EMCOR (EME) 29 Feb 202019 Q4 Earnings call transcript

Good morning. My name is Lara, and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group Fourth Quarter and Full Year 2019 Earnings Call. [Operator Instructions] Ms. Jamie Baird with FTI Consulting, you may begin.

good and Lara, you, morning, everyone. Thank the to EMCOR Group call. conference Welcome

here We full the company's morning. year to XXXX discuss which are reported today were fourth this earlier results, quarter and

of call I like Kevin Vice will ahead. please to management. the Shared would over who Services, turn Matz, to Executive Kevin, go introduce President

we and I have statements arrived where at you, morning, Welcome our financial everyone. arrived you Thank have hope information. to our have Internet X. non-GAAP contains that hope our site, welcome. presentation presentation Jamie. Good earnings We you forward-looking call. advance and discussion certain will And today. remarks slide the The to there, and accompany Slide Please

quarter Guzzi, non-GAAP Senior disclosures financial President, results. Officer review fourth and depicts disclosures. everyone Executive XXXX the Vice Treasurer; to conjunction and Chief Slide year and accompanying are the Maxine Counsel, General Mark encourage in with information President our Officer; X our me the and in President Page discuss of the slides Executive and Chairman, to Pompa, full I both our Tony Vice describes executives who Financial X slides. are and discussion with Mauricio. They Chief the and detail forward-looking statements

our the under this call will of Internet, Investor Presentation. call slides, participants For not accessing including website presentation, the section conference Relations the via the be in archived

can You emcorgroup.com. find us at

to call said, that With over Tony. let the turn me please

of some detail. year speak that, also and XXXX Mark Kevin, and Thanks, going up quarter my the the to I'm of in fourth to results. on focus will pick discussion full he'll

revenue $X.XX. had X. operations good any $X.XX $XXX terrific We be billion; bookings income, continuing income We record in performance shape, with overall covering growth X.X%. quite considering $XXX income. Performance finished from We for exceeds revenue upfront the of record growth revenue at the XXXX operating we at almost We through Remaining XX.X% Overall, had per we of had a the share of in cash net net to XXXX. metric. records which on and I'm flat million; with million; financial set with of year revenue from had which organic earnings operations relevant here pages going is or period, from $X.X had year-ago of good RPOs our million, leave that We growth year strong flow XXXX. X billion, organic the in Obligations $XXX

Our we the and opportunities extremely team our the of customers. made most well executed to serve that had

We executed margin going record in annual Performance matched also $X.XXX flat with growth that Remaining of performance price. and revenue organic income segment focus that our now exceptional of growth. were well the year for We a operating balance Obligations despite of we XXXX X.X%. Adding to exit robust billion strong in to the I'm on million purchase $XXX totaling organic discussion my year. acquisitions such sheet

growth of Our segments. underlying organic Electrical Mechanical of execute we to year, XX%, we Construction these to segments with combined well in grew and $X.X billion, X.X%. revenues basis, another great On had continue a and with growth

a was X.X%. margin income Operating strong

midsized small, all markets. across our inclusive of markets, in and winning are We had data We large geographies strength and end commercial projects centers.

with managing work winning and are tight jobs are labor in We successfully these skilled tradespeople market. this

provides and our for project young the workforce as We opportunity build the are managers. to future foremen to strength this growth using develop our

existing companies increased Lower and presence capability see in and our before, but and an production Integration our these also each is Iowa, an continue that our footprint Midwest in progressing Southeast we markets. geographic white technical of our build I've capabilities. well. end, also of only opportunity not fill expands As Texas, important mentioned in each in XXXX, segments, the to enhances acquisitions that executed To our in we as to three space acquisitions these is

performance income increase the operating in Turning versus We In the our year-ago operating at income had revenue helped XX.X% Services Building period. we best XXXX, segment. to had X.X%. lead a that XX.X% to margin to growth

performance in XXXX, had our performance its excellent technical business, our held capabilities We mechanical own an and and new integrated services growth commercial each. business, a geographic successfully four our in with acquired excellent We market. in companies evolving improved business government presence site-based and in and establishing

our commercial transitioned have contracts We large maintenance site-based several in well business.

segment improved Harvey, annual improved performance, had affected trajectory our which much post and Our Services has Industrial XXXX. really early

well. income customers had serving and growth operating are strong We revenue our very and

have quickly as penetration also EMCOR customers and can Industrial deliver. new which increased launched service offerings, team they know the customer new gained We several our Services

new cleaning added drive important facility to cleaning and also have repair capacity to Louisiana our a We revenues.

has and are for U.K. segment well perform well, continued team much and have improved how proud quite Our business we our to we how performs now. of the

of known some We to most sophisticated for doing complex in maintenance have built solutions is a facility owners the that U.K. the in franchise technically the leading U.K.

results. XXXX With Mark, on turn to over I'll the color that, he'll financial Mark? more provide it and

good to on Thank and participating Tony, everyone morning you, today. the call

accessing we Slide are now webcast, via this X. presentation on those For the

Tony opening Over which some the our detailed provide slides, commentary. next our during several year fourth quarter of to results a performance, full his XXXX I before outlined of discussion will moving XXXX

call today. and discussed a both financial Commission within earlier consolidated is As filed during and Exchange today's XX-K statements Securities reminder, Form the our in with financial release included information earnings our all announcement

of discuss four EMCOR's revenues quarter $X.X over quarter million Consolidated let's up billion So are in $XXX.X performance. X.X% or fourth XXXX.

businesses such a were in last of by Our EMCOR owned revenues to not time businesses year's to fourth quarter. fourth pertaining acquired, that include results period of million quarter $XX.X attributable

States segments. impacted Mechanical of United our positively United Building United Construction States Acquisition Construction, Electrical each revenues Services and States

quarter revenues X.X% Excluding organically. the impact million of or businesses acquired, fourth increased consolidated $XX.X

million XXXX. million All X.X% segments Industrial growth quarter of experienced or $XX.X States of EMCOR's quarter revenues our the than increased fourth four United reportable of segment Construction revenue during Services other from XXXX. Electrical $XXX.X

grew Excluding water revenue manufacturing, organically substantial the to substantially or XXXX hospitality large acquisition of quarterly the year. Revenue projects transportation, revenues sectors this versus completion or the certain prior due the market were within during within segment's market care health commercial gains and declines and of X.X% $XX.X completion institutional, offset early revenues million, sectors XXXX. by

million $XXX.X United of Construction quarter XX.X% million or Mechanical four revenues increased $XXX.X from States XXXX.

Excluding acquisition revenues of increased organically. revenues $XX.X million, $XX.X X.X% this or million segment's

Mechanical quarterly of or with set As of XXXX's million fourth increased segment to during activities. Mechanical in I from than four market EMCOR's $X.XX have organic calls quarter. revenue This of surpasses growth $XX gains the total across sectors the generated in other from record within or all-time revenue for most performance mentioned remains hospitality our revenues. XX.X%. and quarter Building quarterly segment's revenue U.S. $XXX.X during $XXX revenues domestic construction each our the contributing XXXX, increased sectors, increase third X.X%, Construction Construction all overall United growth business States record broad-based being X.X% such billion segment million million of with U.S. quarter revenues Services represents

indefinite of contract partially services decline definite $XX.X segment's quantity gains division and within or this $XX.X due a million, were acquisition smaller commercial base, a quarterly within services services by million increased revenues the divisions lower the revenue duration X.X% site-based product and offset government Excluding resulted revenues in mechanical to opportunities. which organically. Revenue

planned segment, within Similar to the large $XXX.X record Building schedules, reduced revenues of of activity Industrial performance which to cyclicality XXXX's fourth of segment for $XX.X X.X% Mechanical of the quarter. Services as Services maintenance States Construction U.S. this Additionally, quarter-over-quarter result million project energy customers' our segment. United all-time revenues activity declined an to million revenue represents our segment's due services quarterly in or U.S. turnaround led division lower decreased a quarter-over-quarter.

and of revenues EMCOR. relatively our rates is of activities. The last from shipments exchangers million as all-time a new Services is increase partially currency addition, revenues as quarterly for services referenced. and Kingdom driven billion incremental decrease contracts In $X.X that within this in quarter My the just statement project as turnaround revenue on segment of $X.X X.X% heat an newbuild a in activities foreign operation, repair well shop well revenues revenues of $XXX.X due repair maintenance million fourth United impact quarter a exchange fourth both Building by or decline in increased reduction to quarter-over-quarter. neutral our were record quarterly I quarterly experienced in as volumes,

and of resulting an increase Please revenues of and general quarter higher of in Slide as asset quarter-over-quarter increase and increase current in an all-time will our Selling, reflect $XX.X year's organic X. $X.X revenue businesses organic inclusive represent due million turn organic to segment's details continue margin taxes. reportable for growth income operating $XXX.X I cover represents of I of operating year's well operating this quarterly of is million. amortization an support a each result through primarily the mainly employment This represents XXXX's an or an to approximately costs, administrative non-income-based of corresponding the million to and acquired, fourth quarter slide. to XX% in headcount over expenses intangible from approximately revenues from as quarter quarter of $XX X.X% record million of XXXX. EMCOR increase increase income $XXX.X The last certain an quarter. incremental SG&A, includes four quarter Xth X.X% for increase represents state performance our and revenues of $XXX.X income in as operating compares of million XXXX's as period. million Reported X.X%

of quarter increase as by last million segment margin $X.X change $XX.X a Operating $X.X U.S. or sector of decreased in Services projected to institutional by gross stages had from earlier in power X.X% gross operating income that stages over are basis a the of included which gaming sectors, completion more due telecommunications $XX.X of comparable basis Mechanical million growth Reported points segment XXXX's in operating improvement point XXXX a market Construction a projects Electrical revenue in XXXX's completion. the profit and fourth U.S. XXX gross quarter. market margins quarterly partially X.X% result the lower period-over-period, profit X.X% million fourth profit fourth industrial our and typically year's operating XX activities, quarter. mix of the Quarter-over-quarter of of represents commercial, margin XXXX. completion, hospitality from which a of certain Construction increased income projects as than period. inclusive million, of within large projects contraction higher and from project represents of sector First, latter than approaching percentage submarket quarter the the reflect offset XXXX's

Our income, has a million increased approximately by margin fourth total reporting operating XXXX's million. is quarter X.X% or $XX.X from of $XXX.X U.S. construction business which operating

administrative last income reduction result $XX.X in and of Operating expenses the a quarter. U.S. gross points well revenue to basis personnel incurred from as for energy in is certain and to primarily increase represents slight our do Operating due XX million severance Services selling, $XXX,XXX for mix, expenses change fourth due reduction a by year's as margin with that within as revenues treatment. decreased divisions changes services not an an general Building associated qualify of margin government restructuring X.X% of in and

U.S. income awards both reduction represents in revenue, operating operating quarter-over-quarter. Our Services activity quarter. Industrial from in segment quarter. strong improvement addition operating of operating represents XXXX's favorably to of fourth points with of $X and primary by the an was project margin XXXX. judgment, performance customer income fourth revenues, X.X% of of joint is quarterly XX quarterly revenues million an revenues reasons segment's venture from operating the a were to This in adverse incremental for $XXX,XXX XXXX's $X.X U.K. margin the Building new connection in addition Lower million Services and operating which of income and dispute $XX.X X.X% reduction million impacted in basis is over

on now X. are We Slide

are project for to from Construction the revenue as not quarter-over-quarter. fourth from approximately XXXX's four XXXX data comparable quarter This $XX.X $X million due share Restructuring U.S. $X.XX Construction of share U.S. compared by XX.X% gross financial partially previous operations. gross Electrical a revenues, pertained or $XXX.X year basis follows. as and the has million. U.S. our a during in to represents less segment. Diluted our Electrical slides within slightly XX ago. favorable margin continuing addressed offset Building continuing has on primarily fourth favorable improved key XX.X% earnings improved of execution year-over-year resources is profit points Quarterly by million per a for by Construction our within Additional segment, quarter Quarter per realignment which $X.XX of profit the our XXXX operations quarter represents expenses of management fourth mix diluted common improvement U.S. within Mechanical Services XXXX quarter to $X.XX

due tax year. the XXXX lower rate XX.X%, We $XXX.X XXXX four tax which quarter. to XXXX the of the million. Our This the prior by earlier. period quarter corresponding flow cash $XXX.X than cash flow for certain flow discrete is rate in million exceeded year-to-date Such which nearly with year finished of operating XXXX's for cash is performance referenced in operating amount operating million, resulted in full of fourth $XX Tony items

We are now on Slide XX.

with the commentary as in Tony's revenues consolidated of are billion and incremental complete, or contributed now annual quarter $X.XX than With revenues of $XXX.X up our to time that Acquisitions by not period. full XXXX billion million, U.K. impacted Industrial positively fourth XXXX to compared $X.XX U.S. segments. reportable year XX.X% $X.XX billion commentary, all of pertaining and Services our period EMCOR were such segments the in of other businesses owned Building and XXXX's

increased $XXX.X revenues million the strong of X.X%. a or acquired, Excluding businesses organically impact year-to-date

annual than all Building achieving $XXX.X revenues rates revenues, billion or Acquisitions in revenue incremental increased U.S. reportable our other million throughout growth $XXX.X of in XXXX, the with full segments double Electrical For Construction growth revenue $X.XX of year of of contributed all million resulting segment our U.K. X.X%. segments, growth Services we digits. XX.X%. achieved organic

energy Substantial resulting Construction or revenues million commercial, Acquisitions transportation, the within health in and institutional $XX.X care, $X.XX sectors. completion $X.XX the revenues, to billion million organic the Significant revenue Mechanical more than revenue for revenue than certain water XX.X% the market service government resulted XXXX decline mechanical, of $XXX.X revenues a first or of incremental increase patterns U.S. to which year-over-year large Mechanical demand offset an and XXXX. segment's Building and in million commercial within most Services Hurricane services our of the effect Construction $X.XX XXXX. growth services Harvey. the within divisions in resulting within market market as a or hospitality within division increased revenue of capital increased in more project to of declines $XXX.X U.S. million mentioned, contributed increased the due manufacturing offset contributed of X.X%. and activity from sectors hospitality projects market operations $XXX.X XX.X% and negatively was compared U.S. prior for the XXXX, $XXX.X more base. annual the increase of billion maintenance U.S. organic across contract their of in million of their result increased impacted compared the within services than revenue XXXX due Tony Strong Services the Acquisitions segment of a of revenues, revenue revenues sector, attrition growth field billion to normalization site-based XX.X%. Industrial within of decline compensated to half XX.X%. sectors year by revenue project as carryover growth as

segment's commercial Services sterling. primarily $XX.X foreign new Building This maintenance headwind movement of unfavorable the $XXX.X growth due increased awards pound revenues contract XXXX for sectors. market to U.K. to the currency million, result a Our a X% despite institutional and segment, within exchange year-over-year was revenue as million

expenses in administrative increase This asset $XX.X acquired, $XXX.X to compared XXXX. incremental amortization. of to the reported Selling, related as million SG&A million includes $XXX.X XX. and million Please of $XX.X businesses of Slide general inclusive million intangible turn of an increase to represent

revenues, result As increase compared a percentage a growth compensation our due the costs revenue which higher period. of year-over-year organic SG&A plans is as personnel, increase in company-wide X.X% our in profitability. in annual to X.X% support overall was of growth for increase to our in labor expenses as required an The SG&A XXXX indirect associated in with to is employment XXXX incentive to as well due

due of an year-over-year and revenues XXXX's professional million seen annual initiatives a and million represents performance. $XX.X to is XXXX's in ongoing operating increase over X% progress. $XXX.X on basis, expenses certain or income a we increase year-to-date Additionally, have fee

of reportable margins an for year. Starting through which Electrical the prior and XXXX's income certain in XXXX All our segment the my of the to telecommunication higher represents reporting higher several the segment all-time operating project completion X.X% is will well and Services of $XX.X of million an which the increase XXXX commercial hospitality income, Mechanical higher in operating Construction are as record X.X%, record operating or segments Mechanical primarily returns over points for reporting manufacturing is water segment's levels operating inclusive operating compared sector margin this due $XXX.X to revenues market to U.S. with XX as X.X% Operating as activity institutional $XXX commentary operating from performance. or profitability other segment, within decline annual a operating segment. I transportation, increase to than move institutional health U.S. sector Construction and our care operating XXXX The market the an profit which, as XXXX. Electrical million X.X% year-over-year offset Construction in million in in was U.S. large which sectors. I segment, than Construction an by our operating margin, income contraction the address represents annual XX% gross million, Increased increased increase and as market projects basis revenues. income in segment. associated U.S. is represents and commercial XXXX Similar sector, due $X.X sectors, of income market margin. increase and was market well despite is

a stages of income The margin our the operating is to reduction of in includes in greater large current projects completion. due mix, revenue percentage which earlier

fourth revenue and the million Services XXXX of to sectors. increased of to profitability $XXX.X and and addition, favorably prior result the market services income In project XX within increased margin than prior year Building within of for million growth XXXX's a impacted represents compares hospitality $XX.X margin their contracts of basis due by other and the quarter in successful for was operating U.S. X.X% XX.X% in performance. manufacturing or Operating point year service improvement. closeouts operating a year X% project each operating divisions full government as improved XXXX

attributable segment's activities X.X% annual gross capital million established $XX.X revenues. $XX.X operating profit for services margin. normal to U.S. services, XXXX. records higher for segment's new to more a The both mentioned, million increase As performance Industrial our or income Tony demand pattern previously to year-over-year and project increased is from operating including this turnaround the due field Services XXXX of income throughout operations operating

resulted year-over-year. shop segment's X.X% project well million from income from improvement increase $XXX,XXX as year within from sterling. of approximately The in operating and field income newbuild decrease This revenues million with rate operating profit heat Services Building exchange service movement an scope U.K. operating services sales commercial in profitability of which the $XX.X a of $X.X pound activities in exchanger as market awards. in offset full for to a this related XXXX increased operations, services reduction negatively income the increased of resulting new from gross due or impacted contract unfavorable customers existing by sector, the segment's was to valuation

Slide We are now on XX.

key my by consistent profit profit common a year greater on from per financial than ago. to full is reduced during Diluted Additional share Year-to-date million, gross as $X.XX of is addressed gross $X.XX activity. year gross from commentary earnings are $XXX.X million Slide XXXX's share per of $X.X billion operations continuing of XX.X% costs restructuring diluted is is profit $X.X year-over-year. Total margin not follows. XXXX's data XX while compared

loss operations operations or diluted continuing noncash share earnings for XXXX continuing per have intangible from non-GAAP asset the $XXX,XXX, $X.XX approximately represents improvement. adjusted would When EPS the XX.X% number, from $X.XX comparing of XXXX's in XXXX's increase year's share been XXXX. current an per year-over-year to share per earnings impairment earnings Adjusting diluted

of growth of Working roughly expended intangible contract levels cash assets capital dividend of strength, approximately financing million year-over-year in payments Slide $XX continued EMCOR's to capital of and in modest Goodwill approximately shareholders. XXXX, December result sheet growth. is have investing of partially strong expenditures and primarily cash strong increased has XX, leverage. its during XX, acquisitions, which $XXX XXXX, our of as December accounts cash including primarily of $XXX receivable for are XXXX. line in strong due related approximately used increased from Cash on activities, now with are Variations to note continues driven and revenue by million XXXX. a has well balance $XX.X liquidity flow, to follows. Net a million as in by with acquisition $XX.X as operating million We activity, the amortization offset million expense as increased businesses and XX. result to offset acquired identifiable recognized assets of our maintain seven

million repayments by $XX Total revolving facilitate debt, XX, operating lease program, and loan. net has $XX.X principal acquisition is our credit under to borrowings million our our million $XXX.X of partially outstanding quarterly due XXXX, December excluding from mandatory to increased liabilities, offset line our term under

have advantage during As a had December the complete year of series strong our a a a in outstanding XXXX which debt-to-capitalization We leverage cash take performance of ability affords result all us and modest ratio of us. of without XX, sheet EMCOR during balance successfully base flow XX.X% our opportunities we at to of now outstanding front allowed us XXXX. borrowings, XXXX, profile. begin the to with an increasing the that acquisitions earnings

my With the concluded, call Tony. Tony? to commentary return will I prepared

against were about quarter going total End level the we billion. about of just nonresidential it's $X.X over to to as quarter RPO quarter Obligations. XXXX. a be Thanks, talk of when up it's over billion. of end quarter, fourth billion, fourth on to market million activity is the measured or continue quarter fourth $X.XX third XXXX record RPO opportunities talk a measuring In over always revenue when $XX Book-to-bill at X% there's our XX, nice the and fairly X, about, $X.XX strong was which in I'm move Total compared about to December fourth RPOs to year, Remaining the Mark. and into year. Performance lot of see short, page we

projects on never is and operations. business We said much our it our lot, been, depends a a it of this never our will quarter-to-quarter be; flow very not has the business, maintenance it and

large small construction projects. have and We

not material RPO and that activity. drives part of that's time RPO have then work We

maintenance and services. We operations have

services segments We is have to in RPOs $X.XX One industrial lead XXXX. was way RPO success billion XXXX XXXX given in a expect XXXX we look look revenue year-over-year projects various over me versus RPOs before, means average success. small, opportunities lens see average report. and I XX.X% continue projects large our faster-burning Average a said is better as to at billion we level, our markets in are the to growth, what it generating And executing $X.XX overlaid that our to ahead. very we to in of high at on XXXX. for Again, have we we an and those nine gauge believe a the at longer

roughly have million XXXX. X% $XX or RPOs Domestic since December increased

RPO segment construction breakeven a of of despite X%. XXXX third quarter just little having under year-over-year over growth from Our activity's

to projects projects seeing HVAC building it's supported growth for we more $XXX by complex million. is mechanical our repair this project Services to of in demand see improvement robust Most retrofits, Building addition continue maintenance up business. in control In and larger, demand opportunities, our segment as and almost services

and and work of HVAC All desire effectiveness around this of comfort of to their customers' efficiency, cost the building improve control centers systems.

of side page, market RPOs right by we the On the sector. show

market XXXX look year-over-year noted, up opportunities, softness. bar and closely continue sectors XXXX variances than Market offer or like more resembles the participation. sector market market down segmentation As to of the timing the slight

very are projects did suited of companies. that growth good said, for With see these some large, care well in Again, complex XXXX. our being projects many we health in

with bidding education, remain activity and single general, year, of classifications market into commercial, most move variances care remains we in our between and with strong. markets forecast As we AIA active, digits, the industrial. nonresidential the low health that the grow In will believe

nicely segments. are each in these market positioned We large of

of I'm going XX year, XX. As close pages and these to end we go on into the remarks the

middle we As strong enough X% We expect low, pretty we nonresidential and start service we has building the and market will are provide fall construction, XXXX, going performance. in again We we a their the spring decent and we to season. operating seasons turnaround specialty think, for think good our about on industrial believe continue and normal turnaround a it's we needs. do season, the to to to this well customers are to be opportunities perform growth, deliver year, us turnaround X% to believe positioned service of be

initial we revenue at Against set this $X.X backdrop, will billion. guidance billion $X.X to

be initial per will share $X.XX. from continuing diluted earnings $X.XX to Our operations guidance

the with and based timing we already need always, coupled patient work do win won, we the of how Our we've execute work range on XXXX. is to in The outcomes on will is potential question the to and end into to discussion the low I'd segment range? midpoint the can we control. what we end buckets: to move two of what from like cannot always the control high the

I'll the uncontrollables. talk we We things First, about can't always control. discuss

press significant in As site or norm what or capital always, condition United control. condition our election customers here we operating uncertainty job as the the have may due the can outside environment slow year-end, States, down to we in investments through we a projects year or general economic for could down slow

has this the While whether also we be, always minimal, subject we're continue so it far factors the been to or last coronavirus. expect be and tariffs year, it year, impact external will to

do guidance that may we where that's things midpoint or control put Now, focus; our our impact we to onto range. and end high that the meet really moving and of ability our

to First, care QX pretty have season, and common. decent we from advantage win of work late almost and project opportunity need a We the health to and that need turnaround must to manufacturing. take end our market, transportation for to QX maintain to centers, is to cost capital in We fall data and of work large productivity. in inclusive discipline to look and of expertise labor allow have opportunity we will QX, our small share any have drive commercial, skill and bid us every project to that execute to

execute needs our work project continue to to to on large strong contracts. well and maintenance have small we Our multisite continue growth, must

opportunity have do to high I always will we that work. of With the I capital And have to continue prefer we've at share degree balanced returning a to look and to capital pretty cycles. productivity to allocation, to in of acquisition drive two- cash capital However, certainty this between across respect shareholders. execute, allocation win project our and three-year had that time, growth had

pipeline XXXX, to in share price that's acquisitions, our we purchase in executed and returned and Services $XXX segment. XXXX million Across approximately dividends our repurchases. their through construction and And $XXX we across U.S. million Building shareholders shareholders. In the cash have And same. and allocation have XXXX to decent similar our return we cash to remain those executed and we XXXX. acquisitions, to note, XXXX, And capital flexibility priorities in also the to a of

let brief begin experienced. we a on we recently the systems before comment Q&A, make intrusion me our Finally,

As attack we the systems disclosed that IT we were of affecting previously company's the target a February ransomware malware. XX, certain RYUK on of with we determined

As problem. precautionary measure, the implemented they properly designed. we and operated systems contain shut to our as designed, business certain as We continuity a plans help down

and service, XXX% focus operations near fulfill our The plans to is productivity maintain to productive. of we field customer and have

objective the EMCOR, like The our customers appreciate financial priority our been do of the a are this XXXX also the potential cybersecurity attack. or back-office guidance. at Security quickly this attack assist been systems thank time Through evidence we and our be employees, measurably see team stepped on customer has forensic thorough. our to either completion continuing, full firm the improving operations. have our specific year retained has online, in and is we investigation, partners, company's that bringing action. leading direct patience not I have investigation line call vendors the would And a have EMCOR the and counsel, this impact of contemplated for as have although everyone our data We employee no our to facilitate who answered will which we help taken to to back in is and up while worked of to we a through us. We process. is

Our an efficient our this operations team. remain performed team the manner and has in in extraordinary support to back-office continued attack. effective We field, the in and

provide service. expect delivering for excellent we Moving continue They have our forward, We'll will remain customers. the from us. to focused on come to

And with questions. your that, I will Lara? take

the you. from from comes Instructions] line of D.A. first Brent question [Operator Thank Your Davidson. Thielman

Your line now live. is

year. Thanks. Good morning, congratulations. Great

you. Thank

industrial on starting Maybe services.

if just off going you I'm from And year spring turnaround solid really segment? to to curious big you XXXX. is you this too think can if the a contributions better, be had early call it's XXXX those You saw in grow whether

when a spring have a that of at of you of and season. here, the think I how our quarter. we'll a up ends see? do the call. pretty We'll you said in Mark, that of it good some early it. see It's leak quarter good too right first that the second started it mid We're visibility call, midst in you turnaround might the end what in to

Yes.

endeavoring we for we whatever mobilized. as obviously we labor have early a we're do a now when a And bit preview to guess, think, little lot know a right I customers. But we'll can said, to I call. obviously. of get results, our more, Brent, little of it's February Tony

Okay.

organic so mid- Okay, guess. new had fair be XXXX, a sort enough. kind And then I still of expected, should growth a growth in or single-digit norm Services lot we'd we of high XXXX stronger But a changed. Building in business than as of thinking that

think mid-single thinking right about digits. the way, I it you're the

in businesses And in brought off accelerate significant contracts. what project be will our that capability, have can time kind on dependent of comes maintenance period. some that some course, work like small given project multisite of of a Just contracts XXXX. we And of those construction on

at of and it be was if So they're mid-single the end the satisfied. we'd in not I year, the think I quarter-to-quarter look digits, businesses, but

guess, included the Is the Are project. they of called And construction And of Okay. commercial I Are complexity data to X-part curious in just these of just of or these, the line question. accretive? large then they over segments? RPOs? the kind that course in but profile was out your the because given presentation, margin projects, in infrastructure it then industrial

the think as the would think fairly to they fast for commercial I way RPO for about They question. is them the significant burn projects. far as most part in be

EMCOR whether the the think deliver it. the paying is we're it's contract for for of margin because business buying net-net-net, dependent customer is good say we're on very acceleration. can and not, would work or much type I materials I doing, we structure or really whether

We work. it, we in when have very do great customers strong value we that our for expertise and deliver

Okay, you. thank

Thank you.

next We Thalhimer of from from Davis. Thompson the coming Adam line question have your

live. is line Your

is that well. I'm a you going high-level had and guys. spring almost Good view What's morning, fall the turnaround Tony, good season, right surprised refinery now? your of

is some positioned you sophisticated March and demanding for platforms. well very the customers, EMCOR at better the pretty execute in to as it, view, flux, right resources consolidating vendor in able High-level hell, be right time.

So you're gaining share?

I don't know.

real in I past. the think be Adam. this careful, talked to got about We've you've

it, up their turnaround once you've to turnarounds it. what's been of into that services whether nature line turnaround got how you're you able you've the in performing bring those have, I think seasons how it's customers additional involved and the in your

We competitors there. have some good

to So talk always hesitant I'm share. about

or think we time material, it we business, service in construction whether which services our focus it about the our use serving I more labor capturing in our prefer the labor-based business, more that and business on tight best to and a we customers? are our share. of We lot think be opportunity we should labor be industrial And is opportunities the opportunities, I discretely don't and capturing are market? any

can us kind of Okay. country; you And the in what see then, you just walk bidding-wise? demand, around

Sure.

demand think, fairly strong. generally, is I

I continues retrofit upgrade. think be energy based and smaller Northeast, the on it projects building in sophisticated to and projects

You're you're in medical the at projects. looking up Northeast,

power some projects. You're looking at

looking use. You're multi-site at

proper, at City area, York New as down market has the been New a rebuilds a of business least we'll you center You're to that looking medical facilities. and EMCOR, as data never from at production-type hospital right? think lot you Metro Northeast not high-rise specifically. power, mean, I get the whole I pricing There's a in residential carve for separate because move of the out business. York

more we of You go work do river, that there. the across

fit-off our There's very some projects there. I infrastructure buying lot there's which a stage, work tenant big the bit large. fits now think some of the of skill marquee We're Airport. coming, a are large set in LaGuardia little underway,

to infrastructure careful MTA, As take. on. may But play contracts need take, to be there. you or nature contracts the what you But not of with going don't very you contracting the larger we a may some there's little you with Kennedy, go now of what

definition market to headquarters the a with in market, in data a becomes potential the Mid-Atlantic, center It's down market commercial be what's down care of the go as market. and Mid-Atlantic, center the And market. Amazon across in It's D.C. all strong strong coming with has well that it also D.C. those a positioned on data going area further strong. health bigger extended expand it's board. a And places. Metro very area, beyond that into You we're Virginia, you big a

strong We're it's our businesses, a of get downstream but the serve something south, been good the pretty gas, our well. growth. pretty seeing fairly market. plants. As movement in There's manufacturing and down ones again, you lot operations a industrial That's oil construction in

leader excited. BKI Of very manufacturing/industrial, health market sophisticated course, and the do the very and southeast data They're work by which made care people, a where in who acquisition, that's we way. we're centers, they're down the terrific across

energy strong, As you water go the overall, down with very an Florida market, efficiency, service-type Florida. energy South especially for The well authorities for upgrade, into positioned that work the is in market, down fairly happen all we're work. will the Florida commercial

base. and Texas, just customer to gas we the get business business here, the about it's You consolidating a oil talked turnaround

a them. to decent a of That seasons. more presents two you Remember, We're so years we serve the be weak to have sophisticated contractor Harvey. challenges, absent in even couple ago, and of were middle fairly its

acquisition of into to work to We Medical the in serve made and is Antonio. of You gain rural up markets back. entrance returned. in Metro go San have life the down Houston College more an Station area, signs

on So to have do to we're Texas. there in like more We'd bullish Dallas.

Right Morley-Moss a market of given other player years data ago now, entrance to into the not strong parts our think from are us country, exposed is are us Although we're acquisition major what in participating. a we we fairly of but has we maybe be a Dallas and to going like the couple center market.

across As you sophisticated there market strong, us, at you Arizona, and Southwest, fairly the look very Arizona the go for owners. is

It commercial relatively we has sector all health a that care sector, tech participate sector, mechanical and And side. well there a on are a the and has strong.

to you dynamics. has California, go California its As own

there pretty with Bay the in performance. issues and in manufacturing, section Pacific again, of, a a strong. Orange also in down, expect County big the center led We strong go expect to we're Northern market's terrific Northwest. Area we Francisco up institutional infrastructure. Pacific company and market busy Northwest, San own Southern high-tech and at area, The And pretty its and cross California a pretty medical, from a the presence general participants the good electrical California, general, have the data you good L.A. but is by in superstar pretty has

region, across strong. the go continues Mountain and You Denver in come Midwest market across Rocky the the

there opportunities There's for us.

strong that's the of does protection great food process subsidiary get there one And We the Midwest side contractors to at work wide the to continue And better just have whole we're one travel, you work as happen do for most Ohio can companies do. expect is in protection the we continues bell the the that in we and the Midwest, great of west. Pennsylvania, one parts remember, But one good, have them and of someone in a the better. to very really maybe another us, too. food of as in that a in on fire our And to refocus is Ohio. We few be our go we EPC capable move which Upper Ohio strength. fire in is there's areas least across, work. the to Midwest, you for and And works of have probably strong, not terrific country.

So folks almost good still see I would right in opportunities They're projects, markets nationwide. we all say winning. bidding are the net-net, our and

the With market. our just right, been way it, might It Labor's to position, it's X% fairly the X% growth. big a and about we've has we that tight. growth, be built. capability of think that some And

We have great to very be We well. able labor. execute should still

McGregor. Congrats Thanks. the awesome. on Okay,

you. Thank

Thank you.

Stifel. from coming question next Dilts your have from We line of the Noelle

live. is Your line

talked you're four your Well, lay could good growth you was guidance, hoping across I But growth you're a in about I how you specifically the thinking thinking divisions know bit out about morning. about how XXXX and also margins. generally. expectations

division. I it think here. mean to Because in I the that for ask about in decision. I'll it. every and a way it, win, shouldn't say Yes, us to needed we is the binary by that better we that the is a comes to we needed wanted first hard lot decision think quarter especially of two to way folks to a Last about It's those segments, to won Mark saying our construction of we binary sitting really year, in here wanted win, decisions kick that we win

happen. And year, know side. were never Last the how we you so going on to happen not or that's plus

precious And stretch get another to think divisions our maybe of reforecast not think about one doing try the don't We really your really And we it about conversion. job capabilities road. or we a we characteristics get think it by each drive about using resource the then of don't labor and crazy we've long time. that to and the clarity. We of those that We for doesn't it, now down have year, folks it's more we don't take growth. across been that And we have way. a business. overrun think the So as about overall

you could... maybe Mark,

double-digit Yes, that when the our had all other XXXX, segments revenue Tony Tony could could the the impact U.S. an certainly our of the operations, commentary line to our Obviously, than is, those and clearly, we see see And family. mechanical, and optimistic look we the our be we'll movement across certainly we growth substantial clearly, a both that places made of where project is acquisitions, largest to our reporting basis. I in it that, this regards I but segment. to construction believe in would referenced both add on growth I in you segments. U.K. in as timing, Building growth, year, of we're think, to can do that where But I you beyond project it's at had control. X% X% the see only to organic in logical industrial Services XXXX think impact at X% better We're would or Tony's the referenced, to EMCOR irrespective early call both the With than definitively point electrical just positively XXXX. somewhat earlier they're thing for because but too top little X%, going

visibility. not just with there we're quite So yet

Yes. been it And served well. years us and that's we've it how for doing

five thoughts And apologies. have U.K. my given on about so platforms, was of... any But the Any kind worry that I I should I yes, margins? Okay. ignoring

No, when go the that a got okay. with us I the in question Adam's to We've good U.S. The U.K. go positions job. really back done and and for is on great market U.K., they've

U.K. The service. the of I in part, delivery and excellence talk continues technical share. stability in Adam, business one market because take So, about will to the share of

all to our with Noelle, I'll five-year performance, at year industrial, full XXXX regards our performed of margins, chime than look reporting greater other just in. income history. XX-year than our When performance segments, you or margin operating

the piece improvements, would piece a paper I are. make but to looking for improvements that we they myself, for be I'll And we I satisfied. with equivalent of would where We're from year if sign So colleagues we levels paper. be clearly, at sitting we speak sign finished, for think that me, of not not just happy my doesn't to we're could to performing incremental today that incremental say us but

should margin dollars by in XX together, skew focused construction than margin or especially mean, we're percentages. segments, are nature I we're last contracts call we I in on said Mark. of either that this, year, basis the quarter third to last XX right now, year, go our think, Absolutely, much or the could points. the but more we call They in

where infrastructure as complicated as that long The we of we period a skew can over really be other do work it timing we large should conservative time. be projects, to tend on thing

So, all the of same a has and the lot characteristics. food processing work

right his same this Mark's margins flow what generation on we an margin. Worry down whether conversation the So growth, with or the focus now. grow X%, great I good about dollars at At stay in turn think level, don't and to not. opportunity cash implicit is

any in some at, cycle? in of in just comment opportunities M&A terms the makes the of are Could Have you in we you of sort given the looking That question. the later terms Last targets on that seen you're pipeline of you're seeing that market? what sense. multiple compression

a we And last on really life's people know. selling we're the the reality We're the in especially redefine their are build still executing work. more in to doing their that from and that And is fair I company, and of their terrific, not the work, with they a business we're to life's note been crazies work. over terrific from They buying deals to We want business. for person of couple still and businesses terrific a He on deal long-term the knew home want we're coming knew a great and thought really year four the home a want that against we they a business. And were focused world. we And We competing years, never going he equity are up years, it's have from, we the made bought a almost. we've been for private for us. gentleman him. couple his got

made get off. kind we involved in looking say, on And on doesn't me has for I had did He that to I you and everything you you we've We weeks of but was multiple at two "I where was it and wouldn't me. run or couple you ran ourselves told it we for were business, told processes. me metric, thought importantly, for XX, stayed you're EMCOR. turns some overperformed it's in He we're let's would do. And process at small he sense it to That's XX, told bid, company. more got the going you everything a We for side. deals us, a that important, were say a that every And luck, that did relatively It do." than a said, nothing ago, nonaggressive it better sort note us we years, just and when say four to. of to able small the going was good don't for

try to That's us out the deals. We're make for it a to who wants grow keep So grinding not fair and are we're we known the making bargain we are. going for help fair as continue way great We not to we we business can great where careers provide term, companies. who can the someone to with be long with together hunters. deal

much. Thanks so

you. Thank

question We line of the coming your next Eastman have Capital Markets. Sean KeyBanc from from

Your line is live. now

the for Lane's one other ask line Brian Morning. since I'm to us going just waiting there. on

He can wait.

to I'm be The what's there. you work about looking and Industrial between guys about we just the We of field just did kind there, Services thinking maybe mix how add stronger, XXXX service should business, of curious the did new relative shop? a line

of Just business Services? any kind in comments on and progression Industrial mix margin

from come always part absorption progression in margin critical. third think to more our the ability That's second quarter. I the of get and will

certain at. the We mix That's specific there's of clearly, looking than tend going a us. part extended they time. And over part of XXXX worth work skew through than it's XXXX bigger to the that have the shops favorable the have But each drive little number a will to maybe shops, no we're probably a maybe in to similar, The field. an of more bigger correlation period a to hope dollars But with to is mix business. still us more in XXXX. a But other. incremental to people is we some with the lot it our be

the the end And in is $XX which Sean, it Services XXXX, roughly of is all over million. Industrial our Obligations was at Yes, segment, $XXX up million. shop-related, Remaining Performance

see the door, in skewing just the like services as to out But that larger. field of be pushing for again, successfully key segment's revenues, that so just of hard So the we're them going expense through activity the and from I there. once get think facilities said as going that to because percentages long all incremental much we're at Tony it's improvement would that successful to our in to as it's

the Excellent. Learned Got for a lot today. call this helpful. it, on very Thanks time.

will next from of Mondillo your Sidoti Thank line question you. & Joe from come the Company. And

Your line is live.

good guys, Hi morning.

Joe. Morning,

have. all I XXXX Did spread but at that wage change was of you dynamics past you years? price/cost to given if compared could the the that increases, in also wondering leverage about talk

No.

I You our The see you consistent. is mix relatively it. think relatively margins, gross look where that's and consistent, they're at

think work pay to gross the more. though, size is are used XX at skew based now. size have on little do about because Joe, basis skew with so be, more always XX, to operating three- focus margins that Look, We union. XX skew income much XX, business, they that we to we of The our of to, can bidding points of used a no good even more the size wage basis things, there a The into it can far, XX, now our what you our five-year we in of attention We a our One And pretty on we idea points mix than margins visibility XX, the surprises are we operating. contracts mix. we is project. nonunion, are dynamics right? we're labor also our have

get crew So to down mix. then you

can know got because On job. contract. crew side, mix if around we mix, we we very the the crew we know we that definition do what to what exceptions union know have And and that strong we we bidding the bid, for

we're have on On the the good thing. a again, mix we pretty use to particular of non-union a with idea going folks side,

what have weeks. to out but our pass really is, the Can now? So prices materials, of which dislocation a you on is on it going that? right could, Could saying short-term eight would most You you I'm itself not have within XX to customer. price/cost on differential

this year past All the just right. relative How given to organically at a your mean, of down your trending past sort in bit, to And economy relative has point the been a slowing project time I wondering, intake I'm seemed years? little RPOs bit. in years, just

want that it skewed it was that means look strong And in We the would XX with at I to bid. was one people takes our calls say strong. different it year, to jobs can bid series than available And more that subsidiary a We little short be loss, just as about as finished most we and year. look last very at term. is that of a really organizations. last

Okay.

terms in there just saw like a Could year, so any it a is was little think And of single-digit that that conservative maybe higher the growth frame you low than that which bit calling sort you ago? aspect? is just a there looks of guidance? the it's different to year than I growth, relative guidance, last Or and visibility for

sitting we We've quarter. same of We to today. almost say, know this right? year We're give XX what every way think the first we saying front in years, a start for We the guidance here out us. is We whole conservative. got year we're try people in

part a saying, this these We project-based of have because in and me know go no lot us. off a people really badness of of business. of I to work binary us tired piece to badness. they're book I've in there's Every three-year us thing business. learned they're time. project long our going we market like a get pieces little things of a making year finish of absence big period out not. And not absence in two in a terrific got coming our And and They a binary business, start year on our give run manufacturer decision to numbers, the see project it's the get. that's is someone a versus is But make else whether a or of get that continue. that is the decisions hesitant that over a two-year, We customers won't And always reason it. going decision of usually make It's don't

they're at so then declined year very the industry And ask and even is modestly in construction it last construction, sort what some very XXXX. amongst seeing that's broad, Okay. similar of, in XXXX, I reports, to like this want the then the that's calling help some for starts question, a if you're to looks and looking nonresidential declines overall of that your reports... it customers? different? seeing, Because bigger you're what understand a you report broad bit and little such that's Or a what is your Could business just little us why

would expansive first skew most opportunities lot lots to tend that of lot wouldn't report, saying I we broad right. of residential things It's high-rise in A participate there. be a a you're what even of Yes, there, really sitting market, is in think quarter here in, higher project the today We us the we in see to of XXXX. and for part. market, end good that front that in

did or, last the then, how of question October? two out your fourth press BKI, XXXX? mean, $XXX in annually the And fourth perform sort for how you know Okay. And did two you've guess, is the quarter what that and then or months I revenue in that perform in that the of D&A put I part. of million that relative if was quarter what September expectation in to release?

what think skew the gates. have, how contractors of a sophisticated end to we done of sort and would they the top of they execute. have is million work The in that our projects, $XXX action, can got any it a execute know This is it's into performance. knows pretty time. XX-week quickly. over eight- out subsidiary immediately. how do could specific and pick they large we period had one they'll most some they think the out what company EMCOR's break the they coming don't pretty do toughest, is to that lull performance up We and had is would of What it's good a K, we do it's we be small companies Like they start in of disclosed of

Mark?

occurring the November, clearly, is acquisition lot get Tony's to through we commentary, thing to amortization. have with add of just Joe, temper in Yes. would a only backlog the I acquired

And went line, but to of is diminished top months, as So is we to commentary somewhat the contribution when what by because the bullish is obviously, the to just incremental press initial that XXXX, amortization is a regard of profit line release with be out expense, the at why and drag that's weren't we we provided with least going that weren't its for backlog. regulation. in which top acquired that pursuant accounting contribution,

XX our It of really it the ebbs pragmatic Yes. some of buy just at of multiple ebbs that something large any be why that And to also you just look we a and we're the of things company buy from own and That's eight And the that. out months for flows same that size, time when that, like of of comes just look over talked sort off contribution size, that, project because we one significant of has to with and business. work. with at not it flows right, being we project about years and year. work their Mark large looking comes when

also Could for Right, just the your acquisition, XXXX? DNA understandable. given wondering expectation the is size of just the what

we for and With year related it's did $XX.X for million. to a it's full if year up, XXXX, regards that slightly of full look will slightly And of then is roughly up. the businesses, disclosed XXXX. a not changing pure the And XX-K, our expense it to intangible capital footnotes amortization from of significantly the If suspect, is percentage the these different for amortization going acquired single anything, some you're expense to depreciation for be us than intangibles it in function just assets. this Yes. acquired the And I is talking company, newer points. capital

Have thanks. day. great Okay, a

Thank you.

be question. Thank please will you. continue. your Presenters, That last for

team today, field in you have it and great forward look table all in we you, are And here blessed that for in this Okay. I And that all. we around I'll finish for are in great your a people us the We with do saying, efficient we to by here. interest know XXXX. thanks for operate support for us have we to all, manner. I talking thankful We customers, EMCOR. the Have a XXXX, and to great day, a thank very team our the in and safe, and you following

Thank conference. concludes everyone for participating. This you today's

day. a lovely disconnect. now may Have You