Dismal 2002 Construction Market Batters Contractor Financials on Wall Street

Aug. 15, 2003
Publicly held electrical contractors, as well as contractors in other trades, turned in mixed results in 2002, according to a recently released study by FMI Corp., Raleigh, N.C.

Publicly held electrical contractors, as well as contractors in other trades, turned in mixed results in 2002, according to a recently released study by FMI Corp., Raleigh, N.C.

Earnings after taxes for the 38 construction contractors covered in the report actually climbed in 2002 to 1.7 percent from 1.4 percent.

But 2002 stock prices for two publicly held electrical contractors, Integrated Electrical Services (IES), Houston, and Quanta Services Inc., also based in Houston, bounced along at the low end of their recent price history. Both companies have seen their share prices increase in recent months.

One electrical contractor that weathered the financial storm on Wall Street better than many of its competitors is Emcor. Shares of the Norwalk-Conn.-based company, a mechanical and electrical construction giant with over 70 subsidiaries and $1.1 billion in 2002 electrical sales, last year hit new highs near $60 per share.

Revenues for Emcor’s U.S. electrical construction and facilities services segment for 2002 decreased by $182.3 million compared with 2001, from $1.3 billion to 1.1 billion. This business segment accounted for 29 percent of Emcor’s total sales. The decrease in revenues was primarily due to a reduction in fast-track telecom and other contracts in 2002 compared with the prior year.

During 2002, transportation infrastructure work increased and energy generation work remained steady compared to the prior year. The $16 million (1.2 percent) decrease in 2001 revenues attributable to this segment compared with 2000 was due to reduced levels of fast-track data center and commercial construction in the New York, Chicago, Washington, D. C., and California markets, as well as reduced levels of activity in the Las Vegas and Ohio markets.