UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 26, 2004
EMCOR GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-2315 11-2125338
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(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
301 Merritt Seven Corporate Park
Norwalk, Connecticut 06851
(Address of principal executive offices) (Zip code)
(Registrant's telephone number, including area code) 203-849-7800
Item 7. Financial Statements and Exhibits
(c) Exhibits.
Exhibit No. Description of Exhibit
99.1 Press Release dated February 26, 2004
Item 12 Results of Operations and Financial Condition
On February 26, 2004, EMCOR Group, Inc. issued a press release disclosing
the results of operations for the fiscal year ended December 31, 2003. A copy of
this press release is attached as Exhibit 99.1.
EXHIBIT INDEX
Exhibit No. Description
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99.1 Press release issued by EMCOR Group, Inc.
on February 26, 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
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Frank T. MacInnis
Chairman of the Board of Directors,
Chief Executive Officer and President
Date: February 26, 2004
Exhibit 99.1
EMCOR GROUP, INC. REPORTS 2003 FOURTH QUARTER RESULTS
-- Expects Improved Earnings in 2004 --
NORWALK, CONNECTICUT, February 26, 2003 - EMCOR Group, Inc. (NYSE: EME) today
reported results for the fourth quarter and year ended December 31, 2003.
For the fourth quarter of 2003, the Company reported net income of $2.6 million,
or $0.17 per diluted share, compared with net income of $21.3 million, or $1.38
per diluted share, in the fourth quarter of 2002. Revenues in the 2003 fourth
quarter were $1.17 billion, versus $1.12 billion, an increase of 4.7% versus the
year ago period. The acquisition of Consolidated Engineering Services, Inc.
("CES") in December 2002 contributed $86.1 million to revenues during the 2003
fourth quarter. Revenues declined 3.1% on an organic basis, reflecting increased
selectivity by the Company in the construction projects it pursues.
Fourth quarter 2003 operating income was $7.4 million, or 0.6% of revenues,
versus operating income of $39.1 million, or 3.5% of revenues in the year ago
period. The Company's operating income for the 2003 fourth quarter includes an
operating loss of $11.9 million in EMCOR Group's UK-based operations. Of this
loss, approximately $5.8 million was related to a charge taken in connection
with the financial deterioration of a significant customer during the fourth
quarter.
Selling, General and Administrative expenses ("SG&A") for the fourth quarter of
2003 totaled $116.8 million, or 10.0% of revenues, compared to SG&A of $104.7
million, or 9.4% of revenues, in the fourth quarter of last year. The primary
reason for the increase in SG&A is the inclusion of CES in EMCOR's 2003 fourth
quarter results. For full year 2003, SG&A as a percentage of revenues was 9.6%;
excluding acquisitions, SG&A as a percentage of revenues was 8.4% versus 8.9% in
2002.
As of December 31, 2003, the Company's contract backlog was $3.03 billion, a
4.9% increase from backlog of $2.89 billion at the end of 2002. Backlog levels
continued to decline from a high of $3.15 billion at the end of the 2003 second
quarter, reflecting the continuing impact of actions being taken by the Company
to conserve capacity to support more profitable private sector projects as they
become available.
- MORE -
EMCOR Announces 2003 Fourth Quarter Results Page 2
Frank T. MacInnis, Chairman and CEO of EMCOR Group, commented, "Fourth quarter
profits reflected the continued effects of the recessionary economy on EMCOR
operations. As anticipated, our margins were negatively affected by a higher
than normal amount of public sector work and reduced demand for discretionary
small project work in the private sector. However, our most serious
disappointment was the performance of our UK subsidiary. Although we are pleased
with the steps taken by our new UK management group to restructure their
operations and improve project controls, I remain uneasy about the strength and
profit potential of the UK market. Accordingly, EMCOR management will be
considering various alternatives with respect to all or portions of the UK
subsidiary in the coming months."
Net income for the 2003 full-year period was $20.6 million, or $1.33 per diluted
share, versus $62.9 million, or $4.07 per diluted share, a year ago. Revenues
for the 2003 full-year period were $4.53 billion, 14.3% higher than revenues of
$3.97 billion in 2002. The CES acquisition contributed $412.6 million in
revenues to the Company's results for 2003. Organic revenue growth for 2003 was
1.5%.
For 2003, the Company reported operating income of $45.2 million, compared with
operating income of $114.3 million in 2002. As a percentage of revenues,
operating income for the 2003 full-year period was 1.0%, versus 2.9% a year ago.
Mr. MacInnis added, "During 2003, we took steps to position EMCOR Group for
future growth and development. We are pleased with the performance of EMCOR
Facilities Services and are optimistic about the outsourcing-driven leverage
opportunities in its markets. The strength and liquidity of our year-end balance
sheet, including a debt to capital ratio of 21%, enables us to work from a
position of financial stability to take advantage of the gradual recovery of our
private sector customer base.
"EMCOR's diverse business model enabled us to remain profitable during the
recession years, despite a deterioration in our principal private sector
markets, especially commercial construction. Entering 2004, our project backlog
provides a strong revenue base, but at lower than historical margin levels due
to a larger than normal percentage of public sector projects undertaken in 2002
and 2003. These projects will delay earnings growth in the first half of 2004,
even though the Company expects renewed demand for its HVAC repair and
maintenance services starting in the second quarter of 2004.
"Our long-term strategy has been to increase the proportion of our revenues that
we derive from multi-year facilities service relationships, and 2004 will see
continued progress towards that objective. We anticipate that our facilities
services operations will grow, reflecting our heightened marketing and sales
efforts and increasing demand for our site-based and mobile services and our
remote monitoring capabilities. EMCOR is already providing facilities services
to more than one billion square feet of commercial, institutional and industrial
space, and we expect to be the beneficiaries of productivity-based outsourcing
decisions by American manufacturing and commercial concerns."
- MORE -
EMCOR Announces 2003 Fourth Quarter Results Page 3
The Company announced that, based on the current business environment, it
expects 2004 revenues to be between $4.3 and $4.4 billion, reflecting the
previously-announced "rightsizing" of several underperforming construction
subsidiaries, balanced in part by an anticipated 10% to 15% growth rate in the
Company's facilities services business. 2004 earnings per share on a diluted
basis are expected to be between $1.75 and $2.35, before restructuring charges
of approximately $5.0 million attributable to management realignment and other
initiatives. Major factors influencing earnings include the pace of economic
recovery, its impact on the Company's core markets, and the growth rate of
EMCOR's facilities services business.
Mr. MacInnis concluded, "Some of our companies are already seeing the effects of
the improving economy, but we have yet to see any significant overall recovery
in construction margins. Our continued selective approach to project acquisition
will ensure that we can promptly respond to increased demand for our services,
whenever it occurs. Our recently announced management realignment broadens and
focuses our management team, and we will be taking the appropriate steps to
address the poor performance of our UK operations. These efforts should provide
solid profit improvement opportunities for EMCOR companies, particularly in the
third and fourth quarters of 2004, with continued earnings acceleration in 2005
as new private sector capital projects are added to backlog and revenue."
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, Thursday, February 26, at 5:00 PM Eastern Time. You can access
the live call through the Home Page of the Company's Web site at
www.emcorgroup.com.
This release may include "forward looking statements." These statements are
based on certain assumptions and analyses made by the Company in light of its
experience and its perception of historical trends, current conditions, expected
future developments and other factors it believes are appropriate. Such
statements are subject to a number of assumptions, risks and uncertainties,
general economic and business conditions, business opportunities that may be
presented to and pursued by the Company and other factors, many of which are
beyond the control of the Company. Actual results may differ materially from
those anticipated in the statements.
-FINANCIAL TABLES FOLLOW-
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EMCOR GROUP, INC.
FINANCIAL HIGHLIGHTS
(In thousands, except share and per share information)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended For the Years Ended
December 31, December 31,
2003 2002 2003 2002
---- ---- ---- ----
Revenues $1,171,650 $1,119,068 $4,534,646 $3,968,051
Cost of sales 1,047,446 975,269 4,052,192 3,485,417
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Gross profit 124,204 143,799 482,454 482,634
Selling, general and
administrative expenses 116,818 104,687 437,302 368,209
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Operating income 7,386 39,112 45,152 114,425
Interest expense, net 2,605 998 8,236 2,099
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Income before taxes 4,781 38,114 36,916 112,326
Income tax provision 2,157 16,770 16,295 49,424
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Net income 2,624 $ 21,344 $ 20,621 $ 62,902
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Basic earnings per share $ 0.17 $ 1.43 $ 1.38 $ 4.23
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Diluted earnings per share $ 0.17 $ 1.38 $ 1.33 $ 4.07
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Weighted average shares of
Common Stock outstanding:
Basic 15,020,008 14,908,164 14,986,079 14,876,906
Diluted 15,431,124 15,458,002 15,461,698 15,457,002
GE>
EMCOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2003 2002
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ASSETS
Cash and cash equivalents $ 78,260 $ 93,103
Accounts receivable, net 1,009,170 964,968
Costs and estimated earnings in excess of billings
on uncompleted contracts 249,393 235,809
Inventories 9,863 12,271
Prepaid expenses and other 42,470 28,784
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Total current assets 1,389,156 1,334,935
Investments, notes, and other long-term receivables 26,452 24,642
Property, plant & equipment, net 66,156 70,750
Goodwill 277,994 290,412
Identifiable intangible assets, net 22,226 13,845
Other assets 13,263 23,907
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Total assets $1,795,247 $1,758,491
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings under working capital credit line $ 139,400 $ 112,000
Current maturities of long-term debt and capital
lease obligations 367 22,276
Accounts payable 451,713 409,562
Billings in excess of costs and estimated earnings
on uncompleted contracts 345,207 363,092
Accrued payroll and benefits 131,623 159,416
Other accrued expenses and liabilities 110,147 113,529
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Total current liabilities 1,178,457 1,179,875
Long-term debt and capital lease obligations 561 905
Other long-term obligations 94,873 87,841
Total stockholders' equity 521,356 489,870
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Total liabilities and stockholders' equity $1,795,247 $1,758,491
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