. On the other hand, the company reiterated its full year 2015 revenues to be about $6.6 billion.

In Conclusion

We are impressed with EMCOR’s quarterly results, after dismal earnings in the first quarter. Strong execution of strategic initiatives led to a minimal but noteworthy reduction of persisting operational problems. If the growth pace continues in the future too, we expect to see further enhancement in both revenue and operating margins in the coming quarters as well.

EMCOR currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Dycom Industries Inc. DY, AO Smith Corp. AOS and Danaher Corp. DHR. While Dycom and A.O.Smith sport a Zacks Rank #1 (Strong Buy), Danaher Corp. carries a Zacks Rank #2 (Buy).

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DANAHER CORP (DHR): Free Stock Analysis Report
 
SMITH (AO) CORP (AOS): Free Stock Analysis Report
 
EMCOR GROUP INC (EME): Free Stock Analysis Report
 
DYCOM INDS (DY): Free Stock Analysis Report
 
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