Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Rich Wesolowski – Sidoti & Company.
Rich Wesolowski – Sidoti & Company
I was trying to unearth a 4Q revenue and profit number for the 2007 facilities acquisitions including Ohmstede from the 10-K. And I came up with $100 million in 4Q sales and $2 million in operating profit, is that accurate?
Frank MacInnis
That’s close enough.
Rich Wesolowski – Sidoti & Company
How much help will you get in ?09 from at least a lower backlog amortization expense?
Frank MacInnis
We discussed when we closed the Ohmstede transaction on late ?07 that there was going to be a tremendous amount of amortization that was going to burn early on related to the contract backlog. That obviously has happened. However; as you know, we did close additional transactions in 2008. So, we are going to be looking at an annual savings of amortization expense ?09 versus ?08 anywhere between the lower 3’s up to $4 million year-over-year.
Rich Wesolowski – Sidoti & Company
Three to four million. Frank can you talk about any even anecdotal differences you see in competition between today and what you would expect for the next year and what you had seen last downturn, given that there is a broad weakness in almost all construction markets, including those that you don’t play in?
Frank MacInnis
First of all, Rich and listeners, we have said it before and we’ll say it again. We do not experience meaningful competition from housing contractors who attempt to move over to non-residential construction or infrastructure construction during downturns in housing. They have different kind of skills, different balance sheets, different labor relationships and we don’t see them as a factor.
The differentiating process that takes place in a recession tends to benefit companies like EMCOR because of our customer’s tendency to gravitate towards companies like EMCOR who are financially strong, capable of providing essentially unlimited surety bonds, and therefore, a source of certainty insofar as both the timely and the budgetary compliance with contract requirements.
So, in past recessions, we have seen EMCOR perform well, relative to its smaller competition and all of our competition is smaller, because we are the largest in the business. As I mentioned before, we have also seen significantly less recessionary impact on our facility services business than we have on construction, which has always been more cyclical. And that is the reason why we established our multi-billion dollar facility serves business in the first place some ten years ago.
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