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Yahoo
14-05-2025
- Business
- Yahoo
EME Q1 Earnings Call: Data Center and Healthcare Expansion Drive Outperformance, Tariff Risks Managed
Specialty construction contractor company EMCOR (NYSE:EME) reported Q1 CY2025 results exceeding the market's revenue expectations , with sales up 12.7% year on year to $3.87 billion. The company's full-year revenue guidance of $16.5 billion at the midpoint came in 0.8% above analysts' estimates. Its non-GAAP profit of $5.26 per share was 13.7% above analysts' consensus estimates. Is now the time to buy EME? Find out in our full research report (it's free). Revenue: $3.87 billion vs analyst estimates of $3.78 billion (12.7% year-on-year growth, 2.2% beat) Adjusted EPS: $5.26 vs analyst estimates of $4.63 (13.7% beat) Adjusted EBITDA: $360.7 million vs analyst estimates of $328.5 million (9.3% margin, 9.8% beat) The company reconfirmed its revenue guidance for the full year of $16.5 billion at the midpoint Adjusted EPS guidance for the full year is $23.33 at the midpoint, beating analyst estimates by 0.6% Operating Margin: 8.2%, in line with the same quarter last year Free Cash Flow Margin: 2.1%, down from 3.3% in the same quarter last year Market Capitalization: $21.14 billion EMCOR's first quarter results were shaped by strong performance from its Electrical and Mechanical Construction segments, supported by the integration of Miller Electric and continued demand from data center, healthcare, and water infrastructure projects. CEO Tony Guzzi pointed to the company's proactive move into new geographies and the ability to execute complex projects, stating, 'We continue to have excellent execution in our Electrical and Mechanical Construction segments with 12.5% and 11.9% operating margins, respectively.' Looking ahead, EMCOR's guidance reflects expectations for sustained operating margins, with the leadership team highlighting confidence in the company's ability to manage through tariff uncertainty and macroeconomic risks. Guzzi emphasized that the guidance range incorporates potential impacts from tariffs, noting, 'We will manage through the tariff uncertainty similar to how we manage the supply chain and cost disruptions around COVID.' The company anticipates continued growth in its key market sectors and maintains a disciplined approach to cost management and capital allocation. Management attributed the quarter's performance to robust execution in its construction businesses, expanded project scope driven by acquisitions, and ongoing strength in several end-markets. Forward-looking commentary focused on navigating external headwinds while leveraging a record project backlog to support growth. Construction Segment Momentum: The Electrical and Mechanical Construction divisions led results, with significant activity in data centers, healthcare, and water/wastewater sectors. The integration of Miller Electric contributed to both revenue growth and backlog expansion. Project Backlog Expansion: Remaining performance obligations (RPOs) rose to $11.8 billion, a 28% year-over-year increase, fueled by organic growth and the Miller acquisition. Notably, data center-related RPOs grew by 112% year-over-year. Building Services Shift: The U.S. Building Services segment saw mixed results, with mechanical services offsetting declines in site-based services. Management intends to continue prioritizing mechanical services, forecasting a shift in revenue mix to 80% mechanical services by next year. Industrial Services Headwinds: The Industrial Services segment faced challenges from a slower turnaround season due to extreme weather and increased credit loss allowances. Management expects performance to improve as the year progresses. Margin Drivers: Management credited improved margins to enhanced project execution, prefabrication, virtual design and construction (VDC) capabilities, and disciplined labor management. Segment operating margins in construction reached the higher end of historical performance. Looking forward, management expects continued growth in construction demand, supported by a diversified backlog and strategic focus on high-growth sectors, while remaining vigilant regarding external risks such as tariffs and macroeconomic uncertainty. Data Center and Healthcare Expansion: Ongoing demand for complex data center and healthcare projects is expected to sustain revenue growth, with management noting that data center activity remains strong due to increased geographic reach and larger project scopes. Tariff and Cost Management: The company's guidance incorporates potential cost impacts from tariffs, with plans to mitigate risks through contract negotiation and price adjustments. Management believes that normalization of trade barriers may further benefit domestic manufacturing activity. Project Mix and Margin Focus: The ability to maintain or improve operating margins will depend on the mix of project types, effective cost control, and continued execution of large-scale, high-margin projects. Leadership emphasized discipline in overhead and job cost management as critical to delivering on guidance. Brent Thielman (D.A. Davidson): Asked if maintaining guidance range reflected operational risks from tariffs or broader macro uncertainty. CEO Tony Guzzi clarified that the decision was driven by early-year uncertainty and not specific to growth concerns, emphasizing cautious guidance. Adam Thalhimer (Thompson Davis & Company): Queried about the strategic direction for the Building Services segment. Guzzi explained the focus would remain on growing mechanical services, aiming for an 80-20 split with site-based services. Brian Brophy (Stifel): Inquired about the sustainability of data center demand amid industry headlines. Guzzi stated that demand is increasing, with more locations and larger projects, providing good near-term visibility. Alex Dwyer (KeyBanc Capital Markets): Asked about the growth in project backlog (RPOs) compared to revenue guidance. CFO Jason Nalbandian attributed the higher backlog to longer-duration projects and the addition of Miller Electric's portfolio. Adam Bubes (Goldman Sachs): Sought clarification on margin drivers in construction and the impact of project mix. Guzzi noted that improved execution and scale, especially in large and mid-sized projects, are supporting margins at the high end of historical ranges. In the coming quarters, the StockStory team will be monitoring (1) the pace of backlog conversion in data center and healthcare projects, (2) the company's ability to offset cost pressures from tariffs and labor through contract management and pricing, and (3) whether the Building Services and Industrial Services segments demonstrate the expected rebound in performance. Execution against these milestones will provide insight into EMCOR's ability to maintain growth and margin stability. EMCOR currently trades at a forward P/E ratio of 20.2×. Should you double down or take your chips? The answer lies in our free research report. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
Associated Press
30-04-2025
- Business
- Associated Press
EMCOR Group, Inc. Reports First Quarter 2025 Results
NORWALK, Conn.--(BUSINESS WIRE)--Apr 30, 2025-- EMCOR Group, Inc. (NYSE: EME) today reported results for the first quarter ended March 31, 2025. First Quarter 2025 Results of Operations Revenues for the first quarter of 2025 totaled $3.87 billion, an increase of 12.7%, compared to $3.43 billion for the first quarter of 2024. Net income for the first quarter of 2025 was $240.7 million, or $5.26 per diluted share, compared to net income of $197.1 million, or $4.17 per diluted share, for the first quarter of 2024. Net income for the first quarter of 2025 included $9.4 million, or $6.9 million after taxes, of transaction related costs associated with the acquisition of Miller Electric Company ('Miller Electric'), which closed during the quarter. Excluding these transaction costs, non-GAAP net income for the first quarter of 2025 was $247.6 million, or $5.41 per diluted share. Operating income for the first quarter of 2025 was $318.8 million, or 8.2% of revenues, compared to operating income of $260.0 million, or 7.6% of revenues, for the first quarter of 2024. Excluding the previously referenced transaction costs, non-GAAP operating income for the first quarter of 2025 was $328.1 million, or 8.5% of revenues. Operating income included depreciation and amortization expense (inclusive of amortization of identifiable intangible assets) of $41.9 million and $29.6 million for the first quarter of 2025 and 2024, respectively. Refer to 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. Selling, general and administrative expenses ('SG&A') for the first quarter of 2025 totaled $404.0 million, or 10.4% of revenues, compared to $329.4 million, or 9.6% of revenues, for the first quarter of 2024. The Company's income tax rate for the first quarter of 2025 was 25.8%, compared to 26.4% for the first quarter of 2024. Remaining performance obligations ('RPOs') as of March 31, 2025, were a record $11.75 billion, inclusive of $1.0 billion of RPOs from Miller Electric. This compares to $9.18 billion as of March 31, 2024, an increase of $2.57 billion year-over-year. From a market sector perspective, the Company experienced increases in the majority of the sectors in which it operates, with the most significant growth coming from Network and Communications, Healthcare, Manufacturing and Industrial, Hospitality and Entertainment, and Institutional. Such increases were partially offset by reductions in RPOs within the High-Tech Manufacturing and Commercial market sectors, as a result of progress made on certain construction projects. Tony Guzzi, Chairman, President, and Chief Executive Officer of EMCOR, commented, 'Our first quarter results—which include 12.7% year-over-year revenue growth, a 22.6% increase in operating income, and $11.75 billion in remaining performance obligations—demonstrate the continued strength of our business. Once again, results were driven by our U.S. Electrical Construction and U.S. Mechanical Construction segments, which had year-over-year revenue growth of 42.3% and 10.2%, respectively, and operating margins of 12.5% and 11.9%, respectively. Our performance reflects our customers' confidence in our ability to execute complex projects across diverse end markets, as well as our proactive expansion into new geographies, and our productivity resulting from the use of virtual design and construction technologies and prefabrication capabilities. Coupled with sustained excellence in labor planning, large project coordination, and the sharing of best practices, we delivered exceptional results for our customers.' Mr. Guzzi continued, 'The integration of Miller Electric is on track and the acquisition contributed $183 million in revenues to our U.S. Electrical Construction segment during the quarter. Despite the headwinds in our site-based business, our U.S. Building Services segment performed well as demand remains robust for mechanical services, and our U.K. Building Services segment continued to perform as expected. While the results of our U.S. Industrial Services segment were impacted by a slower start to the turnaround season, we anticipate this segment's performance will improve throughout the year.' Full-Year 2025 Guidance Based on anticipated project mix and near-term visibility, EMCOR currently expects the following for the full year 2025. Commenting on the Company's guidance, Mr. Guzzi concluded, 'Despite a dynamic and uncertain environment, we remain well positioned with a significant year-over-year increase in RPOs and a healthy project pipeline. As we've done over the last several years, we will continue to focus on what we can control, and our guidance reflects our confidence in our ability to execute with efficiency and discipline, delivering strong operating results for our shareholders. It also contemplates our view, as of today, of the potential impact of tariffs and other macroeconomic factors on our business.' First Quarter 2025 Earnings Conference Call Information EMCOR Group's first quarter conference call will be broadcast live via the internet today, Wednesday, April 30, at 10:30 AM Eastern Standard Time and can be accessed through the Company's website at About EMCOR 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 EMCOR routinely posts information that may be important to investors in the 'Investor Relations' section of our website at Investors and potential investors are encouraged to consult the EMCOR website regularly for important information about EMCOR. Forward Looking Statements: This release and related presentation contain forward-looking statements. Such statements speak only as of April 30, 2025, and EMCOR assumes no obligation to update any such forward-looking statements, unless required by law. These forward-looking statements include statements regarding anticipated future operating and financial performance; financial guidance and projections underlying that guidance; the nature and impact of our remaining performance obligations; the timing of future projects; our ability to support organic growth and balanced capital allocation; the financial impact of acquisitions, including the acquisition of Miller Electric Company; market opportunities and growth prospects; customer trends; and project mix. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated (whether expressly or implied) by the forward-looking statements. Accordingly, these statements do not guarantee future performance or events. Applicable risks and uncertainties include, but are not limited to, adverse effects of general economic conditions; domestic and international political developments and/or conflicts; changes in the specific markets for EMCOR's services; weakness of the sectors from which we generate revenues; adverse business conditions; scarcity of skilled labor; productivity challenges; the nature and extent of supply chain disruptions impacting availability and pricing of materials; inflationary trends, including fluctuations in energy costs; the impact of legislation and/or government regulations; changes in interest rates; changes in foreign trade policy including the effect of tariffs; the lack of availability of adequate levels of surety bonding; increased competition; the impact of legal proceedings, claims, lawsuits, or governmental investigations; and unfavorable developments in the mix of our business. Certain of the risk factors associated with EMCOR's business are also discussed in Part I, Item 1A 'Risk Factors,' of the Company's 2024 Form 10-K, and in other reports filed from time to time with the Securities and Exchange Commission and available at and Such risk factors should be taken into account in evaluating our business, including any forward-looking statements. Non-GAAP Measures: This release and related presentation also include certain financial measures that were not prepared in accordance with U.S. generally accepted accounting principles (GAAP). Reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this release. The Company uses these non-GAAP measures as key performance indicators for the purpose of evaluating performance internally. We also believe that these non-GAAP measures provide investors with useful information with respect to our ongoing operations. Any non-GAAP financial measures presented are not, and should not be viewed as, substitutes for financial measures required by GAAP, have no standardized meaning prescribed by GAAP, and may not be comparable to the calculation of similar measures of other companies. In addition, forecast non-GAAP diluted earnings per share for full-year 2025 is a forward-looking non-GAAP financial measure. The Company does not provide a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP on a forward-looking basis because such reconciliations are not accessible without unreasonable effort, due to the uncertainty and inherent difficulty of predicting the occurrence and the financial impact of adjustments such as acquisition related transaction costs that impact comparability and the periods in which such items may be recognized. View source version on CONTACT: Andrew G. Backman Vice President Investor Relations (203) 849-7938FTI Consulting, Inc. Investors: Blake Mueller (718) 578-3706 KEYWORD: UNITED STATES NORTH AMERICA CONNECTICUT INDUSTRY KEYWORD: FINANCE MANUFACTURING OTHER MANUFACTURING PROFESSIONAL SERVICES ENGINEERING SOURCE: EMCOR Group, Inc. Copyright Business Wire 2025. PUB: 04/30/2025 07:30 AM/DISC: 04/30/2025 07:29 AM
