31 Jul, 2007
EMCOR's Quarter
However, the news is amazing.
EMCOR boosted its expectations of full-year 2007 sales to as high as $5.7 billion.
The company's backlog of work is at $4.26 billion, a record high. It's up 32% over 6/30/06. It's up 10.9% over 3/31/07. More impressive is the claim of Frank T. MacInnis, the boss here, that the composition of the backlog now includes "larger and more complex projects, which tend to have longer durations and increasing profit opportunities." A few years ago, EMCOR's backlog had more public-sector projects in it. Those had lower profit opportunities, and the company's results reflected that.
Operating income came in at 3.1% of revenues in Q2 '07, vs. 2.1% for Q2 '06.
Organic revenue growth in the quarter was 11.5%.
The company's backlog of work is at $4.26 billion, a record high. It's up 32% over 6/30/06. It's up 10.9% over 3/31/07. More impressive is the claim of Frank T. MacInnis, the boss here, that the composition of the backlog now includes "larger and more complex projects, which tend to have longer durations and increasing profit opportunities." A few years ago, EMCOR's backlog had more public-sector projects in it. Those had lower profit opportunities, and the company's results reflected that.
Operating income came in at 3.1% of revenues in Q2 '07, vs. 2.1% for Q2 '06.
Organic revenue growth in the quarter was 11.5%.
EMCOR's operations include electrical contracting, mechanical contracting, and facilities services.
EleBlog take: I am a BIG fan of EMCOR and of Mr. MacInnis. However, I do not own EME stock (or have any other investment in the company). Reason: I don't think I could ethically rave about the company's performance if I had stock in the thing. Is EME stock a buy right now? Generally speaking, I'd be giving the stock market a wide berth at this very moment, so my answer (were I to remove the self-applied shackles) would be NO.
But if you take the time to check out EMCOR's situation, you can see that it has no debt, that it's been very prudent in terms of shopping for acquisitions (even during the go-go contractor roll-up days of 1997-2001), and that the company is now generating cash flow -- and if the backlog numbers and characterization are honest, it will do more of that in the future.
A big change for EMCOR, as I've written here recently, comes from that 2-for-1 split. Before the split, the company had too few shares outstanding to earn the notice of Wall Street types. This has now changed. There could well be more recommendations from more analysts coming the company's way in the near future which -- should the stock market calm down (???) -- might make this a worthwhile investment.
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