What changed in this filing

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Item 1. Financial Statements

2024-07-25 compared with 2024-04-25 · 272 added, 102 removed, 611 unchanged (38% of the section changed)

51 unchanged sentences

Three months ended

Six months ended

2024 2023 2024 2023

Revenues $ 3,666,897 $ 3,045,622 $ 7,099,173 $ 5,936,054

4 unchanged sentences

Net periodic pension income (cost)

221 ( 282 ) 443 ( 556 )

Interest income (expense), net

12 unchanged sentences

Three months ended

June 30, Six months ended

2024 2023 2024 2023

Other comprehensive (loss) income, net of tax:

$ 247,572 $ 140,595 $ 444,721 $ 252,068

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments 245 3,614 ( 971 ) 5,871

1 unchanged sentence

loss included in net income (1)

Other comprehensive (loss) income

482 534 966 1,053

Other comprehensive income (loss)

727 4,148 ( 5 ) 6,924

Comprehensive income

$ 248,299 $ 144,743 444,716 258,992

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

(1) Net of tax of $ 0.2 million for each of the three months ended June 30, 2024 and 2023, and net of tax of $ 0.3 million and $ 0.4 million for the six months ended June 30, 2024 and 2023, respectively.

See Notes to Consolidated Financial Statements.

3 unchanged sentences

(In thousands)(Unaudited)

Three months ended

Six months ended

Cash flows - operating activities:

$ 444,721 $ 252,068

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

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

Depreciation and amortization 27,408 25,393

Amortization of identifiable intangible assets 36,412 32,100

Provision for (recovery of) credit losses

9,898 ( 343 )

Provision for credit losses

Non-cash share-based compensation expense 11,371 7,535

1 unchanged sentence

Changes in operating assets and liabilities, excluding the effect of businesses acquired ( 114,965 ) ( 98,479 )

Net cash provided by (used in) operating activities

Net cash provided by operating activities

411,958 214,932

7 unchanged sentences

Proceeds from revolving credit facility — 100,000

Repayments of revolving credit facility

— ( 100,000 )

Repayments of finance lease liabilities ( 1,393 ) ( 1,477 )

4 unchanged sentences

Payments for contingent consideration arrangements — ( 3,026 )

Net cash (used in) provided by financing activities

Net cash used in financing activities

( 181,444 ) ( 126,370 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 927 ) 5,856

Increase (decrease) in cash, cash equivalents, and restricted cash 52,737 ( 36,243 )

Increase in cash, cash equivalents, and restricted cash

18,448 45,984

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

3 unchanged sentences

(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 .

(2) Includes $ 0.9 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of June 30, 2024.

See Notes to Consolidated Financial Statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the three months ended March 31, 2023 and 2024

For the three months ended June 30, 2023 and 2024

(In thousands)(Unaudited)

4 unchanged sentences

stock Noncontrolling

Balance, December 31, 2022

Balance, March 31, 2023

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

8 unchanged sentences

Share-based compensation expense 3,448 — 3,448 — — — —

Balance, June 30, 2023

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

Balance, March 31, 2024

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

247,572 — — — 247,572 — —

Other comprehensive income

727 — — 727 — — —

Tax withholding for common stock issued under share-based compensation plans ( 118 ) — ( 118 ) — — — —

Common stock dividends ( 11,749 ) — 35 — ( 11,784 ) — —

Repurchases of common stock ( 111,061 ) — — — — ( 111,061 ) —

Share-based compensation expense 4,844 — 4,844 — — — —

Balance, June 30, 2024

$ 2,745,597 $ 612 $ 92,434 $ ( 85,709 ) $ 4,238,867 $ ( 1,501,644 ) $ 1,037

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

See Notes to Consolidated Financial Statements.

EMCOR Group, Inc.

and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the six months ended June 30, 2023 and 2024

(In thousands)(Unaudited)

EMCOR Group, Inc.

stock Capital

surplus Accumulated other comprehensive loss (1)

earnings Treasury

stock Noncontrolling

Balance, December 31, 2022

1 unchanged sentence

252,068 — — — 252,068 — —

Other comprehensive income

6,924 — — 6,924 — — —

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

Tax withholding for common stock issued under share-based compensation plans ( 5,295 ) — ( 5,295 ) — — — —

Common stock issued under employee stock purchase plan 4,441 — 4,441 — — — —

Common stock dividends ( 15,714 ) — 82 — ( 15,796 ) — —

Repurchases of common stock ( 106,163 ) — — — — ( 106,163 ) —

Share-based compensation expense 7,535 — 7,535 — — — —

Balance, June 30, 2023

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

Balance, December 31, 2023

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

444,721 — — — 444,721 — —

Other comprehensive loss

6 unchanged sentences

Share-based compensation expense 11,371 — 11,371 — — — —

Balance, March 31, 2024

Balance, June 30, 2024

$ 2,745,597 $ 612 $ 92,434 $ ( 85,709 ) $ 4,238,867 $ ( 1,501,644 ) $ 1,037

12 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.

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.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024.

NOTE 2 - New Accounting Pronouncements

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

Based on an evaluation of individual projects that were substantially complete in prior periods but had revisions to total estimated cost or anticipated contract value that resulted in an increase to profitability in excess of $ 1.0 million, we recognized revenue during the three and six months ended June 30, 2024 and 2023, as summarized in the following table (in thousands):

For the three months ended

For the six months ended

2024 2023 2024 2023

United States electrical construction and facilities services $ 3,076 $ — $ 8,413 $ —

5 unchanged sentences

NOTE 3 - Revenue from Contracts with Customers (Continued)

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.

During the three months ended June 30, 2024, we recognized $ 12.3 million of gross profit on two contracts, which are currently in process, as a result of favorable developments on certain outstanding claims.

Of this amount, $ 8.4 million was reported within our United States electrical construction and facilities services segment and $ 3.9 million was reported within our United States mechanical construction and facilities services segment.

Based on an evaluation of individual projects that had revisions to total estimated costs or anticipated contract value that resulted in a reduction of profitability in excess of $ 1.0 million, our operating results were negatively impacted during the three and six months ended June 30, 2024 and 2023, as summarized in the following table (in thousands):

For the three months ended

For the six months ended

2024 2023 2024 2023

United States electrical construction and facilities services $ 12,292 $ 2,616 $ 16,485 $ 8,345

United States mechanical construction and facilities services 7,886 — 14,620 2,686

United States building services

— 1,084 — 1,544

Total impact $ 20,178 $ 3,700 $ 31,105 $ 12,575

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 months ended March 31, 2024 and 2023 (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 and six months ended June 30, 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.

For the three months ended March 31,

For the three months ended June 30,

Total 2023 % of

20 unchanged sentences

NOTE 3 - Revenue from Contracts with Customers (Continued)

For the three months ended March 31,

For the three months ended June 30,

Total 2023 % of

16 unchanged sentences

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

For the three months ended March 31,

For the three months ended June 30,

Total 2023 % of

4 unchanged sentences

Total segment revenues $ 781,108 $ 775,012

For the three months ended March 31,

For the three months ended June 30,

Total 2023 % of

4 unchanged sentences

Total United States operations $ 3,560,330 $ 2,939,575

For the three months ended March 31,

For the three months ended June 30,

Total 2023 % of

8 unchanged sentences

NOTE 3 - Revenue from Contracts with Customers (Continued)

For the six months ended June 30,

Total 2023 % of

United States electrical construction and facilities services:

Network and communications market sector $ 634,561 41 % $ 429,039 32 %

Commercial market sector 162,999 10 % 190,918 14 %

Manufacturing and industrial market sector 203,926 13 % 181,124 14 %

Healthcare market sector 114,957 7 % 120,316 9 %

High-tech manufacturing market sector 88,346 6 % 68,593 5 %

Institutional market sector 76,571 5 % 74,661 6 %

Transportation market sector 99,981 6 % 75,149 6 %

Water and wastewater market sector 15,299 1 % 12,061 1 %

Hospitality and entertainment market sector 38,308 2 % 39,802 3 %

Short-duration projects (1)

102,283 7 % 98,420 7 %

Service work 29,558 2 % 34,153 3 %

1,566,789 1,324,236

Less intersegment revenues ( 2,084 ) ( 1,323 )

Total segment revenues $ 1,564,705 $ 1,322,913

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

For the six months ended June 30,

Total 2023 % of

United States mechanical construction and facilities services:

Network and communications market sector $ 305,704 10 % $ 186,455 8 %

Commercial market sector 532,138 17 % 545,150 24 %

Manufacturing and industrial market sector 392,375 13 % 307,686 13 %

Healthcare market sector 273,424 9 % 230,570 10 %

High-tech manufacturing market sector 687,806 22 % 294,449 13 %

Institutional market sector 224,384 7 % 135,674 6 %

Transportation market sector 29,662 1 % 21,447 1 %

Water and wastewater market sector 150,443 5 % 135,948 6 %

Hospitality and entertainment market sector 29,630 1 % 23,608 1 %

Short-duration projects (1)

182,831 6 % 155,395 7 %

Service work 277,515 9 % 239,466 11 %

3,085,912 2,275,848

Less intersegment revenues ( 3,066 ) ( 3,177 )

Total segment revenues $ 3,082,846 $ 2,272,671

(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 six months ended June 30,

Total 2023 % of

United States building services:

Mechanical services $ 1,095,883 70 % $ 977,039 65 %

Commercial site-based services 370,501 24 % 416,694 28 %

Government site-based services 95,884 6 % 106,654 7 %

Total segment revenues $ 1,562,268 $ 1,500,387

For the six months ended June 30,

Total 2023 % of

United States industrial services:

Field services $ 585,672 86 % $ 536,721 86 %

Shop services 92,428 14 % 86,445 14 %

Total segment revenues $ 678,100 $ 623,166

Total United States operations $ 6,887,919 $ 5,719,137

For the six months ended June 30,

Total 2023 % of

United Kingdom building services:

Service work $ 101,004 48 % $ 103,345 48 %

Project work 110,250 52 % 113,572 52 %

Total segment revenues $ 211,254 $ 216,917

Total operations $ 7,099,173 $ 5,936,054

Accounts Receivable and Allowance for Credit Losses

5 unchanged sentences

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

At 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.

At June 30, 2024 and December 31, 2023, our allowance for credit losses was $ 33.3 million and $ 22.5 million, respectively.

The increase in our allowance for credit losses was primarily due to a reserve taken in the first quarter of 2024 for a specific customer bankruptcy within the commercial site-based services division of 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.

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

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 3 - Revenue from Contracts with Customers (Continued)

The change in the allowance for credit losses for the six months ended June 30, 2024 was as follows (in thousands):

Balance at December 31, 2023

1 unchanged sentence

Amounts written off against the allowance, net of recoveries

Balance at March 31, 2024

Balance at June 30, 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.

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):

Net contract liabilities in the accompanying Consolidated Balance Sheets consisted of the following amounts as of June 30, 2024 and December 31, 2023 (in thousands):

2024 December 31, 2023

4 unchanged sentences

Net contract liabilities $ ( 1,491,899 ) $ ( 1,327,036 )

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.

Contract assets and contract liabilities increased by approximately $ 1.0 million and $ 29.6 million, respectively, as a result of acquisitions made by us in 2024.

Excluding the impact of acquisitions, net contract liabilities increased by approximately $ 136.3 million during the six months ended June 30, 2024, primarily 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 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 March 31, 2024 (in thousands, except for percentages):

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 June 30, 2024 (in thousands, except for percentages):

2024 % of Total

7 unchanged sentences

Total operations $ 8,999,223 100 %

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

Our remaining performance obligations at June 30, 2024 were approximately $ 9.0 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.

Our remaining performance obligations are comprised of:

(a) original contract amounts, (b) change orders for which we have received written confirmations from our customers, (c) pending change orders for which we expect to receive confirmations in the ordinary course of business, (d) claim amounts that we have made against customers for which we have determined we have a legal basis under existing contractual arrangements and as to which the variable consideration constraint does not apply, and (e) other forms of variable consideration to the extent that such variable consideration has been included within the transaction price of our contracts.

Such claim and other variable consideration amounts were immaterial for all periods presented.

EMCOR Group, Inc.

2 unchanged sentences

NOTE 3 - Revenue from Contracts with Customers (Continued)

Our remaining performance obligations are comprised of:

Such claim and other variable consideration amounts were immaterial for all periods presented.

Refer to the table below for additional information regarding our remaining performance obligations, including an estimate of when we expect to recognize such remaining performance obligations as revenue (in thousands):

10 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 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.

During the first half of 2024, we acquired four companies for upfront consideration of $ 181.8 million, inclusive of our estimates of customary working capital adjustments.

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.

(a) two companies that have been 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 has been 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 has been 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.

In connection with these acquisitions, we acquired working capital of $ 26.8 million and other net assets of $ 0.7 million, and have preliminarily ascribed $ 42.0 million to goodwill and $ 112.3 million to identifiable intangible assets.

We expect that all of the goodwill and identifiable intangible assets acquired in connection with these 2024 acquisitions will be deductible for tax purposes.

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

4 unchanged sentences

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.

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.

The purchase price allocations for the businesses acquired in 2024 are preliminary and subject to change during their respective measurement periods.

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

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

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

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

EMCOR Group, Inc.

3 unchanged sentences

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):

The following tables summarize our calculation of Basic and Diluted Earnings per Common Share (“EPS”) for the three and six months ended June 30, 2024 and 2023 (in thousands, except share and per share data):

For the three months ended

5 unchanged sentences

Diluted earnings per common share $ 5.25 $ 2.95

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.

For the six months ended

$ 444,721 $ 252,068

Weighted average shares outstanding used to compute basic earnings per common share 47,053,768 47,584,656

Effect of dilutive securities—Share-based awards 182,970 182,586

Shares used to compute diluted earnings per common share 47,236,738 47,767,242

Basic earnings per common share $ 9.45 $ 5.30

Diluted earnings per common share $ 9.41 $ 5.28

The number of share-based awards excluded from the computation of diluted EPS for the three and six months ended June 30, 2024 because they would be anti-dilutive were 5,200 and 9,399 , respectively.

The number of share-based awards excluded from the computation of diluted EPS for the three and six months ended June 30, 2023 because they would be anti-dilutive were 8,726 and 9,026 , respectively.

NOTE 6 - Inventories

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

Inventories in the accompanying Consolidated Balance Sheets consisted of the following amounts as of June 30, 2024 and December 31, 2023 (in thousands):

2024 December 31,

2 unchanged sentences

Inventories $ 103,896 $ 110,774

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 7 - Debt

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.

Excluding finance lease liabilities of $ 6.7 million at June 30, 2024 and $ 5.3 million at December 31, 2023, we had no outstanding debt as of June 30, 2024 and December 31, 2023.

The current portion of our finance lease liabilities of $ 2.5 million at June 30, 2024 and December 31, 2023 was included in “Other accrued expenses and liabilities” and the non-current portion of our finance lease liabilities of $ 4.2 million and $ 2.8 million at June 30, 2024 and December 31, 2023, respectively, were included in “Other long-term obligations” in the accompanying Consolidated Balance Sheets.

Credit Agreement

3 unchanged sentences

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.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 7 - Debt (continued)

There were no direct borrowings outstanding under the 2023 Revolving Credit Facility as of June 30, 2024 and December 31, 2023.

However, outstanding letters of credit reduce the available capacity under this facility, and as of June 30, 2024 and December 31, 2023, we had $ 75.0 million and $ 116.7 million of letters of credit outstanding, respectively.

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

3 unchanged sentences

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.

The fee was 0.125 % of the unused amount as of June 30, 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.

1 unchanged sentence

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.

We were in compliance with all such covenants as of June 30, 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 March 31, 2024 and December 31, 2023 (in thousands):

Assets at Fair Value as of March 31, 2024

The following tables summarize the assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2024 and December 31, 2023 (in thousands):

Assets at Fair Value as of June 30, 2024

Asset Category Level 1 Level 2 Level 3 Total

4 unchanged sentences

Restricted cash (3)

1,502 — — 1,502

Total $ 865,264 $ — $ — $ 865,264

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 March 31, 2024, we had $ 528.3 million in money market funds.

At June 30, 2024, we had $ 564.9 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 unchanged sentences

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

18 unchanged sentences

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.

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.

Although there were no outstanding borrowings under our 2023 Credit Agreement as of June 30, 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.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 9 - Income Taxes

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):

The following table presents our income tax provision and our income tax rate for the three and six months ended June 30, 2024 and 2023 (in thousands, except percentages):

For the three months ended

For the six months ended

2024 2023 2024 2023

Income tax provision $ 91,563 $ 53,098 $ 162,130 $ 94,429

1 unchanged sentence

The difference between the U.S.

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.

statutory tax rate of 21 % and our effective income tax rate for both the three and six months ended June 30, 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 and six months ended June 30, 2024, when compared to the three and six months ended June 30, 2023, was predominantly due to greater income before income taxes.

The decrease in our effective income tax rate for the three and six months ended June 30, 2024, when compared to the three and six months ended June 30, 2023, was attributable to the impact of favorable discrete tax items during the first half of 2024.

As of June 30, 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 2019 through 2021.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 10 - Common Stock

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.

As of June 30, 2024 and December 31, 2023, there were 46,712,350 and 47,047,265 shares of our common stock outstanding, respectively.

During the three months ended June 30, 2024 and 2023, we issued 12,506 and 42,578 shares of common stock, respectively.

During the six months ended June 30, 2024 and 2023, we issued 80,579 and 114,654 shares of common stock, respectively.

We have paid quarterly dividends since October 25, 2011.

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.

We currently pay a regular quarterly dividend of $ 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.

Subsequently, the Board has from time to time increased the amount authorized for repurchases under such program.

In June 2024, our Board increased such amount by $ 500 million.

Since the inception of the repurchase program, the Board has authorized us to repurchase up to $ 2.65 billion of our outstanding common stock.

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.

During the six months ended June 30, 2024, we repurchased approximately 0.4 million shares of our common stock for approximately $ 150.3 million, inclusive of the applicable excise tax.

Since the inception of the repurchase program through June 30, 2024, we have repurchased approximately 26.2 million shares of our common stock for approximately $ 2.04 billion.

As of June 30, 2024, there remained authorization for us to repurchase approximately $ 610.8 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.

4 unchanged sentences

These amounts will be subsequently recognized as net periodic pension cost (income) within the Consolidated Statements of Operations.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 11 - Retirement Plans (Continued)

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

4 unchanged sentences

Components of Net Periodic Pension Cost

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):

The components of net periodic pension (income) cost of the UK Plan for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):

For the three months ended

For the six months ended

2024 2023 2024 2023

Interest cost $ 2,362 $ 2,451 $ 4,738 $ 4,827

3 unchanged sentences

$ ( 203 ) $ 231 $ ( 406 ) $ 455

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 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.

As of June 30, 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 $ 2.1 billion, which represents approximately 23 % 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 March 31, 2024, we satisfied approximately $ 48.1 million of the collateral requirements of our insurance programs by utilizing surety bonds.

As of June 30, 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.

3 unchanged sentences

However, when remediation is required as part of our contract performance, we believe we comply with all applicable regulations governing the discharge of hazardous materials into the environment or otherwise relating to the protection of the environment.

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 12 - Commitments and Contingencies (Continued)

Government Contracts

13 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 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.

As of June 30, 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 $ 53.6 million and $ 51.0 million, respectively.

The estimated non-current portion of such undiscounted insurance liabilities included in “Other long-term obligations” as of June 30, 2024 and December 31, 2023 were $ 233.5 million and $ 229.8 million, respectively.

The current portion of anticipated insurance recoveries of $ 12.2 million and $ 11.9 million as of June 30, 2024 and December 31, 2023, respectively, were included in “Prepaid expenses and other” and the non-current portion of anticipated insurance recoveries of $ 47.5 million and $ 48.8 million as of June 30, 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 three months ended March 31, 2024 and 2023 (in thousands):

For the three months ended

The following table presents additional cash flow information for the six months ended June 30, 2024 and 2023 (in thousands):

For the six months ended

Cash paid for:

3 unchanged sentences

Right-of-use assets obtained in exchange for new finance lease liabilities $ 2,566 $ 457

EMCOR Group, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 14 - Segment Information

7 unchanged sentences

• United Kingdom building services.

The following tables present financial information for each of our reportable segments for the three and six months ended June 30, 2024 and 2023 (in thousands):

For the three months ended

Revenues from unrelated entities:

United States electrical construction and facilities services $ 799,994 $ 678,167

United States mechanical construction and facilities services 1,655,181 1,194,113

United States building services 781,108 775,012

United States industrial services 324,047 292,283

Total United States operations 3,560,330 2,939,575

United Kingdom building services 106,567 106,047

Total operations $ 3,666,897 $ 3,045,622

Total revenues:

United States electrical construction and facilities services $ 802,884 $ 679,006

United States mechanical construction and facilities services 1,669,887 1,209,242

United States building services 792,277 802,934

United States industrial services 326,312 293,057

Less intersegment revenues ( 31,030 ) ( 44,664 )

Total United States operations 3,560,330 2,939,575

United Kingdom building services 106,567 106,047

Total operations $ 3,666,897 $ 3,045,622

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 months ended March 31, 2024 and 2023 (in thousands):

For the three months ended

For the six months ended

Revenues from unrelated entities:

33 unchanged sentences

NOTE 14 - Segment Information (Continued)

For the six months ended

Operating income (loss):

United States electrical construction and facilities services $ 180,166 $ 91,238

United States mechanical construction and facilities services 364,160 206,074

United States building services 80,298 83,787

United States industrial services 30,712 22,907

Total United States operations 655,336 404,006

United Kingdom building services 11,154 11,351

Corporate administration ( 73,729 ) ( 63,780 )

Total operations 592,761 351,577

Net periodic pension income (cost)

Interest income (expense), net

13,647 ( 4,524 )

Income before income taxes $ 606,851 $ 346,497

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