What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-28 compared with 2023-02-23 · 315 added, 263 removed, 1294 unchanged (31% of the section changed)

14 unchanged sentences

Property, plant, and equipment, net

179,378 157,819

Operating lease right-of-use assets 310,498 268,063

41 unchanged sentences

Selling, general and administrative expenses 1,211,233 1,038,717 970,937

Restructuring expenses — — 2,214

Impairment loss on goodwill, identifiable intangible assets,

and other long-lived assets — — 232,750

Impairment loss on long-lived assets

Operating income 875,756 564,877 530,800

19 unchanged sentences

Net income including noncontrolling interests $ 633,329 $ 406,122 $ 383,701

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments 6,417 ( 10,786 ) ( 360 )

1 unchanged sentence

1,330 897 26,031

Other comprehensive (loss) income ( 9,889 ) 25,671 ( 19,945 )

Other comprehensive income (loss)

7,747 ( 9,889 ) 25,671

Comprehensive income 641,076 396,233 409,372

3 unchanged sentences

_________________

(1) Net of tax (provision) benefit of $( 0.3 ) million, $( 8.7 ) million, and $ 5.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

(1) Net of tax provision of $ 0.5 million, $ 0.3 million, and $ 8.7 million for the years ended December 31, 2023, 2022, and 2021, respectively.

The accompanying notes to consolidated financial statements are an integral part of these statements.

13 unchanged sentences

Gain on sale or disposal of property, plant, and equipment

( 2,057 ) ( 6,393 ) ( 782 )

Excess tax benefits from share-based compensation ( 1,719 ) ( 1,654 ) ( 828 )

2 unchanged sentences

Non-cash expense from contingent consideration arrangements 2,287 1,610 1,810

Non-cash expense for impairment of goodwill, identifiable intangible assets,

and other long-lived assets — — 232,750

Non-cash expense for impairment of long-lived assets

Non-cash share-based compensation expense 13,739 12,125 11,107

1 unchanged sentence

Changes in operating assets and liabilities, excluding the effect of businesses acquired:

(Increase) decrease in accounts receivable ( 340,091 ) ( 246,856 ) 139,377

Increase in accounts receivable

( 626,494 ) ( 340,091 ) ( 246,856 )

Increase in inventories ( 23,442 ) ( 31,541 ) ( 116 )

(Increase) decrease in contract assets ( 44,725 ) ( 50,648 ) 7,829

Increase (decrease) in accounts payable 111,488 54,849 ( 9,022 )

Decrease (increase) in contract assets

5,733 ( 44,725 ) ( 50,648 )

Increase in accounts payable

82,192 111,488 54,849

Increase in contract liabilities 489,728 299,897 44,713

(Decrease) increase in accrued payroll and benefits and other accrued expenses and liabilities ( 30,025 ) 46,573 113,835

Increase (decrease) in accrued payroll and benefits and other accrued expenses and liabilities

189,268 ( 30,025 ) 46,573

Changes in other assets and liabilities, net 24,868 ( 4,109 ) ( 56,874 )

3 unchanged sentences

Proceeds from sale or disposal of property, plant, and equipment

13,604 7,145 2,754

Purchases of property, plant, and equipment

( 78,404 ) ( 49,289 ) ( 36,192 )

Investments in and advances to unconsolidated entities — — ( 1,595 )

4 unchanged sentences

Repayments of revolving credit facility ( 200,000 ) ( 270,000 ) —

Proceeds from long-term debt — — 300,000

Repayments of long-term debt and debt issuance costs ( 246,171 ) ( 13,875 ) ( 13,875 )

8 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 6,372 ( 12,515 ) ( 1,279 )

(Decrease) increase in cash, cash equivalents, and restricted cash ( 365,500 ) ( 80,994 ) 543,642

Increase (decrease) in cash, cash equivalents, and restricted cash

332,682 ( 365,500 ) ( 80,994 )

Cash, cash equivalents, and restricted cash at beginning of year (1)

3 unchanged sentences

_________________

(1) Includes $ 0.6 million, $ 1.2 million, $ 0.7 million, and $ 1.1 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of December 31, 2022, 2021, 2020, and 2019, respectively.

(1) Includes $ 0.6 million, $ 1.2 million, and $ 0.7 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of December 31, 2022, 2021, and 2020, respectively.

The accompanying notes to consolidated financial statements are an integral part of these statements.

10 unchanged sentences

Balance, December 31, 2020

$ 2,053,244 $ 606 $ 47,464 $ ( 109,233 ) $ 2,480,321 $ ( 366,490 ) $ 576

Net income including noncontrolling interests 383,701 — — — 383,532 — 169

Other comprehensive loss ( 19,945 ) — — ( 19,945 ) — — —

Cumulative-effect adjustment (2)

Other comprehensive income

25,671 — — 25,671 — — —

7 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 406,122 — — — 406,122 — —

Other comprehensive income 25,671 — — 25,671 — — —

Other comprehensive loss

( 9,889 ) — — ( 9,889 ) — — —

Common stock issued under share-based compensation plans 2 2 — — — — —

3 unchanged sentences

Repurchases of common stock ( 660,609 ) — — — — ( 660,609 ) —

Distributions to noncontrolling interests ( 43 ) — — — — — ( 43 )

Share-based compensation expense 12,125 — 12,125 — — — —

Balance, December 31, 2022

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

Net income including noncontrolling interests 633,329 — — — 632,994 — 335

Other comprehensive loss ( 9,889 ) — — ( 9,889 ) — — —

Other comprehensive income

7,747 — — 7,747 — — —

Common stock issued under share-based compensation plans — 2 ( 2 ) — — — —

6 unchanged sentences

$ 2,470,815 $ 611 $ 91,813 $ ( 85,704 ) $ 3,814,439 $ ( 1,351,381 ) $ 1,037

_________________

(1) Represents cumulative foreign currency translation and post retirement liability adjustments of $( 1.8 ) million and $( 83.9 ) million, respectively, as of December 31, 2023, $( 8.3 ) million and $( 85.2 ) million, respectively, as of December 31, 2022, and $ 2.5 million and $( 86.1 ) million, respectively, as of December 31, 2021.

(2) Represents adjustment to retained earnings upon the adoption of Accounting Standards Codification Topic 326.

The accompanying notes to consolidated financial statements are an integral part of these statements.

6 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, 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.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

8 unchanged sentences

Actual results could materially differ from those estimates.

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.

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.

Revenue Recognition

8 unchanged sentences

The Company maintains an allowance for credit losses to reduce outstanding receivables to their net realizable value.

A considerable amount of judgment is required when determining expected credit losses.

Judgment is required when determining expected credit losses.

Estimates of such losses are recorded when we believe a customer, or group of customers, may not be able to meet their financial obligations due to deterioration in financial condition or credit rating.

6 unchanged sentences

At December 31, 2023 and 2022, our accounts receivable of $ 3,203.5 million and $ 2,567.4 million, respectively, were recorded net of allowances for credit losses of $ 22.5 million and $ 22.4 million, respectively.

The decrease in our allowance for credit losses was attributable to the write-off of specific amounts deemed uncollectible, partially offset by the provision for credit losses recorded during 2022.

We have adjusted our allowance for credit losses during 2022 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.

8 unchanged sentences

Cost is determined principally using the average cost method.

Refer to Note 6 - Inventories of the notes to consolidated financial statements for additional information.

At the inception of a contract, we determine whether the arrangement is or contains a lease.

11 unchanged sentences

Property, plant, and equipment is stated at cost.

Depreciation, including amortization of assets under finance leases, is recorded principally using the straight-line method over estimated useful lives of 3 to 10 years for machinery and equipment, 3 to 7 years for vehicles, furniture and fixtures and computer hardware/software, and 25 years for buildings.

Depreciation, including amortization of assets under finance leases, is recorded using the straight-line method over estimated useful lives of 3 to 10 years for machinery and equipment, 3 to 7 years for vehicles, furniture and fixtures, and computer hardware/software, and 25 years for buildings.

Leasehold improvements are amortized over the shorter of the remaining lease term or the expected useful life of the improvement.

8 unchanged sentences

Goodwill and indefinite-lived intangible assets, such as trade names, are evaluated at least annually for impairment (each October 1, absent any earlier identified impairment indicators) and are written down if impaired.

Identifiable intangible assets with finite lives are amortized over their useful lives and are reviewed for impairment whenever facts and circumstances indicate that their carrying values may not be fully recoverable.

Identifiable intangible assets with finite lives are amortized over their useful lives and, along with certain other long-lived assets, are reviewed for impairment whenever facts and circumstances indicate that their carrying values may not be fully recoverable.

See Note 8 - Goodwill, Identifiable Intangible Assets, and Other Long-Lived Assets of the notes to consolidated financial statements for additional information.

7 unchanged sentences

The current portion of anticipated insurance recoveries of $ 11.9 million and $ 16.0 million as of December 31, 2023 and 2022, respectively, were included in “Prepaid expenses and other” and the non-current portion of anticipated insurance recoveries of $ 48.8 million and $ 59.0 million as of December 31, 2023 and 2022, 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.

Foreign Operations

13 unchanged sentences

We had no unrecognized income tax benefits as of December 31, 2023 and 2022.

Valuation of Share-Based Compensation

Our share-based compensation plans and programs are administered by our Board of Directors or its Compensation and Personnel Committee.

See Note 13 - Share-Based Compensation Plans of the notes to consolidated financial statements for additional information regarding these share-based compensation plans and programs.

EMCOR Group, Inc.

2 unchanged sentences

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Valuation of Share-Based Compensation

Our share-based compensation plans and programs are administered by our Board of Directors or its Compensation and Personnel Committee.

See Note 13 - Share-Based Compensation Plans of the notes to consolidated financial statements for additional information regarding these share-based compensation plans and programs.

We recognize all share-based payments issued to acquire goods or services in the statement of operations based on the fair value of such payments.

Compensation expense related to share-based awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period.

We recognize expense for all share-based payments issued to acquire goods or services based on the fair value of such payments.

Compensation expense related to share-based awards is generally recognized on a straight-line basis over the requisite service period, which is the vesting period.

The benefits of tax deductions in excess of recognized compensation expense are recognized in the Consolidated Statements of Operations when the underlying awards vest or are settled.

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.

The Financial Accounting Standards Board (the “FASB”) has issued an Accounting Standards Update (“ASU”), 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.

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

In order to utilize such guidance, an entity must first conclude that the modified terms directly replace or have the potential to replace an eligible reference rate due to reference rate reform, and that any contemporaneous changes to other terms that change, or have the potential to change, the amount or timing of contractual cash flows are related to the replacement of a reference rate.

During the second quarter of 2023, we amended our then existing credit agreement to change the reference rate from LIBOR to an interest rate based on the secured overnight financing rate, as administered by the Federal Reserve Bank of New York (“SOFR”).

As such amendment was within the scope of the aforementioned guidance, we adopted this accounting pronouncement and utilized the optional expedients referenced above.

We are not exposed to any other material contracts that reference LIBOR.

The adoption of this accounting pronouncement did not have a material impact on our financial position and/or results of operations.

In November 2023, the FASB issued an ASU, which expands the required disclosure for reportable segments.

This guidance requires entities to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all segment disclosures which are currently required annually.

This ASU additionally requires entities to disclose the title and position of the individual or the name of the group or committee identified as its chief operating decision-maker.

Such guidance, which is required to be applied retrospectively, is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, although early adoption is permitted.

While the adoption of this ASU will not have an impact on our financial position and/or results of operations, we are currently evaluating the impact to our segment disclosures.

In December 2023, the FASB issued an ASU intended to enhance the transparency and decision-usefulness of income tax disclosures.

Such guidance requires entities to provide additional information within their income tax rate reconciliation, including further disclosure of federal, state, and foreign income taxes and to provide more details about these reconciling items if a quantitative threshold is met.

This guidance additionally requires expanded disclosure of income taxes paid, including amounts paid for federal, state, and foreign taxes.

This ASU, which is required to be applied prospectively, is effective for fiscal years beginning after December 15, 2024, although early adoption and retrospective application is permitted.

While the adoption of this ASU will not have an impact on our financial position and/or results of operations, we are currently evaluating the impact on our income tax disclosures, including the processes and controls around the collection of this information.

NOTE 3 - REVENUE FROM CONTRACTS WITH CUSTOMERS

66 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.

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.

Our fixed price construction projects generally use a cost-to-cost input method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts.

Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.

EMCOR Group, Inc.

2 unchanged sentences

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.

For our unit price construction contracts, progress towards complete satisfaction is measured through an output method, such as the number of units produced or delivered, when our performance does not produce significant amounts of work in process or finished goods prior to complete satisfaction of such performance obligations.

11 unchanged sentences

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, 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 $ 48.5 million during the year ended December 31, 2022.

Of this amount, approximately $ 33.5 million was reported within our United States electrical construction and facilities services segment, approximately $ 13.7 million was reported within our United States mechanical construction and facilities services segment, and approximately $ 1.3 million was reported within our United States building services segment.

There were no increases in total estimated costs or reductions to anticipated contract value that had a significant impact on our operating results during each of the years ended December 31, 2021 and 2020.

Additionally, there were no significant amounts of revenue recognized during the years ended December 31, 2022 or 2021 related to performance obligations satisfied in prior periods.

During the year ended December 31, 2020, we recognized revenue of $ 6.1 million associated with the final settlement of the contract value for two projects within our United States electrical construction and facilities services segment that were completed or substantially completed in prior periods.

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 during the years ended December 31, 2023, 2022, and 2021, as summarized in the following table (in thousands):

2023 2022 2021

United States electrical construction and facilities services

$ 12,535 $ 33,463 $ 4,627

United States mechanical construction and facilities services

10,864 13,679 2,264

United States building services

5,658 1,261 —

$ 29,057 $ 48,403 $ 6,891

During the year ended December 31, 2023, we recognized revenue of approximately $ 16.5 million on individual projects that were substantially complete in prior periods but had revisions to total estimated cost or anticipated contract value, which resulted in an increase to profitability in excess of $ 1.0 million.

Of this amount, approximately $ 3.4 million was reported within our United States electrical construction and facilities services segment and approximately $ 13.1 million was reported within our United States mechanical construction and facilities services segment.

There were no significant amounts of revenue recognized during the years ended December 31, 2022 or 2021 related to performance obligations satisfied in prior periods.

EMCOR Group, Inc.

5 unchanged sentences

Our contracts are with many different customers in numerous industries.

The following tables provide further disaggregation of our revenues by categories we use to evaluate our financial performance within each of our reportable segments (in thousands, except for percentages).

Refer to Note 18 - 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 (in thousands):

Due to continued growth in certain of our end markets, during 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.

Total 2022 % of

1 unchanged sentence

United States electrical construction and facilities services:

Network and communications market sector

$ 934,455 34 % $ 801,052 33 % $ 621,139 30 %

Commercial market sector 402,886 14 % 414,539 17 % 398,996 20 %

Manufacturing market sector 301,606 12 % 230,894 11 % 241,415 13 %

Manufacturing and industrial market sector

394,804 14 % 301,606 12 % 230,894 11 %

Healthcare market sector 242,931 9 % 178,348 7 % 107,442 5 %

High-tech manufacturing market sector

140,471 5 % 88,544 4 % 35,196 2 %

Institutional market sector 147,375 5 % 154,077 6 % 178,729 9 %

1 unchanged sentence

Water and wastewater market sector 21,234 1 % 21,251 1 % 14,962 1 %

Hospitality market sector 17,563 1 % 15,346 1 % 23,797 1 %

Hospitality and entertainment market sector

81,815 3 % 33,818 1 % 23,257 1 %

Short duration projects (1)

7 unchanged sentences

United States mechanical construction and facilities services:

Network and communications market sector

$ 410,397 8 % $ 295,261 7 % $ 279,953 7 %

Commercial market sector 1,115,993 22 % 1,079,872 25 % 1,042,751 27 %

Manufacturing market sector 632,332 15 % 579,176 15 % 486,753 14 %

Manufacturing and industrial market sector

698,993 14 % 632,332 15 % 579,176 15 %

Healthcare market sector 489,485 10 % 479,937 11 % 487,111 12 %

High-tech manufacturing market sector

845,251 16 % 320,597 7 % 173,302 4 %

Institutional market sector 316,255 6 % 331,727 8 % 263,285 7 %

1 unchanged sentence

Water and wastewater market sector 286,912 6 % 261,501 6 % 213,314 5 %

Hospitality market sector 29,511 1 % 38,405 1 % 40,079 1 %

Hospitality and entertainment market sector

52,919 1 % 44,615 1 % 66,059 2 %

Short duration projects (1)

6 unchanged sentences

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

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - REVENUE FROM CONTRACTS WITH CUSTOMERS (Continued)

Total 2022 % of

1 unchanged sentence

United States building services:

Mobile mechanical services $ 1,713,989 63 % $ 1,560,120 64 % $ 1,323,499 64 %

Mechanical services

$ 2,042,244 65 % $ 1,748,455 64 % $ 1,590,506 65 %

Commercial site-based services 865,232 28 % 810,210 29 % 680,351 28 %

1 unchanged sentence

Total segment revenues $ 3,120,134 $ 2,754,953 $ 2,455,129

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - REVENUE FROM CONTRACTS WITH CUSTOMERS (Continued)

Total 2022 % of

22 unchanged sentences

Contract assets as of December 31, 2023 and 2022 additionally included $ 6.7 million and $ 3.8 million, respectively, associated with claims.

There were no claim amounts included within accounts receivable as of December 31, 2022 or 2021.

There were $ 15.4 million of claims included within accounts receivable as of December 31, 2023.

There were no claims included within accounts receivable as of December 31, 2022.

There were contractually billed amounts and retention related to contracts with unapproved change orders and claims of approximately $ 157.7 million and $ 131.4 million as of December 31, 2023 and 2022, respectively.

For contracts in claim status, contractually billed amounts will generally not be paid by the customer to us until final resolution of the related claims.

Contract liabilities from our construction contracts arise when amounts invoiced to our customers exceed revenues recognized under the cost-to-cost measure of progress.

Contract liabilities additionally include advanced payments from our customers on certain contracts.

Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation and are recorded as either current or long-term, depending upon when we expect to recognize such revenue.

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

EMCOR Group, Inc.

2 unchanged sentences

NOTE 3 - REVENUE FROM CONTRACTS WITH CUSTOMERS (Continued)

Contract liabilities from our construction contracts arise when amounts invoiced to our customers exceed revenues recognized under the cost-to-cost measure of progress.

Contract liabilities additionally include advanced payments from our customers on certain contracts.

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 amounts as of December 31, 2023 and 2022 (in thousands):

13 unchanged sentences

Contract assets and contract liabilities increased by approximately $ 2.0 million and $ 3.8 million, respectively, as a result of acquisitions made by us in 2023.

Excluding the impact of acquisitions, net contract liabilities increased by approximately $ 254.9 million for the year ended December 31, 2022, due 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.

Excluding the impact of acquisitions, net contract liabilities increased by approximately $ 497.9 million for the year ended December 31, 2023, predominantly due 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 customer deposits and 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.

1 unchanged sentence

As of December 31, 2023 and 2022, accounts receivable included $ 555.9 million and $ 456.9 million, respectively, of retainage billed under terms of our contracts.

These retainage amounts represent amounts which have been contractually invoiced to customers where payments have been partially withheld pending the achievement of certain milestones, satisfaction of other contractual conditions, or completion of the project.

These retainage amounts represent amounts which have been contractually invoiced to customers where payments have been partially withheld pending the completion of the project.

We estimate that approximately 88 % of the retainage outstanding as of December 31, 2023 will be collected during 2024.

As of December 31, 2023 and 2022, accounts payable included $ 93.6 million and $ 82.4 million, respectively, of retainage withheld under terms of our subcontracts.

These retainage amounts represent amounts invoiced to the Company by our subcontractors where payments have been partially withheld pending the achievement of certain milestones, satisfaction of other contractual conditions, or completion of the project.

These retainage amounts represent amounts invoiced to the Company by our subcontractors where payments have been partially withheld pending the completion of their scope of work.

We estimate that approximately 90 % of the retainage outstanding as of December 31, 2023 will be paid during 2024.

4 unchanged sentences

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 (in thousands, except for percentages):

December 31, 2023 % of Total

35 unchanged sentences

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 2023, we acquired eight companies for total consideration of $ 99.6 million.

Such acquisitions include:

(a) a national energy efficiency specialty services firm, the results of operations of which have been included in our United States building services segment, and (b) seven companies, the results of operations of which were de minimis, consisting of:

(i) three companies that have been included within our United States mechanical construction and facilities services segment, one of which provides mechanical and pipe fabrication services in the Midwestern region of the United States, and two of which add capabilities to our national fire protection services, and (ii) four mechanical services companies in the Western and Midwestern regions of the United States that have been included within our United States building services segment and enhance our presence in geographies where we have existing operations.

In connection with these acquisitions, we acquired working capital of $ 9.1 million and other net liabilities of $ 6.1 million, including certain deferred tax liabilities, and have preliminarily ascribed $ 37.4 million to goodwill and $ 59.2 million to identifiable intangible assets.

We expect that $ 29.6 million of the goodwill and identifiable intangible assets acquired in connection with these 2023 acquisitions will be deductible for tax purposes.

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

2 unchanged sentences

(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.

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

We expect that all of the goodwill and identifiable intangible assets acquired in connection with these 2022 acquisitions will be deductible for tax purposes.

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

2 unchanged sentences

(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 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.

During 2020, we acquired three companies for total consideration of $ 50.3 million.

Such acquisitions include:

(a) a company that provides building automation and controls solutions within the Northeastern region of the United States, (b) a full service provider of mechanical services in the Washington, D.C.

metro area, and (c) a company that provides mobile mechanical services in the Southern region of the United States.

The results of operations for all three companies have been included within our United States building services segment.

In connection with these acquisitions, we acquired working capital of $ 3.0 million and other net liabilities of $ 3.9 million and have ascribed $ 13.1 million to goodwill and $ 38.1 million to identifiable intangible assets.

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

EMCOR Group, Inc.

2 unchanged sentences

NOTE 4 - ACQUISITIONS OF BUSINESSES (Continued)

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.

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

automation and controls solutions.

We expect that $ 90.5 million of the goodwill and identifiable intangible assets acquired in connection with these 2021 acquisitions will be deductible for tax purposes.

The purchase price allocation for one of the businesses acquired in 2023 is preliminary and subject to change during its measurement period.

As we finalize such purchase price allocation, 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 and 2020 have been finalized during their respective measurement periods with an insignificant impact.

The purchase price allocations for the other businesses acquired in 2023 as well as the businesses acquired in 2022 and 2021 have been finalized during their respective measurement periods with an insignificant impact.

NOTE 5 - EARNINGS PER SHARE

17 unchanged sentences

The increase in inventories as of December 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 extended 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.

(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, (b) an increase in raw materials on hand to support our fabrication facilities given the growth in demand for our fire protection services, and (c) higher levels of work in process inventory within our United States industrial services segment given greater new build heat exchanger orders.

EMCOR Group, Inc.

9 unchanged sentences

Land, buildings, and leasehold improvements

142,114 130,358

Construction in progress 13,514 6,060

28 unchanged sentences

NOTE 8 - GOODWILL, IDENTIFIABLE INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS (Continued)

For the year ended December 31, 2021, no impairment of our goodwill was recognized.

However, during the second quarter of 2020, we concluded that the carrying amount of our United States industrial services segment exceeded its fair value, resulting in the recognition of a non-cash goodwill impairment charge of $ 225.5 million which was included within our results of operations for the year ended December 31, 2020.

An interim impairment assessment was considered necessary as a result of the significant impact the COVID-19 pandemic and concurrent decline in demand for oil and other refined products had on our revenue and operating margin expectations for such segment.

The valuation methodology utilized in this prior year interim impairment test was consistent with the approach described above.

We did not identify indicators of impairment related to any other reporting unit that would have required an interim impairment assessment during 2020 and there was no other impairment of goodwill recognized for the year ended December 31, 2020.

For the years ended December 31, 2022 and 2021, no impairment of our goodwill was recognized.

Due to the inherent uncertainties involved in making estimates, our assumptions may change in future periods.

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Given the amounts by which the fair value exceeds the carrying value for each of our reporting units, the decreases in estimated fair values described above would not have significantly impacted the results of our 2023 impairment tests.

Further, for each of our reporting units, other than our United States industrial services segment, a 10% decline in the estimated fair value of such reporting unit, due to other changes in our assumptions, including forecasted future cash flows, would not have significantly impacted the results of our 2022 impairment tests.

In the case of our United States industrial services segment, however, such a decrease would cause the estimated fair value of this reporting unit to approximate its carrying value.

Further, for each of our reporting units, a 10% decline in the estimated fair value of such reporting unit, due to other changes in our assumptions, including forecasted future cash flows, would not have significantly impacted the results of our 2023 impairment tests.

The changes in the carrying amount of goodwill by reportable segment during the years ended December 31, 2023 and 2022 were as follows (in thousands):

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Balance at December 31, 2021

Acquisitions and purchase price adjustments 24,467 4,269 9,749 — 38,485

$ 159,512 $ 303,887 $ 312,781 $ 114,088 $ 890,268

17,601 6,942 4,340 — 28,883

Intersegment transfers 900 4,500 ( 5,400 ) — —

Balance at December 31, 2022

Acquisitions and purchase price adjustments 17,601 6,942 4,340 — 28,883

178,013 315,329 311,721 114,088 919,151

— 4,524 32,874 — 37,398

Intersegment transfers — ( 1,500 ) 1,500 — —

Balance at December 31, 2023

$ 178,013 $ 318,353 $ 346,095 $ 114,088 $ 956,549

The aggregate goodwill balance as of December 31, 2021 included $ 493.6 million of accumulated impairment charges, which were comprised of $ 139.5 million within the United States building services segment and $ 354.1 million within the United States industrial services segment.

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - GOODWILL, IDENTIFIABLE INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS (Continued)

Identifiable Intangible Assets and Other Long-Lived Assets

7 unchanged sentences

If the carrying amount of the trade name is greater than the implied fair value of the trade name, an impairment in the amount of the excess is recognized and charged to operations.

In addition, we review for impairment of identifiable intangible assets that are being amortized as well as other long-lived assets whenever facts and circumstances indicate that their carrying values may not be fully recoverable.

For the years ended December 31, 2023, 2022, and 2021, no impairment of our indefinite-lived trade name intangible assets was recognized.

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - GOODWILL, IDENTIFIABLE INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS (Continued)

We review for impairment of identifiable intangible assets that are being amortized as well as other long-lived assets whenever facts and circumstances indicate that their carrying values may not be fully recoverable.

This test compares their carrying values to the undiscounted pre-tax cash flows expected to result from the use of the assets.

If the assets are impaired, the assets are written down to their fair values, generally determined based on their discounted estimated future cash flows.

For the years ended December 31, 2022 and 2021, no impairment of our indefinite-lived intangible assets, finite-lived intangible assets, or other long-lived assets was recognized.

However, during the second quarter of 2020, given the external market conditions disclosed above, we evaluated certain of our identifiable intangible assets and other long-lived assets for impairment.

Such assets included those associated with the businesses in our United States industrial services segment.

As a result of these assessments, we recorded non-cash impairment charges of $ 7.3 million, which were included within our results of operations for the year ended December 31, 2020.

During the quarter ended September 30, 2023, we identified facts and circumstances that indicated the carrying values of certain long-lived assets within our United States mechanical construction and facilities services segment may not be fully recoverable.

As a result, we determined that these assets were impaired, and, during the third quarter of 2023, recognized a $ 2.4 million impairment charge.

For the years ended December 31, 2023, 2022, and 2021, there were no other indicators of impairment with respect to identifiable intangible assets that are being amortized as well as other long-lived assets.

Identifiable intangible assets as of December 31, 2023 and 2022 consisted of the following (in thousands):

17 unchanged sentences

Total $ 1,264,334 $ ( 606,592 ) $ ( 63,767 ) $ 593,975

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - GOODWILL, IDENTIFIABLE INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS (Continued)

Identifiable intangible assets attributable to businesses acquired in 2023 and 2022 have been valued at $ 59.2 million and $ 65.9 million, respectively, and consist of customer relationships, trade names, and contract backlog.

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The weighted average amortization periods for the unamortized balances remaining are, in the aggregate, approximately 7.00 years, which are comprised of the following:

7.25 years for customer relationships, 7.00 years for trade names, 4.75 years for developed technology/vendor network, and 1.00 year for contract backlog.

7.25 years for customer relationships, 5.75 years for trade names, and 3.75 years for developed technology/vendor network.

Amortization expense related to identifiable intangible assets with finite lives was $ 67.1 million, $ 61.3 million, and $ 64.1 million for the years ended December 31, 2023, 2022, and 2021, respectively.

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - GOODWILL, IDENTIFIABLE INTANGIBLE ASSETS, AND OTHER LONG-LIVED ASSETS (Continued)

The following table presents the estimated future amortization expense of identifiable intangible assets in the following years (in thousands):

2023 $ 63,366

Thereafter 87,269

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These assumptions and estimates may change in future periods, especially in times of uncertain economic conditions and rising interest rates.

Such assumptions and estimates may also be impacted by supply chain, production, and other logistical issues currently impacting our business.

Significant adverse changes to external market conditions or our internal forecasts, if any, could result in future impairment charges.

It is not possible at this time to determine if any future impairment charge will result or, if it does, whether such a charge would be material to our results of operations.

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - DEBT

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

December 31, 2022 December 31, 2021

Term loan, interest payable at varying amounts through 2025 $ 242,813 $ 256,688

Excluding finance lease liabilities, we had no outstanding debt as of December 31, 2023.

Refer to Note 16 - Leases of the notes to consolidated financial statements for additional information regarding our finance leases, including outstanding balances.

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

December 31, 2022

Unamortized debt issuance costs ( 2,080 )

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Credit Agreement

Until March 2, 2020, we had a credit agreement dated August 3, 2016 , which provided for a $ 900.0 million revolving credit facility and a $ 400.0 million term loan.

On March 2, 2020 , we amended and restated such agreement to provide for a $ 1.3 billion revolving credit facility (the “2020 Revolving Credit Facility”) and a $ 300.0 million term loan (the “2020 Term Loan”) (collectively referred to as the “2020 Credit Agreement”) expiring March 2, 2025 .

We may increase the 2020 Revolving Credit Facility to $ 1.9 billion if additional lenders are identified and/or existing lenders are willing to increase their current commitments.

Until December 20, 2023, we had a credit agreement that was entered into on March 2, 2020 , which provided for a $ 1.3 billion revolving credit facility (the “2020 Revolving Credit Facility”) and a $ 300.0 million term loan (the “2020 Term Loan”).

On December 20, 2023 , we amended and restated such agreement (as amended and restated, the “2023 Credit Agreement”) to provide for a $ 1.3 billion revolving credit facility (the “2023 Revolving Credit Facility”) expiring December 20, 2028 .

If additional lenders are identified and/or existing lenders are willing to increase their current commitments, we may increase the 2023 Revolving Credit Facility by an amount equal to the greater of:

(a) $ 900 million or (b) the Company’s Adjusted EBITDA (as such term is defined in the 2023 Credit Agreement) for the twelve-month period ending immediately prior to the increase in commitment.

We may allocate up to $ 600.0 million of available capacity under the 2023 Revolving Credit Facility to letters of credit for our account or for the account of any of our subsidiaries.

As of December 31, 2022 and 2021, the balance of the 2020 Term Loan was $ 242.8 million and $ 256.7 million, respectively.

There were no direct borrowings outstanding under the 2020 Revolving Credit Facility as of December 31, 2022 and 2021.

However, outstanding letters of credit reduce the available capacity under such facility, and as of December 31, 2022 and 2021, 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 ( 4.73 % at December 31, 2022) plus 1.00 % to 1.75 %, based on certain financial tests.

There were no direct borrowings outstanding under the 2023 Revolving Credit Facility as of December 31, 2023 or the 2020 Revolving Credit Facility as of December 31, 2022.

However, outstanding letters of credit reduce the available capacity under these facilities, and as of December 31, 2023 and 2022, we had $ 116.7 million and $ 71.3 million of letters of credit outstanding, respectively.

The balance of the 2020 Term Loan as of December 31, 2022 was $ 242.8 million.

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - DEBT (Continued)

At the Company’s election, borrowings under the 2023 Revolving Credit Facility bear interest at either:

(1) a base rate plus a margin of 0.125 % to 0.875 %, depending on the Company’s Leverage Ratio (as such term is defined in the 2023 Credit Agreement), or (2) a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York for the applicable tenor plus 0.10 % (“Adjusted Term SOFR”) plus a margin of 1.125 % to 1.875 %, depending on the Company’s Leverage Ratio.

The base rate is determined by the greater of:

(a) the prime commercial lending rate announced by Bank of Montreal from time to time ( 7.50 % at December 31, 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 %.

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

The interest rates in effect at December 31, 2022 and 2021 were 5.73 % and 1.10 %, respectively.

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 December 31, 2022 and 2021.

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.

(a) the prime commercial lending rate announced by Bank of Montreal from time to time, (b) the federal funds effective rate, plus ½ of 1.00%, (c) Adjusted Term SOFR for a one-month tenor, plus 1.00 %, or (d) 0.00 %.

A commitment fee is payable on the average daily unused amount of the 2023 Revolving Credit Facility, which ranges from 0.125 % to 0.25 %, depending on the Company’s Leverage Ratio.

The fee was 0.125 % of the unused amount as of December 31, 2023.

Fees for letters of credit issued under the 2023 Revolving Credit Facility range from 0.85 % to 1.875 % of the respective face amounts of outstanding letters of credit, depending on the nature of the letter of credit, and are computed depending on the Company’s Leverage Ratio.

We capitalized an additional $ 3.4 million of debt issuance costs associated with the 2023 Credit Agreement.

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Obligations under the 2023 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 December 31, 2022 and 2021.

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

Any voluntary prepayments are applied against the outstanding balance of the loan and reduce our future scheduled payments on a ratable basis.

Based on our outstanding balance, principal payments of $ 13.9 million are due on December 31 of each year until maturity, with any remaining unpaid principal and interest due on March 2, 2025.

Finance Lease Liabilities

See Note 16 - Leases of the notes to consolidated financial statements for additional information.

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The 2023 Credit Agreement contains customary 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 December 31, 2023.

NOTE 10 - FAIR VALUE MEASUREMENTS

12 unchanged sentences

$ 789,750 $ — $ — $ 789,750

Restricted cash (2)

Deferred compensation plan assets (2)

1 unchanged sentence

Total $ 837,065 $ — $ — $ 837,065

_________________

(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 December 31, 2023, we had $ 497.3 million 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) Deferred compensation plan assets are classified as “Other assets” in the Consolidated Balance Sheets.

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - FAIR VALUE MEASUREMENTS (Continued)

Assets at Fair Value as of December 31, 2022

2 unchanged sentences

$ 456,439 $ — $ — $ 456,439

Restricted cash (2)

1,223 — — 1,223

Deferred compensation plan assets (2)

36,882 — — 36,882

Restricted cash (3)

Total $ 493,950 $ — $ — $ 493,950

1 unchanged sentence

(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 December 31, 2022 and 2021, we had $ 209.4 million and $ 336.0 million, respectively, in money market funds.

At December 31, 2022, we had $ 209.4 million 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) Deferred compensation plan assets are classified as “Other assets” in the Consolidated Balance Sheets.

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

Restricted cash primarily represents cash held in account for use on customer contracts.

(3) Deferred compensation plan assets are classified as “Other assets” in the Consolidated Balance Sheets.

Nonrecurring Fair Value Measurements

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Such assets are measured at fair value at the time of acquisition based on valuation techniques that appropriately represent the methods which would be used by other market participants in determining fair value.

In addition, goodwill and intangible assets are tested for impairment using similar valuation methodologies to determine the fair value of such assets.

In addition, goodwill, intangible assets, and certain other long-lived assets are tested for impairment using similar valuation methodologies to determine the fair value of such assets.

Periodically, we engage an independent third-party valuation specialist to assist with the valuation process, including the selection of appropriate methodologies and the development of market-based assumptions.

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We believe that the carrying values of our financial instruments, which include accounts receivable and other financing commitments, approximate their fair values due primarily to their short-term maturities and low risk of counterparty default.

The carrying value of our debt associated with the 2020 Credit Agreement approximates its fair value due to the variable rate on such debt.

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Although there were no outstanding borrowings under our 2023 Credit Agreement as of December 31, 2023, the carrying value of any debt associated with this agreement would approximate its fair value due to the variable rate on such debt.

NOTE 11 - INCOME TAXES

12 unchanged sentences

256,175 142,145 136,085

Deferred provision (benefit) 10,483 9,517 ( 36,354 )

Deferred (benefit) provision

( 16,651 ) 10,483 9,517

$ 239,524 $ 152,628 $ 145,602

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - INCOME TAXES (Continued)

For the year ended December 31, 2023, our income tax provision was $ 239.5 million compared to $ 152.6 million for the year ended December 31, 2022 and $ 145.6 million for the year ended December 31, 2021.

The increase in the income tax provision year-over-year was primarily due to increased income before income taxes.

Additionally, the increase in the income tax provision for 2021, when compared to 2020, was partially attributable to the effect of certain increases in the deferred state tax provision.

The income tax rates on income before income taxes for the years ended December 31, 2023, 2022, and 2021, were 27.5 %, 27.3 %, and 27.5 %, respectively.

The slight decrease in the 2022 effective income tax rate, when compared to 2021, was attributable to the favorable impact of certain discrete tax items.

The decrease in the 2021 effective income tax rate, when compared to 2020, was predominantly due to the tax effect, in 2020, of the impairment charges recorded during such year, the majority of which were non-deductible for tax purposes.

Refer to Note 8 - Goodwill, Identifiable Intangible Assets, and Other Long-Lived Assets of the notes to consolidated financial statements for further discussion regarding such impairment charges.

Items accounting for the differences between income taxes computed at the federal statutory rate and the income tax provision for the years ended December 31, 2023, 2022, and 2021 were as follows (in thousands):

3 unchanged sentences

Permanent differences 9,513 5,261 5,316

Non-deductible impairment charges — — 40,165

Foreign income taxes (including UK statutory rate changes) 640 ( 155 ) ( 2,241 )

1 unchanged sentence

$ 239,524 $ 152,628 $ 145,602

EMCOR Group, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - INCOME TAXES (Continued)

The net minimum tax on global intangible low-taxed income for certain earnings of our foreign subsidiaries was approximately $ 0.1 million for each of the years ended December 31, 2022, 2021, and 2020.

The Company recognizes such tax as an expense in the period incurred.

As of December 31, 2023, we had undistributed foreign earnings from certain foreign subsidiaries of approximately $ 167.3 million.

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Our income tax returns are subject to audit by various taxing authorities and are currently under examination for the years 2017 through 2021.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law.

The CARES Act provides for various tax relief and tax incentive measures, which did not have a material impact on our results of operations.

Certain provisions of the CARES Act, however, did favorably impact our liquidity throughout 2020 as they allowed for the deferral of the employer’s portion of Social Security tax payments.

Amounts previously deferred were repaid in two installments of approximately $ 51 million during each of the fourth quarters of 2022 and 2021.

On December 27, 2020, the Consolidated Appropriations Act, 2021, was signed into law.

This act provides for tax relief, as well as an omnibus appropriations package that extends various expiring tax provisions and allows for a 100% tax deduction for the cost of business meals in 2021 and 2022.

The Consolidated Appropriations Act did not have a material impact on our income tax provision for the years ended December 31, 2022 and 2021.

On March 11, 2021, the American Rescue Plan Act was signed into law.

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

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 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.

For tax years beginning after December 31, 2022, the Inflation Reduction Act 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 was below the aforementioned $1.0 billion threshold, as well as the fact that our effective federal income tax rate is in excess of the 15% alternative minimum tax rate, this alternative minimum tax did not have an impact on our financial position and/or results of operations for the year ended December 31, 2023.

Legislation has been enacted in the United Kingdom to implement measures in concert with the Base Erosion and Profit Shifting Pillar Two framework for international taxation developed by the member countries of the Organization for Economic Co-operation and Development (the “Pillar Two Model Rules”).

The Pillar Two Model Rules are intended to ensure that multinational enterprises pay a minimum 15% effective tax rate in every jurisdiction in which they operate.

Given that our effective income tax rate in all jurisdictions in which we operate is in excess of such 15% minimum rate, we do not anticipate that these rules will have a material effect on our tax provision or effective income tax rate;

however, we continue to monitor evolving tax legislation in the jurisdictions in which we operate.

EMCOR Group, Inc.

10 unchanged sentences

Deferred compensation 54,313 40,682

Accrued federal payroll taxes (1)

Other (including liabilities and reserves) 40,110 35,584

7 unchanged sentences

Depreciation of property, plant, and equipment

( 30,075 ) ( 28,435 )

Pension asset ( 4,660 ) ( 4,082 )

2 unchanged sentences

Net deferred income tax liabilities $ ( 56,639 ) $ ( 61,563 )

_________________

(1) Represents employer Social Security tax payments previously deferred under the CARES Act.

At December 31, 2022 and 2021, our net deferred income tax liabilities of $ 61.6 million and $ 51.0 million, respectively, were included in “Other long-term obligations” in the accompanying Consolidated Balance Sheet.

Our net deferred income tax liabilities of $ 56.6 million and $ 61.6 million as of December 31, 2023 and 2022, respectively, were included in “Other long-term obligations” in the accompanying Consolidated Balance Sheet.

Valuation allowances are established when necessary to reduce deferred income tax assets when it is more likely than not that a tax benefit will not be realized.

As of December 31, 2023 and 2022, the total valuation allowance on deferred income tax assets, related to state and local net operating losses, foreign net operating losses, and foreign income tax credit carryovers, was approximately $ 4.4 million and $ 3.6 million, respectively.

The increase in our valuation allowances at December 31, 2022 was primarily a result of the recognition of additional deferred tax assets related to net operating loss carryovers that we determined we would likely not be able to utilize.

The increase in our valuation allowances at December 31, 2023 was a result of the recognition of additional deferred tax assets related to net operating loss carryovers and foreign income tax credit carryovers that we determined we would likely not be able to utilize.

Realization of our deferred income tax assets is dependent on our generating sufficient taxable income in the jurisdictions in which such deferred tax assets will reverse.

8 unchanged sentences

We currently pay a regular quarterly dividend of $ 0.18 per share.

Subsequent to December 31, 2022, our Board of Directors (the “Board”) announced its intention to increase the regular quarterly dividend to $ 0.18 per share commencing with the dividend to be paid in April 2023.

Subsequent to December 31, 2023, our Board of Directors announced its intention to increase the regular quarterly dividend to $ 0.25 per share commencing with the dividend to be paid in April 2024.

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

6 unchanged sentences

We may repurchase our shares from time to time to the extent permitted by securities laws and other legal requirements, including provisions in our 2023 Credit Agreement placing limitations on such repurchases.

The Inflation Reduction Act, 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.

The applicable excise tax for the year ended December 31, 2023 was approximately $ 1.0 million and has been included as a component of treasury stock as it represents a direct cost associated with the repurchase of our common stock.

NOTE 13 - SHARE-BASED COMPENSATION PLANS

We have an incentive plan under which stock awards, stock units, and other share-based compensation may be granted to officers, non-employee directors, and key employees of the Company.

Such plan, as amended, no longer allows for the grant of stock options.

Under the terms of this plan, 3,250,000 shares were authorized, and 692,720 shares remain available for grant or issuance as of December 31, 2023.

4 unchanged sentences

Balance, December 31, 2020

397,918 $ 73.16

Granted 129,859 $ 96.32

2 unchanged sentences

Balance, December 31, 2021

404,468 $ 79.16

Granted 107,621 $ 123.52

2 unchanged sentences

Balance, December 31, 2022

317,594 $ 100.83

Granted 103,024 $ 156.06

2 unchanged sentences

Balance, December 31, 2023

We recognized approximately $ 12.1 million, $ 11.1 million, and $ 11.2 million of compensation expense for stock units awarded to non-employee directors and employees pursuant to our incentive plans for the years ended December 31, 2022, 2021, and 2020, respectively.

We have approximately $ 9.8 million of compensation expense, net of income taxes, which will be recognized over the remaining vesting periods of up to 3 years.

In addition, an aggregate of 49,360 restricted stock units granted to current or former non-employee directors vested as of December 31, 2022, but, at the election of such directors, issuance has been deferred for up to 10 years.

294,849 $ 124.30

An aggregate of 34,196 restricted stock units granted to current non-employee directors vested as of December 31, 2023, but, at the election of such directors, issuance has been deferred for up to 10 years from the date of vest.

In addition, an aggregate of 6,086 restricted stock units granted to former employees vested as of December 31, 2023 but, in accordance with plan documents, were issued in January 2024.

EMCOR Group, Inc.

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NOTE 13 - SHARE-BASED COMPENSATION PLANS (Continued)

There were 20,000 stock options outstanding at December 31, 2019.

Such stock options were exercised during 2020 at a weighted average price of $ 24.48 .

The total intrinsic value (the amounts by which the stock price exceeded the exercise price on the date of exercise) for these options was approximately $ 1.2 million.

There has been no other activity with respect to stock options since December 31, 2020, and there were no options outstanding at December 31, 2022 and 2021.

We recognized approximately $ 13.7 million, $ 12.1 million, and $ 11.1 million of compensation expense for stock units awarded to non-employee directors and employees pursuant to our incentive plan for the years ended December 31, 2023, 2022, and 2021, respectively.

We have approximately $ 11.4 million of compensation expense, net of income taxes, which will be recognized over the remaining vesting periods of up to 3 years.

The income tax benefit derived in 2023, 2022, and 2021 as a result of share-based compensation was approximately $ 3.3 million, $ 3.9 million, and $ 2.6 million, respectively, of which approximately $ 1.7 million, $ 1.7 million, and $ 0.8 million, respectively, represented excess tax benefits.

We have an employee stock purchase plan.

Under the terms of this plan, the maximum number of shares of our common stock that may be purchased is 3,000,000 shares.

Generally, our corporate employees and non-union employees of our United States subsidiaries are eligible to participate in this plan.

Employees covered by collective bargaining agreements generally are not eligible to participate in this plan.

Through December 31, 2023, we sponsored an employee stock purchase plan, which generally allowed our corporate employees and non-union employees of our United States subsidiaries to purchase up to an aggregate of 3,000,000 of our shares.

This plan was terminated subsequent to December 31, 2023.

NOTE 14 - RETIREMENT PLANS

3 unchanged sentences

These amounts will be subsequently recognized as net periodic pension cost (income) within the Consolidated Statement of Operations, as described further below.

United Kingdom Retirement Plan

Our United Kingdom subsidiary has a defined benefit pension plan covering all eligible employees (the “UK Plan”);

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Interest cost 9,722 5,693

Actuarial gain ( 116,372 ) ( 22,071 )

Actuarial loss (gain)

651 ( 116,372 )

Benefits paid ( 10,411 ) ( 11,095 )

3 unchanged sentences

Fair value of plan assets at beginning of year 210,284 356,532

Actual (loss) return on plan assets ( 105,544 ) 21,809

Actual return (loss) on plan assets

10,563 ( 105,544 )

Employer contributions 1,564 4,875

3 unchanged sentences

Funded status at end of year $ 18,980 $ 16,328

The funded status of the UK Plan of $ 16.3 million and $ 7.4 million at December 31, 2022 and 2021, respectively, is included in “Other Assets” in the accompanying Consolidated Balance Sheets.

The funded status of the UK Plan of $ 19.0 million and $ 16.3 million as of December 31, 2023 and 2022, respectively, is included in “Other assets” in the accompanying Consolidated Balance Sheets.

No plan assets are expected to be returned to us during the year ending December 31, 2024.

3 unchanged sentences

NOTE 14 - RETIREMENT PLANS (Continued)

The weighted average assumptions used to determine benefit obligations of the UK Plan as of December 31, 2022 and 2021 were as follows:

The assumptions used to determine benefit obligations of the UK Plan as of December 31, 2023 and 2022 were as follows:

Discount rate 4.8 % 5.0 %

5 unchanged sentences

Net periodic pension cost (income) $ 916 $ ( 4,322 ) $ ( 3,758 )

The weighted average assumptions used to determine net periodic pension cost of the UK Plan for the years ended December 31, 2022, 2021, and 2020 were as follows:

The assumptions used to determine net periodic pension cost of the UK Plan for the years ended December 31, 2023, 2022, and 2021 were as follows:

2023 2022 2021

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This approach models the long term expected returns of the various asset classes held in the portfolio and takes into account the additional benefits of holding a diversified portfolio.

For measurement purposes of the liability, the annual rates of inflation of covered pension benefits assumed for 2022 and 2021 were 2.8 % and 2.9 %, respectively.

For measurement purposes of the liability, the annual rate of inflation of covered pension benefits assumed for both 2023 and 2022 was 2.8 %.

Amounts pertaining to the UK Plan not yet reflected in net periodic pension cost and included in accumulated other comprehensive loss were as follows (in thousands):

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NOTE 14 - RETIREMENT PLANS (Continued)

UK Plan Assets

The investment policies and strategies for the assets of the UK Plan are established by its trustees (who are independent of the Company) to achieve a reasonable balance between risk, likely return, and administration expense, as well as to maintain funds at a level to meet minimum funding requirements.

The investment policies and strategies for the assets of the UK Plan are established by its trustees (who are independent of the Company) to achieve a reasonable balance between risk, likely return, and administration expense, as well as to maintain investment balances at a level to meet minimum funding requirements.

In order to ensure that an appropriate investment strategy is in place, an analysis of the UK Plan’s assets and liabilities is completed periodically.

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The weighted average asset allocations and weighted average target allocations at December 31, 2023 and 2022 were as follows:

Asset Category Target

Allocation Actual

December 31, 2022 Actual

Asset Category Target Asset

December 31, 2023

Target Asset Allocation

December 31, 2022

Debt 90.0 % 87.1 % 75.0 % 80.7 %

3 unchanged sentences

Plan assets of our UK Plan are invested through third-party fund managers in various investments with underlying holdings which, as of December 31, 2023 and 2022, consisted of:

(a) cash and cash equivalents, primarily held as collateral for other financial instruments, (b) debt securities, which include United Kingdom government debt and United States, United Kingdom, European, and emerging market corporate debt, and (c) real estate assets, which represent trusts which invest directly or indirectly in various properties throughout the United Kingdom.

(a) cash and cash equivalents, primarily held as collateral for other financial instruments, (b) debt securities, which include:

(i) United Kingdom government debt, (ii) United States, United Kingdom, other European, and emerging market corporate debt, and (iii) real estate debt, and (c) real estate assets, which represent trusts which invest directly or indirectly in various properties throughout the United Kingdom.

The following tables set forth the fair value of assets of the UK Plan as of December 31, 2023 and 2022 (in thousands):

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The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the total fair value of plan assets.

NAV is determined by the respective fund manager based on the fair value of the underlying assets held by the fund, less its liabilities, divided by the number of units outstanding.

EMCOR Group, Inc.

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(a) funds which invest predominantly in senior secured debt instruments, targeting diversity across regions and sectors, as well as funds which invest in diversified credit vehicles that seek higher returns than traditional fixed income investments, primarily through U.S.

corporate debt, global credit, and structured debt instruments, and (b) funds which aim to provide long-term income through investment in UK property assets.

These investments are redeemable at NAV on a monthly or quarterly basis and have redemption notice periods of up to 90 days.

corporate debt, global credit, and other structured debt instruments, and (b) funds which aim to provide long-term income through investment in UK property assets.

These investments are redeemable at NAV, which is generally determined on a quarterly basis, and have redemption notice periods of up to 180 days.

In addition, certain of these investments are subject to a lockup period of up to 24 months.

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2027 $ 12,079

2028 $ 12,598

Succeeding five years $ 67,955

Other Retirement Plans

We also sponsor three domestic retirement plans in which participation by new individuals is frozen.

1 unchanged sentence

The estimated fair value of the plan assets as of December 31, 2023 and 2022 was approximately $ 5.1 million and $ 4.9 million, respectively.

The plan assets are considered Level 1 assets within the fair value hierarchy and are predominantly invested in cash, equities, and equity and bond funds.

The plan assets are predominantly invested in cash, equity securities, and equity and bond funds, which have quoted market prices in active markets, and as such are considered Level 1 assets within the fair value hierarchy.

The liability balances as of December 31, 2023 and 2022 are classified as “Other long-term obligations” in the accompanying Consolidated Balance Sheets.

The measurement date for these plans is December 31 of each year.

The major assumptions used in the actuarial valuations to determine benefit obligations as of December 31, 2022 and 2021 included discount rates of approximately 4.80 % for 2022 and 2.40 % to 2.50 % for 2021.

Also included was an expected rate of return of 7.00 % for both 2022 and 2021.

The major assumptions used in the actuarial valuations to determine benefit obligations included discount rates of 4.75 % and 5.20 % as of December 31, 2023, and approximately 4.80 % as of December 31, 2022.

In addition, key assumptions included an expected rate of return of 7.00 % in order to determine net periodic pension cost for both 2023 and 2022.

The net periodic pension cost associated with the domestic plans, as well as the reclassification adjustment from accumulated other comprehensive loss to net periodic pension cost, were insignificant for all periods presented.

The future estimated benefit payments expected to be made from the plans for the next ten years is approximately $ 0.5 million per year.

EMCOR Group, Inc.

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date or range of expiration dates of CBA(s)

2022 2021 2022 2021 2020

National Automatic Sprinkler Industry Pension Fund 52-6054620 001 Green Green NA $ 21,583 $ 20,987 $ 17,504 Yes May 2023 to

United Association National Pension Fund (Formerly Plumbers & Pipefitters National Pension Fund) 52-6152779 001 Green Green NA 15,288 14,723 14,095 No February 2023 to

National Electrical Benefit Fund 53-0181657 001 Green Green NA 15,192 12,310 11,573 No May 2023 to

Sheet Metal Workers National Pension Fund 52-6112463 001 Green Yellow NA 9,505 10,307 11,621 No May 2023 to

Pension, Hospitalization & Benefit Plan of the Electrical Industry-Pension Trust Account 13-6123601 001 Green Green NA 8,122 7,355 6,750 No April 2023 to

National Automatic Sprinkler Industry Pension Fund 52-6054620 001 Green Green NA $ 25,559 $ 21,583 $ 20,987 Yes March 2024 to

National Electrical Benefit Fund 53-0181657 001 Green Green NA 18,128 15,192 12,310 Yes

February 2024 to November 2027

United Association National Pension Fund

52-6152779 001 Green Green NA 16,815 15,288 14,723 No

January 2024 to May 2029

Sheet Metal Workers National Pension Fund 52-6112463 001 Green Green

NA 10,797 9,505 10,307 No April 2024 to

Central Pension Fund of the IUOE & Participating Employers 36-6052390 001 Green Green NA 8,573 7,651 6,627 No January 2024 to December 2026

Electrical Workers Local No.

26 Pension Trust Fund 52-6117919 001 Green Green NA 7,844 9,346 7,086 Yes May 2023 to August 2024

Plumbers Pipefitters & Mechanical Equipment Service Local Union 392 Pension Plan 31-0655223 001 Red Red Implemented 7,674 7,110 5,667 Yes May 2025

Central Pension Fund of the IUOE & Participating Employers 36-6052390 001 Green Green NA 7,651 6,627 6,115 No March 2023 to

December 2026

Boilermaker-Blacksmith National Pension Trust 48-6168020 001 Green Yellow NA 6,434 3,479 1,574 No September 2023 to

Sheet Metal Workers Pension Plan of Northern California 51-6115939 001 Red Red Implemented 6,074 7,850 6,605 No June 2023 to June 2026

26 Pension Trust Fund 52-6117919 001 Green Green NA 8,283 7,844 9,346 Yes May 2024 to September 2027

Pension, Hospitalization & Benefit Plan of the Electrical Industry-Pension Trust Account 13-6123601 001 Green Green NA 7,198 8,122 7,355 No January 2025 to

Plumbers Pipefitters & Mechanical Equipment Service Local Union 392 Pension Plan 31-0655223 001 Red Red Implemented 7,010 7,674 7,110 Yes May 2024 to May 2025

Electrical Workers Pension Plan Local 103 IBEW 04-6063734 001 Green Green NA 6,537 2,900 — Yes August 2028

Northern California Pipe Trades Pension Plan 94-3190386 001 Green Green NA 6,317 3,238 2,663 No June 2024 to July 2024

Edison Pension Plan 93-6061681 001 Green Green NA 5,840 5,325 4,229 Yes December 2024

Pipefitters Union Local 537 Pension Fund 51-6030859 001 Green Green NA 5,039 5,922 4,275 Yes August 2025

Southern California Pipe Trades Retirement Fund 51-6108443 001 Green Green NA 4,650 6,272 4,043 No August 2023 to August 2026

Heating, Piping & Refrigeration Pension Fund 52-1058013 001 Green Green NA 4,625 5,591 3,349 Yes July 2023 to July 2025

Southern California IBEW-NECA Pension Trust Fund 95-6392774 001 Yellow Yellow Implemented 4,287 4,876 5,719 No June 2023 to

Sheet Metal Workers Pension Plan of Northern California 51-6115939 001 Red Red Implemented 5,738 6,074 7,850 Yes

June 2024 to June 2026

San Diego Electrical Pension Plan 95-6101801 001 Green Green NA 5,511 4,258 4,068 Yes May 2024

IBEW 332 Pension Fund - Part A 94-2688032 004 Green Green NA 4,177 2,339 1,211 No May 2023 to May 2024

Local 393 Pension Trust Fund Defined Benefit 94-6359772 002 Green Green NA 3,517 3,507 3,168 Yes June 2023 to July 2027

Electrical Contractors Association of the City of Chicago Local Union 134, IBEW Joint Pension Trust of Chicago Pension Plan 2 51-6030753 002 Green Green NA 3,516 4,225 3,004 No June 2023

Eighth District Electrical Pension Fund 84-6100393 001 Green Green NA 3,339 3,298 3,242 Yes May 2023 to August 2024

Northern California Pipe Trades Pension Plan 94-3190386 001 Green Green NA 3,238 2,663 2,463 No June 2023 to June 2024

Heating, Piping & Refrigeration Pension Fund 52-1058013 001 Green Green NA 5,315 4,625 5,591 Yes

July 2024 to July 2025

Pipefitters Union Local 537 Pension Fund 51-6030859 001 Green Green NA 5,179 5,039 5,922 Yes August 2025

Southern California Pipe Trades Retirement Fund 51-6108443 001 Green Green NA 4,657 4,650 6,272 Yes

August 2024 to August 2026

Electrical Contractors Association of the City of Chicago Local Union 134, IBEW Joint Pension Trust of Chicago Pension Plan 2 51-6030753 002 Green Green NA 4,432 3,516 4,225 No June 2024 to December 2024

IBEW Local 701 Pension Fund 36-6455509 001 Green Green NA 3,989 2,625 1,276 No

May 2024 to September 2024

Eighth District Electrical Pension Fund 84-6100393 001 Green Green NA 3,844 3,339 3,298 Yes February 2024 to February 2027

Southern California IBEW-NECA Pension Trust Fund 95-6392774 001 Yellow Yellow Implemented 3,801 4,287 4,876 No May 2024 to

November 2026

IBEW Local No.

82 Pension Plan 31-6127268 001 Green Green NA 3,701 2,549 956 Yes December 2026

Sheet Metal Workers Pension Plan of Southern California, Arizona & Nevada 95-6052257 001 Green Green

NA 3,399 2,921 3,322 No June 2024 to July 2028

Kern County Electrical Workers Pension Fund

001 Green Green NA 3,299 1,542 1,167 Yes

November 2027

EMCOR Group, Inc.

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2023 2022 2023 2022 2021

NECA-IBEW Pension Trust Fund 51-6029903 001 Green Green NA 3,034 2,491 2,369 No May 2023 to December 2023

Arizona Pipe Trades Pension Trust Fund 86-6025734 001 Green Green NA 2,940 2,020 2,301 Yes June 2023 to June 2024

Sheet Metal Workers Pension Plan of Southern California, Arizona & Nevada 95-6052257 001 Green Yellow NA 2,921 3,322 2,706 No June 2023 to June 2026

Electrical Workers Pension Plan Local 103 IBEW 04-6063734 001 Green Green NA 2,900 — — Yes August 2023

IBEW Local 701 Pension Fund 36-6455509 001 Green Green NA 2,625 1,276 1,197 Yes May 2023 to September 2023

IBEW Local No.

82 Pension Plan 31-6127268 001 Green Green NA 2,549 956 18 Yes December 2023 to October 2025

Local 393 Pension Trust Fund Defined Benefit 94-6359772 002 Green Green NA 3,263 3,517 3,507 Yes

June 2024 to July 2024

Arizona Pipe Trades Pension Trust Fund 86-6025734 001 Green Green NA 3,048 2,940 2,020 Yes June 2024

Joint Pension Fund of Local Union No.

2,868 1,762 1,531 Yes

Plumbers & Steamfitters Local 486 Pension Fund

2,828 1,599 1,351 Yes

December 2025

Plumbers & Pipefitters Local No.

189 Pension Fund

2,557 1,272 596 Yes

May 2024 to June 2025

697 IBEW and Electrical Industry Pension Fund 51-6133048 001 Green Green NA 2,528 2,287 1,753 Yes May 2024

Local 38 Defined Benefit Pension Fund 94-1285319 001 Green Green NA 2,010 1,903 2,874 No June 2023

Plumbing & Pipe Fitting Local 219 Pension Fund 34-6682376 001 Red Red Implemented 1,172 1,167 1,680 Yes May 2023

Plumbers & Pipefitters Local 162 Pension Fund 31-6125999 001 Yellow Yellow Implemented 1,132 1,034 969 Yes May 2023

Plumbers Local 24 Pension Fund

2,295 1,819 2,270 Yes

NECA-IBEW Pension Trust Fund 51-6029903 001 Green Green NA 2,228 3,034 2,491 No May 2024 to December 2024

IBEW 332 Pension Fund - Part A 94-2688032 004 Green Green NA 2,062 4,177 2,339 Yes

May 2024 to June 2024

Plumbers & Pipefitters Local 162 Pension Fund 31-6125999 001 Yellow Yellow Implemented 1,243 1,132 1,034 Yes May 2024 to May 2026

Steamfitters Local Union No.

420 Pension Plan 23-2004424 001 Red Red Implemented 1,018 677 553 No May 2023 to April 2024

420 Pension Plan 23-2004424 001 Red Red Implemented 1,227 1,018 677 No April 2026 to May 2026

Boilermaker-Blacksmith National Pension Trust 48-6168020 001 Red

1,140 6,434 3,479 Yes

April 2025 to

September 2026

Plumbing & Pipe Fitting Local 219 Pension Fund 34-6682376 001 Red Red Implemented 919 1,172 1,167 Yes May 2026

Carpenters Pension Trust Fund for Northern California 94-6050970 001 Red Red Implemented 610 532 568 No June 2027

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_________________

(1) The zone status represents the most recent available information for the respective MEPP, which may be 2021 or earlier for the 2022 year and 2020 or earlier for the 2021 year.

In general, plans with a “green” zone status have a funding ratio of at least 80%, plans with an “orange” or “yellow” zone status have a funding ratio of between 65% and less than 80%, and plans with a “red” zone status are less than 65% funded.

(1) The zone status represents the most recent available information for the respective MEPP, which may be from 2022 or earlier for the 2023 year and from 2021 or earlier for the 2022 year.

(2) This information was obtained from the respective plan’s Form 5500 (“Forms”) for the most current available filing.

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Collective Bargaining Agreements

At December 31, 2022, we employed approximately 35,500 people, approximately 60 % of whom 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.

At December 31, 2023, we employed approximately 38,300 people, approximately 60 % of whom 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.

Government Contracts

As a government contractor, we are subject to U.S.

When we perform work as a federal government contractor/subcontractor or when we perform work on a project that has received federal government funding, we are subject to U.S.

government audits and investigations relating to our operations, which such audits may result in fines, penalties and compensatory and treble damages, and possible suspension or debarment from doing business with the government.

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$ 87,058 $ 2,605

2024 58,013 2,145

2025 48,529 1,080

2026 40,055 441

2027 29,132 148

Thereafter 74,510 64

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

Our services are provided to a broad range of commercial, technology, manufacturing, 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.

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.

31 unchanged sentences

Corporate administration ( 127,229 ) ( 110,440 ) ( 102,031 )

Restructuring expenses — — ( 2,214 )

Impairment loss on goodwill, identifiable intangible assets,

and other long-lived assets — — ( 232,750 )

Impairment loss on long-lived assets

( 2,350 ) — —

Total operations 875,756 564,877 530,800

69 unchanged sentences

Total operations $ 6,609,721 $ 5,524,607 $ 5,441,446

NOTE 19 - SUBSEQUENT EVENTS

Subsequent to December 31, 2023, we entered into definitive agreements to acquire three companies for upfront consideration of approximately $ 137.0 million.

These transactions are expected to close in the second quarter of 2024, subject to customary closing conditions.

These acquisitions are comprised of:

(a) two companies that will be included within our United States mechanical construction and facilities services segment including:

(i) a leading plumbing services provider in the Southeast region of the United States and (ii) a full service provider of mechanical construction and maintenance services in Central Texas, and (b) a company which provides building automation and controls solutions in the Northeast region of the United States, that will be included in our United States building services segment.

Report of Independent Registered Public Accounting Firm

38 unchanged sentences

In addition, we performed certain retrospective review procedures to assess management’s historical ability to accurately estimate the transaction price and costs to complete contracts as well as to identify any significant or unusual changes in project revenue and cost forecasts during the period.

Valuation of Goodwill and Indefinite-Lived Intangible Assets

Description of the Matter At December 31, 2022, the Company’s goodwill and indefinite-lived trade name intangible assets were approximately $919.2 million and $230.2 million, respectively.

As discussed in Note 8 to the consolidated financial statements, goodwill and trade names with indefinite lives are tested for impairment at least annually.

Auditing management’s annual impairment tests was especially complex and subjective due to the significant estimation required in determining the fair value of the reporting units for goodwill and the fair value of trade name intangible assets.

Valuation of Goodwill

Description of the Matter At December 31, 2023, the Company’s goodwill was approximately $956.5 million.

As discussed in Note 8 to the consolidated financial statements, goodwill is tested for impairment at least annually.

Auditing management’s annual impairment tests was especially complex and subjective due to the significant estimation required in determining the fair value of the reporting units for goodwill.

In particular, the fair value estimates for goodwill were sensitive to significant assumptions inherent in the Company’s discounted estimated future cash flows such as the weighted average cost of capital, revenue growth rates, and operating margins.

The fair value estimates for trade name intangible assets were sensitive to significant assumptions inherent in the Company’s discounted estimated future cash flows such as the royalty rate, discount rate, and revenue growth rates.

The fair value estimates for goodwill and trade name intangible assets are affected by expectations about future market or economic conditions relevant to each of the markets in which the Company operates.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s impairment review processes for goodwill and trade name intangible assets.

The fair value estimates for goodwill are affected by expectations about future market or economic conditions relevant to each of the markets in which the Company operates.

For example, we tested management’s review controls over the valuation models and significant assumptions described above, including those developed by the Company's third-party valuation specialists.

To test the estimated fair value of the Company’s reporting units and trade name intangible assets, with the support of a valuation specialist, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions and completeness and accuracy of the underlying data used by the Company in its analyses.

To test the estimated fair value of the Company’s reporting units, with the support of a valuation specialist, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions and completeness and accuracy of the underlying data used by the Company in its analyses.

For example, we compared the significant assumptions used by management to the historical financial results of the Company’s reporting units and to current industry and economic trends.

36 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-K

Item 8. Financial Statements and Supplementary Data