What changed in this filing

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Item 1. Financial Statements

2024-04-25 compared with 2023-10-26 · 156 added, 366 removed, 557 unchanged (48% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30,

2024 December 31,

8 unchanged sentences

Property, plant, and equipment, net

186,410 179,378

Operating lease right-of-use assets 321,505 310,498

5 unchanged sentences

Current liabilities:

Current maturities of long-term debt and finance lease liabilities $ 6,482 $ 15,567

Accounts payable $ 865,059 $ 935,967

4 unchanged sentences

Total current liabilities 3,431,485 3,518,355

Long-term debt and finance lease liabilities 97,480 231,625

Operating lease liabilities, long-term 269,799 259,430

21 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Revenues $ 3,432,276 $ 2,890,432

2 unchanged sentences

Selling, general and administrative expenses 329,356 281,152

Impairment loss on long-lived assets

2,350 — 2,350 —

Operating income 259,953 154,910

Net periodic pension (cost) income ( 284 ) 1,025 ( 840 ) 3,288

Interest expense, net ( 90 ) ( 3,194 ) ( 4,614 ) ( 6,234 )

Net periodic pension income (cost)

Interest income (expense), net

7,541 ( 1,832 )

Income before income taxes 267,716 152,804

Income tax provision 70,567 41,331

Net income including noncontrolling interests

$ 197,149 $ 111,473

Net income attributable to noncontrolling interests

Net income attributable to EMCOR Group, Inc.

$ 169,409 $ 105,772 $ 421,477 $ 279,822

Basic earnings per common share $ 4.18 $ 2.33

7 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

$ 197,149 $ 111,473

Net income including noncontrolling interests

$ 169,746 $ 105,772 $ 421,814 $ 279,822

Other comprehensive (loss) income, net of tax:

2 unchanged sentences

loss included in net income (1)

538 404 1,591 1,288

Other comprehensive (loss) income

2 unchanged sentences

$ 196,417 $ 114,249

Comprehensive income attributable to noncontrolling interests 337 — 337 —

Comprehensive income attributable to EMCOR Group, Inc.

$ 164,579 $ 97,464 $ 423,571 $ 261,853

(1) Net of tax of $ 0.5 million and $ 0.1 million for the three months ended September 30, 2023 and 2022, respectively, and net of tax of $ 0.2 million and $ 0.4 million for the nine months ended September 30, 2023 and 2022, respectively.

(1) Net of tax of $ 0.2 million for each of the three months ended March 31, 2024 and 2023.

See Notes to Consolidated Financial Statements.

3 unchanged sentences

(In thousands)(Unaudited)

Nine months ended

September 30,

Three months ended

Cash flows - operating activities:

Net income including noncontrolling interests

$ 197,149 $ 111,473

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

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization 13,337 12,621

Amortization of identifiable intangible assets 16,251 15,877

Non-cash expense for impairment of long-lived assets

Provision for (recovery of) credit losses

9,898 ( 343 )

Non-cash share-based compensation expense 6,527 4,087

1 unchanged sentence

Changes in operating assets and liabilities, excluding the effect of businesses acquired ( 108,069 ) ( 228,803 )

Net cash provided by operating activities 475,897 238,354

Net cash provided by (used in) operating activities

132,264 ( 84,583 )

Cash flows - investing activities:

2 unchanged sentences

Purchases of property, plant, and equipment

( 20,278 ) ( 23,154 )

Net cash used in investing activities ( 19,439 ) ( 25,405 )

1 unchanged sentence

Proceeds from revolving credit facility — 100,000

Repayments of revolving credit facility ( 100,000 ) ( 100,000 )

Repayments of long-term debt

( 142,813 ) —

Repayments of finance lease liabilities ( 773 ) ( 780 )

4 unchanged sentences

Payments for contingent consideration arrangements — ( 1,456 )

Net cash used in financing activities ( 276,157 ) ( 512,598 )

Net cash (used in) provided by financing activities

( 58,948 ) 71,506

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 1,140 ) 2,239

4 unchanged sentences

$ 842,487 $ 420,825

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

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

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

(2) Includes $ 1.5 million and $ 0.8 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of March 31, 2024 and 2023, respectively .

See Notes to Consolidated Financial Statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the three months ended September 30, 2022 and 2023

For the three months ended March 31, 2023 and 2024

(In thousands)(Unaudited)

4 unchanged sentences

stock Noncontrolling

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

Net income including noncontrolling interests

Balance, December 31, 2022

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

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

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

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

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

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

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

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

Balance, June 30, 2023 $ 2,118,087 $ 611 $ 81,556 $ ( 86,527 ) $ 3,450,553 $ ( 1,328,808 ) $ 702

Net income including noncontrolling interests 169,746 — — — 169,409 — 337

Other comprehensive loss

111,473 — — — 111,473 — —

Tax withholding for common stock issued under share-based compensation plans ( 70 ) — ( 70 ) — — — —

Common stock issued under employee stock purchase plan 2,328 — 2,328 — — — —

Common stock dividends ( 8,484 ) — 36 — ( 8,520 ) — —

Repurchases of common stock (2)

Other comprehensive income

2,776 — — 2,776 — — —

Share-based compensation expense 3,168 — 3,168 — — — —

Balance, September 30, 2023 $ 2,279,969 $ 611 $ 87,018 $ ( 91,357 ) $ 3,611,442 $ ( 1,328,784 ) $ 1,039

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

(2) Represents adjustment to estimate of excise tax on net share repurchases.

Estimates of excise tax are subject to change in subsequent reporting periods, particularly if the amount of our share issuances exceed our share repurchases, thereby reducing the estimated excise tax due for the annual period.

Refer to Note 10 - Common Stock for further detail regarding the excise tax on net share repurchases.

See Notes to Consolidated Financial Statements.

EMCOR Group, Inc.

and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the nine months ended September 30, 2022 and 2023

(In thousands)(Unaudited)

EMCOR Group, Inc.

stock Capital

surplus Accumulated other comprehensive loss (1)

earnings Treasury

stock Noncontrolling

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

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

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

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

4 unchanged sentences

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

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

Balance, March 31, 2023

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

Balance, December 31, 2023

Net income including noncontrolling interests 421,814 — — — 421,477 — 337

Other comprehensive income 2,094 — — 2,094 — — —

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

197,149 — — — 197,149 — —

Other comprehensive loss

( 732 ) — — ( 732 ) — — —

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

4 unchanged sentences

Share-based compensation expense 6,527 — 6,527 — — — —

Balance, September 30, 2023 $ 2,279,969 $ 611 $ 87,018 $ ( 91,357 ) $ 3,611,442 $ ( 1,328,784 ) $ 1,039

Balance, March 31, 2024

$ 2,615,382 $ 612 $ 87,673 $ ( 86,436 ) $ 4,003,079 $ ( 1,390,583 ) $ 1,037

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

11 unchanged sentences

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

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

The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023.

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024.

NOTE 2 - New Accounting Pronouncements

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

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

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

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 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 falls 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 amendment of our credit agreement and 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 Financial Accounting Standards Board (the “FASB”) issued an Accounting Standards Update (“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

86 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 during the three and nine months ended September 30, 2023 and 2022, as summarized in the following table (in thousands):

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 three months ended March 31, 2024 and 2023, as summarized in the following table (in thousands):

For the three months ended

September 30, For the nine months ended

September 30,

2023 2022 2023 2022

United States electrical construction and facilities services $ 5,319 $ 5,232

United States mechanical construction and facilities services 3,653 1,164

United States building services — — 2,977 —

Total impact $ 8,972 $ 6,396

3 unchanged sentences

NOTE 3 - Revenue from Contracts with Customers (Continued)

During the three and nine months ended September 30, 2023, we recognized revenue of approximately $ 10.0 million and $ 22.6 million, respectively, 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 the amounts recorded during the three and nine months ended September 30, 2023, approximately $ 4.2 million and $ 4.3 million, respectively, were reported within our United States electrical construction and facilities services segment and approximately $ 5.8 million and $ 18.3 million, respectively, were reported within our United States mechanical construction and facilities services segment.

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

During the three months ended March 31, 2024, we recognized revenue of approximately $ 9.0 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 the amounts recorded during the three months ended March 31, 2024, approximately $ 6.6 million was reported within our United States electrical construction and facilities services segment, predominantly as a result of the settlement of final contract value on two projects, and approximately $ 2.4 million was reported within our United States mechanical construction and facilities services segment.

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

Disaggregation of Revenues

1 unchanged sentence

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, for the three and nine months ended September 30, 2023 and 2022 (in thousands, except for percentages).

The following tables provide further disaggregation of our revenues, by categories we use to evaluate our financial performance within each of our reportable segments, for the three months ended March 31, 2024 and 2023 (in thousands, except for percentages).

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

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

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

For the three months ended September 30,

For the three months ended March 31,

Total 2023 % of

20 unchanged sentences

NOTE 3 - Revenue from Contracts with Customers (Continued)

For the three months ended September 30,

For the three months ended March 31,

Total 2023 % of

16 unchanged sentences

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

For the three months ended September 30,

For the three months ended March 31,

Total 2023 % of

4 unchanged sentences

Total segment revenues $ 781,160 $ 725,375

For the three months ended September 30,

For the three months ended March 31,

Total 2023 % of

4 unchanged sentences

Total United States operations $ 3,327,589 $ 2,779,562

For the three months ended September 30,

For the three months ended March 31,

Total 2023 % of

8 unchanged sentences

NOTE 3 - Revenue from Contracts with Customers (Continued)

For the nine months ended September 30,

Total 2022 % of

United States electrical construction and facilities services:

Network and communications market sector $ 665,493 33 % $ 534,130 31 %

Commercial market sector 295,188 15 % 301,908 17 %

Manufacturing and industrial market sector 278,912 14 % 210,331 12 %

Healthcare market sector 182,442 9 % 119,259 7 %

High-tech manufacturing market sector 102,075 5 % 62,956 4 %

Institutional market sector 112,577 5 % 115,799 7 %

Transportation market sector 118,436 6 % 128,047 7 %

Water and wastewater market sector 18,388 1 % 15,962 1 %

Hospitality and entertainment market sector 56,510 3 % 19,892 1 %

Short duration projects (1)

141,901 7 % 167,553 10 %

Service work 50,080 2 % 47,253 3 %

2,022,002 1,723,090

Less intersegment revenues ( 1,683 ) ( 3,565 )

Total segment revenues $ 2,020,319 $ 1,719,525

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

For the nine months ended September 30,

Total 2022 % of

United States mechanical construction and facilities services:

Network and communications market sector $ 289,085 8 % $ 203,347 6 %

Commercial market sector 828,809 23 % 799,729 25 %

Manufacturing and industrial market sector 485,809 13 % 461,385 15 %

Healthcare market sector 353,595 10 % 367,002 12 %

High-tech manufacturing market sector 549,678 15 % 211,071 7 %

Institutional market sector 224,889 6 % 251,715 8 %

Transportation market sector 31,615 1 % 47,793 1 %

Water and wastewater market sector 201,167 6 % 196,157 6 %

Hospitality and entertainment market sector 38,324 1 % 34,108 1 %

Short duration projects (1)

237,246 7 % 254,102 8 %

Service work 368,378 10 % 340,682 11 %

3,608,595 3,167,091

Less intersegment revenues ( 6,324 ) ( 8,143 )

Total segment revenues $ 3,602,271 $ 3,158,948

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

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

For the nine months ended September 30,

Total 2022 % of

United States building services:

Mechanical services $ 1,519,410 65 % $ 1,300,555 64 %

Commercial site-based services 639,193 28 % 596,589 29 %

Government site-based services 159,502 7 % 144,411 7 %

Total segment revenues $ 2,318,105 $ 2,041,555

For the nine months ended September 30,

Total 2022 % of

United States industrial services:

Field services $ 751,062 86 % $ 732,826 87 %

Shop services 124,252 14 % 109,698 13 %

Total segment revenues $ 875,314 $ 842,524

Total United States operations $ 8,816,009 $ 7,762,552

For the nine months ended September 30,

Total 2022 % of

United Kingdom building services:

Service work $ 157,631 48 % $ 170,840 47 %

Project work 170,012 52 % 192,906 53 %

Total segment revenues $ 327,643 $ 363,746

Total operations $ 9,143,652 $ 8,126,298

Accounts Receivable and Allowance for Credit Losses

1 unchanged sentence

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.

1 unchanged sentence

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

At September 30, 2023 and December 31, 2022, our allowance for credit losses was $ 21.6 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 the first nine months of 2023.

At March 31, 2024 and December 31, 2023, our allowance for credit losses was $ 31.4 million and $ 22.5 million, respectively.

The increase in our allowance for credit losses during the first three months of 2024 was primarily due to a reserve taken for a specific customer bankruptcy within our United States building services segment.

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

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

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

The change in the allowance for credit losses for the nine months ended September 30, 2023 was as follows (in thousands):

The change in the allowance for credit losses for the three months ended March 31, 2024 was as follows (in thousands):

Balance at December 31, 2023

Provision for credit losses 9,898

Net amounts written off against the allowance, net of recoveries

Balance at September 30, 2023 $ 21,644

Amounts written off against the allowance, net of recoveries

Balance at March 31, 2024

Contract Assets and Contract Liabilities

10 unchanged sentences

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

Net contract liabilities in the accompanying Consolidated Balance Sheets consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands):

September 30,

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

Net contract liabilities in the accompanying Consolidated Balance Sheets consisted of the following amounts as of March 31, 2024 and December 31, 2023 (in thousands):

2024 December 31, 2023

4 unchanged sentences

Net contract liabilities $ ( 1,383,372 ) $ ( 1,327,036 )

Contract assets and contract liabilities increased by approximately $ 1.8 million and $ 5.0 million, respectively, as a result of acquisitions made by us during the first nine months of 2023.

Excluding the impact of acquisitions, net contract liabilities increased by approximately $ 352.0 million during the nine months ended September 30, 2023, primarily attributable to an increase in net contract liabilities on our uncompleted construction projects, partially as a result of the timing of invoicing to our customers, which included 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.

The $ 56.3 million increase in net contract liabilities for the three months ended March 31, 2024 was primarily attributable to an increase in net contract liabilities on our uncompleted construction projects, partially as a result of the timing of invoicing to our customers as we continue to effectively manage our working capital.

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

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

Transaction Price Allocated to Remaining Unsatisfied Performance Obligations

The following table presents the transaction price allocated to remaining unsatisfied performance obligations (“remaining performance obligations”) for each of our reportable segments and their respective percentages of total remaining performance obligations as of September 30, 2023 (in thousands, except for percentages):

September 30,

The following table presents the transaction price allocated to remaining unsatisfied performance obligations (“remaining performance obligations”) for each of our reportable segments and their respective percentages of total remaining performance obligations as of March 31, 2024 (in thousands, except for percentages):

2024 % of Total

7 unchanged sentences

Total operations $ 9,175,352 100 %

Our remaining performance obligations at September 30, 2023 were $ 8.64 billion.

Our remaining performance obligations at March 31, 2024 were $ 9.18 billion.

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

6 unchanged sentences

However, to the extent a service contract includes a cancellation clause which allows for the termination of such contract by either party without a substantive penalty, the remaining contract term, and therefore, the amount of unrecognized revenues included within remaining performance obligations, is limited to the notice period required for the termination.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

Our remaining performance obligations are comprised of:

11 unchanged sentences

Total operations $ 7,867,590 $ 1,307,762

EMCOR Group, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 4 - Acquisitions of Businesses

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

During the first nine months of 2023, we acquired seven companies for total consideration of $ 92.8 million.

During the first quarter of 2024, we entered into definitive agreements to acquire four companies for upfront consideration of approximately $ 175.0 million.

Three of these transactions closed subsequent to March 31, 2024, and the fourth is expected to close later in the second quarter of 2024, subject to certain 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, (b) a company, that will be included in our United States building services segment, which provides building automation and controls solutions in the Northeast region of the United States, and (c) an instrumentation and electrical contractor, that will be included in our United States industrial services segment, which provides electrical, automation, digital integration, and fabrication services to various energy sector and process equipment customers.

During calendar year 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) six companies that enhance our presence in geographies where we have existing operations, the results of operations of which were de minimis, consisting of:

(i) two companies that have been included within our Unites States mechanical construction and facilities services segment, one of which provides mechanical and pipe fabrication services, and one of which provides fire protection services, both in the Midwestern region of the United States, 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.

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

Such acquisitions include:

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

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

In connection with these acquisitions, we acquired working capital of $ 7.1 million and other net liabilities of $ 1.1 million, and have 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.

The purchase price allocations for the businesses acquired in 2023 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.

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 2022 have been finalized during their respective measurement periods with an insignificant impact.

NOTE 5 - Earnings Per Share

Calculation of Basic and Diluted Earnings per Common Share

The following tables summarize our calculation of Basic and Diluted Earnings per Common Share (“EPS”) for the three and nine months ended September 30, 2023 and 2022 (in thousands, except share and per share data):

For the three months ended

September 30,

Net income attributable to EMCOR Group, Inc.

$ 169,409 $ 105,772

Weighted average shares outstanding used to compute basic earnings per common share 47,173,974 48,867,420

Effect of dilutive securities—Share-based awards 224,223 182,731

Shares used to compute diluted earnings per common share 47,398,197 49,050,151

Basic earnings per common share $ 3.59 $ 2.16

Diluted earnings per common share $ 3.57 $ 2.16

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

EMCOR Group, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements (Unaudited)

NOTE 5 - Earnings Per Share (Continued)

For the nine months ended

September 30,

Net income attributable to EMCOR Group, Inc.

NOTE 5 - Earnings Per Share

Calculation of Basic and Diluted Earnings per Common Share

The following table summarizes our calculation of Basic and Diluted Earnings per Common Share (“EPS”) for the three months ended March 31, 2024 and 2023 (in thousands, except share and per share data):

For the three months ended

$ 197,149 $ 111,473

4 unchanged sentences

Diluted earnings per common share $ 4.17 $ 2.32

The number of share-based awards excluded from the computation of diluted EPS for the three and nine months ended September 30, 2023 because they would be anti-dilutive were 400 and 800 , respectively.

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

The number of share-based awards excluded from the computation of diluted EPS for the three months ended March 31, 2024 because they would be anti-dilutive was 1,095 .

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

NOTE 6 - Inventories

Inventories in the accompanying Consolidated Balance Sheets consisted of the following amounts as of September 30, 2023 and December 31, 2022 (in thousands):

September 30,

Inventories in the accompanying Consolidated Balance Sheets consisted of the following amounts as of March 31, 2024 and December 31, 2023 (in thousands):

2024 December 31,

2 unchanged sentences

Inventories $ 113,751 $ 110,774

The increase in inventories as of September 30, 2023, compared to December 31, 2022, was a result of:

(a) advanced purchases of materials and equipment for use on specific construction projects, in an effort to mitigate the impact of increased lead times, which have resulted from supply chain disruptions, (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.

NOTE 7 - Debt

Debt in the accompanying Consolidated Balance Sheets consisted of the following amounts as of September 30, 2023 and December 31, 2022 (in thousands):

September 30,

2023 December 31,

Term loan $ 100,000 $ 242,813

Unamortized debt issuance costs ( 1,360 ) ( 2,080 )

Finance lease liabilities 5,322 6,459

Total debt 103,962 247,192

current maturities 6,482 15,567

Total long-term debt $ 97,480 $ 231,625

Excluding finance lease liabilities of $ 5.3 million in each period, we had no outstanding debt as of March 31, 2024 and December 31, 2023.

The current portion of our finance lease liabilities of $ 2.4 million and $ 2.5 million at March 31, 2024 and December 31, 2023, respectively, were included in “Other accrued expenses and liabilities” and the non-current portion of our finance lease liabilities of $ 2.9 million and $ 2.8 million at March 31, 2024 and December 31, 2023, respectively, were included in “Other long-term obligations” in the accompanying Consolidated Balance Sheets.

Credit Agreement

We have a credit agreement dated December 20, 2023 (the “2023 Credit Agreement”), which provides 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.

There were no direct borrowings outstanding under the 2023 Revolving Credit Facility as of March 31, 2024 and December 31, 2023.

However, outstanding letters of credit reduce the available capacity under this facility, and as of March 31, 2024 and December 31, 2023, we had $ 89.9 million and $ 116.7 million of letters of credit outstanding, respectively.

EMCOR Group, Inc.

2 unchanged sentences

NOTE 7 - Debt (continued)

Credit Agreement

We have a credit agreement dated as of March 2, 2020 , which provides 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 “Original 2020 Credit Agreement”) expiring March 2, 2025 .

On April 28, 2023 , we entered into the First Amendment to the Original 2020 Credit Agreement (the “First Amendment”), pursuant to which the reference rate contained therein was changed from LIBOR to Adjusted Term SOFR (as defined below).

The Original 2020 Credit Agreement, as amended by the First Amendment, is hereinafter referred to as “the 2020 Credit Agreement.” 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.

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

As of September 30, 2023 and December 31, 2022, the balance of the 2020 Term Loan was $ 100.0 million and $ 242.8 million, respectively.

There were no direct borrowings outstanding under the 2020 Revolving Credit Facility as of September 30, 2023 and December 31, 2022.

However, outstanding letters of credit reduce the available capacity under such facility, and as of September 30, 2023 and December 31, 2022, we had $ 123.7 million and $ 71.3 million, respectively, 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) 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”) ( 5.42 % at September 30, 2023) plus a margin of 1.00 % to 1.75 %, based on certain financial tests.

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 ( 8.50 % at September 30, 2023), (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 %.

The interest rates in effect at September 30, 2023 and December 31, 2022 were 6.42 % and 5.73 %, 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 September 30, 2023 and December 31, 2022.

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

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

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

(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 March 31, 2024 and 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.

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 September 30, 2023 and December 31, 2022.

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

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

During the quarter ended September 30, 2023, we made a prepayment in the amount of $ 142.8 million.

Based on our outstanding balance, principal payments of $ 5.0 million are due on December 31, 2023 and 2024, with any remaining unpaid principal and interest due on March 2, 2025.

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 March 31, 2024 and December 31, 2023.

NOTE 8 - Fair Value Measurements

6 unchanged sentences

Level 3 – Significant unobservable inputs that reflect the reporting entity’s own assumptions.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 8 - Fair Value Measurements (Continued)

Recurring Fair Value Measurements

The following tables summarize the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2023 and December 31, 2022 (in thousands):

Assets at Fair Value as of September 30, 2023

The following tables summarize the assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2024 and December 31, 2023 (in thousands):

Assets at Fair Value as of March 31, 2024

Asset Category Level 1 Level 2 Level 3 Total

3 unchanged sentences

58,432 — — 58,432

Restricted cash (3)

1,502 — — 1,502

Total $ 900,919 $ — $ — $ 900,919

_________________________

(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 March 31, 2024, we had $ 528.3 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.

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

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

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 8 - Fair Value Measurements (continued)

Assets at Fair Value as of December 31, 2023

4 unchanged sentences

47,315 — — 47,315

Restricted cash (3)

Total $ 837,065 $ — $ — $ 837,065

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 September 30, 2023 and December 31, 2022, we had $ 361.9 million and $ 209.4 million, respectively, in money market funds.

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.

(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.

Nonrecurring Fair Value Measurements

4 unchanged sentences

The inputs used for these nonrecurring fair value measurements represent Level 3 inputs.

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, necessitating a comparison of their carrying values to the undiscounted pre-tax cash flows expected to result from the use of such assets.

As a result of this test, we determined that these assets were impaired, and recognized a $ 2.4 million impairment charge as calculated using a discounted cash flow model.

As of September 30, 2023, the value of these assets was $ 2.0 million, which represents fair value as determined on a nonrecurring basis.

Fair Value of Financial Instruments

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 (Unaudited)

Although there were no outstanding borrowings under our 2023 Credit Agreement as of March 31, 2024 and 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 9 - Income Taxes

The following table presents our income tax provision and our income tax rate for the three and nine months ended September 30, 2023 and 2022 (in thousands, except percentages):

The following table presents our income tax provision and our income tax rate for the three months ended March 31, 2024 and 2023 (in thousands, except percentages):

For the three months ended

September 30, For the nine months ended

September 30,

2023 2022 2023 2022

Income tax provision $ 70,567 $ 41,331

1 unchanged sentence

The difference between the U.S.

statutory tax rate of 21 % and our effective income tax rate for both the three and nine months ended September 30, 2023 and 2022 was primarily a result of state and local income taxes and other permanent book-to-tax differences.

The increase in our income tax provision for the three and nine months ended September 30, 2023, when compared to the three and nine months ended September 30, 2022, was primarily due to greater income before income taxes.

While our effective income tax rate for the nine months ended September 30, 2023 is comparable to that for the nine months ended September 30, 2022, the difference between our effective income tax rate for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 was attributable to a revision to our estimate of the full year impact of certain permanent book-to-tax differences during the third quarter of 2022.

As of September 30, 2023 and December 31, 2022, we had no unrecognized income tax benefits.

statutory tax rate of 21 % and our effective income tax rate for both the three months ended March 31, 2024 and 2023 was primarily a result of state and local income taxes and other permanent book-to-tax differences.

The increase in our income tax provision for the three months ended March 31, 2024, when compared to the three months ended March 31, 2023, was predominantly due to greater income before income taxes.

The decrease in our effective income tax rate for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 was attributable to the impact of favorable discrete tax items during the first quarter of 2024.

As of March 31, 2024 and December 31, 2023, we had no unrecognized income tax benefits.

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

2 unchanged sentences

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

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.

While we do not anticipate that these rules will have a material effect on our tax provision or effective tax rate, we continue to monitor evolving tax legislation in the jurisdictions in which we operate.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 10 - Common Stock

As of September 30, 2023 and December 31, 2022, there were 47,141,954 and 47,666,725 shares of our common stock outstanding, respectively.

During the three months ended September 30, 2023 and 2022, we issued 11,838 and 19,573 shares of common stock, respectively.

During the nine months ended September 30, 2023 and 2022, we issued 126,492 and 191,330 shares of common stock, respectively.

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

As of March 31, 2024 and December 31, 2023, there were 46,995,600 and 47,047,265 shares of our common stock outstanding, respectively.

During the three months ended March 31, 2024 and 2023, we issued 68,073 and 72,076 shares of common stock, respectively.

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

We have paid quarterly dividends since October 25, 2011.

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

Commencing with the dividend to be paid on April 30, 2024, our quarterly dividend will increase from $ 0.18 per share to $ 0.25 per share.

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

1 unchanged sentence

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

During the nine months ended September 30, 2023, we repurchased approximately 0.7 million shares of our common stock for approximately $ 106.1 million.

Since the inception of the repurchase program through September 30, 2023, we have repurchased approximately 25.7 million shares of our common stock for approximately $ 1.87 billion.

As of September 30, 2023, there remained authorization for us to repurchase approximately $ 283.7 million of our shares.

During the three months ended March 31, 2024, we repurchased approximately 0.1 million shares of our common stock for approximately $ 39.2 million, inclusive of the applicable excise tax.

Since the inception of the repurchase program through March 31, 2024, we have repurchased approximately 25.9 million shares of our common stock for approximately $ 1.93 billion.

As of March 31, 2024, there remained authorization for us to repurchase approximately $ 221.9 million of our shares.

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

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

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

corporations, effective for repurchases after December 31, 2022.

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

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 11 - Retirement Plans

6 unchanged sentences

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

Amounts related to these domestic retirement plans were immaterial for all periods presented.

Amounts related to these domestic retirement plans were de minimis for all periods presented.

Components of Net Periodic Pension Cost

The components of net periodic pension cost (income) of the UK Plan for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands):

The components of net periodic pension (income) cost of the UK Plan for the three months ended March 31, 2024 and 2023 were as follows (in thousands):

For the three months ended

September 30, For the nine months ended

September 30,

2023 2022 2023 2022

Interest cost $ 2,376 $ 2,376

1 unchanged sentence

Amortization of unrecognized loss 653 639

Net periodic pension cost (income) $ 233 $ ( 1,022 ) $ 688 $ ( 3,283 )

Net periodic pension (income) cost

$ ( 203 ) $ 224

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 12 - Commitments and Contingencies

7 unchanged sentences

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

As of September 30, 2023, based on the percentage-of-completion of our projects covered by surety bonds, our aggregate estimated exposure, assuming defaults on all our then existing contractual obligations, was approximately $ 2.0 billion, which represents approximately 23 % of our total remaining performance obligations.

As of March 31, 2024, based on the percentage-of-completion of our projects covered by surety bonds, our aggregate estimated exposure, assuming defaults on all our then existing contractual obligations, was approximately $ 2.2 billion, which represents approximately 24 % of our total remaining performance obligations.

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

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

As of September 30, 2023, we satisfied approximately $ 48.1 million of the collateral requirements of our insurance programs by utilizing surety bonds.

As of March 31, 2024, we satisfied approximately $ 48.1 million of the collateral requirements of our insurance programs by utilizing surety bonds.

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

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 12 - Commitments and Contingencies (Continued)

Hazardous Materials

3 unchanged sentences

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.

11 unchanged sentences

It is possible that a litigation matter for which liabilities have not been recorded could be decided unfavorably to us, and that any such unfavorable decision could have a material adverse effect on our financial position, results of operations, or liquidity.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 12 - Commitments and Contingencies (Continued)

Insurance Liabilities

3 unchanged sentences

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

As of September 30, 2023 and December 31, 2022, the estimated current portion of such undiscounted insurance liabilities, included in “Other accrued expenses and liabilities” in the accompanying Consolidated Balance Sheets, were $ 52.4 million and $ 54.8 million, respectively.

The estimated non-current portion of such undiscounted insurance liabilities included in “Other long-term obligations” as of September 30, 2023 and December 31, 2022 were $ 225.4 million and $ 221.7 million, respectively.

The current portion of anticipated insurance recoveries of $ 13.2 million and $ 16.0 million as of September 30, 2023 and December 31, 2022, respectively, were included in “Prepaid expenses and other” and the non-current portion of anticipated insurance recoveries of $ 50.6 million and $ 59.0 million as of September 30, 2023 and December 31, 2022, respectively, were included in “Other assets” in the accompanying Consolidated Balance Sheets.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

As of March 31, 2024 and December 31, 2023, the estimated current portion of such undiscounted insurance liabilities, included in “Other accrued expenses and liabilities” in the accompanying Consolidated Balance Sheets, were $ 53.4 million and $ 51.0 million, respectively.

The estimated non-current portion of such undiscounted insurance liabilities included in “Other long-term obligations” as of March 31, 2024 and December 31, 2023 were $ 238.0 million and $ 229.8 million, respectively.

The current portion of anticipated insurance recoveries of $ 13.3 million and $ 11.9 million as of March 31, 2024 and December 31, 2023, respectively, were included in “Prepaid expenses and other” and the non-current portion of anticipated insurance recoveries of $ 52.8 million and $ 48.8 million as of March 31, 2024 and December 31, 2023, respectively, were included in “Other assets” in the accompanying Consolidated Balance Sheets.

NOTE 13 - Additional Cash Flow Information

The following table presents additional cash flow information for the nine months ended September 30, 2023 and 2022 (in thousands):

For the nine months ended

September 30,

The following table presents additional cash flow information for the three months ended March 31, 2024 and 2023 (in thousands):

For the three months ended

Cash paid for:

12 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.

EMCOR Group, Inc.

2 unchanged sentences

NOTE 14 - Segment Information (continued)

The following tables present financial information for each of our reportable segments for the three and nine months ended September 30, 2023 and 2022 (in thousands):

The following tables present financial information for each of our reportable segments for the three months ended March 31, 2024 and 2023 (in thousands):

For the three months ended

September 30,

Revenues from unrelated entities:

15 unchanged sentences

Total operations $ 3,432,276 $ 2,890,432

For the nine months ended

September 30,

Revenues from unrelated entities:

United States electrical construction and facilities services $ 2,020,319 $ 1,719,525

United States mechanical construction and facilities services 3,602,271 3,158,948

United States building services 2,318,105 2,041,555

United States industrial services 875,314 842,524

Total United States operations 8,816,009 7,762,552

United Kingdom building services 327,643 363,746

Total operations $ 9,143,652 $ 8,126,298

Total revenues:

United States electrical construction and facilities services $ 2,022,557 $ 1,724,400

United States mechanical construction and facilities services 3,650,875 3,187,117

United States building services 2,397,944 2,116,385

United States industrial services 883,808 878,123

Less intersegment revenues ( 139,175 ) ( 143,473 )

Total United States operations 8,816,009 7,762,552

United Kingdom building services 327,643 363,746

Total operations $ 9,143,652 $ 8,126,298

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 14 - Segment Information (Continued)

For the three months ended

September 30,

Operating income (loss):

6 unchanged sentences

Corporate administration ( 39,158 ) ( 29,927 )

Impairment loss on long-lived assets

Total operations 259,953 154,910

Net periodic pension (cost) income ( 284 ) 1,025

Interest expense, net ( 90 ) ( 3,194 )

Income before income taxes $ 234,609 $ 147,925

For the nine months ended

September 30,

Operating income (loss):

United States electrical construction and facilities services $ 154,365 $ 90,646

United States mechanical construction and facilities services 344,550 225,545

United States building services 140,943 108,698

United States industrial services 22,733 18,324

Total United States operations 662,591 443,213

United Kingdom building services 20,220 25,372

Corporate administration ( 93,901 ) ( 80,890 )

Impairment loss on long-lived assets

Total operations 586,560 387,695

Net periodic pension (cost) income ( 840 ) 3,288

Interest expense, net ( 4,614 ) ( 6,234 )

Net periodic pension income (cost)

Interest income (expense), net

7,541 ( 1,832 )

Income before income taxes $ 267,716 $ 152,804

3 unchanged sentences

NOTE 14 - Segment Information (Continued)

September 30,

2024 December 31,

9 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements