Q1 2024 EMCOR Group Inc Earnings Call

Okay.

Yes.

Marlies: Good morning. My name is Marlies, and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group's first quarter 2024 earnings conference call. All participants have been placed on mute to prevent any background noise.

Good morning, My name is more lease and I will be your conference operator today.

Marlies: At this time I would like to welcome everyone to the EMCORE group's first quarter 'twenty 'twenty four earnings conference call.

Marlies: All lines have been placed on mute to prevent any background noise.

Marlies: After the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then 2. I will now turn the call over to Andy Bachman, Vice President of Investor Relations. Mr. Bachman, you may begin.

Marlies: After the speakers spread prepared remarks, there will be a question and answer session.

Andrew G. Backman: You would like to ask a question. During this time simply press Star then the number one.

Andrew G. Backman: On your telephone keypad.

Andrew G. Backman: If you would like to withdraw your question. Please press Star then two.

Andrew G. Backman: I will now turn the call over to Andy Backman.

Andrew G. Backman: <unk> President of Investor Relations. Mr. Blackman, you may begin.

Andrew G. Backman: Thank you, Marlise, and good morning, everyone, and welcome to EMCOR's first quarter 2024 earnings conference call. For those of you joining us by webcast, we are at the beginning of our slide presentation that will accompany our remarks today. This presentation will be archived in the Investor Relations section of our website at emcorgroup.com. With me today are Tony Guzzi, our Chairman, President, and Chief Executive Officer; Jason Nalbandian, Senior Vice President and EMCOR's newly appointed Chief Financial Officer; and Maxine Mauricio, Executive Vice President, Chief Administrative Officer, and General Counsel.

Andrew G. Backman: Thank you Martin and good morning, everyone and welcome to <unk> first quarter 2024 earnings Conference call.

Andrew G. Backman: For those of you joining us by webcast, we were at the beginning of our slide presentation that will accompany our remarks today.

Andrew G. Backman: This presentation will be archived in the Investor Relations section of our website at Amcor group Dot com.

Andrew G. Backman: With me today are Tony Guzzi, our chairman, President and Chief Executive Officer, Jason Nalbandian, Senior Vice President and <unk> newly appointed Chief Financial Officer, and Maxine Mauricio Executive Vice President Chief administrative officer and General Counsel.

Andrew G. Backman: For today's call, Tony will provide comments on our first quarter. Jason will then review our first quarter numbers before turning it back to Tony to discuss RPOs, key market drivers, and how they impact our business segments, as well as review our revised 2024 guidance before we open it up for Q&A. Before we begin, as a reminder, this presentation and discussion contains certain forward-looking statements and may contain certain non-GAAP financial information. Slide two of our presentation describes in detail these forward-looking statements and the non-GAAP financial information disclosures.

Andrew G. Backman: For today's call Tony will provide comments on our first quarter. Jason will then review our first quarter numbers before turning it back to Tony discuss Rps key market drivers and how they impact our business segments as well as reviewing our revised 2024 guidance before we open it up for Q&A.

Andrew G. Backman: Before we begin as a reminder, this presentation and discussion contains certain forward looking statements and may contain certain non-GAAP financial information.

Andrew G. Backman: Slide two of our presentation described in detail. These forward looking statements and the non-GAAP financial information disclosures.

Andrew G. Backman: I encourage everyone to review both disclosures in conjunction with our discussion and accompanying slides. And finally, as a reminder, all financial information discussed during this morning's call is included in our consolidated financial statements in both our earnings press release issued this morning and our Form 10-Q filed with the Securities and Exchange Commission.

Andrew G. Backman: I encourage everyone to review both disclosures in conjunction with our discussion and accompanying slides.

Andrew G. Backman: And finally as a reminder, all financial information discussed during this morning's call is included in our consolidated financial statements within both our earnings press release issued this morning and in our Form 10-Q filed with the Securities and Exchange Commission and with that let me turn the call over to Tony Tony Good morning, Thanks, Andy and Thanks, all of you for joining our call.

Anthony J. Guzzi: Good morning. Thanks, Andy. And thanks, all of you, for joining our call. I'm going to begin my discussion on page 4.

Speaker Change: I'm going to begin my discussion on page four.

Anthony J. Guzzi: We had an exceptional start to the year at EMCOR; it was another quarter of records as our performance established new first quarter records for revenues, operating income, operating margin, and diluted earnings per share and operating cash flow. We earned $4.17 per diluted share and grew revenues by 18.7% to $3.43 billion; revenues increased 18.5% organically. And we were still able to grow RPOs to $9.2 billion, an increase of 1.3 billion, or 16.5% versus the year-ago period.

Anthony J. Guzzi: We had an exceptional start to the year at EMCORE. It was another quarter of records as our performance established new first quarter Records for revenues operating income operating margin and diluted earnings per share and operating cash flow.

Anthony J. Guzzi: We earned $4.17 per diluted share and grew revenues by 18, 7% to $3 43 billion.

Anthony J. Guzzi: Revenues increased 18, 5% organically and we were still able to grow <unk> to $9 2 billion, an increase of $1 3 billion or 16, 5% versus the year ago period.

Anthony J. Guzzi: Our consolidated operating margin was a very strong 7.6%. The performance of our electrical and mechanical construction segments this quarter continued to exceed our already high expectations. Our electrical construction segment revenues grew 18.6%, with operating margin reaching a record 12%. Our mechanical construction segment grew revenues 32.4%, with record first quarter revenues and a record first quarter operating margin of 10.6%. We have executed well with strong demand across many of the market sectors we serve, including high tech and traditional manufacturing, as well as networking communications, which includes our data center work.

Anthony J. Guzzi: Our consolidated operating margin was a very strong seven 6%.

Anthony J. Guzzi: The performance of our electrical and mechanical construction segments. This quarter continue to exceed our already high expectations.

Anthony J. Guzzi: Our electrical construction segment revenues grew 18, 6%.

Anthony J. Guzzi: With operating margin, reaching a record 12% our mechanical construction segment grew revenues 32, 4% with record first quarter revenues at a record first quarter operating margin of 10, 6%.

Anthony J. Guzzi: We executed well with strong demand across many of the market sectors, we serve including high tech and traditional manufacturing as well as networking communications, which includes our data center work, we had outstanding performance of some of the most demanding projects for our most sophisticated customers.

Anthony J. Guzzi: We have outstanding performance on some of the most demanding projects for our most sophisticated customers. Central to our success is how our leadership teams effectively plan where and how we will compete and select the right sectors and geographies that allow us the best opportunity to earn the best outcome when deploying our precious resources. Then there is our excellence in BIM, which is really a lot more than building information modeling. It's much evolved into virtual design and construction. You'll hear me talk about BDC.

Anthony J. Guzzi: Central to our success is our leadership team's effectively plan, where and how we will compete and select the right sectors and geographies that allow us the best opportunity to are the best outcome when deploying our precious resources.

Anthony J. Guzzi: That are excellent and Ben which is really a lot more of them building information modeling, it's much evolved into virtual design and construction you'll hear me talk about BDC. That's how we talk about it at EMCORE, which then moves into pre fabrication estimating project planning and management and our best in class Labor sourcing management and training.

Anthony J. Guzzi: That's how we talk about it at EMCOR, which then moves into prefabrication, estimating, project planning, and management, and our best-in-class labor sourcing, management, and training have all supported and continue to support this strong performance. Our leadership teams from the segment through the subsidiary level down through our project managers and frontline supervision are performing work productively, and, most importantly, safely, resulting in excellent outcomes for our customers and shareholders. Our industrial services segment reported its best quarter post-pandemic.

Anthony J. Guzzi: Have all supported and continue to support this strong performance our leadership teams from <unk> from the segment through the subsidiary level down through our project managers and frontline supervision are performing work productively.

Anthony J. Guzzi: And most importantly safely.

Anthony J. Guzzi: Resulting in excellent outcomes for our customers and shareholders.

Anthony J. Guzzi: Our industrial services segment reported its best quarter post pandemic, we continue to see improved demand for our services and complete some of our largest turnarounds in over five years.

Anthony J. Guzzi: We continue to see improved demand for our services and have completed some of our largest turnarounds in over five years. Our shops continue to perform well, and the electrical business within this segment is experiencing increased demand, both from traditional upstream and midstream customers, as well as for certain renewable fuel projects. Within our U.S. building services segment, our mechanical services business continues to perform well with solid high single-digit operating margins, and strong demand persists for our energy efficiency, building controls, and retrofit projects. Meanwhile, our UK business continues to hold up well despite a tough economic environment. You know, we always have challenges, and this quarter was no different.

Anthony J. Guzzi: Our shops continue to perform well and the electrical business. Within this segment has experienced increased demand both from traditional upstream and midstream customers as well as for certain renewable fuel projects.

Anthony J. Guzzi: Within our U S building services segment, our mechanical services business continues to perform well with solid hot with a solid high single digit operating margins and strong demand persists for our energy efficiency building controls and retrofit projects. Our U K business continues to hold up well, despite a tough economic environment.

Anthony J. Guzzi: We always have challenges in this quarter was no different as mentioned in our last few calls we've had a few contract losses at our U S site based services business is real estate companies in this market continue to be aggressive and take work at or near cost.

Anthony J. Guzzi: As mentioned in our last few calls, we've had a few contract losses in our U.S. site-based services business, as real estate companies in this market continue to be aggressive and take work at or near cost. In addition, during this past month, we had a retail customer file for bankruptcy, which caused us to increase our bad debt reserve, offsetting the increased profitability otherwise experienced within our U.S. building services segment. Overall, we had a great quarter and are seeing continued strength in the market trends we have been discussing for the past few quarters.

Anthony J. Guzzi: In addition, during this past month, we had a retail customer file for bankruptcy.

Anthony J. Guzzi: Caused us which caused us to increase our bad debt reserves.

Anthony J. Guzzi: Offsetting the increased profitability otherwise experienced within our U S building services segment.

Anthony J. Guzzi: Overall, we had a great quarter and are seeing continued strength in the market trends, we have been discussing for the past few quarters.

Anthony J. Guzzi: In addition, in April, we closed three acquisitions that will add to our capabilities in our mechanical construction segment and our U.S. building services segment. We spent $137 million in upfront consideration on these three acquisitions and are excited to integrate them into our business, and integration is well underway. We have also signed a definitive agreement to acquire another company for $38 million that will add to the electrical capabilities in our industrial services segment.

Anthony J. Guzzi: In addition in April we closed three acquisitions that will add to our capabilities and our mechanical construction segment and our U S. Building services segment, we spent $137 million in upfront consideration on these three acquisitions and are excited to integrate them into our business and integration is well underway. We've also signed a definitive.

Anthony J. Guzzi: Minutes of agreement to acquire another company for $38 million that will add to the electrical capabilities in our industrial services segment. This acquisition is expected to close on or around May <unk>.

Anthony J. Guzzi: This acquisition is expected to close on or around May 1st. We ended the quarter with strong RPOs and a balance sheet that continues to support the growth of our business, both organically and through acquisition. With that being said, Jason, I will turn the call over to you.

Anthony J. Guzzi: We ended the quarter with strong <unk> and a balance sheet that continues to support the growth of our business both organically and through acquisition with that being said, Jason I will turn the call over to you.

Jason R. Nalbandian: Thank you, Tony. And good morning, everyone.

Jason: Thank you Tony and good morning, everyone.

Jason R. Nalbandian: Over the next several slides, I'll review our operating performance for each of our segments, as well as some of the key financial data for the first quarter of 2024 in comparison to the first quarter of 2023. I'm going to start with slide five, which is revenue. As Tony mentioned, consolidated revenues were $3.43 billion, an increase of $541.8 million, or 18.7%. Additionally, each of our domestic reportable segments experienced year-over-year increases in revenue, and with organic growth of 18.5%, substantially all of this growth was organic.

Jason: Over the next several slides I'll review, our operating performance for each of our segments as well as some of the key financial data for the first quarter of 2024 in comparison to the first quarter of 2023.

Jason R. Nalbandian: I'm going to start on slide five which is revenues.

Jason R. Nalbandian: As Tony mentioned consolidated revenues were $3 43 billion, an increase of $541 8 million or 18, 7% each.

Jason R. Nalbandian: Each of our domestic reportable segments experienced year over year increases in revenue and with organic growth of 18, 5% substantially all of this growth was organic if.

Jason R. Nalbandian: If we look at each of our segments, revenues for U.S. electrical construction were $764.7 million, an increase of 18.6%. This segment continues to benefit from growth across many of the market sectors in which we participate, with the most significant revenue growth in networking communications, which is predominantly our data center projects. The increased need for cloud computing, data storage, and the emergence of AI have accelerated the demand for these services.

Jason R. Nalbandian: If we look at each of our segments revenues of U S. Electrical construction were $764 7 million an increase of 18, 6%.

Jason R. Nalbandian: This segment continues to benefit from growth across many of the market sectors in which we participate with the most significant revenue growth in networking communications, which is predominantly our datacenter projects.

Jason R. Nalbandian: The increased need for cloud computing data storage and the emergence of AI have accelerated the demand for these services.

Jason R. Nalbandian: Revenues in U.S. mechanical construction were $1.4 billion, increasing 32.4%, with revenue growth across the majority of the market sectors in which we operate. While the most significant growth occurred in the high-tech manufacturing market sector, we also saw notable increases in manufacturing, Industrial, Institutional, and Networking Communications.

Jason R. Nalbandian: Revenues in U S. Mechanical construction were $1 4 billion, increasing 32, 4% with revenue growth across the majority of the market sectors in which we operate.

Jason R. Nalbandian: While the most significant growth occurred in the high Tech manufacturing market sector. We also saw a notable increases in manufacturing.

Jason R. Nalbandian: Industrial institutional and networking communications.

Jason R. Nalbandian: As we've mentioned on previous calls, as a result of projects for customers engaged in the design and manufacturing of semiconductors, as well as the production and development of electric vehicles and related battery technologies, this segment is experiencing strong demand for both its traditional mechanical services as well as our fire and life safety offerings. Coupled with the continued build-out of hyperscale data centers and domestic nearshoring and reshoring, these trends continue to be the driving factors behind the segment's significant organic revenue growth.

Jason R. Nalbandian: As we've mentioned on previous calls as a result of projects for customers engaged in the design and manufacturing of semiconductors as well as the production and development of electric vehicles and related battery technologies. This segment is experiencing strong demand for both its traditional mechanical services as well as our fire and life safety offerings.

Jason R. Nalbandian: Coupled with the continued build out of Hyperscale data centers and domestic reassure near shoring and reassuring. These trends continue to be the driving factors behind the segment's significant organic revenue growth.

Jason R. Nalbandian: Together, our domestic construction segments generated revenues of $2.2 billion, an increase of just over 27%. If we move to U.S. building services, revenues grew 7.7% or 6.6% organically to $781.2 million. The most significant growth in this segment was generated by our Mechanical Services Division. We continue to benefit from strong demand for HVAC projects and retrofits, as well as building automation and control services.

Jason R. Nalbandian: Together, our domestic construction segments generated revenues of $2 2 billion, an increase of just over 27%.

Jason R. Nalbandian: If we move to U S building services revenues grew seven 7% or six 6% organically to $781 $2 million.

Jason R. Nalbandian: The most significant growth in this segment was generated by our mechanical services Division.

Jason R. Nalbandian: We continue to benefit from strong demand for HVAC projects and retrofits as well as building automation and control services. In addition, we are experiencing service volume growth due in part to an expanded customer base.

Jason R. Nalbandian: In addition, we're experiencing service volume growth due in part to an expanded customer base. Looking at U.S. industrial services, revenues were $354 million, increasing 7% year-over-year. With contracts of a more typical size, we executed against a more normal turnaround season and benefited from scope expansion on certain abuse projects. This segment additionally benefited from increased demand for certain renewable fuel projects within the quarters. And lastly on this slide, revenues of $104.7 million for our UK building services segment were exceptional despite a tough operating environment which has led to lower facilities maintenance and discretionary project revenue. Now, we turn to slide six.

Jason R. Nalbandian: Looking at U S industrial services revenues were $354 million, increasing 7% year over year.

Jason R. Nalbandian: With contracts of a more typical size, we executed against a more normal turnaround season and benefited from scope expansion on certain of these projects.

Jason R. Nalbandian: This segment. Additionally benefited from increased demand for certain renewable fuel projects within the quarters and.

Jason R. Nalbandian: And lastly on this slide revenues of $104 7 million for our UK building services segment.

Jason R. Nalbandian: Was exceptional despite a tough operating environment, which has led to lower facilities maintenance and discretionary project revenues.

Jason R. Nalbandian: If we turn to slide six.

Jason R. Nalbandian: You can see operating income for the quarter was $260 million, or 7.6% of revenue. This compares favorably to operating income of just under $155 million, or 5.4% of revenue a year ago. A more favorable mix of work and exceptional project execution continue to be the drivers of our improved performance. Once again, if we look at each of our segments, U.S.

Jason R. Nalbandian: You can see operating income for the quarter was $260 million or seven 6% of revenues.

Jason R. Nalbandian: This compares favorably to operating income of just under 155 million or five 4% of revenues a year ago.

Jason R. Nalbandian: A more favorable mix of work and exceptional project execution continued to be the drivers of our improved performance.

Jason R. Nalbandian: Once again, if we look at each of our segments.

Jason R. Nalbandian: Electoral Construction is reporting operating income of $91.6 million, which represents a 126% increase, and an operating margin of 12%, which is a 570 basis point improvement. Increased gross profit and gross profit margin were the primary drivers of this performance, with the most notable increases in gross profit within networking communications, commercial, and manufacturing and industrial. Operating income for U.S. mechanical construction was $150.7 million, an increase of nearly 75%, and an operating margin of 10.6% represented a 260 basis point improvement.

Jason R. Nalbandian: U S. Electrical construction is reporting operating income of $91 6 billion, which.

Jason R. Nalbandian: Since a 126% increase in operating margin of 12%, which is a 570 basis point improvement.

Jason R. Nalbandian: Increased gross profit and gross profit margin were the primary drivers of this performance with the most notable increases in gross profit within networking communications commercial and manufacturing and industrial.

Jason R. Nalbandian: Operating income for U S. Mechanical construction was $150 7 million, an increase of nearly 75% and operating margin of 10, 6% represents a 260 basis point improvement.

Jason R. Nalbandian: This segment experienced increases in gross profit from the majority of the market sectors in which we operate, with the most notable contribution being generated within the high-tech manufacturing and commercial market sectors. I should also point out that, in addition to increased gross profit margin, the operating margin of each of our construction segments benefited from a reduction in SG&A margin as we leveraged our overhead cost structure during this period of growth. Together, our domestic construction segments have an operating margin of 11.1%.

Jason R. Nalbandian: This segment experienced increases in gross profit from the majority of the market sectors in which we operate with the most notable contribution being generated within the high tech manufacturing and commercial market sectors.

Jason R. Nalbandian: I should also point out that in addition to increased gross profit margin the operating margin of each of our construction segments benefited from a reduction in SG&A margin as we leveraged our overhead cost structure. During this period of growth.

Jason R. Nalbandian: Together, our domestic construction segments or an operating margin of 11, 1%.

Jason R. Nalbandian: Operating income for U.S. building services was $33.5 million, or 4.3% of revenues. While revenues and gross profit of this segment both exceeded that of the prior year, operating income and operating margin decreased by $4 million and 90 basis points, respectively. Unfortunately, a customer bankruptcy within our commercial site-based services division more than offset the increased profitability generated by our mechanical services group during the quarter. This bankruptcy negatively impacted operating income and operating margin of this segment by $11 million and $140 million.

Jason R. Nalbandian: Operating income for U S building services was $33 5 million or four 3% of revenues.

Jason R. Nalbandian: While revenues and gross profit of the segment both exceeded that of the prior year operating income and operating margin decreased by $4 million and 90 basis points.

Jason R. Nalbandian: Unfortunately, our customer bankruptcy within our commercial site based services division more than offset the increased profitability generated by our mechanical services group during the quarter.

Jason R. Nalbandian: This bankruptcy negatively impacted operating income and operating margin of this segment by $11 million and 140 basis points.

Jason R. Nalbandian: Moving to industrial services, operating income was $18 million, or 5.1% of revenues, representing an increase in operating income of 19.6% and a 60 basis point improvement in operating margins. In addition to a slight increase in gross profit margin, this segment benefited from greater overhead absorption given the increase in quarterly revenues previously mentioned. And lastly, UK Building Services is reporting operating income of $5.4 million, or 5.1% of revenue. Despite a reduction in quarterly revenues of this segment, operating income is in line with that of the prior year, and operating margin has improved by 20 basis points as we continue to optimize our project and service mix while seeking to more effectively leverage the overhead cost structure of this section. Let's turn to slide 7.

Jason R. Nalbandian: Moving to industrial services operating income was $18 million or five 1% of revenues representing an increase in operating income of 19, 6% and a 60 basis point improvement in operating margin.

Jason R. Nalbandian: In addition to a slight increase in gross profit margin. This segment benefited from greater overhead absorption given the increase in quarterly revenues previously mentioned.

Jason R. Nalbandian: And lastly, UK building services is reporting operating income of $5 4 million or five 1% of revenues.

Jason R. Nalbandian: Spider reduction in quarterly revenues of this segment operating income is in line with that of the prior year and operating margin has improved by 20 basis points as we continued to optimize our project and service mix, while seeking to more effectively leverage the overhead cost structure of this segment.

Jason R. Nalbandian: Let's turn to slide seven.

Jason R. Nalbandian: We've covered most of this slide already, but I did want to briefly look at SG&A and diluted earnings per share. If we start with SG&A, as I mentioned while reviewing the operating performance of our segments, we were successful in leveraging our overhead cost structure, as evidenced by the 10 basis point reduction in SG&A margin from 9.7% to 9.6%. But I should also point out that somewhat masking our SG&A leverage is the provision we took for the customer bankruptcy within U.S. Building Services, which negatively impacted our consolidated SG&A margin by 40 basis points.

Jason R. Nalbandian: We've covered most of this slide already but I did want to briefly look at SG&A and diluted earnings per share.

Jason R. Nalbandian: If we start with SG&A as I mentioned, while reviewing the operating performance of our segments. We were successful in leveraging our overhead cost structure as evidenced by the 10 basis point reduction in SG&A margin from nine 7% to nine 6%.

Jason R. Nalbandian: But I should also point out that somewhat masking our SG&A leverage is the provision we took for the customer bankruptcy within U S building services, which negatively impacted our consolidated SG&A margin by 40 basis points.

Jason R. Nalbandian: And moving to EPS, diluted earnings per share was $4.17, a nearly 80% increase compared to $2.32 in Q1 of 2023. This EPS performance, like many of our first quarter financial metrics, established a new record for EMCOR for our first quarter. And finally, if we turn to slide 8, the strength of EMCOR's balance sheet continues to be a differentiator for us in the market, providing our customers with confidence as we bid on large-scale, complex, and demanding projects.

Jason R. Nalbandian: And moving to EPS diluted earnings per share was $4 17.

Jason R. Nalbandian: Nearly 80% increase compared to $2 32.

Jason R. Nalbandian: In Q1 of 2023.

Jason R. Nalbandian: This EPS performance like many of our first quarter financial metrics established a new record for EMCORE for first quarter.

Jason R. Nalbandian: And finally, if we turn to slide eight the strength of <unk> balance sheet continues to be a differentiator for us in the market, providing our customers with confidence as we bid on large scale complex and demanding projects.

Jason R. Nalbandian: Given the size and strength of our balance sheet, including $841 million of cash on hand and $1.2 billion of capacity available to us under a revolving credit facility, coupled with our significant cash generation, we remain well-positioned to fund organic growth, pursue strategic M&A, and return capital to shareholders. Although not shown on this slide, operating cash flow for the quarter was $132.3 million, which represents approximately 50% of operating income. As I mentioned on last quarter's earnings call, on an annual basis, we do expect operating cash flow to be in line with a normalized historical average of between 75% to 80% of operating income, or approximately equal to net income. And with that, I'll turn the call back over to Tony for a review of our RPO and market sectors.

Jason R. Nalbandian: Given the size and strength of our balance sheet, including $841 million of cash on hand, and $1 2 billion of capacity available to us under our revolving credit facility, coupled with our significant cash generation, we remain well positioned to fund organic growth pursue strategic M&A and return capital to shareholders.

Jason R. Nalbandian: Although not shown on this slide operating cash flow for the quarter was $132 $3 million, which.

Jason R. Nalbandian: <unk> approximately 50% of operating income.

Jason R. Nalbandian: As I mentioned on last quarter's earnings call on an annual basis, we do expect operating cash flow to be in line with a normalized historical average of between 75% to 80% of operating income or approximately equal to net income.

Jason R. Nalbandian: And with that I'll turn the call back over to Tony for a review of our Rps and market sectors. Thanks, Jason.

Transcription Outsourcing, LLC: Transcript by Transcription Outsourcing, LLC. Thanks, Jason. I'm now on slide nine.

Tony: Thanks, Jason I am now on slide nine so on slide nine you will see a chart that I have discussed this a little bit reformatted over the last four quarters, which highlights some of the key market sectors, where we are seeing growth in many ways. This chart over a long period of time and we start showing at about four quarters, but this idea behind this chart has it really been how we allocated <unk>.

Anthony J. Guzzi: So on slide nine, you'll see a chart that I've discussed. It's a little bit reworked over the last four quarters, which highlights some of the key market sectors where we are seeing growth. In many ways, this chart shows a long period of time, and we start showing it about four quarters in, but this idea behind this chart has really been how we have allocated resources for the last five years or so. Now, let me get into the details of this chart.

Anthony J. Guzzi: <unk> for the last five years or so and now let me get into the details of this chart, we reformat a little bit. So we put things together here and I'm going to start on the upper left hand corner and talk about data centers and connectivity, we have that network and communications and our rpms are up 9%, 51% year over year.

Anthony J. Guzzi: We reformatted a little bit, so we put things together here. And I'm going to start in the upper left-hand corner and talk about data centers and connectivity. We have that network of communications, and our RPOs are up 9%, 51% year-over-year, and they're at a record $1.7 billion on a year-over-year basis. They're up $575 million. A lot of this will tie to the information on the next page, so I'm not going to cover it twice.

Anthony J. Guzzi: And they are at a record $1 $7 billion on a year over year basis. There are $575 million a lot of this will tie to the information on the next page I'm not going to cover it twice.

Anthony J. Guzzi: We continue to see strong demand for Didas, and let me sort of reflect a little bit. We were on calls, you know, about four or six quarters ago where people were talking about whether data center demand was slowing. We hadn't seen that.

Anthony J. Guzzi: We continue to see strong demand for data and let me sort of reflect a little bit we've been on call as you know.

Anthony J. Guzzi: Four to six quarters ago, where people were talking about was data center demand slowing we hadn't seen that in part of that could be our market position with really good customers that really value, what we do to help deliver great projects for them.

Anthony J. Guzzi: And part of that could be our market position with really good customers that really value what we do to help deliver great projects for them. But also, I think we were seeing the beginning of AI almost six quarters ago. And It has become more pronounced; you can't pick up a newspaper today without seeing and talking about data center growth and the quest for more data and more computing power. They also need more energy.

Anthony J. Guzzi: And but also I think we were saying at the beginning of the AI almost six quarters ago.

Anthony J. Guzzi: Ed.

Anthony J. Guzzi: It has become more pronounced you can't pick up a newspaper today without seeing.

Anthony J. Guzzi: And talking about data center growth in the quest for more data and more computing power there.

Anthony J. Guzzi: They also need more energy and I think that will play out over time to <unk> favor.

Anthony J. Guzzi: And I think that will play out over time to EMCOR's favor later, as we continue to build out all sources of energy. But right now, it's focused on data centers. We're well-positioned.

Anthony J. Guzzi: Later as we continue to build out all sources of energy, but right now it's focus on data centers, we are well positioned I'll just give you sort of top level numbers on how we think about the market.

Anthony J. Guzzi: I'll just give you sort of some top-level numbers on how we think about the market. You know, it's a geographic market, and it's a national market. On a geographic basis, today, and if you rewind that tape to early 2019, we were only servicing maybe three data center markets. And that was pretty much where the markets were.

Anthony J. Guzzi: Geographic market and international market.

Anthony J. Guzzi: On a geographic basis today.

Anthony J. Guzzi: And if you rewind that tape to early 2019, we were only servicing maybe three data center markets.

Anthony J. Guzzi: That was pretty much where the markets work, we've expanded that was electrically and today. We are servicing nine data center markets and a lot of that driven by our customers now we've done that through acquisition to better serve our customers we've done that through organic growth.

Anthony J. Guzzi: We've expanded, that was electrically. And today, we're servicing nine data center markets. And a lot of that is driven by our customers. Now, we've done that through acquisition to better serve our customers. We've done that through organic growth, taking our existing operations and teaching them how to do more, but through a lot of peer learning.

Anthony J. Guzzi: Taking our existing operations and teaching them, how to do more but through a lot of peer learning and we've done that through Greenfield expansion and so now we're able to serve more customers in a better way and deliver more projects for them to serve their ultimate customers in the mechanical side, we were really only servicing.

Anthony J. Guzzi: And we've done that through greenfield expansion. Now we're able to serve more customers in a better way and deliver more projects for them to serve their ultimate customers. And the mechanical side, we were really only servicing one major market in 2019, and through acquisition, organic growth, capability building, today we serve, And really, a lot of it has to do with acquisitions being part of it. But really, a lot of it has to do with just strong organic growth capability, growth, peer learning, and greenfield expansion. And so we have to serve our customers. We love to serve our customers.

Anthony J. Guzzi: One major market.

Anthony J. Guzzi: In 2019 and through acquisition and organic growth capability building today, we service six.

Anthony J. Guzzi: And really a lot of it has to do with really acquisition has been part of it but really a lot of it has to do with just strong organic growth capability growing peer learning and greenfield expansion.

Anthony J. Guzzi: And so we have to serve our customers we love to serve our customers we have some of the best.

Anthony J. Guzzi: We have some of the best Data Center capability in the industry, so do other people, and we'll continue to build that capability and build the resources we need to perform. And this is where Virtual Design & Construct, this page is really, other than energy efficiency, a page that's focused on virtual design and construction and what we bring to the market. As we get to energy efficiency and sustainability, sequentially, we're up 9%, 8% year over year. This has been a good long-term market for EMCOR. We're really good at it.

Anthony J. Guzzi: Data center capability in the industry. So to other people and we will continue to build that capability and build the resources, we need to perform and this is where the virtual design and construct this page really other than energy efficiency is a page that is focused on virtual design and construct and what we bring to the market as we get the energy efficiency and sustainability.

Anthony J. Guzzi: Sequentially were up 9%, 8% year over year. This has been a good long term market for us we're really good at it now if you just think about it broadly energy costs are going up paybacks are coming down you would expect this to continue to grow and then you add on top of it that people are looking for more sustainable solutions for those facilities I think of all <unk>.

Anthony J. Guzzi: Now, if you just think about it broadly, energy costs are going up, and paybacks are coming down, you would expect this to continue to grow. And then you add on top of it that people are looking for more sustainable solutions for their facilities. I think we've all committed to different goals through carbon and energy reduction. Now, what drives this is that equipment today is much more efficient than it was, you know, 10 or 15 years ago, and this has been going on for 20, 25 years. But what's really driving that?

Anthony J. Guzzi: Committed to different goals.

Anthony J. Guzzi: Through carbon and energy reduction.

Anthony J. Guzzi: Now what drives this is equipment today is much more efficient than it was.

Anthony J. Guzzi: Yes.

Anthony J. Guzzi: 10, or 15 years ago, and this has been going on for 2025 years, but what's really driving that you can only add so much copper.

Anthony J. Guzzi: You can only add so much copper to the equipment to make it more efficient, which is really also being driven by variable speed drive motors, especially in the air handlers and some of the chillers, and even in some of the rooftop units. It's being driven by a better integration of digital controls, not only at the product integrated controls, but also in the control systems, and we're able to bring that solution. There are still pneumatic controls out there, and the more you take those out, you bring efficiency.

Anthony J. Guzzi: Two the equipment to make it more efficient, which is really also being driven by variable speed drive motors, especially in the air handlers and some of the Chillers and even in some of the rooftop units is being driven by a better integration of digital controls not only at <unk>.

Anthony J. Guzzi: Product integrated controls, but also the control systems and we're able to bring that solution any are there still pneumatic controls out there and the more you take those out you bring efficiency. So the digital controls are better the equipments better and our installation capability continues to be good and our ability to analyze the building.

Anthony J. Guzzi: So the digital controls are better, the equipment's better, and our installation capability continues to be... and our ability to analyze the building. And if you look at EMCOR today, we have 500 energy engineers and people that are LEED certified through the business helping people come up with these solutions. Then you add in the continued benefit of some alternative energy solutions where people want to integrate that into that solution, and we really can offer a great solution for our end customers.

Anthony J. Guzzi: If you look at EMCORE today, we have 500 energy engineers and.

Anthony J. Guzzi: Good.

Anthony J. Guzzi: People that are LEED certified through the business, helping people come up with the solutions that you bring in also the continued benefit of some alternative energy solutions, where people want to integrate that into that solution and we really can offer a great solution for our end customers and these tend to be on with our biggest come.

Anthony J. Guzzi: And these tend to be, with our biggest customers, multi-year programs to think about how they make their facilities, offices, and factories more energy efficient. And there is some government incentive that's supporting this, starting with the CARES Act, and there's been a couple other acts that helped that do that. To get to health care, this has been a good long-term market for employees.

Anthony J. Guzzi: <unk> multi year program to think about how they make their facilities offices factories more energy efficient.

Anthony J. Guzzi: And there is some government incentive that supporting this and started with the cares Act and it's been a couple of other acts that help them do that.

Anthony J. Guzzi: Get to healthcare this has been a good long term market for EMCORE.

Anthony J. Guzzi: In any city where we operate, people want us to be part of that solution because again, the same things that make you great in data centers are the same things that make you set up advanced manufacturing. A hospital in today's world looks like an advanced manufacturing plant to us. With all the different systems that come to play to make that hospital functional, you need a contractor that can bring that BDC capability.

Anthony J. Guzzi: Any city, where we operate people want us to be part of that solution because again, the same things that make your great and data centers. The same things that make you set and advanced manufacturing.

Anthony J. Guzzi: The hospital in today's world It looks like an advanced manufacturing plant to us.

Anthony J. Guzzi: With all the different systems that come to play to make that hospital functional you need a contractor that can bring that BDC capability thats really the birth place.

Anthony J. Guzzi: That's really the birthplace of BIM and BDC for EMCOR was the healthcare sector, you know, 18 years ago, 20 years ago. Now hospitals need to be more flexible. That was happening before COVID; COVID put that on exponential growth for more flexibility.

Anthony J. Guzzi: <unk> and BDC for EMCORE was the health care sector.

Anthony J. Guzzi: 18 years ago, 20 years ago, now hospitals need to be more flexible that was happening before COVID-19 COVID-19 put that on.

Anthony J. Guzzi: Exponential growth for more flexibility that outpatient facilities are more sophisticated.

Anthony J. Guzzi: The outpatient facilities are more sophisticated; you're doing that both in a retrofit market and in a new construction market. And then you have the ongoing work to make those facilities more efficient and more energy efficient. These are big energy users. And of course, they can't go down, right?

Anthony J. Guzzi: Ed.

Anthony J. Guzzi: Youre doing that both in our retrofit market and new construction market and then you have the ongoing work to make those facilities more efficient and more energy efficient. These are big energy users and of course, they can't go down they need 100% power all the time just like the data centers.

Anthony J. Guzzi: They need 100% power all the time, just like the data. Now, let's drop to the bottom of the page and talk about these things together and focus on the center, which is re-shoring and near-shoring. I don't think you can separate what's going on in the chip space from re-shoring, right? It was a national security issue that started to drive the Chips Act, which started to drive people to want to invest here, right?

Anthony J. Guzzi: Now lets dropped to the bottom of page and talk about these things together and focus on the center, which is reassuring near shoring I don't think you can separate what's going on in the chip space from re shoring right. It was a national security issue that started to drive the Chimps Act, which started to drive people to want to invest here right. It wasn't like we woke up one morning, and say Hey, we're comfortable with.

Anthony J. Guzzi: It wasn't like we woke up one morning and said, hey, we're comfortable with having 85% of our chip production somewhere else other than the United States. So that was a re-shoring trend, but it goes beyond that. We saw some of that even before the Chips Act.

Anthony J. Guzzi: <unk>, an 85% of our chip production somewhere else other than the United States. So that was a re shoring trend, but it goes beyond that.

Anthony J. Guzzi: We saw some of that even before the chips Act has helped stabilize it and make it I think it's going to extend the cycle, but you also saw it in other industries and that's why we made the investments we made in our organic businesses in the southeast, but also built through acquisition a footprint in the southeast because we want.

Anthony J. Guzzi: It's helped stabilize it and make it, and I think it's going to extend the cycle. But you also saw it in other industries, and that's why we made the investments we made in our organic businesses in the Southeast, but also built through acquisition a footprint in the Southeast because we wanted to be part of this trend. And this has been going on for 15 years at EMCOR to better serve our customers. And now you have high-tech manufacturing and life sciences, and really what's driving high-tech manufacturing, a lot of it is chip work for us. And what do you need to do to do that?

Anthony J. Guzzi: It would be part of this trend and this has been going on for 15 years at EMCORE to better serve our customers.

Anthony J. Guzzi: And.

Anthony J. Guzzi: You have the high Tech manufacturing and life Sciences, and really what's driving the high tech manufacturing a lot of it.

Anthony J. Guzzi: Chip work for Us and what do you need to do that well the legislation's written that you need a great workforce.

Anthony J. Guzzi: Well, the legislation is written that you need a great workforce that comes through an apprentice program, that's highly trained, that pays good wages, that operates safely, and quite frankly, it's written to benefit the union contractor or the non-union contractor that, wage and benefits-wise, looks an awful lot like a union contractor. And then you get to life sciences. A lot of this was coming back anyway; the disruption in the supply chains caused by COVID made more of it come. And then you take it, and then you think about all the new drugs, especially the weight loss drugs.

Anthony J. Guzzi: That came from an apprentice program, that's highly trained that pays good wages that operate safely and quite frankly, it's written to benefit the union contractor or the nonunion contractor that wage and benefits wise it looks an awful lot like a union contractor.

Anthony J. Guzzi: And then you get the life Sciences, a lot of this was coming back anyway.

Anthony J. Guzzi: The disruption in the supply chain caused by Covid made more of a come and then you take it and then you think about all the new drug, especially the weight loss drugs and we're in all the right places to support that whether it be in Indiana, whether it would be in the research triangle Park or New Jersey mechanically electrically in some of our prime card.

Anthony J. Guzzi: And we're in all the right places to support that, whether it be in Indiana, whether it be in Research Triangle Park or New Jersey, mechanically, electrically, and some of our prime contracting ability on the industrial side. But when you get to the EV value chain, look, I don't know whether it's going to be 10% penetration, 15% penetration, or 20% penetration. We just know it's going to be more than it is today, and the infrastructure, which is what we've mainly been participating in, that's going to be built, we'll participate in it.

Anthony J. Guzzi: Tracking ability on the industrial side when.

Anthony J. Guzzi: When you get to the EV value chain.

Anthony J. Guzzi: I don't know, whether its going to be 10% penetration, 15% penetration of 20% penetration. We just know it's going to be more than it is today and the infrastructure, which is what we've mainly been participating in that is going to be built.

Anthony J. Guzzi: We're going to participate in.

Anthony J. Guzzi: When you look at this bottom page.

Anthony J. Guzzi: And when you look at this bottom page, all of our trades are participating, whether it be fire life safety, whether it be mechanical or electrical, and that's really true for this whole page. I would say energy efficiency for us is mainly mechanical.

Anthony J. Guzzi: All of our trades are participating whether it be fire life safety, whether it be mechanical electrical and that's really true for this whole page I would say the energy efficiency for US is mainly mechanical mechanical services play, but the other ones all of our company that we're not in every market to win everything but we have.

Anthony J. Guzzi: But the other ones, all our company, we're not in every market doing everything, but we have the capability to really play all this. And that's what this is, a resource allocation chart. And we think about that long and hard, and we've been thinking about this chart for six, seven years now. And now I'm going to go to the next page on 10, and I'm not going to belabor the point.

Anthony J. Guzzi: To really play in all of this and that's what this is a resource allocation chart.

Anthony J. Guzzi: And we think about that long and hard and we've been thinking about this chart really for six seven years now and now I'm going to go to the next page on 10, and I'm not going to belabor. The point other than that we had pretty good growth outside of that page right I mean, our water and wastewater, which you can see on the right hand side is now $636 million is up.

Anthony J. Guzzi: Other than that, we have pretty good growth outside of that page, right? I mean, our water and wastewater, which you can see on the right-hand side, is now 636 million; it's up 30 percent. And these are bigger wards; they typically become episodic. And most of our work is being done in Florida for the reasons that you know. There was a consent decree about six years ago in Miami-Dade, but also, there's just growth in population in Florida, both on the east and west coasts of Florida, and we participate in both. It was actually a little bit of a surprise to us that we're now at a new record RPO and up 36% year over year. I guess it shouldn't have been.

Anthony J. Guzzi: 30%.

Anthony J. Guzzi: And these are bigger awards, they typically become episodic and most of our work is being performed in Florida for the reasons that you know.

Anthony J. Guzzi: As a consent decree about six years ago that in.

Anthony J. Guzzi: In Miami Dade.

Anthony J. Guzzi: But also it's just growth in population in Florida, both on the East and West Coast of Florida, and we participate in both.

Anthony J. Guzzi: Institutional was actually a little bit of a surprise to us to work now at a new record <unk> and up 36% year over year I guess it shouldn't have been we have capability and the kinds of things we do in the institutional sector, whether it's K through 12 schools on the energy efficiency side and remodel are really a lot of this is being driven by.

Anthony J. Guzzi: We have the capability to do the kind of things we do in the institutional sector, whether it's K-12 schools on the energy efficiency side and remodel, or really a lot of this is being driven by state, local, and federal buildings, but mainly campuses and institutions that have broader campus settings on a multi-year program. And a lot of these facilities, whether it be better connectivity, you know, where we're helping them get better Wi-Fi across the whole campus, or quite simply energy efficiency programs across the campus, or building research facilities that look an awful lot like the life science labs and facilities that we talked about on the previous page. Transportation grew for us. Again, that's episodic in nature also.

Anthony J. Guzzi: State local federal buildings, but mainly campuses in institutions that have broader campus settings, and a multi year program and a lot of these facilities, whether it be better connectivity.

Anthony J. Guzzi: We're helping them get better Wi Fi across the whole campus.

Anthony J. Guzzi: It's quite simply energy efficiency programs across the campus or building research facilities to look an awful lot like the life science labs and facilities that we talked about on the previous page transportation grew for US again, that's episodic in nature also for this right now for US is electrical work and its airports and traffic control systems and then the short.

Anthony J. Guzzi: For this right now, for us, it's electrical work, and it's airports and traffic control systems. And then the short duration project, which mixes into a lot of the energy efficiency work and is more broadly based, is up nearly 9%. That's a good sign.

Anthony J. Guzzi: Duration project, which mixes into a lot of the energy efficiency work.

Anthony J. Guzzi: It is more broadly based.

Anthony J. Guzzi: Nearly 9% that's a good sign that's pretty interesting because what's happening there is we're back and we're back into a book to Bill mode.

Anthony J. Guzzi: That's pretty interesting because what's happening there is we're back into a book to bill mode. We figured out the supply chain. Lead times are extended. We had the bubble there in short order. I actually didn't think it would continue to grow the way it's been, but that just shows you the strong underlying demand for people to get more efficient and upgrade their facilities. For some, it's as simple as they have to be competitive in a triple net lease environment. And if they don't upgrade it, they won't be.

Anthony J. Guzzi: We figure out the supply chain lead times are extended we had the bubble there in short actually didn't think it would continue to grow the way. It has been but that just shows you the strong underlying demand for people to get more efficient and upgrade our facility. So it's as simple as they have to be competitive in a triple net lease environment and if they don't upgrade they won't be yes, we have had some decrease in.

Anthony J. Guzzi: Now, we have had some decrease in commercial work, but as Jason described, it's still a big part of what we do, still pretty profitable. Again, commercial for us has not been a new office building sector for a long time. Now, we will go in and do tenant fit out work on multiple floors for high-end clients. Like some of you listening to this call, we will do that work. But also, the decrease mainly was some of the logistical work we were doing for large dry good distribution centers. That would be both electrical and fire safety.

Anthony J. Guzzi: <unk> is Jason described is still big part of what we do still pretty profitable again commercial for US has not been a new office building sector for a long time now we will go in and do tenant fit out work multiple floor for high end clients like some of you listening to this call we will do that work.

Anthony J. Guzzi: But.

Anthony J. Guzzi: And also the decrease mainly was some of the logistical work we were doing for large dry good distribution centers that would be both electrical and fire life safety, but we have seen an increase in cold storage warehouses, which are smaller in dollar award.

Anthony J. Guzzi: But we have seen an increase in cold storage warehouses, which are smaller in dollar award that actually require higher skill for us to do both from a mechanical, especially some of the refrigerant work on that, and fire life safety. So you put all that together, and you look at the right hand side, and the left hand side, you know, we're up in domestic construction, substantially by a billion and two over a year, we're up in building services, and industrial has good bookings in its shop work. So now, what does that lead you to do? You go to page 11, which is what most of you care about.

Anthony J. Guzzi: But require actually higher skill for us to do both from a mechanical especially some of the refrigerant work on that and fire life safety. So you put all that together and you look at the right hand side of the left hand side, we're up in domestic construction substantially 1 billion year over year, we're up in building services and industrial has good bookings and.

Anthony J. Guzzi: Its shop work. So now what does that lead you to do you go to page 11, which is what most of you care about.

Anthony J. Guzzi: We had this robust performance you've got to look at and say what are you going to do what we're going to increase guidance right and we're going to we're executing exceptionally well.

Anthony J. Guzzi: We had this robust performance, and you have to look at it and say, what are you going to do? Well, we're going to increase guidance, right? And we're executing exceptionally well. (Inaudible) As a result of that, our EPS guidance range is going to go from $14.50 to $15.00 per share to $15.50 to $16.50 per share.

Anthony J. Guzzi: Really better than we ever have we have really strong mix in our <unk>, we're winning the right work in the right markets. They are significant.

Anthony J. Guzzi: <unk> projects that are technically complex with accelerated timelines and scope expansion and more reasonable contract terms, especially in our electrical and mechanical construction segments.

Anthony J. Guzzi: As a result of that our EPS guidance range is going to go from 14 to $15 per share to $15 50 to $16 50 per share.

Anthony J. Guzzi: We're also going to increase our revenue guidance from a range of $13.50 to $14.00 to $14.00 to $14.50. You know, in order to achieve the upper end of this revised guidance, we've got to keep executing with discipline and precision. The results are strong operating margins, and what we're telling you on this call to save you asking the question in this guidance, we plan on operating the business this year between seven and a seven and a half percent operating margin. We're going to continue to face challenges. We talked about one today.

Anthony J. Guzzi: We're also going to increase our revenue guidance from a range of 13, 5% 2014 to $14 to $14 five.

Anthony J. Guzzi: No.

Anthony J. Guzzi: Order to achieve the upper end of this revised guidance range, we got to keep executing with discipline and precision the results and strong operating margin and what we're telling you on this call to save you asking the question.

Anthony J. Guzzi: In this guidance we plan on operating the business this year between 7% seven 5% operating margins.

Anthony J. Guzzi: We're going to continue to face challenges, we talked about one today, we're going to continue to face challenges.

Anthony J. Guzzi: We're going to continue to face challenges both in our site-based business in the U.S. and U.K. We'll work through those. We've shown we can do that. Macro factors such as high interest rates, supply chain, energy price disruptions, global conflicts, they're all going to pose challenges for us.

Anthony J. Guzzi: Both in our site based business in the U S and U K a work through those we've shown we can do that macro factors such as high interest rate supply chain energy price disruptions global conflicts theyre, all going to pose challenges for us I would like to say that we havent done all that in the past <unk> been good at it but we are we will develop contingency plans we have them.

Anthony J. Guzzi: I'd like to say that we haven't done all that in the past and been good at it, but we are. We will develop contingency plans. We already have them.

Anthony J. Guzzi: We develop them every day, and we execute as best we can to overcome these challenges. We're also going to remain diligent in those that are more exposed, especially the high interest rates. And for us, that means our commercial, real estate, and private equity customers. We're going to continue to be balanced capital allocators and invest in organic growth as well as strategic acquisitions. We've already done more acquisitions year-to-date this year than we have in the last two years and individually in those years, and we're already really happy with what we've done because it continues to build the business for the long term and serve our customers better. Finally, you know, and by the way, our acquisition pipeline is robust, and you would expect that I'm going to get into that. But I'll save you the question. Why is it robust?

Anthony J. Guzzi: We develop them everyday and we execute as best we can to overcome these challenges.

Anthony J. Guzzi: We're also going to remain diligent and those that are more exposed, especially the high interest rates and for us that means our commercial real estate and private equity customers, we're going to continue to be balanced capital allocators and invest in organic growth as well as strategic acquisitions, we've already done more acquisitions year to date. This year that we have the last two years.

Anthony J. Guzzi: And.

Anthony J. Guzzi: Individually in those years, and we're already and we're already.

Anthony J. Guzzi: I really like what we've done because it continues to build the business for the long term and serve our customers better.

Anthony J. Guzzi: Finally.

Anthony J. Guzzi: And by the way our acquisition pipeline is robust and you would expect that I'm going to get into that I'll. Save you. The question why is it robust because people are doing better after the pandemic right people good companies arent for sale when they are not doing well they become for sale when they are doing well in the markets. We're serving theyre doing well also maybe not as well as we are but they are.

Anthony J. Guzzi: Because people are doing better after the pandemic, right? People, good companies aren't for sale when they're not doing well. They become for sale when they're doing well, and the markets we're serving are doing well. Also, maybe not as well as we are, but they're doing well.

Anthony J. Guzzi: Doing well and so that's when companies could become for sale and I think I've always said a thousand times over never fall in love with the deal and deals happen when they happen.

Anthony J. Guzzi: And so that's when companies can become for sale. And I've always said 1000 times over, never fall in love with a deal. And deals happen when they happen. You know, I've done this long enough that I don't fall in love with deals. Maybe I did that 20 years ago.

Anthony J. Guzzi: I've done this long enough that I don't fall in love with it maybe I did that 20 years ago. Finally, I want to thank all of the EMCORE leaders and teammates for their hard work and dedication to serving our customers primarily in a safe and productive way. We put safety first is one of our core values.

Anthony J. Guzzi: Finally, I want to thank all of the EMCOR leaders and teammates for their hard work and dedication to serving our customers primarily in a safe and productive way. We put safety first as one of our core values. Personally, I'm grateful to lead such an outstanding team. We do lead our company through our EMCOR values of mission first, people always. And we're gonna continue to be focused on executing our mission for our customers and shareholders while keeping EMCOR a great place to work for all our employees. With that, Marlise, I'll turn it over to you and take any questions you may have.

Anthony J. Guzzi: Personally I'm grateful to lead such an outstanding team, we do lead our company through our core values of mission first people always.

Marlise: And we're going to be continue to be focused on executing our mission for our customers and shareholders, while keeping EMCORE great place to work for our employees with that <unk> I'll turn it over to you and take any questions you may have.

Marlise: Thank you very much we will now begin the question and answer session to ask a question you May Press Star then one on your desk and if youre using a speakerphone. Please pick up your handset before pressing the key.

Marlies: Thank you very much. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. And if you're using a speakerphone, please pick up your handset before pressing the key. If at any time after your question has been addressed, you would like to withdraw your question, please press star, then two. At this time, we'll start with a question from Brent Thielman from D.A. Davidson. Brent, please go ahead.

Brent Edward Thielman: You said anytime Youre question has been addressed you would like to withdraw your question. Please press Star then two.

Marlies: At this time, we will start with a question from Brian Tillman from D. A Davidson Brent. Please go ahead.

Brent Edward Thielman: Hey, great. Thanks, good morning.

Brent Edward Thielman: Hey, great. Thanks. Good morning, Tony. I understand the manufacturing and the high-tech manufacturing verticals; how do you think about the sustainability of those areas without government incentives and then also how much of those verticals for you are being driven by, call them mega jobs, that might require kind of billions of investment versus sort of more selective, that might be more selective versus kind of broader-based investment?

Marlies: Right.

Brent Edward Thielman: Tony.

Brent Edward Thielman: The manufacturing and high Tech manufacturing verticals, how do you think about the sustainability of those areas without government incentives and then also how much of those verticals for you or being driven by call them Mega jobs might require kind of $1 billion of investment.

Brent Edward Thielman: Versus sort of more selective there might be more selective versus kind of broader based investment.

Anthony J. Guzzi: I don't know how to parse the second one really, as far as mega jobs versus, but we see demand being pretty strong across it. My general view on some of the high-tech manufacturing areas that have been built, you think about there's probably six semiconductor, seven semiconductor markets; they've been semiconductor markets. There is a rebirth in some of those markets. The only real new one is the one outside Syracuse in Clay, New York.

Tony: I don't know how to parse the second one really.

Anthony J. Guzzi: As far as mega jobs versus but we see demand being pretty strong across it.

Anthony J. Guzzi: My General view on some of the high Tech manufacturing areas that have been built if you think about there's probably six semiconductor seven semiconductor markets.

Anthony J. Guzzi: They've been semiconductor markets. There is a rebirth in some of those markets. The only real new one is the one.

Anthony J. Guzzi: Outside Cherokees, and Clay New York, the other ones as well.

Anthony J. Guzzi: The other ones are where the business happened, right? It was happening in Phoenix before. It was happening in Austin, Texas before. It was happening in Columbus, Ohio.

Anthony J. Guzzi: The business happening right at what is happening in Phoenix before it was happening in Austin, Texas before it was happening Columbus, Ohio is new also I guess, but I think intel's been thinking of expanding Boise, Idaho was happening before Salt Lake City was happening before.

Anthony J. Guzzi: It's new also, I guess, but I think Intel's been thinking of expanding. Boise, Idaho, was happening before. Salt Lake City was happening before.

Anthony J. Guzzi: Oregon was happening before. So these, for the most part, other than maybe two markets, have been well-established markets. Even Raleigh, North Carolina, I mean, you know, Wolfspeed, which is one of the customers, there was Cree at one time, and Cree did semiconductors for their lighting products and decided just to focus on semiconductors. So I think a lot of it would be happening anyway.

Anthony J. Guzzi: Oregon was happening before so these for the most part other than maybe two markets have been well established markets.

Anthony J. Guzzi: Even Raleigh North Carolina.

Anthony J. Guzzi: Speed, which is one of the customers are with Cree onetime accreted semiconductors for their lighting products and decided just to focus on semiconductors.

Anthony J. Guzzi: So.

Anthony J. Guzzi: I think a lot of it would be happening anyway.

Anthony J. Guzzi: I think they realized they were too exposed to the supply chain. The supply chain had to move more to the U.S. It's pretty obvious why you can't, if you're a Taiwan semiconductor company, why you just can't be in Taiwan.

Anthony J. Guzzi: They realize they were too exposed to the supply chain the supply chain had to move more to the U S. It's pretty obvious why you can't if your Taiwan semiconductor why you just can't be in Taiwan.

Anthony J. Guzzi: It's both diversification and what any responsible business would do. Intel is investing for their next generation. I mean, Intel was not cash poor. Neither is Samsung. Neither is Micron.

Anthony J. Guzzi: It's both the diversification as with any responsible business would do.

Anthony J. Guzzi: Intel is investing for their next generation of Intel was not cash poor.

Anthony J. Guzzi: Neither is Samsung.

Anthony J. Guzzi: Neither is micron and these are very good companies into hot invest through a cycle.

Anthony J. Guzzi: These are very good companies at investing through a cycle. Now, what have the government incentives done? Well, they've done a couple of things, right? I think they've helped strengthen commitment to a site.

Anthony J. Guzzi: Now what did the government incentives definitely thought a couple of things right I think they've helped strengthen commitment to our site.

Anthony J. Guzzi: I think they've also sort of put some rules around how the work will get done and with what kind of people and what kind of trade skill, which is a very high trade skill, which was probably going to happen anyway, because you need the kind of people that we're privileged to have here at EMCOR working with us to do those kinds of jobs. But I think it lengthens it and it makes it less turbulent as far as how it will get built out because I think there's a fairly significant assurance of supply in national security.

Anthony J. Guzzi: Think they also sort of putting some rules around how the work will get done with what kind of people and what kind of trade.

Anthony J. Guzzi: <unk>, which is very high.

Anthony J. Guzzi: Mid scale, which is probably going to happen anyway.

Anthony J. Guzzi: Because you need the kind of people that we're privileged to have here at EMCORE and working with us to do those kind of jobs.

Anthony J. Guzzi: But I think it lessens it.

Anthony J. Guzzi: It makes it less turbulent as far as how it will get built out because I think there is a fairly significant.

Anthony J. Guzzi: A surety of supply and National Security play and then you combined combine that with the need for AI chips. They have a market right now theres been a lot of talk can we get to that specific market is are they stopping and starting.

Anthony J. Guzzi: And then you combine that with the need for AI chips; they have a market, right? Now there's been a lot of talk when you get to that specific market: are they stopping, are they starting? You know, pauses and stops, and maybe our award sizes won't be so big, but the sites we're working on today, we feel really good about. Our long-term sites, we have a couple more we're helping start the infrastructure on, we'll see what happens there. So that one, we feel good about. You get to the broader industrial level. This was happening; it was just starting to happen pre-COVID.

Anthony J. Guzzi: Pauses and stops and maybe our award sizes won't be so big but the sites. We're working on today, we feel really good our long term sights a couple more we're helping start to infrastructure on we'll see what happens there. So that one we feel good about you get to the broader industrial.

Anthony J. Guzzi: This was happening it was just starting to happen pre COVID-19, it's why we invested in the southeast.

Anthony J. Guzzi: It's why we invested in the Southeast from 2008 to 2020 through acquisition and then organic expansion and building capability. And we have some great companies down there, right? I mean, these are market leaders led by really strong teams.

Anthony J. Guzzi: 2008 to 2023.

Anthony J. Guzzi: Through acquisition and organic expansion and building capability and we have some great companies out there right. I mean these are market leaders led by really strong teams.

Anthony J. Guzzi: And we're a destination employer. But, you know, people were bringing manufacturing back to the U.S., and why? Now, part of it was energy before.

Anthony J. Guzzi: And we are a destination employer.

Anthony J. Guzzi: But.

Anthony J. Guzzi: People were bringing manufacturing back to the U S why now.

Anthony J. Guzzi: Some of it was energy before we were lower cost energy I'm not going to get into all the scenario, Rob why we're not as lower cost as we were at one time.

Anthony J. Guzzi: We were lower cost energy. I'm not going to get into all the scenarios around why we're not as lower cost as we were at one time. But we're also a safer market. And quite frankly, the logistical challenges and the cost advantages of being in China and Southeast Asia aren't what they once were. So, and then with automation, when you bring it back, you can have a better supply. And then you think about what happened with COVID.

Anthony J. Guzzi: But we're also more safe market and quite frankly, the logistical challenges and the cost advantages of being in China, and southeast Asia arent, what they want to work.

Anthony J. Guzzi: And so and then with automation when you bring it back you can have better supply and then you think about what happened with Covid.

Anthony J. Guzzi: You know, I said this before, it used to be a manufacturer, right? So, and I used to do a lot of work around manufacturing in the past. We started with, we always wanted two suppliers for most of our critical components, right, if you go back 25 years. And then we said, okay, well, maybe we don't need to do that for the critical components.

Anthony J. Guzzi: I've said this before it used to be a manufacturer so.

Anthony J. Guzzi: And.

Anthony J. Guzzi: And I used to do a lot of work around manufacturing in a previous life. We started with we always wanted to suppliers for most of our critical components right. If you go back 25 years.

Anthony J. Guzzi: And then we said, okay, well, maybe we don't need to do that for the critical components witness mislead our key suppliers to be doing that out of two factors.

Anthony J. Guzzi: We need to lead our key suppliers to do that out of two factors. And then we got sloppy over the last 10 years, and we said, well, we can have one supplier out of one factory, and we'll be okay. And that doesn't matter whether that was in Mexico or China or Eastern Europe; that didn't turn out to be okay, right? And now we're back to building supply chain redundancy, and the natural starting point for that supply chain redundancy is the U.S., and that's mainly centered in the mid-central places like Indiana, the southeast, and Texas Square.

Anthony J. Guzzi: And then we got sloppy over the last 10 years, and we said well we can have one supplier out of one factory and we'll be okay.

Anthony J. Guzzi: And it doesn't matter, whether that was in Mexico, or China or eastern Europe that didn't turn out to be okay, right and now we're back to building supply chain redundancy in natural catching point for that supply chain redundancy in the U S and thats, mainly centered in the mid central in places like Indiana, the southeast and Tech.

Anthony J. Guzzi: Quite frankly.

Anthony J. Guzzi: So we feel really bullish about that look there'll be ups and downs, maybe the award won't be as large in the future, but we're well entrenched with some key customers and some key sites to deliver great results for them on really sophisticated projects.

Anthony J. Guzzi: And so we feel really bullish about that. Look, there'll be ups and downs. Maybe the award won't be as large in the future, but we're well entrenched with some key customers and some key sites to deliver great results for them.

Speaker Change: Okay. Okay I appreciate that and then just on the electrical business.

Brent Edward Thielman: Okay, okay. I appreciate that. And then just on the electrical business, I mean, 12% margins are exceptional. Just wondering, can you unpack that?

Speaker Change: Present margin exceptional just wondering can you unpack that anyway.

Brent Edward Thielman: <unk> to <unk>.

Brent Edward Thielman: 12% sort of Brent here.

Anthony J. Guzzi: I mean, what leads to a, Transcripts provided by Transcription Outsourcing, LLC. But you know, it wasn't all that too long ago in the first quarter of 2022 to bring up a more challenging time for us, where we had, through the supply chain, a lot of jobs stalled in the electrical sector. And we were in our earn in the margins; I think we were in 6% margin, high fives that quarter. And, you know, External folks' hair was on fire. We sort of knew what the drivers were, and I would say there's drivers flip right, okay?

Brent Edward Thielman: Just felt really relying to think about what is very important going forward yes.

Anthony J. Guzzi: I never talk about go forward margins, we always think about it in bands and we always think about it over sort of eight quarters looking back.

Anthony J. Guzzi: It wasn't all that long.

Anthony J. Guzzi: Long ago in the first quarter of 2022 not too.

Anthony J. Guzzi: More challenging time for us, where we had through supply chain a lot of jobs stalled in the electrical sector and we werent, earning the margins I think we earn 6% margin or high fives that quarter.

Anthony J. Guzzi: External folks hairs on fire and we sort of knew what the drivers were and I would say those drivers flip this quarter.

Anthony J. Guzzi: So the drivers are why we didn't do well; that had nothing to do with execution in the field. We maybe had a little unproductive labor because we kept people as we were waiting for jobs that didn't start up to start up. We had some supply chain snarls that caused that, and then that caused people to delay the site conditions and the buildup. And so we did the right thing. We kept our powder dry.

Anthony J. Guzzi: So the drivers of why we didn't do well they had nothing to do with execution in the field.

Anthony J. Guzzi: Maybe we had a little unproductive labor because we kept people and were waiting for jobs that didn't start up to startup we had some supply chain snarls that caused that.

Anthony J. Guzzi: And then that caused people to delay the site conditions and the buildup.

Anthony J. Guzzi: So we did the right thing we kept our powder dry we kept our some of our key labor, especially supervision because we knew we were going to be doing the work.

Anthony J. Guzzi: We kept some of our key labor, especially supervision, because we knew we were going to be doing the work. I would say the opposite happened this quarter. We had near flawless execution in our electrical business on a really good mix of work that led to these results. Is it always going to be this good? Probably not, but we have a really good electrical business led in the field by really capable people with a great segment team.

Anthony J. Guzzi: I'd say the opposite happened this quarter.

Anthony J. Guzzi: We had near flawless execution in our electrical business on a really good mix of work.

Speaker Change: Led to these results is it always going to be this good probably not but we have a really good electrical business led in the field by really capable people with a great segment team, yes, Jason the only thing I would add there right is it truly is a combination of execution and mix in the quarter.

Jason R. Nalbandian: The only thing I would add there, right, is that it truly is a combination of execution and mix in the quarter. There are no anomalies when we look at large project closeouts or project losses. Anything to that effect really netted to near zero in the quarter. So it truly is mix and execution. I think 12 percent is a record quarterly operating margin for electrical, so I wouldn't necessarily say that that's the new norm. I think, to Tony's point, it makes sense to look at it over a 15 to 18-month period, and that's probably something we can expect to see from electrical in the near term.

Jason R. Nalbandian: Theres no anomalies when we look at large project Closeouts or project losses anything to that effect really netted to near zero in the quarter. So it truly is mixed and execution I think 12% is a record quarter.

Jason R. Nalbandian: Quarterly operating margin for electrical so I wouldn't necessarily say that that's the new norm I think to Tony's point. It makes sense to look at it over a 15 to 18 month period, and that's probably something we can expect to see from electrical in the near term.

Anthony J. Guzzi: You know, if you take our electrical team and our mechanical team and say, what do they actually focus on? They look at the operating margin in a given quarter as an output metric. So what are they focused on? The inputs, right? How productive is the labor on a job? How safe is that labor on a job?

Jason R. Nalbandian: If you put the our electrical payment or mechanical team and say what do they actually focus on they look at the operating margin in a given quarter as an output metric. So what are they focused on the inputs right. How productive is the labor on a job how safe is it labor on a job how much of a portion of the job that we've been able to put through our BDC process, which is pre fab.

Brent Edward Thielman: How much a portion of the job that we've been able to put through our VDC process, which is prefab, BIM, modeling, how successful we've been in negotiating the contract to have constructive discussions as the scope of work expands. They're looking at the input metrics, right, and then they're looking at the absorption they're getting on their overhead as they do this work. And that leads to great results. I mean, I think they look at the end of a quarter and look down at the results, and say, "That's pretty good." But they're back to focusing on the input metrics.

Brent Edward Thielman: Been modeling.

Brent Edward Thielman: How successful we've been at in negotiating the contract.

Brent Edward Thielman: To have constructive discussions at scope expands.

Brent Edward Thielman: They are looking at the input metrics right and then they're looking at the absorption theyre getting on their overhead as they do this work.

Brent Edward Thielman: And that leads to a great results I mean, I think they look at the end of the quarter and look down at the results. It is pretty good but they're back to focusing on the input metrics.

Brent Edward Thielman: Okay.

Anthony J. Guzzi: Okay, and Tony or Jason, I mean, just with respect to the comments on mix also in context of the guidance, and I realize it moves around quarter to quarter, but I guess when I think about mix for you guys, it's sort of larger, more complex, sort of developments that require some level of sophistication that you bring. Why would that look any different going forward?

Speaker Change: Tony or Jason.

Brent Edward Thielman: To the comments on mix also in context of the guidance and I realize it moves around quarter to quarter, but I guess when I think about mix for you guys its sort of larger and more complex.

Anthony J. Guzzi: For the development that requires some level of sophistication that you bring why would that look any different going forward.

Tony: I don't think it will at least in our guidance.

Jason R. Nalbandian: I don't think it will, at least under our guidance. Jason, do you agree?

Anthony J. Guzzi: Great.

Jason: When you look at our guidance and Tony said margins for the year between 7% and seven 5% right I think the thing to remember is 7% margins would be equivalent to what we did on an annual basis in 2023, which was a record and seven 5% margin is really our trailing 12 months average margin and so I think what we're saying there is that.

Anthony J. Guzzi: Yeah. And I think, right, when you look at our guidance, and Tony said margins for the year between 7 and 7.5 percent, right? I think the thing to remember is 7 percent margin would be equivalent to what we did on an annual basis in 2023, which was a record. And 7.5 percent margin is really our trailing 12-month average margin. And so I think what we're saying there is that the mix we expect for the remainder of the year is consistent with the mix we've seen in the last 12 months.

Anthony J. Guzzi: The mix, we expect for the remainder of the year is consistent with the mix. We have seen in the last 12 months or you think about the input side of that.

Anthony J. Guzzi: We're doing a really good job on resource allocation and that extends.

Anthony J. Guzzi: You see it in the construction.

Anthony J. Guzzi: And you think about the input side of that. We're doing a really good job on resource allocation, and that extends beyond – obviously, you see it in the construction segments over the last several quarters, but quite frankly, you're also seeing it in building services because of what's happening in mechanical services and building controls, right? The mix there is very good also.

Anthony J. Guzzi: Over the last several quarters, but quite frankly, youre also seeing in building services because of what's happening in mechanical services and building controls right. There. The mix. There is very good also and look the industrial team also is focus the mix in a good direction, whether it's how they manage the mix within their shops of the <unk>.

Anthony J. Guzzi: Shops, we have how they think about their field resources and how they do that versus some of the specialty services, we have versus the turnaround and then quite frankly, we're pretty excited about some of the things we have going on in our electrical business and how they think about mix there.

Anthony J. Guzzi: And look, the industrial team also has focused the mix in a good direction, whether it's how they manage the mix within their shops, of the five shops we have, how they think about their field resources and how they do that versus some of the specialty services we have versus the turnaround, and then, quite frankly, we're pretty excited about some of the things we have going on in our electrical business and how they think about the mix there, really precious resources like And for us, that really means supervision, shop capability, VDC capability, project engineers, and project managers.

Anthony J. Guzzi: When you have we have.

Anthony J. Guzzi: Precious resources like we have and for us that really means supervision shop capability VDC capability.

Anthony J. Guzzi: Project Engineers project managers.

Anthony J. Guzzi: We think large and long about what we're going to commit to over a long period of time, and what's more attractive and quite frankly, what's happening with us we're winning right our customers are choosing us because we deliver for them.

Anthony J. Guzzi: We think long and hard about what we're going to commit to over a long period of time and what's more attractive. And quite frankly, what's happening with us. We're winning, right? Our customers are choosing us because we deliver for them.

Anthony J. Guzzi: Okay.

Speaker Change: Leave it there thanks for taking the questions.

Anthony J. Guzzi: Thank you and now we will take a question from Adam <unk> from Thompson Davis, Adam You May proceed.

Brent Edward Thielman: Okay, I'll leave it there. Thanks for taking the question.

Adam Robert Thalhimer: Thank you. And now we will take a question from Adam Thalhimer from Thompson Davis. Adam, you may proceed.

Adam Robert Thalhimer: Hey, good morning, guys. Great quarter. Congratulations on that. And Jason, welcome to the call. Hey Tony, can you just keep going on that because I was actually curious how you allocate resources, you know, resources how much of it is top-down, like you're having a discussion with the customers, and how much of it is your subsidiary. Most of it.

Adam Robert Thalhimer: Hey, good morning, guys, great quarter, congrats on that and Jason and welcome to the call.

Adam Robert Thalhimer: Hey, Tony can you just keep going on that because I was actually curious how you do allocate.

Adam Robert Thalhimer: Resources, how much of it is is top down like year, having the discussion with the customers and how much of it is your subsidiaries most.

Anthony J. Guzzi: Most of it is at the subsidiary and segment level. We, for lack of a better word, at the segment and corporate level, have put out our intent. We think about markets. We think about where the best place for us to allocate our resources and how we're going to allocate them. But our fighting unit, quite frankly, at EMCOR is our subsidiaries, and they're good. And then within those subsidiaries, we think about which subsidiaries get more investment versus other subsidiaries because of the opportunities that are in front of them. And It's a very thoughtful process.

Tony: Most of it is at the subsidiary and segment level.

Anthony J. Guzzi: We for lack of a better word.

Anthony J. Guzzi: Segment and corporate level think we put out our intent we think about markets we think about.

Anthony J. Guzzi: Where's the best place for us to allocate our resources, how we're going to allocate them.

Anthony J. Guzzi: Our fighting unit quite frankly at EMCORE is our subsidiaries and they are good and then then within those subsidiaries right, we think about which subsidiaries get more investment versus other subsidiaries because of the opportunities that are in front of them.

Anthony J. Guzzi: And it's a very thoughtful process.

Anthony J. Guzzi: We have very sophisticated business leaders at the subsidiary level, supported by great relationships with labor, whether it's union or non-union, with superintendents and project foremen and project managers. And they look at their playing field and say, "What's the best way to allocate these resources to derive the best results for our company, their people, and the best results for our customers?" and to build something that's sustainable in these markets based on the opportunities they see in front of them.

Anthony J. Guzzi: We have very sophisticated business leaders at the subsidiary level supported by great relationships, whether with labor, whether it's union or non union with.

Anthony J. Guzzi: Superintendents and project formative project managers and they look at their playing field to say, what's the best way to allocate these resources to derive the best results for our company. There are people the best results for our customers.

Anthony J. Guzzi: And to build something thats sustainable in these markets.

Anthony J. Guzzi: Based on the opportunities they see in front of them and for US that's usually.

Anthony J. Guzzi: And for us, that's usually, you know, a six to 24-month planning horizon at the subsidiary level, and then thinking about how that builds capability. What makes a great data center builder? What makes a good complex project builder that can do things under pressure with a fast timeline and a demanding customer?

Anthony J. Guzzi: Our 6% to 24 month planning horizon at the subsidiary level.

Anthony J. Guzzi: And then thinking about how that builds capabilities.

Anthony J. Guzzi: What makes a great datacenter builder.

Anthony J. Guzzi: It makes it a good complex project builder that can do things under pressure with a.

Anthony J. Guzzi: Our fast timeline with a demanding customer a lot of markets that look like that but you have to build that capability.

Anthony J. Guzzi: A lot of markets that look like that, but you have to build that capability. And then what we do a really good job of, and this is where our segment teams do an exceptional job of, how do you, how do you don't move people for a long period of time, but how do you peer learn? Peer learning at EMCOR is a big deal.

Anthony J. Guzzi: And then when we do a really good job of and this is where our segment teams do an exceptional job of.

Anthony J. Guzzi: How do you move the people for a long period of time, but how do you <unk>.

Anthony J. Guzzi: Peer learning at EMCORE is a big deal so I talked about the expansion into other markets that we've done it's not like every place that we expanded into a datacenter market. We didn't have a company. It's just they weren't serving a data center market.

Anthony J. Guzzi: So I talked about the expansion into other markets that we've done. It's not like every place that we expanded into a data center market that we didn't have a company. It's just they weren't serving a data center market. And so the team, the electrical team, said, okay, we do this really well. Why can't we do it here?

Anthony J. Guzzi: And so the team or the electrical team said, okay. We do this really well why can't we do it here and when we do it here. This is how we have to think about a skull way back here to estimating so we'll work together on the estimates and then how do we think about be able on the BDC capability. How do we think about prefab in that market. What is scheduled start to look like because we're going to make.

Anthony J. Guzzi: And when we do it here, this is how we have to think about it. Let's go way back here to estimating. So we'll work together on the estimate. And then how do we think about building the VDC capability? How do we think about prefabrication in that market? What does our schedule start to look like? Because we're going to make a commitment to a customer, we probably have in another market to tell them now that we can do that in this market.

Anthony J. Guzzi: Commitment to our customer we probably have another market to tell them now we can do that in this market and for our guys Thats a pretty high bar to jump over to have them trained up and ready to go.

Anthony J. Guzzi: And for our guys, that's a pretty high bar to jump over to have them trained up and ready to go. And, you know, that's how our people think about it. That's one example that happens every day across our company.

Anthony J. Guzzi: And that's how our folks think about that as one example, that's happening every day across our company.

Anthony J. Guzzi: I guess.

Anthony J. Guzzi: You've kind of put a speed governor on the RPM growth is that fair.

Anthony J. Guzzi: We don't take work, we don't think we can execute.

Adam Robert Thalhimer: So I guess, um... You've kind of put a speed limiter, Governor, on the RPO growth. Is that fair?

Speaker Change: That's true, but I wouldn't I have heard other people say hey, we're turning away work I don't think that would be true here.

Anthony J. Guzzi: We don't take on work we don't think we can do. That's true. But I wouldn't, you know. I've heard other people say, Hey, we're turning away work. I don't think that would be true here.

Adam Robert Thalhimer: I think we think about what we're going to bid and when we bid to work or estimate the work or work in partnership with our customers to think about taking the work.

Anthony J. Guzzi: Sure we can execute it and we may not win it all the time, we don't we don't win everything that we want to win.

Anthony J. Guzzi: I think we think about what we're going to bid. And when we bid the work or estimate the work or work in partnership with our customers to think about taking the work, we're pretty sure we can do it. And we may not win it all the time. We don't we don't win everything that we want to win. But, you know, I wouldn't call it speeding, Governor, but we certainly don't try to outrun our headlights, right?

Speaker Change: Got it.

Governor: I wouldn't call it a speed governor, but we very much don't try to outrun our headlights right.

Anthony J. Guzzi: We try to stay within our capability.

Anthony J. Guzzi: What are the contractors don't do well is where they don't have the capability to do a job they grow beyond their capabilities.

Anthony J. Guzzi: And they lack the execution resources, so the way, we build capability and build capacity.

Anthony J. Guzzi: Is.

Anthony J. Guzzi: Someone that had been an assistant project manager Assistant project engineer.

Anthony J. Guzzi: We try to stay within our capability. Where contractors don't do well is where they don't have the capability to do a job. They grow beyond their capabilities, and they lack the execution resources. So the way we build capability and build capacity is, you know, someone that had been an assistant project manager, assistant project engineer, a regular foreman, can now become a general foreman, maybe help us get another superintendent out on the field, which allows us to build more labor force.

Anthony J. Guzzi: <unk>.

Anthony J. Guzzi: Regular Forman now can become a general foremen, maybe help us get another superintendent out on the field, which allows us to build more labor force.

Anthony J. Guzzi: And then that assistant project manager now can run their own work a year year and a half later with the right training and then we can build that capability or if we're going to expand in another market. So may be one of our <unk>.

Anthony J. Guzzi: Electricals had had done at pretty a lot of industrial work, we take that person and say, okay. Here's what's different between that work in data center work or here's what's different between that work in semiconductor work and this is the things you need to be aware of and they work with other <unk> companies to understand those nuances.

Anthony J. Guzzi: And then that assistant project manager can now run their own work a year, a year and a half later with the right training. And then we can build that capability or if we're going to expand into another market. So maybe one of our electrical engineers that has done a lot of industrial work, we take that person and say, okay, here's what's different between that work and data center work. Or here's what's different between that work and semiconductor work.

Speaker Change: But I would say.

Anthony J. Guzzi: Yes, our governor is our capacity to build scale in our it's not cash.

Anthony J. Guzzi: It's not capital investment, it's building the human capital and acquiring the human capital and training at the wafer are comfortable we can expand the company.

Anthony J. Guzzi: And these are the things you need to be aware of. And they work with other EMCOR companies to understand those nuances. But I would say, you know, yes, our governor is our capacity to build skill, and it's not cash. It's not capital investment; it's building human capital and acquiring human capital and training it the way for us to be comfortable expanding the company.

Anthony J. Guzzi: And sorry, if I missed it what's the forward look on data centers.

Anthony J. Guzzi: So I think it's pretty good I mean, you read the same things we've done we've done a lot of work on that.

Speaker Change: I think it's pretty good.

Anthony J. Guzzi: We don't see any slowdown in the.

Anthony J. Guzzi: The thing that will constrain it but then we'll fix that we always do people is there'll be more investment in the energy infrastructure and then they'll keep growing and there is nothing in the near term to suggest that's a problem.

Adam Robert Thalhimer: And sorry if I missed it, what's the forward look on data?

Anthony J. Guzzi: I think it's pretty good. I mean, you read the same things we've done. We've done a lot of work on that.

Adam Robert Thalhimer: And are you seeing any.

Anthony J. Guzzi: To the extent, you're seeing any weakness in non res.

Anthony J. Guzzi: More broadly like commercial I know you don't play that much but it sounds like that would be confined to building services.

Adam Robert Thalhimer: I mean, when we don't see any slowdown and, you know, the thing that will constrain it, but then we'll fix that. We always do, people. There'll be more investment in energy infrastructure, and then they'll keep growing. And there's nothing in the near term to suggest that's a problem.

Speaker Change: No that's not true.

Adam Robert Thalhimer: We just reallocate our resources. So we were very good at in the fire life safety World at large big box retail distribution centers that slowdown on the dry goods side.

Anthony J. Guzzi: And are you seeing any... To the extent you're seeing any weakness in non-res... kind of more broadly, like commercial, I know you don't play there much, but it sounds like that would be confined to building services.

Anthony J. Guzzi: That theyre very capable people, we move that capability to other places like battery plants like semiconductor plants through training through.

Anthony J. Guzzi: No, that's not true. We just reallocate our resources. So we were very good at in the fire life safety world at large big box retail distribution centers that slow down on the dry goods side. We built that.

Anthony J. Guzzi: Through a very careful do one do it right.

Anthony J. Guzzi: Get it right we have a great team there.

Anthony J. Guzzi: And we.

Anthony J. Guzzi: So yeah, there's slowdowns. I mean, there's certain markets, you know. I don't think the New York guys are running around spiking the ball in the end zone right now. They're working hard, and they're doing fine. But, you know, you wouldn't say that it's a booming market. You know, there's no Hudson Yards. There's none of that happening right now. You know, maybe a little slowdown in the Northeast overall, but that's being overcome by other parts of the country.

Anthony J. Guzzi: We build that so yes, there is slowdown I mean, there are certain markets.

Anthony J. Guzzi: I don't think the New York guys are running around spiking the ball in the end zone right now.

Anthony J. Guzzi: Looking hard and Theyre doing fine.

Anthony J. Guzzi: You wouldn't say that is a booming market theres no Hudson yards is none of that happening right now.

Anthony J. Guzzi: Maybe a little slowdown in the northeast overall, but thats been overcome by other parts of the.

Anthony J. Guzzi: Our country.

Anthony J. Guzzi: I mean, nothing is always up and to the right, as you know, Adam. Commercially, yeah, we're not really in the light commercial business in any significant way, even in building services, other than some of the maintenance contracts. So, yeah, I mean, we have our share of challenges, but luckily, we have more good than those challenges right now. Jason, do you have anything to add?

Anthony J. Guzzi: Net net.

Jason: Things are always up into the right as you know Adam I mean.

Jason: Commercial yes, we're not really in the light commercial business in any significant way even in building services.

Jason: Other than some of the maintenance contracts.

Jason: So yes, I mean, we have our share of challenges, but luckily we have more goods.

Jason: Challenges right now.

Adam Robert Thalhimer: Absolutely. All right. Thanks.

Anthony J. Guzzi: Jason you have anything to add.

Jason: You've covered it Tony.

Adam Robert Thalhimer: Absolutely. All right. Thanks guys. Appreciate the time.

Jason: Absolutely alright, thanks, guys I appreciate the time I appreciate the time.

Alexander David Dwyer: And we continue with a question from Alex Dwyer from KeyBank. Alex, you may go ahead.

Speaker Change: And we continue with a question from Alex Dwyer from Keybanc.

Alexander David Dwyer: You May go ahead.

Alexander David Dwyer: Hi team, congrats on a great start to the year. Thanks.

Alexander David Dwyer: Hi team congrats on a great start to the year.

Anthony J. Guzzi: So, I just wanted to ask about the productivity improvements we've seen over the past year. How broad-based have these improvements been in the business? Are they concentrated in a couple of end markets or projects or geographies? I just want to get a better sense for how much more room there is to run in, like, implementing prefab and virtual design and BIM throughout the broader company.

Alexander David Dwyer: Thanks.

Alexander David Dwyer: So I just wanted to ask about the productivity improvements we've seen over the past year.

Anthony J. Guzzi: How broad based have these improvements and the business is it concentrated in a couple of end markets or projects or geographies I just wanted to get a better sense for how much more room. There is to run an implementing prefab and virtual design in and then throughout the broader company.

Anthony J. Guzzi: Look, Alex, the reality is, you know, we're every day trying to figure out that impact on our ongoing margins versus more favorable contract terms. I would say most of our margin enhancement is coming from executives. I mean, any job we do, there's plenty of competition. I mean, there are other people that know how to do this work, and so I never sit there and think about, you know, we have very capable competitors in every business that we have. So we're earning margins because we're earning them, and it's hard to separate. I would say this in general, right?

Speaker Change: Look Alex the reality is we're every day trying to figure out that impact on our ongoing margins versus more favorable contract terms I would say most of our margin enhancement.

Anthony J. Guzzi: It's coming from <unk>.

Anthony J. Guzzi: Execution.

Anthony J. Guzzi: I mean any job, we do theres plenty of competition there.

Anthony J. Guzzi: Other people that know how to do this work and so I never sit there and think about.

Anthony J. Guzzi: We have very capable competitors in every business that we have.

Anthony J. Guzzi: So, we're earning margins because we're earning them.

Anthony J. Guzzi: And it's hard to separate I would say this in general right.

Anthony J. Guzzi: The place where you have a multiyear build like some of these data center markets for semiconductor markets or even the manufacturing sites.

Anthony J. Guzzi: Where you have a multi-year build, like some of these data center markets or semiconductor markets or even manufacturing sites, where you have a multi-year build, you get better. Your people get better, they get more productive. We think there are better ways to do it, and if the mix of contracts skews more for us towards fixed price versus GMP with a fee, then we do better.

Anthony J. Guzzi: Where you have a multiyear build you get better.

Anthony J. Guzzi: Your people get better they get more productive.

Anthony J. Guzzi: We think better ways to do it and if the mix of contracts skew more for us towards fixed price versus GMP.

Anthony J. Guzzi: The fee than we do better if we can convert more GMP to fixed price that's good for us and the owner.

Anthony J. Guzzi: If we can convert more GMPs to fixed prices, that's good for us and the owner because we have certainty; they have certainty of cost. And somewhere 50, 60% along the way, we also have certainty of outcome, or we think we do. So it's hard to separate some of that stuff, but I will tell you this, though, right?

Anthony J. Guzzi: Because we have certainty they have certainty of costs.

Anthony J. Guzzi: And somewhere 50, 60% along the way.

Anthony J. Guzzi: We also have certainty of outcome.

Anthony J. Guzzi: Where we think we do.

Anthony J. Guzzi: So it's hard to separate some of that stuff I will tell you this though right.

Anthony J. Guzzi: The more work we can do in the shop versus in the field, the better we do it. The more we can get into planning earlier with our BDC, Virtual Design, Construct, and implement more of those tools, the earlier we can do that, the better off we will be. And so I just give you a broad number. And we have, We were probably around 500 BDC people, mainly BIM operators, in 2019, end of 2018. Today, that number is 1,500.

Anthony J. Guzzi: More work, we can do in the shop versus in the field the better we do.

Anthony J. Guzzi: The more we can get into planning earlier with our BDC.

Anthony J. Guzzi: Virtual design construct and implement more of those tools. The earlier, we can do that the better off we were.

Anthony J. Guzzi: And so I'll just give you a broad number and we have.

Anthony J. Guzzi: We were probably around 500, BDC people, mainly bim operators.

Anthony J. Guzzi: In 2019 end of 18.

Anthony J. Guzzi: Today that number is 500.

Anthony J. Guzzi: Now, you could draw a correlation between that and our margin increase. I think that's part of it that we're doing more. And it goes beyond prefab. A lot of times we simplify VDC to prefab, but it goes way beyond that. It goes to, you know, we have a couple of people that are really good.

Anthony J. Guzzi: Now you could draw a correlation between that and our margin increase I think that's part of it that we're doing more.

Anthony J. Guzzi: It goes beyond prefab and a lot of times, we simplify BDC to prefab, but it goes way beyond that it goes to.

Anthony J. Guzzi: We are a company with a really good you start to build things and 40 or parametric right and what Youre doing is youre finding the mistakes before you go to the site.

Anthony J. Guzzi: You start to build things in 40 or parametric, right? And what you're doing is you're finding the mistakes before you go to the site. And if you can find the mistakes before you go to the site and the collisions and all the things that are going to go wrong, then you perform better, right? The most frustrating thing in the world for a foreman or a tradesperson or a project engineer or project manager is to have installed something and then have to take it out or have someone take your work out because they didn't get it right. And, you know, our people don't like rework, even if we get paid for it. That's not because these folks are really proud of their work.

Anthony J. Guzzi: And if you can find the mistakes before you go to the site and the collisions and all the things that are going to go wrong.

Anthony J. Guzzi: Then you perform better right. The most frustrating thing in the world for a foreman or or trades person or a project engineer project managers have installed something.

Anthony J. Guzzi: And then I have to take it out or have someone take your work out because they didn't get it right.

Anthony J. Guzzi: And our people don't like rework, even if we get paid for it that's not that he's got folks are really proud of the work quality also goes up right with BC, whether it's filled installed or whether its shop because again, if you went to a construction site today and as almost any side, even the smaller projects are guys for the most part are looking at something on an iPad or a work.

Anthony J. Guzzi: Quality also goes up, right, with BC, whether it's field installed or whether it's in the shop. Because again, if you went to a construction site today, and it's almost any site, even the smaller projects, our guys, for the most part, are looking at something on an iPad or a workstation, and they're looking at what they're going to build in three dimensions on that iPad, and they visually see what they're going to build and what it should look like versus trying to read it in two dimensions just off the drawing.

Anthony J. Guzzi: Station and Theyre looking at what Theyre going to build in three dimensions.

Anthony J. Guzzi: One that iPad and a visually see what theyre going to build on what it should look like versus trying to read it in two dimensions just off the drawing.

Anthony J. Guzzi: And, you know, our technology has seeped through the organization, and we'd be really taking the tools. Now, we just take tools and make them better. We don't self-develop any of these tools, because there are good tools out there.

Anthony J. Guzzi: And.

Anthony J. Guzzi: Our technology is cheap through the organization and we really have taken the tools now we just take tools to make them better we don't self develop any of these stores because with tools out there.

Anthony J. Guzzi: We've really taken leadership of that and we have a dedicated group that does that now.

Anthony J. Guzzi: Our construction segment the two work together on electrical mechanical it's not that different.

Anthony J. Guzzi: But we've really taken leadership of that, and we have a dedicated group that does that now in our construction segment. The two work together on electrical and mechanical. It's not that different.

Anthony J. Guzzi: The mechanical is probably a little more complex and advanced in the electrical folks on this.

Anthony J. Guzzi: Because think about this flows happenings are systems, where the electrical is it's more rigidity conduit and runs right, but both are doing more of it and with intellectual guys think about when they do BDC is how do I take something I'm going to do 100 times and take that work out of the field, so theres less connections and the connections easier.

Anthony J. Guzzi: The mechanical is probably a little more complex and advanced than the electrical folks on this. Because, think about it, there's flows happening, there's systems where the electrical is. It's more rigidity, conduit, and runs, right? But both are doing more of it. And what the electrical guys think about when they do VDC is, how do I take something I'm going to do 100 times and take that work out of the field so there are fewer connections and the connections are easier? That's, broadly speaking, how they think about it.

Anthony J. Guzzi: Broadly speaking, how they think about it.

Anthony J. Guzzi: And then we're doing more skids and assemblies in both mechanical and electrical and again that makes it more rigorous it makes it more.

Anthony J. Guzzi: Stable when it gets to the field to be able to be built so I would say is it half of why we're doing better productivity sure and then some of it is just we're getting better because we've done these jobs multiple times.

Anthony J. Guzzi: EMCORE is a wonderful peer learning environment. So that's the construction side when you get to the smaller project mechanical service side, so a little different.

Anthony J. Guzzi: And then we're doing more skids and assemblies in both mechanical and electrical. And again, that makes it more rigorous. It makes it more stable when it gets to the field to be able to be built. So I'd say, you know, is that half of why we're doing better productivity? Sure. And then some of it's just that we're getting better because we've done these jobs multiple times. And look, EMCOR is a wonderful peer learning environment.

Anthony J. Guzzi: When youre doing a project a lot of times productivity is almost secondary to making sure you don't disrupt the owner and then it becomes a logistical.

Anthony J. Guzzi: Again, because usually we are operating in a build site right. So they've got to keep working.

Anthony J. Guzzi: And so our guys have to really understand that get the logistics right.

Anthony J. Guzzi: That in and get the building up the ranks so when youre doing a retrofit promise, especially a mid size to medium size or smaller one there youre thinking about how do I make my customer more productive when I do it and then how do I make sure that I've covered all my contingencies.

Anthony J. Guzzi: So that's the construction side. When you get to the smaller project, mechanical service side, it's a little different. There, when you're doing a project, a lot of times, productivity is almost secondary to making sure you don't disrupt the owner, and then it becomes a logistical game because you're usually operating in a built site, right? So they gotta keep working. And so our guys have to really understand that, get the logistics right, get that in, and get the building up right. So when you're doing a retrofit product, especially a midsize to medium size, a small one, there you're thinking about how do I make my customer happy.

Anthony J. Guzzi: I have to do these very complex logistical jobs and built site. So that's a long winded answer to what you were searching for but.

Speaker Change: I think the only thing I would add you asked specifically about investments in certain markets or different sectors and I think none of these investments are targeted at a single market sector at the same pre fabrication facility that can do a high tech manufacturing or support of high Tech manufacturing project can support a health care project or any other sector that we're working on and the same thing with <unk>.

BDC: BDC Youre right its not targeted at any subset of our work other than more sundar construction side and our services, maybe Jason can talk a little bit about how capex moved here.

Anthony J. Guzzi: I think the only thing I would change is

Jason R. Nalbandian: Jason, talk a little bit about how CapEx moved here and how we built or built infrastructure. In the quarter, relatively comparable year over year, but I think if you go to a full year of 2023, that's when you'd really see it compared to a full year of 2022.

Jason R. Nalbandian: And how do we built more build infrastructure.

Jason: In the quarter relatively comparable year over year, but I think if you go to a full year 2023, that's when you would really see it compared to full year 2022, I think our capex was up roughly 60% and that really was a lot of these investments that Tony has been talking about and we will continue to invest in prefab facilities will continue to invest in.

Anthony J. Guzzi: I think our CapEx was up roughly 60%, and that really was a lot of these investments that Tony has been talking about. And we'll continue to invest in prefab facilities. We'll continue to invest in BIM. But all our investments, someone asked the question earlier about whether these are top-down or bottom-up. or are they bottom up? They're bottom up. But there's a receptive, knowledgeable ear at the top to ascertain where the best way to invest is and also to provide resources when needed to help them invest.

Anthony J. Guzzi: <unk> will expand the facilities that we have where we need more capacity and we'll find ways to add facilities in other markets, where we currently don't have the same capacity we do elsewhere.

Anthony J. Guzzi: But all of our investments.

Anthony J. Guzzi: Someone asked the question earlier about these top down.

Anthony J. Guzzi: Or are they bottom up their bottom up.

Anthony J. Guzzi: But theres a receptive knowledgeable here at the top to ascertain where the best way to invest and also to provide.

Anthony J. Guzzi: Resources when needed to help them invest.

Anthony J. Guzzi: You know, we haven't turned down significant capital investment here in five years. I only say five years because I don't remember, because our folks bring these forward, and they tend to be very well thought out. And as a contractor, just so we understand that too, our folks are looking for less than four years of cash payback when they make an infrastructure investment. Because we do think like contractors, right? We're looking at the current market and say, this is good for today, it'll be good for the future, but let's make sure we can make a profit today. And the other thing is we, 95% I always qualify things probably 100%, but 95% of our prefabrications are for us in our jobs; we don't prefabricate for the future.

Anthony J. Guzzi: We havent turned down.

Anthony J. Guzzi: A.

Anthony J. Guzzi: Significant capital investment here in five years, and I only say five years, because I remember before that because our folks bring these forward they tend to be very well thought and they're taken and as a contractor just so we understand that too.

Anthony J. Guzzi: Folks are looking for.

Anthony J. Guzzi: Less than four year cash payback when they make that infrastructure investment because we do think like contractors right. We're looking at the current market and say this is good for today it will be good for the future, but let's make sure we can.

Anthony J. Guzzi: Can earn today and the other thing is we now.

Anthony J. Guzzi: 95% I always qualify things, probably a 100%, but 95% of our pre fabrication for us and our jobs, we don't pre fabricated for the market.

Alexander David Dwyer: Thank you, that's really helpful. So if I can just ask the next one, I guess, like the industrial services outlook commentary, it seemed a lot more positive this quarter. Large, large turnarounds are coming through with the larger scopes, and you're getting better overhead leverage on that. And then 1Q was the best performance since the pandemic. Would you say there's better visibility now into customer spending plans and turnarounds now? Or is it still kind of different? I'd say yes and no.

Alexander David Dwyer: Thank you that's really helpful.

Speaker Change: So if I can just ask the next one.

Alexander David Dwyer: I guess like the industrial services outlook commentary it seemed a lot more positive this quarter large large turnarounds are coming through with the larger scopes and youre getting better overhead leverage on that and then <unk>.

Alexander David Dwyer: Was the best performance since the pandemic like would you say, there's better visibility now into customer spending plans and turnarounds now or is it still kind of different.

Alexander David Dwyer: At.

Speaker Change: I would say, yes and no.

Anthony J. Guzzi: Right, yes, and that we have pretty good visibility and that we understand they're going to do the work, but they could shift it from the fourth quarter to the first quarter or third quarter to the fourth quarter. I would say that, you know, I had the privilege of seeing the kind of relationships our folks have firsthand recently with one of the biggest refining customers, and they're they're at the top, and they're deep. Do you know why?

Speaker Change: Right, Yes, and that we have pretty good visibility in that we understand theyre going to do the work, but they could shifted from fourth quarter to first quarter of third quarter to fourth quarter.

Anthony J. Guzzi: I would say that I had the privilege of seeing the kind of relationships our folks have.

Anthony J. Guzzi: Firsthand recently.

Anthony J. Guzzi: One of the biggest.

Anthony J. Guzzi: Refining customers in there.

Anthony J. Guzzi: Are there at the top and their deep why because we help that customer performance solve problems.

Anthony J. Guzzi: Because we help that customer perform and solve problems. And ultimately, that's what that business comes down to. You have to have the best technical resources.

Anthony J. Guzzi: And ultimately that's what that business comes down to you have to have the best technical resources.

Anthony J. Guzzi: And the good news I take away from what I've seen recently in that business is that there's a little strain on manpower going on right now. And when that happens on the Gulf Coast, that's usually a good thing. It means that there's more activity going on. And when there's more activity going on, that's good for the larger contractors like us.

Anthony J. Guzzi: And the good news I take away from what I have seen recently that businesses Theres, a little straining for manpower going on right now and when that happens in the <unk>.

Anthony J. Guzzi: Gulf Coast, that's usually a good thing.

Anthony J. Guzzi: It means that there is more activity going on and when there is more activity going on thats good for the larger contractors like us.

Speaker Change: Thank you I'll leave it there.

Marlies: Thank you very much. Mr. Guzzi, we have no further questions at this time, and I will turn it back to you for some closing comments, please.

Speaker Change: Thank you very much Mr.

Speaker Change: Mr. <unk>, we have no further questions at this time.

Anthony J. Guzzi: I will turn it back to you for.

Anthony J. Guzzi: Closing comments. Please look we got off to a good start this year.

Anthony J. Guzzi: Look, we got off to a good start this year. We've been performing really well. I don't think you can ever discount the skill it takes for our folks in the field. You heard me talk about it earlier. And someone asked me an interesting question today, you know, Are these decisions being made top down at the segment level, subsidiary level? I'd say it's a team sport.

Anthony J. Guzzi: It's been a we've been performing really well.

Anthony J. Guzzi: I don't think you can ever discount the scale. It takes of our folks in the field you heard me talk about it earlier.

Anthony J. Guzzi: And someone asked me that's interesting question today.

Anthony J. Guzzi: Are these decisions being made top down at the segment level subsidiary level I'd say, it's a team sport.

Anthony J. Guzzi: But at the end of the day, we're only as good as the projects that our subsidiaries deliver on the projects that they commit to our customers. And with that, I'll thank them and see y'all in a couple months. Great. Thank you, Tony.

Anthony J. Guzzi: But at the end of the day, we're only as good as our subsidiaries.

Speaker Change: Deliver on the projects that they commit to our customers and with that I'll. Thank them in.

Speaker Change: See all in a couple of months.

Marlies: Great. Thank you, Tony, and thank you, Jason, and thank you, Maxine, and to all of you for joining us today. If you should have any follow-up questions, please do not hesitate to reach out. Thank you all again, and have a great day. And, Marlise, could you please close the call?

Speaker Change: Great. Thank you Tony and thank you, Jason and thank you Maxine and to all of you for joining US today. If you should have any follow up questions. Please do not hesitate to reach out. Thank you all again and have a great day and more at least could you. Please close the call.

Marlies: Okay.

Marlise: Yes, it does.

Marlies: Yes, that's... This conference is now concluded. Thank you for attending today's presentation, and you may now disconnect. Have a great rest of your day.

Speaker Change: This conference has now concluded. Thank you for attending today's presentation and you may now disconnect have a great rest of your day.

Marlies: [music].