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EMCOR Group (EME)Stock (General Builders Industry, General Contractors Industry)
 Also in 2007, Emcor's backlog (unrecognized yet received revenue ie partial prepayment) grew to $4.49 billion from $3.50 billion in 2006.[6] Backlog represents a key metric in the general contracting industry in that it illustrates future revenue routes. Essentially, partial prepayments to Emcor for individual projects foreshadow future payments as these ventures mature. Between 2006 and 2007, the electrical and mechanical construction services industry expanded considerably due to the increasing need for complex systems.[7] The demand for such complexity stemmed from both the desire of businesses to deeply integrate computer operations into their informational infrastructure as well as legal measures requiring corporations to amplify their environmental and energy conservation efforts. In particular, these two constraints created opportunities for electrical and mechanical services in the non-residential construction arena.[8] For example, in 2007, total spending in the United States for non-residential construction exceeded $630.0 billion, an increase of 15.6% from such spending in 2006.[9]
[edit] Company Overview[edit] Business SegmentsThe Emcor Group operates in two main segments: electrical & mechanical engineering as well as facilities construction services. Within the facilities construction services segment, the company subdivides its operations into either the facilities retrofitting business or the facilities maintenance one. Between 2005 and 2007, Emcor generated an increasing percentage of its total revenue from the electrical & mechanical engineering segment. While in 2005, electrical and mechanical engineering revenue supplied only 30% of Emcor’s gross revenue, by 2006, this segment's revenue contribution had ballooned to 41% of total 2006 revenue. Finally, by 2007, electrical and mechanical engineering projects contributed to 50% of Emcor’s gross revenue.[12]
[edit] Business Financials[edit] Finances
[edit] AcquisitionIn September 2007, Emcor acquired FR X Ohmstede Corporation for $445.5 million.[22] Between 2004 and 2007, Ohmstede was the leading North American provider of aftermarket maintenance and repair services, replacement parts, and fabrication services for the petrochemical industry. Through the Ohmstede acquisition, Emcor acquired a core competency in the in-shop repair business as well as the customized heat exchangers industry.[23] Additionally, through this purchase, Emcor developed the ability to provide aftermarket maintenance of shell and tube heat exchangers in the electric works field.[24] Book entries for Ohmstede’s revenue began in the first quarter of 2008.
[edit] Trends and Forces[edit] High Growth in Non-Residential Electrical Construction Services Disproportionately Benefits EmcorThe electrical and mechanical construction services industry grew substantially between 2005 and 2007 due to the increasing demand for complex & content-heavy systems.[27] Such complexity arose from the expanded use of computers in integrated systems, an increased demand for more technologically advanced communications, and new legal requirements necessitating energy savings and environmental control in individual spaces.[28] The demand for these services was typically driven by non-residential construction and renovation activity. Total spending in the United States for non-residential construction exceeded $630.0 billion in 2007, an increase of 15.6% from such spending in 2006 ($544.98 billion), according to the United States Census Bureau.[29] Emcor’s United States electrical & mechanical construction services business controls 33.7% of the electric work market share ($10.5 billion segment).[30] In 2007, The Emcor group procured 2035 New Contracts in the electric works business segment out of the segment total of 6040 New Contracts, thereby solidifying their role as the electric works market leader.[31] These new electric work services contributed to 60% ($3.54 billion) of Emcor’s 2007 revenue ($5.9 billion).[32] [edit] Fragile Economic Moat Around Simple Electric Systems Market Threatens Emcor’s Market Share DominanceThe electric works industry suffers from low barriers to entry; the market is served by small, owner-operated private companies and several large public corporations (Emcor Group, Quanta Services, Mastec Corp, etc).[33] As a result, Edison Electric Institute experts estimate that any organization with capital in excess of $10 million dollars can at least enter the small contract segment (contracts which range in size from $1 million to $10 million) of the electric works industry.[34] Stiff competition in the simple electric works segment has already adversely impacted Emcor’s ability to corner the market. In 2006, Emcor recorded $2.54 billion for their simple electric works projects (constituting 65% of the simple electric systems market share). In 2007, this same niche only supplied Emcor with $2.3 billion in revenue, or 58% of the market share.[35] [edit] Aging U.S. and Canadian Infrastructure Will Need RenovationIn 2007, The Emcor Group spent over $8 million lobbying for contracts related to infrastructural renovation and construction in the United States.[36] That same year Emcor entered into 2035 Electric Work contracts comprising 33.7% of Electric Work Market share in the United States, earning $3.54 billion.[37] Additionally Emcor possess an electric work backlog in excess of $3 billion dollars; cumulative contract quantity and value represent approximately 35% of 2008-2010 Electric Work market share.[38] The U.S. and Canadian electric power grid consists of more than 200,000 miles of high-voltage lines delivering electricity to over 300 million people.[39] The infrastructure is aging and requires significant maintenance and expansion to handle the nation's growing power needs. North American Electric Reliability Council (NERC) industry professionals estimate a complete electric infrastructural overhaul before 2018 in order to respond to the wavering reliability of the transmission system.[40] In addition, NERC issued a report forecasting a 135,000 peak-megawatt consumption (ie consumption during summer) by 2017, a 17.7% increase over the next ten years.[41] . Lastly, the failure rate for an electricity transformer rises sharply 30 years after installation; the US' last significant investment in transformers occurred in 1974, to accommodate a peak of 185 giga-voltage amperes. As a result, power companies throughout the United States are beginning to replace aging transformer units. These factors in their entirety benefit Emcor’s Electric Works division.[42] [edit] Competition and Market ShareEmcor Corporation competes with other general contracting firms to acquire business in either the electrical/mechanical engineering segment or the facilities maintenance one.
 EMCOR Group2004 Data 2005 Data 2006 Data 2007 Data 2008 Data Most Recent Data Available [edit] References
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