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EMCOR (EME) Q2 Earnings & Revenues Beat Estimates, Up Y/Y
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EMCOR Group, Inc. (EME - Free Report) reported impressive second-quarter 2024 results, with earnings and revenues surpassing the Zacks Consensus Estimate and increasing year over year.
The upside was backed by a continued strong mix and pipeline of projects in large and growing market sectors with long-term secular trends, including high-tech and traditional manufacturing, network and communications, institutional and healthcare.
During the quarter, the company observed strong demand for its specialty contracting services, indicating a positive business trajectory. Also, remaining performance obligations (RPOs) approached record levels and the pipeline remained robust. Owing to this solid performance, the company raised its financial guidance for 2024.
Following the results, shares of EMCOR dropped 2.8% during the trading session on Jul 25.
Earnings & Revenues Discussion
EME reported adjusted earnings per share (EPS) of $5.25, surpassing the Zacks Consensus Estimate of $3.68 by 42.7%. The metric also increased 78% from the year-ago quarter’s figure of $2.95.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
Revenues of $3.67 billion surpassed the consensus mark of $3.54 billion by 3.4% and increased 20.4% year over year from $3.05 billion. Strength across the segments helped the company achieve 17.7% higher organic revenues.
Segment Details
EMCOR currently operates in four reportable segments, which are U.S. Construction Services (Electrical and Mechanical Construction and Facilities Services), U.S. Building Services, U.S. Industrial Services and U.K. Building Services.
U.S. Construction Services: This segment's revenues rallied 31.1% year over year to $2.46 billion. The company witnessed strong demand across many of the markets served.
The segment’s operating income appreciated by 77.1%. The margin expanded 320 basis points (bps) year over year to 12.3%.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 18% year over year to $800 million. Operating income surged 74.6% and margin expanded 360 bps year over year to 11.1%. The U.S. Mechanical Construction and Facilities Services segment’s revenues rose 38.6% year over year to $1.66 billion. The segment’s operating income rose 78.1% and its margin expanded 290 bps year over year to 12.9%.
The U.S. Building Services: Revenues in the segment were up 0.8% from the prior-year quarter’s levels to $781.1 million. The upside was backed by a strong mechanical services business and solid demand for its energy efficiency, building control installations and upgrades and retrofit projects. Operating income inched up 1.5% year over year and the margin was flat at 6%.
U.S. Industrial Services: This segment’s revenues increased 10.9% year over year to $324 million. EMCOR continues to see improved demand for its services. Operating income increased 61.6% and the margin expanded 120 bps to 3.9%.
U.K. Building Services: This segment’s revenues increased 0.5% from the year-ago quarter to $106.6 million. However, the segment’s operating income fell 2.5% and the margin fell 20 bps to 5.6% year over year.
Operating Highlights
The gross margin expanded 260 bps year over year to 18.7% in the quarter. Selling, general and administrative expenses — as a percentage of revenues — were flat year over year at 9.6%.
Operating margin in the quarter was 9.1%, up 260 bps from 6.5% year over year.
Liquidity & Cash Flow
As of Jun 30, 2024, EMCOR had cash and cash equivalents of $807.3 million compared with $789.8 million at 2023-end. Total long-term obligations totaled $653.7 million, up from the 2023-end level of $620.6 million.
Net cash provided by operating activities was $412 million in first-half 2024 compared with $214.9 million in the prior-year.
The RPOs, as of Jun 30, 2024, increased 8.6% year over year to $9 billion.
2024 Outlook Raised
The company now expects annual revenues between $14.5 billion and $15 billion compared with $14 billion and $14.5 billion expected earlier. In 2023, it reported $12.58 billion in annual revenues.
EPS is now expected to be within $19.00-$20.00 versus $15.50-$16.50 projected earlier and $13.31 reported in 2023.
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in the second quarter of 2024. Its adjusted earnings topped the Zacks Consensus Estimate and rose year over year. The company reported better-than-expected earnings in the trailing seven quarters.
However, quarterly net sales missed the consensus mark and declined on a year-over-year basis.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis.
The company performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
NVR, Inc. (NVR - Free Report) reported mixed second-quarter 2024 results, with earnings missing the Zacks Consensus Estimate while Homebuilding revenues surpassed the same. Both metrics increased on a year-over-year basis.
The upside was backed by improved demand trends, which resulted in higher settlements. Although the cancelation rate increased during the quarter, growth in new orders and increased average selling price of new orders are encouraging for the company’s prospects.
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EMCOR (EME) Q2 Earnings & Revenues Beat Estimates, Up Y/Y
EMCOR Group, Inc. (EME - Free Report) reported impressive second-quarter 2024 results, with earnings and revenues surpassing the Zacks Consensus Estimate and increasing year over year.
The upside was backed by a continued strong mix and pipeline of projects in large and growing market sectors with long-term secular trends, including high-tech and traditional manufacturing, network and communications, institutional and healthcare.
During the quarter, the company observed strong demand for its specialty contracting services, indicating a positive business trajectory. Also, remaining performance obligations (RPOs) approached record levels and the pipeline remained robust. Owing to this solid performance, the company raised its financial guidance for 2024.
Following the results, shares of EMCOR dropped 2.8% during the trading session on Jul 25.
Earnings & Revenues Discussion
EME reported adjusted earnings per share (EPS) of $5.25, surpassing the Zacks Consensus Estimate of $3.68 by 42.7%. The metric also increased 78% from the year-ago quarter’s figure of $2.95.
EMCOR Group, Inc. Price, Consensus and EPS Surprise
EMCOR Group, Inc. price-consensus-eps-surprise-chart | EMCOR Group, Inc. Quote
Revenues of $3.67 billion surpassed the consensus mark of $3.54 billion by 3.4% and increased 20.4% year over year from $3.05 billion. Strength across the segments helped the company achieve 17.7% higher organic revenues.
Segment Details
EMCOR currently operates in four reportable segments, which are U.S. Construction Services (Electrical and Mechanical Construction and Facilities Services), U.S. Building Services, U.S. Industrial Services and U.K. Building Services.
U.S. Construction Services: This segment's revenues rallied 31.1% year over year to $2.46 billion. The company witnessed strong demand across many of the markets served.
The segment’s operating income appreciated by 77.1%. The margin expanded 320 basis points (bps) year over year to 12.3%.
Within the U.S. Construction umbrella, the U.S. Electrical Construction and Facilities Services segment’s revenues increased 18% year over year to $800 million. Operating income surged 74.6% and margin expanded 360 bps year over year to 11.1%. The U.S. Mechanical Construction and Facilities Services segment’s revenues rose 38.6% year over year to $1.66 billion. The segment’s operating income rose 78.1% and its margin expanded 290 bps year over year to 12.9%.
The U.S. Building Services: Revenues in the segment were up 0.8% from the prior-year quarter’s levels to $781.1 million. The upside was backed by a strong mechanical services business and solid demand for its energy efficiency, building control installations and upgrades and retrofit projects. Operating income inched up 1.5% year over year and the margin was flat at 6%.
U.S. Industrial Services: This segment’s revenues increased 10.9% year over year to $324 million. EMCOR continues to see improved demand for its services. Operating income increased 61.6% and the margin expanded 120 bps to 3.9%.
U.K. Building Services: This segment’s revenues increased 0.5% from the year-ago quarter to $106.6 million. However, the segment’s operating income fell 2.5% and the margin fell 20 bps to 5.6% year over year.
Operating Highlights
The gross margin expanded 260 bps year over year to 18.7% in the quarter. Selling, general and administrative expenses — as a percentage of revenues — were flat year over year at 9.6%.
Operating margin in the quarter was 9.1%, up 260 bps from 6.5% year over year.
Liquidity & Cash Flow
As of Jun 30, 2024, EMCOR had cash and cash equivalents of $807.3 million compared with $789.8 million at 2023-end. Total long-term obligations totaled $653.7 million, up from the 2023-end level of $620.6 million.
Net cash provided by operating activities was $412 million in first-half 2024 compared with $214.9 million in the prior-year.
The RPOs, as of Jun 30, 2024, increased 8.6% year over year to $9 billion.
2024 Outlook Raised
The company now expects annual revenues between $14.5 billion and $15 billion compared with $14 billion and $14.5 billion expected earlier. In 2023, it reported $12.58 billion in annual revenues.
EPS is now expected to be within $19.00-$20.00 versus $15.50-$16.50 projected earlier and $13.31 reported in 2023.
Zacks Rank
EMCOR currently sports a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Construction Releases
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in the second quarter of 2024. Its adjusted earnings topped the Zacks Consensus Estimate and rose year over year. The company reported better-than-expected earnings in the trailing seven quarters.
However, quarterly net sales missed the consensus mark and declined on a year-over-year basis.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis.
The company performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
NVR, Inc. (NVR - Free Report) reported mixed second-quarter 2024 results, with earnings missing the Zacks Consensus Estimate while Homebuilding revenues surpassed the same. Both metrics increased on a year-over-year basis.
The upside was backed by improved demand trends, which resulted in higher settlements. Although the cancelation rate increased during the quarter, growth in new orders and increased average selling price of new orders are encouraging for the company’s prospects.