EMCOR (EME) 27 Apr 232023 Q1 Earnings call transcript

Good morning. My name is Keith, and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group First Quarter 2023 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. Instructions] [Operator

to Mueller over begin. with like today, your the Blake Mr. FTI turn now to conference host I'd Consulting, please

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

which today to company's quarter morning. We are were discuss this here reported XXXX the first results,

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

And to as in Thank earnings always, you you, morning, Blake, first interest welcome and for boys quickly. the EMCOR, for everyone. and and it’s our good call your XXXX, thank quarter moving

For the you that our remarks and as Internet those of arrived who of to and will accompany well, you beginning are presentation have call via you slide welcome website, accessing today. at the hope, we the our our

X. We are slide on

This to both financial certain discussion financial and slides. Page statements X contain forward-looking and discussion may disclosures. in information conjunction contains I the information. accompanying and review statements certain detail disclosures everyone the in non-GAAP describes with our non-GAAP presentation and forward-looking encourage

X, and our and with Counsel, Pompa, discuss Executive are Maxine President quarter results Officer; Officer; Financial Chairman, me Guzzi, President Chief our executives are our Slide the Tony Mark President Vice to Executive and who Vice and Chief the Executive Mauricio. General

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

us at find emcorgroup.com. You can

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

comments. in past morning, as in first four six our I we continued quarter pages call. an Kevin, momentum our through and joining the exceptional good opening my had will Yeah. thank and quarters business for you Thanks, XXXX. few in cover The

focus and I is and customers. excellent driving executing team's team outcomes Our for our dedication the appreciate towards well,

per the had earnings on revenues diluted period. $X.XX XX.X% year revenue first share up versus We quarter strong $X.XX X.X%. billion growth operating of ago and of margin earned organic of We

from RPOs and the XXXX, or record December obligations XX, a performance remaining grew to from period year also We ago billion. $X.XX

we XXXX, XXXX very Indoor that segments, including Quality, energy drove reduction. the During with and broad in retrofit the or business executed which underlying the also and all efficiency across well on focus IAQ, continued, a the of Air to leads first themes strength in markets quarter our emissions

the in expansion. demand and markets, and semiconductors high-tech by healthcare chains all including EV and communications driven projects Growth supply things or manufacturing the around network value data vehicle strong center the manufacturing, electric and onshoring capacity domestic in traditional industrial and chain and

in refinery continue see demand increase downstream We services. for and also our an to petrochemical

improve discuss will evidenced detail of in I these profit well margin on our a mix improved as trends Further, in my executing are by gross good more of XX.X%. commentary. later we business we to our balance We XXXX. disruption, and and headwinds which such supply to to chain inflation face but continue mitigate still planning through headwinds of the expect execution we from continue

and executing construction our demonstrate, trades As across geographies. our estimating, a segment winning, skill subsidiary sectors, complex great our had market the projects to and teams results planning and and expertise to year This segments. in was the of start due in diverse we

continued strong value Our margin of Driving X% areas as semiconductors chain of the Mechanical perform especially in Construction segment an in organic revenue the with growth centers. for growth exceptional demand of continues an operating as and this manner data to well is and manufacturing, income EV in X.X%. high-tech penetration

but are trades. traditional We trades, life winning ever-expanding piping the our and fire in safety also

job result site a operating execution of by in exceptional income margin planning is excellence supported and BIM and strong Our prefabrication.

to Our historical levels. performance to Electrical to strengthen levels segment's continue Construction historic

across of quarter, work, and and basis XX.X%. ago period, important organic year industrial. representing performance X.X% as and had margin care sectors income point We improvement such earned growth and center in manufacturing data robust communications, we operating our which encompasses a of the versus health revenue XXX a We network had an

continue to the BIM and improved the Modeling results in prefabrication. Building our Information or expect by to use segment and strengthen We increased with of execution, project supported planning

in and have us. opportunities recent well opened segment for are Our new this performing and acquisitions markets

Our work US supply coordination up executed Building job to and revenue organic of superior We Services planning, as strong margin Mechanical across X.X% had project We XX.X%. segment operating through quarter. with and evidenced had the that by site address impacted year. some a such negatively performance estimating business segment's work chain the growth, first improved successfully managed trade challenges Services and last of growth,

customers' we work the about then which reductions customers' our goals. emissions sustainability in and talk improve do increase our efficiency and to often energy We results air quality, supports

through companies to institutional, diverse deliver services and commercial, services these and channels manufacturing of projects work building customers. Our a care health set to

diverse these serve estate service possible. customers major to the channels and competitive energy seek a or ESCOs see but companies. ability to we'll We utilities and customers of also such serve our through directly, as real out broadest continue customers set providers, advantage, our through We

pace. quarter The a executed margin results XXXX. improve Earning to of Services steady continue of up We for our shop X.X% services. more normal demand a operating mix saw our season and in segment and and turnaround at Industrial improved the first

to efficiency for renewable supporting continue operating well demand energy expansion. execute the as fuel and our work We as increased customers'

we and segment's electrical films. of positive solar The this improve, work supporting even solar about if our to chain performance outlook trajectory would more execution not were these issues continues panel delaying be segment's supply

despite and headwinds. Our a well UK exchange continues to foreign team challenging execute market

We our record owner-direct management continue mix We grow of happy base of project of RPOs work with contracts our and an are and quarter in to excellent customer facilities with work. the $X.XX billion. leave mix our

balance and to support our our growth capital model. strong outlook a allocation have sheet organic We

the Mark. And with presentation turn I that, will to over

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

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

consolidated performance, this first morning. in included well earnings other Securities both next Commission I commentary our data and filed augment and as earlier operating financial Form XX-Q chief Over reportable as release of statements review quarter slides, our several the with our financial and the will opening announcement Tony's derived from Exchange each segment's

EMCOR's first So our $X.XX quarter up XX.X% $XXX.X XXXX. one, expand are review million let's revenues or Consolidated billion of over performance. quarter of

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

of the impact million $XXX.X acquisitions, revenues XX.X% Excluding First increased quarter-over-quarter. approximately consolidated quarter or

consolidated of the of our each and that I will established quarter. segments, the being with reviewing segments, starting quarter $X.XX operating to With represents would results best billion I reportable reporting Before our a of ever that new of record our said, highlight first second like revenues our revenue. results now cover individual

United $XXX.X quarter XXXX's $XXX.X million million, Electrical or one segment States Construction in quarter. revenues XX.X% comparable of increased

grew than in this segment's project within traditional market offset a quarter-over-quarter. the strong declines XX.X% contribution, entertainment activity commercial Excluding market organically and revenue activity. communications, network sectors and Increased hospitality incremental acquisition transportation and more healthcare, revenues sector manufacturing and

customer evidenced $XX growth segment as Revenue obligations and services contracts. related executing We semiconductors, design the million continue remaining activity Construction and Mechanical from growth technologies. quarter to from or experience communications within period. network projects, billion strong as of the sector, performance customers the sectors, market for and supporting and demand by United States from increased these increased market of Network of and predominantly approximately Communications against $X.X well Mechanical during high-tech center the our fire the battery the included are manufacture our year Revenues in quarter X.X% vehicles protection electric within the Construction ago as was derived both and/or data we

in first billion, our record to Construction surpassed of as first year US quarter that similar the well. our records growth Mechanical businesses million Electrical This the or Electrical demand Additionally, strong are construction period Both a Construction XX.X%. by segment, in our center XXXX revenue quarter represent Construction consequently, and established Mechanical data experiencing development. resulting and of total $XXX.X prior segment from our revenues $X.XX new performance

Notably, United States primarily each revenues which representing quarter, segment. more last compared HVAC Services disruptions was all-time chain an of due record Building for and increased generated million the equipment of its segment's Services retrofit incremental facilitated this was XX.X%, Growth availability slightly within the delays. that division, project severely lines. saw first supply impacted by we to and work, quarterly greater improved when execution experienced ongoing from $XXX.X increase revenues year's an which or service in to $XX.X million segment Mechanical project

their this that this strong be demand energy us. facilities. our focusing segment improve of to as most With demand indoor we an carbon control will Additionally, experience continues for area automation footprint, solutions for of continuing companies to their building believe on customers quality efficiency air and/or ways and the seek

broader a as the result, $XX.X achieved of of year-over-year. in our start XXXX. United volatility see resumption continue demand million, X.X% States in Services ongoing services generated we a and increase Our revenues solid Despite to $XXX.X Industrial and offerings to a million or field gas industry, the segment an we for steady oil

we pull-through increase new operations. experienced shop within heat and build exchanger have and services orders cleaning Additionally, in an this segment's maintenance

sterling quarter revenues rate from Unfavorable the negatively segment's Services Building pound exchange this one first Kingdom of of weakening represent million last million. the impacted segment year's $XXX.X United revenues $XX.X reduction million a by of XXXX $XX.X to movements quarter. due

activity well due maintenance in of of EMCOR's as renewed with pursuant decreased contracts impact facilities exchange, loss foreign not the the customers reduction as period-over-period. certain rebuild, certain revenues Excluding project UK to to a

quarter resulting SG&A in general Selling, expenses million. million administrative expenses SG&A in first $XXX.X asset the of X.X% intangible year's compared period. million acquired, businesses quarter revenues ago current incremental eight. increase of of includes Please of turn represent and of an and inclusive and $X.X amortization, of for to X.X% year $XXX.X $XX.X to slide organic million, revenues the approximately from in

personnel and revenue XXXX continued resulting administration period. growth, from to we in in added benefits back our contract EMCOR's increases functions, salaries With and support the have office corresponding

EPS we performance. morning's resulting both income our the cover in to operating as the one our full quarter diluted outlook, positive have in a expense year-over-year in the revision with anticipated seen share, well and this in increase XXXX Additionally, will Tony increase improvement actual per later year as presentation, incentive reflect earnings in which and compensation

performance for operating one year compares a income margin quarter of represent ago. was of company. and X.X% $XXX.X Reported revenues, quarter records revenues income Consistent operating it $XXX my favorably X.X% or the commentary, or income each for revenue approximately quarter's with new of operating current million million the the operating to

operating is performance as Specific quarterly by follows. segment income

income a of in reductions as which labor the negative XXXX $XX.X segment quarter, of million XXXX from comparable Our of of US year's an improved $XX.X Electrical job margin is revenue mix favorable more in last operating and supply as given well productivity the in significantly chain resulted well challenges, period. Reported disruptions, million, from increase site Construction earned impact as operating as X.X% sequencing efficiency.

Although experiencing and This still to we chain severe both of current year experienced in equipment improved due the environment. availability in adapt impact optimal the less this is of our to supply been various level of the that are has management early degrees ability than subsidiary team's to operating less difficulties, XXXX. than part

US segment a quarter million increase Construction our of from year's earned $XX.X First substantial quarter Mechanical from a and X% million margin a income $XX.X represents last X.X% operating year of ago. of represents increase the operating

both to pricing In primary the improvements and this as a exceptional commodity driving factors revenue to in mix the execution, were this environments improvement. of when supply XXXX, addition quarter as first segment's better well quarter-over-quarter compared project moderate chain

which which of to is profit of these US gross execution, inflationary driven Mechanical saw $XX.X project negotiated of million Consistent compares impact better to improvements response in well division, and the pressures for and XXXX's segment's margin experienced. were revenues $XX.X adjustments, income we've first to gross have both Services as revenue the Building X.X% performance, Operating increases as been or in in enacted the price Services favorable million due quarter. the by or X.X% with revenues

reasons pricing expansion Compared to income Industrial operating revenues with more an our better Services improvements. coupled these increase period, ago for a of segment or US of normalized mix, and demand margin, primary year in of the quarter-over-quarter operating slight represents million are with X.X% million $XX the $X.X

of decrease and while resulted million, in margin impact $X.X of segment X.X% in UK the decrease million revenues in margin shift of operating Building profit X.X% of margin. reduced experienced of this Services from represents income the of on which project mix a quarterly a year operating a size a work, gross $X.X ago. is income, operating reduced Exacerbating

from impact unfavorable prior the the impacted project the a to quarter resulting also in $XXX,XXX comparison contributing enhanced first closeout, Additionally, unfavorable negatively is which of exchange period-over-period quarter by segment's reported year margin This operating in operating in XXXX's rate period. was income successful the movements.

We on slide now nine. are

prior profit of higher are is or as by for Gross than addressed the of points million Additional XX.X% XX.X% financial slides basis margin period, XXX significance previous the follows. items comparable gross and quarter not $XXX.X the of million is on $XX.X quarter-over-quarter. year up

$X.XX per EPS income, net $X.XX in earnings in share improvement in to and has combined shares quarter. a first common XXXX’s Diluted reduction year-over-year. quarterly our weighted as was $X.XX average to increase The a outstanding compared with led

Our quarter XXXX positively our $X.XX. impacted first diluted share per repurchases in have by XXXX share earnings

Please turn return sheet to strength pursue positioning capital slide us and liquidity, XX. fund organic shareholders. strategic maintains in to EMCOR's to balance its M&A growth, opportunities

follows. decreased hand just note are of by when compared to December $XXX million. within our Cash million as $XX.X on XXXX, Fluctuation has balance sheet, of of over

million operations, expenditures our These uses repurchases $XX.X our During million deployed of under capital stockholders partially we through and dividends. offset utilized credit activities, to acquisitions of were for $XX.X period borrowings fund million investing by during returned including of the the revolving to share million cash $XXX and and quarter, $XX.X cash facility.

by from the balance by in primarily marginally entirely has were of acquisitions, quarter by completed identifiable acquisitions goodwill of result while asset expense XXXX, organic than increased the two intangible these decreased more slight period, capital working amortization have one period. $XXX The offset was growth nearly million. connection the in increase us recognized Resulting our assets during the assets our a during with as during

our the net referenced. revolving period debt-to-capitalization on our our increase the the in payments. repurchases over increased And has facility a previously lastly, our ratio, is of just just and primary million, income increased exceeded XX. has of our debt under balance under reflected for bottom as borrowings by slide dividend in Total stockholders' share as equity This for the $XX change credit $XXX debt reason by million, result the additional

will completed, With my return presentation I back portion call of to now this Tony? morning's Tony. slide the

by Yeah. page three services final quarters segment Remaining our The first XX, on XXXX, Thanks, demand Obligations, Performance Mark, market. experienced we and of be for the trend the I'm going robust to quarter of and continued the into XXXX. in

the little was and first Performance the of of up billion, but Total Obligations end all billion approximately the at RPOs or March a over $X.X were XXXX million billion, XX% $X.X billion Remaining $X.XX almost quarter company total over $X.X increase organic. the or of $XXX

RPOs demand in is project three also Additionally, sign first year-end $XXX first strong XXXX organic a XXXX. With were our continued increasing growth, from X.X% quarter months bookings a with strong million XX.X% the most resilient underlying the or in sectors. of revenue growth RPO of

year growth with period. these of first year-end in saw RPO experiencing first RPO in first domestic the the RPOs quarter in broad-based increase segments versus was growth each the business double-digit our reporting ago each four quarter quarter the segments Further, XXXX. of from

RPOs just U.S. segment or XX%. under by saw increased strong Our XXXX. two Construction domestic RPOs increasing March or million XX% from experienced The segments year-over-year construction combined $X.X project Mechanical with growth billion $XXX

XX%. million While segment Electrical Construction saw $XXX of the or increase an U.S.

Construction continued for increase centers, semiconductor health Much data from demand RPO of facilities. segment's care results and hyperscale manufacturing the

value also or in Electric are includes new manufacturing We of and battery production important which and the the this engaged vehicles, driven Vehicle industrial support chain, and facilities of to build-out industry. development plants the electric EV other

as facilities services. and capacities this our seeing the across across some and are value increased also we're strong our EV manufacturing by customers. of Also demand expansion, this expansion seeing capacity for of Life well and on-shoring reassuring industrial from Safety chain as the demand Fire and We of whole

now on projects. lot demand due to we a XXXX quality to Mechanical and deliver in lot small billion, repair well of quarter general products. million retrofit this which focused of service which stands as Our service these Services serve from and division and a XXXX, RPO exchanger saw year-over-year midsized heat $XXX efficiency, soft work project to all increase our at indoor channels and $X.XX energy grew for grows work. Like its is services Industrial an Services RPO projects XX% or slightly as Services U.S. that awards Building the project and continued all in a levels, March increased is in US air

broken to page, market RPOs we the show Moving sector. right the down of side by

As sectors. XX segmentation sector expanded you can to market we see, have

As and work, February future previously we and RPOs greater current stated our into we into call out in for our three what was as sectors. commercial transparency split reported

XX% that's in it The buildings, the bottom golden includes RPOs commercial basis. a commercial first the over the little traditional and of million And Commercial have projects, year-over-year which and work or is office increased retail warehouses, other buildings. and on sector restaurants $XXX at bar. a is

We disaggregated projects, that network network This into includes data and and XX% maroon which the sectors ones our to data and are telecommunications as we include sector that work fiber previously communication. or that other to is And year-over-year. commercial projects. and grown referred centers, has million these And bar. RPOs projects cabling

as now and We the or $XXX increased life the pharmaceutical called it's XXX%. high-tech in biotech, green and have semiconductor manufacturing projects Year-over-year, RPOs group shown the sector, the over these in high-tech are projects, high-tech services And sciences, million value bar. EV and by a chain. have

-- high-tech sector, these And stages and will RPOs. a to we our We part in expansion believe of for and and growth, in projects see growth and continue to capacity will lot large bit that sectors little in in, down industries of expect initial as a the that it high-tech coming in be are up times drive are most manufacturing that's these this what development. we

think just It think We the negligible of but also the to not further demand, duration that only demand. that impact legislation we has been support to-date, legislation will government was designed believe we passed, of will elongate sectors. there that it increase that and these was

continue before, Life all these across sectors. gold, across broaden said the the all That and would continue maroon provide we to sectors. Fire our I've we As Safety projects & and be to services green

market include up at much offsetting this And reduction and in of Looking manufacturing XX% other and XX%, and which and water X%. it's the sectors activity, projects, was wastewater short up XX%; repair partially transportation up RPOs industrial increase and and are healthcare HVAC work, flat, maybe institutional RPOs. is year-over-year up and service duration a

have of And construction, sector labor non-residential mechanical and and is. our noteworthy demonstrates it solutions one participation, participation UK geographies. balanced electrical This to see market we and retrofit is ability looking how service US diverse at and before, balance our provide strengths repair which to the our is across and highlighted market sectors technical

We have project decent continue sectors. market opportunities work in to across new non-residential hand and bid many

mix we robust well project in in have project good, is environment. mentioned executing before is sectors a Our very operating are phases I and what our today drive of still of all growth. several that delivery these challenging

redundant our and highlights next to the explain page of I today explaining I disclosure the not I On think just see met page page XX. with and I we many XX, going cover to page, commentary the depth that we've the RPOs am things more made it with because on that would enhanced commercial, around them about you'll detail you. be talk on think in

to XX. And page I XX now with will that, turn and

market billion in range $X.XX our to are to to to success diluted $X.XX of diluted is guidance expect at $XX $XX, from continue we increase but uncertainty XXXX earnings was We what despite has to what to expect per are now revenues, our share to $X.XX going $XX.X to and earnings going a that billion guidance share leave be. per we it. intact our we guidance revenue our in in a

we we data continue care, key centers, Our remote like about, semiconductors, and to sciences. RPOs demand in talked commercial strong, see health life bio remain areas

the systems before, switchgear strong We with also as exists for for life end our like and that schedule finished said across and are experienced unreliable last supply delivery services long fire safety through equipment. seeing chain most challenges lead The still issues major I times, HVAC demand, markets. we

inflationary see for We continue fuel. to pressures also materials expect labor, to and

estimating we XXXX, we and first to of in most continue quarter allocation. of in as and to the will However, adapt did resource better XXXX planning

end some believe several cover going not guidance it and So in this where to first up will on our ones. ones control the in list, depend do that is control. our we that And we it's range in I'm but control are our the of some more an and major factors, exhaustive upside

need to improve use we to our we need to and modeling thing is continue first efficiency, building increase of information The planning enhanced increase BIM prefabrication drive do or to service impact to enhance of of quality to the delivery. inflation the need estimating and pricing and chain continue and mitigate to challenges. and our supply We pay can attention productivity our safety

to productivity, safety need mix not an labor we as staff employer of Third, to classifications also jobs with our the choice our right and skills reputation to but our and cost. only leverage of enhance our

they need to Fifth, educate at service actively and as occupancy need refinancing with our monitor now we issues. lead better. status the payment us remain and and commercial their organization Fourth, we with levels employees our work all to train customers with vigilant financial and of challenged condition smarter be and to

And gain finally, to always look leverage. SG&A we

However, think one, control will not customers. sourcing improving I lead beyond and could times market performance. anyway. don't to XXXX, and that's that in material Number areas always continue challenge have our the much we affect our our

and economic and in it decision and some will impact our move of interest higher those us. or expect may services, planning in rephased the rescoped. be uncertainty and stage two, to postponed, demand this rates may Number customers' stage later impact for projects periods, some I the will the then products

reopening increases by continues Number market energy the and of it and uncertain potentially Ukraine could caused is demand. supply, three, especially took and intensify. OPEC the in supply markets China conflict out as disruption

continue to and supporting returning However, our to we'll successful continue execute and growth flow, operating strong organic and dividends strategy through that while shareholders our long-term and generate acquisition, we cash cash balances repurchases. allocation expect to to capital share

serving teamwork would your our continue drive best results discipline, the to EMCOR be dedication as customers. results possible to to because none possible produce thank a result outstanding shareholders. I Finally, for for And and of so like as of this always, the our to would we customers well, continue without team our

questions And Keith, with I take will that,

Thank you. Davidson. D.A. I time begin first today's Brent And question this the At session. from Thielman [Operator comes with question-and-answer will Instructions]

Good a on Hi. Congrats quarter. Thanks. morning. great

Thank Brent. morning, Good you.

traditional I verticals of the would Tony, tightening. an kind your apart risk. most to you around in may of levels be wondering on area just But just really that context the exposure these heightened there pick that It commercial was if you that you'd of helpful. could love be like comment concerns of are have credit I'd how versus sort would vertical new high anecdotes hear retrofit there and upgrades within Any construction? seems

traditional I from essentially And we can flat mean disclosure. enhanced part did leased that's so and Then year-end. the bars that's it's you up the the yellow see year-over-year, it's why commercial.

of be part, part meant the elongated do, burn through. Now because most That's for those hitting. to we the a that starting result really is projects are saw that where to supply we're quicker you of impact of lines

is It's duration aftermarket. It’s bulk that duration. major even it that that yellow could retrofit. there, you that retrofit. pink the most It's not we that pink was has or are. X% section changes. moves section, our short short less what energy of It's the time, duration It's longer section projects, where spread It's So section projects. and and is build-out. business probably if that's now. you pink what of think sectors call yellow out-of-the-ground across the backlog, all stuff residential. what tenant It's probably other It's retrofit would EMCOR's very take we At about that part, that the do commercial is X.X% of I new commercial than or ad short our traditional but one in in fast provider of to kind commercial high-rise duration today for different. projects do The

said, more IRA, talked coming and continue We maroon elongation. is talked like that even careful attention that's And when us. in And the I'd time. like been good We're breakout, for careful it's we pay we was then to about commercial up, a financing. green, that a sector coming growth careful to growth that the because we right, their we're even the maybe move long the commercial attention that's Act in and legislation. or developer-led. before lot mean, But the We've CHIPS where it the you as and I and a growth about is that especially of for collections, expect right, enhanced we sector. to pay reality I

Do new has legs to market now? a that market way I like project the energy Do I opportunities I duration efficiency market. energy growth think a The grow there's the commercial efficiency And Do think customers? is we yes. well-capitalized market service No. is with answer think right lot go? for I short and the

have or construction and us that all through would the of a in-house that contractor service go or programs We manager what fund the go owners the be go and called may have to direct like a while. manufacturing a contractor a where run through facilities channels. setting, that the their they through owner. providers different lot We general and for choice of We with in through their we're there direct university to channel. work that the projects large that help We We go have but been and real sell they utilities managers. estate the go project. We salespeople to

And the sell major knows every sales done. may have how how go where have they to to sell people figure we that channels. one get force we and actually through them it the ESCOs And now they and to actually sell to out have go those then projects of

think legs. We market we that that has like And so position.

starting thinking understand complex defined a for we because answer, traditionally we the that that's disclosure have why were was. growth the to enhanced sector it's but us commercial So what harder the where did make way real we to it we and -- were it people

that. appreciate Okay. I

and guess healthcare with that consider on diverse staying would broader happen a to of be Tony, piece expansion the there. is, aligned my customers the customers specific that you group just the a Just sticks the question guess fairly spending? some RPOs, really I this topic of or is I just also to continued trend, me out

$X.XX disrupted over trend. can do think is It's of weren't new They or two broader so But new Brent. on because specific you part a quite if right? a the in backlog both, they with building we multiuse. both, It's about look way building and frankly, little or be drive COVID can facilities large been they got, facilities They retrofitting were period, middle emergency you bit facilities that because year it of time over projects. customers three the a COVID.

this some have demand it's long-term pent-up capital is So planning, but what should of or trend. a been

more facilities backup power. operate complex and low-voltage complex Hospitals facility paid to electrical and to from they out much negative general have their more need ventilation pressure positive And about healthcare to needs. have think put much all our they're while and to They sustainability they They they have flex to doing to more they're They that, to in ability be world. needs that an need going have pressure they cleaner. to have have better goals need facilities, big efficiently. how

like last the to understand I'd of of looks construction from two it seeing just, below love more is And I a margin we've the levels business groups? because just but -- supply last big to profound snap guess, Tony. mechanical or little past. related electrical seen Okay. that. definitely more in the electrical the still kind maybe disruptions which back year, the one, in challenges it of Are sort you Thanks,

market say on electrical than major mechanical, would think the more consolidated more end I it's it's I products, path. for and critical probably more a

rejigger buy of work equipment, lot a lot our HVAC that. So of methods we do means to we've around Mechanically, we work. to had a and

We plants where equipment. district supporting work also owner or the a lot the piping bought big do of process

that business, do they so And in for gear. major electrical the too,

are forces think, visibility up more look going has they're But at do. down have has And my date when not and in say have mechanicals in experience much been is the like better, haven't they to tune down to times you what And at to least than and keep they the But on little mechanical electrical their think force. moved general, performance the with The yet. us The lead really to panels, happening all. factories. the great gotten switchgears delivery I at little they sales smart better bit. started a I things generators what's electrical sales a mechanical do, move

It's really yeah. helpful. Yeah,

guys. Thanks Okay.

Yeah.

Thank question from Thalhimer next you. Davis. And comes Thompson, with Adam the

guys. Great good Hey, morning, quarter.

Thanks, Adam.

On the your was best in industrial business, that years. op quarterly three income

there Just results. like can the what and you curious, build what on -- QX visibility your the is if

a Look, normalized like portends where operating what for backlog think better. We shop we're We We in gotten environment, is is think have good. which we that our future. the more things like at.

expect continue to normally. to operate We

to We have believe don't season we fall have reason no up. a normal turnaround coming

we right, think is pull product especially around alternative Mark, a up or long building new But solar, XX and the renewables, the energy, a these that's new everywhere. in have, which I I the service, is mean… clogged

would Yes, sight only of add lose the that I business. fact is thing just don't the Adam, seasonality of the of

we couple that, a we've a -- well. said four. of mix of while quarter driven during and one And as quarter having with base. times his bookends that of we kind But a seen close Tony remarks, as in saw, it mentioned saw environment it's operating is lot normal as to us pre-prepared a it's So customer

deploying schedules we're least XX-month adhere is we've Industrial we're their going have. them, And XXXX qualified that a at optimistic period for -- we to planning So with segment. if our like performance the customers Services label to normal that to the look the been

our reflected that is in And of that's takeup. reflected part our And guidance guidance. in

What the have followed panels? don't is I closely. I solar Okay. outlook that for

that's this who that's uptick about better sort qualified part than see -- But I It's still good. this don't there's There plugged think are talk big way more not and bidding what us someone on of as followed work. our as know again, year. business. we about our be going that But me, to that of a lot to work, up. of we closely there's people through to see, it based lot a delayed people certainly

Yes. comment. macro Blake is, guess I on I guess, manifest kind And then this, touch touched your And on do just macro the where short loaded kind of you debate wanted itself? would to I big there's but these like the government projects locked it of big projects? -- to maybe duration there's projects so lot seems of risk Because but and a support go, those are think and

Yes.

the them hard duration while. have short to something I been I projects mean tell. – driving that's for think there's it's a

pricing. view of this mind there's energy my so counterbalancing And sustainable in because right, for more out there, who drive And people facilities.

So the on and say, one I just project. hand, you do sit there won't

prices my that hand, say, continue project, worse On to and become because escalate. energy you uncertain don't structure every cost the I becomes do other day,

committed requires modernization replacement equipment. of goals. of can't have in requires That there you unless equipment It you sustainability get and facility. the work. -- fixing something new compressor simple lot a do major most a And all to as and our customers as lines manufacturing And

If on to a it -- something and X.XX variable that out in change a be you're used chiller, take cost speed now and with per putting has kw per profile. tonne you tonne, market in that's your something operating X.XXkw

going don't thinking you're do me. these in going all right? the So these that. been do energy my of to have always start no existence efficiency, I triple vein has to If forces net on building then I competitive, be around have that And I the longer about, leases, to may okay, which

think And so than probably we heavily that. to a build exposed on you have I you're outlook have new if commercial, different that

about XXX it if those of expansion around in help reshoring, remember, ecosystem costs. a not guess I talked most I can are most And you are it data can also it of my of elongate a mind. and on I there's projects these centers. think, going value major now, this from some each big government semiconductors, think of worried happening chain, that was And EV, point these whole things of those. rate interest That basis in about customers only support. only on, without

the layer of onshoring with demand value of what One, part industries, demand to going think I self-funded for the a and drives way. respect then they're the some mix these that to And create most in of critical favorable industries, they're kind on some the top that of over you they're long-term doing. for national security and

have for great And look, us, we RPOs.

be RPOs. these but we expect couple could bit in expect level, the major pretty that this little overall quarter-to-quarter, of we'll years From a continue our -- plus high good but or next sectors, see. as to great to have trends We to minus over

Exactly. Good Thanks guys. color.

you. the Thank Eastman And next question comes with from Sean KeyBanc.

are I good think our Great I -- quarter mean, this start unsustainable effectively are just was we start kind start. there's still better mean, for I just takeaway Yet saying, record quarter. year? performance the kind Very really updating in margin of is team. from I sort that through to came Is you chain lingering supply a flowing a margins. thought of challenges. outlook here. the of first something big first quarter thought the there the first or Hi, the I through not guys the

Sean. I don't know,

outlook I big to think $X.XX move. taking $X.XX, pretty a to our up $X.XX $XX to from

what that is in guidance, I extrapolate through think and the the guidance in the we strong and businesses, we're think revenue really velocities I if that saying further, you year. that, think margins in we said the our expect initial I

in nothing right, and projects we was first extraordinary quarter, But finish. start, Now, they mix we Mark? are -- the dependent there

we out, same first headwinds point and in additional one was I'd some of with level. thing of extent only activity recollect write-down mechanical if not regards you XXXX project at both from quarter year, the quarter last The construction. electrical that have write-downs, did Sean, to the in

to difficult mild the relative XXXX’s the is geographies to with quarter only the like quantify. most activity might had I have of we forward I difficult winter deal is does didn't job on year. The some of done one, in in we quarter pattern other level weather. thing, But regards have that's the same the fairly operate, outsized which impact with quantify thing difficulties weather said, to to It finding not is site pulled we the an extremely with performance. And

think quarter for that this strong operating operating margins is, other I thing -- And income seasonally the industrial. is bolstered a quarter first margins

factor there, if quarter hope deliver to third we and have second to of we of so mean the deliver that we back can't some And especially work year. the half in to the solar with towards us

right? about I sizable guess general then caution, the macro I don't and mean things talked And I forces just those -- are control. don't we So, control. we

so believe, pretty where to towards And underlying strong update us. with We operating eye year range revenue it's on think out strong with have I the is that in updated depending an we we that. strong underlying guidance. that a to started We performance. you we is there guidance But think that have And what are strong prudent guidance.

what seems And the in back not great like I wind is the a where the watermark the I balance the I low like year with dynamic have is to of take the the of Yes. that there's sales, want for year? Look, a to at operating perspective first margin guess I quarter from go over find lot margin XXXX don't cushion year. I of in a to it feel mind, getting guidance out that the was to update. just

a out the think though, execute we we at I we up those a macro quarter. takes to And had could got strong we right? we'll things any well in five the this that we impact neater guidance that range. given four most think they countervailing keep think of we are on that Yes, macro important. where end of to obviously and that margins the can and and put they somewhere we lot went those think puts that lot at or how I -- And mean level forces points are and back looking of the we There's I mean, start we when in year, with

a topical, your potentially you see maybe to element M&A so the different from do How back being credit tightening way. approaching And that pipeline? coming impacting that

execute don't need things we what I our think execute. we ability other we to think it to impacts like to would do

this, sale, right? right, be is for know overall M&A less may things the we if Sean, though, think environment I not favorable,

for value, selling deals is most have us not shareholders, where because That's Now, opportunities our business of drive also most we're the lot we've right? the are successful, life's that the grow. and they a looking at, the gives we M&A their buy for are most the last we best, operate of where necessarily of over market. years things new only the been three lot typical things to we in it we and person people have done but the selling work, a the which

companies right much But around auction now. and interest market, the right people to place look, the trying ability the their rates, want sell the process, tightening that credit market is therefore, between in not now a They're in robust equity not and secondary to debt. private covenants are their

lines geographies continue I have we we're new build for our acceptable services to like offering That or of oh, the for our put all a so add significantly. of And that the pursue it volumes geographies my do. of But things -- M&A seen. enhance that. like to across we to kinds pipeline an secret. services no do, or to ever the I together, same is follow think most we pipeline a would footprint, things god, said, capability, down product what I don't number to I us say, it's think, being on you product the are add was, would mean, opportunities and it's would robust I've

Thanks it. All Many right. team. to the the Got perspective. compliments it. Got for

you. Thank

Thank to the session. Guzzi concludes would call closing like I question-and-answer any return the you. this to And Tony for comments.

hope well. in well good lot us. We of Thank all Have of all. you XXXX. be a started you summer work safe. and I got much We ahead And very a are

Thank concluded. for you. The now presentation. has Thank conference you attending today's

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