EMCOR (EME) 31 Jul 212021 Q2 Earnings call transcript

Good morning. My name is Jerome, and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group Second Quarter 2021 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Mr. Instructions] [Operator FTI with Haskel Consulting. Kwestel

You may begin.

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

morning. turn We are Matz, will results, this introduce quarter company’s Executive XXXX like here today Shared please to which discuss Vice President management. were Services to Kevin, call over the the of second I’d Kevin to who reported ahead. go

and good everybody. morning, Haskel, you, Thank

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a good were numbers, covering four clear what throes Thanks, morning in am a a of to a we reported quarter upfront six. in going everybody. no XXXX year we pandemic be second I our sight. step When to And pages back, take difference with makes? to Kevin, And you here, and Yeah. the end

rising some in cases again. geographies COVID-XX Although, are

with XX% quarter, a visibility continue our balance the which had restrictions. in the prior site us impacting are $X.XX of important X.X% environment. revenues to remember growth that had $XXX operating partially either focused than in typical We flow income and stable This our this in We work second of than we income employee liquidating more strong a share very we as and in quarter, environment of or we revenue to per ago. year, organic million a our respect of It markets unusual resulted remain this due year, much operating Regardless key quarter growth. year for better XXXX of pattern We to were We of a lockdowns safety operations sheet diluted to our investment in shutdown. working COVID-XX and we operating in billion, on revenue imposed is cash capital sizeable growth very overall, had had maintained against with leading of during quarter. XX% much last customer to a comparison have strong strong margins revenue a shutdown more several earnings our geographic with factors $X.XX. and

geographies. Building in the trends billion record to sectors rest refer our Mechanical Electrical had business a substantial segments, Construction as market as in RPO growth our This $X.X the and grew segment. them across Our well our strong. I’ll to was are and obligations, as performance and presentation remaining broad Services and We growth of for based RPOs

in than just operating our excellent our more market of are with Mechanical COVID We believe segment see and margins as trade revenue sectors, our geographic across our that, Construction precision sectors. year. had infrastructure income strong Electrical We up and Construction Mechanical centers results Construction we of normal quarter, growth footprint. operational had commercial the For last of and the based our Electrical especially execution broad across executing Mechanical both segment to and in income had XX.X% in resumption XX.X%, and segments. and demand healthcare the we grow continued quarter and With from we data impacted X.X%, margins and discipline Electrical Construction across X.X% second commercial the of logistical growth reflects of I market business. growth operating offerings which that’s really our drove within with and We

both quick small and work perspective. are a project revenue term work from project large strong Our and booking

to and availability. work uncertainty pricing to and our material schedule continue very the bid around hard amid We work

the Our experienced have negotiations. partners this and The communication are so contract but we of planning, an this to with requires challenge. execution-oriented with chain blessed weathered and far it across supply sound But team chain is supply EMCOR. I issue balance and to the thoughtful of year. careful most Again, are culture pressures with attention detail, likely we us customers, be redundant, with our for

year revenue best end XX% the and We period is this segments the business. and almost Electrical across with teams leave in ago growth. XXXX from Construction are Our quarter strong of Mechanical very of very growth strong these and operators some of nearly the X% from despite RPO the the

or retrofit margins and on ago see Our up quarter, and operating the special a organically, accelerating We at IAQ X.X%. versus RPOs increased U.S. demand XX.X%. had projects revenue quality. additionally retrofit period, for air HVAC of emphasis are a indoor XX.X% year income very energy with Operating XX.X% RPOs growth strong income with growth of were Services segment strong XX.X%. and Building

several very business important bookings site-based with also We’re in customer commercial strong performing and year-to-date well wins. our

customers, this We are for pipeline not only healthy a of opportunities new have very in work winning current our executing business. but are and

their see facilities our pandemic. improve continue to as services, mechanical commercial our the expect site-based well customers emerge for strong to as services from they We demand seek as business to as

recently anticipating early as entered exceptional remain In crack levels start a improve. We movement. partner scheduling our protection. bankruptcy Our to who expect our revenue through Building customer I $X key are a will basis, strong XXXX. move and the spreads comparisons done operating energy from we had receivable on to We we job despite continues of at inquiries needs and performance efficient Industrial a with improved Services income of better very into post-pandemic air seeing view customers’ a a XXXX, do safer for for taking and utilization XXXX facilities are making we these and near an we segment, had positive forward and customer Services and improve team quality late more has million in second EBITDA robust as half believe and breakeven our charge an

segment U.K. Our with operating strong had income of Services quarter, XX.X%. growth Building another

the to delivering if had environment. over great and employees ever a management project continue focus strong for facilities to well our deliver in their in customers We’ve very start and and for I our our didn’t first, remiss shareholders and Overall, changing XXXX. remainder We safety customers year execute to strong on for full of the and retrofit for for would growth and poised we Mark. shareowners an I turn for discussion quarter while our results U.K. also I a to customers With that, have will our thank offering. the remain the be

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

accessing webcast now seven. those For slide on via presentation this the are we

through on earlier Exchange Over XXth. financial our consolidated brief XX-Q morning will from All on and today. Tony’s next quarter well Commission commentary update supplement both Form announcement derived as our June the I included the a performance, results year-to-date earnings slides, several opening information EMCOR’s as this financial in with referenced our release statements, second filed and Securities provide is

revisit let’s performance. quarter up over $X.XX review second quarter million XX% our of two and expand So, $XXX.X revenues or Consolidated billion EMCOR’s are of XXXX.

pertaining of million that $XX.X Services the both States positively States United EMCOR attributable time included not revenues quarter. were segments. Electrical to United second acquired Construction results impacted year’s quarter our revenues Building second in by to businesses owned last and such Acquisition businesses Our

two by revenues of measures nearly certain quarter numerous customers, million than compare the of of quarter. well Construction each governmental our impact XXXX, corresponding as Despite Excluding follows. between authorities. EMCOR’s revenues from quarterly containment acquired, represent the increased severely by of or for the periods quarter all-time impacted million or $XXX.X $XXX XX.X% due segments quarter XXXX COVID-XX to and mitigation an the less XX.X% increased second the which second revenues quarterly as the was are compared States when XXXX, United businesses revenue difficult record to of $XX.X mandated to the Electrical and environment challenging second segment pandemic, specifics in XXXX The our million company. as reportable

increases Significant of revenues commercial, drivers were increased healthcare segment’s institutional the from acquisition in within contribution sectors the quarter-over-quarter. $X.X the projects and the of million, revenue XX.X% period-over-period improvement. market revenues primary Excluding

in the the submarket market or attributable two to market activity was million, telecommunication With from strong revenues strength Construction storage sector, primarily in respect for work, see sustained cloud we $XXX.X segment, of driving to within the our commercial continue experienced as center country. center demand XX.X% growth continues segment. Construction data commercial sector, computing sector segment consistent $XXX.X growth and growth data growth project the increase this activities. commercial customer States see last healthcare for sector by in across the the segment to projects Mechanical United increased We million and with demand also experience year. an quarter data to Electrical given in Revenue market

our we market project from are experienced healthcare various opportunities in With distribution of facilities. the chains addition, new fire the continued the installations of system of projects ranging In sector, retrofits in mechanical facilities. and increase build-out first resulted regard to quarter we a existing segment has during customers’ in with complete number this for the trends healthcare consistent supply engaged in protection number warehousing of both the and this e-commerce to an within year,

States our obligations, United we remaining XX.X%. these an within increased revenues cover revenue Second Tony Tony a the of Construction in segments prepared $XXX.X quarterly or this as Services combined at Construction million million remarks. of quarter performance bookings. United or combined covered, strong increased of all-time represents each Building record States million more completion for segments. will business performance result high revenue briefly revenues $XXX.X $XXX.X This which Despite for of of my $X.XX project detail XX.X%. EMCOR’s billion performance, increased this

activity building primary quality, augmented controls activity and as the project by in well as acquisition organically. this almost quarterly Revenue all-time gains the represents million, their revenues due $XX.X the divisions revenues. segment’s also and for This automation were incremental compared COVID to an indoor increased to record aimed customers’ of projects segment at maintenance XXXX’s of performance Excluding improving segment’s increased XX% impacted each revenues resumption air industries. oil quarter’s to of the this revenue quarter, and market million experienced within as X.X% decreased of conditions segment those of reduction other in Services $X.X gas to below quarterly adverse within return to $XXX.X quarter-over-quarter million year, revenues prolonged Industrial related or EMCOR’s the Of of post-quarter levels strong the is and yet still as more revenue quarters performance. pre-pandemic declines this X.X% the segment abrupt has significantly due less than revenue XXXX. prior one revenue drivers

beginning As previously are XXXX. we returning turnaround planning of -- to see demand Tony toward look positive for as signs early our we indicated,

additional contract last Building during of began increased XX.X% project Let’s that in of Resumption not maintenance as this any industry. recommenced. two hope million activity year headwinds that one United macroeconomic deferred Kingdom in quarter or year’s we was of has quarter $XXX.X this from work quarter. strengthened impacting million see that $XX.X revenues Services XXXX do

of of Please intangible of million $XX.X turn slide segment from exchange revenues million administrative of revenues of eight. this two $XXX.X acquired, was attributable $XX.X SG&A million. and amortization, period. quarter incremental favorable reflect movement increase Adjusting Additionally, the expenses represent XX% companies EMCOR’s from for rate of Selling, asset organic during to general expenses an to million and increase benefited $XX.X XXXX. inclusive

actions such costs from reductions. year the a resulting actions with and in to cost percentage including pandemic, from period substantial the benefited salary response reductions temporary As prior to pertain significant taken reductions COVID-XX furloughs, headcount employment of reminder,

factors driven Additionally, of second have which significant reduced XXXX forecasts, earnings of include results incentive records of operating additions internal for included levels by the as growth forecasts, performance as quarter to well downward across profitability eclipse as accruals. in our EMCOR’s created by of as second pandemic. of as These uncertainty result headcount a increased revenues, quarterly of growth, such the compensation quarter numerous incentive previous companies. compensation well necessitated support contrast, levels the XXXX a the expense, In the recalibration our

that accruals so the reduced last in point accruing no at either year, this at reversing while based rates, XXXX, is there previous or Just incentive performance we misunderstanding, at significantly year were the the year, this quarter’s time on expectations. our linear of the more are earnings compensation for first our months year with the of for our and incentive remainder projections tracking six levels our current

the quarterly these the consolidated for within of to $XXX.X the due segment, included for XXXX Industrial increases for year. addition second in customer basis impacted our non-cash In costs, in operating million XX prior an loss to margin $XXX.X quarter U.S. income the SG&A to of due a $X.X $XXX.X by million provision quarter to of million, a Services Reported XXXX losses impairment operating compares second filing points. recorded in the charge quarter, credit results of our employment our which negatively million bankruptcy

a income year’s second over of $XXX.X million non-GAAP quarter income XXXX’s impairment operating operating charge, period the XX.X% or million. current adjusted improvement Excluding represents $XX.X for last

for of For segments of our represents quarter as with has reportable continued U.S. in from XXXX our last $XX.X the the of revenue an revenue by margin X.X% year’s Services quarter. improvement U.S. adjusted due double-digit percentages. last operating of than operating Specific gross the of Consistent our million revenues more to represents by performance other each $XX.X of is XXXX, quarterly follows. segment quarterly margin X.X% second Reported increased profit over XXXX ended second performance, of period. and given strong favorable the margin reporting income XX, margin Services Industrial Electrical June Operating improvement increased year’s quarter is income comparable operating operating mix a segment XXX-basis-point Construction by project consistent our operating with execution. non-GAAP million and in quarter

income X.X% million million U.S. operating increased of Construction represents quarter from period. Mechanical last $XX.X a slight Reported segment margin our of the Services comparable quarter. XXXX Second of operating from $XX.X reduction year’s

revenues our gross income in profit in in quarterly Mechanical in period. each reduction increase composition was due the and the of Electrical of terms improvement, XX% major established a from driver work during slight new Construction operating of records resulted decrease margin income dollars. over Our while Each period-over-period margin of operating second operating segments our the to performed modest quarter

margin. segments $XX.X Our This Operating margin last a and have gross larger X.X% than year’s XX $XXX of work. Building performance profit profile operating for call-out period-over-period Services U.S. primary Construction reporting record to that is mechanical quarterly This revenues. quarter-over-quarter strong compared quarter total the X.X% basis U.S. a is the of lower to as which million $XX.X included for projects to operating is most improved and fixed services challenging price million commercial-site-based by new XXXX’s from quarter. of capital business and a dollars. income operating in for million improvement reason income represents due from traditionally operating like quarter million reduction operating a points $X.X or Increased demand and XX-basis-point profit represents margin our is other second income in gross divisions second The was segment’s mix, the service services percentage a second increase revenue due income. in of resumption reporting the

U.S. Industrial operating of $X.X million. Our operating last quarter represents year’s income segment of $XXX,XXX $X.X Services million decrease a second of from approximately loss

of and operating which the operating due in profit profit by increase by impacted basis the quarter, and gross increase results the current segment include margin to bankruptcy, its an gross While segment XXX income $X.X experienced customer losses an negatively the in margin million aforementioned points. during credit

general foreign margin somewhat performance improvement to positive challenged. of million second operating $X is are $X.X financial an improving of administrative $XXX,XXX to the the revenues period-over-period pandemic. of we from in an with actually COVID-XX attributable Building with and year decrease margin sector. market The reduction that in we primarily quarter, a an short-term in operating of XXXX to the the activity is of this U.K. initiatives result of income are expenses certain as slight represents Services in environment to operating movement signs benefited quarterly Approximately a or quarter. an the selling, prior as the Looking albeit current project exchange revenues beginning see ahead, response and to due X.X% in remainder ratio in commercial remains improvement encouraged increase million increase cost-cutting of over in within

We are now slide nine. on

both last $XXX.X Additional XX.X%. as follows. financial due segment million, XXXX’s in items of period. margin as operational new and and share Diluted for basis to earnings the thankful. of per two history, continue for Mechanical Please back segment slide excellence am Construction testimony period compared in of by not quarter I within to subsidiary loss turn represents significance last all-time demonstrated ago XXXX non-GAAP than -- EPS quarter’s by current in U.S. our improvement. performance, XX.X% is other a shifts per gross XXXX diluted On compared long-lived reporting and impairment to year, to $X.XX. EPS to XXXX’s was for of assets the or to quarter-over-quarter on When every of XX. quarterly $X.XX, a points the further we when $X.XX per $XX our This record is the This assets a intangible are the diluted quarterly each adjusted million teams higher in headwinds was or we’re addressed in XX.X% share recorded any current second than lower face. goodwill, Services mix our our diluted comparable profit some years my of compared which previous adding identifiable basis on Building share after Gross our $X.XX and year’s is quarter revenue day slides of loss despite XX the the U.S. quarter Quarter $X.XX quarter year an quarter. earnings to

complete, $XXX.X increases respect highlights results. was With both $XXX.X from touch or the million Revenues of adjusted XXXX’s Operating share of of results I quarterly EMCOR’s sizeable of the X.X% diluted to income $X.XX. for per will first and million commentary some $X.XX X.X%. level six six-month revenues represent increase earnings represent high Year-to-date or of reported an as XXXX. non-GAAP billion on with months

have certain government flows the almost payments third of by year for approximately second of just of year. favorably from extended period in last as cash negative for for and on of Total United the increase our prior of flow shown second growth resulting for and slide, our for three our the the with slightly common substantial that expectation last in not an largely financing million levels comment cash experienced this for in both assets social previously growth organic a legislation was cash with hand year this slide cash we debt cash both and used quarter in year’s deferral XXXX half acquisitions first to the $XXX tax the in six-month as impact million, is the cash on project year. were to accounts and of with of flow operating our of by My XXXX notably and second operating operating investing totaling with turn operating results in offset XXXX. goodwill asset $XX million. strong have from just stock quarter, period, These passed our down accounts $XXX flow payments of since is Kingdom’s assets, our in of full businesses is the additional during six-month sheet and to year liquid. on by the receivable XXXX liabilities in measures, virtually note increased and repurchase the shy contract security employer’s used unchanged the quarter the end investment the expense $XX the it of by Although most substantial recognized XXXX is prior year by along estimated identifiable of the $XXX tax net period we acquired end value-added from have light balances cash activities increased cash throughout balance concert increases impacted slightly predominantly excess With deferral of million, Please used making in have were acquired referenced XX. the Working assets year XXXX of respect to referenced. modestly service also in first EMCOR’s volumes. balance Further, increase approximately the during in taxes strong will is of amortization in capital the that COVID-XX due for driven performance intangible activities during organic to is offset cash our Cash my of first generate to as flow intangible inclusive of million. capital six million. important majority million in the favorably as elevated impacted the remains $XX pandemic, working $XXX period. deadline contract federal compared revenue during allowed decrease connection lease The exclusive year. the months acquisitions which year-to-date our of Net result of the portion receivable

I near- continue invest to return of business, like slide the of allows strategic in return and first year. ratio With remains As both for would us months the due of has borrowings capitalization stockholders’ long-term. to which last against the objectives our Tony? to the from Tony. outstanding to end at EMCOR position debt the call my shareholders to a EMCOR’s presentation of consistent a our to XX.X% net in our strength, portion this complete, to growth reduced equity execute the and XXXX, result capital and of in to six morning’s income our our XX.X% in

to to a at highest talk they’re market give Mark. be am going level. about top I by pages summary sector. Thanks, am you and here, remaining obligations I the XX Hey. And I’ll on going segment to performance XX.

strong mix. a have we However,

book-to-bill is from I or Our strong into that mid year my to But single-digit we RPO guess inclusions to XX comparable XXXX movement of going with kind a RPO non-res quarter-to-quarter projects year both growth three one know quarter. the of small talked June triple-play forward overall here And now RPOs RPO At about in periods. non-residential in page And of we’ve June times, of outperforming talk X.XX. versus business of to had would I statement of with we got the March sort what about and our impact these to last where second for had business. the the level moved large be is in wouldn’t am growth can it we’re All I am growth be that mid-single bookings expect period, versus I somewhere about that fair, each be we’ve growth. until RPO going the We be something the would of we would some not five we from those is second do I at, month-to-month been XXXX, about through quarter market were draw with from commentary. say we’re for we we’ll XXXX business. what I that’s the I increasing what a sort And to clearly XXXX a digits and we this that and bookings a that XXXX, intermix quarter-to-quarter. I many of market. the of sectors period segments talking and sequentially not about December or as this quarter have we for June XXXX. is six-month feel and had our and month-to-month said also sweeping view measurement periods. pretty reality comments talked the we good think think But

again, mentioned, important the about and of look X. just increased the the too months X.X%. They growth, company ago XX.X%, when six billion. book-to-bill or total over of $XXX is They’re $X.X well level real to billion. a to first the for RPO at talked $XXX compared up at quarter million the RPOs second over year And $X.X which $XXX million the end year or organic of increased million I As were

Our data in in driven was June and waste centers, and domestic in had Electrical RPO we’re work. infrastructure manufacturing, construction strong healthcare industrial, since Mechanical the quarter segments the $XXX water, overall being segments. both water And million XXXX and Construction at XX, growth by seeing logistical that and bookings it

We and also million in $XXX RPOs in expect to work energy and and active, the is work in commercial work. total project that of country it’s saying is $XXX that efficiency demand strength of quality addition way on manufacturing we’re getting that Building of XX% continue small another see second small Pre-pandemic doing we organic. our of to movement that work. was the more $XXX centers we lot and that air projects, where short-duration is because are air also a is across Services back value and quarter now increased of indoor the the million, million

footprint a of ease their of productivity reduce that mind and both improve their result will are a increased types of of their safety. to executing desire customers Our carbon improving employees’ solutions their belief projects as IAQ energy a strong costs, an these and by expectation

more the things owners from IAQ that for point work, efficiency think ideas work about One energy tenants. I’d is people of demand real out problem facility. key and your one projects you as energy from to efficiency concepts bring things are We and of for and solvers we the and

were where exactly more making control intense this is and an in factories healthcare their Services, growing customers our you we or to and or better have achieve buildings positioned reduction carbon repair cost or are cleaner service, new systems unit install building updated office Mark told HVAC carbon help and and or less and buildings. uniquely goals We’re service we footprint, we reduce replace Every a facilities, time facilities, efficient. Building

of either The continue RPOs other heat from market savings we combination What solar back durability via important faster it is go we waste that And and we combined XXXX year. to wrap whether we’re the us seeing up work is services which remainder rate contracts. Services a demand generation, and we’re I we’re renewable the of to move our seeing the going growth the power or is executed into winning field strong that power, energy on-site to and am generation. believe that be move that, we be to non-residential XX takes HVAC now of much in RPOs, this is as most as like we’re thing not seeing it heat within benefit It of generation than material as or segment us for these more these Industrial on projects would pages with that XXXX. and sectors next that in turns to at through and underlying case, and it XX. note schedule for half into will flexibility year the people and across have into and With time is

our the As XXXX. of of across the XXXX, are through result and that we at our half assess business. as our revenue performance performance earnings half, we’re first very performing And raising we for well a guidance

in $X.X in previous guidance raise billion which revenues, million to exceeds to our will billion our revenues. range billion revenue $X.X $XXX We of -- $X.X

at visibility a and that we that our second guidance. share new now to will we our guidance the we we raise the We greater know $X.XX to told have, conclusion more with $X.XX earnings of Previously, $X.XX $X.XX. would you per raise from of range can diluted to quarter had

large the percentage middle following top achieve that guidance to the a us must of of happen. end For the to range,

control we control. we like things we focus don’t for you like think what what plans we don’t know things I most to control. and those talk on control would the I of don’t We prepare about that contingency to and

control So have things control. for we we keeping and don’t for and and things we think whether in control our on we labor cost we’re focus plans like that we known our costs, costs. What direct indirect check, we be the to contingency cost the Well, control? material

I to pricing it’s and in opening supply this an here need continue commentary. calls. with at I’ve of I challenge a We time. for good in to long earlier that navigating the fundamental to pretty EMCOR We’re challenge. It’s availability. a about respect listened at have my talked bunch chain mean, been to a and success operating

It’s You calls. more a listen challenge. to

We’re we’ll to We is it. challenge. think but well it navigating well, positioned continue a navigate it

at able the to successful you time. be always all the We’ve that. at now. I’ll right It’s to to need been also very labor find right We for continue a question you answer ask.

to successful be at to continue We that. expect

business We pretty and our right summer find op looking and struggle the else operating now. technicians engineers, we’re in are growing like technicians always will healthily always because we for, HVAC that our everybody to

right construction those great local to the and areas, with so, man look have the time our to labor But And and two always people. the for at relations expect right we able right projects be skill are we we mix. level at the the people

employer We choice. of are an

We now. means expect the than booking very term momentum us, so. million that really quick with to continue, respect for less strong especially to right projects work, project and It’s $X.X or

us strength know be gives a will bunch don’t to to what there’s in We continue team that enough whole market of things to whether control. am to humble conviction is the and enough strong. the continue overall. and non-residential that’s talk underlying about that market humble we the our expect don’t I We control

look, about we’ve We little in vaccinated. in know the our Coast our our us for us years. vaccinated We react do as We’ve expect safe Safety asking We be we this would to what it’s been what to be good or services. business adapt pretty will supply demand And plan the advocating employees better and We being we that major our business have to what three our and if industrial are to that. I us is employees. in expect any success. respect what and expect don’t values done happen to one is corporate COVID need long disruptions and of we geographies. be. want don’t for optimistic, not, from has over people that control we we’re last Gulf our to had weather with have people in customers enough change. that there keeping increased strongly success. them it key our shy will to But to do. to to can a know doing contingency see But a We that overly think

the last they we everything we of today balance be. think don’t don’t as control with of the clearly, are, expect supply them also the could more We But they do to and pronounced for chain issues will than on be the goes year, chain. that supply

like far As things as talked the of returned $XX.X that They million kind $XX right repurchases back we year-to-date returned to shareholders. our were about acquisitions pipe do. million $XXX dividends share as far we as year-to-date. and We capital to spent nearly also down million Mark in allocation, we on as on the

a continue as of to tell have working We is expect that will unequivocally on. now decent year pipeline I progresses acquisitions sheet. balanced are of one right strengths capital balance the to of the our our that you and be we we allocators company

of line we to am a questions. time that will labor basis the team I right the the the that to as reasons at much because center can the that. with the access grow build data take fast to have and capital right it’s know that of large projects all That’s we on to the lot open had so the look have people being and to the success a quick do ability term one customers Jerome, With Our capital please. working and the can projects as these said, quick very sheet. of one balance organically healthcare on and work we the in reasons we’ve happy

comes [Operator line first question Instructions] with from of Dilts Your Stifel. the Noelle

Your line open. is

good quarter. Hi, Congrats another guys. on

Noelle. Hello,

morning. Good

just major really inflation, the raw about last could about talked speak manage hoping and to some coming impact you cost higher quarter. through. making I I this So to efforts of costs material And was you asked

and you onto costs stands customers? just pass your today So that you’ve the zero discuss able to where been could extent which higher to

one end major that yeah, or to lock components major and for works, long There’s price is, especially The gets we right? talked longer it where before the this today. three how in our mitigated, term projects distributors first ways we’ve commodities where

work mean and to relationships. together period together. to projects, have blessed this going together work we’re period through those large good pricing And after all this work is on all we’re to We’re because of I most going inflation. protected businesses

what our portion that’s a short composition think of we’re work at year, know less work of in order, The portion all you than today in of a therefore, our and which the that of work about is, we’re that about environment. our company there’s So We our is you how marks re-pricing that protected. look next executed much gets So we do? time. which two-thirds

we’ll what understand the So that in days may that. that there’s two We days fluctuate customers our where or for we that buy ways the buy mitigate we’ll XX couldn’t of clear make it this either it and very is that. material to component lock or we your XX customers

price on Now, lock it, fixed where if we in then a extra they work hard accept we’re to contract the price. don’t

the than which is customer do purchased executed have component and component, of going less to a work and industrial and be or material that? of lot Big time our the time and the It characteristics XX you be our on work. has third the that’s The in but time material. work is add material it’s work it project may work material of building pricing has to work, material, low of chunk and all of not small days. services not work time Mark, actually by very time anything and material is

just is When next XX% I’ll said. RPO XX hand months... in Tony you in edify the what executed to going actually at look No. be our

more… Little Yeah.

So it’s more two-thirds. actually than

valued So, ends clearly, would is make we’re number chain our relationship involved. sizeable us and the both that this long for all supply together years, least a those can a you on stable and important to be been for it working in as painful for customer EMCOR who were as imagine. network of obviously has of with a

Yeah.

I think, CFO statement both -- really that the the making important and there Mark sides he made chain. value of supply said is statement. a this We

companies prepay that, result if times. our as to the with have at treat of I a other that suppliers be So or us large We we like prepaying We this. we’re expect not somebody also deal communication. they discounts somebody. fair And times early to tend like And don’t treated. open paying in we treat way we take

best not remember about code best that how now, and our important it’s suppliers professionally mean, distributor CEOs good were very our be, we treated. just treatment part as times they treat and get the I most values. part get they’re and at as cases, think electrically best our a conduct you on And expect we with may suppliers, times. many customers of to I they subsidiary lot we’re our labor a we we maybe customer That It’s deal of their all It’s think we market, how from most right large and business. mechanically in their distributing. what last a like treat important of customer do. in You be our them corporate we when is the year, our how conduct. of because It’s people are

helpful. that’s -- really was That Great. Okay.

expand of the one trends and of watching Second with is a might things granular. that just industrial the seeing services you they operating we’ve some upon et spreads, could cetera, more question the for you’re of delay environment good a bit little is crack But strong that in some kind refiners, been work.

to you’re there the you’re outlook? speak and thinking how Just seeing about could you what

planning. they’re better year of I lot think I We We deferring planning. of this year. they’re be for inflection. think maintenance the Again, getting don’t first But delay move what rebuilding, better they on year. forever. plan to next you going through quarter Clearly, be where we think comps really of not they’ll reasons. may, we’re but think year, know they’re the think calling their back that we this seeing as we’re what will beyond next that’s we’re do the really and don’t they real a half

Okay. Thank you.

Eastman comes KeyBanc next with Markets. question from your Sean Capital And

line is open. Your

gentlemen. Hi,

Sean. Good morning,

morning. Good

Good taking morning. for questions. Good my morning. Thanks

Good morning.

of to half expect would Has a did more X first row book-to-bill would in am two now. you characterize quarters put times And I maybe way, since above the second through activity curious than there year. kind half? half? velocity the in the bid how you build the another work book first the So, of you just start the continued to momentum in

we in first am had of thinking I especially half. the think kind booking of of always to that cautious the

Yeah.

But it’s decision. a say with involved share of not get find, is Every size that a binary market don’t scopes the heard me decision to I that -- think OEM typically. gets you’ve we What before, this we’re Sean. an like of

in Sure to we project won we than didn’t the win the win half be. it or with more right were going think first Could year we stronger necessarily won the of we We work. than So is kind the in thought thought activity of I the going necessarily year of we was the again velocity? don’t overall project. the could. and it we second that happen won more half to

work winning work and more year. we we of right won We’re thought typical in of Mark? the kind a the than

there back reasons. making Yeah. button XXXX, obvious is a lot of decisions right? half most customers hit in Sean, of comment that people and now, Tony’s the pause also for the only thing add our I the a to would the front lot people in we’re seeing and us, was of in Clearly, front

of conviction seeing I the the in six mean of rest cautiously XXXX. trend first making that certainly we’re more is going the that year. we months through as to through optimistic We’re decision continue move

Yeah.

I cards is wild think the one chain. supply of

Yeah.

there chain supply think right conviction were the around I more now.

stronger. booking activity even would I think be

One of two it really And It’s suppliers. We the and two in real a lot the the and and back substantial I materials, first our Capacity the thing there’s difficult just part and start labor. which plants. availability talk now. of to have that’s coming hasn’t and out the on of of the U.S. labor. I is But think prices way a back issues, coming things and come figuring now, chain capacity, mills I the overseas. sort is that resumption One is coming both things re-staff right getting second hire They’re down they really I is started holding are labor, on one in very think in yet. one steel the online to think supply center real things. right? think should are

you’re what typically XX-day can on period train we really work, to a would to up temp be trying through agency you would they you And therefore, That operate give talk some the to at period. really way of trial them would environment, make the XX-day person our hire is but do and sure bring if don’t trial right? show When a what would skills get the hire manufacturing manufacturing way they or seasonally and in that’s I’ll substantial just real straight, XX So, can we people suppliers, that, typically very you be to a operating a the either days typically they’re the at. they’re pass the in a the after not for. typically environment, mean, people we although to example, then drug you looking like typically test? capacity And in for I raise. pretty

raise they them once right $XX So an them step to That became now. hour brought time. $XX have they $XX isn’t in hour happening an may then $XX, full and whole at first or

like chunk if the permanent in understaffed probably from getting to we and capacity so, big And they churn as result, still draw be. can of a yet X% would venture say, you’re a where the think, I to that versus is it more find manufacturing XX% workforce, between and they somewhere

question on efficiency, half. of seemingly poised what’s And clearly second drivers That’s mean, that some Services. and construction if Okay. there Building about interesting, sort I piece market the makes of think the the energy business, But are the about swings talk growth secular around got pretty drill durable services I in that cetera, sense? et rate kind IAQ, we’ve Considering down wanted to growth to of as we growth. the segments we Tony. outperform is, non-res That’s the broader the non-res second helpful into my

they’re a timing I mean, go longer. on they typically little what’s with so Yeah. bookings. be will so mean, the going project than are, the little I to larger you a see

some year next into go may they of them. So

is government much, very high summer. right segment’s about, somewhat administration award, nothing and but slow in is much elections, Underlying that when with even growth it growth mid-term What’s and it’s playbook play growth worried You’re depending happens terribly about it, the happens now going will bookings. or restraining I pretty based are and can now so making. on decision we what Mark changed with plus through we be and service now talking the at Congress. right single It’s Pretty slow it business the organic on that digits talk XX% strong. the is should be it’s what’s on

in in things So good down. growth Good that’s growth good what growth sort controls, very agreements, good in service, in projects. of site, repair growth in strong growth service slowing commercial

there to did of point to we So great have But you team out needs those are have benefiting XX% right you’re and to training that they the ready. and do to a needed people right all portion are some trends we’re also in of from. that the revenues, very trends happen good their business, Construction Mark, out XX%, a Those revenues... point the secular Mechanical what anticipates

Yeah.

Do service have also is add ... projects. anything to you and small that? to

to add. Nothing No.

Okay.

it lot, a I’ll Thanks Okay. gents. turn there. over

Thank you.

Great.

next Thalhimer Adam with Davis. Thompson comes And from question your

is line open. Your

morning, Good Congrats Hey. guys. on great a quarter.

Adam. morning, Good

Thank you.

I I down? I weakness to where segments guess the Can a bring down would the within I possibly because imply are little could bring bit that ask the on that seeing little would wanted guidance, where you -- bit, have first back a revenue of you half to

your What do don’t -- modeling. we

half. So we first the look at

half. first the in second might the as expecting being wild what But happen We’re or Industrial. as good card half better

how we’re So parts, thinking the the I world about you’re other in how but don’t know about general. thinking that’s

Do being the half? similar you revenue see to first Industrial

on cautiously don’t cautiously. we’re with word I But should and an it optimistic again be the I think better. -- emphasis

I issue? within through Services, And there QX, was flowed mix then, Building about that you talked in unusual that any know

unusual. Nothing No.

No.

kind $XXX is for decent million base So back of a half? the

X.X, what?

am know million. the that... was didn’t if quarterly revenue I I No. -- $XXX there $XXX sorry. No. just

don’t operating you we quarterly know and Adam, that. revenue Yeah. do income guidance,

materials clients responding are How to prices?

it Do not. pragmatic, done in newspaper they the want they’re project you’re day. think I or every reading the

straight know. with everywhere. them up what right? it We’re we being hearing them, tell We They’re

want would of anything it’s work So, now ones and us working for we ones we’re are. and They with for to the where it. pay with. their to time want the that reacting they don’t This selective to for customer is is, the and never disappointment. I The us pay shock be wouldn’t same say, characters,

first then, Mark, any cash the thoughts half? better is And back than flow, half on it

that in Adam, mean, I $XXX I year we’re cash commentary, flow expecting excess of Yeah. be to specified my operating in full million.

obviously, first the or through we’re half. million negative $X $X So, million

force So you could that math.

you you Tony, up then, color? brought the And it. pipeline, acquisition more little a can Got give

here we’ve Sure. closed mean, I deals today. some Yeah.

$X.X different and till niche we We sizes. expect have market There did they learning that the things they’ve existing a on couple more quarter. be maybe deal in XXXX get sell. But What near-term. very out to to from product is attach strong. billion won’t of slide, grow it they’re or ready years. are that to help me The maybe standalone thought for pipeline weren’t to line quite either we about close I think, sell, reason the are some pointed we we can ready as through months first companies things expansions here the expansions. post-pandemic least three no be to that ready to at There’s need I or more or They go to sell. And They’re were geographic things that operations. is we us that believe six next been again,

take I’ve have. right? feel things I might I diligence now, due ever I happen. the acquisition episodic. when teams we than said, have in ever do better you better to Deals They’re happen other deals feel I than about the they now think now place always As about we longer about. have have. There’s

sure and cyber targets that. you’re diligence know You good have to make due clearly doing the

to happened you think really pandemic their the doing good you’re what’s in to diligence around have and make back. demand sure what due You coming

some Vincent take we bought and but swinging best still of they Comunale are you’ve the Patriots and to day again life’s of done to -- course, care any multiples. sold think us, not whine beating that’s that can people number for business And they’re with not about return long-term building how consistently it’s to who as fair not their work and Shambaugh have England there I S.A. protection proudly is business, or pay do work, creation. and it and of his our to the and part company Comunale for now those The for way and Paul for the see the EMCOR. anymore, of of really the have do in Meyers years an Mechanical you and Rob am we’re do me Systems Comfort And or life. the shortage me came And pride in with. like with what We that EMCOR I going that’s team he came value when last the about R&R win sort the to go in terrific also. is years. of for that that their cases people us is acquisitions with that private life’s us they the in am still every more best work New But number buy acquisition because team for their beat people pipeline Steve best want us equity team. us. I away all heard a that the of the Shambaugh of on acquisition multiples is in sure Vincent they’re they Pittsburgh fire us, acquisition a to all people part no a in Mark in become work. and beat the want some operator that working XXXX over long-term to and that still terrific know fan, runs Steeler and running now then, has I back usually

business. I’ll do a and different compete not stick we creation the And use the and explain that all have and the try to and I’ll how long-term to we stick get slides to that so leverage people and with do. to have view and stuff of we crazy what in know what world triangles value to

Good strategy. Thanks, Tony. Thanks, Mark.

welcome. You’re

comes And from D.A. Brent your Davidson. Thielman question next with

open. is line Your

morning, Good Brent.

you. morning. good Hey, again... Thank Congrats Hey.

you. Thank

you quarter. I another ...on growth last than this Hey. growth. notable more some great unique that’s year, quarter, XX% but had mean, Tony, circumstances pretty

comes of that that all brought affects to I the in things the And is, it of guess, chain supply the one think industry. have logistical more I up, I wondering have because think assuming pressures am platform been mind everyone manage in equipped better what this is, of do in to geographies, you that? sophisticated just you local light and some so that these share gaining you’re some

What I think winning is I ever think we’re share. more projects. about don’t

to as this the and them look just market with of to to bring get teams an invigorated great Burns resources commissions guess, I carbon to you it some are running for or and share. we’re side, gets solution with going get and we invigorated and our the do and the product yes. we’re we’re think excellence, be technical had Fitzgibbons, IAQ projects and that bring it reduce safely it begin going done, to that team teams. efficiency So, energy buildings do that the I of said technical the three on more And service look with right? it, We energy and think reasons. at the to way in people got right then, is, they’ve an to back can and We segment people’s best there Dan winning the and services. Bordes, we the we I It But of way. those we’re that Joe to on right yeah, in footprint that starts projects to we’re the Then best up folks And level, make that more they’ve which targeting? winning now sure opportunity. and at answer about Mike I more think winning The it,

We lot are more to the labor a can know of to people best labor times we sophisticated. the And we also, bear. we bear that can and bring get

liquidity could manage yeah, it and looking company kind they two sheet ability conservatively and that And they looking contractors guys happen and execute other would better And the think at is foremen EMCOR the When at what across these working have the going industry. best just of it the often will folks some a labor very industry. business follow time together say, overlooked. We data ideas some I and do the that to my to faith and are with any to I’d months folks that They manage or great project, center a to now add less, learning sharing may I XX of things. appropriately and interact thing, burn and have And cost that. and that project have customers peer you’re balance the in you bring a of they at a of are are. I then you’re best years that’s more for the here. in this our in in of looking $XX and our superintendents hyperscale the million and be their XX-megawatt, balance our nine XX-megawatt and project -- to through make our more going better do sheet bear, than resources liquidity another And our and

still Hey. up margins not Tony, a that’s applicable there’s… well, bit the there, like Industrial little good, I Services to it environment seems do but know are as your is you think because

You know.

in too. that’s off. if I growth wonder field services better playing … there, out

a prove whether markets not. have you team or good Bad

is, positive an cash they’re on basis, great income tough okay, generating a been operate right, operating team. near They’ve EBITDA. operating We have -- breakeven market. Mark,

I the think, same applies yes, there.

I And tended costs generally, Yeah. I a guess, the of right lie on the to and of guys, wrong, least, you materials for most people, but think or right? historically, at pass-through just

Yeah.

if potentially but on second rise for am into that’s I asking the now so, you to is Tony, weigh this in jobs your know to potentially profit meaningful add? here, enough constraining I is materials margins because dollars half, should case, the what is And how guess, margins prices or really gross grow, I it new

protect or to look, No. No. how us. dislocation project one on a suppliers short-term it’s choose two might we projects. about just we that. talk It be may Because And like our do

of think, On may to if right to typically protect and life doesn’t relationship going stuff we the That everything large we’re but the hey, we would customers. long-term blow up did the need do on That’s that that. here, we this customer not right. projects, happen our right we because our the projects make smaller

I’d second lot seen think. side what to new argument a constraining is might. We flip is you of potentially and a of that starts? re-shoring that is about We on-shoring manufacturing But the happen give The yet. We is I thing likely haven’t capacity. talked

I last after an relations experienced their are at to people months factories more meaning things is think and long-term. dependent as getting the next actually labor years six in anymore for improved flexibility this and China. look not issue less situation trade years more Mexico. them The onshore. what long-term five making The two whole supply creating the opportunity chain better The they’ve come to is with over us

now standpoint. It sourced that expected being supplier One of the have we facility always dual pretty the see the things least supplier, same in most that bad with We our but the Board. dual we I habit. and XX coming a sourced. back might away right collectively got a across is, customers from about be We substantially to American we years from the thought last dual got facilities. we know products our talk important to industrial At

Okay. Maybe in how much I healthcare that’s both secular your I but I are too cyclical year’s don’t just catch-up What speculate think back to I last hate one your markets, is the of and coming to your Mechanical. related kind from last there? I thoughts and fast on realize business softness. Electrical whether guess, thoughts curious am

that secular. cyclical It’s Does sense? make

the of above. All

think we secular long-term pretty good now. but a trends right it’s cycle into going There’s good

sustainable. Looks Yeah.

Thank Okay. much. very right. All you

Thank Is you. it? that

the time, at hand no this With further I’ll question right. to the company. All call back

have Hey. We a Look, thank quarter. you very good all did for listening.

aware very of And EMCOR lot of us. are pandemic field. a such this we know the have put can passion that’s hard every you And to great can so about day surrounded the to teammates take to am this I we’re work of thankful and to our on how in listening from people. be behind things is encourage right I lot of everything a subject we anybody vaccinations, employ and I folks the Our how start care by doing I

as One of and middle you leave look I of and couple With next you Bye. values over at safety our this core of you. the is to talk Thank the value. squarely that, in months. I’ll that core

concludes Ladies gentlemen, this joining. conference. and Thank for all that you

You may now disconnect.