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Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-04-30 · 164 added, 110 removed, 168 unchanged (62% of the section changed)

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Business of our Form 10-K for the year ended December 31, 2024.

The following table presents selected financial data for the quarters ended March 31, 2025 and 2024 (in thousands, except for percentages and per share data):

The following table presents selected financial data for the quarters ended June 30, 2025 and 2024 (in thousands, except for percentages and per share data):

For the three months ended

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Diluted earnings per common share $ 6.72 $ 5.25

Revenues of $3.87 billion for the quarter ended March 31, 2025 set a new quarterly record for the Company and represent an increase of 12.7% from revenues of $3.43 billion for the quarter ended March 31, 2024.

Demand for our services continues to be strong across most of the market sectors we serve and, as described in further detail below, we experienced revenue growth within all of our reportable segments, except for our United States building services segment.

Revenues for the first quarter of 2025 included incremental acquisition contribution of approximately $250.9 million.

Operating income for the quarter ended March 31, 2025 was $318.8 million, or 8.2% of revenues, establishing new records for the Company with respect to a first quarter.

This compares to operating income of $260.0 million, or 7.6% of revenues, for the quarter ended March 31, 2024.

Revenues of $4.30 billion for the quarter ended June 30, 2025 set a new quarterly record for the Company and represent an increase of 17.4% from revenues of $3.67 billion for the quarter ended June 30, 2024.

Revenues for the second quarter of 2025 included incremental acquisition contribution of approximately $330.3 million.

Operating income for the quarter ended June 30, 2025 was $415.2 million, establishing a new quarterly record for the Company, and operating margin was 9.6%, a record for the Company with respect to a second quarter.

This compares to operating income of $332.8 million, or 9.1% of revenues, for the quarter ended June 30, 2024.

The $82.4 million increase in operating income, and corresponding 50 basis point expansion in operating margin, were predominantly a result of improved operating performance within our United States construction segments, as described in further detail below.

Operating income for the quarter ended March 31, 2025 included incremental acquisition contribution of $14.2 million, net of amortization expense attributable to identifiable intangible assets of $10.5 million.

Net income of $240.7 million, or $5.26 per diluted share, for the quarter ended March 31, 2025 compares favorably to net income of $197.1 million, or $4.17 per diluted share, for the quarter ended March 31, 2024.

While the majority of the increase in our net income and diluted earnings per share was a result of the increased operating income referenced above, diluted earnings per share for the quarter ended March 31, 2025 additionally benefited from a reduced weighted average share count given the impact of common stock repurchases made by us throughout 2024 and the first quarter of 2025.

Operating income for the quarter ended June 30, 2025 included incremental acquisition contribution of $9.2 million, net of amortization expense attributable to identifiable intangible assets of $12.5 million.

Net income of $302.2 million, or $6.72 per diluted share, for the quarter ended June 30, 2025 compares favorably to net income of $247.6 million, or $5.25 per diluted share, for the quarter ended June 30, 2024.

While the majority of the increase in our net income and diluted earnings per share was a result of the increased operating income referenced above, diluted earnings per share for the quarter ended June 30, 2025 additionally benefited from a reduced weighted average share count given the impact of common stock repurchases made by us throughout 2024 and the first half of 2025.

Impact of Acquisitions

In order to provide a more meaningful period-over-period discussion of our operating results, we may discuss amounts generated or incurred (revenues, gross profit, selling, general and administrative expenses, and operating income) from companies acquired.

The amounts discussed reflect the acquired companies’ operating results in the current reported period only for the time period these entities were not owned by EMCOR in the comparable prior reported period.

These amounts reflect the acquired companies’ operating results in the current reported period only for the time period these entities were not owned by EMCOR in the comparable prior reported period.

For further discussion regarding our acquisitions, refer to Note 4 - Acquisitions of Businesses of the notes to consolidated financial statements.

During the first quarter of 2025, we completed the acquisition of Miller Electric Company (“Miller Electric”), a leading electrical contractor predominantly operating across the Southeastern United States.

The results of operations for Miller Electric have been included within our United States electrical construction and facilities services segment.

In addition to Miller Electric, we acquired a company which provides building automation controls and solutions to commercial, institutional, and industrial customers.

Although de minimis, the results of operations for such acquisition have been included within our United States mechanical construction and facilities services segment.

In addition, during the first half of 2025, we acquired three companies for upfront consideration of $38.8 million, inclusive of customary working capital adjustments.

Such acquisitions include:

(a) a company in the Midwestern region of the United States that provides building automation controls and solutions to commercial, institutional, and industrial customers, (b) a company that adds capabilities to our national fire protection offerings, and (c) a provider of mechanical construction and maintenance services in the Western region of the United States.

The results of operations of these three companies have been included within our United States mechanical construction and facilities services segment.

We acquired seven companies during calendar year 2024 for upfront consideration of $231.1 million, inclusive of customary working capital adjustments.

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Results of Operations

The following table presents our operating segment revenues from unrelated entities and their respective percentages of total revenues (in thousands, except for percentages):

For the three months ended March 31,

The following tables present our operating segment revenues from unrelated entities and their respective percentages of total revenues (in thousands, except for percentages):

For the three months ended June 30,

Total 2024 % of

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$ 4,304,400 100 % $ 3,666,897 100 %

As described in more detail below, due to strong demand for our services across most of the market sectors we serve, our consolidated revenues for the first quarter of 2025 increased to $3.87 billion compared to $3.43 billion for the first quarter of 2024.

While the most significant revenue growth was experienced within our United States construction segments, we generated greater revenues within all of our reportable segments, except for our United States building services segment.

Revenues for the first quarter of 2025 included incremental acquisition contribution of approximately $250.9 million.

Revenues of our United States electrical construction and facilities services segment were $1,087.8 million for the three months ended March 31, 2025, an increase of $323.1 million compared to revenues of $764.7 million for the three months ended March 31, 2024.

This segment’s results included $186.3 million of incremental acquisition revenues, almost entirely from Miller Electric.

From a market sector perspective, increased revenues were generated from all of the sectors we serve, except for the manufacturing and industrial market sector, which experienced a modest decline year-over-year.

While the largest increase in revenues was seen within the network and communications market sector, predominantly driven by greater demand for data center construction projects, this segment additionally experienced notable increases in revenues from:

(a) the healthcare market sector, as a result of greater project activity across several of the geographies in which we operate, (b) the transportation market sector, due to certain infrastructure projects currently underway, and (c) the institutional market sector, given an increase in revenues from certain public sector projects.

Our United States mechanical construction and facilities services segment revenues for the three months ended March 31, 2025 were $1,572.6 million, a $144.9 million increase compared to revenues of $1,427.7 million for the three months ended March 31, 2024.

This segment’s results included $47.3 million of incremental acquisition revenues.

Similar to our United States electrical construction and facilities services segment, this segment generated the most significant increase in revenues from the network and communications market sector due to greater demand for data center construction projects.

In addition to data centers, notable revenue growth was experienced within:

(a) the healthcare market sector, primarily throughout the Southeast region of the United States, inclusive of incremental contribution from acquired companies, (b) the hospitality and entertainment market sector, given increased project activity in the Western region of the United States, and (c) the water and wastewater market sector, driven by several projects within the Southeast region of the United States.

Further contributing to the revenue increase within this segment was a greater level of service volume.

For the six months ended June 30,

Total 2024 % of

United States electrical construction and facilities services $ 2,428,091 29 % $ 1,564,705 22 %

United States mechanical construction and facilities services 3,327,860 41 % 3,082,846 43 %

United States building services 1,535,882 19 % 1,562,268 22 %

United States industrial services 640,074 8 % 678,100 10 %

Total United States operations 7,931,907 97 % 6,887,919 97 %

United Kingdom building services 239,865 3 % 211,254 3 %

Consolidated revenues

$ 8,171,772 100 % $ 7,099,173 100 %

As described in more detail below, due to strong demand for our services across most of the market sectors we serve, our consolidated revenues for the three months ended June 30, 2025 increased to $4.30 billion compared to $3.67 billion for the three months ended June 30, 2024, and our consolidated revenues for the six months ended June 30, 2025 increased to $8.17 billion compared to $7.10 billion for the six months ended June 30, 2024.

We experienced revenue growth within the majority of our reportable segments, with the most significant increases being generated from our United States construction segments.

Revenues for the three and six months ended June 30, 2025 included incremental acquisition contribution of approximately $330.3 million and $581.2 million, respectively.

Revenues of our United States electrical construction and facilities services segment were $1,340.2 million for the three months ended June 30, 2025, a $540.3 million increase compared to revenues of $800.0 million for the three months ended June 30, 2024.

Revenues of this segment for the six months ended June 30, 2025 were $2,428.1 million, an $863.4 million increase compared to revenues of $1,564.7 million for the six months ended June 30, 2024.

This segment’s results for the three and six months ended June 30, 2025 included $321.3 million and $507.6 million, respectively, of incremental acquisition revenues, almost entirely from Miller Electric.

From a market sector perspective, increased revenues were generated from nearly all of the sectors we serve.

(a) the healthcare market sector, as a result of greater project activity across several of the geographies in which we operate, (b) the commercial market sector, inclusive of certain office and tenant fit-out projects, (c) the institutional market sector, given an increase in revenues from public sector projects, and (d) the transportation market sector, due to certain infrastructure projects currently underway.

Revenues of this segment for both the three and six months ended June 30, 2025 additionally benefited from greater levels of short-duration projects and service work.

Our United States mechanical construction and facilities services segment revenues for the three months ended June 30, 2025 were $1,755.3 million, a $100.1 million increase compared to revenues of $1,655.2 million for the three months ended June 30, 2024.

For the six months ended June 30, 2025, revenues of this segment were $3,327.9 million, a $245.0 million increase compared to revenues of $3,082.8 million for the six months ended June 30, 2024.

This segment’s results for the three and six months ended June 30, 2025 included $4.0 million and $51.3 million, respectively, of incremental acquisition revenues.

Similar to our United States electrical construction and facilities services segment, this segment experienced the most significant increase in revenues within the network and communications market sector due to greater demand for data center construction projects.

In addition to data centers, notable revenue growth was generated from:

(a) the manufacturing and industrial market sector, primarily driven by certain food processing projects, and (b) the hospitality and entertainment market sector, given increased project activity, largely in the Western region of the United States.

Further contributing to the revenue increase within this segment were greater levels of short-duration projects and service work.

These increases were partially offset by revenue declines from:

(a) the commercial market sector, as a result of:

(i) fewer active warehousing and distribution projects for certain of our e-commerce customers and (ii) the completion or substantial completion of certain tenant fit-out or office projects, and (b) the high-tech manufacturing market sector as we work towards completion of the initial phases of certain semiconductor manufacturing construction projects.

Revenues of our United States building services segment for the three months ended March 31, 2025 were $742.6 million compared to revenues of $781.2 million for the three months ended March 31, 2024.

Excluding incremental acquisition contribution of $2.6 million, this segment’s revenues for the three months ended March 31, 2025 decreased by $41.1 million as the strength of its mechanical services division was more than offset by revenue declines within its commercial site-based and government site-based services divisions due to the loss of certain facilities maintenance contracts not renewed pursuant to rebid.

With respect to this segment’s mechanical services division, revenue growth was experienced from:

(a) the high-tech manufacturing market sector, as we near completion of certain semiconductor manufacturing construction projects, and (b) the commercial market sector, as a result of:

(i) fewer active warehousing and distribution projects for some of our e-commerce customers, and (ii) the completion or substantial completion of several tenant fit-out or office projects.

Revenues of our United States building services segment were $793.3 million and $1,535.9 million for the three and six months ended June 30, 2025, respectively, compared to revenues of $781.1 million and $1,562.3 million for the three and six months ended June 30, 2024.

This segment’s revenues for the six months ended June 30, 2025 included incremental acquisition contribution of $2.6 million.

For both 2025 periods, this segment’s mechanical services division experienced revenue growth from:

(a) HVAC project and retrofit work, as demand for these services remained strong, partially as our customers continue to seek ways to improve the energy efficiency of their facilities, (b) service repair and maintenance volumes, given growth in our service contract base, and (c) building automation and controls projects, as we continue to expand our service offerings in this area.

Revenues of our United States industrial services segment for the three months ended March 31, 2025 were $359.0 million, compared to revenues of $354.1 million for the three months ended March 31, 2024.

This segment’s results included $14.7 million of incremental acquisition revenues.

Excluding such acquisition contribution, the reduction in this segment’s revenues resulted primarily from the deferral or delay of planned turnaround projects, partially due to abnormal weather conditions within the Gulf Coast region.

For the three months ended March 31, 2025, our United Kingdom building services segment generated revenues of $105.3 million, a slight increase from the $104.7 million generated during the three months ended March 31, 2024.

A modest reduction in facilities maintenance revenues was more than offset by increased project work largely within the manufacturing and industrial and network and communications market sectors.

Offsetting the strength of the mechanical services division were revenue declines within this segment’s commercial site-based and government site-based services divisions due to the loss of certain facilities maintenance contracts that were not renewed upon rebid in a prior period.

Revenues of our United States industrial services segment for the three months ended June 30, 2025 were $281.1 million, a decrease of $43.0 million compared to revenues of $324.0 million for the three months ended June 30, 2024.

Revenues of this segment for the six months ended June 30, 2025 were $640.1 million, a decrease of $38.0 million compared to revenues of $678.1 million for the six months ended June 30, 2024.

This segment’s results for the three and six months ended June 30, 2025 included $5.0 million and $19.7 million, respectively, of incremental acquisition revenues.

The reduction in this segment’s revenues for both 2025 periods resulted from:

(a) its field services division, given:

(i) lower turnaround project demand when compared to the prior year, which benefited from scope growth on certain projects and (ii) the completion of a renewable fuel project, which was active throughout 2024, and (b) its shop services division, largely due to fewer new build heat exchanger sales.

Our United Kingdom building services segment revenues were $134.6 million and $239.9 million for the three and six months ended June 30, 2025, respectively, compared to revenues of $106.6 million and $211.3 million for the three and six months ended June 30, 2024, respectively.

The increase in this segment’s revenues for both 2025 periods was due to:

(a) greater service revenues, partially as a result of the recent award of a facilities maintenance contract by a new customer, and (b) increased project work, largely within the manufacturing and industrial and network and communications market sectors.

Revenues of this segment for the three and six months ended June 30, 2025 were positively impacted by $7.4 million and $6.8 million, respectively, given favorable exchange rate movements for the British pound versus the United States dollar.

Cost of sales and gross profit

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For the three months ended

For the six months ended

2025 2024 2025 2024

Cost of sales $ 3,470,629 $ 2,982,896 $ 6,615,283 $ 5,825,863

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Gross profit margin 19.4 % 18.7 % 19.0 % 17.9 %

Our gross profit for the three months ended March 31, 2025 was $722.7 million, or 18.7% of revenues, compared to gross profit of $589.3 million, or 17.2% of revenues, for the three months ended March 31, 2024.

The year-over-year increase in gross profit and the expansion in gross profit margin were driven by both of our United States construction segments, as well as our United States building services segment in each case due to an improved revenue mix and excellent project execution.

Our gross profit for the three months ended March 31, 2025 included incremental acquisition contribution of $41.8 million net of amortization expense attributable to identifiable intangible assets of $5.4 million.

Our gross profit for the three months ended June 30, 2025 was $833.8 million, or 19.4% of revenues, compared to gross profit of $684.0 million, or 18.7% of revenues, for the three months ended June 30, 2024.

Gross profit for the six months ended June 30, 2025 was $1,556.5 million, or 19.0% of revenues, compared to gross profit of $1,273.3 million, or 17.9% of revenues, for the six months ended June 30, 2024.

The year-over-year increases in gross profit and the expansion in gross profit margin were driven by both of our United States construction segments, as well as our United States building services segment, in each case due to an improved revenue mix and excellent project execution.

Our gross profit for the three and six months ended June 30, 2025 included incremental acquisition contribution of $43.7 million and $85.4 million, respectively, net of amortization expense attributable to identifiable intangible assets of $7.0 million and $12.4 million, respectively.

Selling, general and administrative expenses

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For the three months ended

For the six months ended

2025 2024 2025 2024

Selling, general and administrative expenses $ 418,559 $ 351,193 $ 822,521 $ 680,549

SG&A margin 9.7 % 9.6 % 10.1 % 9.6 %

Our selling, general and administrative expenses for the three months ended March 31, 2025 were $404.0 million, or 10.4% of revenues, compared to selling, general and administrative expenses of $329.4 million, or 9.6% of revenues, for the three months ended March 31, 2024.

Selling, general and administrative expenses for the three months ended March 31, 2025 included:

(a) $27.5 million of incremental expenses directly related to companies acquired, including amortization expense attributable to identifiable intangible assets of $5.1 million, and (b) $9.4 million of transaction related costs incurred in connection with the acquisition of Miller Electric.

Excluding incremental expenses resulting from acquisitions, our selling, general and administrative expenses increased by $37.7 million, primarily as a result of greater:

(a) salaries and related employment expenses, due to additional headcount to support our organic revenue growth as well as annual cost of living adjustments, (b) incentive compensation expense, predominantly within our United States construction segments, given higher projected annual operating results, and (c) computer hardware and software costs due to various information technology and cybersecurity initiatives currently in process.

These increases were partially offset by a decrease in the provision for credit losses year-over-year.

The 80 basis point year-over-year increase in our SG&A margin was primarily due to:

(a) improved gross profit and gross profit margin, which resulted in the above referenced increase in incentive compensation expense across certain of our operating subsidiaries, (b) a decrease in revenues, without a commensurate decrease in selling, general and administrative expenses, within our United States building services segment, and (c) the impact of the $9.4 million of transaction related costs referenced above.

Our selling, general and administrative expenses for the three months ended June 30, 2025 were $418.6 million, or 9.7% of revenues, compared to selling, general and administrative expenses of $351.2 million, or 9.6% of revenues, for the three months ended June 30, 2024.

Selling, general and administrative expenses for the six months ended June 30, 2025 were $822.5 million, or 10.1% of revenues, compared to selling, general and administrative expenses of $680.5 million, or 9.6% of revenues, for the six months ended June 30, 2024.

Selling, general and administrative expenses for the three and six months ended June 30, 2025 included $34.4 million and $62.0 million, respectively, of incremental expenses directly related to companies acquired, including amortization expense attributable to identifiable intangible assets of $5.5 million and $10.6 million, respectively.

Included in selling, general and administrative expenses for the six months ended June 30, 2025 were $9.4 million of transaction related costs incurred during the first quarter in connection with the acquisition of Miller Electric.

Excluding incremental expenses resulting from acquisitions, our selling, general and administrative expenses for the three and six months ended June 30, 2025 increased by $32.9 million and $80.0 million, respectively, primarily as a result of greater:

(a) incentive compensation expense, predominantly within our United States construction segments, given higher projected annual operating results, (b) salaries and related employment expenses, due to additional headcount to support our organic revenue growth as well as annual cost of living adjustments, and (c) computer hardware and software costs due to various information technology and cybersecurity initiatives currently in process.

The 50 basis point increase in our SG&A margin for the six months ended June 30, 2025 was primarily due to:

(a) improved gross profit and gross profit margin, which resulted in the above referenced increase in incentive compensation expense across certain of our operating subsidiaries, (b) a decrease in revenues, without a commensurate decrease in selling, general and administrative expenses, within our United States building services and United States industrial services segments, and (c) the impact of the $9.4 million of transaction related costs referenced above.

Operating income (loss)

The following table presents our operating income (loss) and operating income (loss) as a percentage of segment revenues (“operating margin”) (in thousands, except for percentages):

For the three months ended March 31,

The following tables present our operating income (loss) and operating income (loss) as a percentage of segment revenues (“operating margin”) (in thousands, except for percentages):

For the three months ended June 30,

Revenues 2024 % of

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Net periodic pension income

Interest (expense) income, net

(3,240) 6,106

Income before income taxes $ 412,027 $ 339,135

For the six months ended June 30,

Revenues 2024 % of

Operating income (loss):

United States electrical construction and facilities services $ 293,701 12.1 % $ 180,166 11.5 %

United States mechanical construction and facilities services 425,484 12.8 % 364,160 11.8 %

United States building services 86,468 5.6 % 80,298 5.1 %

United States industrial services 6,341 1.0 % 30,712 4.5 %

Total United States operations 811,994 10.2 % 655,336 9.5 %

United Kingdom building services 13,412 5.6 % 11,154 5.3 %

Corporate administration (91,438) — (73,729) —

Consolidated operating income

733,968 9.0 % 592,761 8.3 %

Net periodic pension income

Interest income, net

Income before income taxes $ 736,224 $ 606,851

Operating income for the three months ended March 31, 2025 was $318.8 million, an increase of $58.8 million compared to operating income of $260.0 million for the three months ended March 31, 2024.

Operating margin for the three months ended March 31, 2025 was 8.2% compared to an operating margin of 7.6% for the three months ended March 31, 2024.

Operating income for the three months ended June 30, 2025 was $415.2 million, an increase of $82.4 million compared to operating income of $332.8 million for the three months ended June 30, 2024.

Operating margin for the three months ended June 30, 2025 was 9.6% compared to an operating margin of 9.1% for the three months ended June 30, 2024.

For the six months ended June 30, 2025, operating income was $734.0 million, an increase of $141.2 million compared to operating income of $592.8 million for the six months ended June 30, 2024.

Operating margin for the six months ended June 30, 2025 was 9.0% compared to an operating margin of 8.3% for the six months ended June 30, 2024.

As described in more detail below, these increases in profitability were predominantly a result of improved operating performance within our United States construction segments, due to a more favorable mix of work and better project execution, including enhanced productivity, due in part to investments in virtual design and construction, prefabrication, and automation.

Operating income for the three months ended March 31, 2025 included incremental acquisition contribution of $14.2 million net of amortization expense attributable to identifiable intangible assets of $10.5 million.

Operating income of our United States electrical construction and facilities services segment was $136.1 million, or 12.5% of revenues, for the three months ended March 31, 2025, compared to $91.6 million, or 12.0% of revenues, for the three months ended March 31, 2024.

Operating income and operating margin of this segment benefited from greater gross profit and gross profit margin due to an increase in revenues, excellent project execution, and a more favorable mix of work.

While the most significant increase in gross profit was generated within the network and communications market sector, this segment additionally experienced increases within the majority of the other market sectors in which we operate.

Largely driven by Miller Electric, this segment’s operating income included incremental acquisition contribution of $12.0 million, net of amortization expense attributable to identifiable intangible assets of $8.0 million.

Our United States mechanical construction and facilities services segment’s operating income for the three months ended March 31, 2025 was $186.7 million, or 11.9% of revenues, compared to operating income of $150.7 million, or 10.6% of revenues, for the three months ended March 31, 2024.

Similar to our United States electrical construction and facilities services segment, this improved performance was a result of greater gross profit and gross profit margin due to an increase in revenues, excellent project execution, and a more favorable mix of work.

From a market sector perspective, this segment also experienced greater profitability across the majority of the sectors in which we operate, with the most significant increases in gross profit coming from the network and communications and high-tech manufacturing market sectors.

Despite the reduction in high-tech manufacturing revenues referenced above, favorable progression on a number of contracts resulted in greater profitability within the quarter.

This segment’s operating income included incremental acquisition contribution of $2.6 million, net of amortization expense attributable to identifiable intangible assets of $1.6 million.

Partially offsetting these increases was a reduction in gross profit from the commercial market sector, primarily as a result of the reduced revenues previously referenced.

Operating income of our United States building services segment was $36.4 million, or 4.9% of revenues, for the three months ended March 31, 2025 compared to $33.5 million, or 4.3% of revenues, for the three months ended March 31, 2024.

For the first quarter of 2025, this segment experienced an increase in gross profit and gross profit margin from its mechanical services division, due to greater profitability across its portfolio of HVAC retrofits, building automation and controls projects, and repair service work orders.

These increases were partially offset by reductions in gross profit and gross profit margin from the segment’s commercial site-based services and government site-based services divisions given the loss of the previously referenced facilities maintenance contracts.

The results of this segment for the prior year period included an $11.0 million reserve for a specific customer bankruptcy within its commercial site-based services division, which negatively impacted the segment’s operating margin by 140 basis points for the three months ended March 31, 2024.

Our United States industrial services segment reported operating income of $6.8 million, or 1.9% of revenues, for the three months ended March 31, 2025, compared to $18.0 million, or 5.1% of revenues, for the three months ended March 31, 2024.

The decreases in operating income and operating margin of this segment were primarily a result of:

(a) a less favorable revenue mix when compared to the prior year period, which benefited from turnaround projects of a greater size as well as a large renewable fuel project, (b) the impact of the aforementioned project deferrals and delays, which resulted in a greater amount of unabsorbed labor costs, and (c) a $4.0 million increase in the allowance for credit losses, which negatively impacted the operating margin of this segment by 110 basis points.

Operating income of our United Kingdom building services segment was $5.0 million, or 4.7% of revenues, for the three months ended March 31, 2025, compared to $5.4 million, or 5.1% of revenues, for the three months ended March 31, 2024.

The slight decrease in operating income and the reduction in operating margin were due to certain mobilization costs incurred during the first quarter of 2025 as a result of the recent award of a facilities maintenance contract by a new customer.

Our corporate administration expenses for the three months ended March 31, 2025 were $52.2 million, compared to $39.2 million for the three months ended March 31, 2024.

The increase in corporate expenses was primarily due to:

(a) $9.4 million in transaction related costs incurred in connection with the acquisition of Miller Electric, and (b) greater computer hardware and software costs, due to various information technology and cybersecurity initiatives currently in process.

Net interest income for the three months ended March 31, 2025 was $5.4 million compared to net interest income of $7.5 million for the three months ended March 31, 2024.

The year-over-year decrease in net interest income was a result of an increase in interest expense, given the outstanding borrowings under our revolving credit facility during the first quarter of 2025, coupled with a reduction in interest income due to a lower average rate earned on our invested cash.

For the three months ended March 31, 2025, our income tax provision was $83.5 million compared to an income tax provision of $70.6 million for the three months ended March 31, 2024.

Our effective income tax rate for the three months ended March 31, 2025 was 25.8% compared to an effective income tax rate for the three months ended March 31, 2024 of 26.4%.

Operating income for the three and six months ended June 30, 2025 included incremental acquisition contribution of $9.2 million and $23.5 million, respectively, net of amortization expense attributable to identifiable intangible assets of $12.5 million and $23.0 million, respectively.

Operating income of our United States electrical construction and facilities services segment was $157.6 million, or 11.8% of revenues, for the three months ended June 30, 2025, compared to $88.6 million, or 11.1% of revenues, for the three months ended June 30, 2024.

Operating income of this segment for the six months ended June 30, 2025 was $293.7 million, or 12.1% of revenues, compared to $180.2 million, or 11.5% of revenues, for the six months ended June 30, 2024.

Operating income and operating margin of this segment for both 2025 periods benefited from greater gross profit and gross profit margin due to an increase in revenues, excellent project execution, and a more favorable mix of work.

Largely driven by Miller Electric, this segment’s operating income for the three and six months ended June 30, 2025 included incremental acquisition contribution of $9.8 million and $21.8 million, respectively, net of amortization expense attributable to identifiable intangible assets of $11.4 million and $19.4 million, respectively.

Our United States mechanical construction and facilities services segment’s operating income for the three months ended June 30, 2025 was $238.7 million, or 13.6% of revenues, compared to operating income of $213.4 million, or 12.9% of revenues, for the three months ended June 30, 2024.

Operating income of this segment for the six months ended June 30, 2025 was $425.5 million, or 12.8% of revenues, compared to $364.2 million, or 11.8% of revenues, for the six months ended June 30, 2024.

Similar to our United States electrical construction and facilities services segment, this improved performance for both 2025 periods was a result of greater gross profit and gross profit margin due to an increase in revenues, excellent project execution, and a more favorable mix of work.

From a market sector perspective, this segment also experienced greater profitability across a number of the sectors in which we operate, with the most significant increase in gross profit coming from network and communications.

This segment’s operating income for the six months ended June 30, 2025 included incremental acquisition contribution of $2.3 million, net of amortization expense attributable to identifiable intangible assets of $2.1 million.

Partially offsetting this increased profitability was a decrease in gross profit from the commercial market sector, primarily as a result of the reduced revenues previously referenced.

Operating income of our United States building services segment was $50.0 million, or 6.3% of revenues, for the three months ended June 30, 2025 compared to $46.8 million, or 6.0% of revenues, for the three months ended June 30, 2024.

Operating income of this segment for the six months ended June 30, 2025 was $86.5 million, or 5.6% of revenues, compared to $80.3 million, or 5.1% of revenues, for the six months ended June 30, 2024.

For both 2025 periods, this segment’s mechanical services division continued to produce strong margins across its portfolio of HVAC retrofits, building automation and controls projects, and repair service work orders.

Headwinds faced in this segment’s commercial site-based services and government site-based services divisions, given the loss of the previously referenced facilities maintenance contracts, partially offset such profitability during the first six months of 2025.

The results of this segment for the six months ended June 30, 2024 included an $11.0 million reserve for a specific customer bankruptcy within its commercial site-based services division, which negatively impacted the segment’s operating margin by 70 basis points in such prior year period.

Our United States industrial services segment reported an operating loss of $0.4 million, or (0.1)% of revenues, for the three months ended June 30, 2025, compared to operating income of $12.7 million, or 3.9% of revenues, for the three months ended June 30, 2024.

For the six months ended June 30, 2025, this segment reported operating income of $6.3 million, or 1.0% of revenues, compared to operating income of $30.7 million, or 4.5% of revenues, for the six months ended June 30, 2024.

The decreases in profitability of this segment for both 2025 periods were primarily a result of:

(a) the reductions in segment revenues discussed above, which also resulted in a greater amount of unabsorbed labor costs, and (b) a less favorable revenue mix when compared to the prior year period, which benefited from turnaround projects of a greater size as well as a large renewable fuel project.

In addition, the results of this segment for the six months ended June 30, 2025 were negatively impacted by a $5.0 million increase in the allowance for credit losses, which reduced its operating margin by 80 basis points.

Operating income of our United Kingdom building services segment was $8.4 million, or 6.3% of revenues, for the three months ended June 30, 2025, compared to $5.8 million, or 5.4% of revenues, for the three months ended June 30, 2024.

Operating income for the six months ended June 30, 2025 was $13.4 million, or 5.6% of revenues, compared to $11.2 million, or 5.3% of revenues, for the six months ended June 30, 2024.

For both 2025 periods, the increase in this segment’s operating income and operating margin was primarily due to the revenue growth it experienced, which resulted in:

(a) greater gross profit and (b) a reduction in SG&A margin as our segment management team leveraged its overhead cost structure.

Operating income of this segment for the three and six months ended June 30, 2025 were positively impacted by $0.5 million as a result of favorable exchange rate movements for the British pound versus the United States dollar.

Our corporate administration expenses for the three months ended June 30, 2025 were $39.2 million, compared to $34.6 million for the three months ended June 30, 2024.

For the six months ended June 30, 2025, our corporate administrative expenses were $91.4 million, compared to $73.7 million for the six months ended June 30, 2024.

Corporate expenses for the first six months of 2025 included $9.4 million of transaction related costs incurred in connection with the acquisition of Miller Electric.

Excluding these items, the increase in corporate expenses for both 2025 periods was primarily a result of greater computer hardware and software costs, due to various information technology and cybersecurity initiatives currently in process.

For the three months ended June 30, 2025, net interest expense was $3.2 million, compared to net interest income of $6.1 million for the three months ended June 30, 2024.

For the six months ended June 30, 2025, net interest income was $2.1 million, compared to net interest income of $13.6 million for the six months ended June 30, 2024.

These year-over-year fluctuations were a result of an increase in interest expense, given the outstanding borrowings under our revolving credit facility during the first half of 2025, coupled with a reduction in interest income due to a lower average daily invested cash balance.

For the three and six months ended June 30, 2025, our income tax provision was $109.9 million and $193.4 million, respectively, compared to an income tax provision of $91.6 million and $162.1 million for the three and six months ended June 30, 2024, respectively.

Our effective income tax rate for the three and six months ended June 30, 2025 was 26.7% and 26.3%, respectively, compared to an effective income tax rate for the three and six months ended June 30, 2024 of 27.0% and 26.7%, respectively.

Refer to Note 9 - Income Taxes of the notes to consolidated financial statements for further discussion regarding our income tax provision and effective income tax rate.

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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 percentage of total remaining performance obligations (in thousands, except for percentages):

% of Total December 31, 2024 % of Total March 31,

% of Total December 31, 2024 % of Total June 30,

Remaining performance obligations:

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Total operations $ 11,914,388 100 % $ 10,102,199 100 % $ 8,999,223 100 %

Our remaining performance obligations at March 31, 2025 were approximately $11.75 billion compared to approximately $10.10 billion at December 31, 2024 and approximately $9.18 billion at March 31, 2024.

Our remaining performance obligations at June 30, 2025 were approximately $11.91 billion compared to approximately $10.10 billion at December 31, 2024 and approximately $9.00 billion at June 30, 2024.

When compared to December 31, 2024, remaining performance obligations increased by approximately $1.81 billion.

Such increase was driven by the acquisition of Miller Electric, which added approximately $1.0 billion of remaining performance obligations as of March 31, 2025, as well as new contract awards across all of our reportable segments.

From a market sector perspective, the most significant growth was experienced within:

(a) network and communications, largely as a result of several data center construction contracts, (b) healthcare, (c) manufacturing and industrial, including certain food processing construction projects, (d) water and wastewater, and (e) hospitality and entertainment.

Partially offsetting these increases was a decrease in remaining performance obligations within the high-tech manufacturing market sector, primarily as a result of progress made on certain semiconductor construction projects.

Acquisitions, notably Miller Electric, account for approximately $0.96 billion of such increase, with the remaining growth resulting from new contract awards across all of our reportable segments.

From a market sector perspective, we experienced growth within the majority of the sectors we serve, with the most significant increases within:

(a) network and communications, largely as a result of several data center construction contracts, (b) institutional, (c) manufacturing and industrial, due to certain:

(i) food processing construction projects and (ii) renewable energy projects, (d) commercial, including various warehousing and distribution projects, and (e) hospitality and entertainment.

See Note 3 - Revenue from Contracts with Customers of the notes to consolidated financial statements for further disclosure regarding our remaining performance obligations.

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Management monitors financial markets and overall economic conditions for factors that may affect our liquidity and capital resources and adjusts our capital allocation strategy as necessary.

Negative macroeconomic trends could have an adverse effect on future liquidity if we experience delays in the payment of outstanding receivables beyond normal payment terms, an increase in credit losses, or significant increases in the price of commodities or the materials and equipment utilized for our project and service work, beyond those experienced to date.

In addition, during economic downturns, there have typically been fewer small discretionary projects from the private sector and our competitors have aggressively bid larger long-term infrastructure and public sector contracts.

In addition, during economic downturns, there have

typically been fewer small discretionary projects from the private sector and our competitors have aggressively bid larger long-term infrastructure and public sector contracts.

Our liquidity is also impacted by:

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While we strive to negotiate favorable billing terms, which allow us to invoice in advance of costs incurred on certain of our contracts, there can be no assurance that such terms will be agreed to by our customers.

As of March 31, 2025, we had cash and cash equivalents, excluding restricted cash, of $576.7 million, which are maintained in depository accounts and highly liquid investments with original maturity dates of three months or less.

As of June 30, 2025, we had cash and cash equivalents, excluding restricted cash, of $486.0 million, which are maintained in depository accounts and highly liquid investments with original maturity dates of three months or less.

Both our short-term and long-term liquidity requirements are expected to be met through our cash and cash equivalent balances, cash generated from our operations, and, as necessary, the borrowing capacity under our revolving credit facility.

Our credit agreement provides for a $1.30 billion revolving credit facility, for which there was $978.5 million of available capacity as of March 31, 2025.

Our credit agreement provides for a $1.30 billion revolving credit facility, for which there was $978.5 million of available capacity as of June 30, 2025.

Refer to Note 7 - Debt of the notes to consolidated financial statements for further information regarding our credit agreement.

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The following table presents a summary of our operating, investing, and financing cash flows (in thousands):

For the three months ended

For the six months ended

Net cash provided by operating activities $ 302,158 $ 411,958

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$ (853,234) $ 18,448

During the three months ended March 31, 2025, our cash balance, including cash equivalents and restricted cash, decreased by approximately $762.9 million from $1,340.4 million at December 31, 2024 to $577.5 million at March 31, 2025.

Changes in our cash position from December 31, 2024 to March 31, 2025 are described in further detail below.

During the six months ended June 30, 2025, our cash balance, including cash equivalents and restricted cash, decreased by approximately $853.2 million from $1,340.4 million at December 31, 2024 to $487.2 million at June 30, 2025.

Changes in our cash position from December 31, 2024 to June 30, 2025 are described in further detail below.

Operating Activities – Operating cash flows generally represent our net income as adjusted for certain non-cash items and changes in assets and liabilities.

Net cash provided by operating activities for the three months ended March 31, 2025 was approximately $108.5 million compared to approximately $132.3 million for the three months ended March 31, 2024.

Net cash provided by operating activities for the six months ended June 30, 2025 was approximately $302.2 million compared to approximately $412.0 million for the six months ended June 30, 2024.

The decrease in our operating cash flow period-over-period was a result of an increase in working capital, primarily on our construction projects, given the progression on a number of contracts for which we were previously billed ahead.

As we worked through these upfront payments, we saw the expected decrease in operating cash as our cash outflows exceeded our inflows on these projects.

Such decrease was partially offset by an increase in our net income for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Such decrease was partially offset by an increase in our net income for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Investing Activities – Investing cash flows consist primarily of payments for acquisition of businesses, capital expenditures, and proceeds from the sale or disposal of property, plant, and equipment.

Net cash used in investing activities for the three months ended March 31, 2025 increased by approximately $856.0 million compared to the three months ended March 31, 2024, predominantly due to the acquisition of Miller Electric.

Net cash used in investing activities for the six months ended June 30, 2025 increased by approximately $727.7 million compared to the six months ended June 30, 2024, predominantly due to the acquisition of Miller Electric.

Financing Activities – Financing cash flows consist primarily of the issuance and repayment of short-term and long-term debt, repurchases of common stock, payments of dividends to stockholders, and the issuance of common stock through certain equity plans.

Net cash used in financing activities was $0.8 million for the three months ended March 31, 2025 compared to $58.9 million for the three months ended March 31, 2024.

The $58.1 million variance was primarily due to $250.0 million in borrowings made under our revolving credit facility, partially offset by a $185.8 million increase in common stock repurchases made by us during the first quarter of 2025.

Net cash used in financing activities was $231.1 million for the six months ended June 30, 2025 compared to $181.4 million for the six months ended June 30, 2024.

The $49.7 million variance was primarily due to a $283.2 million increase in common stock repurchases made by us, partially offset by $250.0 million in net borrowings made under our revolving credit facility during the first half of 2025.

The timing of common stock repurchases is at management’s discretion subject to securities laws and other legal requirements and depends upon several factors, including market and business conditions, current and anticipated future liquidity, share price, and share availability, among others.

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We currently pay a regular quarterly dividend of $0.25 per share.

For the three months ended March 31, 2025 and 2024, cash payments related to dividends were $11.5 million and $8.5 million, respectively.

For the six months ended June 30, 2025 and 2024, cash payments related to dividends were $22.6 million and $20.2 million, respectively.

Our credit agreement places limitations on the payment of dividends on our common stock.

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Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash – We are exposed to fluctuations in foreign currency exchange rates, almost entirely with respect to the British pound.

Therefore, the $6.0 million variance between the three months ended March 31, 2025 and 2024 was a direct result of exchange rate movements for the British pound versus the United States dollar.

Therefore, the $15.5 million variance between the six months ended June 30, 2025 and 2024 was a direct result of exchange rate movements for the British pound versus the United States dollar.

Material Cash Requirements from Contractual and Other Obligations

As of March 31, 2025, our short-term and long-term material cash requirements for known contractual and other obligations were as follows:

Outstanding Debt and Interest Payments – As of March 31, 2025, we had $250.0 million in direct borrowings outstanding under our revolving credit facility.

As of June 30, 2025, our short-term and long-term material cash requirements for known contractual and other obligations were as follows:

Outstanding Debt and Interest Payments – As of June 30, 2025, we had $250.0 million in direct borrowings outstanding under our revolving credit facility.

Future interest payments will be determined based on prevailing interest rates at that time.

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Operating and Finance Leases – In the normal course of business, we lease real estate, vehicles, and equipment under various arrangements which are classified as either operating or finance leases.

Future payments for such leases, excluding leases with initial terms of one year or less, were $454.3 million at March 31, 2025, with $106.0 million payable within the next 12 months.

Open Purchase Obligations – As of March 31, 2025, we had $2.72 billion of open purchase obligations, of which payments totaling approximately $2.31 billion are expected to become due within the next 12 months.

Future payments for such leases, excluding leases with initial terms of one year or less, were $499.3 million at June 30, 2025, with $112.1 million payable within the next 12 months.

Open Purchase Obligations – As of June 30, 2025, we had $2.82 billion of open purchase obligations, of which payments totaling approximately $2.39 billion are expected to become due within the next 12 months.

These obligations represent open purchase orders to suppliers and subcontractors related to our construction and services contracts.

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Insurance Obligations – As described in further detail in Note 12 - Commitments and Contingencies of the notes to consolidated financial statements, we have loss payment deductibles and/or self-insured retentions for certain insurance matters.

As of March 31, 2025, our insurance liabilities, net of estimated recoveries, were $247.2 million.

As of June 30, 2025, our insurance liabilities, net of estimated recoveries, were $262.1 million.

Of this net amount, approximately $56.6 million is estimated to be payable within the next 12 months.

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The aggregate amount of these liabilities can change due to additional business acquisitions, settlement of outstanding liabilities, changes in the fair value of amounts owed based on performance during such post-acquisition periods, and accretion in present value.

As of March 31, 2025, the present value of expected future payments relating to these contingent consideration arrangements was $28.6 million.

As of June 30, 2025, the present value of expected future payments relating to these contingent consideration arrangements was $15.0 million.

Of this amount, $13.5 million is estimated as being payable within the next 12 months, with the remainder due pursuant to the terms of our contractual agreements, some of which extend into 2027.

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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, 2025, 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 $2.8 billion, which represents approximately 24% of our total remaining performance obligations.

As of June 30, 2025, 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 $2.7 billion, which represents approximately 23% of our total remaining performance obligations.

Surety bonds expire at various times ranging from final completion of a project to a period extending beyond contract completion in certain circumstances.

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In addition, surety bonds or letters of credit may be issued as collateral for certain insurance obligations.

As of March 31, 2025, we satisfied approximately $61.7 million and $71.2 million of the collateral requirements of our insurance programs by utilizing surety bonds and letters of credit, respectively.

As of June 30, 2025, we satisfied approximately $61.7 million and $71.2 million of the collateral requirements of our insurance programs by utilizing surety bonds and letters of credit, respectively.

All such letters of credit were issued under our revolving credit facility, therefore reducing the available capacity of such facility.

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As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

There have been no significant changes to our critical accounting policies or methods during the three months ended March 31, 2025.

There have been no significant changes to our critical accounting policies or methods during the six months ended June 30, 2025.

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 2. Management’s Discussion and Analysis