Business Wire | Oct 29, 2020 07:30AM EDT

EMCOR Group, Inc. Reports Third Quarter 2020 Results

Oct. 29, 2020

NORWALK, Conn.--(BUSINESS WIRE)--Oct. 29, 2020--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.

EMCOR Group's third quarter conference call will be available live via internet broadcast today, Thursday, October 29, at 10:30 AM Eastern Daylight Time. The live call may be accessed through the Company's website at www.emcorgroup.com.

Forward Looking Statements:

This release contains certain forward-looking statements. Any such comments speak only as of October 29, 2020 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, the nature and impact of our remaining performance obligations, our ability to pursue acquisitions, our ability to return capital to shareholders, market opportunities, market growth and customer trends. 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 are no guarantee of future performance. Such risks and uncertainties include, but are not limited to, adverse effects of general economic conditions, changes in the political environment, changes in the specific markets for EMCOR's services, adverse business conditions, availability of adequate levels of surety bonding, increased competition, unfavorable labor productivity, mix of business, the impact of the 2020 ransomware attack, and the impact of the COVID-19 pandemic on our revenue and operations, including employees, construction activity, and facilities utilization, and the risk factors associated with EMCOR's business discussed in Part I, Item 1A "Risk Factors," of the Company's 2019 Form 10-K, in Part II, Item 1A "Risk Factors," of the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, 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.

Non-GAAP Measures:

This release also includes 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 on-going 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 2020 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 it is unable to provide such reconciliations without unreasonable effort, due to the uncertainty and inherent difficulty of predicting the occurrence and the financial impact of items such as impairment charges that impact comparability and the periods in which such items may be recognized. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

EMCOR GROUP, INC.

FINANCIAL HIGHLIGHTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share information)

(Unaudited)

For the three months ended For the nine months ended September 30, September 30,

2020 2019 2020 2019

Revenues $ 2,201,714 $ 2,287,741 $ 6,515,567 $ 6,770,671

Cost of sales 1,838,530 1,951,754 5,504,036 5,779,550

Gross profit 363,184 335,987 1,011,531 991,121

Selling,general and 226,793 220,119 658,964 652,536 administrativeexpenses

Restructuring 536 119 605 567 expenses

Impairment losson goodwill,identifiableintangible - - 232,750 - assets,and otherlong-livedassets

Operating 135,855 115,749 119,212 338,018 income

Net periodicpension (cost) 751 381 2,211 1,187 income

Interest (1,484) (2,678) (6,082) (8,732) expense, net

Income before 135,122 113,452 115,341 330,473 income taxes

Income tax 73,936 31,618 62,179 92,257 provision

Net income $ 61,186 $ 81,834 $ 53,162 $ 238,216



Basic earningsper common $ 1.11 $ 1.46 $ 0.96 $ 4.24 share



Dilutedearnings per $ 1.11 $ 1.45 $ 0.96 $ 4.22 common share



Weightedaverage shares of common stockoutstanding:

Basic 54,979,310 56,216,840 55,302,385 56,189,388

Diluted 55,200,245 56,558,450 55,509,722 56,494,430



Dividendsdeclared per $ 0.08 $ 0.08 $ 0.24 $ 0.24 common share



EMCOR GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

September 30, 2020(Unaudited)

December 31,2019

ASSETS

Current assets:

Cash and cash equivalents

$

679,342

$

358,818

Accounts receivable, net

1,942,341

2,030,813

Contract assets

187,313

177,830

Inventories

39,253

40,446

Prepaid expenses and other

48,841

51,976

Total current assets

2,897,090

2,659,883

Property, plant and equipment, net

155,161

156,187

Operating lease right-of-use assets

236,297

245,471

Goodwill

846,908

1,063,911

Identifiable intangible assets, net

596,679

611,444

Other assets

97,850

93,462

Total assets

$

4,829,985

$

4,830,358

LIABILITIES AND EQUITY

Current liabilities:

Current maturities of long-term debt and finance lease liabilities

$

9,693

$

18,092

Accounts payable

596,093

665,402

Contract liabilities

714,686

623,642

Accrued payroll and benefits

385,752

382,573

Other accrued expenses and liabilities

219,858

195,757

Operating lease liabilities, current

52,766

53,144

Total current liabilities

1,978,848

1,938,610

Borrowings under revolving credit facility

-

50,000

Long-term debt and finance lease liabilities

272,243

244,139

Operating lease liabilities, long-term

199,967

204,950

Other long-term obligations

371,062

334,879

Total liabilities

2,822,120

2,772,578

Equity:

Total EMCOR Group, Inc. stockholders' equity

2,007,289

2,057,134

Noncontrolling interests

576

646

Total equity

2,007,865

2,057,780

Total liabilities and equity

$

4,829,985

$

4,830,358

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

September 30, December 31, 2020 2019 (Unaudited)

ASSETS

Current assets:

Cash and cash equivalents $ 679,342 $ 358,818

Accounts receivable, net 1,942,341 2,030,813

Contract assets 187,313 177,830

Inventories 39,253 40,446

Prepaid expenses and other 48,841 51,976

Total current assets 2,897,090 2,659,883

Property, plant and equipment, net 155,161 156,187

Operating lease right-of-use assets 236,297 245,471

Goodwill 846,908 1,063,911

Identifiable intangible assets, net 596,679 611,444

Other assets 97,850 93,462

Total assets $ 4,829,985 $ 4,830,358

LIABILITIES AND EQUITY

Current liabilities:

Current maturities of long-term debt and finance $ 9,693 $ 18,092 lease liabilities

Accounts payable 596,093 665,402

Contract liabilities 714,686 623,642

Accrued payroll and benefits 385,752 382,573

Other accrued expenses and liabilities 219,858 195,757

Operating lease liabilities, current 52,766 53,144

Total current liabilities 1,978,848 1,938,610

Borrowings under revolving credit facility - 50,000

Long-term debt and finance lease liabilities 272,243 244,139

Operating lease liabilities, long-term 199,967 204,950

Other long-term obligations 371,062 334,879

Total liabilities 2,822,120 2,772,578

Equity:

Total EMCOR Group, Inc. stockholders' equity 2,007,289 2,057,134

Noncontrolling interests 576 646

Total equity 2,007,865 2,057,780

Total liabilities and equity $ 4,829,985 $ 4,830,358

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2020 and 2019

(In thousands) (Unaudited)

2020

2019

Cash flows - operating activities:

Net income

$

53,162

$

238,216

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

34,881

32,412

Amortization of identifiable intangible assets

44,765

34,500

Provision for credit losses

3,409

1,621

Deferred income taxes

(28,104)

(913)

Excess tax benefits from share-based compensation

(192)

(601)

Non-cash expense for impairment of goodwill, identifiable intangible assets, and other long-lived assets

232,750

-

Non-cash share-based compensation expense

8,510

8,840

Other reconciling items

1,361

3,696

Changes in operating assets and liabilities, excluding the effect of businesses acquired

196,292

(140,850)

Net cash provided by operating activities

546,834

176,921

Cash flows - investing activities:

Payments for acquisitions of businesses, net of cash acquired

(44,930)

(79,984)

Proceeds from sale or disposal of property, plant and equipment

1,891

1,612

Purchase of property, plant and equipment

(34,180)

(35,829)

Investments in and advances to unconsolidated entities

-

(794)

Distributions from unconsolidated entities

-

38

Net cash used in investing activities

(77,219)

(114,957)

Cash flows - financing activities:

Proceeds from revolving credit facility

200,000

-

Repayments of revolving credit facility

(250,000)

(25,000)

Proceeds from long-term debt

300,000

-

Repayments of long-term debt and debt issuance costs

(280,049)

(11,400)

Repayments of finance lease liabilities

(3,390)

(3,357)

Dividends paid to stockholders

(13,280)

(13,458)

Repurchase of common stock

(99,048)

-

Taxes paid related to net share settlements of equity awards

(2,574)

(3,771)

Issuance of common stock under employee stock purchase plan

4,887

4,501

Payments for contingent consideration arrangements

(4,070)

(3,589)

Distributions to noncontrolling interests

(70)

(250)

Net cash used in financing activities

(147,594)

(56,324)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(1,304)

(2,047)

Increase in cash, cash equivalents, and restricted cash

320,717

3,593

Cash, cash equivalents, and restricted cash at beginning of year (1)

359,920

366,214

Cash, cash equivalents, and restricted cash at end of period (2)

$

680,637

$

369,807

EMCOR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2020 and 2019

(In thousands) (Unaudited)

2020 2019

Cash flows - operating activities:

Net income $ 53,162 $ 238,216

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 34,881 32,412

Amortization of identifiable intangible assets 44,765 34,500

Provision for credit losses 3,409 1,621

Deferred income taxes (28,104) (913)

Excess tax benefits from share-based compensation (192) (601)

Non-cash expense for impairment of goodwill,identifiable intangible assets, 232,750 - and other long-lived assets

Non-cash share-based compensation expense 8,510 8,840

Other reconciling items 1,361 3,696

Changes in operating assets and liabilities, 196,292 (140,850) excluding the effect of businesses acquired

Net cash provided by operating activities 546,834 176,921

Cash flows - investing activities:

Payments for acquisitions of businesses, net of (44,930) (79,984) cash acquired

Proceeds from sale or disposal of property, plant 1,891 1,612 and equipment

Purchase of property, plant and equipment (34,180) (35,829)

Investments in and advances to unconsolidated - (794) entities

Distributions from unconsolidated entities - 38

Net cash used in investing activities (77,219) (114,957)

Cash flows - financing activities:

Proceeds from revolving credit facility 200,000 -

Repayments of revolving credit facility (250,000) (25,000)

Proceeds from long-term debt 300,000 -

Repayments of long-term debt and debt issuance (280,049) (11,400) costs

Repayments of finance lease liabilities (3,390) (3,357)

Dividends paid to stockholders (13,280) (13,458)

Repurchase of common stock (99,048) -

Taxes paid related to net share settlements of (2,574) (3,771) equity awards

Issuance of common stock under employee stock 4,887 4,501 purchase plan

Payments for contingent consideration arrangements (4,070) (3,589)

Distributions to noncontrolling interests (70) (250)

Net cash used in financing activities (147,594) (56,324)

Effect of exchange rate changes on cash, cash (1,304) (2,047) equivalents, and restricted cash

Increase in cash, cash equivalents, and restricted 320,717 3,593 cash

Cash, cash equivalents, and restricted cash at 359,920 366,214 beginning of year ^(1)

Cash, cash equivalents, and restricted cash at end $ 680,637 $ 369,807 of period ^(2)

(1)

Includes $1.1 million and $2.3 million of restricted cash classified as "Prepaid expenses and other" in the Consolidated Balance Sheets as of December 31, 2019 and 2018, respectively.(2)

Includes $1.3 million and $1.7 million of restricted cash classified as "Prepaid expenses and other" in the Consolidated Balance Sheets as of September 30, 2020 and 2019, respectively.(1) Includes $1.1 million and $2.3 million of restricted cash classified as "Prepaid expenses and other" in the Consolidated Balance Sheets as of December 31, 2019 and 2018, respectively.(2) Includes $1.3 million and $1.7 million of restricted cash classified as "Prepaid expenses and other" in the Consolidated Balance Sheets as of September 30, 2020 and 2019, respectively.EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands) (Unaudited)

For the three months endedSeptember 30,

2020

2019

Revenues from unrelated entities:

United States electrical construction and facilities services

$

508,863

$

554,637

United States mechanical construction and facilities services

891,509

869,188

United States building services

551,555

532,122

United States industrial services

139,712

234,166

Total United States operations

2,091,639

2,190,113

United Kingdom building services

110,075

97,628

Total worldwide operations

$

2,201,714

$

2,287,741

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands) (Unaudited)

For the three months ended September 30,

2020 2019

Revenues from unrelated entities:

United States electrical construction and $ 508,863 $ 554,637 facilities services

United States mechanical construction and 891,509 869,188 facilities services

United States building services 551,555 532,122

United States industrial services 139,712 234,166

Total United States operations 2,091,639 2,190,113

United Kingdom building services 110,075 97,628

Total worldwide operations $ 2,201,714 $ 2,287,741



For the nine months endedSeptember 30,

2020

2019

Revenues from unrelated entities:

United States electrical construction and facilities services

$

1,479,973

$

1,652,109

United States mechanical construction and facilities services

2,516,062

2,444,683

United States building services

1,542,054

1,567,899

United States industrial services

661,909

788,271

Total United States operations

6,199,998

6,452,962

United Kingdom building services

315,569

317,709

Total worldwide operations

$

6,515,567

$

6,770,671

For the nine months ended September 30,

2020 2019

Revenues from unrelated entities:

United States electrical construction and $ 1,479,973 $ 1,652,109 facilities services

United States mechanical construction and 2,516,062 2,444,683 facilities services

United States building services 1,542,054 1,567,899

United States industrial services 661,909 788,271

Total United States operations 6,199,998 6,452,962

United Kingdom building services 315,569 317,709

Total worldwide operations $ 6,515,567 $ 6,770,671



EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands) (Unaudited)

For the three months endedSeptember 30,

2020

2019

Operating income (loss):

United States electrical construction and facilities services

$

47,059

$

33,630

United States mechanical construction and facilities services

80,048

61,213

United States building services

38,205

35,051

United States industrial services

(9,794)

5,561

Total United States operations

155,518

135,455

United Kingdom building services

5,327

4,754

Corporate administration

(24,454)

(24,341)

Restructuring expenses

(536)

(119)

Total worldwide operations

135,855

115,749

Other corporate items:

Net periodic pension (cost) income

751

381

Interest expense, net

(1,484)

(2,678)

Income before income taxes

$

135,122

$

113,452

EMCOR GROUP, INC.

SEGMENT INFORMATION

(In thousands) (Unaudited)

For the three months ended September 30,

2020 2019

Operating income (loss):

United States electrical construction and facilities $ 47,059 $ 33,630 services

United States mechanical construction and facilities 80,048 61,213 services

United States building services 38,205 35,051

United States industrial services (9,794) 5,561

Total United States operations 155,518 135,455

United Kingdom building services 5,327 4,754

Corporate administration (24,454) (24,341)

Restructuring expenses (536) (119)

Total worldwide operations 135,855 115,749

Other corporate items:

Net periodic pension (cost) income 751 381

Interest expense, net (1,484) (2,678)

Income before income taxes $ 135,122 $ 113,452



For the nine months endedSeptember 30,

2020

2019

Operating income (loss):

United States electrical construction and facilities services

$

123,146

$

120,380

United States mechanical construction and facilities services

192,156

156,152

United States building services

85,421

90,535

United States industrial services

5,424

31,209

Total United States operations

406,147

398,276

United Kingdom building services

16,442

14,371

Corporate administration

(70,022)

(74,062)

Restructuring expenses

(605)

(567)

Impairment loss on goodwill, identifiable intangible assets, and other long-lived assets

(232,750)

-

Total worldwide operations

119,212

338,018

Other corporate items:

Net periodic pension (cost) income

2,211

1,187

Interest expense, net

(6,082)

(8,732)

Income before income taxes

$

115,341

$

330,473

EMCOR GROUP, INC.RECONCILIATION OF 2020 AND 2019 NON-GAAP OPERATING INCOME ANDNON-GAAP OPERATING MARGIN(In thousands) (Unaudited)

In our press release, we provide non-GAAP operating income and non-GAAP operating margin for the three and nine months ended September 30, 2020 and 2019. The following table provides a reconciliation between operating income and operating margin determined on a non-GAAP basis to the most directly comparable GAAP measures for such periods.

For the nine months ended September 30,

2020 2019

Operating income (loss):

United States electrical construction and $ 123,146 $ 120,380 facilities services

United States mechanical construction and 192,156 156,152 facilities services

United States building services 85,421 90,535

United States industrial services 5,424 31,209

Total United States operations 406,147 398,276

United Kingdom building services 16,442 14,371

Corporate administration (70,022) (74,062)

Restructuring expenses (605) (567)

Impairment loss on goodwill, identifiable (232,750) - intangible assets, and other long-lived assets

Total worldwide operations 119,212 338,018

Other corporate items:

Net periodic pension (cost) income 2,211 1,187

Interest expense, net (6,082) (8,732)

Income before income taxes $ 115,341 $ 330,473



EMCOR GROUP, INC.RECONCILIATION OF 2020 AND 2019 NON-GAAP OPERATING INCOME ANDNON-GAAP OPERATING MARGIN(In thousands) (Unaudited)

In our press release, we provide non-GAAP operating income and non-GAAP operating margin for the three and nine months ended September 30, 2020 and 2019. The following table provides a reconciliation between operating income and operating margin determined on a non-GAAP basis to the most directly comparable GAAP measures for such periods.

For the three months For the nine months ended ended September 30, September 30,

2020 2019 2020 2019

GAAP operating income $ 135,855 $ 115,749 $ 119,212 $ 338,018

Impairment loss ongoodwill, identifiableintangible assets, - - 232,750 - and other long-livedassets

Non-GAAP operating $ 135,855 $ 115,749 $ 351,962 $ 338,018 income

For the three months endedSeptember 30,

For the nine months endedSeptember 30,

2020

2019

2020

2019

GAAP operating margin

6.2

%

5.1

%

1.8

%

5.0

%

Impairment loss on goodwill, identifiable intangible assets, and other long-lived assets

-

%

-

%

3.6

%

-

%

Non-GAAP operating margin

6.2

%

5.1

%

5.4

%

5.0

%

EMCOR GROUP, INC.RECONCILIATION OF 2020 AND 2019 NON-GAAP NET INCOME(In thousands) (Unaudited)

In our press release, we provide non-GAAP net income for the three and nine months ended September 30, 2020 and 2019. The following table provides a reconciliation between net income determined on a non-GAAP basis to the most directly comparable GAAP measure for such periods.

For the three For the nine months ended months ended September 30, September 30,

2020 2019 2020 2019

GAAP operating margin 6.2 % 5.1 % 1.8 % 5.0 %

Impairment loss on goodwill,identifiable intangible assets, - % - % 3.6 % - %and other long-lived assets

Non-GAAP operating margin 6.2 % 5.1 % 5.4 % 5.0 %

EMCOR GROUP, INC.RECONCILIATION OF 2020 AND 2019 NON-GAAP NET INCOME(In thousands) (Unaudited)

In our press release, we provide non-GAAP net income for the three and nine months ended September 30, 2020 and 2019. The following table provides a reconciliation between net income determined on a non-GAAP basis to the most directly comparable GAAP measure for such periods.

For the three months For the nine months ended ended September 30, September 30,

2020 2019 2020 2019

GAAP net income $ 61,186 $ 81,834 $ 53,162 $ 238,216

Impairment loss ongoodwill, identifiableintangible assets, - - 232,750 - and other long-livedassets

Tax effect of impairmentloss on goodwill,identifiable 35,776 - (34,089) - intangible assets, andother long-lived assets

Non-GAAP net income $ 96,962 $ 81,834 $ 251,823 $ 238,216

EMCOR GROUP, INC.RECONCILIATION OF 2020 AND 2019 NON-GAAP DILUTED EARNINGS PER SHARE(In thousands) (Unaudited)

In our press release, we provide non-GAAP diluted earnings per common share for the three and nine months ended September 30, 2020 and 2019. The following table provides a reconciliation between diluted earnings per common share determined on a non-GAAP basis to the most directly comparable GAAP measure for such periods.

For the three For the nine months months ended ended September 30, September 30,

2020 2019 2020 2019

GAAP diluted earnings per common $ 1.11 $ 1.45 $ 0.96 $ 4.22 share

Impairment loss on goodwill,identifiable intangible assets, - - 4.19 - and other long-lived assets

Tax effect of impairment loss ongoodwill, identifiable 0.65 - (0.61) - intangible assets, and otherlong-lived assets

Non-GAAP diluted earnings per common $ 1.76 $ 1.45 $ 4.54 $ 4.22 share

View source version on businesswire.com: https://www.businesswire.com/news/home/20201029005186/en/

CONTACT: R. Kevin Matz Executive Vice President Shared Services (203) 849-7938 FTI Consulting, Inc. Investors: Jamie Baird (212) 850-5659