What changed in this filing

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Item 1. Financial Statements

2023-04-27 compared with 2022-10-27 · 158 added, 341 removed, 558 unchanged (47% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

(Unaudited) December 31,

47 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

Revenues $ 2,890,432 $ 2,592,549

7 unchanged sentences

Income tax provision 41,331 26,451

Net income including noncontrolling interests 105,772 99,740 279,822 282,033

Net income attributable to noncontrolling interests — — — 169

Net income attributable to EMCOR Group, Inc.

$ 105,772 $ 99,740 $ 279,822 $ 281,864

Net income $ 111,473 $ 73,386

Basic earnings per common share $ 2.33 $ 1.39

7 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

Net income including noncontrolling interests $ 105,772 $ 99,740 $ 279,822 $ 282,033

Other comprehensive (loss) income, net of tax:

Net income $ 111,473 $ 73,386

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments 2,257 ( 2,842 )

1 unchanged sentence

loss included in net income (1)

404 800 1,288 2,412

Other comprehensive (loss) income ( 8,308 ) ( 887 ) ( 17,969 ) 1,421

Other comprehensive income (loss) 2,776 ( 2,387 )

Comprehensive income $ 114,249 $ 70,999

Comprehensive income attributable to noncontrolling interests — — — 169

Comprehensive income attributable to EMCOR Group, Inc.

$ 97,464 $ 98,853 $ 261,853 $ 283,285

(1) Net of tax of $ 0.1 million and $ 0.2 million for the three months ended September 30, 2022 and 2021, respectively, and net of tax of $ 0.4 million and $ 0.6 million for the nine months ended September 30, 2022 and 2021, respectively.

(1) Net of tax of $ 0.2 million for each of the three months ended March 31, 2023 and 2022.

See Notes to Consolidated Financial Statements.

3 unchanged sentences

(In thousands)(Unaudited)

Nine months ended

September 30,

Three months ended

Cash flows - operating activities:

Net income including noncontrolling interests $ 279,822 $ 282,033

Adjustments to reconcile net income to net cash provided by operating activities:

Net income $ 111,473 $ 73,386

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization 12,621 11,578

3 unchanged sentences

Changes in operating assets and liabilities, excluding the effect of businesses acquired ( 228,803 ) ( 199,541 )

Net cash provided by operating activities 238,354 113,941

Net cash used in operating activities ( 84,583 ) ( 95,814 )

Cash flows - investing activities:

2 unchanged sentences

Purchases of property, plant and equipment ( 23,154 ) ( 11,501 )

Distributions from unconsolidated entities — 196

Net cash used in investing activities ( 25,405 ) ( 13,953 )

1 unchanged sentence

Proceeds from revolving credit facility 100,000 —

Repayments of revolving credit facility ( 100,000 ) —

Repayments of finance lease liabilities ( 780 ) ( 979 )

4 unchanged sentences

Payments for contingent consideration arrangements ( 1,456 ) ( 805 )

Distributions to noncontrolling interests — ( 43 )

Net cash used in financing activities ( 512,598 ) ( 213,127 )

Net cash provided by (used in) financing activities 71,506 ( 193,513 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 2,239 ( 3,419 )

5 unchanged sentences

(1) Includes $ 0.6 million and $ 1.2 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of December 31, 2022 and 2021, respectively.

(2) Includes $ 1.1 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of September 30, 2022 and 2021.

See Notes to Consolidated Financial Statements.

EMCOR Group, Inc.

and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the three months ended September 30, 2021 and 2022

(In thousands)(Unaudited)

EMCOR Group, Inc.

stock Capital

surplus Accumulated other comprehensive loss (1)

earnings Treasury

stock Noncontrolling

Balance, June 30, 2021 $ 2,091,177 $ 607 $ 53,204 $ ( 106,925 ) $ 2,648,109 $ ( 504,520 ) $ 702

Net income including noncontrolling interests 99,740 — — — 99,740 — —

Other comprehensive loss ( 887 ) — — ( 887 ) — — —

Tax withholding for common stock issued under share-based compensation plans ( 249 ) — ( 249 ) — — — —

Common stock issued under employee stock purchase plan 1,857 — 1,857 — — — —

Common stock dividends ( 6,988 ) — 44 — ( 7,032 ) — —

Repurchases of common stock ( 45,217 ) — — — — ( 45,217 ) —

Share-based compensation expense 2,617 — 2,617 — — — —

Balance, September 30, 2021 $ 2,142,050 $ 607 $ 57,473 $ ( 107,812 ) $ 2,740,817 $ ( 549,737 ) $ 702

Balance, June 30, 2022 $ 1,952,791 $ 609 $ 65,212 $ ( 93,223 ) $ 2,995,844 $ ( 1,016,353 ) $ 702

Net income including noncontrolling interests 105,772 — — — 105,772 — —

Other comprehensive loss ( 8,308 ) — — ( 8,308 ) — — —

Tax withholding for common stock issued under share-based compensation plans ( 56 ) — ( 56 ) — — — —

Common stock issued under employee stock purchase plan 2,074 — 2,074 — — — —

Common stock dividends ( 6,418 ) — 32 — ( 6,450 ) — —

Repurchases of common stock ( 206,292 ) — — — — ( 206,292 ) —

Share-based compensation expense 2,859 — 2,859 — — — —

Balance, September 30, 2022 $ 1,842,422 $ 609 $ 70,121 $ ( 101,531 ) $ 3,095,166 $ ( 1,222,645 ) $ 702

(1) Represents cumulative foreign currency translation adjustments and post retirement liability adjustments.

(2) Includes $ 0.8 million and $ 1.4 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of March 31, 2023 and 2022, respectively.

See Notes to Consolidated Financial Statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the nine months ended September 30, 2021 and 2022

For the three months ended March 31, 2022 and 2023

(In thousands)(Unaudited)

5 unchanged sentences

Balance, December 31, 2021 $ 2,253,089 $ 607 $ 61,874 $ ( 83,562 ) $ 2,835,504 $ ( 562,036 ) $ 702

Net income including noncontrolling interests 282,033 — — — 281,864 — 169

Other comprehensive income 1,421 — — 1,421 — — —

Net income 73,386 — — — 73,386 — —

Other comprehensive loss ( 2,387 ) — — ( 2,387 ) — — —

Common stock issued under share-based compensation plans 1 1 — — — — —

3 unchanged sentences

Repurchases of common stock ( 181,810 ) — — — — ( 181,810 ) —

Distributions to

noncontrolling interests ( 43 ) — — — — — ( 43 )

Share-based compensation expense 3,438 — 3,438 — — — —

Balance, September 30, 2021 $ 2,142,050 $ 607 $ 57,473 $ ( 107,812 ) $ 2,740,817 $ ( 549,737 ) $ 702

Balance, March 31, 2022 $ 2,135,798 $ 608 $ 62,374 $ ( 85,949 ) $ 2,901,909 $ ( 743,846 ) $ 702

Balance, December 31, 2022 $ 1,974,291 $ 609 $ 74,795 $ ( 93,451 ) $ 3,214,281 $ ( 1,222,645 ) $ 702

Net income including noncontrolling interests 279,822 — — — 279,822 — —

Other comprehensive loss ( 17,969 ) — — ( 17,969 ) — — —

Net income 111,473 — — — 111,473 — —

Other comprehensive income 2,776 — — 2,776 — — —

Common stock issued under share-based compensation plans — 1 ( 1 ) — — — —

4 unchanged sentences

Share-based compensation expense 4,087 — 4,087 — — — —

Balance, September 30, 2022 $ 1,842,422 $ 609 $ 70,121 $ ( 101,531 ) $ 3,095,166 $ ( 1,222,645 ) $ 702

Balance, March 31, 2023 $ 2,066,325 $ 610 $ 75,850 $ ( 90,675 ) $ 3,318,560 $ ( 1,238,722 ) $ 702

(1) Represents cumulative foreign currency translation adjustments and post retirement liability adjustments.

11 unchanged sentences

In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of those of a normal recurring nature) necessary to present fairly our financial position and the results of our operations.

Our reportable segments and related disclosures reflect certain reclassifications of prior year amounts from our United States mechanical construction and facilities services segment to our United States building services segment, and from our United States building services segment to our United States construction segments, due to changes in our internal reporting structure aimed at realigning our service offerings.

The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022.

Our reportable segments and related disclosures reflect certain reclassifications of prior year amounts from our United States mechanical construction and facilities services segment to our United States building services segment due to changes in our internal reporting structure aimed at realigning our service offerings.

Additionally, to align our legal structure with changes in our reporting structure that were made in prior periods, effective April 1, 2023, ownership of the subsidiaries of Bahnson, Inc.

has been transferred from Bahnson, Inc.

to EMCOR Construction Services, Inc.

and EMCOR Mechanical Services, Inc.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023.

NOTE 2 - New Accounting Pronouncements

The Company is currently evaluating the impact of an accounting standards update issued by the Financial Accounting Standards Board (the “FASB”), which provides temporary optional expedients and exceptions to existing U.S.

This guidance is aimed at easing the financial reporting burdens related to reference rate reform, including the market transition from LIBOR, or other interbank offered rates, to alternative reference rates.

Such accounting pronouncement allows entities to account for and present certain contract modifications, which occur before December 31, 2022 and result from the transition to an alternative reference rate, as an event that does not require remeasurement at the modification date or reassessment of a previous accounting determination.

Although not yet reflected within such accounting pronouncement, the FASB has announced its intention to extend the period of time that entities can utilize this guidance from December 31, 2022 to December 31, 2024.

While we are still evaluating the impact of this pronouncement, we do not anticipate that it will have a material impact on our financial position and/or results of operations, as we are not exposed to any contracts that reference LIBOR, other than our credit agreement dated as of March 2, 2020, which contains provisions that allow for the amendment of such agreement to use alternative reference rates upon the discontinuation of LIBOR.

In October 2021, an accounting pronouncement was issued by the FASB, that changes how an entity accounts for revenue contracts it acquires in a business combination.

The pronouncement requires entities to apply the revenue recognition guidance within Accounting Standards Codification Topic 606 to recognize and measure contract assets and liabilities from contracts with customers in a business combination, creating an exception to the fair value recognition and measurement principle typically utilized when valuing acquired assets.

The guidance is aimed at improving comparability by addressing when an acquirer should recognize a contract asset or contract liability, as well as how such assets and liabilities should be measured, and will generally result in companies recognizing contract assets and contract liabilities at amounts consistent with those recorded by the target entity prior to acquisition.

This guidance is effective for public business entities for fiscal years beginning after December 15, 2022, with early adoption permitted.

We are currently evaluating the potential impact of this accounting pronouncement;

however, we do not believe that its adoption will have a material impact on our financial position and/or results of operations.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The Financial Accounting Standards Board (the “FASB”) has issued an accounting standards update, which provides temporary optional expedients and exceptions to existing U.S.

This guidance is aimed at easing the financial reporting burdens related to reference rate reform, including the market transition from the London interbank offered rate (“LIBOR”), or other interbank offered rates, to alternative reference rates.

Such accounting pronouncement, as amended, allows entities to account for and present certain contract modifications, which occur before December 31, 2024 and result from the transition to an alternative reference rate, as an event that does not require remeasurement at the modification date or reassessment of a previous accounting determination.

Our credit agreement contains provisions that allow for an amendment to use alternative reference rates upon the discontinuation of LIBOR.

In accordance with these provisions, we anticipate amending such agreement during the second quarter of 2023, to change the reference rate from LIBOR to an interest rate based on the secured overnight financing rate (“SOFR”).

At that point, we will utilize the optional expedients provided for in this accounting pronouncement.

We do not anticipate that the amendment of our credit agreement or the adoption of this accounting pronouncement will have a material impact on our financial position and/or results of operations.

NOTE 3 - Revenue from Contracts with Customers

6 unchanged sentences

In determining if the collectability of consideration is probable, the Company considers the customer’s ability and intention to pay such consideration through an evaluation of several factors, including an assessment of the creditworthiness of the customer and our prior collection history with such customer.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

(2) Identify the performance obligations in the contract

16 unchanged sentences

The expected value method is typically utilized in situations where a contract contains a large number of possible outcomes while the most likely amount method is typically utilized in situations where a contract has only two possible outcomes.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

Variable consideration is included in the transaction price only to the extent it is probable, in the Company’s judgment, that a significant future reversal in the amount of cumulative revenue recognized under the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

5 unchanged sentences

Based upon this assessment, the Company estimates the transaction price, including whether the variable consideration constraint should be applied.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

Contract claims are another form of variable consideration which is common within our industry.

12 unchanged sentences

Such changes in estimates may also result in the reversal of previously recognized revenue if the ultimate outcome differs from the Company’s previous estimate.

For the three and nine months ended September 30, 2022 and 2021, there were no significant amounts of revenue recognized during the period related to performance obligations satisfied in prior periods.

In addition, for the three and nine months ended September 30, 2022 and 2021, there were no significant reversals of revenue recognized associated with the revision of transaction prices.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

(4) Allocate the transaction price to performance obligations in the contract

(4) Allocate the transaction price to the performance obligations in the contract

For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on a relative standalone selling price.

10 unchanged sentences

The selection of the method to measure progress towards completion can be either an input method or an output method and requires judgment based on the nature of the goods or services to be provided.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

For our construction contracts, revenue is generally recognized over time as our performance creates or enhances an asset that the customer controls as it is created or enhanced.

10 unchanged sentences

For certain of our revenue streams, such as call-out repair and service work, outage services, refinery turnarounds, and specialty welding services that are performed under time and materials contracts, our progress towards complete satisfaction of such performance obligations is measured using an output method as the customer receives and consumes the benefits of our performance completed to date.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near term.

For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made.

Changes in Estimates

Due to uncertainties inherent in the estimation process, as well as the significant judgment involved in determining variable consideration, it is possible that estimates of costs to complete a performance obligation, and/or our estimates of transaction prices, will be revised in the near term.

For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, or changes in the estimate of transaction prices, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made.

When the current estimate of total costs for a performance obligation indicates a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident.

Based on an evaluation of individual projects that had revisions to total estimated costs, which resulted in a reduction of profitability in excess of $ 1.0 million, our operating results were negatively impacted by approximately $ 10.5 million and $ 34.9 million during the three and nine months ended September 30, 2022, respectively.

The entire amount recorded during the three months ended September 30, 2022, was reported within our United States electrical construction and facilities services segment.

However, of the amount recorded during the nine months ended September 30, 2022, approximately $ 26.5 million was reported within our United States electrical construction and facilities services segment and approximately $ 8.4 million was reported within our United States mechanical construction and facilities services segment.

There were no changes in total estimated costs that had a significant impact on our operating results during the three and nine months ended September 30, 2021.

Based on an evaluation of individual projects that had revisions to total estimated costs or anticipated contract value, which resulted in a reduction of profitability in excess of $ 1.0 million, our operating results were negatively impacted by approximately $ 6.4 million and $ 10.0 million during the three months ended March 31, 2023 and 2022, respectively.

Of the amount recorded during the three months ended March 31, 2023, approximately $ 5.2 million was reported within our United States electrical construction and facilities services segment and approximately $ 1.2 million was reported within our United States mechanical construction and facilities services segment.

Of the amount recorded during the three months ended March 31, 2022, approximately $ 4.6 million was reported within our United States electrical construction and facilities services segment and approximately $ 5.4 million was reported within our United States mechanical construction and facilities services segment.

There were no significant amounts of revenue recognized during the three months ended March 31, 2023 or 2022 related to performance obligations satisfied in prior periods.

Disaggregation of Revenues

1 unchanged sentence

Our contracts are with many different customers in numerous industries.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

The following tables provide further disaggregation of our revenues, by categories we use to evaluate our financial performance within each of our reportable segments, for the three months ended March 31, 2023 and 2022 (in thousands).

Refer to Note 14 - Segment Information of the notes to consolidated financial statements for additional information on how we disaggregate our revenues by reportable segment.

The following tables provide further disaggregation of our revenues, by categories we use to evaluate our financial performance within each of our reportable segments, for the three and nine months ended September 30, 2022 and 2021 (in thousands):

For the three months ended September 30,

Due to continued growth in certain of our end markets, beginning with the first quarter of 2023, we have expanded the market sectors included in the disclosure for each of our United States construction segments, as shown below.

All prior period disclosures have been adjusted to additionally reflect these changes.

For the three months ended March 31,

Total 2022 % of

United States electrical construction and facilities services:

Network and communications market sector $ 213,751 33 % $ 145,374 28 %

Commercial market sector 97,098 15 % 101,841 19 %

Manufacturing market sector 78,562 12 % 61,618 12 %

Manufacturing and industrial market sector 85,241 13 % 66,465 13 %

Healthcare market sector 55,503 9 % 32,070 6 %

High-tech manufacturing market sector 30,554 5 % 19,869 4 %

Institutional market sector 37,411 6 % 31,766 6 %

1 unchanged sentence

Water and wastewater market sector 7,458 1 % 5,312 1 %

Hospitality market sector 4,575 1 % 2,522 1 %

Hospitality and entertainment market sector 20,052 3 % 5,854 1 %

Short duration projects (1)

4 unchanged sentences

Total segment revenues $ 644,746 $ 522,030

(1) Represents those projects which generally are completed within three months or less.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

For the three months ended September 30,

For the three months ended March 31,

Total 2022 % of

United States mechanical construction and facilities services:

Network and communications market sector $ 99,421 9 % $ 55,634 6 %

Commercial market sector 255,846 24 % 261,500 26 %

Manufacturing market sector 156,524 14 % 154,644 15 %

Manufacturing and industrial market sector 141,635 13 % 149,571 15 %

Healthcare market sector 112,728 10 % 119,832 12 %

High-tech manufacturing market sector 116,796 11 % 57,573 6 %

Institutional market sector 64,048 6 % 65,922 7 %

1 unchanged sentence

Water and wastewater market sector 68,662 6 % 61,744 6 %

Hospitality market sector 6,513 1 % 10,806 1 %

Hospitality and entertainment market sector 10,077 1 % 12,780 1 %

Short duration projects (1)

5 unchanged sentences

(1) Represents those projects which generally are completed within three months or less.

For the three months ended September 30,

Total 2021 % of

United States building services:

Mobile mechanical services $ 462,401 65 % $ 408,949 65 %

Commercial site-based services 199,957 28 % 166,375 27 %

Government site-based services 48,292 7 % 49,293 8 %

Total segment revenues $ 710,650 $ 624,617

For the three months ended September 30,

Total 2021 % of

United States industrial services:

Field services $ 213,866 87 % $ 196,846 85 %

Shop services 33,373 13 % 35,372 15 %

Total segment revenues $ 247,239 $ 232,218

Total United States operations $ 2,708,660 $ 2,392,192

For the three months ended September 30,

Total 2021 % of

United Kingdom building services:

Service work $ 51,762 44 % $ 65,486 51 %

Project work 65,939 56 % 63,994 49 %

Total segment revenues $ 117,701 $ 129,480

Total operations $ 2,826,361 $ 2,521,672

EMCOR Group, Inc.

2 unchanged sentences

NOTE 3 - Revenue from Contracts with Customers (Continued)

For the nine months ended September 30,

Total 2021 % of

United States electrical construction and facilities services:

Commercial market sector $ 908,999 53 % $ 776,121 52 %

Manufacturing market sector 210,331 12 % 162,186 11 %

Healthcare market sector 119,259 7 % 75,417 5 %

Institutional market sector 115,799 6 % 138,973 9 %

Transportation market sector 128,047 7 % 144,788 10 %

Water and wastewater market sector 15,962 1 % 9,909 1 %

Hospitality market sector 9,887 1 % 11,286 1 %

Short duration projects (1)

167,553 10 % 137,260 9 %

Service work 47,253 3 % 29,008 2 %

1,723,090 1,484,948

Less intersegment revenues ( 3,565 ) ( 2,473 )

Total segment revenues $ 1,719,525 $ 1,482,475

For the nine months ended September 30,

Total 2021 % of

United States mechanical construction and facilities services:

Commercial market sector $ 1,225,897 38 % $ 1,133,092 39 %

Manufacturing market sector 461,385 15 % 394,439 14 %

Healthcare market sector 367,866 12 % 357,483 12 %

Institutional market sector 267,373 8 % 215,635 7 %

Transportation market sector 47,793 1 % 63,075 2 %

Water and wastewater market sector 196,157 6 % 141,917 5 %

Hospitality market sector 22,892 1 % 30,593 1 %

Short duration projects (1)

257,571 8 % 246,812 9 %

Service work 345,414 11 % 308,871 11 %

3,192,348 2,891,917

Less intersegment revenues ( 8,143 ) ( 4,345 )

Total segment revenues $ 3,184,205 $ 2,887,572

(1) Represents those projects which generally are completed within three months or less.

For the nine months ended September 30,

For the three months ended March 31,

Total 2022 % of

United States building services:

Mobile mechanical services $ 1,275,298 63 % $ 1,172,663 65 %

Mechanical services $ 462,534 64 % $ 381,397 60 %

Commercial site-based services 209,371 29 % 203,550 32 %

1 unchanged sentence

Total segment revenues $ 725,375 $ 635,627

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

For the nine months ended September 30,

For the three months ended March 31,

Total 2022 % of

4 unchanged sentences

Total United States operations $ 2,779,562 $ 2,461,052

For the nine months ended September 30,

For the three months ended March 31,

Total 2022 % of

11 unchanged sentences

In addition to monitoring delinquent accounts, management reviews the credit quality of its receivables by, among other things, obtaining credit ratings of significant customers, assessing economic and market conditions, and evaluating material changes to a customer’s business, cash flows, and financial condition.

At September 30, 2022 and December 31, 2021, our allowance for credit losses was $ 25.3 million and $ 23.5 million, respectively.

The increase in our allowance for credit losses was attributable to an increase in the provision for credit losses, partially offset by the write-off of specific amounts deemed unrecoverable.

We have adjusted our allowance for credit losses during the first nine months of 2022 to account for the impact of changing economic conditions, including rising interest rates.

At March 31, 2023 and December 31, 2022, our allowance for credit losses was $ 21.8 million and $ 22.4 million, respectively.

We continue to adjust our allowance for credit losses to account for the impact of changing economic conditions, including rising interest rates.

Allowances for credit losses are based on the best facts available and are reassessed and adjusted on a regular basis as additional information is received.

Should anticipated collections fail to materialize, or if future economic conditions compare unfavorably to our forecasts, we could experience an increase in our credit losses.

The change in the allowance for credit losses for the nine months ended September 30, 2022 was as follows (in thousands):

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

The change in the allowance for credit losses for the three months ended March 31, 2023 was as follows (in thousands):

Balance at December 31, 2022 $ 22,382

Provision for credit losses 3,211

Amounts written off against the allowance, net of recoveries ( 1,475 )

Balance at September 30, 2022 $ 25,270

Recovery of credit losses ( 343 )

Net amounts written off against the allowance ( 211 )

Balance at March 31, 2023 $ 21,828

Contract Assets and Contract Liabilities

2 unchanged sentences

Such amounts are recoverable from our customers based upon various measures of performance, including achievement of certain milestones, completion of specified units, or completion of a contract.

In addition, many of our time and materials arrangements, as well as our contracts to perform turnaround services within the United States industrial services segment, are billed in arrears pursuant

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

to contract terms that are standard within the industry, resulting in contract assets and/or unbilled receivables being recorded as revenue is recognized in advance of billings.

In addition, many of our time and materials arrangements, as well as our contracts to perform turnaround services within the United States industrial services segment, are billed in arrears pursuant to contract terms that are standard within the industry, resulting in contract assets and/or unbilled receivables being recorded as revenue is recognized in advance of billings.

Also included in contract assets are amounts we seek or will seek to collect from customers or others for errors or changes in contract specifications or design, contract change orders or modifications in dispute or unapproved as to scope and/or price, or other customer-related causes of unanticipated additional contract costs (claims and unapproved change orders).

5 unchanged sentences

The long-term portion of contract liabilities is included in “Other long-term obligations” in the Consolidated Balance Sheets.

Net contract liabilities in the accompanying Consolidated Balance Sheets consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):

September 30,

Net contract liabilities in the accompanying Consolidated Balance Sheets consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

2023 December 31, 2022

4 unchanged sentences

Net contract liabilities $ ( 856,001 ) $ ( 827,360 )

Contract assets and contract liabilities increased by approximately $ 1.9 million and $ 13.6 million, respectively, as a result of acquisitions made by us in 2022.

Excluding the impact of acquisitions, net contract liabilities increased by approximately $ 176.8 million during the nine months ended September 30, 2022, primarily attributable to an increase in net contract liabilities on our uncompleted construction projects, partially as a result of the timing of invoicing to our customers, which included advanced billings on several large projects in the earlier stages of completion, resulting in amounts invoiced exceeding the revenue recognized for such projects.

The $ 28.6 million increase in net contract liabilities for the three months ended March 31, 2023 was primarily attributable to an increase in net contract liabilities on our uncompleted construction projects, partially as a result of the timing of invoicing to our customers, which included advanced billings on several large projects in the earlier stages of completion, resulting in amounts invoiced exceeding the revenue recognized for such projects.

There was no significant impairment of contract assets recognized during the periods presented.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

Transaction Price Allocated to Remaining Unsatisfied Performance Obligations

The following table presents the transaction price allocated to remaining unsatisfied performance obligations (“remaining performance obligations”) for each of our reportable segments and their respective percentages of total remaining performance obligations as of September 30, 2022 (in thousands, except for percentages):

September 30,

The following table presents the transaction price allocated to remaining unsatisfied performance obligations (“remaining performance obligations”) for each of our reportable segments and their respective percentages of total remaining performance obligations as of March 31, 2023 (in thousands, except for percentages):

2023 % of Total

7 unchanged sentences

Total operations $ 7,873,143 100 %

Our remaining performance obligations at September 30, 2022 were $ 7.10 billion.

Our remaining performance obligations at March 31, 2023 were $ 7.87 billion.

Remaining performance obligations increase with awards of new contracts and decrease as we perform work and recognize revenue on existing contracts.

1 unchanged sentence

Our remaining performance obligations include amounts related to contracts for which a fixed price contract value is not assigned when a reasonable estimate of the total transaction price can be made.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

Remaining performance obligations include unrecognized revenues to be realized from uncompleted construction contracts.

16 unchanged sentences

Total operations $ 6,388,624 $ 1,484,519

EMCOR Group, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 4 - Acquisitions of Businesses

Acquisitions are accounted for utilizing the acquisition method of accounting and the prices paid for them are allocated to their respective assets and liabilities based upon the estimated fair value of such assets and liabilities at the dates of their respective acquisition by us.

During the first nine months of 2022, we acquired four companies for total consideration of $ 93.2 million.

During the first quarter of 2023, we acquired two companies, each for an immaterial amount.

One company has been included within our Unites States mechanical construction and facilities services segment and provides mechanical and pipe fabrication services in the Midwestern region of the United States.

The other company has been included within our United States building services segment and provides mechanical services in the Western region of the United States.

The results of operations for both such companies were de minimis.

During calendar year 2022, we acquired six companies for total consideration of $ 100.8 million.

Such acquisitions include:

(a) a company that provides electrical construction services in the Greater Boston area, the results of operations of which have been included in our United States electrical construction and facilities services segment, and (b) three companies that enhance our presence in geographies where we have existing operations, the results of operations of which were de minimis, consisting of:

(a) a company that provides electrical construction services in the Greater Boston area, the results of operations of which have been included in our United States electrical construction and facilities services segment, and (b) five companies that enhance our presence in geographies where we have existing operations, the results of operations of which were de minimis, consisting of:

(i) two companies that provide fire protection services in the Northeastern and Southern regions of the United States, respectively, and that have been included within our United States mechanical construction and facilities services segment, (ii) two companies that specialize in either building automation and controls or mechanical services in the Southwestern and Southern regions of the United States, respectively, and that have been included within our United States building services segment, and (iii) a company that provides electrical construction services in the Midwestern region of the United States and that has been included within our United States electrical construction and facilities services segment.

In connection with these acquisitions, we acquired working capital of $ 7.1 million and other net liabilities of $ 1.1 million, and have preliminarily ascribed $ 28.9 million to goodwill and $ 65.9 million to identifiable intangible assets.

During calendar year 2021, we acquired eight companies for total consideration of $ 131.2 million.

Such acquisitions include:

(a) two companies, the results of operations of which have been included within our United States mechanical construction and facilities services segment, consisting of:

(i) a company that provides mechanical services within the Southern region of the United States and (ii) a company that provides fire protection services in the Midwestern region of the United States, (b) two companies that provide electrical construction services for a broad array of customers in the Midwestern region

EMCOR Group, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 4 - Acquisitions of Businesses (Continued)

of the United States, the results of operations of which have been included in our United States electrical construction and facilities services segment, and (c) four companies, the results of operations of which have been included within our United States building services segment, consisting of:

(i) a company that provides mobile mechanical services across North Texas and (ii) three companies that enhance our presence in geographies where we have existing operations and provide either mobile mechanical services or building automation and controls solutions.

In connection with these acquisitions, we acquired working capital of $ 22.9 million and other net liabilities of $ 0.6 million, including certain deferred tax liabilities, and have ascribed $ 38.3 million to goodwill and $ 70.6 million to identifiable intangible assets.

We expect that the majority of the goodwill acquired in connection with these acquisitions will be deductible for tax purposes.

The purchase price allocations for the businesses acquired in 2022 are preliminary and subject to change during their respective measurement periods.

We expect that all of the goodwill acquired in connection with these acquisitions will be deductible for tax purposes.

The purchase price allocations for the businesses acquired in 2023 and for one of the businesses acquired in 2022 are preliminary and subject to change during their respective measurement periods.

As we finalize such purchase price allocations, adjustments may be recorded relating to finalization of intangible asset valuations, tax matters, or other items.

Although not expected to be significant, such adjustments may result in changes in the valuation of assets and liabilities acquired.

The purchase price allocations for the businesses acquired in 2021 have been finalized during their respective measurement periods with an insignificant impact.

The purchase price allocations for the other businesses acquired in 2022 have been finalized during their respective measurement periods with an insignificant impact.

NOTE 5 - Earnings Per Share

Calculation of Basic and Diluted Earnings per Common Share

The following tables summarize our calculation of Basic and Diluted Earnings per Common Share (“EPS”) for the three and nine months ended September 30, 2022 and 2021 (in thousands, except share and per share data):

The following table summarizes our calculation of Basic and Diluted Earnings per Common Share (“EPS”) for the three months ended March 31, 2023 and 2022 (in thousands, except share and per share data):

For the three months ended

September 30,

Net income attributable to EMCOR Group, Inc.

common stockholders $ 105,772 $ 99,740

Weighted average shares outstanding used to compute basic earnings per common share 48,867,420 53,700,603

Effect of dilutive securities—Share-based awards 182,731 284,055

Shares used to compute diluted earnings per common share 49,050,151 53,984,658

Basic earnings per common share $ 2.16 $ 1.86

Diluted earnings per common share $ 2.16 $ 1.85

For the nine months ended

September 30,

Net income attributable to EMCOR Group, Inc.

common stockholders $ 279,822 $ 281,864

Net income $ 111,473 $ 73,386

Weighted average shares outstanding used to compute basic earnings per common share 47,775,819 52,713,005

3 unchanged sentences

Diluted earnings per common share $ 2.32 $ 1.39

The number of share-based awards excluded from the computation of diluted EPS for the three and nine months ended September 30, 2022 because they would be anti-dilutive were 850 and 1,350 , respectively.

There were no anti-dilutive share-based awards for the three months ended September 30, 2021.

The number of share-based awards excluded from the computation of diluted EPS for the nine months ended September 30, 2021 because they would be anti-dilutive were 2,550 .

There were no anti-dilutive share-based awards for the three months ended March 31, 2023.

However, the number of share-based awards excluded from the computation of diluted EPS for the three months ended March 31, 2022 because they would be anti-dilutive was 62,481 .

EMCOR Group, Inc.

2 unchanged sentences

NOTE 6 - Inventories

Inventories in the accompanying Consolidated Balance Sheets consisted of the following amounts as of September 30, 2022 and December 31, 2021 (in thousands):

September 30,

Inventories in the accompanying Consolidated Balance Sheets consisted of the following amounts as of March 31, 2023 and December 31, 2022 (in thousands):

2023 December 31,

2 unchanged sentences

Inventories $ 100,405 $ 85,641

The increase in inventories as of September 30, 2022, compared to December 31, 2021, was primarily a result of advanced purchases of materials and equipment for use on specific construction projects, in an effort to mitigate the impact of increased lead times, which have resulted from supply chain disruptions.

The increase in inventories as of March 31, 2023, compared to December 31, 2022, was a result of:

(a) advanced purchases of materials and equipment for use on specific construction projects, in an effort to mitigate the impact of increased lead times, which have resulted from supply chain disruptions, and (b) an increase in raw materials on hand to support our fabrication facilities given the growth in demand for our fire protection services.

NOTE 7 - Debt

Debt in the accompanying Consolidated Balance Sheets consisted of the following amounts as of September 30, 2022 and December 31, 2021 (in thousands):

September 30,

Debt in the accompanying Consolidated Balance Sheets consisted of the following amounts as of March 31, 2023 and December 31, 2022 (in thousands):

2023 December 31,

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We may allocate up to $ 400.0 million of available capacity under the 2020 Revolving Credit Facility to letters of credit for our account or for the account of any of our subsidiaries.

As of September 30, 2022 and December 31, 2021, the balance of the 2020 Term Loan was $ 256.7 million and as of September 30, 2022, we had $ 170.0 million in direct borrowings outstanding under the 2020 Revolving Credit Facility.

As of March 31, 2023 and December 31, 2022, the balance of the 2020 Term Loan was $ 242.8 million and as of March 31, 2023, we had $ 100.0 million in direct borrowings outstanding under the 2020 Revolving Credit Facility.

There were no direct borrowings outstanding under the 2020 Revolving Credit Facility as of December 31, 2022.

Outstanding letters of credit reduce the available capacity under such facility, and as of September 30, 2022 and December 31, 2021, we had $ 71.4 million and $ 71.3 million, respectively, of letters of credit outstanding.

Outstanding letters of credit reduce the available capacity under such facility, and as of March 31, 2023 and December 31, 2022, we had $ 71.3 million of letters of credit outstanding.

At the Company’s election, borrowings under the 2020 Credit Agreement bear interest at either:

(1) a base rate plus a margin of 0.00 % to 0.75 %, based on certain financial tests, or (2) United States dollar LIBOR ( 3.67 % at September 30, 2022) plus 1.00 % to 1.75 %, based on certain financial tests.

(1) a base rate plus a margin of 0.00 % to 0.75 %, based on certain financial tests, or (2) United States dollar LIBOR ( 5.16 % at March 31, 2023) plus 1.00 % to 1.75 %, based on certain financial tests.

The base rate is determined by the greater of:

(a) the prime commercial lending rate announced by Bank of Montreal from time to time ( 6.25 % at September 30, 2022), (b) the federal funds effective rate, plus ½ of 1.00%, (c) the daily one month LIBOR rate, plus 1.00 %, or (d) 0.00 %.

(a) the prime commercial lending rate announced by Bank of Montreal from time to time ( 8.00 % at March 31, 2023), (b) the federal funds effective rate, plus ½ of 1.00%, (c) the daily one month LIBOR rate, plus 1.00 %, or (d) 0.00 %.

Upon the discontinuation of LIBOR, our 2020 Credit Agreement contains provisions which allow for the use of alternate benchmark rates.

The weighted average interest rates in effect at September 30, 2022 were 4.67 % for the 2020 Term Loan and 4.20 % for the 2020 Revolving Credit Facility.

In accordance with such provisions, we anticipate amending such agreement during the second quarter of 2023 to change the reference rate from LIBOR to SOFR.

The interest rates in effect at March 31, 2023 were 6.16 % for the 2020 Term Loan and 5.81 % for the 2020 Revolving Credit Facility.

The interest rate in effect at December 31, 2022 for the 2020 Term Loan was 5.73 %.

A commitment fee is payable on the average daily unused amount of the 2020 Revolving Credit Facility, which ranges from 0.10 % to 0.25 %, based on certain financial tests.

The fee was 0.10 % of the unused amount as of September 30, 2022 and December 31, 2021.

The fee was 0.10 % of the unused amount as of March 31, 2023 and December 31, 2022.

Fees for letters of credit issued under the 2020 Revolving Credit Facility range from 0.75 % to 1.75 % of the respective face amounts of outstanding letters of credit, depending on the nature of the letter of credit, and are computed based on certain financial tests.

We capitalized an additional $ 3.1 million of debt issuance costs associated with the 2020 Credit Agreement.

Debt issuance costs are amortized over the life of the agreement as part of interest expense.

EMCOR Group, Inc.

2 unchanged sentences

NOTE 7 - Debt (Continued)

We capitalized an additional $ 3.1 million of debt issuance costs associated with the 2020 Credit Agreement.

Debt issuance costs are amortized over the life of the agreement as part of interest expense.

Obligations under the 2020 Credit Agreement are guaranteed by most of our direct and indirect subsidiaries and are secured by substantially all of our assets.

The 2020 Credit Agreement contains various covenants providing for, among other things, the maintenance of certain financial ratios and certain limitations on the payment of dividends, common stock repurchases, investments, acquisitions, indebtedness, and capital expenditures.

We were in compliance with all such covenants as of September 30, 2022 and December 31, 2021.

We were in compliance with all such covenants as of March 31, 2023 and December 31, 2022.

We are required to make annual principal payments on the 2020 Term Loan.

10 unchanged sentences

Recurring Fair Value Measurements

The following tables summarize the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2022 and December 31, 2021 (in thousands):

Assets at Fair Value as of September 30, 2022

The following tables summarize the assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2023 and December 31, 2022 (in thousands):

Assets at Fair Value as of March 31, 2023

Asset Category Level 1 Level 2 Level 3 Total

2 unchanged sentences

Restricted cash (2)

1,070 — — 1,070

Deferred compensation plan assets (3)

6 unchanged sentences

Restricted cash (2)

1,223 — — 1,223

Deferred compensation plan assets (3)

2 unchanged sentences

(1) Cash and cash equivalents consist of deposit accounts and money market funds with original maturity dates of three months or less, which are Level 1 assets.

At September 30, 2022 and December 31, 2021, we had $ 114.8 million and $ 336.0 million, respectively, in money market funds.

At March 31, 2023 and December 31, 2022, we had $ 173.4 million and $ 209.4 million, respectively, in money market funds.

From time to time, we have cash balances in certain of our domestic bank accounts that exceed federally insured limits.

(2) Restricted cash is classified as “Prepaid expenses and other” in the Consolidated Balance Sheets.

15 unchanged sentences

NOTE 9 - Income Taxes

The following table presents our income tax provision and our income tax rate for the three and nine months ended September 30, 2022 and 2021 (in thousands, except percentages):

The following table presents our income tax provision and our income tax rate for the three months ended March 31, 2023 and 2022 (in thousands, except percentages):

For the three months ended

September 30, For the nine months ended

September 30,

2022 2021 2022 2021

Income tax provision $ 41,331 $ 26,451

1 unchanged sentence

The difference between the U.S.

statutory tax rate of 21 % and our income tax rate for both the three and nine months ended September 30, 2022 and 2021 was primarily a result of state and local income taxes and other permanent book-to-tax differences.

The increase in our income tax provision for the three and nine months ended September 30, 2022 was due to an increase in our income tax rate.

The increase in our income tax provision for the three months ended September 30, 2022 was additionally a result of an increase in income before income taxes.

The increase in our income tax rate for the three and nine months ended September 30, 2022 was attributable to an increase in certain permanent book-to-tax differences and the unfavorable impact of certain discrete tax items during the third quarter of 2022.

As of September 30, 2022 and December 31, 2021, we had no unrecognized income tax benefits.

statutory tax rate of 21 % and our effective income tax rate for both the three months ended March 31, 2023 and 2022 was primarily a result of state and local income taxes and other permanent book-to-tax differences.

The increase in our income tax provision for the three months ended March 31, 2023, when compared to the three months ended March 31, 2022, was due to:

(a) greater income before income taxes, and (b) an increase in our effective income tax rate.

The change in our effective income tax rate was attributable to an increase in certain permanent book-to-tax differences, including the impact of the expiration of specific provisions within the Consolidated Appropriations Act, 2021, which allowed for a 100% tax deduction for business meals in 2022.

For periods after December 31, 2022, the tax deduction for business meals has been reduced to 50%.

As of March 31, 2023 and December 31, 2022, we had no unrecognized income tax benefits.

We file a consolidated federal income tax return including all of our U.S.

2 unchanged sentences

Our income tax returns are subject to audit by various taxing authorities and are currently under examination for the years 2017 through 2020.

The Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) was signed into law on August 16, 2022.

Among other provisions, such act creates an excise tax of 1% on the fair value of net stock repurchases in excess of share issuances made by publicly traded U.S.

corporations, effective for repurchases after December 31, 2022.

The impact of this excise tax on our financial position, and/or liquidity, in future periods, will vary based on the level of repurchases made by us in a given year.

While we are still evaluating the potential impact of this excise tax on our results of operations, interpretive accounting guidance indicates that this tax likely can be recorded as a component of treasury stock, as opposed to an expense within the statement of operations, given that it is a direct cost associated with the repurchase of our common stock.

For tax years beginning after December 31, 2022, the Inflation Reduction Act additionally creates a 15% corporate alternative minimum tax on profits of corporations whose average annual adjusted financial statement income exceeds $1.0 billion for any consecutive three-tax-year period preceding the then current tax year.

Based on our average annual income for the preceding three years, which has remained below the aforementioned $1.0 billion threshold, as well as the fact that our effective federal income tax rate has historically been in excess of the 15% alternative minimum tax rate, we do not anticipate that this alternative minimum tax will have an impact on our financial position and/or results of operations.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 10 - Common Stock

As of September 30, 2022 and December 31, 2021, there were 47,647,114 and 53,299,738 shares of our common stock outstanding, respectively.

During the three months ended September 30, 2022 and 2021, we issued 19,573 and 18,528 shares of common stock, respectively.

During the nine months ended September 30, 2022 and 2021, we issued 191,330 and 145,815 shares of common stock, respectively.

As of March 31, 2023 and December 31, 2022, there were 47,635,583 and 47,666,725 shares of our common stock outstanding, respectively.

During the three months ended March 31, 2023 and 2022, we issued 72,076 and 95,331 shares of common stock, respectively.

These shares were issued upon either the satisfaction of required conditions under our share-based compensation plans or the purchase of common stock pursuant to our employee stock purchase plan.

We have paid quarterly dividends since October 25, 2011.

Commencing with the dividend to be paid on October 31, 2022, our dividend will increase from $ 0.13 per share to $ 0.15 per share.

Commencing with the dividend to be paid on April 28, 2023, our dividend will increase from $ 0.15 per share to $ 0.18 per share.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 10 - Common Stock (Continued)

In September 2011, our Board of Directors (the “Board”) authorized a share repurchase program allowing us to begin repurchasing shares of our outstanding common stock.

1 unchanged sentence

Since the inception of the repurchase program, the Board has authorized us to repurchase up to $ 2.15 billion of our outstanding common stock.

During the nine months ended September 30, 2022, we repurchased approximately 5.8 million shares of our common stock for approximately $ 660.6 million.

Since the inception of the repurchase program through September 30, 2022, we have repurchased approximately 25.0 million shares of our common stock for approximately $ 1.76 billion.

As of September 30, 2022, there remained authorization for us to repurchase approximately $ 389.8 million of our shares.

During the three months ended March 31, 2023, we repurchased approximately 0.1 million shares of our common stock for approximately $ 16.1 million.

Since the inception of the repurchase program through March 31, 2023, we have repurchased approximately 25.1 million shares of our common stock for approximately $ 1.78 billion.

As of March 31, 2023, there remained authorization for us to repurchase approximately $ 373.7 million of our shares.

The repurchase program has no expiration date, does not obligate the Company to acquire any particular amount of common stock, and may be suspended, recommenced, or discontinued at any time or from time to time without prior notice.

We may repurchase our shares from time to time to the extent permitted by securities laws and other legal requirements, including provisions in our 2020 Credit Agreement placing limitations on such repurchases.

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposes a nondeductible excise tax of 1% on the fair value of net stock repurchases in excess of share issuances made by publicly traded U.S.

corporations, effective for repurchases after December 31, 2022.

Starting with the first quarter of 2023, we have included the applicable excise tax as a component of treasury stock as it represents a direct cost associated with the repurchase of our common stock.

NOTE 11 - Retirement Plans

8 unchanged sentences

Components of Net Periodic Pension Cost

The components of net periodic pension cost (income) of the UK Plan for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands):

The components of net periodic pension cost (income) of the UK Plan for the three months ended March 31, 2023 and 2022 were as follows (in thousands):

For the three months ended

September 30, For the nine months ended

September 30,

2022 2021 2022 2021

Interest cost $ 2,376 $ 1,529

2 unchanged sentences

Net periodic pension cost (income) $ 224 $ ( 1,159 )

Employer Contributions

For the nine months ended September 30, 2022, our United Kingdom subsidiary contributed approximately $ 3.2 million to the UK Plan and anticipates contributing an additional $ 0.5 million during the remainder of 2022.

EMCOR Group, Inc.

10 unchanged sentences

We have agreed to indemnify the surety companies for amounts, if any, paid by them in respect of surety bonds issued on our behalf.

As of September 30, 2022, based on the percentage-of-completion of our projects covered by surety bonds, our aggregate estimated exposure, assuming defaults on all our then existing contractual obligations, was approximately $ 1.5 billion, which represents approximately 21 % of our total remaining performance obligations.

As of March 31, 2023, based on the percentage-of-completion of our projects covered by surety bonds, our aggregate estimated exposure, assuming defaults on all our then existing contractual obligations, was approximately $ 1.5 billion, which represents approximately 19 % of our total remaining performance obligations.

Surety bonds are sometimes provided to secure obligations for wages and benefits payable to or for certain of our employees, at the request of labor unions representing such employees.

In addition, surety bonds may be issued as collateral for certain insurance obligations.

As of September 30, 2022, we satisfied approximately $ 48.1 million of the collateral requirements of our insurance programs by utilizing surety bonds.

As of March 31, 2023, we satisfied approximately $ 48.1 million of the collateral requirements of our insurance programs by utilizing surety bonds.

We are not aware of any losses in connection with surety bonds that have been posted on our behalf, and we do not expect to incur significant losses in the foreseeable future.

27 unchanged sentences

The liabilities are derived from known facts, historical trends, and industry averages, utilizing the assistance of an independent third-party actuary to determine the best estimate for the majority of these obligations.

As of September 30, 2022 and December 31, 2021, the estimated current portion of such undiscounted insurance liabilities, included in “Other accrued expenses and liabilities” in the accompanying Consolidated Balance Sheets, were $ 52.8 million and $ 61.5 million, respectively.

The estimated non-current portion of such undiscounted insurance liabilities included in “Other long-term obligations” as of September 30, 2022 and December 31, 2021 were $ 216.0 million and $ 242.4 million, respectively.

The current portion of anticipated insurance recoveries of $ 16.1 million and $ 26.4 million as of September 30, 2022 and December 31, 2021, respectively, were included in “Prepaid expenses and other” and the non-current portion of anticipated insurance recoveries of $ 59.5 million and $ 99.0 million as of September 30, 2022 and December 31, 2021, respectively, were included in “Other assets” in the accompanying Consolidated Balance Sheets.

These balances decreased from December 31, 2021 primarily as a result of the payment, by our insurers, of certain claims for which we previously maintained a reserve and corresponding insurance receivable.

As of March 31, 2023 and December 31, 2022, the estimated current portion of such undiscounted insurance liabilities, included in “Other accrued expenses and liabilities” in the accompanying Consolidated Balance Sheets, were $ 54.3 million and $ 54.8 million, respectively.

The estimated non-current portion of such undiscounted insurance liabilities included in “Other long-term obligations” as of March 31, 2023 and December 31, 2022 were $ 231.4 million and $ 221.7 million, respectively.

The current portion of anticipated insurance recoveries of $ 16.3 million and $ 16.0 million as of March 31, 2023 and December 31, 2022, respectively, were included in “Prepaid expenses and other” and the non-current portion of anticipated insurance recoveries of $ 62.3 million and $ 59.0 million as of March 31, 2023 and December 31, 2022, respectively, were included in “Other assets” in the accompanying Consolidated Balance Sheets.

NOTE 13 - Additional Cash Flow Information

The following table presents additional cash flow information for the nine months ended September 30, 2022 and 2021 (in thousands):

For the nine months ended

September 30,

The following table presents additional cash flow information for the three months ended March 31, 2023 and 2022 (in thousands):

For the three months ended

Cash paid for:

5 unchanged sentences

We are one of the largest specialty contractors in the United States and a leading provider of electrical and mechanical construction and facilities services, building services, and industrial services.

Our services are provided to a broad range of commercial, industrial, utility, and institutional customers through approximately 90 operating subsidiaries, which specialize principally in providing construction services relating to electrical and mechanical systems in all types of facilities and in providing various services relating to the operation, maintenance, and management of those facilities.

Our services are provided to a broad range of commercial, industrial, healthcare, utility, and institutional customers through approximately 100 operating subsidiaries.

Such operating subsidiaries are organized into the following reportable segments:

4 unchanged sentences

• United Kingdom building services.

For a more complete description of our operations, refer to Item 1.

Business of our Form 10-K for the year ended December 31, 2021.

We refer to our United States electrical construction and facilities services segment and our United States mechanical construction and facilities services segment together as our United States construction segments.

Our reportable segments and related disclosures reflect certain reclassifications of prior year amounts from our United States mechanical construction and facilities services segment to our United States building services segment due to changes in our internal reporting structure aimed at realigning our service offerings.

EMCOR Group, Inc.

2 unchanged sentences

NOTE 14 - Segment Information (continued)

The following tables present financial information for each of our reportable segments for the three and nine months ended September 30, 2022 and 2021 (in thousands):

The following tables present financial information for each of our reportable segments for the three months ended March 31, 2023 and 2022 (in thousands):

For the three months ended

September 30,

Revenues from unrelated entities:

15 unchanged sentences

Total operations $ 2,890,432 $ 2,592,549

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 14 - Segment Information (continued)

For the nine months ended

September 30,

Revenues from unrelated entities:

United States electrical construction and facilities services $ 1,719,525 $ 1,482,475

United States mechanical construction and facilities services 3,184,205 2,887,572

United States building services 2,016,298 1,804,488

United States industrial services 842,524 702,763

Total United States operations 7,762,552 6,877,298

United Kingdom building services 363,746 386,089

Total operations $ 8,126,298 $ 7,263,387

Total revenues:

United States electrical construction and facilities services 1,724,400 1,485,324

United States mechanical construction and facilities services 3,212,374 2,895,930

United States building services 2,091,128 1,876,141

United States industrial services 878,123 730,851

Less intersegment revenues ( 143,473 ) ( 110,948 )

Total United States operations 7,762,552 6,877,298

United Kingdom building services 363,746 386,089

Total operations $ 8,126,298 $ 7,263,387

For the three months ended

September 30,

Operating income (loss):

14 unchanged sentences

NOTE 14 - Segment Information (continued)

For the nine months ended

September 30,

Operating income (loss):

United States electrical construction and facilities services $ 90,646 $ 127,548

United States mechanical construction and facilities services 226,571 220,697

United States building services 107,672 96,523

United States industrial services 18,324 ( 5,663 )

Total United States operations 443,213 439,105

United Kingdom building services 25,372 23,040

Corporate administration ( 80,890 ) ( 74,362 )

Total operations 387,695 387,783

Net periodic pension (cost) income 3,288 2,738

Interest expense, net ( 6,234 ) ( 3,965 )

Income before income taxes $ 384,749 $ 386,556

September 30,

2023 December 31,

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements