Q4 2025 EMCOR Group Inc Earnings Call

February 26, 2026

Speaker #1: And due to select project opportunities, RPOs within hospitality and entertainment have more than doubled year over year. I'm now going to turn to page 7 because I think it's important to look at some of the longer-term trends and what's really driving our growth over a sustained period of time, and also to highlight our diversity of demand.

Group fourth quarter and full year 2025 earnings conference call.

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Speaker #3: You also need to have experienced leaders

After the speaker's prepared remarks, there will be a question and answer session.

If you would like to ask a question during this time, simply press star and then number 1 on your telephone keypad,

Speaker #1: So now go to page 7 and let's take a minute. I want you to focus your eyes on the middle of this page. And in the middle of this page, you'll see where we were on the left-hand bar at 12:30:19.

if you would like to withdraw your questions, you may press star and 2

At this time, I'd like to turn the floor over to Lucas, Sullivan director, Financial Planning and Analysis Mr. Sullivan, you may begin,

Speaker #1: Right before COVID. We were about 4.036 billion in RPOs, and I want you to focus your eyes on that royal blue bar or dark blue bar.

Thanks Jamie. Good morning everyone. And welcome to Moores fourth quarter and full year 2025 earnings conference call.

Speaker #1: And that's our Network and Communications business. And I want you to look over at 12/31/25. Those Network and Communications RPOs are about $4.4 billion today, which is greater than our total RPOs at the end of 12/31/19.

Speaker #1: But then look at the total number of 13.254 billion. And realize that we have grown everything else by over 8.5 billion dollars. Now I want you to come over to the left side of the page, and I want you to look at some of these long-term growth trends.

For those of you joining us by webcast, we are at the beginning of our slide presentation, that will accompany our remarks today. This presentation will be archived in the investor relations section of our website at emcor. Group.com, with me today are Tony Guzzi, our chairman president and Chief Executive Officer Jason now, bandian senior vice president, and Morse Chief Financial Officer, and Maxine Mauricio Executive Vice President, chief administrative officer and general counsel.

Speaker #1: I'm going to spend a little bit of time, and we've already done that with the near-term commentary, high-tech manufacturing on a compound annual growth rate—and that's an in-and-out of a major project—but from where we started in 12:31:19, which had some semiconductor work in it and pharma work in it, to where we are today has grown by a compound annual growth rate of 48%.

For today's call, Tony will provide comments on our fourth quarter and full year and discuss our rpos Jason will then review the fourth quarter and full year numbers. Then turn it back to Sony to discuss our guidance before we open it up for Q&A.

Before we begin a quick reminder that this presentation and discussion contains certain forward-looking statements and may contain certain non-gaap financial information.

Speaker #1: And we remain very bullish on this market with a demand for semiconductor chips, the reshoring of pharma, the growth in GLP-1 drugs and what's going to happen there, and just in general, what has been reshored in high-tech and what's going to continue to grow.

Slide 2 of our presentation describes in detail. These forward-looking statements and the non-gaap financial information disclosures

I encourage everyone to review both the disclosures in conjunction with our discussion and accompanying slide.

Speaker #1: 48% compound annual growth. Right above that is network and communications. We thought we had a great data business center business in 2019. We went from having a very strong data business center business to a terrific data center business.

Speaker #1: Now I'm not going to say we're the only ones that can do data center work at scale. But we're the only ones that can operate in about 17 markets: electrically, and we're doing about seven markets now mechanically.

And finally, as a reminder, all financial information discussed during this morning's call is included in our Consolidated financial statements. Within both, our earnings press release issued this morning and in our form 10K filed with the Securities and Exchange Commission. And with that let me turn the call over to Tony Tony. Yeah thanks Lucas. Uh good morning and Welcome to our fourth quarter 2025 earnings call.

Speaker #1: And we're one of the only ones that can cover the whole country on fire life safety projects in the data center business. Look at healthcare.

Speaker #1: 23%. That is a stable market for EMCOR. It's been one of our long-term markets. And it's as complex to build a high-rise hospital as it is a data center.

I'm going to speak briefly to the fourth quarter in my opening comments but we'll focus. My introductory remarks on what drove our continued success in 2025. So I'm going to start on pages 4 through 5 of our earnings presentation.

Speaker #1: And that's why our electricians and our pipe fitters can move between those sectors so easily, between high-tech manufacturing, network and communication, and really industrial work.

We had an excellent close to the year with our fourth quarter results. In the fourth quarter, we generated revenues of 4.5 billion which represents 19.7% growth.

Speaker #1: They can move between those and we do that. Institutional is up 20%. That was actually a surprise to us when we went back and looked at the compound annual growth rate in institutional across that sector.

Speaker #1: Water and wastewater is a great market for us, mainly in Florida. 24% compound annual, driven by consent decrease from the EPA, driven by just growth in Florida.

We earn adjusted earnings per share of $7.19 per diluted. Share a 13.8% increase from 2024 and delivered adjusted operating income of 440 million. A 13.1% increase from 2024. We did this while achieving strong adjusted operating margins of 9.7%.

Our adjusted results for the fourth quarter, exclude the gain, on the sale of our UK business and the trans transaction costs related to upsell.

Speaker #1: And driven by updating technology in these large wash wastewater plants. Transportation, as you talk about mixed management, we have decided to de-emphasize the transportation market, especially the electrical roadway market.

For the full year are just results. Includes the items as well as the transaction costs incurred. To the first quarter due to the acquisition of the Miller Electric Company.

Speaker #1: It takes a while to get out, but that will continue to drop unless a big airport or a project like that comes in. And that would be then balancing against these other markets.

Speaker #1: I love the bottom in commercial was a GDP grower. It's a pretty good considering the engine house has happened over this period. But look at the short duration projects.

By any measure 2025 was a tremendous year for us, we had record revenues of nearly 17 billion dollars and record adjusted for your operating margin of 9.4% and at the high end of our guidance range. We also had a record adjusted diluted earnings per share at $25.87 per share and increase of 20% from 2024,

Speaker #1: To me, that's a sign of what's going on across all the markets, especially in the built space. And that contains some commercial work. That contains some institutional work.

With operating cash flow of 1.3 billion. We continue to our exceptional record of cash conversion.

Speaker #1: That contains some manufacturing work. And these are projects that are going to last less than five months and typically have a ticket size of somewhere between $50,000 and $500,000.

Speaker #1: And that's put on top of that, the big service space we have in EMCOR across our fire life safety projects, across our mechanical service business, and across even our day two electrical work.

Our success. Once again, demonstrates our ability to execute with discipline across our business as we drive Innovation and efficiency to achieve exceptional outcomes for our customers. We have delivered sustained strong results. Despite the fact that we are working on the most technically Tech technically, sophisticated fast-paced and demanding projects in our history.

Speaker #1: So what allows you to have that kind of compound annual growth across that sustained period of time? And these are no particular order. First of all, you got to be where your customers are.

Speaker #1: You have to be able to meet them where they are. You have to have national reach. You have to have the geographic footprint. But that's not enough.

Tony Guzzi: of cash conversion. Our success once again demonstrates our ability to execute with discipline across our business as we drive innovation and efficiency to achieve exceptional outcomes for our customers. We have delivered sustained strong results despite the fact that we are working on the most technically sophisticated, fast-paced, and demanding projects in our history. We had a great year, and we enjoyed delivering for our customers and our shareholders. Notably, we earned full-year mechanical and electrical construction operating margins of 12.8 and 12.1%, respectively, demonstrating excellent execution across a diverse range of projects by size and market and geography. We did this while growing revenues of these segments by 10.1% and 51.8%, respectively.

We had a great year and we enjoyed the living for our customers and our shareholders notably we earned full year, mechanical and electrical construction operating margins of 12.8 and 12.1% respectively. Demonstrating excellent execution, across a diverse range of projects by size and market and geography.

Speaker #1: You can have a geographic footprint that can execute. You have to have opportunistically travel. You don't just travel to travel. We're not going to be the contractor that uses a labor broker in places labor around the country.

We did this while growing revenues of these segments by 10.1% and 51.8% respectively.

Speaker #1: For the most part, when we travel, we're traveling in our construction business with very strong union journeymen and commercial wiremen and others that can move around the country.

Speaker #1: And check into the union and we draw from that. And we're an employer of choice. And that is driven by the strong field leadership we have at the local level.

We achieved a 6% operating margin in our Building Services segment driven by the underlying strength of our Mechanical Services business, which achieved High single-digit operating margins and 6% growth virtually, all that growth was organic demand for this business remains strong with a primary focus on aftermarket Market projects and retrofits.

Speaker #1: We've got the technical expertise. We have great prefabrication capability. BDC capability that we use to work across these sectors. And really, the BDC we use today in our data center business and the BDC we use today in our high-tech manufacturing was really honed in the healthcare sector over 20 years ago.

Building Automation and controls upgrades and services in indoor air quality and Energy Efficiency projects.

We made well positioned with our Industrial Services segment to serve a rebounding oil and gas industry.

Tony Guzzi: We achieved a 6% operating margin in our building services segment, driven by the underlying strength of our mechanical services business, which achieved high single-digit operating margins and 6% growth. Virtually all that growth was organic. Demand for this business remains strong, with a primary focus on aftermarket projects and retrofits, HVAC service and repair, building automation and controls upgrades and services, and indoor air quality and energy efficiency projects. We remain well-positioned with our industrial services segment to serve a rebounding oil and gas industry. We divested our UK business to focus on our US operations. We found EMCOR UK a great strategic home and achieved a very strong result in the sale for our shareholders. We acquired Miller Electric, which is the largest acquisition in EMCOR history.

We divested our UK business to focus on our us operations. We found em core UK, a great strategic home achieved a very strong result for our cell in the cell for our shareholders.

Speaker #1: We have a great reputation and safety record. It's really a hallmark of who we are. And why we continue to attract the best trade labor.

Speaker #1: Our customers want us to do the work for them. One of the benefits of scale to us is we can train. We can share means and methods.

We acquired Miller Electric, which is the largest acquisition in M core history. The integration is on track, our leadership and value are aligned and Miller will serve as a great platform for growth in the Southeast and Texas.

Speaker #1: And we can share best practices across our country. And that allows us to have very strong acquisition pipelines over sustained period of time. And allows us to make the right smart growth organic investments.

In addition to Miller, we acquired 9 other companies across our mechanical Construction and building Services segments. Collectively. These platform enhancing Acquisitions will help us to better serve our customers.

Speaker #1: I think this page is something that really is a hallmark of our company. And I think this page was really what we have built together with our capital allocation strategy, which is on page 14, coupled with what is on page 7, is what we get paid for to do to build a company that has great diversity of demand, can take advantage of the end markets in many cases, and then build a sustainable compounding record of success.

Tony Guzzi: The integration is on track, our leadership and values are aligned, Miller will serve as a great platform for growth in the Southeast and Texas. In addition to Miller, we acquired nine other companies across our mechanical construction and building services segments. Collectively, these platform-enhancing acquisitions will help us to better serve our customers. We repurchased almost $600 million in shares and increased our quarterly dividend to $0.40 per share. This return of cash to shareholders, coupled with our organic investment and acquisitions, affirms our successful balanced capital allocation strategy. We maintained our industry-leading safety record in this demanding and complex environment with a TRI under 1 for the second year in a row.

Speaker #1: With that, Jason, I'll turn it over to you.

Speaker #2: Thank you, Tony. And good morning, everyone. Before we dive into our results for the fourth quarter, I thought it made sense to step back and take a look at how we performed for the full year, which is summarized on slide 8.

We repurchased almost 600 million in shares and increased our quarterly dividend to 40 cents per share. This return of cash to shareholders coupled, with our organic investment and Acquisitions affirms. Our successful balance Capital allocation strategy. We maintained our Sterling balance sheet that allows for continued, organic and acquisition growth. We remained our in, we maintained our industry-leading safety record in this demanding and complex environment with a try or under 1 for the second year in a row. We earned inclusion into the S&P 500 and we were recognized by Fortune as the number 1. Most admired company in the engineering construction industry and we built our our

Speaker #2: In 2025, we earned revenues of $16.99 billion, operating income of $1.71 billion, and operating margin of 10.1%, and diluted earnings per share of $28.19.

Poe to 13.25 billion from 10.1 billion, despite our record revenues.

That's quite a year, right? Congratulations to our team. And thank you for a great 2025.

I'm now going to go to page 6.

Speaker #2: When excluding the transaction costs incurred in connection with both the acquisition of Miller Electric and the sale of EMCOR UK, as well as the gain on sale of EMCOR UK, we are non-gap operating income of $1.59 billion, operating margin of 9.4%, and diluted earnings per share of $25.87.

these are PRS, which I will now highlight

Which I will now highlight.

Tony Guzzi: We earned inclusion into the S&P 500, and we were recognized by Fortune as the number one most admired company in the engineering construction industry. We built our RPOs to $13.25 billion from $10.1 billion, despite our record revenues. That's quite a year, right? Congratulations to our team, thank you for a great 2025. I'm now going to go to page 6. These RPOs, which I will now highlight, 0.2% year-over-year and 17.6% organically. On a sequential basis, RPOs have increased at 5.1% since September, or 3.6% organically.

2%, uh, uh, year-over-year and 17.6% organically.

Speaker #2: All of which were records for EMCOR. We performed extremely well in 2025, benefiting from some of the best execution in our history and a favorable mix of work, both of which allowed us to deliver a full-year operating margin at the high end of the guidance we previously provided and in excess of our expectations when we began the year.

Speaker #2: If we turn to slide 9, I'll now review the operating performance for each of our segments during the quarter, starting with revenues. $4.5 billion represents a quarterly record for EMCOR, with revenues increasing 19.7% or 9.5% organically.

On a sequential basis rpos have increased 5.1 since September or 3.6% organically driven by demand in our data center business, rpos within the network and Communications totaled. A record 4.46 billion at the end of December and increase of 1.65 billion or an early, nearly 60% year-over-year. We see no change in the momentum of the capex plans from our customers in this sector and we have good visibility for the next 2 to 3 years as we work to support their build up.

Institutional, rpos have increased by just under 440 million.

Speaker #2: Revenues of US electrical construction were a quarterly record of $1.36 billion, increasing 45.8% due to a combination of strong organic growth and the acquisition of Miller.

Tony Guzzi: Driven by demand in our data center business, RPOs within the network and communications totaled a record $4.46 billion at the end of December, an increase of $1.65 billion, or nearly 60% year-over-year. We see no change in the momentum of the CapEx plans from our customers in this sector, and we have good visibility for the next two to three years as we work to support their buildup. Institutional RPOs have increased by just under $440 million, or 40%, to $1.55 billion, largely as we continue to see demand for our services within the education sector, including from a number of colleges and universities. Manufacturing and industrial RPOs have increased by $201 million, or 23%, to $1.1 billion.

Or 40% to 1.55 billion largely. As we continue to see demand for our services within the education sector sector, including from a number of colleges and universities manufacturing and Industrial rpos have increased by 201 million.

Or 23%.

Speaker #2: Similar to recent quarters, the most significant growth in this segment was generated from our data center projects within the network and communications market sector, where revenues increased nearly 50% year over year.

Speaker #2: While this represents the greatest increase during the quarter, almost all other sectors experienced growth. Healthcare, institutional, and hospitality and entertainment represent the next three largest increases in addition to greater small project volumes.

Speaker #2: I think the best way to summarize this segment's performance in the quarter is that half of its growth came from data centers and half of its growth came from strength in the underlying or more traditional business.

Speaker #2: Once again, this highlights our diversity of demand. Moving to US mechanical construction, revenues of $1.94 billion increased 17%, establishing a new quarterly record for this segment.

Tony Guzzi: As I mentioned last quarter, in addition to project awards driven by customers' onshoring and reshoring initiatives, growth in this sector has also benefited from certain food processing projects within our mechanical construction segment, as well as a renewable energy project in our industrial services segment. Led by our mechanical construction segment, water and wastewater RPOs have increased by $408.5 million, or nearly 60% to $1.1 billion, as we continue to win projects throughout Florida. Due to select project opportunities, RPOs within the hospitality and entertainment have more than doubled year-over-year. I'm now going to turn to page 7, because I think it's important to look at some of the longer-term trends and what's really driving our growth over a sustained period of time, and also to highlight our diversity of demand.

Tony Guzzi: As I mentioned last quarter, in addition to project awards driven by customers' onshoring and reshoring initiatives, growth in this sector has also benefited from certain food processing projects within our mechanical construction segment, as well as a renewable energy project in our industrial services segment. Led by our mechanical construction segment, water and wastewater RPOs have increased by $408.5 million, or nearly 60% to $1.1 billion, as we continue to win projects throughout Florida. Due to select project opportunities, RPOs within the hospitality and entertainment have more than doubled year-over-year. I'm now going to turn to page seven, because I think it's important to look at some of the longer-term trends and what's really driving our growth over a sustained period of time, and also to highlight our diversity of demand.

To 1.1 billion. As I mentioned last quarter, in addition to project Awards, driven by customers on Shoring and reshoring initiatives growth in the sector has also benefited from certain food processing projects within our mechanical construction segment, as well as a renewable energy project in our Industrial Services segment. Led by our mechanical construction segment Water and Wastewater rpos have increased by 4008.5 million, or nor near nearly 60% to 1.1 billion as we continue to win projects throughout Florida and due to select project opportunities, rpos within the hospitality and entertainment at more than doubled year-over-year. I'm now going to turn to page 7 because I think it's important to look at some of the longer term Trends and what's really growing driving our growth over a sustained period of time and also to highlight our diversity of demand. So now go to page 7. Let's take a minute.

Speaker #2: Similar to electrical, due to greater demand for data center construction projects, this segment saw the largest increase from the network and communications market sector, where quarterly revenues grew nearly 80% year over year.

I want you to focus your eyes on the middle of this page. And in this middle of this page, you'll see where we were on the left hand bar at 12:30 19, right? Right before. Co

Speaker #2: Sticking with my earlier comment regarding broad-based demand, mechanical construction experienced quarterly revenue increases in 8 out of the 11 sectors that we track, with the only meaningful decrease coming from high-tech manufacturing.

We were about 4.036 billion and rpos and I want you to focus your eyes on that royal blue bar or dark blue bar. And that's our Network and Communications business.

And I want you to look over at 123125.

Speaker #2: Notably, manufacturing and industrial, including food processing, was up just over 50%. Institutional was up 55%, and commercial increased 17% as we are starting to see resumption in warehousing demand.

Those networking Communications rpos are about 4.4 billion today which is greater than our total rpos at the end of 123119.

Tony Guzzi: Now go to page 7, and let's take a minute. I want you to focus your eyes on the middle of this page. In this middle of this page, you'll see where we were on the left-hand bar at 31 December 2019, right before COVID. We were about $4.036 billion in RPOs. I want you to focus your eyes on that royal blue bar or dark blue bar, and that's our network and communications business. I want you to look over at 31 December 2025. Those network and communications RPOs are about $4.4 billion today, which is greater than our total RPOs at the end of 31 December 2019. Look at the total number of $13.254 billion and realize that we have grown everything else by over $8.5 billion.

But let me look at the total number of 13.254 billion.

Speaker #2: As we've discussed throughout the year, although we are still executing off a higher base than decrease in high-tech manufacturing is a result of the completion of certain semiconductor projects.

And realize that we have grown everything else by over 8 and a half billion dollars. Now, I want you to come over to the left side of the page and I want you to look at some of these long-term growth trends.

I'm going to spend a little bit of time and we've already done that with the near-term commentary.

Speaker #2: On a combined basis, our construction segments generated revenues of $3.3 billion, an increase of 27.4%. Looking next at US building services, revenues of $772.5 million reflect a 2.2% increase all of which was organic.

Speaker #2: This marks the third quarter of revenue growth since the loss of the site-based contracts that we've previously referenced, and this performance was driven by our Mechanical Services division, which increased revenues by nearly 5% due to strength across each of their service lines, including projects and retrofits, repair service, service maintenance, and building automation and controls.

Tony Guzzi: Now, I want you to come over to the left side of the page, and I want you to look at some of these long-term growth trends. I'm going to spend a little bit of time, and we've already done that with the near-term commentary. High-tech manufacturing on a compound annual growth rate, that's an in and out of a major project, but from where we started in 31 December 2019, which had some semiconductor work in it and pharma work in it, to where we are today, has grown by a compound annual growth rate of 48%, we remain very bullish on this market, with the demand for semiconductor chips, the reshoring of pharma, the growth in GLP-1 drugs, and what's going to happen there, and just in general, what has been reshored in high tech and what's going to continue to grow.

Working it to where we are today has grown by compound annual growth rate of 48% and we remain very bullish on this Market with a demand for Semiconductor chips. The reassuring of fora Pharma the growth in glp1 drugs, and what's going to happen there and just in general, what has been re-shared in high-tech and what's going to continue to grow, 48%, compound annual growth, right above that is network and Communications.

Speaker #2: Turning to our industrial services segment, revenues of $341.1 million have increased 9.1%. In the quarter, we experienced a more robust turnaround schedule including the execution of certain projects that were delayed from Q3 to Q4, which led to increased revenues from both our field and shop services operations.

Tony Guzzi: 48% compound annual growth. Right above that is network and communications. We thought we had a great data center business in 2019. We went from having a very strong data center business to a terrific data center business. Now, I'm not going to say we're the only ones that can do data center work at scale, but we're the only ones that can operate in about 17 markets electrically, and we're doing about 7 markets now mechanically. We're one of the only ones that can cover the whole country on fire-life safety projects in the data center business. Look at healthcare, 23%. That is a stable market for EMCOR.

Speaker #2: In addition, this segment benefited from progress made on a large solar project, which is currently in process. And lastly, for the two months prior to the sale on December 1st, UK building services generated fourth-quarter revenues of $95.3 million.

We thought we had a great day to Business Center business in 2019, we went from having a very strong Data Business Center business to a terrific Data Center business. Now, I'm not going to say we're the only ones that can do data center work at scale, but we're the only ones that can operate in about 17 markets, electrically, and we're doing about 7 markets in El mechanically, and we're 1 of the only ones that can cover the whole country on fire Life, Safety projects in the data center business. Look at Healthcare 23%, that is a stable market. For emcor, it's been 1 of our long-term markets and it says, complex to build a high-rise hospital as it is a Data Center. And that's why our electricians and our Pipe Fitters can move between those sectors. So, uh, easily between high-tech, manufacturing Network and communication, and really industrial work, they can move between those. And, and we do that.

Speaker #2: Let's turn to slide 10 for operating income. For the fourth quarter, we generated operating income of $573.8 million, or $12.7% of revenues. When adjusting for the transaction expenses and the gain on sale of EMCOR UK, we are a non-gap operating income of $439.6 million, a quarterly record for EMCOR.

Tony Guzzi: It's been one of our long-term markets, and it's as complex to build a high-rise hospital as it is a data center, and that's why our electricians and our pipefitters can move between those sectors so easily. Between high tech manufacturing, network and communication, and really industrial work, they can move between those, and we do that. Institutional is up 20%. That was actually a surprise to us when we went back and looked at the compound annual growth rate in institutional across that sector. Water and wastewater is a great market for us, mainly in Florida. 24% compound annual, driven by consent decrees from the EPA, driven by just growth in Florida, and driven by updating technology in these large wastewater plants. Transportation, as you talk about mixed management, we have decided to de-emphasize the transportation market, especially the electrical roadway market.

Institutional is up 20%. That was actually a surprise to us when we went back and looked at the compound annual growth rate, institutional across that sector Water. And Wastewater is a great market for us. Mainly in Florida 24%, compound area driven by, uh, consent. Decrees from the EPA driven by just growth in Florida and driven by, uh, updating technology in these large wash Wastewater plants.

Speaker #2: This performance resulted in an exceptional 9.7% non-gap operating margin, the highest we achieved in any quarter this year. Looking at each of our segments, electrical construction had operating income of $173.1 million, a 17% increase.

Transportation is you talk about mixed management. We have decided to deemphasized, the electrical roadway Market

It takes a while to get out, uh, but that will continue to drop unless a big airport or project like that comes in and that would be then balancing against these other markets.

Speaker #2: As a result of its revenue growth, the segment experienced greater gross profit across the majority of the market sectors in which we operate, resulting in an increase in operating income to a record level.

Speaker #2: While down from the record 15.8% earned in last year's fourth quarter, this segment's operating margin of $12.7% remained well above its historical average and was in line with our expectations particularly when compared against a rolling 12 to 24-month average, which would imply a range of 12 to 12.6% for the segment.

Tony Guzzi: It takes a while to get out, but that will continue to drop unless a big airport or a project like that comes in, and that would be then balancing against these other markets. I love the bottom. Commercial is a GDP grower. It's pretty good considering the engine office that's happened over this period. Look at the short-duration projects. To me, that's a sign of what's going on across all the markets, especially in the build space, and that contains some commercial work, that contains some institutional work, and that contains some manufacturing work. These are projects that are going to last less than 5 months and typically have a ticket size of somewhere between $50 and $500,000.

Speaker #2: When adjusting for the impact of incremental intangible asset amortization, gross profit margin of the segment remained relatively consistent year over year, reflecting the overall strength of our execution and project portfolio.

I love the bottom in commercial was a GDP grower, it's pretty good. Considering the engine office has happened over this period, but look at the short duration projects to me. That's a sign of what's going on across all the markets, especially in the built space, and that contains some commercial work. That contains some institutional work, that can save some manufacturing work. And these are projects that are going to last less than 5 months and typically have a ticket size of somewhere between 50 and 500,000 and that's and then you put on top of that, the big service base. We have in M4 across our fire Life. Safety projects across our mechanical Service, uh business, and it costs even our day to electrical work. So, what allows you to have that kind of compound annual growth across that sustained period of time?

And these are no particular order. First of all, you got to be where your customers are.

Speaker #2: Contributing to the unfavorable comparison in operating margin, was an unusually low SG&A margin in last year's fourth quarter due to the timing of recognition of certain expenses in the prior year.

You have to be able to meet them where they are. You have to have National reach. You have to have the geographic footprint, but that's not enough. You can have a geographic footprint that can execute

Speaker #2: Operating income for US mechanical construction increased by 13.6% to a quarterly record of $250.5 million. While slightly below that of the prior year's quarter, operating margin of $12.9% was equivalent to the third quarter of this year as we continue to execute well.

Tony Guzzi: That's, and then, put on top of that, the big service space we have at EMCOR across our fire and life safety projects, across our mechanical service business, and across even our day two electrical work. What allows you to have that kind of compound annual growth across that sustained period of time? These are in no particular order. First of all, you got to be where your customers are. You have to be able to meet them where they are, you have to have national reach, you have to have the geographic footprint. That's not enough. You can have a geographic footprint that can't execute. You have to have, opportunistically travel. You don't just travel to travel. We're not going to be the contractor that uses a labor broker and places labor around the country.

You have to have opportunistically travel. You don't just travel to travel. We're not going to be the contractor. That uses a labor broker in places labor around the country. For the most part. When we travel, we're traveling in our construction business, with very strong union, uh, uh, journeyman and Commercial Wireman and others that can move around the country, and check into the union, and we draw from that, and we're an employer of choice.

Speaker #2: From an end market standpoint, we saw greater gross profit across many of the sectors in which we operate, with the largest increases generally tracking in line with the revenue fluctuations I previously mentioned.

Speaker #2: Together, our construction segments grew operating income by nearly 15% and earned a combined operating margin of $12.8%. US building services generated operating income of $41.3 million, a modest increase over the prior year, and operating margin was a consistent 5.4%.

And that is driven by the strong field leadership. We have at the local level, we've got the technical expertise, we have great prefabrication capability, BDC capability that we use to work across these sectors and really the VDC we use today.

Tony Guzzi: For the most part, when we travel, we're traveling in our construction business with very strong union journeymen and commercial wiremen and others that can move around the country and check into the union. We draw from that. We're an employer of choice, and that is driven by the strong field leadership we have at the local level. We've got the technical expertise. We have great prefabrication capability, VDC capability that we use to work across these sectors. Really, the VDC we use today in our data center business, and the VDC we use today in our high-tech manufacturing, was really honed in the healthcare sector over 20 years ago. We have a great reputation and safety record. It's really a hallmark of who we are and why we continue to attract the best trade labor.

In our data center business. In the VDC we use today in our high-tech manufacturing was really honed in the Health Care system over 20 years ago.

We have a great reputation in safety record. It's really a Hallmark of who we are and why we continue to attract the best trade labor.

Our customers want us to do the work for them.

Speaker #2: Moving to industrial services, this segment's revenue growth, coupled with 30 basis points of operating margin expansion, due to better absorption, resulted in a 21.1% increase in operating income.

Speaker #2: And lastly, UK building services delivered break-even performance during the quarter as 3.7 million of underlying operating income was entirely offset by transaction-related costs, which were expensed within the UK.

Speaker #2: Let's move to slide 11, and I'll cover a few quarterly highlights that were not included on the previous pages. Gross profit of $891.2 million has increased by 17.7%, and our gross profit margin for the quarter was an outstanding 19.7%.

Tony Guzzi: Our customers want us to do the work for them. One of the benefits of scale to us is we can train, we can share means and methods, and we can share best practices across our country. That allows us to have very strong acquisition pipelines over a sustained period of time and allows us to make the right, smart, growth, organic investments. I think this page is something that really is a hallmark of our company, and I think this page is really what we have built together with that. Our capital allocation strategy, which is on page 14, coupled with what is on page 7, is what we get paid for to do to build a company that has great diversity of demand, can take advantage of the end markets in many cases, and then build a sustainable, compounding record of success.

1 of the benefits of scale to us. Is we can train, we can share means and methods and we can share best practices across our country and that allows us to have very strong acquisition pipelines over sustained period of time and allows us to make the right spark growth organic Investments. I think this page is something that really is a Hallmark of our company. And I think this page was really what we have built together with that our Capital allocation strategy, which is on page 14, coupled, with, with this on page 7 is what we get paid for to do to build a company that has great diversity of demand, can take advantage of the end markets in many cases. And then build a sustainable compounding record of success with that. Jason, I'll turn it over to you.

Thank you, Tony. Thank you. Good morning everyone.

Speaker #2: SG&A was $462.3 million, or 10.2% of revenues. Included in SG&A for the quarter were 10.7 million of transaction expenses related to the sale of EMCOR UK, which impacted SG&A margin by 20 basis points.

In 2025 we're in revenues of 16.99 billion.

Operating income of 1.71 billion.

Speaker #2: Accounting for half of the remaining increase in SG&A, was 35.2 million of incremental expenses from acquired companies, and 6.2 million of additional amortization expense.

And operating margin of 10.1% and diluted earnings per share of 28.19.

Speaker #2: Excluding these items, SG&A grew by 41.8 million, almost entirely due to employment costs, given both greater headcount to support our organic growth, as well as increased incentive compensation expense in certain of our segments given the higher annual operating results.

Tony Guzzi: With that, Jason, I'll turn it over to you.

Jason Dangelo: Thank you, Tony. Good morning, everyone. Before we dive into our results for Q4, I thought it made sense to step back and take a look at how we performed for the full year, which is summarized on slide 8. In 2025, we earned revenues of $16.99 billion, operating income of $1.71 billion, an operating margin of 10.1%, and diluted earnings per share of $28.19. When excluding the transaction costs incurred in connection with both the acquisition of Miller Electric and the sale of EMCOR UK, as well as the gain on sale of EMCOR UK, we are a non-GAAP operating income of $1.59 billion, operating margin of 9.4%, and diluted earnings per share of $25.87, all of which were records for EMCOR.

When excluding the transaction costs incurred in connection with both the acquisition of Miller Electric and the sale of M core UK, as well as the gain on sale of M core UK. We are not non-gaap operating income of 1.59 billion, operating margin of 9.4% and diluted earnings per share of $25.87

all of which were records for M core.

Speaker #2: And finally, on this page, diluted earnings per share were $9.68, or $7.19 on an adjusted basis, which represents an increase of 13.8% year over year.

We performed extremely well in 2025 benefiting from some of the best execution in our history and a favorable mix of work. Both of which allowed us to deliver a full year. Operating margin at the

Speaker #2: If we quickly turn to slide 12, with 1.1 billion of cash on hand, our balance sheet positions us well to continue to deliver on our philosophy of balanced capital allocation which includes organic investment, strategic acquisitions, and returning cash to shareholders.

high end of the guidance. We previously provided and in excess of our expectations, when we began the year,

If we turned to slide 9, I'll now review the operating performance for each of our segments during the quarter starting with revenues.

Speaker #2: Our commitment to this model is further demonstrated by the recent increase in our dividend of 60% and the incremental $500 million of authorization under our share repurchase program.

4.5 billion represents a quarterly record for M core with revenues increasing 19.7% or 9.5% organically.

Jason Dangelo: We performed extremely well in 2025, benefiting from some of the best execution in our history and a favorable mix of work, both of which allowed us to deliver a full year operating margin at the high end of the guidance we previously provided and in excess of our expectations when we began the year. If we turn to slide 9, I'll now review the operating performance for each of our segments during the quarter, starting with revenues. $4.5 billion represents a quarterly record for EMCOR, with revenues increasing 19.7% or 9.5% organically. Revenues of US Electrical Construction were a quarterly record of $1.36 billion, increasing 45.8% due to a combination of strong organic growth and the acquisition of Miller.

Speaker #2: During the quarter, we repurchased approximately $155 million worth of our shares, bringing our year-to-date repurchases to roughly $580 million. And we executed against our M&A pipeline, utilizing over a billion dollars on acquisitions during the year including an additional $122 million in Q4.

Revenues of us electrical construction were a quarterly record of 1.36 billion increasing 45.8%. Due to a combination of strong organic growth and the acquisition of Miller.

Similar to recent coders the most significant growth in the segment was generated from our data center projects, within the network and Communications Market sector, where revenues increased nearly 50% year-over-year.

Speaker #2: And finally, on this page, we had operating cash flow of $524.4 million during the quarter, or 1.3 billion for the full year, representing conversion in excess of 80% of operating income when adjusting for the gain on sale of EMCOR UK.

while this represents the greatest increase during the quarter almost all other sectors experienced growth,

Healthcare institutional, and hospitality and entertainment represent. The next 3 largest increases. In addition to Greater small project volumes

Speaker #2: With that, I'll turn the call back over to Tony. Thanks, Jason. And I'm going to close on pages 13 and 14. As discussed, we're well positioned to continue to deliver excellent results in 2026.

Jason Dangelo: Similar to recent quarters, the most significant growth in this segment was generated from our data center projects within the network and communications market sector, where revenues increased nearly 50% year-over-year. While this represents the greatest increase during the quarter, almost all other sectors experienced growth. Healthcare, institutional, and hospitality and entertainment represent the next three largest increases in addition to greater small project volumes. I think the best way to summarize this segment's performance in the quarter is that half of its growth came from data centers, and half of its growth came from strength in the underlying or more traditional business. Once again, this highlights our diversity of demand. Moving to US mechanical construction, revenues of $1.94 billion increased 17%, establishing a new quarterly record for this segment.

I think the best way to summarize, this segment's performance in the quarter is that half of its growth came from data centers and half of its growth came from strength in the underlying or more traditional business.

Once again, this highlights our diversity of demand,

Speaker #2: We expect to earn revenues of 17.75 billion to 18.5 billion and achieve diluted earnings per share from 27.25 to 29.25 with a full-year operating margin of between 9 and 9.4%.

Moving to us mechanical construction revenues of 1.94 billion increased 17% establishing a new quarterly record for this segment.

Speaker #2: As we set guidance, and I have stated this many times over the years, we have always thought about it the following way. From the low end to the midpoint, we have a high degree of confidence that we will deliver that outcome absent a major economic event.

Similar to electrical due to Greater demand for data center construction projects this segment. So the largest increase from the network and Communications Market sector, where quarterly revenues grew nearly 80% year-over-year.

Speaker #2: From the midpoint to the high end of our range, we need to execute very well from a margin standpoint, and we need to book 40 to 45 percent of new work to allow us to hit the mid to high point of our revenue range, easily said, the better our margins, the higher our revenue, the more we move to the higher end of our range.

Sticking with my earlier comment regarding broad-based demand mechanical, construction experienced. Quarterly Revenue increases in 8 out of the 11 sectors that we track with the only meaningful decrease coming from high-tech Manufacturing.

Notably manufacturing and Industrial including food processing was up just over 50%.

Jason Dangelo: Similar to electrical, due to greater demand for data center construction projects, this segment saw the largest increase from the network and communications market sector, where quarterly revenues grew nearly 80% year-over-year. Sticking with my earlier comment regarding broad-based demand, mechanical construction experienced quarterly revenue increases in 8 out of the 11 sectors that we track, with the only meaningful decrease coming from high-tech manufacturing. Notably, manufacturing and industrial, including food processing, was up just over 50%, institutional was up 55%, and commercial increased 17%, as we are starting to see resumption in warehousing demand. As we've discussed throughout the year, although we are still executing off a higher base, the decrease in high-tech manufacturing is a result of the completion of certain semiconductor projects.

Jason Dangelo: Similar to electrical, due to greater demand for data center construction projects, this segment saw the largest increase from the network and communications market sector, where quarterly revenues grew nearly 80% year-over-year. Sticking with my earlier comment regarding broad-based demand, mechanical construction experienced quarterly revenue increases in eight out of the 11 sectors that we track, with the only meaningful decrease coming from high-tech manufacturing. Notably, manufacturing and industrial, including food processing, was up just over 50%, institutional was up 55%, and commercial increased 17%, as we are starting to see resumption in warehousing demand. As we've discussed throughout the year, although we are still executing off a higher base, the decrease in high-tech manufacturing is a result of the completion of certain semiconductor projects.

Speaker #2: As we look at the composition of our RPOs, we begin the year with a strong mix of work, with estimated gross margins in line with those experienced over the last two years.

Institutional was up 55% and Commercial increased, 17%, as we are starting to see resumption in where housing demand.

Speaker #2: We have a strong foundation across diverse geographies and sectors. At this time, we see no slowing of demand from most of our end markets, and continue to see exceptional prospects in our data center markets.

As we've discussed throughout the year, although we are still executing off a higher base to decrease in high-tech, manufacturing is a result of the completion of certain semiconductor projects.

Speaker #2: As we move into 2026, we need to keep leveraging our training, VDC, fabrication, and project planning and delivery capabilities. We must not only continue to incrementally improve, but also innovate in our internal processes and delivery.

On a combined basis, our construction segments, generated revenues of 3.3 billion and increase of 27.4%.

looking next at us Building Services revenues of 772.5 million reflect a 2.2% increase, all of, which was organic

Speaker #2: We must also continue to protect ourselves through careful contract negotiation, execution, and compliance. We deliver for our customers, and we continue to do so, but we also strive to protect our rights as we deliver these complex projects.

Speaker #2: We will always face some macroeconomic challenge of some kind and some headwinds, but our team has excelled over these challenges, overcoming these challenges over a very long period of time.

This marks the third quarter of Revenue growth since the loss of the site-based contracts, that we've previously referenced. And this performance was driven by our Mechanical Services Division, which increased revenues by nearly 5% due to strength across each of their service lines, including projects and retrofits.

Jason Dangelo: On a combined basis, our construction segments generated revenues of $3.3 billion, an increase of 27.4%. Looking next at US Building Services, revenues of $772.5 million reflect a 2.2% increase, all of which was organic. This marks the Q3 of revenue growth since the loss of the site-based contracts that we've previously referenced. This performance was driven by our mechanical services division, which increased revenues by nearly 5% due to strength across each of their service lines, including projects and retrofits, repair service maintenance, and building automation and controls. Turning to our industrial services segment, revenues of $341.1 million have increased 9.1%.

Repair service.

Service maintenance and building Automation and controls.

Speaker #2: I do believe that we are an employer of choice because of our excellence in field leadership. From our frontline foreman, superintendents, project managers, and executives, to our subsidiary and segment leadership.

Turning to our Industrial Services segment.

Revenues of 341.1 million have increased 9.1%.

Speaker #2: We will continue to execute a balanced capital allocation strategy focused on organic investment, strategic acquisitions, and returning cash to shareholders through share repurchases and dividends, which we show on page 14.

In the quarter, we experienced a more robust turnaround schedule, including the execution of certain projects that were delayed from Q3 to Q4.

Which led to increased revenues from both our field and Shop Services operations.

Speaker #2: Our balanced capital allocation strategy has provided the foundation for our compounding record of success over the last 10 to 15 years. As I close, I want to thank my teammates.

In addition, this segment benefited from progress made on a large solar project which is currently in process,

Speaker #2: I appreciate all you do for EMCOR every day, and for our customers, and appreciate the safe and productive way you execute our work. With that, Jamie, I'll turn the call over to you for questions.

And lastly for the 2 months, prior to the sale on December 1st, UK Building Services generated fourth quarter revenues of 95.3 million.

Let's turn to slide 10 for operating income.

Jason Dangelo: In the quarter, we experienced a more robust turnaround schedule, including the execution of certain projects that were delayed from Q3 to Q4, which led to increased revenues from both our field and shop services operations. In addition, this segment benefited from progress made on a large solar project, which is currently in process. Lastly, for the 2 months prior to the sale on 1 December, UK Building Services generated Q4 revenues of $95.3 million. Let's turn to Slide 10 for operating income. For the Q4, we generated operating income of $573.8 million, or 12.7% of revenues. When adjusting for the transaction expenses and the gain on sale of EMCOR UK, we are a non-GAAP operating income of $439.6 million, a quarterly record for EMCOR.

Jason Dangelo: In the quarter, we experienced a more robust turnaround schedule, including the execution of certain projects that were delayed from Q3 to Q4, which led to increased revenues from both our field and shop services operations. In addition, this segment benefited from progress made on a large solar project, which is currently in process. Lastly, for the two months prior to the sale on 1 December, UK Building Services generated Q4 revenues of $95.3 million. Let's turn to slide 10 for operating income. For the Q4, we generated operating income of $573.8 million, or 12.7% of revenues. When adjusting for the transaction expenses and the gain on sale of EMCOR UK, we are a non-GAAP operating income of $439.6 million, a quarterly record for EMCOR.

Speaker #1: And at this time, if you would like to ask a question, please press star and one using a touchstone telephone. To withdraw your questions, you may press star and two.

.8 million or 12.7% of revenues.

Speaker #1: If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality.

When adjusting, for the transaction expenses and the gain on sale of M core UK, we are a non-gaap operating income of 439.6 million. A quarterly record for Amcor

Speaker #1: Once again, that is star and then one to join the question queue. And our first question today comes from Brett Thielman from D.A. Davidson.

this performance resulted in an exceptional 9.7%. Non-gaap operating margin the highest. We achieved in any quarter this year.

Speaker #1: Please go ahead with your question.

Speaker #2: Okay. Thanks. Good morning.

Looking at each of our segments electrical construction, had operating income of 173.1 million, a 17% increase.

Speaker #3: Good morning, Brett.

Speaker #2: Hey, Tony or Jason, if you could comment just on some of the initiatives that compressed margins a bit last quarter, three Q, I think you moved into some new territories that caused a little pressure there.

As a result of its Revenue growth, the segment experience greater gross profit across the majority of the market sectors in which we operate resulting in an increase in operating income to a record level.

Speaker #2: What lingering impact may that have had in the fourth quarter, if any, and are you sort of beyond that at this stage here in 2026?

Jason Dangelo: This performance resulted in an exceptional 9.7% non-GAAP operating margin, the highest we achieved in any quarter this year. Looking at each of our segments, Electrical Construction had operating income of $173.1 million, a 17% increase. As a result of its revenue growth, the segment experienced greater gross profit across the majority of the market sectors in which we operate, resulting in an increase in operating income to a record level. While down from the record 15.8% earned in last year's Q4, this segment's operating margin of 12.7% remained well above its historical average and was in line with our expectations, particularly when compared against a rolling 12 to 24 month average, which would imply a range of 12 to 12.6% for the segment.

Speaker #3: You always have to be careful to say we're beyond that because we're starting projects all the time, and we execute really well, and we write projects up.

Speaker #3: We write them down. But on balance, I think the headwinds we've experienced in that particular market are behind us now. And we had a little bit of that spillover into the fourth quarter.

While down from the record 15.8% earned in last year's fourth quarter. This segment's operating margin of 12.7% remained well above its historical average and was in line with our expectations particularly when compared against a rolling 12 to 24-month average which would imply a range of 12 to 12.6% for the segment.

Speaker #3: Some of it also is just a mix of work. We didn't finish as much fixed-price work on our electrical segment as we did the year before.

When adjusting for the impact of incremental and tangible asset amiz gross profit margin of the segment remained relatively consistent year-over-year reflecting the overall strength of our execution and project portfolio.

Speaker #3: And we started some work that was more target price or GMP and hopefully will convert some of that to fixed price. But we don't know that.

Speaker #3: But the underlying margins in the business, which you can see from our gross margins, is pretty strong.

Contributing to the unfavorable comparison and operating margin was an unusually low sgna margin in last year's fourth quarter, due to the timing of recognition of certain expenses in the prior year.

Speaker #4: Yeah, and I would echo what Tony said. The only thing I would add to that, right, is I tried to say this in my prepared remarks.

Speaker #4: If you look at the gross profit margin for electrical and you adjust for the amortization impact, it performed relatively consistent year over year. So any impacts that we did have from those project startups was offset by just execution within the segment.

Operating income for us mechanical construction increased by 13.6% to a quarterly record of 250.5 million.

Jason Dangelo: When adjusting for the impact of incremental and tangible asset amortization, gross profit margin of the segment remained relatively consistent year-over-year, reflecting the overall strength of our execution and project portfolio. Contributing to the unfavorable comparison and operating margin was an unusually low SG&A margin in last year's Q4, due to the timing and recognition of certain expenses in the prior year. Operating income for US Mechanical Construction increased by 13.6% to a quarterly record of $250.5 million. While slightly below that of the prior year's quarter, operating margin of 12.9% was equivalent to the Q3 of this year as we continued to execute well.

While slightly below that of the prior Year's quarter operating margin of 12.9% was equivalent to the third quarter of this year as we continue to execute. Well,

Speaker #3: Yeah. And Brett, you could see it in our numbers, right? Are we a little disappointed? We coughed up 50 or 60 basis points this year in electrical operationally.

Speaker #3: Sure, we are. Some of the headwind was from amortization. That's not a cash expense. But when you look over a 12- to 24-month period, that's a pretty good snapshot of our margins.

From an End Market standpoint, we saw greater gross profit across many of the sectors in which we operate with the largest increases generally tracking in line with the revenue fluctuations. I previously mentioned

Speaker #3: We expect to operate somewhere in the mid- to low-12s to 14% or so electrically, and mid- to low-12s to 13.5% or so mechanically.

Together our construction segments grew operating income by nearly 15% and earned a combined operating margin of 12.8%.

Speaker #3: And it's going to bounce around there. But if we could operate this business between 12.5% and 13.5% on a sustained basis across our construction segments, I think we'd be pretty pleased with that.

Us Building Services. Generated operating income of 41.3 million a modest increase over the prior year. And operating margin was a consistent 5.4%.

Moving to Industrial Services.

Jason Dangelo: From an end market standpoint, we saw greater gross profit across many of the sectors in which we operate, with the largest increases generally tracking in line with the revenue fluctuations I previously mentioned. Together, our construction segments grew operating income by nearly 15% and earned a combined operating margin of 12.8%. US Building Services generated operating income of $41.3 million, a modest increase over the prior year, and operating margin was a consistent 5.4%. Moving to Industrial Services, this segment's revenue growth, coupled with 30 basis points of operating margin expansion due to better absorption, resulted in a 21.1% increase in operating income. Lastly, UK Building Services delivered breakeven performance during the quarter, as $3.7 million of underlying operating income was entirely offset by transaction-related costs, which were expensed within the UK.

Speaker #2: Yeah. Okay. Tony, maybe just to follow up, I mean, an interesting chart there on slide 7. So on the network communications data center side, you talked about good visibility here for the next two to three years.

This segment's Revenue growth coupled with 30 basis points of operating margin expansion due to better absorption resulting in a 21.1% increase in operating income.

Speaker #2: I think it'd be hard to dispute that. Maybe one of the questions that oftentimes comes up is just your regional exposure. Do you see yourself having to move into different regions to get more of this work?

And lastly, UK Building Services delivered Break, Even performance during the quarter as 3.7 million of underlying. Operating income was entirely offset by transaction related costs, which were expensed within the UK.

Let's move to slide 11 and I'll cover a few quarterly highlights that were not included on the previous pages.

Speaker #2: Or maybe you could just talk about what's happening where you're already at, where you have, where you're positioned today, that is going to continue to support.

Speaker #3: Yeah. I mean, I'd have to go through several markets electrically. But the way I look at it is we have a strong we have a solid position in the Midwest.

Rose profit of 891.2 million has increased by 17.7% and our gross profit margin for the quarter was an outstanding 19.7%.

Speaker #3: We'd like to make that a little bit stronger. In some of the markets, we think we can do that either through acquisition investment or organic growth.

Sgna was 462.3 million or 10.2% of revenues.

Included in sg&a for the quarter, were 10.7 million of transaction, expenses related to the sale of M core UK which impacted sg&a margin by 20 basis points.

Speaker #3: Arizona, we continue to build that out. We've just built a better position mechanically. In Arizona, that we look to take advantage of it. And electrically, we moved into that market two years ago, and we're starting to hit full ramp right now.

Jason Dangelo: Let's move to slide 11. I'll cover a few quarterly highlights that were not included on the previous pages. Gross profit of $891.2 million has increased by 17.7%, and our gross profit margin for the quarter was an outstanding 19.7%. SG&A was $462.3 million, or 10.2% of revenues. Included in SG&A for the quarter were $10.7 million of transaction expenses related to the sale of EMCOR UK, which impacted SG&A margin by 20 basis points. Accounting for half of the remaining increase in SG&A was $35.2 million of incremental expenses from acquired companies and $6.2 million of additional amortization expense.

Accounting for half of the remaining increase in sgna was 35.2 million of incremental, expenses from acquired companies and 6.2 million of additional amortization expense.

Speaker #3: Texas, we're pretty strong. Mechanically, we'll take some of our first significant jobs in Texas. And there's a mixed management decision, right? We had that capability there doing semiconductor work.

Excluding these items sgna grew by 41.8 million almost entirely due to employment costs, given both greater headcount to support our organic growth, as well as increased incentive compensation expense in certain of our segments, given the higher annual operating results.

Speaker #3: We'll continue to do some of that. But quite frankly, we think some of the rural data center work is better for us to do.

Speaker #3: And it allows us to sort of get more productivity in our prefab shops also by doing that. And we invested ahead of that. The semiconductor work we did there in a lot of ways was the beachhead to participate more broadly in the market and especially in the data center market.

And finally on this page diluted earnings per share were $9.68 or $7.19 on an adjusted basis which represents an increase of 13.8% year-over-year.

We quickly turned to slide 12.

Jason Dangelo: Excluding these items, SG&A grew by $41.8 million, almost entirely due to employment costs, given both greater headcount to support our organic growth, as well as increased incentive compensation expense in certain of our segments, given the higher annual operating results. Finally, on this page, diluted earnings per share were $9.68, or $7.19 on an adjusted basis, which represents an increase of 13.8% year-over-year. Quickly turn to slide 12, with $1.1 billion of cash on hand, our balance sheet positions us well to continue to deliver on our philosophy of balanced capital allocation, which includes organic investment, strategic acquisitions, and returning cash to shareholders.

Speaker #3: Mechanically, electrically, we have a very good position in the Dallas-Fort Worth area. We'll look to expand out of that. Atlanta, we have a very strong position mechanically.

With 1.1 billion of cash on hand. Our balance sheet positions us. Well to continue to deliver on our philosophy of balanced Capital allocation, which includes organic investment, strategic, Acquisitions and returning cash to shareholders.

Speaker #3: And we have a secondary position electrically, and we'll look to continue to strengthen that. The Carolinas— we're pretty strong both mechanically and electrically—more so mechanically, but still pretty strong electrically.

Speaker #3: Northern Virginia, quite frankly, we're terrific both mechanically and electrically. And then as you get to Oregon, we're very strong electrically. So we will continue in Iowa, we're very strong electrically.

Our commitment to this model is further demonstrated by the recent increase in our dividend of 60% and the incremental 500 million of authorization under our share repurchase program,

155 Million worth of our shares. Bringing our year-to-date repurchases, to roughly 580 million,

Speaker #3: We will continue to round out capability. You can tell we're in more markets electrically than mechanically. Some of that is we found it advantageous to be able to take our electricians that were very skilled in our management teams and doing something such as steel mill work at one time and they've proven to be very good data center builders also.

And we executed against our m&a, pipeline utilizing over a billion dollars on Acquisitions during the year, including an additional 122 million in Q4.

Jason Dangelo: Our commitment to this model is further demonstrated by the recent increase in our dividend of 60% and the incremental $500 million of authorization under our share repurchase program. During the quarter, we repurchased approximately $155 million worth of our shares, bringing our year-to-date repurchases to roughly $580 million. We executed against our M&A pipeline, utilizing over $1 billion on acquisitions during the year, including an additional $122 million in Q4. Finally, on this page, we had operating cash flow of $524.4 million during the quarter, or $1.3 billion for the full year, representing conversion in excess of 80% of operating income when adjusting for the gain on sale of EMCOR UK. With that, I'll turn the call back over to Tony.

Speaker #3: And we've been able to take that skill from some of our companies and move it to others. And it takes about 18 months to ramp them up to get to full production where they can hit the kind of margins our traditional data center companies.

And finally, on this page we had operating cash flow of 524.4 million during the quarter or 1.3 billion for the full year, representing conversion and excess of 80% of operating income. When adjusting for the gain on sale of M for UK with that, I'll turn the call back over to Tony, thanks Jason and I'm going to close on pages 13 and 14.

Speaker #3: And mechanically, there's no real reason some of we haven't expanded as much as just the footprint of where we are and what it takes mechanically to build the capability because of the prefab and all the other things that are a little more extensive.

As discussed. We're well positioned to continue to deliver. Excellent results in 2026.

Speaker #3: And in fire life safety, we can cover the entire market, and we do.

We expect to earn revenues of 17.75 billion to 18.5 billion and achieved eluded earnings per share from $27.25 to $29.25 with a full year, operating margin of between 9 and 9.4%.

Speaker #2: Got it. Appreciate that, Tony. Hey, just one last one. I mean, your balance sheet—you sort of have a war chest here. How do you think about total excess liquidity here, assuming you want to keep some level of cash on the balance sheet? Also, I understand your revolver is untapped?

As we set guidance, and I have stated this many times over the years, we have always thought about it the following way.

Tony Guzzi: Thanks, Jason. I'm going to close on pages 13 and 14. As discussed, we're well-positioned to continue to deliver excellent results in 2026. We expect to earn revenues of $17.75 to 18.5 billion and achieve diluted earnings per share from $27.25 to 29.25, with a full year operating margin of between 9% and 9.4%. As we set guidance, and I have stated this many times over the years, we have always thought about it the following way: From the low end to the midpoint, we have a high degree of confidence that we will deliver that outcome absent a major economic event.

From the low end to the midpoint. We have a high degree of confidence that we will deliver that outcome absent, a major economic event.

Speaker #2: Just some thoughts there. It seems like you can do a lot here.

Speaker #3: I'll hit a macro level on that. And then, Jason, we'll get into some specifics about cash we'd probably like to have on hand. I think in general, we're never going to have a highly leveraged balance sheet on a sustained basis.

Speaker #3: Because think of who we're working for. One of our competitive differentiators, especially on this large project work, is we're not a leveraged company. And think about the hyperscalers.

From the midpoint to the high end of our range. We need to execute very well from a margin standpoint. And we need to book for book, 40 to 45% of new work to allow us to hit the mid to high point of our uh Revenue range. Easily said the better, our margins, the higher Revenue, the more we move to the higher end of our range

Speaker #3: They're not looking to do business with leveraged companies. And it's also when you look to the bonding line, it's a nice ability to be able to have a surety bond without question when you need it.

As we look at the composition of our rpos, We Begin the year with a strong mix of work with estimated gross. Margins in line with those experienced over the last 2 years.

Tony Guzzi: From the midpoint to the high end of our range, we need to execute very well from a margin standpoint. We need to book 40% to 45% of new work to allow us to hit the mid to high point of our revenue range. Easily said, the better our margins, the higher our revenue, the more we move to the higher end of our range. We look at the composition of our RPOs. We begin the year with a strong mix of work, with estimated gross margins in line with those experienced over the last 2 years. We have a strong foundation across diverse geographies and sectors. At this time, we see no slowing of demand from most of our end markets. We continue to see exceptional prospects in our data center markets.

Speaker #3: And we've had that luxury. But we also would be willing to lever up for the right acquisitions or series of acquisitions to go to one to one and a half times, maybe two times in a leveraged back down to one times.

We have a strong foundation of the diversity geographies and sectors at this time we see no slowing of demand from most of our end markets and continue to see exceptional prospects in our data center markets.

As we move into 2026, we need to keep leveraging our training VDC fabrication and project planning and delivery capabilities.

Speaker #3: What I wouldn't do is borrow a bunch of money to buy back stock. We like to do the buyback through excess liquidity. And if we're going to borrow money, it's because we're building and we're buying into a asset that's going to return cash to us over an extended period of time.

We must not only continue to incrementally improve but also innovate in our internal processes and delivery.

We must also continue to protect ourselves through careful contract, negotiation execution, and compliance.

We deliver for our customers and we will continue to do so. But we also strive to protect our rights as we deliver these complex projects.

Speaker #3: That's sort of macro level. Jason maybe gets the specifics.

Speaker #4: I would say if you go to that slide 14 that Tony referenced earlier, and you look at what we've done this year, last year, and even over the last 10 years, I think that's what our playbook looks like going forward, right?

We will always face some macroeconomic challenge of some kind and some headwinds, but our team has excelled at over these challenges. Overcoming these challenges over a very long period of time.

Tony Guzzi: As we move into 2026, we need to keep leveraging our training, VDC, fabrication, and project planning and delivery capabilities. We must not only continue to incrementally improve, but also innovate in our internal processes and delivery. We must also continue to protect ourselves through careful contract negotiation, execution, and compliance. We deliver for our customers, and we will continue to do so, but we also strive to protect our rights as we deliver these complex projects. We will always face some macroeconomic challenge of some kind and some headwinds, but our team has excelled at overcoming these challenges over a very long period of time. I do believe that we are an employer of choice because of our excellence in field leadership, from our frontline foremen, superintendents, project managers, and executives to our subsidiary and segment leadership.

Speaker #4: It continues to be a balanced approach towards capital allocation. We think we have a strong M&A pipeline as we move into next year. We'll continue to return capital to shareholders, and you saw that in the repurchases this year, and you saw that in the increase in dividend.

I do believe that we are an employer of choice because of our excellence in field leadership from our Frontline, Foreman superintendent project, managers, and Executives to our subsidiary and segment leadership.

Speaker #4: In terms of minimal cash balance for our balance sheet, it's probably somewhere in the neighborhood of 300 to 400 million dollars. So obviously, our balance sheet positions us to continue to deploy cash strategically as we move into 2026.

We will continue to execute a balanced Capital, allocation strategy focused on organic investment, strategic Acquisitions and returning cash to shareholders through, share repurchases and dividends which we show on page 14.

Speaker #3: Yeah. I think if you ask any of our management team, down through the segment level, we would love to replicate 2025 here in 2026 and 2027.

Our balance Capital, allocation strategy has provided the foundation, for our compounding record of success, over the last 10 to 15 years.

Speaker #3: However, you've heard me say many times, deals happen when they happen. And what we are going to do is maintain discipline. We're not going to I think people on the line know me well enough and know this management team well enough that we don't buy into hype and we don't buy into frenzy.

As I close, I want to thank my teammates. I appreciate all you do for mqu every day and for our customers and appreciate the safe and productive way. You execute our work with that. Jamie, I'll turn the question. Uh, call over to you for questions.

Tony Guzzi: We will continue to execute a balanced capital allocation strategy focused on organic investment, strategic acquisitions, and returning cash to shareholders through share repurchases and dividends, which we show on page 14. Our balanced capital allocation strategy has provided the foundation for our compounding record of success over the last 10 to 15 years. As I close, I want to thank my teammates. I appreciate all you do for EMCOR every day and for our customers, and appreciate the safe and productive way you execute our work. With that, Jamie, I'll turn the call over to you for questions.

and at this time, if you would like to ask a question, please press star and 1 using a touchtone telephone

Speaker #3: We have to believe there's a long sustained business case for why we would do something. And we have to believe that we can add value.

Speaker #3: And our acquisition record is pretty darn good. I always say never give anybody an A, but I'd give us a strong B plus over an extended period of time.

To withdraw your questions. You may press star and 2. If you are using a speaker-phone, we do ask that you. Please pick up your handset prior to pressing the keys to ensure the best sound quality once again, that is star and then 1 to join the question queue.

Speaker #3: And we're going to continue to do that. We're not private equity guys. We're not averaging multiples down. We're looking to buy and build for the long term and build sustainable positions.

and our first question today comes from

Brett thielman from da Davidson. Please go ahead with your question.

Hey, thanks. Good morning morning, Brett.

Speaker #3: And how we got from some of these places to sort of 17 electrical data center markets is we bought companies that were in the business and were able to strengthen it through peer learning, transferring people for short periods of time to help it, and really doing a great job of taking our best practices and means and methods and sharing it across the company.

Jason Dangelo: At this time, if you would like to ask a question, please press Star and 1 using a touch-tone telephone. To withdraw your questions, you may press Star and 2. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality. Once again, that is Star and then 1 to join the question queue. Our first question today comes from Brent Thielman, from D.A. Davidson. Please go ahead with your question.

Operator: At this time, if you would like to ask a question, please press Star and 1 using a touch-tone telephone. To withdraw your questions, you may press Star and 2. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality. Once again, that is Star and then 1 to join the question queue. Our first question today comes from Brent Thielman, from D.A. Davidson. Please go ahead with your question.

Speaker #3: Especially as it comes to virtual design construct, VDC, BIM, and prefabrication.

Speaker #2: Okay. Hey, thanks, guys. I'll pass it on.

Speaker #1: Our next question comes from Adam Thalheimer from Thompson Davis. Please go ahead with your question.

Brent Thielman: Hey, thanks. Good morning.

Speaker #5: Hey, good morning, guys. Congrats on the strong quarter and the year. Tony, I wanted to ask you first about RPOs. The 33% in network and communications obviously, some others in your space are even higher than that.

Tony Guzzi: Morning, Brett.

Brent Thielman: Hey, Tony or Jason, if you could comment just on some of the initiatives that compressed margins a bit last quarter, Q3. I think you moved into some new territories that caused a little pressure there. Like, what lingering impact may have that had in Q4, if any? Are you sort of beyond that at this stage here in 2026?

Hey um Tony or Jason. Um if you could comment just on some of the initiatives that compressed margins a bit last quarter 3Q. Um I think you moved into some new territories, it caused a little pressure there. Like what lingering impact may have that had in the fourth quarter if any and are you sort of beyond that at this stage here in 2026? You know, you always have to be careful to say we're beyond that because we're starting projects all the time and we execute really well and we write projects up, we write them down but on balance I think the headwinds we've experienced in that particular Market are behind us South and we had a little bit of that spill over into the fourth quarter.

Speaker #5: And I'm just curious if that was a conscious decision on your part to stay more diversified or if that reflects something else like geographic mix.

Tony Guzzi: You know, you always have to be careful to say we're beyond that, because we're starting projects all the time, and we execute really well, and we write projects up, we write them down. On balance, I think the headwinds we've experienced in that particular market are behind us now, and we had a little bit of that spill over into Q4. Some of it also is just mix of work. We didn't finish as much fixed price work in our electrical segment as we did the year before, and we started some work that was more target price or GMP and, you know, hopefully, we'll convert some of that to fixed price, but we don't know that. The underlying margins in the business, which you can see from our gross margins, is pretty strong.

Speaker #3: It's funny. I'll go to the second thing you said. It's geographic and sector mix. We're not passing up great data center opportunities because we're doing the other work.

Speaker #3: However, we're not going to go away from our existing customers. We have very strong companies and markets that have limited to no data center exposure.

Speaker #3: We have one of the best electrical contractors in the country in San Diego. That generates great returns, serves our customers well. Does it through a mix of pharma and high-tech manufacturing work.

Convert some of that to fixed price but we don't know that. But the underlying margins in the business which you can see from our gross margins is pretty strong. Yeah. And I, I I, I would Echo what Tony said, the only thing I I would add to that, right? Is and I, I tried to say this in my prepared, remarks, if you look at the gross profit margin for electrical and you adjust for the amortization impact, uh, it performed relatively consistent year-over-year. So any impacts that we did have from those projects startups, was, was offset by by just execution within the segment. Yeah, yeah. And you could see it in our numbers, right? Are we a little disappointed. We coughed up 50 or 60 basis points this year in electrical operationally. Sure we are.

Speaker #3: Some defense work and healthcare work. There's not a data center opportunity there for them to do. But they earn returns that are as good or better than our segment averages.

Some of the headwind was from amortization, that's not a cash expense.

Jason Dangelo: Yeah, I would echo what Tony said. The only thing I would add to that, right, is I tried to say this in my prepared remarks. If you look at the gross profit margin for electrical and you adjust for the amortization impact, it performed relatively consistent year-over-year. Any impacts that we did have from those project startups was offset by just execution within the segment.

Speaker #3: And we have a chunk of our business that exists just like that in places like California, some of the inner mountain states, some of the Midwestern towns.

Speaker #3: And as you go to something as specific as water and wastewater, we're not walking away from opportunities in Florida to do data centers, although the first ones are going to get built.

Tony Guzzi: Yeah, Brett, you can see it in our numbers, right? Are we a little disappointed we coughed up 50 or 60 basis points this year in electrical operationally? Sure, we are. Some of the headwind was from amortization. That's not a cash expense. You know, when you look over a 12 to 24-month period, that's a pretty good snapshot of our margins. We expect to operate somewhere mid to low 12s to 14% or so electrically, and mid to low 12s, so, 13.5% or so mechanically, and it's going to bounce around there. If we could operate this business between 12.5 and 13.5 on a sustained basis across our construction segments, I think we'd be pretty pleased with that.

But you know when you look over a 12 to 24 month period that's a pretty good. Snapshot of our margins. We expect to operate somewhere, mid to low, 12s to 14 or so percent, electrically and mid to low 12. So I had 13 and a half percent or so mechanically and it's going to bounce around there. Uh, but if we could operate this business between 12 and 5 and 135 on a sustained basis, across our construction segments, I think it would be pretty pleased with that.

Speaker #3: And we will participate in that. But the teams that do that water and wastewater work are very specialized. Could they do chiller plant work and things like that?

Yep. Okay.

Speaker #3: Sure. But they're very specialized on that customer base and in that product offering. So yeah, some of it's intentional. It's been intentional, Adam, beyond the last four or five years.

Speaker #3: It's been intentional over a very long period of time to build diversity of demand. But that being said, and I'll give you a great example.

Speaker #3: We had a very good industrial electrical contractor in the Midwest that are in middling returns for years. But very technically capable. When the opportunity presented itself in Northwest Indiana to do data center work, we were able to take some of our skill base on the supervision side and our estimating side train the people there to do the work, estimate the work.

Brent Thielman: Yep. Okay. Tony, maybe just to follow up, I mean, an interesting chart there on slide 7. On the network communications data center side, you talked about good visibility here for the next two to three years. I think, it'd be hard to dispute that. Maybe one of the questions that oftentimes comes up is just, like, your regional exposure.

Um, Tony maybe just to follow up. I mean an interesting chart there on sled 7. So, um, on the network communications data center side, you talked about good visibility here for the next 2 to 3 years. I, I think, uh, be hard to dispute that, um, could, maybe 1 of the questions that often times comes up, is just like your Regional exposure. Are you, do you see yourself having to move into different regions to get more of this work or, or maybe you could just talk about what's happening where you're already at, where you have where your position today that you guys are going to continue to? Yeah, I mean, I'm not I have to go through markets electrically but the way I look at it is uh, we have a strong, we have a solid position in the Midwest.

We'd like to make that a little bit stronger uh in some of the markets.

Speaker #3: And now they're one of the best data center builders we have. And so we have the ability to do that when the opportunity and we create the opportunity presents itself and our customers need us to do that.

Uh, we think we can do that either through uh acquisition investment.

Or organic growth.

Speaker #3: So, I'd say yes, part of it has been intentional as a long-term strategy. But are we shooting to say we're only going to do 33% data center work and RPOs?

Tony Guzzi: Mm-hmm.

Brent Thielman: Do you see yourself having to move into different regions to get more of this work? Or maybe you could just talk about what's happening where you're already at, where you're positioned today, that you guys are going to continue?

Uh, Arizona, we continue to build that out. Uh, We've we've

just,

Speaker #3: Could be 40 for a part of a period of time. Could be 45. Could go down to 30. It's just the overall demand and the mix of work and margin we have out there.

Tony Guzzi: Yeah, I mean, I'd have to go through several markets electrically. The way I look at it is, we have a solid position in the Midwest. We'd like to make that a little bit stronger in some of the markets. We think we can do that either through acquisition investment, or organic growth. Arizona, we continue to build that out. We've just built a better position mechanically in Arizona, that we look to take advantage of it. Electrically, we moved into that market two years ago, and we're starting to hit full ramp right now. Texas, we're pretty strong. Mechanically, we'll take some of our first significant jobs in Texas, and there's a mixed management decision, right? We had that capability there doing semiconductor work.

Uh built a a better position mechanically in Arizona that we look to take advantage of it and electrically uh we moved into that market 2 years ago and we're starting to hit full ramp right now.

Speaker #4: Yeah. The only other thing I would add too is just remember that for us, but we show as RPOs are the funded phases of a contract.

Speaker #4: So if we're working on a data center campus where there's multiple buildings and we have even a verbal for the phase two, we're only showing that first phase in our RPOs.

Speaker #4: So others may be doing it differently, which could skew percentages. But for us, this is funded contracted work that we have in hand and 80% of this will burn over the next 12 months.

Speaker #3: Yeah.

Speaker #1: Got it. Okay. So but you're saying if the outlook for data centers is strong, don't be surprised if it goes to 40, 45 percent.

Uh, Texas. Uh, we we're pretty strong. Uh, mechanically. We'll take some of our first significant jobs in Texas and there's a mixed management decision, right? We had that capability there doing semiconductor work. We'll continue to do some of that. But quite frankly, we think some of the rural data center work is better for us to do and it allows us to sort of get more productivity in our prefab shops. Also, by doing that and we invested ahead of that, uh, the the semiconductor work we did there in a lot of ways was the beach head to participate more broadly in the market and especially in the data center Market mechanically electrically. We have a very good position in the Dallas Fort Worth area. We'll look to expand out of that.

Speaker #3: Yeah. It could. If you look at our electrical segment where we've been able to get into 17 markets, it's 40 to 50 percent on a sustained I think it'll stay there for a while, may even go up a little bit.

Speaker #3: Because we have found that that skill is the most we have the most ability to take that electrical skill and translate that into other markets from other work that they have done.

Tony Guzzi: We'll continue to do some of that. Quite frankly, we think some of the rural data center work is better for us to do. It allows us to sort of get more productivity in our prefab shops also by doing that. We've invested ahead of that. The semiconductor work we did there in a lot of ways, was the beachhead to participate more broadly in the market and especially in the data center market. Mechanically, electrically, we have a very good position in the Dallas-Fort Worth area. We'll look to expand out of that. Atlanta, we have a very strong position mechanically. We have a secondary position electrically. We'll look to continue to strengthen that. The Carolinas, we're pretty strong, both mechanically and electrically, more so mechanically, but still pretty strong electrically.

Speaker #1: Okay. Last one for me. I was curious on semiconductors when the next wave of awards might be in that space.

Speaker #3: Well, we're seeing some of it now. They're just getting awarded in smaller chunks. We're very ingrained in one of the for one of the customers, two of the customers in Arizona.

Speaker #3: And we're also there in Arizona and the mountain states fire life safety. I don't know if because you're already on site, I'm not sure you'll see the magnitude of the awards that we saw initially because they can leave it off to us in pieces.

Uh Atlanta. We have a very strong position mechanically and we have a secondary position electrically and we'll look to continue to strengthen that uh the Carolinas. Uh we're pretty strong, both mechanically and electrically more, so mechanically, but still pretty strong electrically, Northern Virginia, uh quite frankly, we're terrific, both mechanically and electrically. Uh, and then as you get to Oregon, we're very strong electrically. So we will continue. And in Iowa, very strong electrically, we will continue to round that uh capability. You can tell we're in more markets. Electrically the mechanically. Uh, some of that is uh uh we we found it. Uh, advantageous to be able to take our electricians that were very skilled in our management teams and doing, you know, something to steal. No work at 1 time. And they've proven to be very good data center. Builders also,

Tony Guzzi: Northern Virginia, quite frankly, we're terrific, both mechanically and electrically. Then as you get to Oregon, we're very strong electrically. We will continue. Iowa, very strong electrically. We will continue to round out that capability. You can tell we're in more markets electrically than mechanically. Some of that is, we've found it advantageous to be able to take our electricians that were very skilled in our management teams and doing, you know, some things of steel mill work at one time, and they've proven to be very good data center builders also.

Speaker #3: And I think that's an important delineation with us. We have a pretty good idea of the work we're going to be doing there, which is some of that 40 to 45 percent we have to book in a year.

Speaker #3: But Jason made a really important point, right? Everything we do goes back to gap, right? So our RPOs are funded contracts, signed purchase orders, the non-cancelable portion of a service agreement.

And we've been able to take that skill uh from our our some of our companies and move it to others and it takes about 18 months to ramp them up to get to full production where you know they can hit the kind of margins, our traditional data center companies and mechanically there's no real reason some of uh that we haven't expanded as much as just the footprint of where we are and what it takes mechanically to build the capability because of the prefab and all the other things are a little more extensive. And in fire Life Safety uh we can cover the entire market and we do

Speaker #3: I mean, that is different than some of our peers do things. I mean, we know that we may be at a data center site for two or three years.

Tony Guzzi: We've been able to take that skill from our some of our companies and move it to others. It takes about 18 months to ramp them up to get to full production where, you know, they can hit the kind of margins our traditional data center companies do mechanically. There's no real reason, some of that we haven't expanded as much, it's just the footprint of where we are and what it takes mechanically to build the capability because of the prefab and all the other things are a little more extensive. In fire life safety, we can cover the entire market, and we do.

Speaker #3: We're pretty sure the buildings we're going to get. But A, the work isn't contracted to us yet. And so therefore, we'll plan for it.

Speaker #3: But we certainly and in a semiconductor site, we know that maybe two years ago, we might have got 150 million dollar award. And it's going to look like that 150 million dollar award again.

Speaker #3: But they're letting it out to us to 30, 50 million dollars a time because they know that that's how they're funding is going to work.

Speaker #3: And that's how they did the actual we've been that way forever. It's a little different when you have these huge projects. And we just have chosen to stay very consistent and not guess at what the future holds and keep it to that kind of convention.

Brent Thielman: Got it. Appreciate that, Tony. Just last one, I mean, your balance sheet, you sort of have a war chest here. How do you think about, like, total excess liquidity here, assuming you want to keep some level of cash on the balance sheet, also understand your revolver's untapped? Just thoughts there. It seems like you can do a lot here.

Speaker #3: And that's to say the same thing about our operating margin performance. The only thing to get added back here are hard things like transaction costs, like the sale of the UK or a significant impairment.

Balance sheet on a sustained basis, because think of who we're working for 1 of our competitive differentiators, especially on this large Project work is we're not a leveraged company and and think about the the, the hyperscalers, uh, they're not looking to do business with leverage companies and it's also, when you look at a bonding line, it's a, it's a nice, uh, ability to be able to have a surety bond without question when you need it. Uh, and we've had that luxury.

Tony Guzzi: Yeah. I'll hit a macro level on that, then Jason will get into some specifics about what, like, cash we'd probably like to have on hand. I think in general, we're never gonna have a highly leveraged balance sheet on a sustained basis, because think of who we're working for. One of our competitive differentiators, especially on this large project work, is we're not a leverage company. Think about the hyperscalers, they're not looking to do business with leverage companies. It's also, when you look to the bonding line, it's a nice ability to be able to have a surety bond without question when you need it, and we've had that luxury.

Speaker #3: We have restructuring going on in the business all the time where we're restructuring subsidiaries. We don't do that. We don't try to add back amortization.

Speaker #3: We figure our investors are smart enough to do that themselves. It's a non-cash expense. We figure once we go down that rabbit hole, we become adjusted on adjusted on adjusted.

Speaker #3: And we just chose to stay pure to the GAAP numbers, both for RPOs and operating income and revenue recognition. Jason? Yeah, I mean, I think it's just easier.

Tony Guzzi: We also would be willing to lever up for the right acquisitions or series of acquisitions to go to 1 to 1.5 times, maybe 2 times, and then leverage back down to 1 times. What I wouldn't do is borrow a bunch of money to buy back stock. We like to do the buyback through excess liquidity. If we're gonna borrow money, it's because we're building in or we're buying into a asset that's gonna return cash to us over an extended period of time. That sort of macro level, Jason, maybe get to the specifics.

Speaker #1: The numbers are very clean. We appreciate that. I'll turn it over. Thanks, guys.

Speaker #3: We appreciate it sometimes because you salivate over other people that have 5% off.

Speaker #1: I can't speak for everybody else. I appreciate it.

Speaker #3: But go ahead. Thanks, Adam.

Speaker #1: Our next question comes from Brian Brophy from Steeple. Please go ahead with your question.

Speaker #5: Yeah. Thanks. Good morning, everybody. Appreciate you taking the question. So your data center work has been growing a bit faster on the mechanical side than on the electrical side for a few quarters now.

But but we also would be willing to lever up for the right Acquisitions or series of Acquisitions to go to 1 to 1 and a half times maybe 2 times in a leveraged back down. Uh, to 1 times, I what I wouldn't do is borrow a bunch of money to buy back stock. We like to do the buyback, through excess liquidity. Uh, and if we're going to borrow money, it's because we're building in or, or buying into a, a a asset that's going to return cash to us over extended period of time, that sort of macro level. Jason maybe gets the specifics. I, I would say if you go to that slide, 14 that Tony referenced earlier and you look at what we've done this year last year and even over the the last 10 years. I think that's what our Playbook looks like going forward, right? It continues to be a, a balanced approach towards that Capital allocation, we, we think we have a strong m&a pipeline as we move into next year. We'll continue to to uh, return Capital to shareholders and and you saw that in the repurchases this year. And and you saw that in the increase in dividend uh in terms of of minimal cash balance for our

Speaker #5: Can you talk about what are the drivers behind that? And do you expect that to sustain itself in the next or this year? Thanks.

Jason Dangelo: I would say, if you go to that slide 14 that Tony referenced earlier, and you look at what we've done this year, last year, and even over the last 10 years, I think that's what our playbook looks like going forward, right? It continues to be a balanced approach towards capital allocation. We think we have a strong M&A pipeline as we move into next year. We'll continue to return capital to shareholders, and you saw that in the repurchases this year, and you saw that in the increase in dividend. In terms of minimal cash balance for our balance sheet, you know, it's probably somewhere in the neighborhood of $300 to $400 million.

Speaker #3: It could. It could because we've first was the basis, right? In comparison to the segment. And so we've opened up a couple new markets on the data center side.

Balance sheet, you have, it's probably somewhere in the neighborhood of 300 to 400 million. So so obviously our balance sheet positions us to, to continue to deploy cash strategically as we move into 2026. Yeah, I I I think, I think if you ask any of our management team down through the segment level, we would love the replicate 2025 here in 26 and 27. However, you've heard me say many times dils happen when they happen.

Speaker #3: And also, I think one of the growth areas in that is it's a little different on the scope. We're benefiting more from the AI data center, even though we're building the AI data centers electrically.

Speaker #3: But the scope doesn't increase as much going from 100 megawatt cloud storage data center to a 200 megawatt AI data center on the electrical side.

Jason Dangelo: Obviously, our balance sheet positions us to continue to deploy cash strategically as we move into 2026.

Tony Guzzi: Yeah, I think if you ask any of our management team down through the segment level, we would love to replicate 2025 here in 2026 and 2027. However, you've heard me say many times, deals happen when they happen. What we are going to do is maintain discipline. We're not gonna. You know, I think, you know, people on the line know me well enough to know this management team well enough, that we don't buy into hype, and we don't buy into frenzy. We have to believe there's a long-sustained business case for why we would do something, and we have to believe that we can add value. You know, our acquisition record is pretty darn good.

Speaker #3: But on the mechanical side, it can be a 1.5 to 2 times multiplier on the mechanical systems that will go in. And what's interesting about that, that in either case is that usually include the major end equipment.

Speaker #4: Yeah. I think Tony's point on the base is very important as well, right? Mechanical is up more on a percentage basis. But on a dollars basis, electrical grew a billion dollars this year.

Speaker #4: Mechanical grew 850 million. So electrical is still growing more in terms of dollars. It's just off a larger base gives you a smaller percentage.

Speaker #3: I think one way to look at it too, electrically, we about two years ago established ourselves as more of a national player in data centers.

And what we are going to do is maintain discipline. Uh, we're not going to, you know, I think, you know, people on the line, know me, well enough and know this management team, well, enough that we don't buy into hype and we don't, we don't buy into frenzy, we have to believe there's a long sustained business case for why we would do something. And we have to believe that we can add value and, you know, our acquisition, uh, record. It is pretty darn good. I always say it, never give anybody an A, but I'd give us a strong B+ over an extended period of time and we're going to continue to do that. You know, we're not, you know, private Equity guys. We're not averaging multiples down. We're looking to buy and build for the long term and build sustainable positions. And how we got from some of these places to serve 17 electrical data center markets. Is we bought companies that are in the business and we're able to strengthen it through peer learning, uh, transferring people for short periods of time to help it and really doing a great job of taking our best practices and means and methods and sharing it across the company, especially as it comes to uh virtual design.

Tony Guzzi: I always say I'd never give anybody an A, but I'd give us a strong B plus over an extended period of time, and we're gonna continue to do that. You know, we're not, you know, private equity guys. We're not averaging multiples down. We're looking to buy and build for the long term and build sustainable positions. How we got from some of these places to serve 17 electrical data center markets, is we bought companies that were in the business, and we're able to strengthen it through peer learning, transferring people for short periods of time to help it, and really doing a great job of taking our best practices and means and methods and sharing it across the company, especially as it comes to, virtual design, construct, VDC, BIM, and pre-fabrication. Okay. Hey, thanks, guys. I'll pass it on.

Struck VDC Bim and prefabrication.

Okay. Hey thanks guys. I'll pass it on.

Speaker #3: Mechanically, I would still would say we're still a super regional player in data centers. So you may see that growth because of the base and how we're continuing to penetrate new markets mechanically.

Our next question comes from Adam thalheimer from Thompson Davis. Please go ahead with your question.

Speaker #3: And it takes a little longer to penetrate mechanically. And we're starting to see some of the investments return to us now from what we made two or three years ago mechanically.

Hey, good morning, guys. Congrats on the strong quarter and, and the year.

Tony, I wanted to ask you first about rpos,

Speaker #5: Thank you. That's helpful. And then related, I think you mentioned 17 electrical markets. On the data center side, you're up to now, 7 mechanical.

Speaker #5: And it's grown. Nicely over time. Where can that go over time?

the 33% in network and Communications, you know, obviously some others in your space or even higher than that. Sure. And I'm just curious if that was a conscious decision on your part to stay more Diversified or if that reflects something else like Geographic mix I it's it's it's funny. I'll go to the second thing. He said it's Geographic in sector. Mix.

Speaker #3: I actually don't know. I think we'll stop counting soon because they're now becoming you start counting the state of Ohio versus the four submarkets in Ohio.

Operator: Our next question comes from Adam Thalhimer, from Thompson Davis. Please go ahead with your question.

Adam Thalhimer: Hey, good morning, guys. Congrats on the strong quarter and the year.

Speaker #3: And things like that. You take the state of Indiana versus the two or three submarkets. I think the way I think about it is we are now starting to build scale in some critical infrastructure places.

Tony Guzzi: You're welcome.

Uh, we're not passing up great data center opportunities, because we're doing the other work, uh, however we're not going to go away from our existing customers. We have very strong companies in markets that have limited to no data center exposure,

Adam Thalhimer: Tony, I wanted to ask you first about RPOs. The 33% in network and communications, you know, obviously, some others in your space are even higher than that.

We have 1 of the best electrical contractors in the country in San Diego.

Speaker #3: So if you think about how this has happened and why it's happened, it's because it's been this quest for power. Right? Quest for stranded power.

Tony Guzzi: Sure.

Adam Thalhimer: I'm just curious if that was a conscious decision on your part to stay more diversified, or if that reflects something else, like geographic mix?

That generates great returns serves our customers well does it through a mix of uh Pharma and high-tech manufacturing work?

Uh, some Defense work and Healthcare work.

Speaker #3: And that's how our great industrial electrical got into the data center business in Indiana, because they went and chased the stranded power from the steel mills and auto plants that had been there before.

Tony Guzzi: It's funny, I'll go to the second thing you said, it's geographic and sector mix. We're not passing up great data center opportunities because we're doing the other work. However, we're not gonna go away from our existing customers. We have very strong companies in markets that have limited and no data center exposure. We have one of the best electrical contractors in the country, in San Diego, that generates great returns, serves our customers well, does it through a mix of pharma and high-tech manufacturing work, some defense work, and healthcare work. There's not a data center opportunity there for them to do, but they are in returns that are as good or better than our segment averages.

Speaker #3: And so you think about that over time, there's still stranded power out there. And that should keep that's why we say two to three year pretty good outlook because our customers are telling us that.

There's not a data center opportunity there for them to do but they are in returns that are as good or better than our segment averages and we have a a a a chunk of our business exists. Just like that in places like California. Uh, some of the Inner Mountain States, some of the midwestern towns.

Speaker #3: And they may even be a little bit beyond that. They feel pretty good maybe a little longer after we're contractors. We always discount that back a little bit.

Speaker #3: And, but I will say this: the markets are now dependent on where they can get power in place. My gut is there'll be a couple more markets added.

Speaker #3: And then in the markets they're in, they're going to start to build even more density just like they did in Northern Virginia. Right outside of Columbus, Ohio, what they've done in Chicago.

Tony Guzzi: We have a chunk of our business that exists just like that in places like California, some of the Intermountain States, some of the Midwestern towns. As you go to the, like, something as specific as water and wastewater, we're not walking away from opportunities in Florida to do data centers, although the first ones are gonna get built, and we will participate in that. The teams that do that water and wastewater work are very specialized. Could they do chiller plant work and things like that? Sure. They're very specialized on that customer base and in that product offering. Yeah, some of it's intentional. It's been intentional, Adam, beyond the last four or five years. It's been intentional over a very long period of time to build diversity of demand.

Speaker #3: What they've done in Arizona. They've built in Atlanta. They're building density in those markets. And they do that for a reason. And Dallas. They do that for a reason because they think there's a good view on power in the long term.

It's been intentional over a very long period of time to build diversity of demand. But that being said, I'll give you a great example. We had a uh very good industrial electrical contractor in the Midwest.

Speaker #3: And also, the connections there are really, really good. And the latency becomes important in some of those major metro areas for the knowledge workers long term.

Speaker #3: Now, do I understand how the latency works and everything? Not really. But that's how it all works when you put it all together. So, it'll go up, but it's not going to grow like it did, because they're now starting to build critical mass in those markets.

That are in middling returns for years but very technically capable when the opportunity to present it itself in Northwest, Indiana to do data center work. We were able to take some of our skill-based, on the supervision side and our estimating side.

Train the people there to do the work estimate, the work. And now they're 1 of the best data center Builders we have

Speaker #5: Understood. Appreciate the caller. Pass it on.

And so we have the ability to do that when the opportunity and we create the opportunity presents itself and our customers need us to do that.

Tony Guzzi: That being said, and I'll give you a great example, we had a very good industrial electrical contractor in the Midwest, that are in middling returns for years, but very technically capable. When the opportunity presented itself in Northwest Indiana to do data center work, we were able to take some of our skill base on the supervision side and our estimating side, train the people there to do the work, estimate the work, and now they're one of the best data center builders we have. We have the ability to do that when the opportunity, and we create the opportunity, presents itself and our customers need us to do that. I'd say, yes, part of it has been intentional as a long-term strategy, but are we shooting to say we're only gonna do 33% data center work on our RPOs?

Speaker #1: Our next question comes from Justin Hawk from Baird. Please go ahead with your question.

Speaker #3: Yeah, great. I guess first one—I mean, you've talked about the fire life safety projects being strong for a while. I think you made some comments here about kind of the uniqueness of what you're doing on the data center specifically.

Speaker #3: But can you just elaborate a little bit more on your capabilities there? And how you're different in that market?

Speaker #2: Yeah. Are we different? Yeah. Because I think we have some of the best fire we have critical mass on design. And we have a very strong position with the road local in the UA for sprinkler fitters.

So I'd say, yes, part of it has been intentional as a long-term strategy, but are we shooting to say we're only going to do 33% data center work in our rpos could be 40 for a part of a period of time. Could be 45. Could go down to 30, it's just the overall demand and the mix of work and margin. We have out there. Yeah, the only other thing I would add too is just remember that for us but we show as rpos are the funded phases of a contract. So if we're working on a data center campus where there's multiple buildings and and we we have even a verbal for the phase 2, we're only showing that first phase in our RPO. So others may be doing it differently, which could skew percentages. But for us, this is funded contracted work that we have in hand and and 802% of this will burn over the next 12 months. Yeah.

Speaker #2: So, if you take the business first, and you take a step back—and those that have been with us for a while, be patient for a second as I answer this question.

Got it. Okay. So

Tony Guzzi: Could be 40 for a part of a period of time, could be 45, could go down to 30. It shifts the overall demand and the mix of work and margin we have out there.

but you're saying if the outlook for data centers is strong,

Speaker #2: It's one of the few trades what we do that the actual implementation of that part of the specification is a design-build product. The way the specification is written is it says provide a fire life safety system in accordance with the code at both the national standard and then their state and local standards.

Jason Dangelo: Yeah. The only other thing I would add, too, just remember that for us, what we show as RPOs are the funded phases of a contract. If we're working on a data center campus where there's multiple buildings and we have even a verbal for the phase two, we're only showing that first phase in our RPO. Others may be doing it differently, which could skew percentages, but for us, this is funded, contracted work that we have in hand, and 82% of this will burn over the next 12 months.

Uh those don't be surprised if it goes to 40. 45%. Yeah it could. If you look at our electrical segment uh where we've been able to get in the 17 markets, it's 40 to 50% on the sustained. I think it'll stay there for a while. It may even go up a little bit, uh because we have found that that scale.

Speaker #2: And our guys are experts at that. And what they do then is, we design it. And then fire life safety has a fairly significant prefabrication component.

Is the most, uh, we have the most ability to take that electrical skill and translate that into other markets from other work that they have done.

Okay.

Tony Guzzi: Yeah.

Adam Thalhimer: Got it. Okay, you're saying if the outlook for data centers is strong, don't be surprised if it goes to 40%, 45%?

Speaker #2: And we have some pretty at-scale fabrication shops to support our fire life safety business. And then it's for the union, other than 16 closed local, it's a road local that will travel.

Uh, last 1 for me, I was curious on semiconductors when the next wave of uh, Awards might be in that space. Well, we're seeing some of it now. They just get an award in a smaller chunks. Uh, we're very, uh, uh, uh,

Tony Guzzi: Yeah, it could. If you look at our electrical segment, where we've been able to get into 17 markets, it's 40% to 50% on a sustain. I think it'll stay there for a while, may even go up a little bit. Because we have found that skill is the most ability to take that electrical skill and translate that into other markets from other work that they have done.

Ingrained in 1 of the 1 of 1 of the customers, 2 of the customers in Arizona.

Speaker #2: And so our people can travel across the country, and it also tends to get connected—to think of another word—like Legos or Tinker Dot.

And we're also there in Arizona and the the mountain states uh, fire like safety.

Speaker #2: It's a connected system, and we prefab most of it in the shops. And then finally, it has a nice aftermarket component. And we have a nice aftermarket business.

Speaker #2: And that is one of the places where if we build it, we have a pretty good shot at getting the long-term service agreement post a building.

Adam Thalhimer: Okay. Last one for me. I was curious on semiconductors, when the next wave of awards might be in that space?

Speaker #2: So it's a national business in scope. It's a design-build business in scope on that specific trade. We have a great workforce. And we're at scale in that business.

Uh, I don't know if it, I, you know, because you're already on site, I'm not sure you'll see the magnitude of the awards that we saw initially because they can leave it out to us in pieces. And that, I think that's an important delineation with us. We have a pretty good idea of the work, we're going to be doing there, which is some of that uh, 40 to 45%. We have to book a year.

Tony Guzzi: Well, we're seeing some of it now. They're just getting award into smaller chunks. We're very ingrained in one of the one of, for one of the customers, two of the customers in Arizona, and we're also there in Arizona and the Mountain States, fire life safety. I don't know if, you know, because you're already on site, I'm not sure you'll see the magnitude of the awards that we saw initially, because they can leave it out to us in pieces. That's an important delineation with us. We have a pretty good idea of the work we're gonna be doing there, which is some of that, 40% to 45% we have to book a year. Jason made a really important point, right? Everything we do goes back to GAAP, right?

Speaker #2: And probably as good as anybody else in that business. I'll never say we're the only ones. But one of the few that can operate on a national basis.

But but Jason made a really important point, right? Everything we do goes back to Gap, right? So our rpos are funded, contracts signed purchase orders, the non-cancellable portion of a service agreement,

Speaker #3: Okay. I appreciate more of the history lesson on that. So thank you for that. I guess my second one is I guess for Jason here.

Speaker #3: And it's just more of a model question. But the Danforth acquisition obviously much smaller than the Miller was. But I know it's going to have an intangible component with it as well.

Speaker #3: Now that it's closed, I think Miller that was like 40 million for the year that was kind of a drag. What's kind of the similar magnitude for Danforth just so we can kind of think about what's running through?

Tony Guzzi: Our RPOs are funded contracts, signed purchase orders, the non-cancellable portion of a service agreement. I mean, that is different than some of our peers do things. I mean, we know that we may be at a data center site for 2 or 3 years. We're pretty sure the buildings we're gonna get, but A, the work isn't contracted to us yet, therefore, we'll plan for it. We certainly, on a semiconductor site, we know that maybe 2 years ago, we might have got a $150 million award, and it's gonna look like that $150 million award again.

Speaker #2: So I'll hit a couple of things on amortization first. So if we look just at Danforth, in 2025, round numbers, it's about 2.7 million dollars of amortization.

Speaker #2: In 2026, it's going to be around 14.2 million. So you got about 11.5 of incremental amortization from Danforth in '26. Just a refresher on Miller, we said in year one, so 2025, it'd be about 40.5 million of amortization.

I mean that is different than some of our peers do things. I mean we know that we may be at a data center site for uh 2 or 3 years. We're pretty sure the buildings we're going to get but a the work isn't contracted to us yet and so therefore we'll plan for it but we certainly in in a in a semiconductor site, we know that maybe 2 years ago, we might have got a 150 million dollar award and it's going to look like that 150 million dollar award again but they're letting it out to us to 3050 million dollars of time because they know that that's how their funding is going to work. And that's how they did the actual contract for that piece of the work. So we've been that way forever. It's a little different when you have these, uh, huge projects and we just have chosen to stay very consistent and not guess what the future holds and keep it to that kind of uh, convention. And not to say the same thing about our operating margin performance. The only thing to get added back, here are hard things like transaction costs like uh uh the sale.

Speaker #2: In 2026, it's going to be about 33. So you should see about seven and a half drop-off. So if you just look across EMCOR, while we may have a little bit of amortization benefit in electrical, it's going to be offset in mechanical.

Tony Guzzi: They're letting it out to us for $30, 50 million a time, because they know that that's how their funding is gonna work, and that's how they did the actual contract for that piece of the work. We've been that way forever. It's a little different when you have these huge projects, and we just have chosen to stay very consistent and not guess at what the future holds and keep it to that kind of dimension. That's to say the same thing about our operating margin performance. The only thing to get added back here are hard things, like transaction costs, like the sale of the UK or a significant impairment. We have restructuring going on in the business all the time, where we're, you know, restructuring subsidiaries. We don't do that.

Speaker #2: So, if you really net the two, it's near neutral.

Of the UK or a significant impairment. We have restructuring going on in the business all the time where we're, you know, restructuring subsidiaries. We don't do that. We don't try to, you know, add back amortization. We figure our investors are smart enough to do that themselves. It's a non-cash expense. We figure, once we go down that rabbit hole.

Speaker #3: Great. Oh, that's helpful. Appreciate it. Thank you.

Speaker #2: Thank you.

Speaker #1: And our next question comes from Avi Jarosiewicz from UBS. Please go ahead with your question.

We become adjusted on adjusted on adjusted and we've just chose to stay pure to the Gap numbers, both for rpos and operating income and revenue recognition. Jason agreed. Yeah. And it's, I think it's just easier.

Speaker #4: Hey. Good morning, guys.

Speaker #5: Good morning, Avi.

Speaker #4: So you've noticed it in the past, how much more your revenue has grown than your headcount. Is that something that you expect is going to be able to continue this year?

The numbers are very clean. We appreciate that. I'll turn it over. I appreciate it sometimes because you, you salivate over, other people that have 5% off. I can't speak for everybody else. I appreciate it. Go ahead, thanks. Al

Tony Guzzi: We don't try to, you know, add back amortization. We figure our investors are smart enough to do that themselves. It's a non-cash expense. We figure once we go down that rabbit hole, we become adjusted, on adjusted, on adjusted, and we just chose to stay pure to the GAAP numbers, both for RPOs and operating income and revenue recognition. Jason?

Speaker #4: Or are some of those productivity gains maybe slowing down and requiring some more headcount to support the revenue?

Our next question comes from Brian Brophy from steeple, please go ahead with your question.

Speaker #5: I think we'll keep the trend going. Yeah. I think over time, we've said revenue is growing two to three times faster than headcount. We saw that again for the full year of '25.

Jason Dangelo: Agreed. Yeah.

Speaker #5: Our revenue outpaced headcount by 2X. And I think that model holds for the future.

Tony Guzzi: Yeah, I mean, I think it's just easier.

Question. Um so your data center Works been growing a bit faster on the mechanical side than on the electrical side for a few quarters. Now can you talk about um what are the drivers behind that? Uh and do you expect to have to sustain itself in the next or this year? Thanks uh it could.

Adam Thalhimer: The numbers are very clean. We appreciate that. I'll turn it over. Thanks, guys.

Speaker #4: Yeah. And we'll continue to get the productivity gains, and we'll continue to do the means and method sharing across the country to allow even more productivity gains.

Tony Guzzi: We appreciate it sometimes because you salivate over other people that have 5%.

Adam Thalhimer: I can't speak for everybody else. I appreciate it.

Tony Guzzi: Go ahead. Thanks, Adam.

Speaker #5: Okay. That is helpful. And then just as we think about the margin guidance for this year, I appreciate that you gave that color on the intangible amortization.

it could because we've first with the basis right in comparison to the segment and so we've opened up a couple new markets on the data center side and also I think 1 of the growth areas in that is it's a little different on the

Uh, scope.

Operator: Our next question comes from Brian Brophy, from Stifel. Please go ahead with your question.

Brian Brophy: Yeah, thanks. Good morning, everybody. Appreciate you taking the question. Your data center work's been growing a bit faster on the mechanical side than on the electrical side for a few quarters now. Can you talk about what are the drivers behind that? Do you expect that to sustain itself into next or this year? Thanks.

Speaker #5: But just without the UK business and with large projects continuing to grow and productivity continuing to grow, would have expected maybe starting point of around flat for the year for operating margins.

Tony Guzzi: It could. It could, because we've first, with the basis, right, in comparison to the segment, we've opened up a couple of new markets on the data center side. Also, I think one of the growth areas in that is, it's a little different on the scope. We're benefiting more from the AI data center, even though we're building the AI data centers electrically. The scope doesn't increase as much going from a 100 megawatt cloud storage data center to a 200 megawatt AI data center on the electrical side. On the mechanical side, it can be a 1.5 to 2 times multiplier on the mechanical systems that will go in. What's interesting about that in neither cases, that usually include the major end equipment.

Speaker #5: So maybe if you could just help us think through that and specific.

Speaker #3: Yeah, yeah. At the high end of our range, it is flat. And so then it becomes a revenue. If we do come in flat—so on the size business we have with 12,000 projects—we're giving you a 40 basis point range.

Uh we're we're benefiting more from the AI data center, even though we're building the AI data centers electrically but the scope doesn't increase as much going from a 100 megawatt cloud storage data center to a 200 megawatt uh uh uh uh AI data center on the electrical side. But on the mechanical side, it can be a 1.5 to 2 times multiplier on the mechanical systems that will go in. And what's interesting about that that you need in either case, is that usually include the major end equipment.

Yeah, I think Tony's point on on the base is very important as well. Right now mechanical is up.

Speaker #3: It's pretty tight. And could we come in at the high end of that range? Sure. But if we don't hit the midpoint of the guidance, that allows us—it's a revenue margin thing.

Speaker #3: And it's really contract mix is probably the biggest thing in there. We think we'll maybe pick up a little better on project write-downs year over year.

More on a percentage basis, but on a dollars basis, electrical grew a billion dollars. This year, mechanical grew 850 million. So, electrical is still growing more in terms of dollars. It's just off a larger base, gives you a smaller percent. I I think 1 way to look at it too. Uh, electrically, we've we about 2 years ago, established ourselves, as more of a national

Speaker #3: And so all that comes together, that's how we get to the range. It's a pretty tight range, and I think the bottom is pretty safe.

Jason Dangelo: Yeah. I think Tony's point on the base is very important as well, right? Mechanical is up more on a percentage basis, but on a $ basis, electrical grew $1 billion this year, mechanical grew $850 million. Electrical is still growing more in terms of $, it's just off a larger base and do a smaller percentage.

Speaker #3: Could there be upside on the top? A lot of things would go right. Sure. But we gave you the 9.4 because we think we have a probability of hitting the 9.4.

Speaker #2: Yeah. The way I view the range is, at the high end, we're essentially saying we could replicate the record margins that we achieved in 2024.

Player in data centers mechanically I would still would say it was still a Super Regional player in data centers. So you may see that growth because of the base and how we continuing to penetrate new markets mechanically and it it takes a little longer to penetrate mechanically and we're starting to see some of the Investments returned to us. Now from what we made 2 or 3 years ago, mechanically

Speaker #2: That midpoint of that range is somewhere around our rolling 12 to 24-month average, more or less. It is equivalent to that midpoint. And at the low end, we're saying this is what margins could look like if we have a different mix.

Tony Guzzi: I think one way to look at it, too, electrically, we about two years ago, established ourselves as more of a national player in data centers. Mechanically, I would still say we're still a super regional player in data centers. You may see that growth because of the base and how we're continuing to penetrate new markets mechanically. It takes a little longer to penetrate mechanically, and we're starting to see some of the investments return to us now from what we made two or three years ago, mechanically.

Speaker #2: So we talked about the water and wastewater work that we have ahead of us. It's great work. We're not turning down data center work to do it.

Thank you, that's helpful. And then and then related, um, I think you mentioned 17, electrical markets on the data center side. You're up to now 7 mechanical and it's grown uh, nicely over time. Where where can that go over time?

Speaker #2: It's a different margin profile. We're acting as a prime contractor. There's more subcontract component. There's more material and equipment component, so lower margins. So what we're saying is, as we do some of that work and potentially revenue skews upward, it could have an impact on margins.

I actually don't know. I, I think it, I think it will stop counting soon because they're now becoming you start counting the state of Ohio, versus the 4 sub markets in Ohio and things like that. You take the state of Indiana versus the 2 or 3 sub markets,

I I I think the way I think about it is

Speaker #2: But we still think in a fairly high band, and a band that is at record levels for EMCOR over the last two years.

Brian Brophy: Thank you. That's helpful. Related, I think you mentioned 17 electrical markets on the data center side, you're up to now 7 mechanical, and it's grown nicely over time. Where can that go over time?

we are now starting to build scale and some critical infrastructure places.

Speaker #4: Okay. Understood. Appreciate the color. Thank you.

Speaker #2: Thank you.

Speaker #1: Our next question comes from Tim Mulroney from William Blair. Please go ahead with your question.

Tony Guzzi: I actually don't know. I think we'll stop counting soon because they're now becoming. Do you start counting the state of Ohio versus the four submarkets in Ohio and things like that? Do you take the state of Indiana versus the two or three submarkets? I think, the way I think about it is, we are now starting to build scale in some critical infrastructure places. If you think about how this has happened and why it's happened, it's because it's been this quest for power. Right. Quest for stranded power. That's how our great industrial electrical got into the data center business in Indiana, because they went and chased the stranded power from the steel mills and auto plants that had been there before.

Speaker #5: Yeah. Thanks for squeezing me in as I'm looking at the time here. I'm just going to ask one question. And I really just want to build on that last question.

So I if you think about how this has happened and why it's happened, it's because it's been this quest for power, right? Quest for stranded power and that's how we that's how our great industrial electrical got into the data center business in Indiana because they went and chased the strand of power from the steel mills and auto plants that had been there before.

Speaker #5: You guys, because maybe, though, Tony, from a higher level—a more conceptual standpoint. So bear with me. Because as I step back and think about the situation that we're in, this really is a renaissance for blue-collar trade labor.

And so, you know, you think about that over time, they're still stranded power out there and that should keep. That's why we say 2 to 3 year pretty good outlook because our customers are telling us that and they may even be a little bit beyond that, they feel pretty good. Maybe a little longer they have to work contractors, we always discount that back a little bit and but I will say this, the markets are now dependent on where they can get power in place my gut.

Speaker #5: American unionized labor in this country. So as I look at your guide for '26, I wonder, what is the fair value? What is a fair burden for the critical services that you provide?

Tony Guzzi: You know, you think about that over time, there's still stranded power out there. That's why we say 2 to 3 year, pretty good outlook, because our customers are telling us that, and they may even be a little bit beyond that. They feel pretty good, maybe a little longer. After we're contractors, we always discount that back a little bit. I will say this, the markets are now dependent on where they can get power in place. My gut is there'll be a couple more markets added, and then in the markets they're in, they're going to start to build even more density, just like they did in Northern Virginia, right outside of Columbus, Ohio, what they've done in Chicago, and what they've done in Arizona. They built in Atlanta.

Speaker #5: Is it 12 to 13 percent margin in the construction business? Why can't that go higher? Thank you. I think it's a mixed question. And I think this whole thing is about risk and return for us too, Tim.

Is there'll be a couple more markets added. Uh, and then in the markets, they're in, they're going to start to build even more density, just like they did in Northern Virginia. Uh, right outside of Columbus, Ohio, what they've done in Chicago, what they've done in Arizona, they they built in Atlanta, they're building density in those markets and they do that for a reason and Dallas, they do that for a reason because they think there's a good view on power in the long term. And also the connections, there are really really good.

Speaker #5: Clearly, where we make our most margin is where we take the most risk on a contracting basis, which is where we take fiscal price risk.

Speaker #5: And the more our mixed use of that, especially on these large projects, and we do well, the more money we can make. However, there are certain operating conditions on the ground that doesn't allow us to do that.

Uh and and and the latency becomes important in some of those major Metro areas for the knowledge workers a long time. Now, do I understand how the latency works and everything? Not really but that's how it all works. You know, when you put it all together, so it will go up but it's not going to grow like it did because now they're starting to build critical mass in those markets.

Understood. I appreciate the caller. Pass it on.

Tony Guzzi: They're building density in those markets, and they do that for a reason. In Dallas. They do that for a reason, because they think there's a good view on power in the long term, and also the connections there are really, really good. And the latency becomes important in some of those major metro areas for the knowledge workers long term. Now, do I understand how the latency works and everything? Not really, but that's how it all works, you know, when you put it all together. It'll go up, but it's not going to grow like it did, because now they're starting to build critical mass in those markets.

Speaker #5: And a classic example would have been the job that happened last year. We went in a new market. We felt pretty sure of ourselves on the fixed price.

Our next question comes from Justin Hawk from beard. Please go ahead with your question.

Speaker #5: We reevaluate that now, today. We probably should have gone into that market on that project, with that design, and with the schedule they gave us.

Speaker #5: We probably should have pushed harder for a GMP contract. Which would have maybe taken some of the upside away from us if we've executed the way we thought we could.

Speaker #5: But would have protected us on the downside. I think the other thing that I think you're right. But remember, part of that renaissance actually goes back to labor too.

Jason Dangelo: Understood. Appreciate the color. Pass it on.

Uh, yeah, great. Um, I guess first 1, I mean you you talked about the the fire Life Safety projects, um, being strong for a while. I think you made some comments here about, uh, you know, kind of the uniqueness of of what you're doing on the, the data center specifically. But can can you just elaborate a little bit more on on your capabilities there? Um, and, and, you know, how, how you're different in in that market? Yeah, I don't. Are we different? Yeah, because I think we have some of the best fire. We we have critical mass on design.

Speaker #5: I think they’ve been very good with us on labor increases. But the packages you put together on a job here put pressure on the budgets of our end customers.

Operator: Our next question comes from Justin Hauke from Baird. Please go ahead with your question.

Justin Hauke: Yeah, great. I guess, first one, I mean, you've talked about the fire life safety projects, being strong for a while. I think you made some comments here about, you know, kind of the uniqueness of what you're doing on the data center specifically. Can you just elaborate a little bit more on your capabilities there and, you know, how you're different in that market?

Speaker #5: And that's how you get into some of these target price GMP-type projects because they're saying, "Okay. We're not exactly how you're going to put this labor force together in this remote market in this section of Iowa or this section of Texas." So there's some underlying things going on here.

First. And and you think take a step back and those that have been with us for all be patient for a second. As I asked this question,

uh,

It's the 1 of the few trades. What? We do that, the actual implementation of that, part of the specification is a design build product.

Speaker #5: But generally, I agree with you. I don't think our customers pay us enough for what we do, and they're going to continue to ask us to pay more.

Tony Guzzi: Yeah, Are we different? Yeah, because I think we have some of the best fire... We have critical mass on design, and we have a very strong position with the road local in the UA for sprinkler fitters. If you take the business first and you take a step back, and those that have been with us for a while, be patient for a second as I answer this question. It's one of the few trades, what we do, that the actual implementation of that part of the specification is a design build product. The way the specification is written, is it says, Provide a fire life safety system in accordance with the code at both the national standard, and then their state and local standards. Our guys are experts at that.

Speaker #5: I don't disagree. We have the best skilled labor in the country. I don't disagree with you. Understood. Very clear. Thank you, Tony.

Speaker #1: Our next question comes from Adam Bubis from Goldman Sachs. Please go ahead with your question.

Speaker #4: Hi. Good morning. One more on the outlook. And sorry if I missed this. But can you help us break out the revenue growth outlook between organic and acquisition?

Speaker #4: I know there's a few moving pieces with divestitures and the acquisitions you did last year.

Speaker #5: Yeah, I guess my first comment there, right, is you have to remember the UK basically gives us a 3% headwind on the revenue growth.

Tony Guzzi: What they do then is we design it, then the fire life safety has a fairly significant prefabrication component. We have some pretty at scale fabrication shops to support our fire life safety business. Then it's a. For a union, other than 16 closed local, it's a road local that will travel. Our people can travel across the country, and it also tends to get connected, to think of another word, like Legos or Tinker Toy. It's a connected system, and we prefab most of it in the shops. Finally, it has a nice aftermarket component, and we have a nice aftermarket business.

Speaker #5: So if you look at our guidance, and let's say at the low end it's 4.5%, and at the high end it's 9%. It's really equivalent to 7.5% and 12%.

The way the specification is ready, written is it says provide a a fire like safety, uh, system in accordance with the code at both the National Standard and then their state and local standards and our guys are experts at that. And and what they do then is we design it. And then the, uh, firelife safety has a fairly significant prefabrication component, and we have some pretty at scale, uh, fabrication shops, uh, to support our our fire like safety business and then it's a for the union other than 16 closed locals. It's a road, local that will travel and so our people can travel across the country and it also tends to get connected to think of it. Another word, like Legos or Tinker tinkered on. It's it's a connected system and we prefab most of it in the in the shops and then finally it has a nice aftermarket component and we have a nice aftermarket business and that is 1 of the places where if we build it we have a pretty good shot at getting the long-term service agreement, uh post. Uh,

Speaker #5: When you consider the one month of incremental contribution we have from Miller and the 10 months from Danforth, and you put that together, it really offsets the UK impact, the loss of revenues from the UK.

Uh, a building. So it's a national business and scope.

Speaker #5: So if you look at it and you say, "What's the guidance? How much of that is organic? How much of that is acquisition?" I would say really all of it is organic because the lost revenue from the UK is just offset by the acquisitions.

It's a design, build business and scope on that specific trade. Uh, we have a, uh, great Workforce and we're at scale in that business, uh, and probably as good as anybody else at this. I've never said, we're the only ones but 1 of the few that can operate on a national basis

Speaker #1: Got it. Understood. Helpful. And then can you help update us on the M&A pipeline today? I know it's hard to predict timing of M&A.

Okay, no, I I appreciate um, more of the history lesson on that. So thank you for that. Um, I guess my second 1 is is I guess for Jason here and it's just more of a model question. But, um,

Tony Guzzi: That is one of the places where if we build it, we have a pretty good shot at getting a long-term service agreement, post a building. It's a national business in scope. It's a design build business in scope on that specific trade. We have a great workforce, and we're at scale in that business, and probably as good as anybody else in that business. I'll never say we're the only ones, but one of the few that can operate on a national basis.

Speaker #1: But can you talk about how active your M&A pipeline is maybe compared to this time last year? And any way to characterize the pipeline of opportunities in terms of size of businesses, region, or technical exposure?

The Danforth acquisition obviously much smaller than the Miller was but you know I know it's going to have an intangible component with it as well. Now that it's closed. Um you know I think I think Miller that was like 40 million for the year. That that was kind of a drag what what kind of the similar magnitude for dance with just, so we can kind of think about what what's running through.

Speaker #5: Sure. First of all, we have as good or better pipelines sitting here today than we did at the end of 2020 because we knew we were already going to do Miller, right?

Justin Hauke: Okay. I appreciate more of the history lesson on that, so thank you for that. I guess my second one is I guess, for Jason here, and it's just more of a model question, but the Danforth acquisition, obviously much smaller than the Miller was, but, you know, I know it's going to have an intangible component with it as well. Now that it's closed, you know, I think Miller, that was like $40 million for the year, that was kind of a drag. What's kind of the similar magnitude for Danforth, just so we can kind of think about what's running through?

Speaker #5: We were in negotiation. So if you look at the pipeline beyond Miller, our pipeline today is broader and more diverse than it was at the end of '24.

All right, so I'll hit a couple things on Advertising first. So if we look just at at Danforth in 2025 round numbers it's about 2.7 million dollars of amortization in 2026. It's going to be around 14.21% from Danforth and in 26.

Speaker #5: And the universe of them is where we like to buy, right? Mechanical and electrical segments, building service, focus on mechanical service and building controls company.

Speaker #5: That's where we're going to buy for the most part. And there's some spattering around millwright work and maybe some of the handling work we do in our mechanical business to supplement what else we do there.

Jason Dangelo: I'll hit a couple of things on amortization first. If we look just at Danforth, in 2025, round numbers, it's about $2.7 million of amortization. In 2026, it's going to be around $14.2 million. You got about $11.5 million of incremental amortization from Danforth in 2026. Just a refresher on Miller, we said in year one, so 2025, it'd be about $40.5 million of amortization. In 2026, it's going to be about $33 million. You should see about $7.5 million drop off. If you just look across EMCOR, while we may have a little bit of amortization benefit in electrical, it's going to be offset in mechanical. If you really net the two, it's near neutral.

Just a refresher on Miller. We said in year 1 so 2025, it'd be about 40.5 million of amortization in 2026. It's going to be about 33, so you should see about 7 and a half, uh, drop off. So if you just look across M core, while we may have a little bit of amortization benefit in electrical, it's going to be offset in mechanical. So if you really net the 2 it's it's near neutral.

Speaker #5: But that's what we'll do. Deals happen when they happen. I know we're a landing here's who we're a landing site. We're a landing site for someone that's selling their life's work or their family's life's work.

Great. Oh, that's helpful. Appreciate it. Thank you.

Thank you.

Speaker #5: That's proven very good for us. Typically, it might be a broker, but it's not a brokered sale. Very much like Miller, very much like Quibi, very much like Bachelor and Kimball.

And our next question comes from Avi Joss jerez from UBS, please go ahead with your question.

Hey, good morning guys. Morning Obby um,

Speaker #5: Very much a years ago coming out. These are sort of landmark businesses that we're going to hopefully get to a deal. In other places, ESOP.

Speaker #5: That was Danforth. We're a great place for ESOPs long-term and part of Miller was an ESOP. Why? Because we have an operational culture that's focused on the trades.

Justin Hauke: Great. No, that's helpful. Appreciate it. Thank you.

Speaker #5: And that's really how that ESOP started at one time when that family moved that business into an ESOP. What we don't do particularly well in is auctions against private equity.

Jason Dangelo: Thank you.

Operator: Our next question comes from Avi Jaroslawicz from UBS. Please go ahead with your question.

Speaker #5: We're not the I don't have enough on my team with the vest that can go in and rip a company apart and tell me what it's worth.

Avi Jaroslawicz: Hey, good morning, guys.

Levi Jaroslawicz: Hey, good morning, guys.

Jason Dangelo: Morning, Avi.

Avi Jaroslawicz: You've noted in the past, how much more your revenue has grown, than your headcount. Is that something that you expect is going to be able to continue this year, or are some of those productivity gains maybe slowing down and requiring, yeah, just some more headcount to support the revenue?

Speaker #5: So we're not as good there. And we're not playing the average multiple game down. We're actually buying companies for the long term. And our deal size could be everything from $2 million, where we buy some HVAC technicians and it augments a smaller branch we have, all the way up to Miller at $865 million.

Levi Jaroslawicz: You've noted in the past, how much more your revenue has grown, than your headcount. Is that something that you expect is going to be able to continue this year, or are some of those productivity gains maybe slowing down and requiring, yeah, just some more headcount to support the revenue?

So you've noticed you've noted it in the past, uh, just how much more your Revenue has grown uh, than your headcount. Is that something that you expect is going to be able to continue this year or are some of those productivity gains maybe slowing down and requiring? Um, yeah. Just some more head count to support the revenue. I, I think we'll keep to try and going. Yeah, I think over over time, we've said, it's it revenue is growing 2 to 3 times faster than a headcount. We saw that again for for the full year of 25 or Revenue at PACE, headcount by by 2X. And I think that model holds for the future, yeah, we'll continue to get the productivity gains and we'll continue to, uh, do the means and methods sharing across the country allow even more productivity gains

Speaker #5: We'd do anything along those lines. Could we do a couple 500 million dollar acquisitions this year, 3 to 5 hundred? Sure. We could. And we could do 4 or 5 hundred I mean, 100 million dollar acquisitions.

Tony Guzzi: I think we'll keep the trend going.

Jason Dangelo: Yeah. I think over time, we've said it's revenue is growing two to three times faster than headcount. We saw that again for the full year of 2025. Our revenue outpaced headcount by 2x, I think that model holds for the future.

Speaker #5: Just don't know sitting here today. But I feel as good about our pipeline today. At this point in the year, as I have at any time in the last three or four years.

Tony Guzzi: Yeah. We'll continue to get the productivity gains, and we'll continue to do the means and method sharing across the country to allow even more productivity gains.

Okay, uh, that is helpful and then just a as we think about the uh, the margin guidance for this year and appreciate that you gave uh that color on the intangible amortization. But um, just without the UK business and with large projects continuing to grow and productivity continued to grow, would have would have expected maybe, you know, starting point of uh, around flat for the year for for operating margins. So uh, maybe if you could just help us think through that and all right? Yeah, yeah, the high end of our range. It is flat.

Speaker #1: Great. Thanks so much.

Speaker #5: You bet.

Speaker #1: And with that, everyone, we will be ending today's question-and-answer session. I would like to turn the floor back over to Tony for any closing remarks.

Avi Jaroslawicz: Okay, that is helpful. Just as we think about the margin guidance for this year, I appreciate that you gave that color on the intangible amortization. Just without the UK business and with large projects continuing to grow and productivity continuing to grow, would've expected maybe, you know, starting point of around flat for the year for operating margins. Maybe if you could just help us think through that and-

Levi Jaroslawicz: Okay, that is helpful. Just as we think about the margin guidance for this year, I appreciate that you gave that color on the intangible amortization. Just without the UK business and with large projects continuing to grow and productivity continuing to grow, would've expected maybe, you know, starting point of around flat for the year for operating margins. Maybe if you could just help us think through that and-

Uh and so then it becomes a revenue if we do come in flat. So you know on the size business, we have with 12,000 projects, we're giving you a 40 basis, point range.

Speaker #5: Thanks, Jamie. And hey, thanks to all the analysts. I thought this was a great question and answer session today. I think you got to the heart of what we wrestle with every day.

Speaker #5: I want to thank my colleagues from EMCOR and my teammates for what was a great '25. Reality is most of us already forgot about '25.

We think we'll maybe pick up a little better on uh project right. Down here over here.

Speaker #5: We're here in the third week of February. We've all been focused on '26, really, since probably the fourth quarter of '25. We have a great outlook.

Tony Guzzi: Yeah, yeah, at the high end of our range, it is flat. Then it becomes a revenue. If we do come in flat, you know, on the size business we have with 12,000 projects, we're giving you a 40 basis point range. It's pretty tight. Could we come in at the top, high end of that range? Sure. If we don't hit the midpoint of the guidance, you know, that allow us. You know, it's a revenue margin thing. It's really, contract mix is probably the biggest thing in there. We think we'll maybe pick up a little better on project write-downs year-over-year. All that comes together, that's how we get to the range. It's a pretty tight range.

Speaker #5: We're in all the right sectors. We're playing with the right team. And we have a terrific capital allocation strategy. Thanks for your interest in EMCOR.

Speaker #5: And thank you to all my teammates.

Tony Guzzi: You know, I think the bottom is pretty safe. Could there be upside on the top? A lot of things would go right, sure. We gave you the 94 because we think we have a probability of hitting the 94.

Jason Dangelo: Yes. The way I view the range is, at the high end, we're essentially saying we could replicate the record margins that we achieved in 2024. That midpoint of that range is somewhere around our rolling 12 to 24 month average, more or less, it is equivalent to that midpoint. At the low end, we're saying, this is what margins could look like if we have a different mix. We talked about the water and wastewater work that we have ahead of us. It's great work. We're not turning down data center work to do it. It's a different margin profile. We're acting as a prime contractor. There's more subcontract component, there's more material and equipment component, so lower margin.

And so, all that comes together. That's how we get to the range. It's pretty tight range and, you know, I I, I think the bottom is pretty safe. Could there be upside on the top? A lot of things would go, right? Sure. But we gave you the 94 because we think we have a probability of hitting the 94. Yeah, the way the way I've used the range is at the high end. We're essentially saying we could replicate the record margins that we achieved in 2024 that midpoint of that range is somewhere around our rolling, 12 to 24 month, average more or less. It is equivalent to that midpoint and at the low end we're saying this is what margins could look like if we have a different mix. So we talked about the water and waste water work, that we have ahead of us. It's great work. We're not turning down data center work to do it. It's a different margin profile. We're acting as a prime contractor, there's more subcontract component. There's more material and Equipment component. So lower margins. So what we're saying is as we do some of that work and potentially Revenue skews upward, it could have an impact on margins, but we still think in a in a fairly high band. And, uh, a band that is is

Is at record levels for M core over the last 2 years.

Okay, understood uh appreciate the color. Thank you. Thank you.

Our next question comes from Tim Maloney from William Blair, please go ahead with your question.

Yeah, thanks for squeezing me in as I'm looking at the time here. I'm just gonna ask 1 question. Um,

Jason Dangelo: What we're saying is, as we do some of that work and potentially revenue skews upward, it could have an impact on margins, but we still think in a fairly high band and a band that is at record levels for EMCOR over the last two years.

Uh and I really just want to build on that last question. Um, you guys because maybe maybe they'll Tony from like a more, a higher level, a more conceptual standpoint. So bear with me. Because as I step back and I think about the situation that we're in,

Avi Jaroslawicz: Okay, understood. Appreciate the color. Thank you.

Levi Jaroslawicz: Okay, understood. Appreciate the color. Thank you.

Tony Guzzi: Thank you.

Like this, this really is a Renaissance for Blue Collar, trade labor. American unionized labor in this country.

Operator: Our next question comes from Tim Mulrooney, from William Blair. Please go ahead with your question.

Tim Mulrooney: Yeah, thanks for squeezing me in. As I'm looking at the time here, I'm just gonna ask one question. I really just want to build on that last question, you guys, because maybe though, Tony, from, like, a more, a higher level, a more conceptual standpoint, so bear with me. Because as I step back and I think about the situation that we're in, like, this really is a renaissance for blue-collar trade labor, American unionized labor in this country. As I look at your guide for 2026, I wonder, you know, what is the fair value? What is a fair burden for the critical services that you provide? Is it 12% to 13% margin in the construction business? Like, why can't that go higher? Thank you.

So as I look at your guide for 26, I wonder you know what is the fair value? What is a fair burden for the critical services that you provide? Is it 12 to 13% margin in the construction business? Like why why can't that go?

Higher. Thank you.

Uh,

I, I think it's a mixed question. And, and, and I, I, I think this whole thing is about risk and return for us to Tim,

uh, you know, clearly

where we make our most margin is where we take the most risk on a Contracting basis, which is where we take fixed price risk.

and you know the more excuse to that especially on these large projects and we do well the more money we can make

Uh however there's certain operating uh conditions on the ground. That doesn't allow us to do that.

Tony Guzzi: I think it's a mixed question, and I think this whole thing's about risk and return for us, too, Tim. You know, clearly, where we make our most margin is where we take the most risk on a contracting basis, which is where we take fixed price risk. You know, the more our mix skews to that, especially on these large projects, and we do well, the more money we can make. However, there are certain operating conditions on the ground that doesn't allow us to do that. A classic example would have been the job that happened last year. We went a new market. We felt pretty sure of ourselves on the fixed price.

And a classic example would have been the job that happened. Last year we went to New Market. We felt pretty sure of ourselves on the fixed price.

We, we evaluate that now. Today, we probably should have went into that market on that project, with that design. And with the schedule, they gave us, we probably should have pushed harder for a GMP contract, which would have maybe not taken some of the upside away from us.

If we've executed the way we thought we could but would have protected us on the downside.

Tony Guzzi: We reevaluate that now today, we probably should have went into that market on that project, with that design, and with the schedule they gave us, we probably should have pushed harder for a GMP contract, which would have maybe not taken some of the upside away from us if we've executed the way we thought we could, but would have protected us on the downside. I think the other thing that. I think you're right, but remember, part of that renaissance actually goes back to labor, too.

I I I think the other thing that that I think you're right but remember part of that Renaissance actually goes back to labor too. Uh I think they've been very good with us on labor increases but the packages you put together on a job here put pressure on the budgets uh of our end customers and that's how you get into some of these Target price. Uh, GMP type projects because they're saying, okay we're not exactly how you're going to put this labor force together in this remote Market in this section of Iowa or this section of Texas. So there's some underlying things going on here, but generally, I agree with you. I don't think our customers pay us enough for what we do and we're going to continue to ask us to pay more. I don't disagree. We have the best skilled labor in the country. I don't disagree with you.

Tony Guzzi: I think they've been very good with us on labor increases, but the packages you put together on a job here puts pressure on the budgets of our end customers. That's how you get into some of these target price, GMP-type projects, because they're saying, "Okay, we're not exactly how you're going to put this labor force together in this remote market, in this section of Iowa or this section of Texas." There's some underlying things going on here, but generally, I agree with you. I don't think our customers pay us enough for what we do, and we're going to continue to ask us to pay them more. I don't disagree. We have the best skilled labor in the country. I don't disagree with you.

Understood very clear. Thank you Tony.

Adam.

Do this from Goldman Sachs, please. Go ahead with your question.

Tim Mulrooney: Understood. Very clear. Thank you, Tony.

Operator: Our next question comes from Adam Bubes, from Goldman Sachs. Please go ahead with your question.

Operator: Our next question comes from Adam Bubes from Goldman Sachs. Please go ahead with your question.

Adam Bubes: Hi, good morning. One more on the outlook. Sorry if I missed this, can you help us break out the revenue growth outlook between organic and acquisition? I know there's a few moving pieces with divestitures and the acquisitions you did last year.

Tony Guzzi: Yeah. I guess my first comment there, right, is you have to remember, the UK basically gives us a 3% headwind on the revenue growth. If you look at our guidance, and let's say at the low end, it's 4.5%, and at the high end, it's 9%, it's really equivalent to 7.5% and 12%. When you consider the 1 month of incremental contribution we have from Miller and the 10 months from Danforth, you put that together, it really offsets the UK impact, the loss of revenues from the UK. If you look at it... You say, what's the guidance? How much of that is organic? How much of that is acquisition?

He put that together, it really all sets the UK impact, the loss of revenues from the UK. So, if you look at it and you say, what's the guidance, how much of that is organic? How much that is acquisition? I would say, really all of it is organic because the Lost revenue from the UK, is just offset by the acquisitions.

Got it. Understood helpful. And then, can you help update us on the m&a pipeline today? I, I know it's hard to predict timing of m&a, but can you talk about how active your m&a pipeline is maybe compared to this time last year? And, uh, any way to characterize the pipeline of opportunities in terms of size of businesses region or technical exposure? Sure, first of all, we we, we, we have as good or better pipelines sitting here today,

Tony Guzzi: I would say really all of it is organic because the lost revenue from the UK is just offset by the acquisitions.

Adam Bubes: Got it. Understood. Helpful. Then can you update us on the M&A pipeline today? I know it's hard to predict timing of M&A, but, can you talk about how active your M&A pipeline is, maybe compared to this time last year? Any way to characterize the pipeline of opportunities in terms of size of businesses, region, or technical exposure?

Than we did at the end of uh, a 2020 because we knew we were already going to do Miller, right? We were in negotiation. So if you look at the pipeline Beyond Miller, our pipeline today is broader and more diverse than it was at the end of 24.

Uh,

Tony Guzzi: Sure. First of all, we have as good or better pipeline sitting here today than we did at the end of because we knew we were already gonna do Miller, right? We were in negotiation. If you look at the pipeline beyond Miller, our pipeline today is broader and more diverse than it was at the end of 2024. The universe of them is where we like to buy, right? Mechanical and electrical segments, building service, focus on mechanical service and building controls company. That's where we're gonna buy for the most part, you know, and there's some spattering around millwright work and maybe some of the handling work we do in our mechanical business to supplement what else we do there. That's what we'll do. Deals happen when they happen.

And and, and, and the universe of them is where we like to buy, right? Uh, mechanical and electrical segments, building service focus on mechanical service and building controls company, that's where we're going to buy for the most part. You know? And and there's some spattering around Mill, right work and maybe, uh, some of the handling work we do in our mechanical business to supplement. What else we do there? But that's what we'll do, uh, deals happen when they happen. I know, we're a landing. Here's who we're a landing.

Uh uh, site or Landing site for someone. That's selling their life's work or their family's life work. That's proven, very good for us.

Tony Guzzi: Here's where we're a landing site for someone that's selling their life's work or their family's life work. That's proven very good for us. They're typically, it might be a broker, but it's not a brokered sale. Very much like Miller, very much like Quebe, very much like Batchelor & Kimball, very much years ago, keep climbing out. These are sort of landmark businesses that we're going to hopefully get to a deal. In other places, ESOP, that was Danforth. We're a great place for ESOPs long term, and part of Miller was an ESOP. Why? Because we have an operational culture that's focused on the trades, and that's really how that ESOP started at one time, when that family moved that business into an ESOP.

They're typically it might be a broker but it's not a broker itself. Uh, very much like Miller, very much like quibi. Very much like, Batchelor and Kimball, uh, very much years ago, call me. Now, these are sort of landmark businesses that we're going to hopefully get to a deal. In other places, uh, uh, ESOP that was Danforth, we're a great place for esops long term and part of Miller was an ESOP, why? Because we have a operational culture that's focused on the trades. And that's really how that ESOP started at 1 time. When that family moved that business into an ESOP, what we don't do particularly well in is auctions against private Equity, you know, we're not the, I don't have enough on my team with the vests that can go in and rip a company apart and tell me what it's worth. So we're not as good there and we're not, you know, playing the average multiple game down. Uh we're actually buying companies for the long term and our deal size could be everything from 2 million where we buy some HVAC technicians and it augments a smaller Branch. We have all the way up to Miller at 865 million would do anything.

Along those lines. Could we do a couple hundred million dollar Acquisitions this year 3 to 500? Sure we could.

Tony Guzzi: What we don't do particularly well in is auctions against private equity. You know, we're not, I don't have enough on my team with the best that can go in and rip a company apart and tell me what it's worth. We're not as good there, and we're not, you know, playing the average multiple game down. We're actually buying companies for the long term. Our deal size could be everything from $2 million, where we buy some HVAC technicians, and it augments a smaller branch we have, all the way up to Miller at $865 million. We'd do anything along those lines. Could we do a couple $500 million acquisitions this year, $300 to $500 million? Sure, we could. We could do $400, $500 million, I mean, $100 million acquisitions.

And we could do, uh, 4 or 5 hundred, I mean hundred million dollar Acquisitions. Just don't know sitting here today, but I feel as good about our pipeline today at this point in the year as I have at any time in the last 3 or 4 years.

Great. Thanks so much.

Tony Guzzi: Just don't know sitting here today, but I feel as good about our pipeline today at this point in the year as I have at any time in the last three or four years.

Adam Bubes: Great. Thanks so much.

And with that everyone, we will be ending. Today's question and answer session. I would like to turn the floor back over to Tony for any closing, remarks, thanks, Jamie and take. Hey thanks to all the analysts. I thought this was a great question and answer session today. I think you got to the heart of what we wrestle with every day. Uh, I I want to thank my colleagues from M core, uh, and my teammates for what was a great 25 reality. Is most of us already forgot about 25. We're here in the third week of February. We've all been focused on 26, really since you know, probably the fourth quarter or 25.

Tony Guzzi: You bet.

Operator: With that, everyone, we will be ending today's question and answer session. I would like to turn the floor back over to Tony for any closing remarks.

Uh we have a great Outlook. Uh we're in all the right sectors, we're playing with the right team and we have a terrific Capital, allocation strategy. Thanks for your interest in M core and thank you to all my teammates.

Tony Guzzi: Thanks, Jamie, hey, thanks to all the analysts. I thought this was a great question and answer session today. I think you got to the heart of what we wrestle with every day. I want to thank my colleagues from EMCOR and my teammates for what was a great 2025. Reality is most of us already forgot about 2025. We're here in the third week of February. We've all been focused on 2026, really since, you know, probably the Q4 2025. We have a great outlook. We're in all the right sectors, we're playing with the right team, and we have a terrific capital allocation strategy. Thanks for your interest in EMCOR, thank you to all my teammates.

And with that everyone will be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.

Operator: With that, everyone, we'll be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.

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