Emcor group, inc. reports second quarter results
Norwalk, conn.--(business wire)--emcor group, inc. (nyse:eme) today reported results for the second quarter ended june 30, 2016. for the second quarter of 2016, net income from continuing operations attributable to emcor was $56.5 million, or $0.92 per diluted share, compared to $47.0 million, or $0.74 per diluted share, in the second quarter of 2015. included in net income from continuing operations attributable to emcor for the second quarter of 2016 were transaction expenses of $1.7 million after tax, or $0.03 per diluted share, related to the acquisition of ardent services, l.l.c. and rabalais constructors, llc (collectively, “ardent”), which was completed on april 15, 2016. excluding these transaction expenses, non-gaap net income from continuing operations attributable to emcor in the second quarter of 2016 was $58.1 million, or $0.95 per diluted share. revenues for the second quarter of 2016 were $1.93 billion, an increase of 17.0% compared to revenues of $1.65 billion for the second quarter of 2015. operating income for the second quarter of 2016 was $92.3 million, or 4.8% of revenues, compared to operating income of $77.7 million, or 4.7% of revenues, for the second quarter of 2015. included in operating income for the second quarter of 2016 were pre-tax transaction expenses of $2.8 million related to the ardent acquisition. excluding these expenses, non-gaap operating income for the second quarter of 2016 was $95.0 million, or 4.9% of revenues. selling, general and administrative expenses for the second quarter of 2016 were $181.8 million, or 9.4% of revenues, compared to $161.4 million, or 9.8% of revenues, in the year ago period. the company's income tax rate in the second quarter of 2016 was 36.8%, compared to an income tax rate of 38.0% in the year ago period. backlog as of june 30, 2016 was $3.81 billion, a 5.1% increase compared to backlog of $3.62 billion at the end of the second quarter of 2015. domestic backlog grew $201.7 million year-over-year, while backlog in the uk building services segment decreased $16.7 million year-over-year primarily driven by the negative impact of foreign currency translation. year-over-year growth in backlog in the u.s. mechanical construction and u.s. building services segments more than offset declines in the u.s. industrial services and u.s. electrical construction segments. from an end market perspective, backlog growth in the commercial, industrial, water and wastewater and hospitality markets was partially offset by declines in the healthcare, institutional and transportation sectors. tony guzzi, president and chief executive officer of emcor, commented, “the second quarter was a record second quarter for revenues, operating income and diluted earnings per share from continuing operations, building upon an already strong start in 2016. organic revenue growth was over 12%, when compared to the second quarter of 2015, with increases across all domestic segments, further bolstered by our recent acquisitions. solid revenue growth combined with strong execution drove a 22.3% increase in proforma operating income and a greater than seven fold increase in operating cash flow year-over-year. additionally, despite significant revenue growth, backlog increased by 5.1% compared to june 30, 2015, and we maintained a book to bill of almost 1.0 for the quarter.” mr. guzzi added, “our u.s. industrial services segment exhibited exceptional performance with 48% organic revenue growth, nearly doubling the segment’s strong operating income from the comparable year ago period. our performance was driven by strength in our field-based specialty services work, including large project activity, which offset continued weakness in our new build heat exchanger business. our u.s. mechanical construction segment continued positive momentum, delivering double-digit organic revenue and operating income growth for the third consecutive quarter compared to the year ago period. revenues in our u.s. electrical construction segment were also strong with high-single-digit organic revenue growth and solid contributions from the ardent acquisition. however, operating income for the segment was negatively impacted by a significant write-down on a transportation project. our u.s. building services segment performed well on the top line and delivered operating margins of 4.0%. lastly, our uk business delivered another good quarter with strong revenue and mid-teen growth in operating income despite the impact of continued foreign exchange headwinds.” mr. guzzi concluded, “we are pleased by our performance in the first half of the year and are encouraged by our prospects for continued growth in 2016 and beyond. the second quarter marks the fourth consecutive quarter that we have grown our backlog year-over-year while delivering robust revenue growth. for the second time this year, we are raising our full year 2016 guidance for revenue and diluted earnings per share from continuing operations, excluding transaction expenses related to the ardent acquisition, to reflect better than expected performance in our domestic construction and industrial services segments. notwithstanding having completed two acquisitions in the first half of 2016, we continue to seek out opportunities that will expand the breadth of our service offerings and our geographic reach. this is supported by a healthy balance sheet, which positions us well to continue to capitalize on both organic and acquisition growth opportunities and return capital to our shareholders.” revenues for the first six months of 2016 totaled $3.68 billion, an increase of 13.5% compared to $3.24 billion for the first six months of 2015. net income from continuing operations attributable to emcor for the first six months of 2016 was $90.9 million, or $1.48 per diluted share, compared to $80.2 million, or $1.26 per diluted share, for the first six months of 2015. included in net income from continuing operations attributable to emcor for the first six months of 2016 were transaction expenses of $2.3 million after tax, 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 six months of 2016 was $93.2 million, or $1.52 per diluted share. operating income for the first six months of 2016 was $147.9 million, or 4.0% of revenues, compared to $133.0 million, or 4.1% of revenues, in the first six months of 2015. included in operating income for the first six 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 six months of 2016 was $151.7 million, or 4.1% of revenues. sg&a totaled $349.2 million, or 9.5% of revenues, compared to $323.0 million, or 10.0% of revenues, in the first six months of 2015. 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 $7.4 billion, an increase from the previous estimate of $7.2 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 $2.90 to $3.10, up from a previous range of $2.75 to $3.00. 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 second quarter conference call will be available live via internet broadcast today, thursday, july 28, 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 ended june 30, for the six months ended june 30, emcor group, inc. condensed consolidated balance sheets (in thousands) june 30, 2016 (unaudited) december 31, 2015 emcor group, inc. condensed consolidated statements of cash flows for the six months ended june 30, 2016 and 2015 (in thousands) (unaudited) emcor group, inc. segment information (in thousands) (unaudited) for the three months ended june 30, $ for the six months ended june 30, 2016 2015 revenues from unrelated entities: united states electrical construction and facilities services $ 768,921 $ 665,196 united states mechanical construction and facilities services 1,241,785 1,065,029 united states building services 898,448 875,119 united states industrial services 591,012 457,893 total united states operations 3,500,166 3,063,237 united kingdom building services 178,220 178,535 total worldwide operations $ 3,678,386 $ 3,241,772 emcor group, inc. segment information (in thousands) (unaudited) for the three months ended june 30, for the six months ended june 30, emcor group, inc.reconciliation of 2016 and 2015 operating income in our press release, we provide actual 2016 and 2015 second quarter june 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 ended june 30, for the six months ended june 30, gaap operating income transaction expenses related to the acquisition of ardent non-gaap operating income, excluding ardent transaction expenses emcor group, inc. reconciliation of 2016 and 2015 net income in our press release, we provide actual 2016 and 2015 second quarter june 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 ended june 30, for the six months ended june 30, gaap net income from continuing operations attributable to emcor group, inc. (1) transaction expenses related to the acquisition of ardent (2) non-gaap net income from continuing operations attributable to emcor group, inc., excluding ardent transaction expenses emcor group, inc.reconciliation of 2016 and 2015 diluted earnings per share figures in our press release, we provide actual 2016 and 2015 second quarter june 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 ended june 30, for the six months ended june 30, gaap diluted earnings per common share from continuing operations transaction expenses related to the acquisition of ardent (1) non-gaap diluted earnings per common share from continuing operations, excluding ardent transaction expenses
