What changed in this filing

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Item 1. Business

2024-02-28 compared with 2023-02-23 · 58 added, 49 removed, 186 unchanged (37% of the section changed)

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In 2023, we had revenues of approximately $12.6 billion.

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

Such operating subsidiaries are organized into the following reportable segments:

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We also provide our construction services indirectly by acting as a subcontractor to general contractors, systems suppliers, construction managers, developers, property managers, and other subcontractors.

Our industrial services are generally provided directly to refineries and petrochemical plants.

Our revenues are derived from many different customers in numerous industries, which have operations in several different geographical areas.

We generally provide industrial services directly to refineries and petrochemical plants.

We derive revenues from many different customers in numerous industries, which have operations in several different geographical areas.

Of our 2023 revenues, approximately 97% were generated in the United States and approximately 3% were generated in foreign countries, substantially all in the United Kingdom.

In 2022, approximately 61% of our revenues were derived from our construction operations, approximately 29% of our revenues were derived from our building services operations and approximately 10% of our revenues were derived from our industrial services operations.

In 2023, we derived approximately 63% of our revenues from our construction operations, approximately 28% of our revenues from our building services operations, and approximately 9% of our revenues from our industrial services operations.

For additional information regarding our revenues, see Note 3 - Revenue from Contracts with Customers of the notes to consolidated financial statements included in Item 8.

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Our strategies of expanding our portfolio of service offerings for existing and potential customers and increasing or enhancing our presence in core end markets and geographies, along with our commitment to industry-leading best practices and technological and training capabilities, place us in the position to capitalize on opportunities and trends in the industries we serve and continue to grow our business.

Increasingly, our services are focused on delivering sustainable energy solutions, enhancements in energy efficiency, reductions in waste and emissions, and improvements in the safety and comfort of our customers’ facilities, as discussed in further detail below.

The broad scope of our operations is more particularly described below.

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• Steel fabrication, erection, and welding services.

The electrical and mechanical construction services industry has experienced growth due principally to the increased content, complexity, and sophistication of electrical and mechanical systems resulting, in part, from growth in digital processing, cloud computing, and data storage.

The electrical and mechanical construction services industry has experienced growth principally due to the increased content, complexity, and sophistication of electrical and mechanical systems resulting, in part, from growth in digital processing, cloud computing, data storage, and the emergence of artificial intelligence.

In addition, facilities of all types require extensive electrical distribution systems, sophisticated power supplies, networks of low-voltage and fiber-optic communications cabling, and various mechanical, plumbing, and fire protection and suppression systems.

Moreover, the need for substantial environmental controls within a building, due to the heightened need to maintain extensive computer systems at optimal temperatures, and the demand for increased energy efficiency, have continued to expand opportunities for our electrical and mechanical services businesses.

The demand for these services is typically driven by non-residential construction and renovation activity and, in recent years, has benefited from the re-shoring of the supply chain, the need for additional high-tech manufacturing facilities, and the energy transition/expansion throughout the United States.

Our electrical and mechanical construction services generally fall into one of three categories:

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Of such revenues, approximately 35% were generated by our electrical construction operations and approximately 65% were generated by our mechanical construction operations.

Our largest projects typically include those:

(a) for commercial purposes (such as office buildings, data centers, convention centers, sports stadiums, and shopping malls);

(b) for high-tech manufacturing purposes (such as semiconductor, biotech, life-sciences, and pharmaceutical facilities);

(c) for traditional manufacturing and industrial purposes (such as steel, pulp and paper mills, food processing and automotive manufacturing facilities, power generation (including sustainable energy solutions such as solar and wind), oil and gas refineries, and chemical processing plants);

(d) for transportation purposes (such as highways, bridges, airports, and transit systems);

(e) for institutional purposes (such as educational and correctional facilities and research laboratories);

(f) for healthcare purposes (such as hospitals, surgical centers, rehabilitation and nursing facilities, and medical offices);

(g) for water and wastewater purposes;

and (h) for hospitality purposes (such as resorts, hotels, and gaming facilities).

Our largest projects typically include those within:

(a) the commercial market sector (including warehousing and distribution facilities, office or mixed-use buildings, and shopping malls);

(b) the network and communications market sector (including data centers, data and fiber projects, and cabling);

(c) the manufacturing and industrial market sector (including steel, pulp and paper mills, food processing and traditional automotive manufacturing facilities, power generation (including sustainable energy solutions such as solar and wind), oil and gas refineries, and chemical processing plants);

(d) the high-tech manufacturing market sector (including semiconductor, biotech, life-sciences, and pharmaceutical facilities, as well as projects across the electric vehicle value chain);

(e) the healthcare market sector (including hospitals, surgical centers, rehabilitation and nursing facilities, and medical offices);

(f) the institutional market sector (including educational and correctional facilities and research laboratories);

(g) the water and wastewater market sector;

(h) the transportation market sector (including highways, bridges, airports, and transit systems);

and (i) the hospitality and entertainment market sector (including resorts, hotels, gaming facilities, convention centers, and sports stadiums).

Our largest projects, which typically range in size from $10 million up to and occasionally exceeding $200 million, represented approximately 45% of our electrical and mechanical construction services revenues in 2023.

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Our building services include:

• Mobile mechanical maintenance and services for mechanical, electrical, plumbing, fire safety, and building automation systems;

• Maintenance and services for mechanical, electrical, plumbing, fire safety, and building automation systems;

• Modification and retrofit projects;

• Program development, management, and maintenance for energy systems, including LEED and other sustainable solutions to assist our customers in reducing energy consumption;

• Energy efficiency retrofit services, including HVAC, lighting, water, weatherization, and air flow management solutions:

• Technical consulting and diagnostic services;

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Clients of our building services business include federal and state governments, institutional organizations, utilities, healthcare providers, and major corporations engaged in information technology, telecommunications, pharmaceuticals, financial services, and manufacturing, as well as large retailers and other businesses with geographically dispersed locations.

We provide building services at a number of prominent buildings in the United States, including those that house the National Archives and Records Administration, the Federal Deposit Insurance Corporation, the Government Accountability Office, and the Department of Health and Human Services, as well as other government facilities, including the NASA Jet Propulsion Laboratory.

We provide building services at a number of prominent buildings in the United States, including those that house the National Archives and Records Administration, the Federal Deposit Insurance Corporation, the Government Accountability Office, and the Departments of Transportation, Education, Health and Human Services, Energy, and Homeland Security, as well as other government facilities, including the NASA Jet Propulsion Laboratory.

We also provide building services, as a prime contractor or a subcontractor, to U.S.

military bases, including the Defense Intelligence Agency located on Joint Base Anacostia-Bolling, and are involved in a joint venture providing building services to NASA’s Armstrong Flight Research Center.

The agreements pursuant to which this division provides services to the federal government are frequently for a base period and a number of option years exercisable at the sole discretion of the government, are often subject to renegotiation by the government in terms of scope of services, and are subject to termination by the government prior to the expiration of the applicable term.

military bases and various other governmental agencies.

The agreements pursuant to which this division provides services to the federal government are frequently for a base period and a number of option years exercisable at the sole discretion of the government, are often subject to modification or renegotiation by the government in terms of scope of services, and are subject to termination by the government prior to the expiration of the applicable term.

United States industrial services operations:

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Such services include:

(a) engineering and planning in advance of complex refinery turnarounds;

(a) engineering and planning in advance of complex refinery and petrochemical turnarounds;

(b) overhaul and maintenance of critical process units (including hydrofluoric alkylation units, fluid catalytic cracking units, coking units, heaters, heat exchangers, and related mechanical equipment) during refinery and petrochemical plant shut downs;

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These businesses also design and manufacture highly engineered shell and tube heat exchangers and provide maintenance, repair, and cleaning services for heat exchangers both in the field and at our own shops, including tube and shell repairs, bundle repairs, and extraction services.

In addition to these traditional industrial services, we are working to leverage our expertise in industrial services to construct and maintain carbon capture technologies and renewable energy projects.

In addition to these traditional industrial services, we are beginning to leverage our expertise in industrial services to construct and maintain carbon capture technologies and renewable energy projects.

Across our operations, we compete with national, regional, and local companies, many of which are small, owner-operated entities that carry on their businesses in a limited geographic area, as well as with certain foreign companies.

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(i) the ability to obtain surety bonding;

and (j) adequate working capital or access to bank credit.

We believe our financial position, operating results, access to bank credit and surety bonding, technical expertise, and safety record, among other factors, give us an advantage over many of our competitors.

(j) adequate working capital or access to bank credit;

and (k) the use of technology such as building information modeling (BIM).

We believe our financial position, operating results, access to bank credit and surety bonding, technical expertise including prefabrication and BIM capabilities, and safety record, among other factors, give us an advantage over many of our competitors.

However, relatively few barriers exist to prevent entry into the electrical and mechanical construction services industry.

While the building services industry is also highly fragmented, with most competitors operating in a specific geographic region, a number of large corporations such as Amentum Services, Inc., IAP Worldwide Services, Inc., Fluor Corporation, J&J Worldwide Services, Cushman & Wakefield plc, CBRE Group, Inc., Jones Lang LaSalle Incorporated, Sodexo, Inc., Aramark, and ABM Industries Incorporated are engaged in this field, as are large original equipment manufacturers such as Carrier Global Corporation and Trane Technologies plc.

In addition, we compete with several regional firms serving all or portions of the markets we target, such as BrightView Holdings, Inc., Kellermeyer Bergensons Services, LLC, SMS Assist, L.L.C., and Ferrandino & Son, Inc.

Our principal competitors in the United Kingdom include CBRE Group, Inc., Bouygues UK Ltd., ISS UK Ltd., and Mitie Group PLC.

In addition, we compete with several regional firms serving all or portions of the markets we target, such as BrightView Holdings, Inc., Kellermeyer Bergensons Services, LLC, and SMS Assist, L.L.C.

Our principal competitors in the United Kingdom include CBRE Group, Inc., ISS UK Ltd., Equans Services Limited, OCS Group UK Limited, and Mitie Group PLC.

The key competitive factors in the building services industry include:

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(b) service quality and technical expertise;

and (e) geographic diversity.

(d) cost structure and the ability to control project costs;

and (f) geographic diversity.

Due to our size, our technical capability and management experience, and our geographic presence, we believe our building services operations are in a strong competitive position.

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and foreign manufacturers.

Competitors within this industry include JVIC Catalyst Services, Universal Plant Services, Inc., Turner Industries Group, LLC, Team, Inc., Cust-O-Fab, Inc., Dunn Heat Exchangers, Inc., and Wyatt Field Service Company, LLC, among others.

Competitors within this industry include JVIC Catalyst Services, Universal Plant Services, Inc., Turner Industries Group, LLC, Team, Inc., Cust-O-Fab, Inc., Dunn Heat Exchangers, Inc., Turn2 Specialty Companies, and Wyatt Field Service Company, LLC, among others.

The key competitive factors in the industrial services market consist of:

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Due to our technical capabilities, skilled workforce, and safety record, we believe that we are in a strong competitive position in the industrial services markets that we serve.

Because of the complex tasks associated with turnaround projects, and the precision and cost investment required in manufacturing heat exchangers, we believe that the barriers to entry in this business are significant.

Although the technical expertise and capital investment that is required in manufacturing heat exchangers may be considered a barrier to entry in this field, there are significantly fewer barriers to entry as it pertains to turnaround projects and services.

Human Capital

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Employee Demographic % of Total

Hispanic / Latinx 18 %

Hispanic / Latino

Black / African American 8 %

Multiracial, Native American, Native Hawaiian, and Pacific Islander 3 %

Approximately 60% of our employees are represented by various unions pursuant to approximately 450 collective bargaining agreements between our individual subsidiaries or trade associations and local unions, as well as two collective bargaining agreements that are national or regional in scope.

Approximately 60% of our employees are represented by various unions pursuant to nearly 450 collective bargaining agreements between our individual subsidiaries or trade associations and local unions, as well as two collective bargaining agreements that are national or regional in scope.

We believe that our relations with our labor unions are generally positive.

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• Health and Welfare Plans :

All full-time employees who do not participate in union plans are offered a range of choices among medical, dental and vision plans, life, accident, dependent and disability insurance, and pre-tax health spending accounts that include employer contributions.

All full-time employees who do not participate in union plans are offered a range of choices among medical, dental and vision plans, life, accident, dependent and disability insurance, and pre-tax health savings accounts that include employer contributions.

• Retirement Savings :

We help provide our employees with financial security by offering a 401(k) Savings Plan and an Employee Stock Purchase Plan, both of which include company matching contributions.

We help provide our employees with financial security by offering a 401(k) Savings Plan, which includes company matching contributions.

• Degree Assistance :

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Through our Employee Assistance Program, we offer our employees, and their dependents or household members, access to services and counseling on a variety of personal, professional, legal, and financial matters, at no cost.

Most recently, we started offering college counseling services for the children of our employees.

Key to our attraction and retention of employees is our commitment to our EMCOR Values and our focus on employee safety and diversity, equity, and inclusion.

Our Board of Directors and senior leadership engage in oversight and management, respectively, of our significant human capital initiatives.

• College Coaching :

Our College Coach Program provided through Bright Horizons provides employees and their families with support as they navigate the college admissions process, including live webinars, tuition payment financial planning, and insight from former admissions officers, finance professionals, and educators.

Key to our attraction and retention of employees is our commitment to our EMCOR Values and our focus on employee safety and inclusion.

Our Board of Directors and senior leadership engage in direct oversight and management, respectively, of our significant human capital initiatives.

Our Board of Directors is regularly briefed and provides input on key human capital initiatives and metrics.

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Mutual Respect and Trust, Commitment to Safety, and Teamwork.

We constantly strive to ensure these values are reflected in how we do business every day, from our corporate culture and “tone at the top,” established by our Board of Directors and management team, to the critical work performed by all of our people at every level throughout our organization.

We consistently strive to ensure these values are reflected in how we do business every day, from our corporate culture and “tone at the top,” established by our Board of Directors and management team, to the critical work performed by all of our people at every level throughout our organization.

We reinforce our EMCOR Values through many ongoing initiatives.

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We also regularly provide training on these values, both at time of hire and on an ongoing, periodic basis.

In addition, to develop and reinforce our values company-wide, and empower our leaders to perform at the highest levels, senior leaders are invited to our Leadership for Results course at Babson College and our Leading with Character program at the Thayer Leadership Development Group at West Point.

In addition, to develop and reinforce our values company-wide, and empower our leaders to perform at the highest levels, senior leaders are invited to our Leadership for Results course and our Leading with Character program at the Thayer Leadership Development Group at West Point.

In addition, identified front line leaders such as project managers, superintendents and supervisors are invited to our Leader Development Program, which focuses on the development of skills to enhance their growth as leaders and emphasizes the importance of our EMCOR Values.

Workplace Safety

We believe that our focus on employee safety and well-being is reflected in our results.

In a year in which our employees worked approximately 77.5 million hours, the Company’s Total Recordable Incident Rate in 2022 was approximately 1.2, which was approximately 55% lower than the most recently available industry average of 2.70.

This represents our fourteenth consecutive year with a Total Recordable Incident Rate which was less than half the industry average.

During a year in which our people worked over 80 million hours, the Company’s Total Recordable Incident Rate in 2023 was just under 1.2, which was approximately 50% lower than the U.S.

Bureau of Labor Statistics’ most recently available industry average of 2.4 for NAICS Code 2382, Building Equipment Contractors.

This represents our fifteenth consecutive year with a Total Recordable Incident Rate which was less than half the industry average.

Our position as an industry leader in safety begins with a strong culture of care and vigilance embodied in our EMCOR Values and is supported by a comprehensive suite of training, resources, and analytics.

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Zero Injuries Program and Be Vigilant!

Campaign, (b) incident and injury prevention planning, including in-person and online training tools, adoption of new technology, and best practice guides available through our company intranet, (c) enterprise level reporting and analysis of leading and lagging indicators, (d) a 24-hour incident reporting hotline, and (e) a company-wide program to share and champion best safety practices across our range of businesses.

Diversity, Equity, and Inclusion

We believe that a diverse workforce is important to the long-term success of our business.

We actively seek to increase the diversity of our workforce and to practice our commitment to diversity and inclusion in hiring, development, and training.

This extends to our senior leadership and Board of Directors, where we require that any slate of recruited candidates for a named executive officer or other corporate officer position, and new management-supported director nominees, include individuals from underrepresented demographics.

Campaign, (b) incident and injury prevention planning, including in-person and online training tools and best practice guides available through our company intranet, (c) enterprise level reporting and analysis of leading and lagging indicators, (d) a 24-hour incident reporting hotline, and (e) a company-wide program to share and champion best safety practices across our range of businesses.

These tools are evolving with the way our people work, including employees in the field.

For example, we have deployed an online safety training program available to any employee on a mobile device.

A Diverse and Inclusive Workplace

We believe that a diverse and inclusive workforce is important to the long-term success of our business.

We actively seek to increase the diversity of our workforce and to practice our commitment to diversity and inclusion in hiring, development, and training, embracing diversity of experience, background, and personal characteristics.

We have also designed and implemented policies and practices to promote a workplace free from discrimination, including our Affirmative Action and Equal Opportunity Policy, the implementation, effectiveness, and reporting requirements of which are overseen by our designated Affirmative Action Officer.

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We work to unlock the full potential of all employees at every level through:

(a) the EMCOR Manager Certificate Program, which promotes supervisory management skills, (b) our Degree Assistance Program, which provides tuition reimbursement for continuing education, and (c) the resources available to all employees on our online learning platform, the EMCOR Learning Center, which includes thousands of on-demand training courses on a wide range of topics.

In furtherance of our EMCOR Values, all EMCOR employees are required to complete diversity and inclusion training, and our current and future leaders undergo implicit association and unconscious bias training.

(a) the EMCOR Manager Certificate Program, which promotes supervisory management skills, (b) our Degree Assistance Program, which provides tuition reimbursement for continuing education, and (c) the resources available to all employees on our online learning platform, EMCOR University Online, which includes thousands of on-demand training courses on a wide range of topics.

In furtherance of our EMCOR Values, all EMCOR employees are required to complete inclusive workplace training, and our current and future leaders undergo implicit association training.

Available Information

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Our Board of Directors has an audit committee, a compensation and personnel committee, and a nominating and corporate governance committee.

Each of these committees has a formal charter.

Each of these committees has a formal charter and is comprised of independent directors.

We also have Corporate Governance Guidelines, which include guidelines regarding related party transactions, a Code of Ethics for our Chief Executive Officer and Senior Financial Officers, and a Code of Ethics and Business Conduct for Directors, Officers, and Employees.

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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-K

Item 1. Business