UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) February 28, 2005
EMCOR Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-2315 11-2125338
(Commission File Number) (I.R.S. Employer Identification No.)
301 Merritt Seven, Norwalk, CT 06851
(Address of Principal Executive Offices) (Zip Code)
(203) 849-7800
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
__ Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
__ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
__ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
__ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On February 28, 2005 EMCOR Group, Inc. issued a press release disclosing
results of operations for the fiscal 2004 fourth quarter ended December 31,
2004. A copy of such press release is furnished as Exhibit 99.1 to this Current
Report on Form 8-K.
The information contained in this Current Report on Form 8-K shall not be
deemed to be "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that
Section, nor shall it be incorporated by reference into a filing under the
Securities Act of 1933, or the Exchange Act, except as shall be expressly set
forth by specific reference in such a filing.
Item. 9.01 Financial Statements and Exhibits
(c) Exhibits
Exhibit Number Description
-------------- ---------------------------------------------------------------
99.1 Press Release issued by EMCOR Group, Inc. on February 28, 2005
disclosing results of operations for the fiscal 2004 fourth
quarter ended December 31, 2004.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EMCOR Group, Inc.
By: /s/ Frank T. MacInnis
-----------------------------
Frank T. MacInnis
Chairman of the Board of
Directors and Chief
Executive Officer
Dated: February 28, 2005
EMCOR GROUP, INC. REPORTS 2004 FOURTH QUARTER RESULTS
NORWALK, CONNECTICUT, February 28, 2004 - EMCOR Group, Inc. (NYSE: EME) today
reported results for the fourth quarter and full-year period ended December 31,
2004.
Net income for the 2004 fourth quarter was $10.6 million, or $0.68 per diluted
share, a significant increase when compared with net income of $2.6 million, or
$0.17 per diluted share, in the 2003 fourth quarter. Revenues in the fourth
quarter of 2004 totaled $1.23 billion, compared with total revenues of $1.17
billion a year ago, an increase of 5.0%.
Operating income in the fourth quarter of 2004 was $23.3 million, or 1.9% of
revenues, versus $9.3 million, or 0.8% of revenues, a year ago, an increase of
151.1%. Selling, general and administrative expenses ("SG&A") in the fourth
quarter of 2004 declined 9.9% to $103.6 million from $114.9 million in the
fourth quarter of last year. SG&A as a percentage of revenues decreased to 8.4%
in the fourth quarter of 2004 from 9.8% of revenues in the fourth quarter of
2003, reflecting the effect of the Company's cost reduction initiatives.
The Company's 2004 fourth quarter results include $2.3 million in restructuring
expenses, primarily related to its previously announced management realignment
and related initiatives; there were no charges for restructuring expenses in the
year ago quarter. The effective income tax rate applicable for the 2004 fourth
quarter was 41% compared to 45% for the fourth quarter of 2003.
As of December 31, 2004, the Company's contract backlog totaled $2.75 billion
versus $2.96 billion at September 30, 2004 and $3.03 billion at December 31,
2003. EMCOR continues to actively manage its contract backlog, emphasizing
strict criteria for project bidding and concerted efforts to shift the mix of
projects toward higher-margin, private sector work.
For the 2004 full-year period, the Company reported net income of $33.2 million,
or $2.13 per diluted share, an increase of 61.0% over net income of $20.6
million, or $1.33 per diluted share, in the same period a year ago. 2004
full-year revenues were $4.75 billion versus revenues of $4.53 billion in 2003,
an increase of 4.7%.
- MORE -
EMCOR Announces 2004 Fourth Quarter Results Page 2
Operating income for the 2004 full-year period was $42.1 million, or 0.9% of
revenues, compared to operating income of $47.1 million, or 1.0% of revenues in
the year-ago period.
The Company's results for the 2004 full-year period include the following:
o Restructuring expenses of approximately $8.3 million, primarily related to
the Company's previously announced management realignment and related
initiatives.
o A $2.8 million gain on the sale of assets of the Delcommerce equipment
rental services division of the Company's United Kingdom subsidiary as part
of strategic changes in the UK market.
o A $1.8 million gain on the sale of the UK subsidiary's equity investment in
a South African facilities management joint venture.
o A benefit of approximately $15.5 million related to income tax reserve
adjustments.
Excluding the above items, which the Company believes better reflects year to
year comparability, 2004 operating income would have increased $0.5 million
compared to 2003, and diluted earnings per share would have been $1.37.
Frank T. MacInnis, Chairman and CEO of EMCOR Group, stated, "Our results
confirmed our expectations that 2004 would be a transitional year for the
Company, with a weaker than usual first half, followed by acceleration in the
last six months of the year. We also noted that the rate of our earnings
acceleration would depend upon the rate of the overall economic recovery. In the
fourth quarter, we continued to see gradual improvement of demand in a number of
our markets. Our Electrical business continued its strong performance for the
full year, particularly in the transportation, financial services and healthcare
markets, while our UK operations demonstrated significant improvement in
financial performance in 2004 compared to 2003. We continued to gain ground in
our Facilities Services business, which generated encouraging top line growth in
the quarter and full-year periods."
Mr. MacInnis added, "During the fourth quarter, we continued our long commitment
to cost reduction. We initiated a number of programs in 2004 to accomplish this
goal, and the results can be seen in the almost 10% drop in 2004 fourth quarter
SG&A expense relative to last year, which drove a significant increase in
operating margins for the quarter. As in the past, we remained focused on cash
generation and had another excellent cash quarter, which enabled us to further
improve our already strong balance sheet; our debt to total capitalization ratio
is less than 13%."
- MORE -
EMCOR Announces 2004 Fourth Quarter Results Page 3
Mr. MacInnis continued, "We have entered 2005 with a sense of guarded optimism
in the outlook for our business. The operating environment continues to improve
at a measured pace, as evidenced by our fourth quarter performance, and we are
encouraged by strong activity levels in other sectors of our industry that
participate in the early part of the construction cycle. We expect that, as the
cycle matures, we will experience a rebound in demand for the more profitable
private sector work, and we will have ample capacity to meet that demand."
Mr. MacInnis concluded, "Given our contract backlog and continued project
selectivity, we look for revenue in 2005 to be approximately $4.4 billion to
$4.6 billion, compared to $4.7 billion in 2004. Profitability this year should
be enhanced by improved performance in our Mechanical segment combined with a
better environment for the mobile services operations within our Facilities
Services business. We see corresponding earnings per share in the $2.00 to $2.40
range, roughly a 46% increase at the low end of the range when compared to our
2004 results, after excluding 2004 restructuring expenses, asset sales and
income tax reserve adjustments. While the trajectory of any economic cycle is
difficult to predict, if growth in demand for our higher value-added services
accelerates, we have sufficient capacity to deploy and drive our earnings growth
at a faster pace."
EMCOR Group, Inc. is a worldwide leader in mechanical and electrical
construction services and facilities services. This press release and other
press releases may be viewed at the Company's Web site at www.emcorgroup.com.
EMCOR Group's fourth quarter conference call will be available live via Internet
broadcast today, Monday, February 28, at 10:30 AM Eastern Time. You can access
the live call through the Home Page of the Company's Web site at
www.emcorgroup.com.
The conference call referenced above may contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Any
such forward-looking statements will be based upon information available to
EMCOR, and management's perception thereof, as of the date thereof. EMCOR
assumes no obligation to update any such forward-looking statements. These
forward-looking statements may include statements regarding market share growth,
gross profit, project mix, projects with varying profit margins, and selling,
general and administrative expenses. Such forward-looking statements involve
risks and uncertainties that could cause actual results to differ materially
from the forward-looking statements. Accordingly, any such statements are no
guarantee of future performance. Such risk and uncertainties may 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, increased competition, unfavorable labor
productivity, mix of business, and risks associated with foreign operations.
Certain of the risks and factors associated with EMCOR's business are also
discussed in EMCOR's 2004 Form 10-K and other reports filed by it from time to
time with the Securities and Exchange Commission. Conference attendees and
listeners should take the aforementioned risks and factors into account in
evaluating any forward-looking statements.
-FINANCIAL TABLES FOLLOW-
EMCOR GROUP, INC.
FINANCIAL HIGHLIGHTS
(In thousands, except share and per share information)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Year Ended
December 31, December 31,
(Unaudited) (Unaudited)
2004 2003 2004 2003
---- ---- ---- ----
Revenues $1,229,670 $1,171,650 $4,747,880 $4,534,646
Cost of sales 1,100,423 1,047,446 4,300,978 4,052,192
---------- ---------- ---------- ----------
Gross profit 129,247 124,204 446,902 482,454
Selling, general and
administrative expenses 103,580 114,913 399,338 435,397
Restructuring expenses 2,338 - 8,274 -
Gain on sale of assets - - 2,839 -
---------- ---------- ---------- ----------
Operating income 23,329 9,291 42,129 47,057
Interest expense, net (1,447) (2,605) (6,997) (8,236)
Gain on sale of
equity investment - - 1,844 -
Minority interest (3,814) (1,905) (3,814) (1,905)
---------- ---------- ---------- ----------
Income before income taxes 18,068 4,781 33,162 36,916
Income tax provision (benefit 7,489 2,157 (45) 16,295
---------- ---------- ---------- ----------
Net income $ 10,579 $ 2,624 $ 33,207 $ 20,621
========== ========== ========== ==========
Basic earnings per share $ 0.69 $ 0.17 $ 2.18 $ 1.38
========== ========== ========== ==========
Diluted earnings per share $ 0.68 $ 0.17 $ 2.13 $ 1.33
========== ========== ========== ==========
Weighted average shares of
Common Stock outstanding:
Basic 15,254,027 15,020,008 15,197,905 14,986,079
Diluted 15,611,261 15,431,124 15,566,737 15,461,698
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
December 31, 2004 December 31, 2003
ASSETS
Current assets:
Cash and cash equivalents $ 70,404 $ 78,260
Accounts receivable, net 1,071,937 1,009,170
Costs and estimated earnings in excess of billings
on uncompleted contracts 239,143 249,393
Inventories 10,580 9,863
Prepaid expenses and other 30,267 42,470
---------- ----------
Total current assets 1,422,331 1,389,156
Investments, notes, and other long-term receivables 26,472 26,452
Property, plant & equipment, net 56,468 66,156
Goodwill 279,432 277,994
Identifiable intangible assets, net 18,782 22,226
Other assets 11,244 13,263
---------- ----------
Total assets $1,814,729 $1,795,247
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings under working capital credit line $ 80,000 $ 139,400
Current maturities of long-term debt and capital
lease obligations 806 367
Accounts payable 459,931 451,713
Billings in excess of costs and estimated earnings
on uncompleted contracts 362,148 345,207
Accrued payroll and benefits 138,771 131,623
Other accrued expenses and liabilities 117,477 110,147
---------- ----------
Total current liabilities 1,159,133 1,178,457
Long-term debt and capital lease obligations 1,332 561
Other long-term obligations 91,903 94,873
Total stockholders' equity 562,361 521,356
---------- ----------
Total liabilities and stockholders' equity $1,814,729 $1,795,247
========== ==========
EMCOR GROUP, INC.
COMPUTATION OF ADJUSTED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share information)
(Unaudited)
For the Year Ended December 31, 2004
------------------------------------
Adjusted
As Reported Adjustments (1) Operations
------------ --------------- ----------
Revenues $4,747,880 $4,747,880
Cost of sales 4,300,978 4,300,978
---------- ----------
Gross profit 446,902 446,902
Selling, general and administrative expenses 399,338 399,338
Restructuring expenses 8,274 (8,274) -
Gain on sale of assets 2,839 (2,839) -
---------- -------- ----------
Operating income 42,129 5,435 47,564
Interest expense (net) (6,997) (6,997)
Gain on sale of equity investment 1,844 (1,844) -
Minority interest (3,814) (3,814)
---------- -------- ----------
Income before taxes $ 33,162 3,591 $ 36,753
Income tax (benefit) provision (45) (15,451) 15,406
---------- ------- ----------
Net income $ 33,207 $(11,860) $ 21,347
========== ======== ==========
Diluted earnings per share $ 2.13 $ 1.37
Outstanding shares - diluted 15,566,737 15,566,737
(1) The adjustments reverse certain items, from the "as reported" consolidated
statement of operations. The income tax adjustment is net of the reversal
of tax reserves adjustments and the effect on income taxes related to the
restructuring expenses, gain on sale of assets and gain on sale of equity
investment.
# # #