Emcor group, inc. reports fourth quarter and full-year 2021 results
Norwalk, conn.--(business wire)--emcor group, inc. (nyse: eme) today reported results for the fourth quarter and year ended december 31, 2021. for the fourth quarter of 2021, net income was $101.7 million, or $1.89 per diluted share, compared to $79.8 million, or $1.45 per diluted share, for the fourth quarter of 2020. net income for the fourth quarter of 2020 was negatively impacted by the tax effect of the goodwill, identifiable intangible asset, and other long-lived asset impairment charges recorded in the second quarter of 2020. excluding this tax effect, non-gaap net income for the fourth quarter of 2020 was $102.8 million, or $1.86 per diluted share. revenues for the fourth quarter of 2021 totaled $2.64 billion, an increase of 15.7%, compared to $2.28 billion for the fourth quarter of 2020. operating income for the fourth quarter of 2021 was $143.0 million, or 5.4% of revenues. this compared to $137.6 million, or 6.0% of revenues, for the fourth quarter of 2020. selling, general and administrative expenses for the fourth quarter of 2021 totaled $260.0 million, or 9.8% of revenues, compared to $244.6 million, or 10.7% of revenues, for the fourth quarter of 2020. the company's income tax rate for the fourth quarter of 2021 was 28.8%, compared to an income tax rate of 41.8% for the fourth quarter of 2020. the company’s tax rate for the fourth quarter of 2020 was impacted by the previously referenced impairment charges recorded in the second quarter of 2020. remaining performance obligations as of december 31, 2021 were $5.60 billion compared to $4.59 billion as of december 31, 2020. total remaining performance obligations grew approximately $1.0 billion year-over-year. tony guzzi, chairman, president and chief executive officer of emcor, commented, “the company delivered exceptional results in 2021 with record full year revenues, operating income, and diluted earnings per share, demonstrating our resilience in an uncertain and challenging environment. importantly, while we continued to achieve impressive revenue growth, demand for our services remained strong with remaining performance obligations increasing 21.9% year-over-year to a record $5.60 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 record revenues in the fourth quarter. our u.s. mechanical and electrical construction segments delivered quarterly revenues, which were up 9.4% and 17.3% year-over-year, respectively, driven by key market sectors including manufacturing, healthcare, commercial, and water/wastewater. despite continued supply chain constraints and covid-related headwinds, our u.s. construction segments remained resilient, leveraging our long-term supplier relationships and focusing on safety to maintain solid operating margins. our u.s. building services segment also delivered robust revenue growth in the fourth quarter, up 10.4% year-over-year, driven by increased demand for projects, retrofits, and building automation and controls, including those aimed at increasing energy efficiency. our u.s. industrial services segment performed as we expected as we saw strengthening demand through the year, with the segment delivering revenue and operating income growth of 72.6% and 146.3%, respectively, in the fourth quarter. we continue to deliver for our refining and petrochemical customers and are positioned for the opportunities ahead in the growing renewable energy and renewable fuels markets. our u.k. building services segment continues to perform exceptionally with excellent contract and specialized project execution, resulting in fourth quarter revenue and operating income growth of 7.7% and 17.5%, respectively.” revenues for the 2021 full-year period totaled $9.90 billion, an increase of 12.6%, compared to $8.80 billion for the 2020 full-year period. net income for the 2021 full-year period was $383.5 million, or $7.06 per diluted share, compared to $132.9 million, or $2.40 per diluted share, for the 2020 full-year period. excluding the previously referenced impairment charges recorded in the second quarter of 2020, non-gaap net income for the 2020 full-year period was $354.6 million, or $6.40 per diluted share. operating income for the 2021 full-year period was $530.8 million, or 5.4% of revenues, compared to $256.8 million, or 2.9% of revenues, for the 2020 full-year period. excluding the $232.8 million of non-cash impairment charges recorded in the second quarter of 2020, non-gaap operating income for the 2020 full-year period was $489.6 million, or 5.6% of revenues. sg&a totaled $970.9 million, or 9.8% of revenues, for the 2021 full-year period, compared to $903.6 million, or 10.3% of revenues, for the 2020 full-year period. please see the attached tables for a reconciliation of non-gaap operating income, non-gaap operating margin, non-gaap net income, and non-gaap diluted earnings per share to the comparable gaap measures for the three and twelve months ended december 31, 2020. based on expected project mix and our current visibility into the coming year, and assuming the impact of the covid-19 pandemic and supply chain disruptions do not worsen, emcor expects full-year 2022 revenues to be between $10.4 billion and $10.7 billion and full-year 2022 diluted earnings per share in the range of $7.15 to $7.85. mr. guzzi concluded, “our operating performance in 2021 is a clear reflection of our team’s ability to deliver in a volatile environment. over the course of the year, we completed a number of acquisitions, continued to win new business, delivered outstanding customer service, and drove record results. notably, our focus at every level of the organization on employee safety and well-being, operational excellence, and rigorous contingency planning not only delivered impressive financial results, but also led to our best safety year ever in 2021, an exceptional achievement given the challenges we faced. looking forward, we remain confident in our ability to successfully execute in the current dynamic environment and are better positioned than ever given our healthy balance sheet, the momentum we are seeing in the non-residential market, and our robust remaining performance obligations. as we move into 2022, we will maintain our disciplined capital allocation strategy, focusing on organic growth investments, strategic acquisition opportunities, and returning cash to shareholders through share repurchases and dividends.” 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 24, 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 24, 2022 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, 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, 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 are no guarantee of future performance or events. such risks 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, the availability and pricing of supplies and other materials, the availability of adequate levels of surety bonding, increased competition, unfavorable labor productivity, mix of business, and the impact of the covid-19 pandemic and related government orders and mandates 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 2021 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 also includes certain financial measures, including non-gaap operating income, non-gaap operating margin, non-gaap net income, and non-gaap diluted earnings per share, 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. financial highlights condensed consolidated statements of operations (in thousands, except share and per share information) (unaudited) for the three months ended december 31, for the twelve months ended december 31, 2021 2020 2021 2020 revenues $ 2,640,193 $ 2,281,494 $ 9,903,580 $ 8,797,061 cost of sales 2,237,151 1,897,643 8,401,843 7,401,679 gross profit 403,042 383,851 1,501,737 1,395,382 selling, general and administrative expenses 260,025 244,620 970,937 903,584 restructuring expenses — 1,609 — 2,214 impairment loss on goodwill, identifiable intangible assets, and other long-lived assets — — — 232,750 operating income 143,017 137,622 530,800 256,834 net periodic pension (cost) income 887 769 3,625 2,980 interest expense, net (1,157 ) (1,406 ) (5,122 ) (7,488 ) income before income taxes 142,747 136,985 529,303 252,326 income tax provision 41,079 57,204 145,602 119,383 net income including noncontrolling interests 101,668 79,781 383,701 132,943 net income attributable to noncontrolling interests — — 169 — net income attributable to emcor group, inc. $ 101,668 $ 79,781 $ 383,532 $ 132,943 basic earnings per common share: $ 1.90 $ 1.45 $ 7.09 $ 2.41 diluted earnings per common share: $ 1.89 $ 1.45 $ 7.06 $ 2.40 weighted average shares of common stock outstanding: basic 53,419,752 54,882,514 54,068,982 55,196,173 diluted 53,724,800 55,160,893 54,347,534 55,421,271 dividends declared per common share $ 0.13 $ 0.08 $ 0.52 $ 0.32 emcor group, inc. condensed consolidated balance sheets (in thousands) december 31, 2021 december 31, 2020 assets current assets: cash and cash equivalents $ 821,345 $ 902,867 accounts receivable, net 2,204,519 1,922,096 contract assets 230,143 171,956 inventories 54,098 53,338 prepaid expenses and other 80,889 70,679 total current assets 3,390,994 3,120,936 property, plant & equipment, net 152,066 158,427 operating lease right-of-use assets 260,778 242,155 goodwill 890,268 851,783 identifiable intangible assets, net 589,365 582,893 other assets 157,975 107,646 total assets $ 5,441,446 $ 5,063,840 liabilities and equity current liabilities: current maturities of long-term debt and finance lease liabilities $ 16,235 $ 16,910 accounts payable 734,275 671,886 contract liabilities 788,134 722,252 accrued payroll and benefits 490,867 450,955 other accrued expenses and liabilities 274,406 247,597 operating lease liabilities, current 57,814 53,632 total current liabilities 2,361,731 2,163,232 long-term debt and finance lease liabilities 245,450 259,619 operating lease liabilities, long-term 220,836 205,362 other long-term obligations 360,340 382,383 total liabilities 3,188,357 3,010,596 equity: total emcor group, inc. stockholders’ equity 2,252,387 2,052,668 noncontrolling interests 702 576 total equity 2,253,089 2,053,244 total liabilities and equity $ 5,441,446 $ 5,063,840 emcor group, inc. condensed consolidated statements of cash flows for the twelve months ended december 31, 2021 and 2020 (in thousands) 2021 2020 cash flows - operating activities: net income including noncontrolling interests $ 383,701 $ 132,943 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization 48,347 46,721 amortization of identifiable intangible assets 64,089 59,950 provision for credit losses 8,041 3,269 deferred income taxes 9,517 (36,354 ) non-cash expense for impairment of goodwill, identifiable intangible assets, and other long-lived assets — 232,750 non-cash share-based compensation expense 11,107 11,151 other reconciling items 2,374 1,320 changes in operating assets and liabilities, excluding the effect of businesses acquired (208,359 ) 354,616 net cash provided by operating activities 318,817 806,366 cash flows - investing activities: payments for acquisitions of businesses, net of cash acquired (118,239 ) (50,357 ) proceeds from sale or disposal of property, plant and equipment 2,754 3,463 purchases of property, plant and equipment (36,192 ) (47,969 ) investments in and advances to unconsolidated entities (1,595 ) — distributions from unconsolidated entities 196 — net cash used in investing activities (153,076 ) (94,863 ) cash flows - financing activities: proceeds from revolving credit facility — 200,000 repayments of revolving credit facility — (250,000 ) proceeds from long-term debt — 300,000 repayments of long-term debt and debt issuance costs (13,875 ) (286,987 ) repayments of finance lease liabilities (4,189 ) (4,470 ) dividends paid to stockholders (28,163 ) (17,674 ) repurchases of common stock (195,546 ) (112,553 ) taxes paid related to net share settlements of equity awards (4,210 ) (2,640 ) issuances of common stock under employee stock purchase plan 7,328 6,557 payments for contingent consideration arrangements (6,758 ) (4,070 ) distributions to noncontrolling interests (43 ) (70 ) net cash used in financing activities (245,456 ) (171,907 ) effect of exchange rate changes on cash, cash equivalents, and restricted cash (1,279 ) 4,046 (decrease) increase in cash, cash equivalents, and restricted cash (80,994 ) 543,642 cash, cash equivalents, and restricted cash at beginning of year (1) 903,562 359,920 cash, cash equivalents, and restricted cash at end of period (1) $ 822,568 $ 903,562 (1) emcor group, inc. segment information (in thousands) (unaudited) for the three months ended december 31, 2021 2020 revenues from unrelated entities: united states electrical construction and facilities services $ 541,876 $ 461,817 united states mechanical construction and facilities services 1,060,669 969,433 united states building services 630,142 570,909 united states industrial services 283,644 164,341 total united states operations 2,516,331 2,166,500 united kingdom building services 123,862 114,994 total operations $ 2,640,193 $ 2,281,494 for the twelve months ended december 31, 2021 2020 revenues from unrelated entities: united states electrical construction and facilities services $ 2,015,466 $ 1,806,092 united states mechanical construction and facilities services 3,922,864 3,485,495 united states building services 2,468,892 2,134,016 united states industrial services 986,407 940,895 total united states operations 9,393,629 8,366,498 united kingdom building services 509,951 430,563 total operations $ 9,903,580 $ 8,797,061 emcor group, inc. segment information (in thousands) (unaudited) for the three months ended december 31, 2021 2020 operating income (loss): united states electrical construction and facilities services $ 41,339 $ 43,944 united states mechanical construction and facilities services 92,601 100,380 united states building services 27,791 27,834 united states industrial services 3,997 (8,625 ) total united states operations 165,728 163,533 united kingdom building services 4,958 4,218 corporate administration (27,669 ) (28,520 ) restructuring expenses — (1,609 ) total operations 143,017 137,622 other items: net periodic pension (cost) income 887 769 interest expense, net (1,157 ) (1,406 ) income before income taxes $ 142,747 $ 136,985 for the twelve months ended december 31, 2021 2020 operating income (loss): united states electrical construction and facilities services $ 168,363 $ 161,810 united states mechanical construction and facilities services 319,112 292,536 united states building services 119,024 114,159 united states industrial services (1,666 ) 1,175 total united states operations 604,833 569,680 united kingdom building services 27,998 20,660 corporate administration (102,031 ) (98,542 ) restructuring expenses — (2,214 ) impairment loss on goodwill, identifiable intangible assets, and other long-lived assets — (232,750 ) total operations 530,800 256,834 other items: net periodic pension (cost) income 3,625 2,980 interest expense, net (5,122 ) (7,488 ) income before income taxes $ 529,303 $ 252,326 emcor group, inc. reconciliation of 2021 and 2020 non-gaap operating income and non-gaap operating margin (in thousands, except for percentages) (unaudited) in our press release, we provide non-gaap operating income and non-gaap operating margin for the three and twelve months ended december 31, 2020. the following tables provide a reconciliation between operating income and operating margin determined on a non-gaap basis to the most directly comparable gaap measures for such periods. for the three months ended december 31, for the twelve months ended december 31, 2021 2020 2021 2020 gaap operating income $ 143,017 $ 137,622 $ 530,800 $ 256,834 impairment loss on goodwill, identifiable intangible assets, and other long-lived assets — — — 232,750 non-gaap operating income $ 143,017 $ 137,622 $ 530,800 $ 489,584 for the three months ended december 31, for the twelve months ended december 31, 2021 2020 2021 2020 gaap operating margin 5.4 % 6.0 % 5.4 % 2.9 % impairment loss on goodwill, identifiable intangible assets, and other long-lived assets — % — % — % 2.6 % non-gaap operating margin 5.4 % 6.0 % 5.4 % 5.6 % emcor group, inc. reconciliation of 2021 and 2020 non-gaap net income (in thousands) (unaudited) in our press release, we provide non-gaap net income for the three and twelve months ended december 31, 2020. the following table provides a reconciliation between net income determined on a non-gaap basis to the most directly comparable gaap measure for such periods. for the three months ended december 31, for the twelve months ended december 31, 2021 2020 2021 2020 gaap net income $ 101,668 $ 79,781 $ 383,532 $ 132,943 impairment loss on goodwill, identifiable intangible assets, and other long-lived assets — — — 232,750 tax effect of impairment loss on goodwill, identifiable intangible assets, and other long-lived assets — 22,984 — (11,105 ) non-gaap net income $ 101,668 $ 102,765 $ 383,532 $ 354,588 emcor group, inc. reconciliation of 2021 and 2020 non-gaap diluted earnings per share (unaudited) in our press release, we provide non-gaap diluted earnings per common share for the three and twelve months ended december 31, 2020. the following table provides a reconciliation between diluted earnings per common share determined on a non-gaap basis to the most directly comparable gaap measure for such periods. for the three months ended december 31, for the twelve months ended december 31, 2021 2020 2021 2020 gaap diluted earnings per common share $ 1.89 $ 1.45 $ 7.06 $ 2.40 impairment loss on goodwill, identifiable intangible assets, and other long-lived assets — — — 4.20 tax effect of impairment loss on goodwill, identifiable intangible assets, and other long-lived assets — 0.42 — (0.20 ) non-gaap diluted earnings per common share $ 1.89 $ 1.86 $ 7.06 $ 6.40
