Emcor group, inc. reports third quarter results
Norwalk, conn.--(business wire)--emcor group, inc. (nyse:eme) today reported results for the third quarter ended september 30, 2016. for the third quarter of 2016, net income from continuing operations attributable to emcor was $51.9 million, or $0.85 per diluted share, compared to $41.8 million, or $0.66 per diluted share, in the third quarter of 2015. revenues for the third quarter of 2016 were $1.92 billion, an increase of 13.2% compared to revenues of $1.70 billion for the third quarter of 2015. operating income for the third quarter of 2016 was $86.1 million, or 4.5% of revenues, compared to operating income of $70.0 million, or 4.1% of revenues, for the third quarter of 2015. selling, general and administrative expenses for the third quarter of 2016 were $181.4 million, or 9.4% of revenues, compared to $165.1 million, or 9.7% of revenues, in the year ago period. the company's income tax rate in the third quarter of 2016 was 37.2%, compared to an income tax rate of 38.1% in the year ago period. backlog as of september 30, 2016 was $3.90 billion, a 3.7% increase compared to backlog of $3.77 billion at the end of the third quarter of 2015. year-over-year domestic backlog grew $131.3 million and backlog in our uk building services segment increased $6.1 million. year-over-year growth in backlog in our u.s. mechanical construction segment more than offset declines in our u.s. building services, u.s. industrial services and u.s. electrical construction segments. from an end market perspective, backlog growth in the commercial and healthcare markets was partially offset by declines in the industrial, water and wastewater, hospitality and transportation sectors, while backlog in the institutional sector was flat. tony guzzi, president and chief executive officer of emcor, commented, “we had another strong quarter with record third quarter revenues, operating income, and diluted earnings per share from continuing operations. performance was broad-based across geographies and end markets, delivering a 23% increase in operating income on solid 13% revenue growth compared to the third quarter of 2015. this was largely driven by organic revenues, which increased 8% year-over-year, and was supported by another quarter of strong contribution from our recent acquisitions. backlog saw sustained growth with a 3.7% increase year-over-year and a 2.4% increase from last quarter.” mr. guzzi added, “our strong profitability this quarter was led by our u.s. construction business, which delivered a 34% increase in operating income on mid-teens organic revenue growth. this was driven by our u.s. mechanical construction segment, a standout in the quarter, delivering a 46.5% increase in operating income, with over one hundred basis points of operating margin expansion. this was followed by our u.s. electrical construction segment, which reported a solid 21% increase in operating income despite the impact of a write-down related to a transportation project that is nearing completion. our u.s. building services segment also reported an exceptional quarter, increasing operating income by 41% on 130 basis points of margin expansion, driven by strong performance in our mobile mechanical services operations. our u.s. industrial services revenue was essentially flat compared to the year ago period as we completed a significant project that drove exceptional performance in the first half of the year. lastly, our uk business performed in line with our expectations while facing continued headwinds from foreign exchange rates.” revenues for the first nine months of 2016 totaled $5.6 billion, an increase of 13.4% compared to $4.94 billion for the first nine months of 2015. net income from continuing operations attributable to emcor for the first nine months of 2016 was $142.8 million, or $2.33 per diluted share, compared to $122.0 million, or $1.92 per diluted share, for the first nine months of 2015. included in net income from continuing operations attributable to emcor for the first nine months of 2016 were after-tax transaction expenses of $2.3 million, or $0.04 per diluted share, related to the acquisition of ardent. excluding these transaction expenses, non-gaap net income from continuing operations attributable to emcor in the first nine months of 2016 was $145.2 million, or $2.37 per diluted share. operating income for the first nine months of 2016 was $234.0 million, or 4.2% of revenues, compared to $203.0 million, or 4.1% of revenues, in the first nine months of 2015. included in operating income for the first nine months of 2016 were pre-tax transaction expenses of $3.8 million related to the acquisition of ardent. excluding these transaction expenses, non-gaap operating income in the first nine months of 2016 was $237.8 million, or 4.2% of revenues. sg&a totaled $530.7 million, or 9.5% of revenues, compared to $488.1 million, or 9.9% of revenues, in the first nine months of 2015. mr. guzzi concluded, “we are very pleased by our third quarter performance and encouraged by our growing and diverse backlog, which should support growth into the fourth quarter and 2017. for the third time this year, we are raising our full year 2016 guidance for revenue and non-gaap diluted earnings per share from continuing operations to reflect better than expected third quarter performance in our u.s. construction and u.s. building services segments. we will continue to seek out acquisition opportunities to enhance the breadth of our services and expand our geographic reach as we continue the integration of our recent acquisitions. we will also continue our focus on returning capital to shareholders, supported by our healthy balance sheet and strong cash flow.” based on the expected contributions from recent acquisitions, the current size and mix of backlog and assuming continued improvement in market conditions, emcor now expects full year 2016 revenues to be approximately $7.5 billion, an increase from the previous estimate of $7.4 billion, and full year 2016 diluted earnings per share from continuing operations, excluding transaction expenses related to the ardent acquisition, to now be in the range of $3.10 to $3.20, up from a previous range of $2.90 to $3.10. please see the attached tables for a reconciliation of non-gaap operating income, non-gaap net income from continuing operations attributable to emcor and non-gaap diluted earnings per share from continuing operations to the comparable gaap figures. 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 third quarter conference call will be available live via internet broadcast today, thursday, october 27, at 10:30 am eastern daylight 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 2015 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) (unaudited) condensed consolidated statements of operations for the three months endedseptember 30, for the nine months endedseptember 30, emcor group, inc. condensed consolidated balance sheets (in thousands) september 30,2016(unaudited) december 31,2015 emcor group, inc. condensed consolidated statements of cash flows for the nine months ended september 30, 2016 and 2015 (in thousands) (unaudited) emcor group, inc. segment information (in thousands) (unaudited) for the three months endedseptember 30, for the nine months endedseptember 30, emcor group, inc. segment information (in thousands) (unaudited) for the three months endedseptember 30, for the nine months endedseptember 30, emcor group, inc.reconciliation of 2016 and 2015 operating income(in thousands) (unaudited) in our press release, we provide actual 2016 and 2015 third quarter september 30, 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 endedseptember 30, for the nine months endedseptember 30, transaction expenses related to the acquisition ofardent non-gaap operating income, excluding ardenttransaction expenses emcor group, inc.reconciliation of 2016 and 2015 net income(in thousands) (unaudited) in our press release, we provide actual 2016 and 2015 third quarter september 30, 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 endedseptember 30, for the nine months endedseptember 30, gaap net income from continuing operationsattributable to emcor group, inc. (1) transaction expenses related to the acquisition ofardent (2) non-gaap net income from continuing operationsattributable to emcor group, inc., excluding ardenttransaction expenses emcor group, inc.reconciliation of 2016 and 2015 diluted earnings per share figures(unaudited) in our press release, we provide actual 2016 and 2015 third quarter september 30, 2016 and 2015 diluted earnings per common share from continuing operations. the following table provides a reconciliation between 2016 and 2015 diluted earnings per common share based on non-gaap measures to the most direct comparable gaap measures. for the three months endedseptember 30, for the nine months endedseptember 30, gaap diluted earnings per common share fromcontinuing operations transaction expenses related to the acquisition ofardent (1) non-gaap diluted earnings per common share fromcontinuing operations, excluding ardent transactionexpenses
