EMCOR Group, Inc. Reports Fourth Quarter and Full-Year 2022 Results

EMCOR Group, Inc. (NYSE: EME) today reported results for the fourth quarter and year ended December 31, 2022.

For the fourth quarter of 2022, net income was $126.3 million, or $2.63 per diluted share, compared to $101.7 million, or $1.89 per diluted share, for the fourth quarter of 2021. Revenues for the fourth quarter of 2022 totaled $2.95 billion, an increase of 11.7%, compared to $2.64 billion for the fourth quarter of 2021.

Operating income for the fourth quarter of 2022 was $177.2 million, or 6.0% of revenues, compared to $143.0 million, or 5.4% of revenues, for the fourth quarter of 2021. Operating income included depreciation and amortization expense, inclusive of amortization of identifiable intangible assets, of $28.0 million and $28.2 million for the fourth quarter of 2022 and 2021, respectively.

Selling, general and administrative expenses for the fourth quarter of 2022 totaled $277.6 million, or 9.4% of revenues, compared to $260.0 million, or 9.8% of revenues, for the fourth quarter of 2021.

The Company's income tax rate for the fourth quarter of 2022 was 27.4%, compared to an income tax rate of 28.8% for the fourth quarter of 2021.

Remaining performance obligations as of December 31, 2022 were $7.46 billion compared to $5.60 billion as of December 31, 2021. Remaining performance obligations grew approximately $1.86 billion year-over-year.

Tony Guzzi, Chairman, President and Chief Executive Officer of EMCOR, commented, “The results that we reported today were exceptional, setting a record for quarterly and full year revenues, operating income, and EPS, despite a challenging operating environment. As we look forward, we expect demand for our services to continue to be strong with remaining performance obligations increasing 33.2% year-over-year to a record of $7.46 billion, underscoring the strength of our project pipeline.”

Mr. Guzzi added, “Our U.S. Construction segments posted another quarter of strong results and an outstanding year overall, achieving combined record revenues in the fourth quarter. Notably, our U.S. Mechanical Construction segment had an exceptional year with 9.5% revenue growth, all of which was organic, and operating margins of 7.7% driven by strong execution on various semiconductor, data center, water and wastewater, and healthcare projects. Our utilization of BIM and continued enhancements in our prefabrication capabilities allowed us to deliver our services to customers in a safer and more efficient manner and helped counteract supply chain and inflationary challenges. Our U.S. Electrical Construction segment’s performance strengthened through the year as expected, and we finished the year more in line with our historical performance and expectations. Our U.S. Building Services segment had another excellent year, driven by outstanding performance across the majority of our service lines including repair service, site-based services, building controls, and HVAC projects. Driving much of this work is the demand for improved energy efficiency as energy prices remain volatile and customers' desire to extend the life of their HVAC equipment due to both long equipment lead times and availability issues. In our U.S. Industrial Services segment, revenue grew 13.4% year-over-year all on an organic basis as we continued to experience a resumption in the demand for our services. Our U.K. Building Services segment continues to perform well delivering an operating margin of 6.3% for the year, despite substantial foreign exchange headwinds.”

Revenues for the 2022 full-year period totaled $11.08 billion, an increase of 11.8%, compared to $9.90 billion for the 2021 full-year period. Net income for the 2022 full-year period was $406.1 million, or $8.10 per diluted share, compared to $383.5 million, or $7.06 per diluted share for the 2021 full-year period.

Operating income for the 2022 full-year period was $564.9 million, or 5.1% of revenues, compared to $530.8 million, or 5.4% of revenues, for the 2021 full-year period. Operating income included depreciation and amortization expense, inclusive of amortization of identifiable intangible assets, of $108.6 million and $112.4 million for the 2022 and 2021 full-year periods, respectively.

SG&A totaled $1.04 billion, or 9.4% of revenues, for the 2022 full-year period, compared to $970.9 million, or 9.8% of revenues, for the 2021 full-year period.

Based on expected project mix and our current visibility into the coming year, EMCOR expects full-year 2023 revenues to be between $12.0 billion and $12.5 billion and full-year 2023 diluted earnings per share in the range of $8.75 to $9.50.

Mr. Guzzi concluded, “Our strong operating performance in 2022 was a clear indication of our team’s ability to perform well in a challenging environment. We managed through the significant supply chain disruptions and inflationary pressures that negatively impacted us in 2022. Our field leaders' tenacity and nimbleness coupled with our employees’ technical skill and flexibility drove our record performance. We expect to continue to build on the momentum that we have created over the last few years, with strong demand experienced across important end markets such as semiconductor, healthcare, biotech, pharma, data centers, and energy efficiency retrofits. Notably, our record remaining performance obligations provide us the visibility and confidence that we can achieve another successful year in 2023. Looking ahead, we will continue to execute our balanced capital allocation strategy, utilize our strong balance sheet to make organic investments, pursue strategic acquisition opportunities, and return cash to shareholders through dividends and repurchases.”

Dividend Increase

The Company today announced that its Board of Directors has approved an increase to the Company’s regular quarterly dividend to $0.18 per share from $0.15 per share. The Board expects to declare this cash dividend starting in the second quarter of 2023.

Mr. Guzzi said, "Increasing our dividend is a testament to our very successful fiscal year, our long-term confidence in our business and our solid financial position. We are excited about what the future holds for EMCOR and remain committed to creating long term value for our shareholders.”

EMCOR Group, Inc. is a Fortune 500 leader in mechanical and electrical construction services, industrial and energy infrastructure and building services. This press release and other press releases may be viewed at the Company’s website at www.emcorgroup.com. EMCOR routinely posts information that may be important to investors in the “Investor Relations” section of our website at www.emcorgroup.com. Investors and potential investors are encouraged to consult the EMCOR website regularly for important information about EMCOR.

EMCOR Group's fourth quarter conference call will be available live via internet broadcast today, Thursday, February 23, at 10:30 AM Eastern Standard Time. The live call may be accessed through the Company's website at www.emcorgroup.com.

Forward Looking Statements:

This release contains certain forward-looking statements. Any such comments speak only as of February 23, 2023 and EMCOR assumes no obligation to update any such forward-looking statements, unless required by law. These forward-looking statements may include statements regarding anticipated future operating and financial performance, including financial guidance and projections underlying that guidance; the nature and impact of our remaining performance obligations; our ability to pursue acquisitions; our ability to return capital to shareholders; market opportunities; market growth prospects; and customer trends. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated (whether expressly or implied) by the forward-looking statements. Accordingly, these statements do not guarantee future performance or events. Applicable risks and uncertainties include, but are not limited to, adverse effects of general economic conditions; changes in interest rates; domestic and international political developments; changes in the specific markets for EMCOR’s services; adverse business conditions, including labor market tightness, productivity challenges, the nature and extent of supply chain disruptions impacting availability and pricing of materials, and inflationary trends more generally, including fluctuations in energy costs; the impact of legislation and/or government regulations; the availability of adequate levels of surety bonding; increased competition; unfavorable developments in the mix of our business; and the continuing impact of the COVID-19 pandemic, including the nature, extent, and impact of future variant surges, as well as other health emergencies, and government orders and mandates related thereto, on our revenue and operations. Certain of the risk factors associated with EMCOR’s business are also discussed in Part I, Item 1A “Risk Factors,” of the Company’s 2022 Form 10-K, and in other reports filed from time to time with the Securities and Exchange Commission and available at www.sec.gov and www.emcorgroup.com. Such risk factors should be taken into account in evaluating any forward-looking statements.

Non-GAAP Measures:

This release may include certain financial measures that were not prepared in accordance with U.S. generally accepted accounting principles (GAAP). Reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this release. The Company uses these non-GAAP measures as key performance indicators for the purpose of evaluating performance internally. We also believe that these non-GAAP measures provide investors with useful information with respect to our ongoing operations. Any non-GAAP financial measures presented are not, and should not be viewed as, substitutes for financial measures required by GAAP, have no standardized meaning prescribed by GAAP, and may not be comparable to the calculation of similar measures of other companies.

EMCOR GROUP, INC.

RECONCILIATION OF ORGANIC REVENUE GROWTH

(In thousands, except for percentages) (Unaudited)

The following table provides a reconciliation between organic revenue growth, a non-GAAP measure, and total revenue growth for the quarter and year ended December 31, 2022.

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