Emcor group, inc. reports fourth quarter and full-year 2016 results
Norwalk, conn.--(business wire)--emcor group, inc. (nyse:eme) today reported results for the fourth quarter and fiscal year ended december 31, 2016. for the fourth quarter of 2016, net income from continuing operations attributable to emcor was $42.2 million, or $0.69 per diluted share, compared to $50.4 million, or $0.80 per diluted share, in the fourth quarter of 2015. excluding an impairment charge detailed below, non-gaap net income from continuing operations was $43.7 million, or $0.72 per diluted share, in the fourth quarter of 2016. revenues for the fourth quarter of 2016 totaled $1.95 billion, an increase of 9.7%, compared to $1.78 billion in the fourth quarter 2015. operating income for the fourth quarter of 2016 was $74.5 million, or 3.8% of revenues, compared to operating income of $84.1 million, or 4.7% of revenues, in the fourth quarter of 2015. included in the operating income for the fourth quarter of 2016 was an impairment charge of $2.4 million. excluding this impairment charge, non-gaap operating income in the fourth quarter of 2016 was $76.9 million, or 3.9% of revenues. included in both gaap and non-gaap operating income for the fourth quarter of 2016 was a $20.5 million project loss associated with a contract dispute on a completed project within our u.s. mechanical construction segment. 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 2016 fourth quarter were $194.9 million, or 10.0% of revenues, compared to $168.5 million, or 9.5% of revenues, in the fourth quarter of 2015. backlog as of december 31, 2016 was $3.90 billion, an increase of 3.5% from $3.77 billion at the end of the fourth quarter of 2015. total domestic backlog grew $107.3 million year-over-year and backlog in our u.k. building services segment increased $24.4 million. year-over-year growth in backlog in our u.s. mechanical construction and u.s. electrical construction segments more than offset declines in our u.s. building services and u.s. industrial services segments. from an end-market perspective, backlog growth in the commercial, healthcare, industrial and water & wastewater markets was partially offset by declines in the institutional, transportation and hospitality sectors. tony guzzi, president and chief executive officer of emcor, commented, “the company delivered record revenues and diluted earnings per share from continuing operations in the 2016 full-year period, with growth of 12% and 14%, respectively, excluding transaction expenses and an impairment charge. this was driven by double-digit revenue growth in our combined u.s. businesses, with strong operating income contributions from our u.s. electrical construction segment and our u.s. industrial services segment and bottom-line growth from our u.k. business. we are particularly pleased with these results given the obstacles that were presented throughout the year, including the losses incurred from several large scale projects in both of our u.s. construction segments, with respect to which we are seeking recovery.” mr. guzzi added, “in the quarter, our u.s. electrical construction segment, a standout in the quarter, delivered a 111% increase in operating income, with over 200 basis points of operating margin expansion. while revenues increased 9.4% in our u.s. mechanical construction segment for the quarter, this revenue growth unfortunately did not lead to a corresponding increase in segment profitability. this was due to the execution of a fast-paced process facility project that resulted in a $20.5 million loss due to a contract dispute at the completion of our work. our u.s. building services segment reported an exceptional quarter, with operating income increasing by 35% on a 120 basis point margin expansion, driven by strong performance in its mobile mechanical services operations. our u.s. industrial services segment’s operating income was essentially flat for the quarter; however, for the year, revenues and operating income increased close to 16% and 38%, respectively, on the strength of a significant field services capital project. lastly, our u.k. segment was able to expand operating margins by 70 basis points in the quarter.” revenues for the 2016 full-year period increased 12.4% to $7.55 billion, compared to $6.72 billion for the 2015 full-year period. net income from continuing operations attributable to emcor for the 2016 full-year period was $185.1 million, or $3.02 per diluted share, compared to $172.3 million, or $2.72 per diluted share, in the prior year. excluding transaction expenses and the impairment charge recorded in the fourth quarter, non-gaap net income from continuing operations attributable to emcor in the 2016 full-year period was $188.9 million, or $3.09 per diluted share. operating income for the 2016 full-year period was $308.5 million, or 4.1% of revenues, compared to $287.1 million, or 4.3% of revenues, in the 2015 full-year period. included in operating income for the 2016 full-year period were $3.8 million of transaction expenses related to the ardent acquisition and a $2.4 million impairment charge. excluding the aforementioned expenses, non-gaap operating income in the 2016 full-year period was $314.7 million, or 4.2% 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. for the 2016 full-year period, selling, general and administrative expenses were $725.5 million, or 9.6% of revenues, compared to $656.6 million, or 9.8% of revenues, in the 2015 full-year period. based on the favorable backlog mix and assuming continued improvement in market conditions, emcor expects full-year 2017 revenues to be between $7.5 billion and $7.6 billion, and full-year 2017 diluted earnings per share from continuing operations to be in the range of $3.10 to $3.50. mr. guzzi concluded, “after a solid 2016, we are encouraged by our prospects as we look to 2017 and beyond. our backlog continues to expand despite record revenues, and we are especially pleased with the strong pipeline in our u.s. construction segments. we remain optimistic that the non-residential construction market will continue to improve in 2017, and we are well positioned to capture our share of the market. our healthy balance sheet continues to provide us with the flexibility to pursue strategic acquisitions while returning capital 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 group's fourth quarter conference call will be available live via internet broadcast today, thursday, february 23, at 10:30 a.m. eastern standard time. the live call may be accessed through the company's website at www.emcorgroup.com. this release may contain certain forward-looking statements within the meaning of the private securities reform act of 1995. any such comments are based upon information available to emcor management and its perception thereof, as of this date, and emcor assumes no obligation to update any such forward-looking statements. these forward-looking statements may include statements regarding market opportunities, market share growth, gross profit, backlog mix, projects with varying profit margins, and selling, general and administrative expenses. 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 risk 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 risks and factors associated with emcor's business are also discussed in the company's 2016 form 10-k and in other reports filed from time to time with the securities and exchange commission. all these risks and factors should be taken into account in evaluating any forward-looking statements. emcor group, inc. financial highlights (in thousands, except share and per share information) condensed consolidated statements of operations for the three months endeddecember 31, for the twelve monthsended december 31, emcor group, inc. condensed consolidated balance sheets (in thousands) 2016 2015 emcor group, inc. condensed consolidated statements of cash flows for the twelve months ended december 31, 2016 and 2015 (in thousands) emcor group, inc. segment information (in thousands) for the three months endeddecember 31, for the twelve months endeddecember 31, emcor group, inc. segment information (in thousands) for the three months endeddecember 31, for the twelve months endeddecember 31, emcor group, inc.reconciliation of 2016 and 2015 operating income(in thousands) (unaudited) in our press release, we provide actual 2016 and 2015 fourth quarter and year-to-date december 31, 2016 and 2015 operating income. the following table provides a reconciliation between 2016 and 2015 operating income based on non-gaap measures to the most direct comparable gaap measures. for the three months endeddecember 31, for the twelve months endeddecember 31, emcor group, inc.reconciliation of 2016 and 2015 net income(in thousands) (unaudited) in our press release, we provide actual 2016 and 2015 fourth quarter and year-to-date december 31, 2016 and 2015 net income from continuing operations attributable to emcor group, inc. the following table provides a reconciliation between 2016 and 2015 net income from continuing operations attributable to emcor group, inc. based on non-gaap measures to the most direct comparable gaap measures. for the three months ended december 31, for the twelve months ended december 31, (1) amount is income from continuing operations less net income attributable to noncontrolling interest.(2) amount is net of tax effect of $1.5 million in the 2016 year-to-date period.(3) amount is net of tax effect of $1.0 million in the 2016 quarter and year-to-date periods. emcor group, inc.reconciliation of 2016 and 2015 diluted earnings per share figures(unaudited) in our press release, we provide actual 2016 and 2015 fourth quarter and year-to-date december 31, 2016 and 2015 diluted earnings per share from continuing operations. the following table provides a reconciliation between 2016 and 2015 eps based on non-gaap measures to the most direct comparable gaap measures. (1) amount is net of tax effect of $1.5 million in the 2016 year-to-date period.(2) amount is net of tax effect of $1.0 million in the 2016 quarter and year-to-date periods.
