NORWALK, Conn.--(BUSINESS WIRE)--EMCOR Group, Inc. (NYSE: EME) today reported results for the third quarter ended September 30, 2020.
For the third quarter of 2020, net income was $61.2 million, or $1.11 per diluted share, compared to $81.8 million, or $1.45 per diluted share, for the third quarter of 2019. Net income for the third quarter of 2020 was negatively impacted by the tax effect of the goodwill, identifiable intangible asset, and other long-lived asset impairment charges recorded in the second quarter of 2020, primarily related to our U.S. Industrial Services segment. Excluding such tax effect, non-GAAP net income for the third quarter of 2020 was $97.0 million, or $1.76 per diluted share. Revenues for the third quarter of 2020 totaled $2.20 billion, a decrease of 3.8%, compared to $2.29 billion for the third quarter of 2019.
Please see the attached tables for a reconciliation of non-GAAP net income and non-GAAP diluted earnings per share to the comparable GAAP measures.
Operating income for the third quarter of 2020 was $135.9 million, or 6.2% of revenues. This compares to $115.7 million, or 5.1% of revenues, for the third quarter of 2019.
Selling, general and administrative expenses for the third quarter of 2020 totaled $226.8 million, or 10.3% of revenues, compared to $220.1 million, or 9.6% of revenues, for the third quarter of 2019.
The Company's income tax rate for the third quarter of 2020 was 54.7%, which compares to an income tax rate of 27.9% for the third quarter of 2019. The Company’s tax rate for the third quarter of 2020 was impacted by the previously referenced tax effect of the impairment charges recorded in the second quarter of 2020.
Remaining performance obligations as of September 30, 2020 were $4.53 billion compared to $4.04 billion as of September 30, 2019. Total remaining performance obligations grew approximately $495.1 million year-over-year.
Tony Guzzi, Chairman, President and Chief Executive Officer of EMCOR, commented, “We continue to execute with a high level of focus, discipline, and precision, demonstrating our ability to perform exceptionally well in an uncertain environment. As a result, the Company delivered an excellent third quarter, achieving all-time record operating income of $135.9 million, record third quarter operating margin of 6.2%, and record non-GAAP diluted earnings per share of $1.76 despite a 3.8% decline in revenues year-over-year. Our initiatives to fundamentally realign our cost structure combined with our disciplined working capital management drove robust operating cash flow generation in the quarter, up 23% compared to the prior year period. While impacts related to the COVID-19 pandemic are ongoing, we are cautiously optimistic about demand recovery as our remaining performance obligations increased 12.3% year-over-year, underscoring the resiliency of our business and the markets in which we operate.”
Mr. Guzzi added, “Our U.S. Construction segments posted combined operating income growth of 34.0% and record third quarter operating margin of 9.1%, expanding an outstanding 240 basis points year-over-year, as we leveraged our cost structure and maintained exceptional field performance and productivity levels. Our U.S. Building Services segment reported revenue and operating income growth of 3.7% and 9.0% year-over-year, respectively, driven by strong performance in our commercial and government site-based services businesses and sustained strength in our mobile mechanical services business. The headwinds related to COVID-19 are most prominent in our U.S. Industrial Services segment. However, we are pleased with our efforts to strategically reposition the business through extensive measures to control costs and improve efficiency, and we believe we are well-equipped to succeed when customer demand rebounds. Finally, our U.K. Building Services segment continues to expand its strong competitive position and grow its customer relationships, which drove impressive, double-digit revenue and operating income growth of 12.7% and 12.1% year-over-year, respectively.”
Revenues for the first nine months of 2020 totaled $6.52 billion, a decrease of 3.8%, compared to $6.77 billion for the first nine months of 2019. Net income for the first nine months of 2020 was $53.2 million, or $0.96 per diluted share, compared to $238.2 million, or $4.22 per diluted share, for the first nine months of 2019. Excluding the previously referenced impairment charges recorded in the second quarter of 2020 and the related tax effect, non-GAAP net income for the first nine months of 2020 was $251.8 million, or $4.54 per diluted share.
Operating income for the first nine months of 2020 was $119.2 million, or 1.8% of revenues, compared to $338.0 million, or 5.0% of revenues, for the first nine months of 2019. Excluding the $232.8 million of non-cash impairment charges recorded in the second quarter of 2020, non-GAAP operating income for the first nine months of 2020 was $352.0 million, or 5.4% of revenues. SG&A totaled $659.0 million, or 10.1% of revenues, for the first nine months of 2020, compared to $652.5 million, or 9.6% of revenues, for the first nine months of 2019.
Please see the attached tables for a reconciliation of non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP diluted earnings per share to the comparable GAAP measures.
Based on year-to-date performance, visibility into the remainder of the year and assuming the continuation of current market conditions, EMCOR is raising its full-year 2020 revenue guidance to approximately $8.7 billion, an increase from the prior guidance range of $8.6 billion to $8.7 billion. The Company now also expects full-year 2020 non-GAAP diluted earnings per share in the range of $5.90 to $6.10, an increase from the prior guidance range of $5.00 to $5.50.
Mr. Guzzi concluded, “As we continue to navigate through these unprecedented times, we are focused on the elements of our business in our control, following strict safety protocols for our employees and adjusting our operations, as appropriate. We are very pleased by our year-to-date performance, which speaks to the incredible hard work and dedication across our organization. We have raised our full-year guidance to reflect our solid results in this challenging environment, as well as our expectations for strong and productive execution throughout the remainder of the year. Looking ahead, while visibility remains low, we are encouraged by the growth of our remaining performance obligations and firmly believe the actions we’ve taken to maintain our strong financial position will allow us to continue to deliver long-term value for our shareholders in 2020 and beyond.”
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 routinely posts information that may be important to investors in the “Investor Relations” section of our website at www.emcorgroup.com. Investors and potential investors are encouraged to consult the EMCOR website regularly for important information about EMCOR.
