EMCOR(US:EME)2021-07-31 16:50Financial Data and Key Metrics Changes - The company reported revenues of $2.44 billion, an increase of $423.6 million or 21% compared to Q2 2020, with organic revenue growth of 18% [25][8] - Operating income was $133 million, with an operating margin of 5.5%, compared to an operating loss of $122.6 million in Q2 2020 [44][45] - Diluted earnings per share (EPS) reached $1.78, compared to a loss of $1.52 in the same period last year, marking a 23.6% quarter-over-quarter improvement [56][57] Business Line Data and Key Metrics Changes - The U.S. Electrical Construction segment generated revenues of $489.5 million, up 19.3% from Q2 2020, driven by strong demand in commercial and healthcare sectors [28][30] - The U.S. Mechanical Construction segment saw revenues of $958.7 million, an increase of 21.3%, attributed to growth in commercial and healthcare market activities [30][31] - The U.S. Building Services segment reported revenues of $624.4 million, a 30.4% increase, with organic growth of nearly 21% [34][16] - The Industrial Services segment's revenues decreased by 2.5% to $235.2 million, still below pre-pandemic levels [36] Market Data and Key Metrics Changes - The U.K. Building Services segment experienced a revenue increase of 39.5% to $129.9 million, benefiting from resumed maintenance activities and favorable exchange rates [38] - Remaining performance obligations (RPOs) increased to a record $5.1 billion, up 11.2% year-over-year, indicating strong future revenue potential [71][10] Company Strategy and Development Direction - The company is focused on energy efficiency and indoor air quality (IAQ) projects, anticipating strong demand as customers seek to improve facilities post-pandemic [17][75] - The company plans to continue investing in its business and returning capital to shareholders while maintaining a strong balance sheet [65][94] - The company raised its revenue guidance for 2021 to $9.05 billion and EPS guidance to a range of $6.65 to $7.05, reflecting confidence in ongoing demand [81][80] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operating environment, noting strong bookings and demand across various sectors, despite challenges related to supply chain and labor availability [85][119] - The company expects to navigate supply chain challenges effectively, leveraging strong relationships with suppliers [102][103] - Management remains cautious about potential macroeconomic headwinds but is confident in the company's ability to adapt [89][90] Other Important Information - The company experienced a significant increase in working capital due to revenue growth, impacting cash flow patterns compared to the previous year [9][59] - The balance sheet remains strong, with a debt to capitalization ratio of 11.7%, allowing for continued investment and growth [65][62] Q&A Session Summary Question: Impact of raw material cost and inflation - Management discussed three strategies to mitigate raw material cost increases: locking in prices for long-term projects, re-pricing shorter-term projects, and utilizing time and material contracts [96][97][100] Question: Trends in industrial services - Management indicated that while some refiners may delay work, they do not expect significant deferrals beyond Q1 of next year, anticipating improved performance in the industrial services segment [106][107] Question: Velocity of bookings and future expectations - Management noted that while booking activity has been strong, they remain cautious about predicting future performance, emphasizing the binary nature of project wins [108][110]