EMCOR Group, Inc. Q3 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Highlights

  • Revenues of $2.2 billion, down 3.8% versus Q3 2019; down 7.3% organically when excluding acquisitions.
  • Record operating income of $135.9 million, up 17.4% year-over-year.
  • Operating margin of 6.2%, up from 5.1% in Q3 2019.
  • Non-GAAP diluted EPS of $1.76, up 21.4% from $1.45 last year. GAAP EPS was $1.11 affected by elevated tax rate.
  • Operating cash flow of $270 million in Q3; $547 million year-to-date.
  • Strong liquidity with $679 million in cash; debt-to-capitalization reduced to 12.3%.
  • Raised 2020 guidance: non-GAAP EPS of $5.90 to $6.10 on revenues of about $8.7 billion.

Segment Performance

U.S. Electrical Construction
  • Revenue down 8.3% year-over-year due to COVID-related capital spending slowdowns and oil & gas project deferrals.
  • Operating income grew to $47.1 million; margin expanded to 9.2% (up 310 bps).
  • Improvement driven by strong commercial and telecom work and favorable project closeouts.
U.S. Mechanical Construction
  • Record Q3 revenues at $891.5 million, up 2.6%; organically down 4.5% excluding acquisition revenue.
  • Operating income rose to $80 million; margin expanded to 9.0% (up 200 bps).
  • Higher gross profits across many markets and favorable project mix contributed to performance.
U.S. Building Services

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Operator: Good morning. My name is Lara, and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group Third Quarter 2020 Earnings Call. All lines have been placed in mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Ms. Jamie Baird with FTI Consulting, you may begin. Jamie Baird: Thank you, Lara, and good morning, everyone. Welcome to the EMCOR Group conference call. We are here today to discuss the company’s 2020 third quarter results, which were reported this morning. I would like to turn the call over to Kevin Matz, Executive Vice President of Shared Services, who will introduce management. Kevin, please go ahead. Kevin Matz: Thank you, Jamie, and good morning, everyone. As always, thank you for your interest in EMCOR and welcome to our earnings conference call for the third quarter of 2020. For those of you who are accessing the call via the Internet and our website, welcome, and we hope you have arrived at the beginning of our slide presentation that will accompany our remarks today. We are on slide two. This presentation and discussion contains certain forward-looking statements and certain non-GAAP information. Page two describes in detail the forward-looking statements and the non-GAAP financial information disclosures. I encourage everyone to review both disclosures in conjunction with our discussion and accompanying slides. Slide t

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