Q1 2025 EMCOR Group Inc Earnings Call

April 30, 2025

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I would now like to turn the conference over to Andy Backman, Vice President Investor Relations. Please go ahead.

Andy Backman: Thank you, thank our and good morning, everyone and welcome to <unk> first quarter 2025 earnings Conference call.

Tony Guzzi: And we continue to see demand within our mechanical construction segment for water and wastewater projects, with RPOs increasing 29% year-over-year and 20% sequentially to over 820 million. While we have experienced a decrease in our high-tech manufacturing RPOs, we continue to believe very strongly in the long-term fundamentals of this sector. As we've discussed on prior calls, these projects can be episodic in nature, and RPOs in this space will fluctuate based on timing of project awards, startups, and executions. We still expect future awards in this sector, and some of that should happen later this year.

Andy Backman: As of you joining us by webcast, we were at the beginning of our slide presentation that will accompany our remarks today.

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

Speaker Change: With me today are Tony <unk>, our chairman, President and Chief Executive Officer, Jason Nalbandian, EMCORE, as Chief Financial Officer, and Maxine Mauricio Executive Vice President and Chief administrative officer and General Counsel.

Speaker Change: For today's call Tony will provide comments on our first quarter and discuss our Rps. Jason will then review our first quarter numbers before turning it back to Tony to discuss our guidance and then we'll 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 to have.

Jason Nalbandian: With that, I will turn the floor over to Jason, who will review the quarter's financial results in more detail. Jason? Thank you, Tony, and good morning, everyone. Starting on slide six, I'm going to review the operating performance for each of our segments, as well as some of the key financial data for the first quarter of 2025 as compared to the first quarter of 2024. As Tony mentioned, consolidated quarterly revenues were a record $3.87 billion, an increase of $435.1 million, or 12.7%, which was once again led by our construction segments, where we continue to execute well and demand remains strong across most of the key market sectors that we serve.

Speaker Change: Our presentation described in detail in these forward looking statements and the non-GAAP financial information disclosures.

Speaker Change: 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 within both our earnings press release issued this morning, and our form 10, 10-Q filed with the Securities Exchange and commission and with that let me turn it over to Tony.

Good day and welcome to M called Group Q1, 'twenty five when he's conference calls.

Tony: John Thanks, and good morning, and thank you I'm going to be mostly on page four here to start we had a strong quarter at EMCORE and the first quarter generating revenues of $3 87 billion, reflecting year over year growth of 12, 7%.

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Jason Nalbandian: Revenues for the first quarter included $251 million of incremental acquisition contributions. including $183 million from Miller Electric since the acquisition on February 3rd. On an organic basis, revenues grew by 5.4%. If we look to each of our segments, revenues of U.S. electrical construction were a record $1.09 billion. Due to a combination of organic growth and the Miller Electric acquisition, this segment generated increased revenues from almost all market sectors, with the most significant growth coming from networking communications driven by our data center project. In addition to data centers, notable revenue increases were experienced in healthcare, where our quarterly revenues doubled.

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Tony: We earned $318 $8 million in operating income with an operating margin of eight 2% and diluted earnings per share of $5 26.

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Speaker Change: I would now like to turn the conference over to Andy Backman, Vice President Investor Relations. Please go ahead.

Tony: Representing an increase of 26% from the first quarter of 2024.

Tony: When you adjust for the $9 $4 million of transaction expenses related to our acquisition of Miller electric.

Speaker Change: Thank you cigar and good morning, everyone and welcome to <unk> first quarter 2025 earnings conference call for those of you joining us by webcast. We were at the beginning of our slide presentation that will accompany our remarks today.

Tony: Which closed in February where non-GAAP adjusted operating income of $328 1 million or eight 5% of revenues.

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

Tony: non-GAAP adjusted diluted earnings per share of $5 41.

Tony: <unk> me today are Tony <unk>, our chairman, President and Chief Executive Officer, Jason Nalbandian, EMCORE, as Chief Financial Officer, and Maxine Mauricio Executive Vice President Chief administrative officer and General Counsel.

Tony: We are very pleased with our overall performance.

Jason Nalbandian: transportation due to certain infrastructure projects, and institutional as a result of a greater number of public sector projects. U.S. mechanical construction revenues were $1.57 billion, increasing 10.2%. Similar to electrical, the largest growth during the quarter was seen from data centers within networking communications. In addition, this segment had noteworthy revenue increases within healthcare due to both greater organic activity as well as incremental contribution from acquired companies. Hospitality and Entertainment, given increased project activity, and Water and Wastewater, driven by continued strong demand for our service offerings across the Southeast region of the United States. Revenues of the mechanical segment also benefited from higher levels of service volume.

Tony: Our electrical and mechanical construction segments, which had year over year revenue increases of 42, 3% and 10, 2% respectively drove our performance the growth in our revenues reflects both our proactive move into new geographies to better serve our customers as well as the cough.

Tony: For today's call Tony will provide comments on our first quarter and discuss our Rps. Jason will then review our first quarter numbers before turning it back to Tony to discuss our guidance and then we'll open it up for Q&A.

Tony: 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 described in detail in these forward looking statements and the non-GAAP financial information disclosures.

Tony: <unk> that our customers have in our ability to perform complex projects draw.

Tony: Driving this growth was increased activity within the network and communications, which is data centers health care water.

Speaker Change: Carriage 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 within both our earnings press release issued this morning, and our form 10, 10-Q filed with the Securities Exchange and commission and with that let me turn it over to Tony.

Tony: Wastewater market sectors. The results of our electrical construction segment also included a $183 million in revenues from Miller electric.

Tony: The integration of Miller is on track and that is a credit to both the EMCORE and Miller teams. When you share the same core values that have similar operating disciplines and share best practices than the cultural alignment makes integration more successful. Thank you.

Jason Nalbandian: Partially offsetting the growth in mechanical, however, were reduced revenues in commercial and high-tech manufacturing. The completion or substantial completion of certain tenant fit-out or office projects, coupled with fewer warehousing and distribution projects, which we've referenced on recent calls, were the primary drivers of the reduced commercial revenue. With respect to high-tech manufacturing, we experienced a decrease in revenues from semiconductor projects as we actively work towards the completion of the initial phases of several of these contracts. On a combined basis, our construction segments generated revenues of $2.66 billion, an increase of 21.3%. Moving to U.S. Building Services.

Tony: Tony Thanks, Ed Good morning, and thank you I'm gonna be mostly on page four here to start.

Tony: We had a strong quarter at EMCORE and the first quarter generating revenues of $3 $87 billion, reflecting year over year growth of 12, 7%.

Tony: Henry and your team.

Tony: With respect to operating income the reasons behind our growth remain the same we continue to have excellent execution in our electrical and mechanical construction segments with 12, 5% and 11, 9% operating margins respectively.

Tony: We earned $318 8 million in operating income with an operating margin of eight 2% and diluted earnings per share of $5 26, representing an increase of 26% from the first quarter of 2024.

Tony: To achieve these margins our teams continue to leverage our pre fabrication and virtual design and construction of our BDC capabilities coupled.

Tony: When you adjust for the $9 4 million of transaction expenses related to our acquisition of Miller electric.

Tony: Coupled with excellence in Labor planning and management large project coordination and execution as well as a laser focus on contract terms.

Tony: It's closed in February we are non-GAAP adjusted operating income of $328 1 million or eight 5% of revenues and non-GAAP adjusted diluted earnings per share of $5 41.

Jason Nalbandian: Revenues were $742.6 million, representing a decrease of 4.9%, as the expected reduction in site-based revenues more than offset the strength of our mechanical services operations, which grew revenues by $44.3 million during the quarter. Demand for mechanical services remained robust, and we once again experienced growth across each of those service lines. We still face some headwinds in our compares for this segment as we move through the year. However, as we progress, the decrease in site-based revenues should be less drastic, and we are optimistic that the performance of mechanical services will begin to offset the lower site-based revenues.

Tony: Every quarter, we become better at sharing best practices across our company and in granting them into our standard operating practices and procedures.

Tony: We are very pleased with our overall performance.

Tony: This constant learning makes us more resilient as leaders and as a company.

Tony: The results of our U S building services segment reflects strong performance in our mechanical services Division, which was offset by the headwinds that we previously referenced in our site based services business. Our industrial services segment was impacted by the effects of a slower start to the turnaround season caused in part by Frigid January weather in Texas. In addition.

Tony: That our customers have in our ability to perform complex projects.

Jason Nalbandian: Looking at industrial services, revenues were $359 million, an increase of 1.4%. During the quarter, this segment's performance was impacted by a slower start to the turnaround season due to the delay or deferral of planned projects resulting from freezing weather conditions in Texas during January, which Tony referenced. And lastly, UK Building Services delivered revenues of $105.3 million, essentially in line with that of the prior year period. A modest decline in facilities maintenance revenues was more than offset by increased project demand from certain of our UK customers.

Tony: <unk>, we had an increase in our allowance for credit losses impacted this segment's operating income and operating margin by $4 million or 110 basis points, respectively. We anticipate this segment's performance will improve throughout the year and lastly, our UK building services segment continues to perform.

Tony: Driving this growth was increased activity within the network and communications, which is data centers health care water and wastewater market sectors. The results of our electrical construction segment also included 183 million in revenues from Miller electric.

The integration of Miller is on track and that is a credit to both the EMCORE and Miller teams. When you share the same core values that have similar operating disciplines and share best practices than the cultural alignment makes integration more successful. Thank you Henri and your team.

Tony: As expected now please turn to page five.

Tony: Now I'll discuss our Pos we leave the quarter with diverse <unk> or remaining performance obligations of a $11 8 billion versus $9 2 billion at the end of the first quarter of 2024.

Jason Nalbandian: Let's turn to slide 7. We reported an operating income of $318.8 million, or 8.2% of revenue. and our performance established a new first quarter record for both operating income and operating margin. When compared against the first quarter of 2004, this represents a 22.6% or nearly $59 million increase in operating income and operating margin has expanded by 60 basis points. Excluding Transaction Expenses Related to the Acquisition of Miller Electric Non-GAAP operating income was $328.1 million, up 26.2% or $68 million, and our non-GAAP operating margin was 8.5%, a 90 basis point improvement. Once again, turning to each of our segments, U.S.

Tony: Year over year, our <unk> grew 17, 1% organically and with the inclusion of Miller electric <unk> increased by 28, 1%.

On a sequential basis when compared to December of 2024, our <unk> increased by six 4% organically and 16, 3% when accounting for the Miller Electric acquisition.

Tony: Fabrication and virtual design and construction of our BDC capabilities.

Tony: We had an organic book to bill of 118 for the quarter.

Tony: Coupled with excellence in Labor planning and management large project coordination and execution as well as a laser focus our contract terms.

Tony: Driving our RPM growth or the market set forth and I'll talk about those on this page.

Notably <unk> within networking communications or data centers were $3 6 billion at the end of March <unk> have increased by nearly 112% year over year, and 28% sequentially with Miller contributing to a portion of this growth, adding approximately $400 million of <unk>.

Tony: Every quarter, we become better at sharing best practices across our company.

Tony: And in granting them into our standard operating practices and procedures.

Tony: This constant learning makes us more resilient as leaders and as a company.

Jason Nalbandian: electrical construction generated an operating income of $136.1 million, which represents a 48.6% income. Operating margin was 12.5%, a 50 basis point improvement. From a market sector perspective, this segment benefited from greater gross profit across the majority of the sectors in which we operate, with the largest increases tracking in line with its revenue growth. Operating income of U.S. electrical construction included $12.8 million of incremental contribution from Miller Electric, net of $7.4 million of intangible asset amortization. Operating income for US mechanical construction was 186.7 million or 11.9% of revenue. This represents an increase of nearly 24% and 130 basis points of margin expansion.

Tony: The results of our U S building services segment reflects strong performance in our mechanical services decision, which was offset by the headwinds that we previously referenced in our site based services business. Our industrial services segment was impacted by the effects of a slower start to the turnaround season caused in part by Frigid January weather in Texas. In addition.

Tony: In this important market segment health.

Tony: <unk> is a one 5 billion increased 38% year over year and 14% sequentially health.

Speaker Change: Health care has always been and remains a core market for EMCORE. The Miller electric acquisition broadens our opportunities in this space, adding nearly $240 million of healthcare project RP OS.

Tony: <unk>, we had an increase in our allowance for credit losses impacted this segment's operating income and operating margin by $4 million or 110 basis points respectively.

Speaker Change: <unk> within the manufacturing and industrial segment of $1 1 billion represented an increase of 31% year over year or 29% sequentially.

Tony: We anticipate this segment's performance will improve throughout the year.

Tony: And lastly, our UK building services segment continues to perform as expected now please turn to page five.

Speaker Change: With the majority of this increase being organic.

Speaker Change: Resulting from a combination of new contract awards for existing EMCORE companies and the acquisition of Miller institutional <unk> increased to $1 25 billion, representing 21% year over year growth of 13% sequentially and hospitality and our entertainment rfps have more than doubled year over year to 437.

Tony: Now I'll discuss RP OS we leave the quarter with diverse <unk> remaining performance obligations of $11 8 billion versus $9 2 billion at the end of the first quarter of 2024 year over year, our <unk> grew 17, 1% organically and with the inclusion of Miller.

Jason Nalbandian: This segment experienced the most significant increases in gross profit from the networking communications and high-tech manufacturing sector. Despite the reduction in high-tech manufacturing revenues that I previously referenced, the favorable progression on a number of EV and semiconductor projects resulted in greater profitability during the quarter. And together, our construction segments reported an operating margin of 12.1%, which is a 100 basis point improvement year over year. Excellent execution and a more favorable mix of work continue to be the main drivers of their Operating income for U.S. building services was $36.4 million, or 4.9% of revenues. As the composition of this segment's revenues continues to skew towards more mechanical services and less site-based, an increase in gross profit and gross profit margin more than offset the reduced revenues of the segment, leading to a $3 million increase in operating income and a 60 basis point improvement in operating margin.

Speaker Change: Nearly 73% sequentially due to the award of several sports Stadium and arena projects and Thats really something Miller is good at.

Tony: Electric <unk> increased by 28, 1%.

Tony: On a sequential basis when compared to December of 2024, our <unk> increased by six 4% organically and 16, 3% when accounting for the Miller Electric acquisition, we had it in the organic book to Bill of 118 for the quarter.

While we have experienced a decrease in our high Tech manufacturing RPE OS. We continue to believe very strongly in the long term fundamentals of this sector as we've discussed on prior calls these projects can be episodic in nature and <unk> in this space will fluctuate based on timing of project awards startups and executions, we still expect future.

Tony: Driving our RPM growth or the market set forth and I'll talk about those on this page.

Tony: Notably our Pows within networking communications or data centers were $3 6 billion at the end of March <unk> always have increased by nearly 112% year over year and 28% sequentially with Miller contributing to a portion of this growth, adding approximately $400 million of <unk>.

Jason: Awards in this sector and some of that should happen later this year with that I'll turn the call over to Jason who will review the quarter's financial results in more detail Jason.

Jason Nalbandian: I should also remind everyone that the favorable year-over-year comparison is driven in part by the impact in last year's first quarter of a customer bankruptcy which reduced this segment's operating income by $11 million and operating margin by 140 basis points. Turning to industrial services, operating income of 6.8 million or 1.9% of revenues compares unfavorably to 18 million or 5.1% of revenues a year ago. Adding to the direct impact of the previously referenced project deferrals and delays was a greater amount of unabsorbed overhead. The results of this segment were also impacted by a $4 million increase in the allowance for credit losses, which reduced its operating margins by 110%.

Tony: In this important market segment health.

Tony: Health care RP owes a 1.5 billion increased 38% year over year and 14% sequentially.

Jason: Thank you Tony Hey, good morning, everyone.

Jason: Starting on slide six I'm going to review the operating performance for each of our segments as well as some of the key financial data for the first quarter of 2025 as compared to the first quarter of 2024.

Tony: Health care has always been and remains a core market for EMCORE. The Miller electric acquisition broadens our opportunities in this space, adding nearly $240 million of health care project RP OS.

Jason: As Tony mentioned consolidated quarterly revenues were a record $3 87 billion, an increase of $435 1 million or 12, 7%, which was once again led by our construction segments, where we continue to execute well and demand remained strong across most of the key market sectors that we serve.

Tony: RP OS within the manufacturing and industrial segment up $1 1 billion, representing an increase of 31% year over year or 29% sequentially.

Tony: With the majority of this increase being organic.

Tony: Resulting from a concentration of new contract award for existing EMCORE companies and the acquisition of Miller institutional <unk> increased to $1 25 billion, representing 21% year over year growth of 13% sequentially and hospitality and entertainment.

Speaker Change: Revenues for the first quarter included $251 million of incremental acquisition contribution, including $183 million for Miller electric since the acquisition on February three.

Jason Nalbandian: And lastly, UK Building Services earned operating income of $5 million or 4.7% of revenue. Mobilization costs incurred with the recent award of a facility's maintenance contract by a new customer was the primary reason for the period-over-period reduction in operating income and operating margins.

Jason: On an organic basis revenues grew by five 4%.

I understand them in rfps have more than doubled year over year to $437 million up nearly 73% sequentially due to the award of several sports Stadium and arena projects and that's really something Miller is good at.

Jason: If we look to each of our segments revenues of U S. Electrical construction were a record $1 9 billion.

Jason: Due to a combination of organic growth and the Miller Electric acquisition. This segment generated increased revenues from almost all market sectors with the most significant growth coming from networking communications driven by our datacenter projects.

Jason Nalbandian: Moving to slide eight for a few quarterly highlights, starting with gross profit. Driven by our electrical and mechanical construction segments, as well as our U.S. building services segment, gross margin has expanded by 150 basis points. with gross profit increasing by 22.6%. If we look next to SG&A, our first quarter expenses increased by $74.6 million. Contributing to this variance was $22.5 million of incremental expenses from acquired companies. 5.1 million of additional amortization. and the previously referenced $9.4 million of transaction costs. Excluding these items, SG&A grew by $37.7 million, largely due to employment costs, given both greater headcount to support our organic growth, as well as increased incentive compensation expense within our construction sector.

Tony: And we continue to see demand within our mechanical construction segment for water and wastewater projects with <unk>, increasing 29% year over year and 29% and.

Tony: 20% sequentially to over $820 million, while we have experienced a decrease in our high Tech manufacturing Ipos. We continue to believe very strongly in the long term fundamentals of this sector as we've discussed on prior calls these projects can be episodic in nature and <unk> in this space will fluctuate based on <unk>.

Jason: In addition to data centers notable revenue increases were experienced in healthcare, where our quarterly revenues doubled.

Jason: <unk> due to certain infrastructure projects and institutional as a result of a greater number of public sector projects.

Jason: U S. Mechanical construction revenues were $1 $5 7 billion, increasing 10, 2%.

Speaker Change: Timing of project awards startups and executions, we still expect future awards in this sector and some of that should happen later this year with that I'll turn the call over to Jason who will review the quarter's financial results in more detail Jason.

Jason: Similar to electrical the largest growth during the quarter was seen from data centers within networking communications.

Jason: In addition, this segment had noteworthy revenue increases within healthcare due to both greater organic activity as well as the incremental contribution from acquired companies.

Jason: Thank you Tony.

Speaker Change: Everyone.

Speaker Change: Starting on slide six I'm going to review the operating performance for each of our segments as well as some of the key financial data for the first quarter of 2025 as compared to the first quarter of 2024.

Jason Nalbandian: given the higher projected annual operating SG&A margin for the quarter of 10.4% compared to 9.6% a year ago. Transaction costs account for 20 basis points of the increase, with the remaining 60 basis points being driven by two primary factors. First, we have the incentive compensation expense I just referenced. With the increase in our gross profit margin, it is typical to see an increase in SG&A margin as the improved profitability results in greater subsidiary incentive compensation, which is a variable cost. Next, within U.S. building services, SG&A margin has increased given the decline in revenues we've experienced without a corresponding reduction in SG&A.

Jason: Hospitality and entertainment given increased project activity and water and wastewater driven by continued strong demand for our service offerings across the southeast region of the United States.

Speaker Change: As Tony mentioned consolidated quarterly revenues were a record $3 87 billion, an increase of $435 1 million or 12, 7%, which was once again led by our construction segments, where we continue to execute well and demand remains strong across most of the key market sectors that we serve.

Revenues of the mechanical segment also benefited from higher levels of service volume.

Jason: Partially offsetting the growth in mechanical however were reduced revenues in commercial and high Tech manufacturing.

Jason: The completion or substantial completion of certain tenant fit out our office projects, coupled with fewer warehousing and distribution projects, which we've referenced on recent calls were the primary drivers of the reduced commercial revenues.

Speaker Change: Revenues for the first quarter included $251 million of incremental acquisition contribution.

Speaker Change: Including $183 million for Miller electric since the acquisition on February three.

Jason: With respect to high Tech manufacturing, we experienced a decrease in revenues from semiconductor projects as we actively work towards the completion of the initial phases of several of these contracts.

Speaker Change: On an organic basis revenues grew by five 4%.

Jason Nalbandian: Our segment management team continues to adjust their cost structure, aligning the segment's overhead to its new revenue base. And overall, we do expect to see a decrease in SG&A margin as the year progresses and anticipate a full year SG&A margin more comparable to that of the prior year when adjusting for transaction costs. And finally on this page, diluted earnings per share was $5.26 compared to $4.17, an increase of 26.1%. Excluding transaction costs, non-GAAP diluted earnings per share was $5.41, an increase of $29.75.

Speaker Change: If we look to each of our segments revenues of U S. Electrical construction were a record $1 9 billion.

Jason: On a combined basis, our construction segments generated revenues of $2 66 billion, an increase of 21, 3%.

Speaker Change: Due to a combination of organic growth and the Miller Electric acquisition. This segment generated increased revenues from almost all market sectors with the most significant growth coming from networking communications driven by our data center projects.

Jason: Moving to U S building services.

Jason: Revenues were $742 6 million, representing a decrease of four 9% as the expected reduction in site based revenues more than offset the strength of our mechanical services operations, which grew revenues by $44 $3 million during the quarter.

Speaker Change: In addition to data centers notable revenue increases were experienced in healthcare, where our quarterly revenues doubled transportation due to certain infrastructure projects and institutional as a result of a greater number of public sector projects.

Jason: Demand for mechanical services remains robust and we once again experienced growth across each of those service lines.

Jason Nalbandian: If we turn to slide nine, which is our balance sheet. As a result of the Miller Electric acquisition and approximately $225 million utilized on share repurchases, our cash balance has decreased to just under $577 million at the end of March. During the quarter, we borrowed $250 million under our revolver for temporary working capital needs. As we've stated in the past, our balance sheet, including the $689 million of working capital, remains strong and liquid. And when coupled with our history of cash generation, as well as the nearly $980 million of capacity available under our credit facility, we are well positioned to continue to fund organic growth, pursue strategic M&A, and return capital to shareholders.

Jason: We still face some headwinds in our compares for the segment as we move through the year. However, as we progressed the decrease in site based revenues should be less drastic and we are optimistic that the performance in mechanical services will begin to offset the lower site based revenues.

Speaker Change: U S. Mechanical construction revenues were $1 $5 7 billion, increasing 10, 2%.

Similar to electrical the largest growth during the quarter was seen from data centers within networking communications.

Speaker Change: In addition, this segment had noteworthy revenue increases within healthcare due to both greater organic activity as well as the incremental contribution from acquired companies.

Jason: Looking at industrial services revenues were $359 million, an increase of one 4%.

Speaker Change: During the quarter. This segment's performance was impacted by a slower start to the turnaround season due to the delay or deferral of planned projects, resulting from freezing weather conditions in Texas during January which Tony referenced.

Speaker Change: Hospitality and entertainment given increased project activity and water and wastewater driven by continued strong demand for our service offerings across the southeast region of the United States.

Speaker Change: And lastly, UK building services delivered revenues of $105 3 million essentially in line with that of the prior year period.

Speaker Change: Revenues in the mechanical segment also benefited from higher levels of service volume.

Jason Nalbandian: Although not shown on the slide, operating cash flow was $108.5 million, which compares to $132.3 million in last year's first quarter. As a reminder, operating cash flow during Q1 tends to be the lowest through the funding of the prior year's Incentive Compensation Award. Cash flow in the quarter was additionally impacted by the progression on a number of contracts for which we were previously billed ahead. As we work through these upfront payments, we saw the expected decrease in operating cash as our outflows exceeded our inflows on these projects.

Speaker Change: Partially offsetting the growth in mechanical however were reduced revenues in commercial and high Tech manufacturing.

Speaker Change: A modest decline in facilities maintenance revenues was more than offset by increased project demand from certain of our UK customers.

Speaker Change: The completion or substantial completion of certain tenant fit out our office projects, coupled with fewer warehousing and distribution projects, which we've referenced on recent calls were the primary drivers of the reduced commercial revenues.

Speaker Change: Let's turn to slide seven.

Speaker Change: We reported operating income of $318 8 million or eight 2% of revenues in.

Speaker Change: With respect to high Tech manufacturing, we experienced a decrease in revenues from semiconductor projects as we actively work towards the completion of the initial phases of several of these contracts.

Speaker Change: And our performance established new first quarter record for both operating income and operating margin.

Speaker Change: When compared against the first quarter of 'twenty. Four this represents a 22, 6% or nearly $59 million increase in operating income and operating margin has expanded by 60 basis points.

Speaker Change: On a combined basis, our construction segments generated revenues of $2 66 billion, an increase of 21, 3%.

Tony Guzzi: With that, I'll turn the call back over to Thanks, Jason. I'm going to be on pages 10 to 11 to finish. Given the strong start to the year, we are going to raise the low end of our diluted earnings per share guidance by 40 cents to a range of $22.65 to $24. Our revenue guidance will remain the same at $16.1 billion to $16.9 billion.

Speaker Change: Moving to U S building services revenues.

Speaker Change: Excluding transaction expenses related to the acquisition of Miller Electric <unk>.

Speaker Change: Revenues were $742 6 million, representing a decrease of four 9% as the expected reduction in site based revenues more than offset the strength of our mechanical services operations, which grew revenues by $44 3 million during the quarter.

Speaker Change: non-GAAP operating income was $328 1 million up 26, 2% or $68 million and our non-GAAP operating margin was eight 5% a 90 basis point improvement.

Tony Guzzi: I'd always remind you this is not a quarter to quarter business, the guidance reflects our expectation that we will continue to deliver strong operating margins in 2025. In setting this range, we believe that we have covered the potential impact of tariffs on our business. We will manage through the tariff uncertainty similar to how we manage the supply chain and cost disruptions around COVID. We will try to pass on price increases and protect ourselves as much as we can through proactively negotiating favorable contractual terms. While customers possibly may defer spending or delay projects, we have not yet seen any such actions in a meaningful way, and the growth in our RPOs reflect the strong demand we continue to experience for our services.

Speaker Change: Demand for mechanical services remains robust and we once again experienced growth across each of those service lines.

Speaker Change: Once again, turning to each of our segments U S. Electrical construction generated operating income of $136 1 million, which represents a 48, 6% increase.

Speaker Change: We still face some headwinds in our compares for the segment as we move through the year. However, as we progressed the decrease in site based revenues should be less drastic and we are optimistic that the performance of mechanical services will begin to offset the lower site based revenues.

Speaker Change: Operating margin was 12, 5%, a 50 basis point improvement.

Speaker Change: From a market sector perspective, this segment benefited from greater gross profit across the majority of the sectors in which we operate with the largest increases tracking in line with its revenue growth.

Speaker Change: Looking at industrial services revenues were $359 million, an increase of one 4%.

Speaker Change: Operating income of U S. Electrical construction included $12 8 million of incremental contribution from Miller electric net of $7 4 million of intangible asset amortization.

Speaker Change: During the quarter. The segment's performance was impacted by a slower start to the turnaround season due to the delay or deferral of planned projects, resulting from freezing weather conditions in Texas during January which Tony referenced.

Speaker Change: Operating income for U S. Mechanical construction was $186 7 million or 11, 9% of revenues.

Speaker Change: And lastly, UK building services delivered revenues of $105 3 million essentially in line with that of the prior year period.

Tony Guzzi: We also believe that the normalization of trade and trade barriers will be a long-term net positive for EMCOR, resulting in more reshoring of critical manufacturing. We continue to believe that we are still in the early stages of this investment cycle. That said, simply, we will manage this short-term challenge like we have many others. It is part of our EMCOR culture to train continuously and share best practices around operating in a volatile, uncertain, complex, and ambiguous environment. We call that VUCA. We train on it. And quite frankly, that's been the world we've lived in for the last 12 to 15 years.

Speaker Change: This represents an increase of nearly 24% and 130 basis points of margin expansion.

Modest decline in facilities maintenance revenues was more than offset by increased project demand from certain of our U K customers.

Speaker Change: This segment experienced the most significant increases in gross profit from the networking communications and high Tech manufacturing sectors.

Speaker Change: Let's turn to slide seven.

Speaker Change: Despite the reduction in high Tech manufacturing revenues that I previously referenced the favorable progression on a number of EV in semiconductor projects resulted in greater profitability during the quarter.

Speaker Change: We reported operating income of $318 8 million or eight 2% of revenues in.

Speaker Change: And our performance established new first quarter record for both operating income and operating margin.

Speaker Change: And together our construction segments reported an operating margin of 12, 1%, which is a 100 basis point improvement year over year.

Speaker Change: Excellent execution and a more favorable mix of work continued to be the main drivers of their performance.

Tony Guzzi: Honestly, that is the type of environment that we have come to expect, and as contractors, we can react very well to almost any environment.

Speaker Change: Excluding transaction expenses related to the acquisition of Miller Electric <unk>.

Speaker Change: Operating income for U S building services was $36 4 million or four 9% of revenues.

Speaker Change: non-GAAP operating income was $328 1 million up 26, 2% or $68 million and our non-GAAP operating margin was eight 5% a 90 basis point improvement.

Tony Guzzi: So what will take us to get to the higher end of the range? We got to continue to earn operating margins the higher end of our performance over the last two years. Our RPO mix and bookings need to continue the same patterns that we've seen over the last 18 to 24 months, and we must continue to manage our costs well. As the year progresses, we will know more about each of these and the actual impact of tariffs and other macroeconomic factors that are beyond our control. I often say to our team, and this is part of our DNA too, focus on what you can control.

Speaker Change: As the composition of this segment's revenues continues to skew towards more mechanical services and less site based and increase in gross profit and gross profit margin more than offset the reduced revenues of the segment, leading to a $3 million increase in operating income and a 60 basis point improvement in operating margin.

Speaker Change: Once again, turning to each of our segments U S. Electrical construction generated operating income of $136 1 million, which represents a 48, 6% increase.

Speaker Change: I should also remind everyone that the favorable year over year comparison is driven in part by the impact in last year's first quarter of a customer bankruptcy, which reduced this segment's operating income by $11 million and operating margin by 140 basis points.

Operating margin was 12, 5%, a 50 basis point improvement.

Tony Guzzi: And that is what we plan to do. We're going to exercise discipline around our overhead and job costs. And we'll continue to train and share best practices while proactively addressing any potential issues. like we always do, we will allocate capital with discipline. We have a decent pipeline of acquisition opportunities. And I have said for many years, deals happen when they happen.

Speaker Change: Turning to industrial services operating income of $6 8 million or one 9% of revenues compares unfavorably to $18 million or five 1% of revenues a year ago.

Speaker Change: Operating income of U S. Electrical construction included $12 8 million of incremental contribution from Miller electric net of $7 4 million of intangible asset amortization.

Speaker Change: Adding to the direct impact of the previously referenced project deferrals and delays was a greater amount of unabsorbed overhead.

Speaker Change: Operating income for U S. Mechanical construction was $186 7 million or 11, 9% of revenues.

Speaker Change: The results of this segment were also impacted by a $4 million increase in the allowance for credit losses, which reduced its operating margin by 110 basis points.

Tony Guzzi: Like we always do, we also want to thank our EMCOR teammates for their excellent performance and for living our values of mission first people always. You know, quite frankly, we got the best team in the field from all levels and our subsidiary leaders are executing exceptionally well in a very uncertain environment, but that's what we do as contractors and we do it exceedingly well.

Speaker Change: This represents an increase of nearly 24% and 130 basis points of margin expansion.

Speaker Change: And lastly, the UK building services earned operating income of $5 million or four 7% of revenues.

Speaker Change: This segment experienced the most significant increases in gross profit from the networking communications and high Tech manufacturing sectors.

Speaker Change: Mobilization costs incurred with the recent award of a facilities maintenance contract by a new customer, but the primary reason for the period over period reduction in operating income and operating margin.

Speaker Change: Moving to slide eight for a few quarterly highlights starting with gross profit.

Unknown Executive: We'll turn it over to Sagar for questions. Thank you. We will now begin the question and answer session. To ask a question, please press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.

And together our construction segment reported an operating margin of 12, 1%, which is a 100 basis point improvement year over year.

Speaker Change: Driven by our electrical and mechanical construction segments as well as our U S. Building services segment gross margin has expanded by 150 basis points with gross profit increasing by 22, 6%.

Speaker Change: Excellent execution and a more favorable mix of work continued to be the main drivers of their performance.

Speaker Change: Operating income for U S building services was $36 4 million or four 9% of revenues.

Speaker Change: If we look next to SG&A, our first quarter expenses increased by $74 6 million.

Speaker Change: Contributing to this variance was $22 5 million of incremental expenses from acquired companies.

Unknown Executive: At this time, we will pause momentarily to assemble a roster.

Speaker Change: $5 1 million of additional amortization expense.

Speaker Change: And the previously referenced $9 4 million of transaction costs.

Brent Thielman: Our first question comes from Brent Thielman from DA Davidson, please go ahead. Great, thanks. Good morning. Morning, Brian. Tony, really strong start on RPOs. Looks like, you know, good momentum in most areas of the business right now. I guess in light of that, you know, you did keep the top end of the guidance range here. And my question was more, is it to handicap what could be operational risks, just related to tariffs or supply chain noise? Or is it more related to kind of potential growth headwinds that could surface? Even though it doesn't really sound like that's happened yet, just wanted to get clarity there.

Speaker Change: Excluding these items SG&A grew by $37 7 million largely due to employment costs, given both greater head count <unk>.

Speaker Change: Port our organic growth as well as increased incentive compensation expense within our construction segments.

Speaker Change: The higher projected annual operating results.

Speaker Change: SG&A margin for the quarter of 10, 4% compares to nine 6% a year ago.

Speaker Change: Turning to industrial services operating income of $6 8 million or one 9% of revenues compares unfavorably to $18 million or five 1% of revenues a year ago.

Speaker Change: Transaction costs account for 20 basis points of the increase with the remaining 60 basis points being driven by two primary factors.

Speaker Change: First we have the incentive compensation expense I just referenced.

Speaker Change: Adding to the direct impact of the previously referenced project deferrals and delays with a greater amount of unabsorbed overhead.

Speaker Change: With the increase in our gross profit margin. It is typical to see an increase in SG&A margin as the improved profitability, resulting greater subsidiary incentive compensation, which is a variable cost.

Tony Guzzi: No, it's related than anything even beyond tariffs, right? There's a lot of uncertainty. It's not growth related. We think we have the tariffs nailed down in our range. We feel really good about that. We thought it's April, even without an environment that had tariffs and everything else. I doubt we would have raised the top end of our range, even if you said there's no tariffs, no anything. We brought the bottom up because we feel good about that. But the top end, if you do that math all the way out, it was fairly aggressive guidance. And we contemplated, you know, a year where we would continue to grow, obviously, with our revenue guidance of 16.1 to 16.9.

Speaker Change: The results of this segment were also impacted by a $4 million, increasing the allowance for credit losses, which reduced its operating margin by 110 basis points.

Speaker Change: Next within U S building services SG&A margin has increased given the decline in revenues, we have experienced without a corresponding reduction in SG&A or.

Speaker Change: And lastly, the UK building services earned operating income of $5 million or four 7% of revenues.

Speaker Change: Mobilization costs incurred with the recent award of the facilities maintenance contract by a new customer, but the primary reason for the period over period reduction in operating income and operating margin.

Speaker Change: Our segment management team continues to adjust their cost structure aligning the segment's overhead to its new revenue base.

Speaker Change: And overall, we do expect to see a decrease in SG&A margin as the year progresses, and anticipate a full year SG&A margin more comparable to that of the prior year when adjusting for transaction costs.

Speaker Change: Moving to slide eight for a few quarterly highlights starting with gross profit.

Speaker Change: And finally on this page diluted earnings per share was $5 26 compared to $4 17.

Tony Guzzi: That's mainly due based on the pace and timing of projects, how they'll roll out through the year. But, yeah. More just sort of macroeconomic, early in the year, we feel really good about the prospects we have in the business right now. And I think the one thing to add to that on the margins side, right, is we are maintaining our margin guidance in that same range that we had back in February of 85 to 92. With an adjusted margin for the first quarter here of 85, we're essentially saying margins will at least hold, if not improve, throughout the remainder.

Speaker Change: An increase of 26, 1%.

Speaker Change: If we look next SG&A, our first quarter expenses increased by $74 6 million.

Speaker Change: Excluding transaction costs non-GAAP diluted earnings per share was $5 41, an increase of 29, 7%.

Speaker Change: Contributing to this variance was $22 5 million of incremental expenses from acquired companies.

Speaker Change: If we turn to slide nine which is our balance sheet.

Speaker Change: $5 1 million of additional amortization expense.

Speaker Change: As a result of the Miller electric acquisition and approximately $225 million utilized on share repurchases. Our cash balance has decreased to just under $577 million at the end of March during.

Speaker Change: And the previously referenced $9 4 million of transaction costs.

Speaker Change: Excluding these items SG&A grew by $37 7 million largely due to employment costs, given both greater head count.

Speaker Change: During the quarter, we borrowed $250 million under our revolver for temporary working capital needs.

Speaker Change: Support our organic growth as well as increased incentive compensation expense within our construction segments, given the higher projected annual operating results.

Unknown Executive: Okay, okay.

Tony Guzzi: And then, you know, I guess, again, back on the high-tech manufacturing, you've got a lot of momentum in most areas of the business. Obviously, RPOs are off a bit there, but it seems like there's been a slug of announcements lately on the pharma side related to reshoring. So, I want to come back to that, your assessment of the opportunities that may be building in that vertical, where we could, you know, sort of see an inflection, maybe in RPOs over the next couple of years here. My gut tells me yes. Pharma. I also see you'll see more semiconductor work come in.

Speaker Change: As we stated in the past our balance sheet, including the $689 million of working capital remained strong and liquid and when coupled with our history of cash generation as well as the nearly $980 million of capacity available under our credit facility. We are well positioned to continue to fund organic growth pursue strategic M&A and return.

Speaker Change: SG&A margin for the quarter of 10, 4% compares to nine 6% a year ago.

Transaction costs account for 20 basis points of the increase with the remaining 60 basis points being driven by two primary factors.

Speaker Change: Capital to shareholders.

Speaker Change: First we have the incentive compensation expense I just referenced.

Although not shown on the slide operating cash flow was $108 5 million, which compares to $132 3 million in last year's first quarter.

Speaker Change: With the increase in our gross profit margin. It is typical to see an increase in SG&A margin as the improved profitability, resulting in greater subsidiary incentive compensation, which is a variable cost.

Speaker Change: As a reminder, operating cash flow during Q1 tends to be the lowest to the funding of the prior year's incentive compensation Awards.

Tony Guzzi: We'll be careful what we do there. But I think, you know, macroeconomically, it's set up for that, right? I don't think anybody that's listening to this call right now would say, gee, we feel better about what's happening in China and Taiwan today than before Taiwan's semiconductor started building fabs in Arizona. Well, the answer to that would be, that's even got more tenuous. So the spending may accelerate over the next three to five years, instead of decelerate. I think that that one, I think pharma is absolutely that tied to reshoring. But Brent, I would tell you, there's been a bevy of new drugs, especially around the weight loss area, that we're also seeing expansion and we're positioned very well.

Speaker Change: Next within U S building services SG&A margin has increased given the decline in revenues, we have experienced without a corresponding reduction in SG&A or.

Speaker Change: Cash flow in the quarter was additionally impacted by the progression on a number of contracts for which we were previously build ahead as.

Speaker Change: Our segment management team continues to adjust their cost structure aligning the segment's overhead to its new revenue base.

Speaker Change: As we work through these upfront payments, we saw the expected decrease in operating cash as our outflows exceeded our inflows on these projects.

Speaker Change: With that I'll turn the call back over to Tony.

Tony: Thanks, Jason I'm going to be on pages 10 to 11 to finish.

Tony: Given the strong start to the year, we are going to raise the low end of our diluted earnings per share guidance by 40 to a range of $22, 65% to $24. Our revenue guidance will remain the same at $16 1 billion to $16 9 billion.

Speaker Change: And finally on this page diluted earnings per share was $5 26 compared to $4 17.

Speaker Change: An increase of 26, 1%.

Tony Guzzi: A big chunk of that's happened in the Research Triangle Park area. We have great capability there across the trade spectrum, from millwrights through pipe fitters and onward. I think, you know, the other part that's happening is New Jersey. We have great electrical capability there and mechanical. And then it's happening in the Indiana area, where we're well positioned to. And then you get to the biofarm area. It still is. Southern California is very strong. And we have great capability there, especially electrically and mechanically. So and then if you take all of that and you overlay fire protection, we can service the fire life safety nationally.

Speaker Change: Excluding transaction costs non-GAAP diluted earnings per share was $5 41.

Tony: I would always remind you this is not a quarter to quarter business. The guidance reflects our expectation that we will continue to deliver strong operating margins in 2025.

Speaker Change: An increase of 29, 7%.

Speaker Change: If we turn to slide nine which is our balance sheet.

Tony: In setting this range, we believe that we have covered the potential impact of tariffs on our business.

Tony: We will manage through the tariff on certainly similar to how we manage the supply chain and cost disruptions around COVID-19.

Speaker Change: During the quarter, we borrowed $250 million under our revolver for temporary working capital needs.

Tony: We will try to pass on price increases and protect ourselves as much as we can through proactively negotiating favorable contractor or terms.

Tony: While customers, possibly may deferred spending or delayed projects, we have not yet seen any such actions in a meaningful way and the growth in our <unk> reflect the strong demand we continue to experience for our services.

Tony Guzzi: So again, we look at that, if we're sitting here five years from now, we're going to have built a lot of high-tech manufacturing plants, we're going to have done it hopefully very well, and our combination of VDC, coupled with prefab, coupled with how well our folks share means and method, we expect to be able to deliver exceptional results for our customers in that area. And I think, too, in that space, right, as we await Other phases of awards of the semiconductor space, we're still getting work in the other high-tech areas, be it pharma, biotech, life sciences, EV value chain, and just in the quarter alone, we had $200 million in organic net bookings in that high-tech manufacturing.

Tony: We also believe that the normalization of trade and trade barriers will be a long term net positive for EMCORE, resulting in more reassuring of critical manufacturing. We continue to believe that we are still in the early stages of this investment cycle said simply we will manage the short term.

Speaker Change: <unk> to shareholders.

Speaker Change: Although not shown on the slide operating cash flow was $108 5 million, which compares to $132 3 million in last year's first quarter.

Speaker Change: As a reminder, operating cash flow during Q1 tends to be the lowest to the funding of the prior year's incentive compensation Awards.

Speaker Change: Cash flow in the quarter was additionally impacted by the progression on a number of contracts for which were previously build ahead as.

Tony: <unk> like we have many others.

Tony: It is part of our EMCORE culture shrank continuously and share best practices around operating in a volatile uncertain complex and ambiguous environment, we call that <unk>, we trained on it and quite frankly, that's been the world. We've lived in for the last 12 to 15 years honestly that is the type of environment.

Speaker Change: As we work through these upfront payments, we saw the expected decrease in operating cash as our outflows exceeded our inflows on these projects.

Unknown Executive: Got it.

Jason Nalbandian: One more, maybe more housekeeping. Jason, I was trying to get a sense of whether Miller is accretive or dilutive to the electrical segment margin as you fold that in, or maybe it's neutral. Yeah, I think I think for the quarter certainly diluted to the margin, right? And we talked about the largest piece of that being driven by the intangible asset amortization. And so on an annual basis, we had said to consolidated EMCOR, expect 25 to 30 basis points of margin dilution for the electrical segment, I would say it's probably about 100 to 110 basis points to that segment.

Tony: With that I'll turn the call back over to Tony.

Tony: Thanks, Jason I'm going to be on pages 10 to 11 to finish.

Tony: We have come to expect and as contractors, we can react very well to almost any environment.

Tony: So what will what will take us to get to the higher end of the range.

Tony: We got to continue to earn operating margins the higher end of our performance over the last two years.

Tony: Our RPM mix and bookings need to continue the same patterns that we've seen over the last 18 to 24 months.

Tony: I would always remind you this is not a quarter to quarter business. The guidance reflects our expectation that we will continue to deliver strong operating margins in 2025.

Tony: And we must continue to manage our costs well as.

Unknown Executive: But when you remove the amortization expense, they are in strong margins neutral with our electrical segment. Got it. Okay. Thanks. I'll pass it on. Thanks, Brent.

Tony: As the year progresses, we will know more about each of these in the actual impact of tariffs and other macroeconomic factors that are beyond our control.

Tony: In setting this range, we believe that we have covered the potential impact of tariffs on our business.

Tony: We will manage through the tariff on certainly similar to how we manage the supply chain and cost disruptions around COVID-19.

Tony: I, often say to our team.

Unknown Executive: Okay. Our next question, please.

This is part of our DNA to focus on what you can control and that is what we plan to do we're going to exercise discipline around our overhead and job costs and we'll continue to train and share best practices, while proactively addressing any potential issues.

Adam Thalhimer: Thank you. Our next question comes from Adam Thalhimer from Thompson Davis Company. Please go ahead. Hey, good morning, guys. Great quarter morning. Thank you.

Tony: We will try to pass on price increases and protect ourselves as much as we can through proactively negotiating favorable contractor or terms.

Tony Guzzi: Tony, I want to start on building services. Can you just give us kind of updated, high-level thoughts on where you want to take that segment from here? Oh, I think you know, it's where we've been investing. Our investments dollars have gone into the mechanical service business over a long period of time. Historically, it's been sort of a 70-30 between site-based and 30 being site-based, 70 being mechanical service. That's going to, you know, by this time next year, probably look like 80-20. So we'll continue to invest in technician-based services, we'll be opportunistic on a site-based team, we have a really good team there.

Tony: While customers, possibly may deferred spending or delay projects, we have not yet seen any such actions in a meaningful way and the growth in our <unk> reflect the strong demand we continue to experience for our services.

Tony: Like we always do we will allocate capital with discipline, we have a decent pipeline of acquisition opportunities and I have said for many years deals happen when they happen.

Tony: Like we always do we also want to thank our EMCORE teammates for their excellent performance and for living our values of mission first people always.

Tony: Quite frankly, we got the best team in the field from all levels and our subsidiary leavers leaders are executing exceptionally well in a very.

Tony: Uncertain environment, but that's what we do is contractors and we do it exceedingly well with that.

Tony: <unk> like we have many others. It is part of our EMCORE culture, it shrank continuously and share best practices around operating in a volatile uncertain complex and ambiguous environment, we call that <unk>, we trained on it and quite frankly, that's been the world. We've lived in for the last 12 to 15 years.

Tony: I will turn it over cigar for questions.

Tony Guzzi: grow where it makes sense. And what we're not going to is take, you know, contracts that have very difficult terms and provide little to no margin. And that's what you're really seeing right now on the site-based side. So building services has always been led by mechanical services, you know, our goal long term is to grow both, but mechanical services will be the outcome.

Tony: Thank you.

Tony: We will now begin the question and answer session.

To ask a question. Please press Star then one on your Touchtone phone.

Tony: Honestly that is the type of environment that we have come to expect and as contractors, we can react very well to almost any environment.

Tony: If youre using a speakerphone please pick up your handset before pressing the keys.

Tony: If at any time question has been addressed and you would like to withdraw your question. Please press Star then two.

Tony: So what will what will take us to get to the higher end of the range.

Tony: At this time, we will pause momentarily to assemble the roster.

Tony: We got to continue to earn operating margins at the higher end of our performance over the last two years.

Tony: Yes.

Tony: Our RPM mix and bookings need to continue the same patterns that we've seen over the last 18 to 24 months.

Unknown Executive: Okay. We're done. Got it.

Speaker Change: Our first question comes from Brent Thielman from D. A Davidson. Please go ahead.

Tony Guzzi: You bought back a lot of stock in the first quarter despite closing Miller and also you said some cash outflows related to new project starts. What gave you the confidence to do that? Or can you just give some additional color behind that? Yeah, I think it starts, Adam, it begins and ends with execution. We have a long-term history of being. best in class as far as cash flow generation. We see no reason to believe that won't continue. We will earn cash flow at least at net income, and we'll probably exceed that a little bit as the year progresses.

Tony: And we must continue to manage our costs well as.

Brent Thielman: Great. Thanks, good morning.

Tony: As the year progresses, we will know more about each of these in the actual impact of tariffs and other macroeconomic factors that are beyond our control.

Speaker Change: In Brentwood.

Speaker Change: Okay.

Speaker Change: Tony really strong start on our site.

Speaker Change: Good momentum in most areas of the business right now I guess in light of that.

Tony: I, often say to our team.

Tony: This is part of our DNA to focus on what you can control and that is what we plan to do we're going to exercise discipline around our overhead and job costs and we'll continue to train and share best practices, while proactively addressing any potential issues.

Speaker Change: You did keep the top end of the guidance range here and my question was more is it to handicap, what could be operational risks just related to tariffs or supply chain noise or is it more related to kind of potential gross headwinds.

Tony: Like we always do we will allocate capital with discipline, we have a decent pipeline of acquisition opportunities and I have said for many years deals happen when they happen.

Speaker Change: Surface.

Speaker Change: Even though it doesn't really sound like that's happened yet just wanted to get clarity there.

Jason Nalbandian: There's nothing in our profile that says that won't happen in the future. Yeah, you have customer prepayments that are in and out and bumps here and there, but We're smart about how we set up contractual terms. We're smart about how we execute on a job and keep our customers apprised of where we are in the progress of that job. We're best in class at progress billings. And quite frankly, because of the way we have our incentive plan structured, we have a cash focus in this company that's unrelenting. and put all that together, that gives us the confidence to continue to maybe use our balance sheet a little more aggressively.

Speaker Change: It's related than anything even beyond tariffs right, there's a lot of uncertainty.

Tony: Like we always do we also want to thank our EMCORE teammates for their excellent performance and for living our values of mission first people always.

Speaker Change: And it's not growth related we think we have the tariffs nailed down and our.

Speaker Change: Range, we feel really good about that we thought it's April even without an environment that had tariffs and everything off.

Tony: Quite frankly, we got the best team in the field from all levels and our subsidiary leavers leaders are executing exceptionally well in a very.

Speaker Change: We would have raised the top end of our range. Even if you said theres no tariffs no anything we brought the bottom up because we feel good about that but the top end. If you do that math all the way out it was fairly aggressive guidance.

Tony: Uncertain environment, but that's what we do is contractors and we do it exceedingly well with that.

Tony Guzzi: We've always said that when the right opportunity came along, that we would execute that and it was irrespective of size, that we were very comfortable up to a billion dollars and maybe even a little bit over that. And we've proven that with Miller and we've also been, if you look at the collection of deals we've done in the last five years, we are really good at executing the integration of acquisitions and I would put Miller in the top decile of any acquisition integration that we've ever done. So, you know, we're here to build a business for the long term, we feel good about our cash flow, we feel good about our balance sheet.

Tony: I will turn it over cigar for questions.

Speaker Change: And we contemplated a year, where we would continue to grow obviously with our revenue guidance of 16, 1% to 69, that's mainly due based on the pace and timing of projects, how they'll roll out through the year.

Tony: Thank you.

Tony: We will now begin the question and answer session.

Tony: To ask a question. Please press Star then one on your Touchtone phone.

Tony: If youre using a speakerphone please pick up your handset before pressing the keys.

<unk>.

Speaker Change: But yes.

Speaker Change: More just sort of macroeconomic early in the year.

Tony: If at any time question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: We feel really good about.

The prospects we have in the business right now.

Tony: At this time, we will pause momentarily to assemble our roster.

Speaker Change: And I think I think the one thing to add to that on the margin side right as we're maintaining our margin guidance in that same range that we had back in February of 85 to 92.

Tony: Yes.

Our first question comes from Brent Thielman from D. A Davidson. Please go ahead.

Jason Nalbandian: Jason, do you have anything to add? I would just say we did still have very strong operating cash flow this quarter, right? A little bit down from last year, but I think it's important to remember that traditionally, really with the exception of this year and last year, Q1 operating cash flow for us is historically negative. Right. So at $108 million. Even compared to the $132 or $133 million last year, still very strong operating cash flow in the quarter. And I think, Adam, cutting through, right, we obviously feel very good about not only the profitability but the cash flow characteristics for what we have in our pocket.

Speaker Change: The adjusted margin for the first quarter here of eight five we're essentially saying margins will at least hold if not improve throughout the remainder of the year right.

Brent Thielman: Great. Thanks, good morning.

Tony: Brian morning.

Brent Thielman: Okay.

Brent Thielman: Tony really strong start on <unk> looks like.

Speaker Change: Okay, Okay and then.

Brent Thielman: Good momentum in most areas of the business right now I guess in light of that.

Speaker Change: And I guess again back on the Hi Tech menu stack Shriek, you have got a lot of momentum in most areas of the business, obviously Rps zuroff had been there, but it seems like theres been a slug of announcements lately on the pharma side related to reassuring.

Speaker Change: I wanted to come back to that your assessment of the opportunities that may be building in that vertical where we could see.

Unknown Executive: Got it. Good color.

Unknown Executive: I'll turn it over. Thanks.

Brian Brophy: Adam, our next question please.

Brent Thielman: Even though it doesn't really sound like that's happened yet just wanted to get clarity there.

Speaker Change: See an inflection.

Unknown Executive: Thank you.

Unknown Executive: The next question comes from Brian Brophy from Stiefel. Please go ahead. Thanks. Good morning, everybody. They wanted to ask one on data centers, obviously, continues to be a bright spot here in the near term. But we continue to see, you know, headlines, pointing to some more noise, couple large hyperscalers at this point, adjusting some of their data center commitments. Just curious your thoughts on this area, what's the latest you're seeing? And have you seen any change in your long term customer build plan? Yeah, the change we've seen is actually more areas, more search for power.

Speaker Change: Maybe in <unk> over the next couple of years here.

Brent Thielman: It's related than anything even beyond tariffs right, there's a lot of uncertainty.

Speaker Change: My gut tells me yes.

Speaker Change: Pharma I also see Youll see more.

Brent Thielman: It's not growth related we think we have the tariffs nailed down.

Speaker Change: Semiconductor work come in we'll be careful what we do there, but I think macroeconomically. It set up for that right I don't think anybody that's listening to this call right now, we'd say Gee, we feel better about what's happening in China, and Taiwan today, and before our Taiwan semiconductor started building fabs in Arizona, while the answer to that would be that's even got more.

Brent Thielman: The range, we feel really good about that we thought it's April even without an environment that had tariffs everything out I doubt we would have raised the top end of our range. Even if you said theres no tariffs no anything we brought the bottom up because we feel good about that but the top end. If you do that math all the way out it was fairly.

Speaker Change: Tenuous so the spending may accelerate over the next three to five years instead of decelerate.

Speaker Change: Aggressive guidance.

Brent Thielman: I think that that one I think pharma is absolutely that tied to reassuring for Brett I would tell you theres been a bevy of new drugs, especially around the weight loss area that we're also seeing an expansion and we're positioned very well a big chunk of that has happened in the research Triangle Park area, we have great capability there across the trade spec.

Tony Guzzi: more built. That's what we've seen.

Tony Guzzi: Look, I never read too much into people's data center announcements. because some of that is sometimes just sending a signal that they're pausing. Some of that has to do with design changes. We've been through this a couple times with different hyperscalers, whether it be on the COLO side, or for lack of a better word, the OEM, the owner side where the people are actually gonna occupy them. We've experienced this multiple times, even on a location where they're gonna build six buildings, they build two, then they change the design. What we know is size is increasing, megawatt's increasing, our content's increasing, and the demand for our resources is increasing.

Speaker Change: <unk>.

Speaker Change: But yes.

Speaker Change: Just sort of macroeconomic early in the year.

Speaker Change: We felt really good about.

From from mill rights through pipe Fitters.

Speaker Change: The prospects we have in the business right now.

Brent Thielman: And onward I think the other part is happening is in new Jersey, we have great electrical capability there.

Speaker Change: And I think I think the one thing to add to that on the margin side right as we're maintaining our margin guidance in that same range that we had back in February of $85 to 92.

Brent Thielman: Mechanical and it's happening in the Indiana area, where we're well positioned to and then you get to the Biopharma area. It's still a southern California is very strong and we have great capability, there, especially electrically mechanically so.

Speaker Change: And adjusted margin for the first quarter here of eight five we're essentially saying margins will at least hold if not improve throughout the remainder out here right.

Speaker Change: Okay, Okay and then.

Brent Thielman: And then if you take all of that and you overlay fire protection, we can service the fire life safety nationally.

Speaker Change: And I guess again back on the Hi Tech stack.

Speaker Change: <unk> got a lot of momentum in most areas of the business, obviously rps are off a bit there, but it seems like theres been a slug of announcements lately on the pharma side.

Tony Guzzi: and the number of places people want us to work. And that gives us pretty visibility, I would say, certainly through the end of the year with RPOs. And with the amount of people that have brought us into their build plans, and wanting us to be part of the solution, that has definitely ticked up here in the last six to nine months. Got it. Yeah, that's very helpful.

Brent Thielman: So again, we look at that if we're sitting here five years from now we're going to have built a lot of high tech manufacturing plants, we're going to have done it hopefully very well.

Speaker Change: Related to reassuring.

Speaker Change: I wanted to come back to that your assessment of the opportunities that may be building in that vertical where we could see an inflection.

Brent Thielman: Our combination of EDC, coupled with prefab, coupled with how well our folks share means and method, we expect to be able to deliver exceptional results for our customers in that area.

Speaker Change: Maybe in Rps.

Speaker Change: Next couple of years here My gut tells me yes.

Jason Nalbandian: And then just wanted to understand some of the moving pieces on the EPS guide a little bit better. Obviously, some healthy buyback activity in the quarter. I'm assuming that's contributing. It also appears that the Miller transaction costs are now excluded. I guess, do I have those items right? And are there any other moving pieces on EPS guidance we should be aware of? So, when we set the guidance, we contemplated all the impacts of Miller to include the transaction. But this is such a wide range, and it's so early in the year. It's hard for us to say or read too much into any of that.

Brent Thielman: And I think too in that space right as we await.

Speaker Change: Pharma I also see you will see more.

Brent Thielman: Other phases of awards in the semiconductor space, we're still getting work and the other high tech areas.

Speaker Change: Semiconductor work come in we'll be careful what we do there, but I think macroeconomically. It set up for that right I don't think anybody that's listening to this call right now, we'd say Gee, we feel better about what's happening in China, and Taiwan today than before our Taiwan semiconductor started building fabs in Arizona, well the answer to that would be that's even got more.

Brent Thielman: Pharma and biotech life Sciences, EV value chain I mean, just in the quarter alone, we had $200 million inorganic net bookings in that high tech manufacturing space.

Brent Thielman: Got it.

Brent Thielman: One more maybe more housekeeping, Jason I'm, just trying to get a sense of whether miller as accretive or dilutive to the electrical segment margin.

Speaker Change: So the spending may accelerate over the next three to five years instead of decelerate.

Speaker Change: I think that that one I think pharma is absolutely that tied to re shoring, but Brett I would tell you theres been a bevy of new drugs, especially around the weight loss area that we're also seeing the expansion and we're positioned very well.

Brent Thielman: Hold that in or maybe it's neutral.

Brent Thielman: I think for the quarter, certainly dilutive to the margin rate and we talked about the largest piece of that being driven by the intangible asset amortization and so on an annual basis. We had said to consolidated EMCORE expect 25 to 30 basis points of margin dilution for the electrical segment I would say, it's probably about 100 to 110 basis points to that.

Jason Nalbandian: Our revenue guidance, we feel good about. We're pegging the low end of our guidance around 8.5% margins, and we're pegging the high end of our guidance around 9.2% margins. And if we operate within there and the volume gets to the high end, I think we're going to get towards the higher end of our guidance. Could margins be stronger? That depends on mix. It not only depends on mix, electrical, mechanical, versus the rest of the business, it also depends on mix of contract type, GMP versus fixed price, our ability to convert GMP contracts into fixed price.

Speaker Change: Chunk of that's happened in the research Triangle Park area, we have great capability, there across the trade spectrum for mill rights through pipe Fitters.

Speaker Change: And onward I think the other part is happening is in new Jersey, we have great electrical capability, there and mechanical and it's happening in the Indiana area, where we're well positioned to and then you get to the Biopharma area. It's still a southern California is very strong and we have great capability, there, especially in electrical and mechanical.

Brent Thielman: Segment, but when you remove the amortization expense they earn strong margins neutral with our electrical segment.

Got it okay. Thanks, I'll pass it on thanks, Brian next question. Please.

Jason Nalbandian: All that goes into it. There's 10,000, 12,000 moving pieces out there. It's April. There's some macroeconomic uncertainty. Quite frankly, with the size of the business now and where we are, we probably in any circumstance wouldn't have raised anything but the low end of this guidance range with the first quarter beat that we had. And at the end of the second quarter, we'll give you a pretty good view on maybe what the rest of the year looks like. And maybe at that time, we'll have some more to say about the top end of the range. Got it.

Speaker Change: Our next question comes from Adam <unk> from Thompson Davis. Please go ahead.

Speaker Change: So.

Speaker Change: And then if you take all of that and you overlay fire protection, we can service the fire life safety nationally.

Speaker Change: Hey, good morning, guys great quarter. Good morning, guys. Thank you.

Speaker Change: Tony I wanted to start on building services can you just give us kind of updated high level thoughts on where you want to take that segment from here.

Speaker Change: Again, we look at that if we're sitting here five years from now we're going to have built a lot of high tech manufacturing plants, we're going to have done it hopefully very well.

Speaker Change: Well I think.

Speaker Change: It's where we've been investing.

Speaker Change: And our combination of EDC, coupled with prefab, coupled with how well our folks share means and method, we expect to be able to deliver exceptional results for our customers in that area.

Speaker Change: Our investment dollars have gone into the mechanical service business over a long period of time.

Unknown Executive: That's helpful. I'll pass it on.

Unknown Executive: Thank you.

Speaker Change: Historically, it's been sort of us.

Alex Dwyer: Next question comes from Alex Dwyer from KeyBank Capital Markets. Please go ahead. Good morning. How are you guys? Good. How are you, Alex? Good, good.

Speaker Change: 70, 30 between site base and.

Speaker Change: And I think too in that space right as we await.

Speaker Change: It's 30 being site based 70, maybe mechanical service that's going to.

Speaker Change: Other phases of awards in the semiconductor space, we're still getting work and the other high tech areas.

Speaker Change: By this time next year, probably looks like 80 20.

Speaker Change: Pharma and biotech life Sciences, EV value chain I mean, just in the quarter alone. We had 200 million inorganic net bookings in that high tech manufacturing space.

Tony Guzzi: So on the network and communications portion of your business, can you remind us how much of that is purely data center and what makes up the balance of that? And I guess, has there been a shift in your data center bid pipeline and asks of your customers between mechanical and electrical as we think about current versus prior years? Yeah, so look, 85% or so of that network. The reason we call it network and communications is we also have a low voltage business that's become national in scope. It's part of it. It's four times the size it was five years ago.

So we'll continue to invest in technician based services will be opportunistic on our site based team we have a really good team there.

Speaker Change: So grow where it makes sense and what we're not going to do.

Speaker Change: Got it.

Speaker Change: One more maybe more housekeeping Jason.

Speaker Change: Is take.

Speaker Change: Contracts that have very difficult terms.

Speaker Change: Trying to get a sense of whether miller as accretive or dilutive to the electrical segment margin.

Speaker Change: Provide little to no margin.

Speaker Change: Pulled that in or maybe it's neutral yes.

Speaker Change: And Thats, what Youre really seeing right now on the site based side.

Speaker Change: I think for the quarter, certainly dilutive to the margin rate and we talked about the largest piece of that being driven by the intangible asset amortization and so on an annual basis. We had said to consolidated EMCORE expect 25 to 30 basis points of margin dilution for the electrical segment I would say, it's probably about 100 to 110 basis points to that.

Speaker Change: So building services has always been led by mechanical services.

So our goal long term is to grow both but mechanical services will be the emphasis.

Speaker Change: Okay.

Tony Guzzi: And so that's in there too. But 85% plus of it is just pure data center work, standard electrical work and mechanical work and fire life safety work on data center. As far as I'm trying to remember the answer to your question, have we seen a change in the bid prospects? I would say, yeah, the inflections uh... because number of sites is up. Look, this is, you've heard me say this before, this is almost like a game of thrones looking for power. Everybody's looking for power to power these data centers and they're looking all over the country.

Speaker Change: And then.

Speaker Change: Got it.

Speaker Change: Bought back a lot of stock in the first quarter. Despite closing Miller and <unk> had some cash outflows related to new project starts.

Speaker Change: Segment, but when you remove the amortization expense they earn strong margins neutral with our electrical segment.

Speaker Change: Gave you the confidence to do that or can you just give some additional color behind that.

Speaker Change: Yes.

Brian: Got it okay. Thanks, I'll pass it on thanks, Brian next question. Please.

Speaker Change: Adam It begins and ends with execution.

Speaker Change: We have a long term history of being.

Speaker Change: Our next question comes from Adam Sondheimer from Thompson Davis <unk> Company. Please go ahead.

Speaker Change: Best in class as far as cash flow generation.

Speaker Change: We see no reason to believe that won't continue.

Adam Sondheimer: Hey, good morning, guys great quarter. Good morning, guys. Thank you.

Speaker Change: We will earn cash flow at least at net income.

Brian:

Speaker Change: Tony I wanted to start on building services can you just give us kind of updated high level thoughts on where you want to take that segment from here.

Tony Guzzi: And I we went from, you know, I think I said we went from serving three data center sites in 2019. And I think we went to 14. Now with Miller, we're like 16 or 17 geographies electrically. Mechanically, we went from two, we're like at four. And quite frankly, people would like us to be at eight or 10 mechanically right now. And fire life safety, we service every data center market in the country. And so, net-net, people are in this search for power, and they're in their search for very dependable baseload power that can service these data centers.

Speaker Change: And we will probably exceed that a little bit as the year progresses.

Speaker Change: Nothing in our profile that shows that won't happen in the future you have customer prepayments that are involved in.

Brian: Well I think.

Brian: It's where we've been investing.

Speaker Change: Our bumps here and there but.

Brian: Our investment dollars have gone into the mechanical service business over a long period of time.

Speaker Change: We're smart about how we set up contractual terms.

Speaker Change: We're smart about how we execute on the job and keep our customers apprised of where we are in the progress of that job.

Brian: Historically, it's been sort of a set.

Brian: 70, 30 between site base and.

Speaker Change: Our best in class of progress billings and quite frankly, because of the way we have our incentive plan is structured.

Brian: It's 30 being site based 70, maybe mechanical service.

Brian: It's going to.

Speaker Change: Have a cash focus in this company that is unrelenting.

Brian: By this time next year, probably looks like 80 20.

Speaker Change: And put all that together that gives us the confidence to continue to maybe use our balance sheet a little more aggressively we've always said that when the right opportunity came along that we would execute that and it was irrespective of size that we were very comfortable up to $1 billion.

Brian: So we'll continue to invest in technician based services will be opportunistic on our site based team we have a really good team there.

Tony Guzzi: They're becoming bigger, right? The campuses are becoming bigger and we're working on a couple campuses right now that will be upwards of 2,500 megawatts when built out. That's how people think about data center size now. Typically, the electrical scope is 1.5 to 2x of the mechanical scope. However, that's historical. As you get to the future, electrical might only be 1.25. Not that electrical shrunk, but because of the heat in these data centers, the mechanical scope has walked up. And because there's more cooling, and it is not only airside cooling, there's more rack cooling and immersive cooling around water and liquids to cool, actually, the servers in that media.

Brian: So grow where it makes sense I mean, what we're not going to do.

Brian: Is take.

Brian: Contracts that have very difficult terms and provide little to no margin and thats, what youre really seeing right now on the site based side.

Speaker Change: And maybe even a little bit over that and we've proven out with Miller and we've also been.

Speaker Change: You look at the collection of deals we've done in the last five years, we are really good at executing the integration of acquisitions and I would put Miller in the top decile of any acquisition integration that we've ever done.

Brian: So building services has always been led by mechanical services.

Brian: So our goal long term is to grow both but mechanical services will be the emphasis.

Speaker Change: So we're here to build the business for the long term, we feel good about our cash flow, we feel good about our balance sheet.

Brian: Okay.

Brian: And then.

Speaker Change: Jason you have anything that I would just say we did still have very strong operating cash flow this quarter right for a little bit a little bit down from last year, but I think it's important to remember that traditionally really with the exception of this year and last year Q1 operating cash flow for US is historically negative alright, so at $108 million.

Brian: Got it.

Brian: Bought back a lot of stock in the first quarter. Despite closing Miller and <unk> had some cash outflows related to new project starts.

Tony Guzzi: And so that drives up the mechanical scope, and then just the tonnage that needed to support that also goes up. And so, just to put things in perspective, on a 2,500-megawatt data center campus... So each LM8000, or the Siemens equivalent of a gas turbine, is about 250 to 300 megawatts. So these are to get to data center, you're talking a central utility plant. that it's not dedicated because I mean, electricity comes from everywhere, that would be dedicated to one data center site. To put that in perspective, the biggest integrated steel mills in this country at their height, didn't use 10% of that power.

Brian: Gave you the confidence to do that or can you just give some additional color behind that.

Brian: Okay.

Adam Sondheimer: Adam It begins and ends with execution.

Speaker Change: Even compared to the $132 to $33 million last year still very strong operating cash flow in the quarter and I think Adam cutting through it right. We obviously very feel very good about.

Adam Sondheimer: We have a long term history of being.

Brian: Best in class as far as cash flow generation.

Adam Sondheimer: We see no reason to believe that won't continue.

Speaker Change: Not only the profitability, but the cash flow characteristics of what do we have an RPM right now.

Brian: We will earn cash flow at least at net income.

Brian: And we will probably exceed that a little bit as the year progresses. There is nothing in our profile that shows that won't happen in the future you have customer prepayments that are involved in.

Speaker Change: Got it good color I'll turn it over thanks, guys. Thanks, Adam next question. Please.

Speaker Change: The next question comes from Brian Murphy from Stifel. Please go ahead.

Brian: Our bumps here and there but.

Speaker Change: Thanks, Good morning, everybody.

Brian: We're smart about how we set up contractual terms.

Speaker Change: Hey, Brian.

Brian: We're smart about how we execute on the job and keep our customers apprised of where we are in the progress of that job.

Speaker Change: Hey wanted to ask one on data centers obviously.

Tony Guzzi: So that's the kind of power we're talking. So that's why this quest for power has been going on. I think the positive is, I think we'll be in an environment where we'll be actually able to build power plants that can power data centers. Because if that didn't happen here in the years two through four of this outlook, then that would be a stunt of growth. I don't see that happening either, because you're starting to see more announcements where they just had one in Pennsylvania. They knocked down a big coal plant. In fact, they weren't from a big coal plant.

Speaker Change: Do you use to be a bright spot here in the near term.

Brian: We're best in class of progress billings and quite frankly, because of the way we have our incentive plans are structured.

But we continue to see headlines.

Speaker Change: Going to some more noise couple of large hyperscale or at this point adjusting some of their datacenter commitments just curious your thoughts.

Brian: Have a cash focus in this company that is unrelenting.

Brian: And put all that together that gives us the confidence to continue to maybe use our balance sheet a little more aggressively we've always said that when the right opportunity came along that we would execute that and it was irrespective of size that we were very comfortable up to $1 billion and maybe even a little bit over that and we've.

Speaker Change: On this area, what's the latest you're seeing and have you seen any change in your long term customer build plans.

Speaker Change: Yeah. The change we've seen is actually more areas.

Tony Guzzi: It was decommissioned. They're actually going to put a data center site there, and they're actually going to put 750 megawatts at least of gas fire generation right at the site. Those things will be owned by the utility long term, because it'll be part of the grid. And so you put all that together.

Speaker Change: More search for power.

Speaker Change: More build that's what we've seen.

Brian: Proven out with Miller and we've also been.

Speaker Change: Look at.

Speaker Change: I never read too much into People's data Center announcements.

Brian: You look at the collection of deals we've done in the last five years, we are really good at executing the integration of acquisitions and I would put Miller in the top decile of any acquisition integration that we've ever done.

Speaker Change: Because some of that.

Tony Guzzi: Right now, it's hard for us to see how this is slowing down. Again, we are part of our customer bill plan. They will move around. They will say this site's slowing down. They will say we're going to slow because of design changes. I wouldn't pretend to understand how the integration between a cloud storage platform and a training AI platform and a generative AI platform all work together. I wouldn't pretend to know that. But what I do know is the typical cloud storage were somewhere between 30 and 60 megawatts. And the ones we think are going to AI are north of 100 megawatts at this time.

Speaker Change: Sometimes just sending a signal that we're pausing some of that has to do with the design changes we've been through this a couple of times with different hyperscale or whether it be on the colo side or for lack of a better word the OEM the owner side with the people that actually can occupy them.

Brian: So we're here to build the business for the long term, we feel good about our cash flow, we feel good about our balance sheet.

Speaker Change: We've experienced this multiple times, even on a location where theyre going to build six buildings. They built to any change in the design.

Speaker Change: What we know is sizes, increasing megawatts, increasing our content is increasing and the demand for our resources.

Even compared to the 132 or $33 million last year still very strong operating cash flow in the quarter and I think Adam cutting through it right. We obviously very feel very good about.

Unknown Executive: So put 100 or 200 megawatts into perspective for you. 200 megawatts is about 5,500 homes. That's probably every home, you know, three and a half to four people. That's give or take 20,000 people. That's a small to midsize city in the U.S. is what one data center doing AI will require with power. Got it.

Speaker Change: Leasing.

Speaker Change: And the number of places people want us to work are increasing and that gives us pretty visibility I would say certainly through the end of the year with <unk> and with the amount of people that have brought us into their build plans and wanting us to be part of the solution that has definitely ticked up here in the last six to nine months.

Speaker Change: Not only the profitability, but the cash flow characteristics of what do we have an RPM right now.

Speaker Change: Got it good color I'll turn it over thanks, guys. Thanks, Adam next question. Please.

Speaker Change: The next question comes from Brian Murphy from Stifel. Please go ahead.

Got it that's very helpful. And then just wanted to understand some of the moving pieces on the EPS guide a little bit better obviously, some healthy buyback activity in the quarter I'm, assuming that's contributing.

Unknown Executive: Very helpful thoughts, Tony.

Speaker Change: Thanks, Good morning, everybody.

Unknown Executive: I guess second, on the RPO, the 28% growth rate, I think that's the strongest like RPO growth rate since couple years ago. And I'm just wondering how we think about this 28% RPO growth against the revenue growth guidance, which is low double digits. Is that just a function of more of that RPOs for 2026 projects? Or maybe you're working on more larger projects that burn over multiple years? I guess just wondering if there's anything different in the burn cadence of this RPO going forward? Yeah, I think I think quickly, two things. And I'll let Tony add in as well.

Speaker Change: Hey, Brian.

Speaker Change: Hey wanted to ask one on data centers obviously.

Speaker Change: Can you use to be a bright spot here in the near term.

Speaker Change: It also appears that the Miller transaction costs are now excluded I guess do I have those items right and are there any other.

Speaker Change: But we continue to see headlines.

Speaker Change: Going to some more noise couple of large hyperscale or at this point adjusting some of their data center commitments just curious your thoughts.

Speaker Change: Moving pieces on EPS guidance, we should be aware of so when we set the guidance we contemplated all the impacts of Miller to include to include the transaction expenses.

Speaker Change: On this area, what's the latest you're seeing and have you seen any change in your long term customer build plans.

Speaker Change: But this is such a wide range and it's so early in the year.

Speaker Change: Yeah. The change we've seen is actually more areas.

Speaker Change: It's hard for us to say to read too much into any of that our revenue guidance.

Speaker Change: More search for power.

Speaker Change: So we feel good about where pegging the low end of our guidance around eight 5% margins and we are paying at the high end of our guidance around nine 2% margins.

Speaker Change: More build that's what we've seen.

Speaker Change: Look at.

Speaker Change: I never read too much into People's data Center announcements.

Jason Nalbandian: First, that 28% does include Miller. So organically, it's it is up 17%. And then the second is just if you look at historically what percentage of our RPOs turn to revenues in excess of 12 months. Historically, that number has always been around 85% or so where we stand today about sorry, it's been 85% is going to burn in the next 12 months 15% in excess of 12 months. If we look today, it's about 80% that's going to burn in 12 months and 20% going on beyond 12 months. So we do have a little bit more of that RPO that's slated for a longer term burn.

Speaker Change: And if we operate within there.

Speaker Change: Because some of that.

Speaker Change: And the volume gets to the high end I think we're going to we're going to get towards the higher end of our guidance.

Speaker Change: Sometimes just sending a signal they are pausing and some of that has to do with design changes we've been through this a couple of times with different hyperscale or whether it be on the colo side or for lack of a better word the OEM the owner side with the people that actually get occupy them.

Speaker Change: Good margins would be stronger that depends on mix and not only depends on mix electrical mechanical versus the rest of the business and also depends on mix of contract type GMP versus fixed price our ability to convert.

Speaker Change: We've experienced this multiple times, even on a location where theyre going to build six buildings. They built to any change in the design.

Speaker Change: <unk> contracts into fixed price all of that goes into it. There is 10000 12000 moving pieces out there it's April theres some macroeconomic uncertainty.

Speaker Change: What we know is sizes, increasing megawatts, increasing our content is increasing and the demand for our resources.

Jason Nalbandian: And that's just some of the water and wastewater work we're doing in mechanical, some of the food process work we're doing in mechanical and just some of the jobs that we acquired through Miller. Yeah, and the thing I'd add, it's important to also know, our revenue growth rate is tempered by what you see in building services and industrial services, right. So some of that growth rate matches up with what's going on the electrical mechanical segment, which is where those RPOs are directed towards, and the mechanical services business, which if you looked at the first quarter, right, we grew in our construction businesses total 21.3%, give or take half of that was organic, the balance was really Miller, there's a couple other small things going on there.

Speaker Change: But frankly with the size of the business now and where we are we've probably in any circumstance wouldn't have raised anything but the low end of this guidance range with the first quarter beat that we had and at the end of the second quarter will give you a pretty good view on maybe what the rest of the year looks like and maybe at that time, we'll have some more to say about the top end of the range.

Leasing.

Speaker Change: Got it that's helpful I'll pass it on thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Got it that's very helpful. And then just wanted to understand some of the moving pieces on the EPS guide a little bit better obviously, some healthy buyback activity in the quarter I'm, assuming that's contributing.

Speaker Change: Next question comes from Alex <unk> from Keybanc capital markets. Please go ahead.

Speaker Change: Hey, good morning, how are you guys. Good how're you Alex.

Speaker Change: Yes good.

Speaker Change: So on the network and communications.

Speaker Change: It also appears that the Miller transaction costs are now excluded I guess do I have those items right and are there any other.

Speaker Change: Portion of your business.

Speaker Change: Can you remind us how much of that is purely data center and what makes up the balance of that and I guess has there.

Tony Guzzi: Building services actually contracted that was all driven by site based, our mechanical services business was up to high single digits, right. And then the industrial services business was flattish in the quarter. And that was really geared towards the start of the slower start to year. And the UK was also flattish. So you know, you got a part of the business that's not growing at the rate that construction businesses are, the RPOs are pointed towards the construction mechanical service business, those growth rates more line up with what you'd expect to see there.

Speaker Change: Moving pieces on EPS guidance, we should be aware of.

When we set the guidance we contemplated all of the impacts from Miller to include to include the transaction expenses.

Speaker Change: There been a shift in.

Speaker Change: Your data center bid pipeline and an ASP of your customers between mechanical and electrical.

Speaker Change: But this is such a wide range and it's so early in the year.

As we think about current versus prior years, yes, so look 85% or so of that network. The reason we call. It network and communications is we also have a low voltage business.

Speaker Change: It's hard for us to say to read too much into any of that.

Speaker Change: Our revenue guidance, but we feel good about where pegging the low end of our guidance around eight 5% margins and we are paying at the high end of our guidance around nine 2% margins.

Speaker Change: Become national in scope, it's part of it is four times the size of it it was five years ago and so that's in there too, but 85% plus of it is just pure data center work standard electrical work and mechanical work and fire life safety work on data centers.

Speaker Change: And if we operate within there and the volume gets to the high end I think we're going to we're going to get towards the higher end of our guidance.

Unknown Executive: Thank you. I'll turn it over there.

Unknown Executive: All right, next question. Thank you. Our last question comes from Adam at Goldman Sachs. Please go ahead. Hi, good morning. Tony, you alluded to the data center business expanding into many more markets, both electrically and mechanically over the last several years. When you think about the growth for that business off the current run rate, is the next leg of growth coming from existing markets or new markets? And just if it's new, is that an organic expansion or via M&A? Almost all of our growth in data centers up to this point, I mean through the first quarter of this year, has been organic.

Speaker Change: Good margins would be stronger that depends on mix and not only depends on mix electrical mechanical versus the rest of the business. It also depends on mix of kind of contract type GMP versus fixed price our ability to convert.

Speaker Change: As far as if I remember the question have we seen a change in the bid prospects I would say, yes, the inflections up.

Speaker Change: <unk> contracts into fixed price all of that goes into it. There is 10000 12000 moving pieces out there it's April theres some macroeconomic uncertainty.

Speaker Change: Because number of sites is up look this as you've heard me say this before.

Speaker Change: This is almost like a game of thrones looking for power <unk>.

Speaker Change: Everybody is looking for power to power. These data centers and they are looking all over the country.

Speaker Change: Frankly with the size of the business now and where we are we probably in any circumstance wouldn't have raised anything but the low end of this guidance range with the first quarter beat that we had and at the end of second quarter, We'll give you a pretty good view on maybe what the rest of the year looks like and maybe at that time, we'll have some more to say about the top end of the range.

Speaker Change: We went from I think I said, we went from serving three data center sites in 2019.

Speaker Change: And I think we went to 2014 now with Miller were like 16, or 17 geographies electrically mechanically we went from two or like it for and quite frankly people would like us to be at eight or 10 mechanically right now and fire life safety. We service every data center market in the country.

Adam Thalhimer: If you or acquisitions on four or five years ago, and they weren't really in the data center market in a significant way. If you look at Miller, they contribute, I think, Jason, $400 million in network and communications. So, I mean, they're part of the growth going forward. In fact, I think both the Miller team and the EMCOR team are excited about the markets we can expand with because some of the capabilities they had, some of the enhanced capabilities we bring, and the two of us together can even do more with the resources. I'd say also that you asked about the split between new locations and existing locations.

Speaker Change: Got it that's helpful I'll pass it on thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Next question comes from Alex <unk> from Keybanc capital markets. Please go ahead.

Speaker Change: And so net net people are in their search for power and in their search for very dependable base load power.

Speaker Change: Hey, good morning, how are you guys. Good how are you Alex.

Speaker Change: Yes good.

Speaker Change: That can service these data centers.

Speaker Change: So on the networking communications.

Speaker Change: They are becoming bigger right. The campuses are becoming bigger and we're working on a couple of campuses right now that will be upwards of 2500 megawatts wind build out and that that's how people think about data center size now.

Speaker Change: And of your business.

Speaker Change: Can you remind us how much of that is purely datacenter and what makes up the balance of that.

I guess has there.

Speaker Change: There been a shift in.

Speaker Change: Your data center bid pipeline in and ask some of your customers between mechanical and electrical.

Speaker Change: Typically the electrical scope is one five to two exited mechanical scope. However, that's historical you'll get to the future electrical might only be 125, not that electrical shrunk, but because of the heat in these data centers.

Tony Guzzi: I'd say it's fairly balanced if you look over a year. That fluctuates quarter to quarter, but if you look over a year and you say that over the past year, where has the growth come? I'd say it's 50-50, give or take. Current Campuses, Current Location. When we say location, we mean like a city or a metropolitan area that's like a 50, 40, 30, 40 mile radius. That doesn't mean the sites are all the same. We're talking geographic locations, radiuses, places where they're going to have, like prior Oklahoma, they built there before, but now it's building.

Speaker Change: As we think about current versus prior years, yes, so look 85% or so of that network. The reason we call. It network and communications is we also have a low voltage business.

Speaker Change: The mechanical scope has walked up.

Speaker Change: Because theres more more calling in is not only are cycling theres more rack cooling and immersive calling of our water and.

Speaker Change: In liquids, the KOL actually the servers in that media.

Speaker Change: And so that drives up the mechanical scope and in just the tonnage that needed to support that also goes up.

Speaker Change: As far as if I remember the extra question have we seen a change in the bid prospects I would say, yes, the inflections up.

And so.

Jason Nalbandian: Understood.

Speaker Change: Just to put things in perspective on a 2500 megawatt.

Tony Guzzi: And then on margins, you folks cited a mixed tailwind this quarter and in prior quarters, which types of projects are driving the mixed tailwind? And how do margins on the average data center project specifically compared to portfolio averages? I think in general, when we say mixed tailwind, we mean mixed tailwinds more towards our construction businesses right now. I think, you know, any project, you know, have a range of outcomes on margins. You know, clearly, the larger, more sophisticated ones, if we get it right, where our customers are very demanding and we've been part of the design assist, if all that works out, we can do a little bit better.

Speaker Change: Because number of sites is up look this as you've heard me say this before.

Speaker Change: Data Center campus.

Speaker Change: So each.

Speaker Change: This is almost like a game of thrones looking for power.

Speaker Change: <unk> 1000, or the Siemens equivalent of a gas turbine is about 250 to 300 megawatts.

Speaker Change: Everybody is looking for power to power. These data centers and they are looking all over the country.

Speaker Change: So these are to get to datacenter you were talking a central utility plant.

Speaker Change: Yes.

Speaker Change: Went from I think I said, we went from serving three data center sites in 2019.

Speaker Change: That it's not dedicated because I mean electricity coming from everywhere that would be dedicated to one data center site.

Speaker Change: To put that in perspective, the biggest integrated steel mills in this country at their height.

Speaker Change: <unk> use.

Speaker Change: 10% of that power.

Speaker Change: So that's the kind of power where trucks. So thats why this quest for power has been going on I think the positive is I think we'll be in an environment, where we actually are able to build power plants that can power data centers, because if that didn't happen here in the years two through four this outlook then that would be a stunted growth I don't see that happening either because youre starting to see more announcements were.

Speaker Change: And so net net people are in their search for power and in their search for very dependable base load power.

Tony Guzzi: That's mainly based on our execution more than anything. I think, you know, mid-sized projects can also have those characteristics and small projects have very steady margins by and large and mix up. The reality of all that project mix right now in general to include the mechanical services business, which is more small project focused, sort of 5 million and less. I think the reality of all of it, we are operating over the last three years at the high end of what we have done over a 10-year period. And I think the reason for all that is we've gotten better.

Speaker Change: We can service these data centers.

Speaker Change: They just had one in Pennsylvania, they knocked down.

Speaker Change: Big coal plants actually from Big coal plant is decommission theyre actually going to put a data center site, there and they are actually to put 750 megawatts at least of gas fired generation right at the site.

Typically the electrical scope is one five to two exited mechanical scope. However, that's historical as you get to the future electrical might only be 125, not that electrical shrunk, but because of the heat in these data centers.

Speaker Change: Those things will be owned by the utility long term can be part of the grid and so you put all that together right now it's hard for us to see how this is slowing down again, we are part of our customer Bill plant. They will move around they will say this site slowing down they will say, we're going to slow because of the design changes I wouldn't pretend to understand how the.

Speaker Change: Mechanical scope has walked up.

Tony Guzzi: maybe pricing's got a little bit better, but these are really demanding customers we work for, so they're not paying one nickel more than they have to. We've gotten better, and we've gotten better on the small project side, because we can deliver faster for the owner, and also disrupt their typically retrofit projects. We're very good about not disrupting their ongoing operations, and so that's a valuable skill, and we have very good small project crews. On the mid-size projects, it's sort of better execution, and we're able to take some of the learnings we have from the large project side on BDC and prefab, and bring that down into the mid-market, and the price is the price.

Speaker Change: Because theres more more calling in is not only are cycling theres more rack, calling and immersive calling around water and.

Speaker Change: Integration between our cloud storage platform.

Speaker Change: In liquids to KOL actually the servers in that media.

Speaker Change: <unk> training AI platform to generate of AI platform. All work together I wouldn't pretend to know that but what I do know is the typical cloud stories, where somewhere between 30% and 60 megawatts and the ones. We think are going to AI are north of 100 megawatts. At this time to put a 100 or 200 megawatts into perspective for U 200 megawatt.

And so that drives up the mechanical scope and in just the tonnage that needed to support that also goes up.

Speaker Change: So.

Just to put things in perspective on a 2500 megawatt.

Speaker Change: Data Center campus.

Speaker Change: So each <unk>.

Speaker Change: <unk> 1000, or the Siemens equivalent of a gas turbine is about 250 to 300 megawatts.

Speaker Change: It is about 5500 homes, that's probably average home.

Speaker Change: Three 5% to four people, let's give or take 20000 people. That's a small to mid sized city in the U S.

Speaker Change: So these are to get to datacenter you were talking a central utility plant.

Tony Guzzi: Our competitors really probably can't do that. They don't have the scale to do that, and at the top end, we're working a lot of times collaborative with our customers to get to the right solution and the right planning. We're thinking a lot about labor mix management. What's the ratio of journeymen to apprentices? Wiremen, what's the foreman mix gonna be on the job? What's the experience level of those foremen? How many of our core people are we gonna have on the job versus travelers? All those things go into thinking about how we price the job, how we build contingency, and then finally, how eventually we execute that job.

Speaker Change: That it is not dedicated because I mean electricity coming from everywhere that would be dedicated to one data center site.

Is one data center doing AI will require with power.

Speaker Change: To put that in perspective, the biggest integrated steel mills in this country at their height.

Tony: Got it very helpful. Tony I guess second on.

Speaker Change: Use.

Speaker Change: On the IPO.

Speaker Change: 10% of that power.

Speaker Change: The 28% growth rate.

Speaker Change: So thats the kind of power where trucks. So that's why this quest for power has been going on I think the positive is I think we'll be in an environment, where we actually are able to build power plants that can power data centers, because if that didn't happen here in the years two through four this outlook then that would be a stunted growth I don't see that happening either because you are starting to see more announcements were.

Speaker Change: I think thats the strongest growth rates.

Speaker Change: A couple of years ago, and I'm, just wondering how we think about this 28% RPM growth against the.

Tony Guzzi: I mean, it's a lot of things going into it, but we're at the high end over these last two or three years, and quite frankly, based on our guidance, we saw no reason that that's not gonna happen.

Speaker Change: The revenue growth guidance, which is low double digits is that just a function of more of that Rps for 2026 projects or where maybe you are working on more larger projects that burn over multiple years, just I guess, just wondering if theres anything different in the burn cadence of this IPO going forward, yes, having quickly.

Speaker Change: They just had one in Pennsylvania, they knocked down.

Speaker Change: Big coal plant factory from Big coal plant is decommission theyre actually going to put a data center site, there and Theyre actually to put 750 megawatts at least of gas fired generation right at the site.

Tony Guzzi: And one last one on margins for me. You know, I know you advise on not thinking about the business on a quarter to quarter basis. But typically, you see. And typically, you do see a step up to Q versus one Q and margins any puts and takes around that normal cadence that we see? In all seriousness, Adam, we don't think about the business that way we can't. We have 12,000 projects, give or take 10,000 to 12,000 projects, they start, they close. We have contingency being released after we get more certainty on completion of the job and completion of our labor estimates.

Speaker Change: Two things and then I'll, let Tony add in as well.

Speaker Change: First at 28% does include Miller, so organically it is up 17% and then the second is just if you look at historically what percentage of our <unk> turned to revenues in excess of 12 months historically that number has always been around 85% or so where we stand today about sorry, it's been 80.

Speaker Change: Those things will be owned by the utility long term could it would be part of the grid and so you put all that together right now it's hard for us to see all of this is slowing down again, we are part of our customer Bill plant. They will move around they will say this site slowing down they will say, we are going to slow because of design changes.

Speaker Change: Wouldn't pretend that understand how the integration between our cloud storage platform.

Speaker Change: 5% is going to burn in the next 12 months, 15% in excess of 12 months. If we look today, it's about 80% that's going to burn it in 12 months and 20% going on beyond 12 months. So we do have a little bit more of that <unk>. That's flat. It is slated for a longer term burn and that's just some of the water and wastewater work we're doing in mechanical some of the food.

Speaker Change: <unk> training AI platform to generate of AI platform. All work together I wouldn't pretend to know that but what I do know is the typical cloud stories, where somewhere between 30% and 60 megawatts and the ones. We think are going to AI are north of 100 megawatts. At this time, so put a 100 or 200 megawatts into perspective for U 200 megawatt.

Tony Guzzi: And so there's too many moving parts. I think what we say is, if you look over a, we would say now, Jason, up to 24-month period, three to five quarters, give or take, you'll get a pretty accurate view of how the business is actually performing. And that band of margin expectation is what could actually happen in any quarter. It could be on the upside of that, it could be in the middle of that, maybe on the lower end of it. And none of that really has to do with the underlying fundamentals of the business. That's why we encourage you to look over sort of three to five quarters to get a real view on what's happening with our margins.

Speaker Change: <unk> work, we're doing mechanical and just some of the jobs that we acquired through Miller.

Speaker Change: It is about 5500 homes, that's probably average home.

Speaker Change: And the thing I would add it's important to also know.

Speaker Change: Our revenue growth rate was tempered.

Speaker Change: Three 5% to four people, that's give or take 20000 people. That's a small to mid sized city in the U S.

Speaker Change: By which you see in building services and industrial services right.

Speaker Change: So some of that growth rate matches up with what's going on in the electrical mechanical segment, which is where those <unk> are directed towards and the mechanical services business, which if you looked at the first quarter right.

Speaker Change: Is one data center doing AI will require with power.

Unknown Executive: Thanks so much. Thanks, Adam. Thank you.

Speaker Change: Got it very helpful thoughts, Tony I guess second on.

Andy Backman: This concludes our question and answer session.

Unknown Executive: I would now like to turn the conference back over to our CEO, Tony Guzzi, for closing remarks. And I think it's important to summarize because there's a lot of macroeconomic noise. And so how we think about it is, you know, we're not going to sit here and make a lot of excuses. We're going to operate in the environment that we feel that we're in, and we're going to make contingency plans, we're going to share best practices, we're going to do everything we can to drive the productivity up on our labor, because that's something we can contribute.

Speaker Change: On the IPO.

Speaker Change: We grew in our construction businesses total 21, 3%.

Speaker Change: On the 28% growth rate.

Speaker Change: I think thats, the strongest RPM growth rate since.

Speaker Change: Give or take half of that was organic and the balance was really Miller theres a couple of other small things going on there building services actually contracted that was all driven by site based our mechanical services business was up high single digits.

Speaker Change: A couple of years ago, and I'm, just wondering how we think about this 28% RPM growth against the.

Speaker Change: The revenue growth guidance, which is low double digits is that just a function of more of that Rps for 2026 projects or maybe you are working on more larger projects that that burn over multiple years, just I guess, just wondering if theres anything different in the burn cadence of this IPO going forward having quickly.

Speaker Change: And then the industrial services business was flattish in the quarter and that was really geared towards the start of the slower start to the year in the UK was also flattish. So you got a part of the business that's not growing at the rate the construction businesses are the.

Tony Guzzi: We believe, sitting here today, that we have the impact of the tariffs in our guidance. Those are some arrangements that we made early in the summer. Quite frankly, we probably wouldn't have done that anyway this early in the year. And that's in any macroeconomic environment.

Speaker Change: Two things and then I'll, let Tony add as well.

Speaker Change: <unk> pointed towards the construction mechanical service business those growth rates more lineup with what you'd expect to see there.

Speaker Change: Thank you I'll turn it over there.

Speaker Change: Okay next question.

Speaker Change: Thank you.

Speaker Change: Our last question comes from Adam at Goldman Sachs. Please go ahead.

Tony Guzzi: And we talk about the uncertain macroeconomic environment, I would just caution you, I haven't worked in a certain macroeconomic environment in almost my 15 years here as CEO. There's been a lot of puts and takes and ups and downs and, you know, you take the steel and aluminum tariffs. I think we're seven for seven with presidents since 1974 that have done something with the when they're president. And we are well rehearsed in how to do that. And quite frankly, COVID sharpened that sword for us much more on how we can react. And we started planning on maybe supply chain and tariffs and all those things because we sort of paid attention to who won the election and what that person said.

Adam Cutting: Hi, good morning.

Speaker Change: Tony you alluded to the <unk>.

Speaker Change: 5% is going to burn in the next 12 months, 15% in excess of 12 months. If we look today, it's about 80% that's going to burn it in 12 months and 20% going on.

Adam Cutting: <unk> centre business expanding into many more markets.

Adam Cutting: Electrically mechanically over the last several years when you think about the growth for that business off the current run rate is the next leg of growth coming from existing markets or new markets and just.

Speaker Change: And 12 months. So we do have a little bit more of that <unk>. That's flat. It is slated for a longer term burn and that's just some of the water and wastewater work we're doing in mechanical some of the food process work, we're doing mechanical and just some of the jobs that we acquired through Miller.

Adam Cutting: If it's new is that an organic expansion expansion or via M&A.

Adam Cutting: Almost all of our growth in data centers up to this point.

Speaker Change: And the thing I would add it's important to also know.

Speaker Change: Our revenue growth rate was tempered.

Adam Cutting: I mean through the first quarter of this year has been organic.

Speaker Change: By what you see in building services and industrial services right. So some of that growth rate matches up with what's going on in the electrical mechanical segment, which is where those <unk> are directed towards and the mechanical services business, which if you looked at the first quarter right.

If you or acquisitions on four or five years ago, and they weren't really in the datacenter market in a significant way.

Tony Guzzi: And so we started doing refreshing our training on contractual terms, execution, labor contingencies, all the way back in November and December. It was no surprise to us that there'd be something. It's also important to know that, right, the biggest part of our cost is still labor, and it will always be the bigger part of our cost. And when you talk about these mega jobs, it's always important to know we're not buying most of the end equipment anymore. That is being supplied by the owner or the GC because of what lead times did in COVID.

Adam Cutting: If you look at Miller, they contributed I think Jason a $400 million.

Speaker Change: And networking communications started about the RVO site.

Speaker Change: We grew in our construction businesses total 21, 3%.

Speaker Change: Yes, so I mean, they are part of their part of the growth going forward. In fact, I think both the Miller team and the EMCORE team are excited about the markets, we can expand with.

Speaker Change: Because some of the capabilities they had some of the enhanced capabilities, we bring and the two of US together can even do more with the resources.

Speaker Change: But I would say also you asked about the split between new locations in existing locations I would say, it's fairly balanced if you look over a year that fluctuate quarter to quarter, but if you look over a year and you say that over the past year.

Tony Guzzi: So we feel we've got that taken care of. Secondarily, we feel really good about our labor position in the market. We continue to attract the best and brightest to work for us, and we continue to be able to fill the jobs we need to execute well for our customers. And I'll say this unequivocally, every day I feel we put the best leadership team on the field from forming up. And that's what will make a difference in these periods of uncertainty. And that's why customers allow us to have a 28% increase in RPO. And that's why we have great integration and acquisitions.

Speaker Change: Whereas the growth come I'd say, it's 50, 50 give or take I mean.

Speaker Change: Current campuses current locate and when we say location, we mean like a city or metropolitan area. That's like a 50 40 30 40 mile radius that doesn't mean the sites are all the same we're talking geographic locations Radiuses places, where theyre going to have.

Speaker Change: Those growth rates more lineup with what you'd expect to see there.

Speaker Change: Thank you I'll turn it over there.

Speaker Change: Okay next question.

Speaker Change: Thank you.

Speaker Change: Our last question comes from Adam at Goldman Sachs. Please go ahead.

Tony Guzzi: And that's why people like Miller Electric are excited to be part of our team. And we're excited to have them.

Adam Sondheimer: Hi, good morning.

Speaker Change: Like Pryor, Oklahoma, They built a reform announced building again.

Speaker Change: Tony you alluded to the data center business expanding into many more markets.

Andy Backman: With that, Andy, you can close it off.

Unknown Executive: Thanks, Tony, and thanks, Jason. Thank you all for joining us today. As always, if you have any follow-up questions, please don't hesitate to reach out to me directly. Thank you all again, and have a great day.

Speaker Change: Understood and then on margins you folks excited.

Speaker Change: Electrically mechanically over the last several years when you think about the growth for that business itself. The current run rate is the next leg of growth coming from existing markets or new.

Speaker Change: Mixed tailwind this quarter end.

Speaker Change: Prior quarters, which types of projects are driving the mix tailwind.

Unknown Executive: And, Sagar, will you please close the call? Thank you.

Unknown Executive: This conference has now concluded. Thank you for attending today's presentation.

New markets and just.

Speaker Change: How do margins on average.

Speaker Change: If it's new is that an organic expansion expansion or via M&A.

Speaker Change: <unk> Centre project, specifically compare to portfolio averages.

You may now disconnect.

Speaker Change: I think in general when we say mixed tailwind, we mean mixed tailwind is more towards our construction businesses right now.

Speaker Change: Most all of our growth in data centers up to this point I mean through the first quarter of this year has been organic.

Speaker Change: Any projects have a range of outcomes all margins.

Speaker Change: If you or acquisitions on four or five years ago, and they werent really in the data center market in a significant way.

Speaker Change: Clearly the larger more sophisticated ones, if we get it right, where our customers are very demanding and we have been part of the design assist.

Speaker Change: If you look at Miller, they contributed I think Jason a $400 million.

Speaker Change: And networking communications started up on the IPO side.

Speaker Change: If all of that works out we can do a little bit better.

Speaker Change: Yes, so I mean theyre part of part of the growth going forward in fact, I think both the Miller team and the EMCORE team are excited about the markets, we can expand with because some of the capabilities. They had some of the enhanced capabilities, we bring and the two of US together can even do more with the resources.

Speaker Change: That's mainly based on our execution.

Speaker Change: More than anything I think mid sized projects can also have those characteristics and small projects.

Speaker Change: I have very steady margins by a large and mix up the reality of all of that project mix right. Now in general to include the mechanical services business, which is more small project focus sort of $5 million less I think the reality of all of it.

We are operating at over the last three years at the high end of what we have done over a 10 year period and I think the reason for all of that is we've gotten better.

Speaker Change: Whereas the growth come I'd say, it's 50 50 give or take.

Speaker Change: Sure.

Speaker Change: Maybe pricing has got a little bit better, but these are really demanding customers. We work for us so they're not paying one nickel more than <unk>.

Speaker Change: We've gotten better and we've gotten better on the small project side, because we can deliver faster for the owner and also disruptor.

Speaker Change: Talking geographic locations radius as places, where theyre going to have.

Speaker Change: Typically retrofit projects, we're very good about not disrupting their ongoing operations.

Speaker Change: Like Pryor, Oklahoma, They built every form of announced building again.

Speaker Change: So that's a valuable scale and we have very good small project crews on the mid sized projects that sort of better execution and we're able to take some of the learnings we have from the large project side on VDC in prefab, and bringing that down into the mid market.

Speaker Change: Understood and then on margins you folks excited.

Speaker Change: Mixed tailwind this quarter end.

Speaker Change: In prior quarters, which types of projects are driving the mix tailwind.

Speaker Change: How do margins on the average.

The prices the price our competitors really probably can't do that they don't have the scale to do that.

Speaker Change: Data Center project, specifically compare to portfolio averages.

Speaker Change: And then at the top and we're working a lot of times collaboratively with our customers to get to the right solution and the right planning, we're thinking a lot about labor mix management, what's the ratio of journey inventory premises wireman was the former mix going to be on the job, which experienced level of those form and how many of our core people are we going to have on the job versus travelers.

Speaker Change: I think in general when we say mixed tailwind, we mean mixed tailwind is more towards our construction businesses right now I think any projects have a range of outcomes all margins.

Speaker Change: Clearly the larger more sophisticated once if we get it right.

Speaker Change: Our customers are very demanding and we have been part of the design assist.

Speaker Change: All of those things go into thinking about how we price the job how we built contingency and then finally, how eventually we execute that job.

Speaker Change: If all of that works out we can do a little bit better.

Speaker Change: That's mainly based on our execution.

Speaker Change: It's a lot of things going into it that we're at the high end or these last two or three years and quite frankly based on our guidance. We saw no reason that that's not going to continue.

Speaker Change: More than anything I think mid size projects can also have those characteristics and small projects.

Speaker Change: I have very steady margins by and large.

Speaker Change: And then one last one on margins for me.

Speaker Change: <unk> mix up the reality of all of that project mix right now in general to include the mechanical services business, which is more small project focus sort of $5 million and less.

Speaker Change: I know your advisors or not thinking about the business on a quarter to quarter basis, but typically you see.

Speaker Change: Yes.

Speaker Change: And typically you do see.

Speaker Change: The reality of all of it.

Speaker Change: We are operating at over the last three years at the high end of what we have done over a 10 year period.

Speaker Change: Step up in <unk> versus <unk> and margins any puts and takes around that normal cadence that we see.

Speaker Change: And I think the reason for all of that is we've gotten better.

Speaker Change: Yes.

Speaker Change: In all seriousness, Adam we don't think about the business that way we can't.

Maybe pricing has got a little bit better, but these are really demanding customers. We work for so they're not paying one nickel more than <unk>.

Speaker Change: We have 12000 projects give or take 10 to 12000 projects. They start they close we have contingency being released after we get more certainty on complete.

Speaker Change: We've gotten better and we've gotten better on a small project side, because we can deliver faster for the owner and also that's rough there.

Speaker Change: Completion of the job and completion of our labor estimates.

Speaker Change: So theres too many moving parts I think what we say is if you look over a we would say now Jason of up to 24 month period.

Speaker Change: Typically retrofit projects, we're very good about not disrupting their ongoing operations and so that's a valuable scale and we have very good small project crews on the mid sized projects that sort of better execution and we're able to take some of the learnings we have from the large project side on VDC in prefab, and bringing that down into the mid <unk>.

Speaker Change: Three to five quarters give or take you'll get a pretty accurate view of how that business is actually performance in that band of margin expectation is what could actually happen in any quarter. It could be on the upside of that it can be in the middle of that may be on the lower end of it and none of that really has to do with the underlying fundamentals of the business. That's why we encourage you to look over sort of three.

Speaker Change: Market.

Speaker Change: The prices the price our competitors really probably can't do that they don't have the scale to do that.

Speaker Change: To five quarters to get a real view on what's happening with our margins.

Speaker Change: And then at the top and we're working a lot of times collaboratively with our customers to get to the right solution and the right planning, we're thinking a lot about labor mix management, what's the ratio of journey inventory apprentices wireman was the former mix going to be on the job, which experienced level of those warm and how many of our core people are we going to have on the job versus travelers are.

Speaker Change: Great. Thanks, so much thanks.

Thanks, Tom.

Speaker Change: Thank you.

Speaker Change: This concludes our question and answer session.

Speaker Change: I would now like to turn the conference back over to our CEO, Tony Guzzi for closing remarks, yes look.

Speaker Change: I also think about what's the simple message on the quarter.

Speaker Change: All of those things go into thinking about how we price the job how we built contingency and then finally, how eventually we execute that job.

Speaker Change: And I think it is important to summarize because a lot of macroeconomic noise out there.

Speaker Change: And so how we think about it is we're not going to sit here and make a lot of excuses, we're going to operate in the environment that we feel that we're in and we're going to make contingency plans, we're going to share best practices, we're going to do everything we can to drive the productivity up on our labor because that's something we can control.

Speaker Change: And then one last one on margins for me.

Speaker Change: I know your advice, we're not thinking about the business on a quarter to quarter basis, but typically you thought.

Speaker Change: We believe sitting here today that we have the impacts of the tariffs in our guidance, we thought carefully about that that's why we have a range that may be why we didn't take the lower end up as much as some of you would've liked us to <unk>.

Speaker Change: All right.

Speaker Change: And typically you do see.

Speaker Change: Step up in <unk> versus <unk> and margins any puts and takes around that normal cadence that we see.

Quite frankly, we probably wouldn't have done that anyway. This early in the year.

Speaker Change: A few weeks.

Speaker Change: And that's in any macroeconomic environment.

Speaker Change: It also serves as Adam we don't think about the business that way we can't we.

Speaker Change: And we talk about the uncertain macroeconomic environment I would just caution you I haven't worked in a certain macroeconomic environment and almost by 15 years here as CEO, there's been a lots of puts and takes and ups and downs.

Speaker Change: We have 12000 projects give or take 10 to 12000 projects. They start they close we have contingency being released after we get more certainty on.

Speaker Change: Completion of the job and completion of our labor estimates.

Speaker Change: You take the steel and aluminum tariffs I think we're seven for seven with President's since 1974 that have done something with the steel and aluminum market when Theyre President and we are well rehearsed in how to do that and quite frankly, COVID-19 sharpen that sort of for us much more on how we can react.

Speaker Change: So theres too many moving parts I think what we say is if you look over a we would say now Jason of up to 24 month period.

Speaker Change: And we started planning on maybe.

Speaker Change: Supply chain and tariffs and all of those things because we sort of pay attention to who won the election.

Speaker Change: To five quarters to get a real view on what's happening with our margins.

Speaker Change: The person said and so we started doing refreshing all our training on contractual terms execution labor contingencies, all the way back in November and December was no surprise to us it has to be something.

Speaker Change: Great. Thanks, so much thanks.

Tom: Thanks, Tom.

Speaker Change: Thank you.

Speaker Change: This concludes our question and answer session.

Speaker Change: I would now like to turn the conference back over to our CEO, Tony Guzzi for closing remarks.

Speaker Change: It's also important to note that right. The biggest part of our cost is still labor and it will always be the bigger part of our cost and when you talk about these mega jobs. It's always important to know we're not buying most of the end equipment anymore that is being supplied by the owner or the GEC because of what lead times did in Covid.

Speaker Change: <unk>.

Speaker Change: I also think about what's the simple message on the quarter.

Speaker Change: And I think it's important to summarize because a lot of macroeconomic noise out there.

Speaker Change: So we feel we've got that taken care of secondarily, we feel really good about our labor position in the market. We continue to attract the best and brightest to work for us and we continue to be able to fill our fill the jobs, we need to execute well for our customers and finally.

Speaker Change: We believe sitting here today that we have the impact of the tariffs in our guidance, we thought carefully about that that's why we have a range that may be why we didn't take the lower end up as much as some of you would've liked us to but quite frankly, we probably wouldn't have done that anyway. This early in the year.

Speaker Change: And I'll say this unequivocally everyday I feel we put the best leadership team on the field from forming up and Thats, what will make a difference in these periods of uncertainty and that's why customers allow us to have a 28% increase in RVO and Thats why we have great integration and acquisitions and that's why people like <unk>.

Speaker Change: And that's in any macroeconomic environment.

Andy Backman: Miller electric are excited to be part of our team and we're excited to have them as part of our team with that Andy you can close it off thanks, Tony and thanks, Jason and thank you all for joining US today as always if you have any follow up questions. Please don't hesitate to reach out to me directly. Thank you all again and have a great day and cigar will you. Please close the call.

Speaker Change: Thank you.

Speaker Change: This conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: And we started planning on maybe.

Speaker Change: Supply chain and tariffs and all of those things because we sort of pay attention to are one the election of what that is.

Speaker Change: Also important to note that right. The biggest part of our cost is still labor and it will always be the bigger part of our cost and when you talk about these mega jobs. It's always important to know we're not buying most of the end equipment anymore that is being supplied by the owner or the GEC because of what lead times did in Covid.

Speaker Change: We feel we've got that taken care of secondarily, we feel really good about our labor position in the market. We continue to attract the best and brightest to work for us and we continue to be able to fill our fill the jobs, we need to execute well for our customers and finally.

Speaker Change: Miller electric are excited to be part of our team and we're excited to have them as part of our team with that Andy you can close it off thanks, Tony and thanks, Jason and thank you all for joining US today as always if you have any follow up questions. Please don't hesitate to reach out to me directly. Thank you all again and have a great day and cigar will you. Please close the call.

Speaker Change: Thank you.

Speaker Change: This conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Good day and welcome to M called Group Q1, 'twenty five when these conference calls.

Speaker Change: All participants will be in listen only mode.

Speaker Change: Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: After todays presentation, there will be an opportunity to ask questions.

Speaker Change: Ask a question you might best jobs, then one on your Touchtone phone.

Speaker Change: To withdraw your question. Please press Star then two.

Speaker Change: Please note that this event is being recorded.

Speaker Change: I would now like to turn the conference over to Andy Backman, Vice President Investor Relations. Please go ahead.

Speaker Change: Presentation will be archived in the Investor Relations section of our website at Amcor group Dot Com with me today are Tony Guzzi, Our chairman President and Chief Executive Officer, Jason Nalbandian, EMCORE, as Chief Financial Officer, and Maxine Mauricio Executive Vice President and Chief administrative officer and General Counsel for.

Speaker Change: Of our presentation described in detail in these forward looking statements and the non-GAAP financial information disclosures.

Tony Guzzi: Tony Thanks, Ed Good morning, and thank you.

Tony Guzzi: It'll be mostly on page four here to start we had a strong quarter at EMCORE and the first quarter generating revenues of $3 87 billion, reflecting year over year growth of 12, 7%.

Tony Guzzi: We earned $318 8 million in operating income with an operating margin of eight 2% and diluted earnings per share of $5 26.

Tony Guzzi: An increase of 26% from the first quarter of 2024.

Tony Guzzi: When you adjust for the $9 4 million of transaction expenses related to our acquisition of Miller electric.

Tony Guzzi: Which closed in February we are non-GAAP adjusted operating income of $328 1 million or eight 5% of revenues and non-GAAP adjusted diluted earnings per share of $5 41.

Tony Guzzi: We are very pleased with our overall performance.

Tony Guzzi: Our electrical and mechanical construction segments, which had year over year revenue increases of 42, 3% and 10, 2% respectively drove our performance the growth in our revenues reflects both our proactive move into new geographies to better serve our customers as well as the.

Tony Guzzi: That our customers have in our ability to perform complex projects.

Tony Guzzi: Driving this growth was increased activity within the network and communications, which is data centers health care water and.

Tony Guzzi: Wastewater market sectors. The results of our electrical construction segment also included a $183 million in revenues from Miller electric.

Tony Guzzi: The integration of Miller is on track and that is a credit to both EMCORE and Miller teams. When you share the same core values that have similar operating disciplines and share best practices and the cultural alignment makes integration more successful. Thank you.

Speaker Change: Henry and your team.

Speaker Change: With respect to operating income the reasons behind our growth remain the same we continue to have excellent execution in our electrical and mechanical construction segments with 12, 5% and 11, 9% operating margins respectively.

Speaker Change: To achieve these margins our teams continue to leverage our pre fabrication and virtual design and construction of our BDC capabilities coupled.

Speaker Change: Coupled with excellence in Labor planning and management large project coordination and execution as well as a laser focus on contract terms ever.

Speaker Change: Every quarter, we become better at sharing best practices across our company.

Speaker Change: And in granting them into our standard operating practices and procedures.

Speaker Change: This constant learning makes us more resilient as leaders and as a company.

Speaker Change: The results of our U S building services segment reflects strong performance in our mechanical services Division, which was offset by the headwinds that we previously referenced in our site based services business. Our industrial services segment was impacted by the effects of a slower start to the turnaround season caused in part by Frigid January weather in Texas. In addition.

Speaker Change: <unk>, we had an increase in our allowance for credit losses impacted this segment's operating income and operating margin by $4 million or 110 basis points, respectively. We anticipate this segment's performance will improve throughout the year and lastly, our UK building services segment continues to perform.

Speaker Change: As expected now please turn to page five.

Speaker Change: Now I'll discuss our Pos we leave the quarter with diversity <unk> or remaining performance obligations of $11 8 billion versus $9 2 billion at the end of the first quarter of 2024.

Speaker Change: Year over year, our <unk> grew 17, 1% organically and with the inclusion of Miller electric <unk> increased by 28, 1%.

Speaker Change: On a sequential basis when compared to December of 2024, our <unk> increased by six 4% organically and 16, 3% when accounting for the Miller Electric acquisition, we had an organic book to Bill of 118 for the quarter.

Speaker Change: Driving our RPM growth or the market set forth and I'll talk about those on this page.

Speaker Change: Notably <unk> within networking communications or data centers were $3 6 billion at the end of March <unk> always have increased by nearly 112% year over year and 28% sequentially with Miller contributing to a portion of this growth, adding approximately $400 million of RPM.

Speaker Change: In this important market segment health.

Speaker Change: <unk> is a one 5 billion increased 38% year over year and 14% sequentially.

Speaker Change: RP OS within the manufacturing and industrial segment up $1 1 billion, representing an increase of 31% year over year or 29% sequentially.

Speaker Change: With the majority of this increase being organic.

Speaker Change: Resulting from a combination of new contract award for existing EMCORE companies and the acquisition of Miller institutional <unk> increased to $1 25 billion, representing 21% year over year growth of 13% sequentially and hospitality and entertainment.

Speaker Change: Entertainment Ipos have more than doubled year over year to $437 million up nearly 73% sequentially due to the award of several sports Stadium and arena projects and Thats really something Miller is good at.

Speaker Change: And we continue to see demand within our mechanical construction segment for water and wastewater projects with <unk>, increasing 29% year over year, and 29% and 20% sequentially to over $820 million, while we have experienced a decreased our high tech manufacturing Ipos, we continue to believe very strong.

Speaker Change: In the long term fundamentals of this sector as we've discussed on prior calls these projects can be episodic in nature and <unk> in this space will fluctuate based on timing of project awards startups and executions, we still expect future awards in this sector and some of that should happen later this year with that I'll turn the.

Speaker Change: <unk> over to Jason who will review the quarter's financial results in more detail Jason.

Jason: Thank you Tony and good morning, everyone.

Jason: As Tony mentioned consolidated quarterly revenues were a record $3 87 billion, an increase of $435 1 million or 12, 7%, which was once again led by our construction segments, where we continue to execute well and demand remains strong across most of the key market sectors that we serve.

Jason: Revenues for the first quarter included $251 million of incremental acquisition contribution, including $183 million for Miller electric since the acquisition on February three.

Jason: On an organic basis revenues grew by five 4%.

Jason: If we look to each of our segments revenues of U S. Electrical construction were a record $1 9 billion.

Jason: In addition to data centers notable revenue increases were experienced in healthcare, where our quarterly revenues doubled.

Jason: Transportation due to certain infrastructure projects and institutional as a result of a greater number of public sector projects.

Jason: U S. Mechanical construction revenues were $1 57 billion, increasing 10, 2%.

Similar to electrical the largest growth during the quarter was seen from data centers within networking communications in.

Jason: In addition, this segment had noteworthy revenue increases within healthcare due to both greater organic activity as well as incremental contribution from acquired companies.

Revenues of the mechanical segment also benefited from higher levels of service volume.

Jason: Partially offsetting the growth in mechanical however were reduced revenues in commercial and high Tech manufacturing.

Jason: On a combined basis, our construction segments generated revenues of $2 66 billion, an increase of 21, 3%.

Jason: Moving to U S building services revenues.

Jason: Demand for mechanical services remains robust and we once again experienced growth across each of those service lines.

Jason: Looking at industrial services revenues were $359 million, an increase of one 4%.

Jason: During the quarter. This segment's performance was impacted by a slower start to the turnaround season due to the delay or deferral of planned projects, resulting from freezing weather conditions in Texas during January which Tony referenced.

Jason: And lastly, UK building services delivered revenues of $105 3 million essentially in line with that of the prior year period.

Jason: Modest decline in facilities maintenance revenues was more than offset by increased project demand from certain of our UK customers.

Jason: Let's turn to slide seven.

Jason: We reported operating income of $318 8 million or eight 2% of revenues in.

Jason: And our performance established new first quarter record for both operating income and operating margin.

When compared against the first quarter of 'twenty. Four this represents a 22, 6% or nearly $59 million increase in operating income and operating margin has expanded by 60 basis points.

Jason: Excluding transaction expenses related to the acquisition of Miller Electric <unk>.

Jason: non-GAAP operating income was $328 1 million up 26, 2% or $68 million and our non-GAAP operating margin was eight 5% a 90 basis point improvement.

Jason: Once again, turning to each of our segments U S. Electrical construction generated operating income of $136 1 million, which represents a 48, 6% increase.

Jason: Operating margin was 12, 5%, a 50 basis point improvement.

Jason: From a market sector perspective, this segment benefited from greater gross profit across the majority of the sectors in which we operate with the largest increases tracking in line with its revenue growth.

Jason: Operating income of U S. Electrical construction included $12 8 million of incremental contribution from Miller electric net of $7 4 million of intangible asset amortization.

Jason: Operating income for U S. Mechanical construction was $186 7 million or 11, 9% of revenues.

Jason: This represents an increase of nearly 24% and 130 basis points of margin expansion.

Jason: This segment experienced the most significant increases in gross profit from the networking communications and high Tech manufacturing sectors.

Jason: Despite the reduction in high Tech manufacturing revenues that I previously referenced the favorable progression on a number of EV in semiconductor projects resulted in greater profitability during the quarter.

Jason: And together our construction segments reported an operating margin of 12, 1%, which is a 100 basis point improvement year over year.

Jason: Excellent execution and a more favorable mix of work continued to be the main drivers of their performance.

Jason: Operating income for U S building services was $36 4 million or four 9% of revenues.

Jason: As the composition of this segment's revenues continues to skew towards more mechanical services and less site based and increase in gross profit and gross profit margin more than offset the reduced revenues of the segment, leading to a $3 million increase in operating income and a 60 basis point improvement in operating margin.

Jason: I should also remind everyone that the favorable year over year comparison is driven in part by the impact in last year's first quarter of a customer bankruptcy, which reduced this segment's operating income by $11 million and operating margin by 140 basis points.

Jason: Turning to industrial services operating income of $6 8 million or one 9% of revenues compares unfavorably to $18 million or five 1% of revenues a year ago.

Jason: Adding to the direct impact of the previously referenced project deferrals and delays was a greater amount of unabsorbed overhead.

Jason: The results of this segment were also impacted by a $4 million, increasing the allowance for credit losses, which reduced its operating margin by 110 basis points.

Jason: And lastly, the UK building services earned operating income of $5 million or four 7% of revenues.

Jason: Mobilization costs incurred with the recent award of a facilities maintenance contract by a new customer, but the primary reason for the period over period reduction in operating income and operating margin.

Jason: Moving to slide eight for a few quarterly highlights starting with gross profit.

Jason: Driven by our electrical and mechanical construction segments as well as our U S. Building services segment gross margin has expanded by 150 basis points with gross profit increasing by 22, 6%.

Jason: If we look next to SG&A, our first quarter expenses increased by $74 6 million.

Contributing to this variance was $22 5 million of incremental expenses from acquired companies.

Jason: $5 1 million of additional amortization expense.

Jason: And the previously referenced $9 4 million of transaction costs.

Jason: Excluding these items SG&A grew by $37 7 million largely due to employment costs, given both greater head count to support our organic growth as well as increased incentive compensation expense within our construction segments, given the higher projected annual operating results.

Jason: SG&A margin for the quarter of 10, 4% compares to nine 6% a year ago.

Jason: Transaction costs account for 20 basis points of the increase with the remaining 60 basis points being driven by two primary factors.

Jason: First we have the incentive compensation expense I just referenced.

Jason: With the increase in our gross profit margin. It is typical to see an increase in SG&A margin as the improved profitability, resulting greater subsidiary incentive compensation, which is a variable cost.

Jason: Next within U S building services SG&A margin has increased given the decline in revenues, we have experienced without a corresponding reduction in SG&A.

Jason: Our segment management team continues to adjust their cost structure aligning the segment's overhead to its new revenue base.

Jason: And overall, we do expect to see a decrease in SG&A margin as the year progresses, and anticipate a full year SG&A margin more comparable to that of the prior year when adjusting for transaction costs.

Jason: And finally on this page diluted earnings per share was $5 26 compared to $4 17.

Jason: An increase of 26, 1%.

Jason: Excluding transaction costs non-GAAP diluted earnings per share was $5 41, an increase of 29, 7%.

Jason: If we turn to slide nine which is our balance sheet.

Jason: As a result of the Miller electric acquisition and approximately $225 million utilized on share repurchases. Our cash balance has decreased to just under $577 million at the end of March.

Jason: During the quarter, we borrowed $250 million under our revolver for temporary working capital needs as.

Jason: As we stated in the past our balance sheet, including the $689 million of working capital remained strong and liquid and when coupled with our history of cash generation as well as the nearly $980 million of capacity available under our credit facility. We are well positioned to continue to fund organic growth pursue strategic M&A and return cash.

Jason: To shareholders.

Jason: Although not shown on the slide operating cash flow was $108 5 million, which compares to $132 3 million in last year's first quarter.

As a reminder, operating cash flow during Q1 tends to be the lowest to the funding of the prior year's incentive compensation Awards.

Jason: Cash flow in the quarter was additionally impacted by the progression on a number of contracts for which we were previously build ahead.

Jason: As we work through these upfront payments, we saw the expected decrease in operating cash as our outflows exceeded our inflows on these projects.

Tony Guzzi: With that I'll turn the call back over to Tony.

Tony Guzzi: Thanks, Jason I'm going to be on pages 10 to 11 to finish.

Tony Guzzi: Given the strong start to the year, we are going to raise the low end of our diluted earnings per share guidance by 40 to a range of $22, 65% to $24. Our revenue guidance will remain the same at $16 1 billion to $16 9 billion.

Tony Guzzi: I would always remind you this is not a quarter to quarter business. The guidance reflects our expectation that we will continue to deliver strong operating margins in 2025.

Tony Guzzi: In setting this range, we believe that we have covered the potential impact of tariffs on our business.

Tony Guzzi: We will manage through the tariff on certainly similar to how we manage the supply chain and cost disruptions around COVID-19.

Tony Guzzi: We will try to pass on price increases and protect ourselves as much as we can through proactively negotiating favorable contract drove terms, while customers, possibly may deferred spending or delayed projects, we have not yet seen any such actions in a meaningful way and the growth in our <unk> reflect the strong demand we continue to.

Tony Guzzi: Experienced for our services.

Tony Guzzi: We also believe that the normalization of trade and trade barriers will be a long term net positive for EMCORE, resulting in more reassuring of critical manufacturing. We continue to believe that we are still in the early stages of this investment cycle.

Tony Guzzi: Said simply we will manage this short term challenge like we have many others. It is part of our EMCORE culture shrank continuously and share best practices around operating in a volatile uncertain complex and ambiguous environment, we call that <unk>, we trained on it and quite frankly, that's been the world we've lived in for the.

Tony Guzzi: The last 12 to 15 years honestly that is the type of environment that we have come to expect and as contractors, we can react very well to almost any environment.

Tony Guzzi: So what will what will take us to get to the higher end of the range.

Tony Guzzi: We got to continue to earn operating margins at the higher end of our performance over the last two years.

Tony Guzzi: Our RPM mix and bookings need to continue the same patterns that we've seen over the last 18 to 24 months.

Tony Guzzi: And we must continue to manage our costs well.

Tony Guzzi: As the year progresses, we will know more about each of these in the actual impact of tariffs and other macroeconomic factors that are beyond our control.

Speaker Change: I, often say to our team.

Speaker Change: This is part of our DNA to focus on what you can control and that is what we plan to do we're going to exercise discipline around our overhead and job costs and we'll continue to train and share best practices, while proactively addressing any potential issues.

Speaker Change: Like we always do we will allocate capital with discipline, we have a decent pipeline of acquisition opportunities and I have said for many years deals happen when they happen.

Speaker Change: Like we always do we also want to thank our EMCORE teammates for their excellent performance and for living our values of mission first people always.

Speaker Change: Quite frankly, we got the best team in the field from all levels and our subsidiary weavers leaders are executing exceptionally well in a very.

Speaker Change: Uncertain environment, but that's what we do is contractors and we do it exceedingly well with that.

Speaker Change: I will turn it over cigar for questions.

Speaker Change: Thank you.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question. Please press Star then one on your Touchtone phone.

Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: If at any time question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: Our first question comes from Brent Thielman from D. A Davidson. Please go ahead.

Brent Thielman: Great. Thanks, Good morning, good morning, Brian.

Brent Thielman: Hey, Tony really strong start on <unk> looks like.

Brent Thielman: Good momentum in most areas of the business right now I guess in light of that.

Speaker Change: Yes, you did keep the top end of the guidance range here and my question was more is it to handicap, what could be operational risks just related to tariffs or supply chain noise or is it more related to kind of potential growth headwinds that could surface.

Speaker Change: No it doesn't really sound like that's happened yet just wanted to get clarity there no its related than anything even beyond tariffs right. There's a lot of uncertainty.

Speaker Change: It's not growth related we think we have the tariffs nailed down and our.

Speaker Change: Range, we feel really good about that we thought it's April even without an environment that had tariffs and everything else I doubt, we would have raised the top end of our range. Even if you said theres no tariffs no anything we brought the bottom up because we feel good about that but the top end. If you do that math all the way out it was fairly.

Speaker Change: <unk> of guidance.

Speaker Change: But yes.

More just sort of macroeconomic early in the year, we feel really good about that.

Speaker Change: The prospects we have in the business right now.

Speaker Change: I think the one thing to add to that on the margin side right as we're maintaining our margin guidance in that same range that we had back in February of 85 to 92.

Speaker Change: Adjusted margin for the first quarter here of 85, we're essentially saying margins will at least hold if not improve throughout the remainder of the year right.

Speaker Change: Okay, Okay and then.

Speaker Change: And I guess again back on the Hi Tech.

Speaker Change: <unk> got a lot of momentum in most areas of the business, obviously rps are off a bit there, but it seems like theres been a slug of announcements lately on the pharma side.

Speaker Change: Related to reassuring.

Speaker Change: I wanted to come back to that your assessment of the opportunities that may be building in that vertical where we could.

You see an inflection.

Speaker Change: Maybe an RPM over the next couple of years here.

Speaker Change: My gut tells me yes.

Speaker Change: Pharma I also see Youll see more.

Speaker Change: Semiconductor work come in we'll be careful what we do there, but I think macroeconomically. It set up for that right I don't think anybody that's listening to this call right now, we'd say Gee, we feel better about what's happening in China, and Taiwan today than before our Taiwan semiconductor started building fabs in Arizona, while the answer to that would be that's even gotten.

Speaker Change: More tenuous so the spending may accelerate over the next three to five years instead of decelerate.

Speaker Change: I think that that one I think pharma is absolutely that tied to reassuring.

Speaker Change: I would tell you theres been a bevy of new drugs, especially around the weight loss area that we're also seeing an expansion and we're positioned very well a big chunk of that has happened in the research Triangle Park area, we have great capability there across the trade spectrum for mill rights through pipe Fitters.

Speaker Change: And onward I think the other part is happening is in new Jersey, we have great electrical capability there.

Speaker Change: Mechanical and it's happening in the Indiana area, where we're well positioned to and then you get to the Biopharma area. It's still a southern California is very strong and we have great capability, there, especially electrically mechanically so.

Speaker Change: And then if you take all of that and you overlay fire protection, we can service the fire life safety nationally.

Speaker Change: So again, we look at that if we're sitting here five years from now we're going to have built a lot of high tech manufacturing plants, we're going to have done it hopefully very well.

Speaker Change: Our combination of EDC, coupled with prefab, coupled with how well our folks share means and method, we expect to be able to deliver exceptional results for our customers in that area.

Speaker Change: And I think too in that space right as we await other.

Speaker Change: Other phases of awards in the semiconductor space, we're still getting work and the other high tech areas.

Speaker Change: Pharma and biotech life Sciences, EV value chain I mean, just in the quarter alone, we had $200 million inorganic net bookings in that high tech manufacturing space.

Speaker Change: Got it.

One more maybe more housekeeping, Jason I'm, just trying to get a sense of whether miller as accretive or dilutive to the electrical segment margin as you pulled that in or maybe it's neutral.

Speaker Change: Yes, I think for the quarter, certainly dilutive to the margin rate and we talked about the largest piece of that being driven by the intangible asset amortization and so on an annual basis. We had said to consolidated EMCORE expect 25 to 30 basis points of margin dilution for the electrical segment I would say, it's probably about 100 to 110 basis points.

Speaker Change: To that segment, but when you remove the amortization expense they earn strong margins neutral with our electrical segment.

Mike: Got it okay. Thanks, I'll pass it on thanks Brennan, It's Mike. Our next question. Please. Thank you our next question.

Speaker Change: She comes from Adam <unk> from Thompson Davis. Please go ahead.

Hey, good morning, guys great quarter. Good morning, guys. Thank you.

Speaker Change: Tony I wanted to start on building services can you just give us kind of updated high level thoughts on where you want to take that segment from here.

Speaker Change: Well I think.

Speaker Change: It's where we've been investing.

Speaker Change: Our investment dollars have gone into the mechanical service business over a long period of time.

Speaker Change: Historically, it's been sort of a set.

Speaker Change: 70, 30 between site based and.

Speaker Change: 30 being site based 70, <unk> mechanical service that's going to.

Speaker Change: By this time next year, probably look like 80 20.

Speaker Change: So we'll continue to invest in technician based services will be opportunistic on our site based team we have a really good team there.

Speaker Change: So.

Speaker Change: <unk>, where it makes sense and what we're not going to do.

Speaker Change: Is take.

Speaker Change: Contracts that have very difficult terms.

Speaker Change: And provide little to no margin and Thats, what youre really seeing right now.

Speaker Change: On the site based side.

Speaker Change: So building services has always been led by mechanical services.

Speaker Change: So our goal long term is to grow both but mechanical services will be the emphasis.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: And then.

Speaker Change: Got it.

Speaker Change: You bought back a lot of stock in the first quarter. Despite closing Miller and I'll see you said some cash outflows related to new project starts.

Speaker Change: What gave you the confidence to do that or can you just give some additional color behind that.

Adam: Adam It begins and ends with execution.

Speaker Change: We have a long term history of being.

Adam: Best in class as far as cash flow generation.

Adam: We see no reason to believe that won't continue.

Adam: We will earn cash flow at least at net income.

Adam: And we will probably exceed that a little bit as the year progresses.

Adam: Nothing in our profile that shows that won't happen in the future you have customer prepayments that are in and out.

Adam: Our bumps here and there but.

Adam: We're smart about how we set up contractual terms.

Adam: We're smart about how we execute on the job and keep our customers apprised of where we are in the progress of that job.

Adam: Our best in class of progress billings and quite frankly, because of the way we have our incentive plan is structured.

Adam: Have a cash focus in this company that is unrelenting.

Adam: And put all that together that gives us the confidence to continue to maybe use our balance sheet a little more aggressively we've always said that when the right opportunity came along that we would execute that and it was irrespective of size that we were very comfortable up to $1 billion.

Adam: And maybe even a little bit over that and we've proven out with Miller and we've also been.

Adam: You look at the collection of deals we've done in the last five years, we are really good at executing the integration of acquisitions and I would put Miller in the top decile of any acquisition integration that we've ever done.

Adam: So we're here to build the business for the long term, we feel good about our cash flow, we feel good about our balance sheet.

Adam: Jason you have anything that I would just say we did still have very strong operating cash flow this quarter right for a little bit a little bit down from last year, but I think it's important to remember that traditionally really with the exception of this year and last year Q1 operating cash flow for US is historically negative alright, so at $108 million.

Speaker Change: Even compared to the 132 or $33 million last year still very strong operating cash flow in the quarter and I think Adam cutting through it right. We obviously very feel very good about.

Speaker Change: Not only the profitability, but the cash flow characteristics of what do we have an RPM right now.

Speaker Change: Got it good color I'll turn it over thanks, guys. Thanks, Adam Our next question. Please.

Speaker Change: The next question comes from Brian Murphy from Stifel. Please go ahead.

Brian Murphy: Thanks, Good morning, everybody.

Speaker Change: Hey, Brian.

Brian Murphy: Hey wanted to ask one on data centers obviously.

Speaker Change: Can you use to be a bright spot here in the near term.

Brian Murphy: But we continue to see headlines.

Brian Murphy: Point to some more noise couple of large hyperscale or at this point adjusting some of their datacenter commitments just curious your thoughts.

Brian Murphy: On this area, what's the latest you're seeing and have you seen any change in your long term customer build plans.

Brian Murphy: Yeah. The change we've seen is actually more areas.

Brian Murphy: More search for power.

Brian Murphy: More build that's what we've seen.

Brian Murphy: Look at.

Brian Murphy: I never read too much into People's data Center announcements.

Brian Murphy: Because some of that.

Brian Murphy: Sometimes just sending a signal that we're pausing some of that has to do with design changes we've been through this a couple of times with different hyperscale or whether it be on the colo side or for lack of a better word the OEM the owner side with the people that actually can occupy them.

Brian Murphy: We've experienced this multiple times, even on a location where theyre going to build six buildings. They built to any change in the design.

Brian Murphy: What we know is sizes, increasing megawatts, increasing our content is increasing and the demand for our resources increasing.

Brian Murphy: And the number of places people want us to work are increasing and that gives us pretty visibility I would say certainly through the end of the year with <unk> and with the amount of people that have brought us into their build plans and wanting us to be part of the solution that has definitely ticked up here in the last six to nine months.

Speaker Change: It also appears that the Miller transaction costs are now excluded I guess do I have those items right and are there any other.

Speaker Change: Moving pieces on EPS guidance, we should be aware of so when we set the guidance we contemplated all the impacts of Miller to include to include the transaction expenses.

Speaker Change: But this is such a wide range and it's so early in the year.

Speaker Change: It's hard for us to say to read too much into any of that our revenue guidance, but we feel good about where pegging. The low end of our guidance around eight 5% margins and we are paying at the high end of our guidance around nine 2% margins.

Speaker Change: And if we operate within there and the volume gets to the high end I think we're going to we're going to get towards the higher end of our guidance.

Speaker Change: GMP contracts into fixed price all of that goes into it. There is 10000 12000 moving pieces out there it's April theres some macroeconomic uncertainty.

Speaker Change: Quite frankly with the size of the business now and where we are we've probably in any circumstance wouldn't have raised anything but the low end of this guidance range with the first quarter beat that we had and at the end of the second quarter will give you a pretty good view on maybe what the rest of the year looks like and maybe at that time, we'll have some more to say about the top end of the range.

Speaker Change: Got it that's helpful I'll pass it on thank you.

Speaker Change: Thank you Sir.

Speaker Change: Next question comes from Alex <unk> from Keybanc capital markets. Please go ahead.

Speaker Change: Hey, good morning, how are you guys. Good how're you Alex yes.

Speaker Change: Good.

Speaker Change: So on the network and communications.

Speaker Change: A portion of your business.

Speaker Change: Can you remind us how much of that is purely data center and what makes up the balance of that and I guess.

Speaker Change: Has there been a shift in your.

Speaker Change: Data center bid pipeline and an ASP of your customers between mechanical and electrical.

Speaker Change: As we think about current versus prior years.

Speaker Change: So look 85% or so of that network.

Speaker Change: We call It network and communications is we also have a low voltage business.

Speaker Change: Become national in scope, it's part of it is four times the size it was five years ago.

Speaker Change: And so that's in there too, but 85% plus of it is just pure data center work standard electrical work and mechanical work and fire life safety work on data centers.

Speaker Change: As far as I am sure I remember the extra question have we seen a change in the bid prospects I would say, yes, the inflections up.

Because number of sites is up look this as you've heard me say this before this.

Speaker Change: This is almost like a game of thrones looking for power.

Speaker Change: Everybody is looking for power to power these data centers and they're looking all over the country.

Speaker Change: We went from I think I said, we went from serving three data center sites in 2019.

Speaker Change: And so net net people are in their search for power and in their search for very dependable base load power that.

Speaker Change: Can service these data centers.

Speaker Change: Typically the electrical scope is one 5% to exit the mechanical scope. However, that's historical youll get to the future electrical might only be 125, not that electrical shrunk, but because of the heat in these data centers.

Speaker Change: Mechanical scope has walked up.

Speaker Change: Because theres more more calling in is not only are cycling theres more rack, calling and immersive calling of our water and.

Speaker Change: In liquids, the KOL actually the servers in that media.

Speaker Change: And so that drives up the mechanical scope and in just the tonnage that needed to support that also goes up.

Speaker Change: And so.

Speaker Change: Just to put things in perspective on a 2500 megawatt.

Speaker Change: Data Center campus.

Speaker Change: So each <unk>.

Speaker Change: <unk> 1000, or the Siemens equivalent of a gas turbine is about 250 to 300 megawatts.

Speaker Change: So these are to get to datacenter you were talking a central utility plant.

Speaker Change: It is not dedicated because I mean electricity coming from everywhere that would be dedicated to one data center site.

Speaker Change: To put that in perspective, the biggest integrated steel mills in this country at their height.

Speaker Change: Use.

Speaker Change: 10% of that power.

Speaker Change: They just had one in Pennsylvania, they knocked down.

Speaker Change: Those things will be owned by the utility long term because will be part of the grid and so you put all that together right now it's hard for us to see all of this is slowing down again, we are part of our customer Bill plant. They will move around they will say this site slowing down they will say, we are going to slow because of design changes.

Speaker Change: Wouldn't pretend that understand how the integration between our cloud storage platform.

Speaker Change: <unk> training AI platform to generate of AI platform. All work together I wouldn't pretend to know that but what I do know is the typical cloud stories, where somewhere between 30% and 60 megawatts and the ones. We think are going to AI are north of 100 megawatts. At this time, so put a 100 or 200 megawatts into perspective for U 200 megawatt.

Speaker Change: It is about 5500 homes, that's probably average AUM.

Speaker Change: Three 5% to four people, let's give or take 20000 people. That's a small to mid sized city in the U S.

Speaker Change: Is one data center doing AI will require with power.

Tony Guzzi: Got it very helpful. Tony I guess second on.

Speaker Change: On the IPO.

Tony Guzzi: The 28% growth rate.

Tony Guzzi: I think thats, the strongest <unk> growth rate.

Tony Guzzi: A couple of years ago, and I'm, just wondering how we think about this 28% RPM growth against.

Tony Guzzi: The revenue growth guidance, which is low double digits is that just a function of more of that Rps for 2026 projects.

Tony Guzzi: Or maybe you are working on more larger projects that that burn over multiple years, just I guess, just wondering if theres anything different in the burn cadence of this IPO going forward having.

Speaker Change: Having quickly two things and then I'll, let Tony add as well.

Speaker Change: First at 28% does include Miller, so organically.

Speaker Change: It is up 17% and then the second is just if you look at historically what percentage of our <unk> turn to revenues in excess of 12 months historically that number has always been around 85% or so where we stand today about sorry, it's been 85% is going to burn in the next 12 months, 15% in excess of 12 months.

Speaker Change: We look today, it's about 80% that's going to burn it in 12 months and 20% going on beyond 12 months. So we do have a little bit more of that our apio thats slatted are slated for a longer term burn and that's just some of the water and wastewater work we're doing in mechanical some of the food process work, we're doing in mechanical and just some of the jobs that we acquired through Miller.

Speaker Change: And the thing I would add it's important to also know.

Speaker Change: Our revenue growth rate was tempered.

Speaker Change: By what you see in building services and industrial services right.

Speaker Change: We grew in our construction businesses total 21, 3%.

Speaker Change: Those growth rates more lineup with what you'd expect to see there.

Speaker Change: Thank you I'll turn it over there.

Speaker Change: Okay next question.

Speaker Change: Thank you.

Speaker Change: Our last question comes from Adam at Goldman Sachs. Please go ahead.

Adam: Hi, good morning.

Speaker Change: Tony you alluded to the data center business expanding into many more markets.

Speaker Change: Electrically mechanically over the last several years when you think about the growth for that business off the current run rate is the next leg of growth coming from existing markets or new.

Speaker Change: New markets and just.

Speaker Change: If it's new is that an organic expansion expansion or via M&A.

Speaker Change: Most all of our growth in data centers up to this point I mean through the first quarter of this year has been organic.

Speaker Change: If you or acquisitions on four or five years ago, and they werent really in the datacenter market in a significant way.

Speaker Change: If you look at Miller, they contributed I think Jason a $400 million.

Speaker Change: And networking communications about the RVO site under our feet.

Speaker Change: Whereas the growth come I'd say, it's 50 50 give or take.

Speaker Change: <unk>.

Speaker Change: Talking geographic locations, Radiuses places, where theyre going to have.

Speaker Change: Like Pryor, Oklahoma, they built there before but now it's building again.

Speaker Change: Understood and then on margins you folks cited mix.

Speaker Change: Mixed tailwind this quarter end.

Speaker Change: Prior quarters, which types of projects are driving the mix tailwind.

Speaker Change: How do margins on the average.

Speaker Change: Data Center project.

Speaker Change: Specifically compare to portfolio averages.

Speaker Change: Clearly the larger more sophisticated once if we get it right.

Speaker Change: Where our customers are very demanding and we have been part of the design assist.

All of that works out we can do a little bit better.

Speaker Change: That's mainly based on our execution.

Speaker Change: More than anything.

Speaker Change: Mid sized projects, we can also have those characteristics and small projects.

Speaker Change: <unk> have very steady margins by a large and mix up the reality of all that project mix right now in general to include the mechanical services business, which is more small project focus sort of $5 million less I think the reality of all of it.

Speaker Change: We are operating at over the last three years at the high end of what we have done over a 10 year period.

Speaker Change: And I think the reason for all of that is we've gotten better.

Speaker Change: Maybe pricing has got a little bit better, but these are really demanding customers. We work for so they're not paying one nickel more than <unk>.

Speaker Change: We've gotten better and we've gotten better on the small project side, because we can deliver faster for the owner and also disruptor.

Speaker Change: Market.

Speaker Change: The prices the price our competitors really probably can't do that they don't have the scale to do that.

Speaker Change: And then at the top and we're working a lot of times collaborative with our customers to get to the right solution and the right planning, we're thinking a lot about labor mix management, what's the ratio of journey inventory premises wireman was the former mix going to be on the job, which experienced level of those warm and how many of our core people are we going to have on the job versus travelers all.

Speaker Change: Those things go into thinking about how we price the job how we built contingency and then finally, how eventually we execute that job.

Speaker Change: And then one last one on margins for me.

Speaker Change: I know your advice or not thinking about the business on a quarter to quarter basis, but typically you see.

And typically you do see.

Speaker Change: Up <unk> versus <unk> and margins any puts and takes around that normal cadence that we see.

Speaker Change: In all seriousness, Adam we don't think about the business that way we can't.

Speaker Change: We have 12000 projects give or take 10 to 12000 projects. They start they close we have contingency being released after we get more certainty on.

Speaker Change: Completion of the job and completion of our labor estimates.

Speaker Change: So theres too many moving parts I think what we say is if you look over a we would say now Jason of up to 24 month period.

Speaker Change: 3% to five quarters give or take you'll get a pretty accurate view of how the business is actually performance in that band of margin expectation is what could actually happen in any quarter. It could be on the upside of that it can be in the middle of that may be on the lower end of it and none of that really has to do with the underlying fundamentals of the business. That's why we encourage you to look over sort of three years.

Speaker Change: To five quarters to get a real view on what's happening with our margins.

Speaker Change: Great. Thanks, so much thanks.

Speaker Change: Thanks, Paul.

Speaker Change: Thank you.

Speaker Change: This concludes our question and answer session.

Speaker Change: I would now like to turn the conference back over to our CEO, Tony Guzzi for closing remarks.

Speaker Change: <unk>.

Speaker Change: I also think about what's the simple message on the quarter.

Speaker Change: I think it is important to summarize because a lot of macroeconomic noise out there.

And so how we think about it is we're not going to sit here and make a lot of excuses, we're going to operate in the environment that we feel that we're in and we're going to make contingency plans, we're going to share best practices, we're going to do everything we can to drive the productivity up on our labor because that's something we can control.

Speaker Change: And that's in any macroeconomic environment.

Speaker Change: So you take the steel and aluminum tariffs.

Speaker Change: We're seven for seven with President since 1974 that have done something with the steel and aluminum market when Theyre President and we are well rehearsed in how to do that and quite frankly, COVID-19 sharpen that sort of for us much more on how we can react and.

Speaker Change: And we started planning on maybe.

Speaker Change: Supply chain and tariffs and all of those things because we sort of pay attention to who won the election.

Speaker Change: Thank you.

Speaker Change: This conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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