Emcor group, inc. reports fourth quarter and full-year 2018 results
Norwalk, conn.--(business wire)--emcor group, inc. (nyse: eme) today reported results for the fourth quarter ended december 31, 2018. for the fourth quarter of 2018, net income from continuing operations attributable to emcor was $79.3 million, or $1.38 per diluted share, compared to $53.3 million, or $0.90 per diluted share, for the fourth quarter of 2017. net income from continuing operations attributable to emcor for the fourth quarter of 2017 included after-tax goodwill and identifiable intangible asset impairment charges, primarily related to the u.s. industrial services segment, partially offset by a tax benefit resulting from the revaluation of the company’s u.s. net deferred tax liabilities due to the enactment of the tax cuts and jobs act (the “tax act”). excluding these items, non-gaap net income from continuing operations attributable to emcor for the fourth quarter of 2017 was $67.0 million or $1.13 per diluted share. revenues for the fourth quarter of 2018 totaled $2.23 billion, an increase of 10.8%, compared to $2.01 billion for the fourth quarter of 2017. operating income for the fourth quarter of 2018 was $113.6 million or 5.1% of revenues. this compares to $48.1 million, or 2.4% of revenues, for the fourth quarter of 2017, which included pre-tax impairment charges of $57.8 million. excluding such pre-tax impairment charges, non-gaap operating income for the fourth quarter of 2017 was $105.9 million or 5.3% of revenues. please see the attached tables for a reconciliation of non-gaap operating income, non-gaap net income from continuing operations and non-gaap diluted earnings per share from continuing operations to the comparable gaap figures. selling, general and administrative expenses for the fourth quarter of 2018 totaled $220.9 million, or 9.9% of revenues, compared to $204.6 million, or 10.2% of revenues, for the fourth quarter of 2017. the company's income tax rate in the fourth quarter of 2018 was 28.9%. this compares to an income tax benefit of 17.1% in the year ago period, which included a non-cash tax benefit of $39.3 million, or $0.66 per diluted share, resulting from the revaluation of the company’s u.s. net deferred tax liabilities due to the enactment of the tax act. remaining performance obligations as of december 31, 2018 were $3.96 billion compared to $3.60 billion as of march 31, 2018. domestic remaining performance obligations increased $388.9 million from the first quarter of 2018, while remaining performance obligations of our u.k. building services segment fell $28.4 million. tony guzzi, chairman, president and chief executive officer of emcor, commented, “the company closed out another terrific year achieving record quarterly revenues, operating income, net income and diluted earnings per share from continuing operations. we delivered a 10.8% increase in revenues during the fourth quarter and a 5.8% increase for the year, the majority of which was organic, underscored by broad-based strength across our segments. our exceptional execution coupled with disciplined cost control drove strong operating margins of 5.1% and 5.0% for the fourth quarter and full year, respectively. despite posting impressive revenue growth, our remaining performance obligations continue to be solid and diverse across end market sectors, and we remain well-positioned to capitalize on the sustained non-residential construction growth expected throughout 2019.” mr. guzzi added, “our u.s. construction segments continue to deliver robust revenue performance, with combined revenue growth of 5.7% and 3.8% for the fourth quarter and full year, respectively, reflecting sustained market demand for our services. solid operating margins of 7.1% in our u.s. electrical construction segment and 7.3% in our u.s. mechanical construction segment for the full-year period reflect strong execution across our portfolio of construction projects. our u.s. building services segment continued its strong operational performance, posting double-digit revenue and operating income growth for the fourth quarter, primarily driven by our mechanical, energy and commercial site-based services operations. as expected, we saw a recovery in demand in our u.s. industrial services segment during the fourth quarter, with improvement in both our shop and field services operations, including turnaround project activity. finally, our u.k. building services segment had a strong 2018, delivering revenue and operating income growth of 21.8% and 23.4%, respectively, for the full-year period, as we continue to execute on specialty project opportunities and new service contract awards.” revenues for the 2018 full-year period increased 5.8% to $8.13 billion compared to $7.69 billion for the 2017 full-year period. net income from continuing operations attributable to emcor for the 2018 full-year period was $285.9 million, or $4.89 per diluted share, compared to $228.1 million, or $3.83 per diluted share, for the 2017 full-year period. excluding a $0.9 million impairment charge recorded in the second quarter of 2018, non-gaap net income from continuing operations attributable to emcor for the 2018 full-year period was $286.8 million or $4.91 per diluted share. this compares to non-gaap net income from continuing operations attributable to emcor for the 2017 full-year period of $241.8 million, or $4.06 per diluted share, excluding the previously referenced after-tax impairment charges and the tax benefit resulting from the revaluation of the company’s u.s. net deferred tax liabilities in 2017. operating income for the 2018 full-year period was $403.1 million, or 5.0% of revenues, compared to $328.9 million, or 4.3% of revenues, for the 2017 full-year period. excluding the $0.9 million impairment charge in 2018, non-gaap operating income for the 2018 full-year period was $404.0 million or 5.0% of revenues. this compares to non-gaap operating income for the 2017 full-year period of $386.7 million, or 5.0% of revenues, excluding the $57.8 million pre-tax impairment charges recorded in 2017. please see the attached tables for a reconciliation of non-gaap operating income, non-gaap net income from continuing operations and non-gaap diluted earnings per share from continuing operations to the comparable gaap figures. for the 2018 full-year period, selling, general and administrative expenses totaled $799.2 million, or 9.8% of revenues, compared to $758.7 million, or 9.9% of revenues, for the 2017 full-year period. based on favorable project mix and assuming the continuation of current market conditions, emcor expects full-year 2019 revenues to be between $8.3 billion and $8.4 billion, and full-year 2019 diluted earnings per share from continuing operations to be in the range of $4.70 to $5.40. mr. guzzi concluded, “following a record year, we are optimistic about our opportunities to drive sustained growth across our business. our guidance for 2019 reflects our expanding customer base and diverse pipeline of project activity, while also considering the limited visibility we have into the second half of the year. looking ahead, we will continue to leverage our flexible balance sheet to invest in our business, consistent with our strategy, and return capital to shareholders through share buybacks 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 group's fourth quarter conference call will be available live via internet broadcast today, thursday, february 21, 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 within the meaning of the private securities reform act of 1995. any such comments speak only as of this date and emcor assumes no obligation to update any such forward-looking statements. 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 the forward-looking statements. accordingly, these statements are no guarantee of future performance. 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, availability of adequate levels of surety bonding, increased competition, unfavorable labor productivity and mix of business. certain of the risk factors associated with emcor’s business are also discussed in part i, item 1a “risk factors,” of the company’s 2018 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 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 historical 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 (in thousands, except share and per share information) condensed consolidated statements of operations for the three months ended december 31, for the twelve months ended december 31, emcor group, inc. condensed consolidated balance sheets (in thousands) 2018 2017 emcor group, inc. condensed consolidated statements of cash flows for the twelve months ended december 31, 2018 and 2017 (in thousands) emcor group, inc. segment information (in thousands) for the three months ended december 31, for the twelve months ended december 31, emcor group, inc. segment information (in thousands) for the three months ended december 31, for the twelve months ended december 31, emcor group, inc. reconciliation of 2018 and 2017 operating income in our press release, we provide non-gaap 2018 and 2017 fourth quarter and year-to-date december 31, 2018 and 2017 operating income. the following table provides a reconciliation between 2018 and 2017 operating income based on non-gaap measures to the most directly comparable gaap measures. for the three months ended december 31, for the twelve months ended december 31, emcor group, inc. reconciliation of 2018 and 2017 net income in our press release, we provide non-gaap 2018 and 2017 fourth quarter and year-to-date december 31, 2018 and 2017 net income from continuing operations attributable to emcor group, inc. the following table provides a reconciliation between 2018 and 2017 net income from continuing operations attributable to emcor group, inc. based on non-gaap measures to the most directly comparable gaap measures. for the three months ended december 31, for the twelve months ended december 31, emcor group, inc. reconciliation of 2018 and 2017 diluted earnings per share figures in our press release, we provide non-gaap 2018 and 2017 fourth quarter and year-to-date december 31, 2018 and 2017 diluted earnings per share from continuing operations. the following table provides a reconciliation between 2018 and 2017 eps based on non-gaap measures to the most directly comparable gaap measures. for the three months ended december 31, for the twelve months ended december 31, 2018
