NORWALK, CONNECTICUT, February 28, 2024 - EMCOR Group, Inc. (NYSE: EME) today reported results for the fourth quarter and year ended December 31, 2023.

For the fourth quarter of 2023, net income was $211.5 million, or $4.47 per diluted share, compared to $126.3 million, or $2.63 per diluted share, for the fourth quarter of 2022. Revenues for the fourth quarter of 2023 totaled $3.44 billion, an increase of 16.6%, compared to $2.95 billion for the fourth quarter of 2022.

Operating income for the fourth quarter of 2023 was $289.2 million, or 8.4% of revenues, compared to $177.2 million, or 6.0% of revenues, for the fourth quarter of 2022. Operating income included depreciation and amortization expense, inclusive of amortization of identifiable intangible assets, of $31.2 million and $28.0 million for the fourth quarter of 2023 and 2022, respectively.

Selling, general and administrative expenses for the fourth quarter of 2023 totaled $328.5 million, or 9.6% of revenues, compared to $277.6 million, or 9.4% of revenues, for the fourth quarter of 2022.

The Company's income tax rate for the fourth quarter of 2023 was 27.5%, compared to 27.4% for the fourth quarter of 2022.

Remaining performance obligations as of December 31, 2023 were a record $8.85 billion compared to $7.46 billion as of December 31, 2022, up approximately $1.39 billion year-over-year.

Revenues for the 2023 full-year period totaled $12.58 billion, an increase of 13.6%, compared to $11.08 billion for the 2022 full-year period. Net income for the 2023 full-year period was $633.0 million, or $13.31 per diluted share, compared to $406.1 million, or $8.10 per diluted share, for the 2022 full-year period. Net income for the 2023 full-year period included a long-lived asset impairment charge of $2.4 million, or $1.7 million after taxes. Excluding this impairment charge, non-GAAP net income for the 2023 full-year period was $634.7 million, or $13.34 per diluted share.

Operating income for the 2023 full-year period was $875.8 million, or 7.0% of revenues, compared to $564.9 million, or 5.1% of revenues, for the 2022 full-year period. Excluding the previously referenced impairment charge, non-GAAP operating income for the 2023 full-year period was $878.1 million, or 7.0% of revenues. Operating income included depreciation and amortization expense, inclusive of amortization

of identifiable intangible assets, of $119.0 million and $108.6 million for the 2023 and 2022 full-year periods, 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.

SG&A totaled $1.21 billion, or 9.6% of revenues, for the 2023 full-year period, compared to $1.04 billion, or 9.4% of revenues, for the 2022 full-year period.

The Company's income tax rate for the 2023 full-year period was 27.5%, compared to 27.3% for the 2022 full-year period.

Tony Guzzi, Chairman, President, and Chief Executive Officer of EMCOR, commented, “The Company reported exceptional results for the fourth quarter and full year of 2023, achieving record quarterly and annual revenues, operating income, operating margin, and diluted earnings per share. As we look forward, we continue to expect demand for our services to remain strong, which is reflected in the 18.6% year-over-year increase in our remaining performance obligations.”

Mr. Guzzi added, “Our U.S. Construction segments posted another quarter of exceptional results, concluding an outstanding year. On a combined basis, these segments achieved record revenues and operating income for both the fourth quarter and full year. We remain confident in the future of these businesses given several tailwinds working in our favor, including a strong project pipeline with a solid margin profile. Our U.S. Mechanical Construction segment had a particularly exceptional year with 18.2% annual revenue growth, all of which was organic, driven by strong performance across virtually all end markets. We believe that our investments in building information modeling, prefabrication, digital tools, and robotics have increased our productivity, yielding positive results and enhancing our operational efficiencies across this segment, as evidenced in part by an operating margin of 10.5% for the full year. Our U.S. Electrical Construction segment continued to perform very well as we benefited from consistent strong demand, particularly in the data center market, the energy sector, including several renewable energy projects, and the healthcare market sector, all of which is reflected in the segment’s revenue growth of 14.4% and operating margin of 8.3% for the full year.

This segment also benefited from growth within the high-tech manufacturing market sector as demand for our electrical construction services strengthened throughout the year. Our U.S. Building Services segment had another strong year with revenue growth of 13.3% year-over-year. Key end markets remained resilient with energy efficiency and indoor air quality projects driving retrofit demand. Our U.S. Industrial Services segment continued to improve at a measured pace, delivering revenue growth of 4.4% and operating income growth of 79%, year-over-year. Our U.K. Building Services segment reported an operating margin of 5.9% for the full year, despite operating in a challenged macroeconomic environment.”

Based on expected project mix and our current visibility into the coming year, EMCOR expects full-year 2024 revenues to be between $13.5 billion and $14.0 billion and full-year 2024 diluted earnings per share to be in the range of $14.00 to $15.00.

Mr. Guzzi continued, “2023 was another outstanding year for EMCOR, with record-breaking achievements across virtually every metric. Our revenue and operating income growth was exceptional in 2023, driven by our ability to win and execute well in large, growing market sectors such as high-tech manufacturing, network and communications, manufacturing and industrial, and healthcare, all of which are benefiting from long-term secular trends that require excellence in specialty trade contracting. 2023 was not without its difficulties as the operating environment remained challenging, but we met those challenges with resolve and strong, focused execution, demonstrating the resilience and adaptability of our business as we capitalized on long-term, enduring market trends. Investments in BIM and prefabrication continue to create efficiencies and differentiate us during the bidding process, particularly when coupled with the project-level expertise of our teams in the field and the strength of our balance sheet.”

Mr. Guzzi concluded, “We believe our growth strategy continues to position EMCOR for long-term success, as both our organic and inorganic initiatives are driving record performance. Looking forward, we believe we are positioned in the right market sectors and geographies to continue to win complex projects that allow us an opportunity to perform well for our customers. Our record remaining performance obligations provide solid visibility into 2024, despite some macroeconomic headwinds and other factors that could impact our performance and execution. As always, we will continue to maintain our proven and disciplined approach to capital allocation. We remain focused on returning capital to our shareholders, as evidenced by the latest increase in our dividend, and on investing in the sustainable growth of the Company, both in our existing businesses and through our disciplined acquisition strategy.

We recently signed agreements to acquire several companies that are leaders in their respective offerings and regions, reflecting our strategy of expanding and complementing the capabilities and geographical footprint of our existing businesses to better serve the evolving needs of our customers.”

The Company today announced that its Board of Directors has approved an increase to the Company’s regular quarterly dividend to $0.25 per share from $0.18 per share. The Board expects to declare this cash dividend starting in the second quarter of 2024.

Mr. Guzzi said, “This planned dividend increase is a testament to the exceptional execution of our employees, confidence in our business, and solid financial foundation. We believe our strong performance across key end markets positions us for sustained success going into 2024.”

EMCOR Group's fourth quarter conference call will be available live via internet broadcast today, Wednesday, February 28, at 10:30 AM Eastern Standard Time. The live call may be accessed through the Company's website at www.emcorgroup.com.

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.

This release contains forward-looking statements. Such statements speak only as of February 28, 2024, and EMCOR assumes no obligation to update any such forward-looking statements, unless required by law. These forward-looking statements may include statements regarding anticipated future operating and financial performance, including financial guidance and projections underlying that guidance; the nature and impact of our remaining performance obligations; our ability to be prudent capital allocators; our ability to pursue organic investments and acquisitions; our ability to return capital to shareholders; market opportunities; market 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; changes in the specific markets for EMCOR’s services; adverse business conditions, including labor market tightness and/or disruption, productivity challenges, the nature and extent of supply chain disruptions impacting availability and pricing of materials, and inflationary trends more generally, including fluctuations in energy costs; the impact of legislation and/or government regulations; changes in interest rates; the availability of adequate levels of surety bonding; increased competition; 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 2023 Form 10-K, and in other reports filed from time to time with the Securities and Exchange Commission and available at www.sec.gov and www.emcorgroup.com. Such risk factors should be taken into account in evaluating our business, including any forward-looking statements.

(In thousands, except share and per share information)

For the Years Ended December 31, 2023 and 2022

(1)Includes $0.6 million and $1.2 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of December 31, 2022 and 2021, respectively.

 

(In thousands, except for percentages) (Unaudited)

The following table provides a reconciliation between organic revenue growth, a non-GAAP measure, and total revenue growth for the quarter and year ended December 31, 2023.

(In thousands, except for percentages and per share data) (Unaudited)

In our press release and related presentation, we provide non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP diluted earnings per common share for the years ended December 31, 2023 and 2022. The following tables provide a reconciliation between these amounts determined on a non-GAAP basis and the most directly comparable GAAP measures for such periods.

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Amounts presented in this table may not foot due to rounding.

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