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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-26 · 126 added, 116 removed, 276 unchanged (47% of the section changed)

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• United States industrial services.

• United Kingdom building services.

We refer to our United States electrical construction and facilities services segment and our United States mechanical construction and facilities services segment together as our United States construction segments.

On December 1, 2025, we sold our United Kingdom operations, the results of which are reported within our United Kingdom building services segment through the date of sale.

For a more complete description of our operations, refer to Item 1.

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Gross profit as a percentage of revenues 19.3 % 19.0 %

Gain on sale of United Kingdom operations

$ 144,876 $ —

Operating income $ 1,713,418 $ 1,344,863

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Revenues of $16.99 billion for the year ended December 31, 2025 set a new annual record for the Company and represent an increase of 16.6% from revenues of $14.57 billion for the year ended December 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 the majority of our reportable segments.

Revenues for the year ended December 31, 2024 included incremental acquisition contribution of approximately $251.5 million.

Operating income for 2024 was $1,344.9 million, or 9.2% of revenues, establishing new annual records for the Company with respect to both operating income and operating margin.

This compares to operating income of $875.8 million, or 7.0% of revenues, in 2023.

The $469.1 million increase in operating income, and corresponding 220 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.

Demand for our services continues to be broad-based with strength across most of the market sectors we serve.

As described in further detail below, we experienced revenue growth within all of our reportable segments, except for our United States industrial services segment, which saw a modest reduction in revenues year-over-year.

Revenues for the year ended December 31, 2025 included incremental acquisition contribution of approximately $1.27 billion.

Operating income for 2025 was $1.71 billion, or 10.1% of revenues, compared to operating income of $1.34 billion, or 9.2% of revenues, in 2024.

Our operating results for the year ended December 31, 2025 included a $144.9 million gain on the sale of our United Kingdom operations, which positively impacted operating margin by 85 basis points.

Excluding the impact of such gain, operating income increased by $223.7 million and established a new annual record for the Company.

As described in further detail below, such increase in operating income was predominantly driven by greater contribution from our United States construction segments.

Operating income for the year ended December 31, 2025 included incremental acquisition contribution of $24.4 million, net of amortization expense attributable to identifiable intangible assets of $50.6 million.

Net income of $1,007.1 million, or $21.52 per diluted share, for the year ended December 31, 2024, compares favorably to net income of $633.0 million, or $13.31 per diluted share, for the year ended December 31, 2023.

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, these amounts additionally benefited from greater interest income and a reduction in interest expense in 2024.

Further, our diluted earnings per share for the year ended December 31, 2024 was positively impacted by a reduced weighted average share count due to common stock repurchases made by us throughout 2023 and 2024.

Net income of $1.27 billion, or $28.19 per diluted share, for the year ended December 31, 2025, compares favorably to net income of $1.01 billion, or $21.52 per diluted share, for the year ended December 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 year ended December 31, 2025 additionally benefited from a reduced weighted average share count given the impact of common stock repurchases made by us throughout 2024 and 2025.

Impact of Acquisitions

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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.

For further discussion regarding our acquisitions, refer to Note 4 - Acquisitions of Businesses of the notes to consolidated financial statements included in Item 8.

On February 3, 2025, we completed the acquisition of Miller Electric Company (“Miller Electric”), a leading electrical contractor, for total cash consideration of approximately $876.8 million.

In addition to Miller Electric, during 2025, we acquired nine companies for upfront consideration of $182.1 million.

During 2024, we acquired seven companies for upfront consideration of $231.1 million.

For further discussion regarding our acquisitions, refer to Note 4 - Acquisitions and Dispositions of Businesses of the notes to consolidated financial statements included in Item 8.

Financial Statements and Supplementary Data.

During 2024, we acquired seven companies for upfront consideration of $231.1 million, inclusive of customary working capital adjustments.

These acquisitions are comprised of:

(a) an electrical contractor in the Southeast region of the United States, that has been included in our United States electrical construction and facilities services segment, (b) 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, (c) three companies that have been included in our United States building services segment, including:

(i) a provider of building automation and controls solutions in the Northeast region of the United States, (ii) a mechanical services company in the Western region of the United States, and (iii) a mechanical services company in the Eastern region of the United States, and (d) 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.

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

Such acquisitions include:

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

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

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

Such acquisitions include:

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

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

Discussion and Analysis of Results of Operations

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$ 16,986,422 100 % $ 14,566,116 100 %

As a result of strong demand for our services across most of the market sectors we serve, revenues for the year ended December 31, 2024 increased to $14.57 billion compared to revenues of $12.58 billion for the year ended December 31, 2023.

As described in more detail below, we experienced increases in revenues from the majority of our reportable segments.

Additionally, revenues for 2024 included incremental acquisition contribution of approximately $251.5 million.

Revenues of our United States electrical construction and facilities services segment were $3,342.9 million for the year ended December 31, 2024, a $559.2 million increase compared to revenues of $2,783.7 million for the year ended December 31, 2023.

As described in more detail below, as a result of strong demand for our services across most of the market sectors we serve, consolidated revenues for the year ended December 31, 2025 increased to $16.99 billion compared to consolidated revenues of $14.57 billion for the year ended December 31, 2024.

Revenues for 2025 included incremental acquisition contribution of approximately $1.27 billion.

Revenues of our United States electrical construction and facilities services segment were $5.07 billion for the year ended December 31, 2025, a $1.73 billion increase compared to revenues of $3.34 billion for the year ended December 31, 2024.

This segment’s results for 2025 included $1.11 billion 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.

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 also experienced notable revenue growth within:

(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 tenant fit-out and warehousing and distribution projects, (c) the institutional market sector, primarily given an increase in revenues from public sector projects, (d) the hospitality and entertainment market sector, due to select project opportunities, and (e) the transportation market sector, stemming from certain infrastructure projects currently underway.

Revenues of this segment for the year ended December 31, 2025 additionally benefited from greater levels of short-duration projects and service work.

Partially offsetting these increases was a reduction in high-tech manufacturing revenues as we completed or reached substantial completion on various semiconductor, bio-tech, and life sciences construction projects.

Our United States mechanical construction and facilities services segment revenues for the year ended December 31, 2025 were $7.05 billion, a $644.8 million increase compared to revenues of $6.41 billion for the year ended December 31, 2024.

This segment’s results for 2025 included $145.2 million of incremental acquisition revenues.

Excluding the impact of acquisitions, the increase in this segment’s revenues was primarily a result of growth within the network and communications market sector, predominantly due to data center construction projects.

Increased demand for cloud computing and data storage, driven in part by the emergence of artificial intelligence, has resulted in a greater number of project opportunities for us in several of the geographies in which we operate.

In addition, this segment benefited from revenue growth within a number of the other market sectors we serve, such as:

(a) the high-tech manufacturing market sector, inclusive of construction projects for customers engaged in the design and manufacturing of semiconductors, (b) the manufacturing and industrial market sector, driven by increased activity with various energy sector customers, (c) the transportation market sector, due to certain infrastructure projects currently underway, and (d) the institutional market sector, given increased project revenues from certain schools and universities.

These increases were partially offset by a reduction in revenues within the commercial market sector due in part to reduced demand across the commercial real estate industry.

Our United States mechanical construction and facilities services segment revenues for the year ended December 31, 2024 were $6,405.7 million, a $1,330.9 million increase compared to revenues of $5,074.8 million for the year ended December 31, 2023.

This segment’s results included $172.5 million of incremental acquisition revenues for the year ended December 31, 2024.

Excluding the impact of acquisitions, the increase in this segment’s revenues was attributable to revenue growth within the majority of the market sectors in which we operate, as well as greater levels of service work.

This segment experienced notable increases in revenues within:

(a) the high-tech manufacturing market sector, as a result of stronger demand for our mechanical construction and/or fire protection services by certain customers:

(i) engaged in either the design and manufacturing of semiconductors or the production and development of electric vehicles and/or lithium batteries and (ii) within the biotech, life-sciences, and pharmaceutical industries, (b) the network and communications market sector, due to increased data center project activity as this segment benefited from the same market demand described above within our United States electrical construction and facilities services segment, (c) the institutional market sector, given several public sector or university projects which were active during 2024, (d) the manufacturing and industrial market sector largely as a result of the re-shoring of critical supply chain by certain of our customers, (e) the water and wastewater market sector, driven by several projects within the Southeast region of the United States, and (f) the healthcare market sector, due to an increase in projects throughout several of the regions in which we operate.

Partially offsetting these increases was a reduction in revenues within the commercial market sector, largely as a result of the completion of various warehouse and distribution projects, that were active in 2023.

Revenues of our United States building services segment were $3,114.8 million for the year ended December 31, 2024 compared to $3,120.1 million for the year ended December 31, 2023.

Excluding incremental acquisition contribution of $31.0 million, this segment’s revenues decreased by $36.3 million as the strength of its mechanical services division was more than offset by revenue declines within its commercial site-based services 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) HVAC project and retrofit work, as a result of greater:

(i) project execution stemming from the increased availability of materials and equipment when compared to the prior year, which experienced greater supply chain disruptions and delays, and (ii) demand for system upgrades and replacements, partially as our customers continue to seek ways to improve the energy efficiency or indoor air quality 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 year ended December 31, 2024 were $1,277.2 million, a $109.4 million increase compared to revenues of $1,167.8 million for the year ended December 31, 2023.

This segment’s results included $45.3 million of incremental revenues from an acquired company.

Excluding such acquisition contribution, the increase in this segment’s revenues resulted from greater demand, including turnarounds of a larger size and scope growth on certain projects, in its field services division.

Our United Kingdom building services segment revenues were $425.5 million for the year ended December 31, 2024 compared to $436.4 million for the year ended December 31, 2023.

The decrease in this segment’s revenues for 2024 was primarily a result of the loss of certain facilities maintenance contracts not renewed pursuant to rebid.

Revenues of this segment for 2024 were positively impacted by $11.4 million as a result of favorable exchange rate movements for the British pound versus the United States dollar.

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, (b) the hospitality and entertainment market sector, given increased project activity, and (c) the water and wastewater market sector as a result of greater opportunities in the Southeast region of the United States.

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

increases were partially offset by revenue declines from:

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

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

Revenues of our United States building services segment were $3.12 billion for the year ended December 31, 2025 compared to $3.11 billion for the year ended December 31, 2024.

Revenues of this segment for 2025 included incremental acquisition contribution of $2.6 million.

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.

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 year ended December 31, 2025 were $1.27 billion, a slight decrease compared to revenues of $1.28 billion for the year ended December 31, 2024 given:

(a) lower turnaround project demand when compared to the prior year, which benefited from scope growth on certain projects, (b) the deferral, delay, or cancellation of previously planned turnaround projects, and (c) the completion of a renewable fuel project, which was active throughout 2024.

This segment’s results for 2025 included $19.7 million of incremental acquisition revenues.

On December 1, 2025, we sold our United Kingdom operations, the results of which are reported within our United Kingdom building services segment through the date of sale.

Revenues of this segment for the applicable 2025 period were $471.3 million compared to $425.5 million for the year ended December 31, 2024.

The period-over-period increase was due to:

(a) greater service revenues, as a result of:

(i) the award of new facilities maintenance contracts and (ii) scope expansion on previously existing contracts, and (b) an increase in project work, largely within the manufacturing and industrial and network and communications market sectors.

Revenues of this segment for 2025 were positively impacted by $14.1 million given favorable exchange rate movements for the British pound versus the United States dollar.

Cost of sales and gross profit

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Gross profit margin 19.3 % 19.0 %

Our gross profit for the year ended December 31, 2024 was $2,765.1 million, or 19.0% of revenues, compared to gross profit of $2,089.3 million, or 16.6% of revenues, for the year ended December 31, 2023.

The increase in gross profit and the expansion in gross profit margin were driven by each of our domestic reportable segments due to an improved revenue mix, excellent project execution, and/or favorable pricing.

Our gross profit for 2024 included incremental acquisition contribution of $46.2 million net of amortization expense attributable to identifiable intangible assets of $8.6 million.

Refer to the operating income section below for further discussion regarding the operating performance of each of our reportable segments.

Consolidated gross profit for the year ended December 31, 2025 was $3.28 billion, or 19.3% of revenues, compared to consolidated gross profit of $2.77 billion, or 19.0% of revenues, for the year ended December 31, 2024.

Gross profit for 2025 included incremental acquisition contribution of $165.6 million, net of amortization expense attributable to identifiable intangible assets of $28.1 million.

Excluding the impact of acquisitions, the year-over-year increases in gross profit and 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 improved revenue mix and excellent project execution.

Selling, general and administrative expenses

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SG&A margin 10.1 % 9.7 %

Our selling, general and administrative expenses for the year ended December 31, 2024 were $1,420.2 million, or 9.7% of revenues, compared to selling, general and administrative expenses of $1,211.2 million, or 9.6% of revenues, for the year ended December 31, 2023.

Selling, general and administrative expenses for 2024 included $32.8 million of incremental expenses directly related to companies acquired in 2024 and 2023, including amortization expense attributable to identifiable intangible assets of $6.7 million.

Excluding incremental expenses from businesses acquired, the increase in selling, general and administrative expenses was predominantly attributable to greater:

(a) salaries and related employment expenses, largely as a result of additional headcount to support our organic revenue growth as well as annual cost of living adjustments, and (b) incentive compensation expense at certain of our operating subsidiaries, due to higher operating results than in the prior year.

Our selling, general and administrative expenses for the year ended December 31, 2025 were $1.71 billion, or 10.1% of revenues, compared to selling, general and administrative expenses of $1.42 billion, or 9.7% of revenues, for the year ended December 31, 2024.

Selling, general and administrative expenses for 2025 included $141.3 million of incremental expenses directly related to companies acquired, including amortization expense attributable to identifiable intangible assets of $22.5 million.

Additionally included in selling, general and administrative expenses for 2025 were $9.4 million of transaction related costs incurred in connection with the acquisition of Miller Electric and $10.7 million of transaction related costs incurred in connection with the sale of our United Kingdom operations.

Excluding incremental expenses resulting from acquisitions and dispositions, our selling, general and administrative expenses increased by $132.9 million, primarily as a result of greater:

(a) incentive compensation expense, predominantly within our United States construction segments, given higher 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 40 basis point increase in our SG&A margin for the year ended December 31, 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, and (b) the impact of the transaction related costs referenced above.

Operating income (loss)

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Corporate administration (181,894) — (144,354) —

Impairment loss on long-lived assets — — (2,350) —

Gain on sale of United Kingdom operations

Consolidated operating income

1,713,418 10.1 % 1,344,863 9.2 %

Net periodic pension income (cost)

Net periodic pension income

Interest expense (12,020) (3,779)

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Income before income taxes $ 1,721,624 $ 1,377,382

Operating income for the year ended December 31, 2024 was $1,344.9 million, an increase of $469.1 million compared to operating income of $875.8 million for the year ended December 31, 2023.

Operating income for the year ended December 31, 2025 was $1.71 billion, an increase of $368.6 million compared to operating income of $1.34 billion for the year ended December 31, 2024.

Operating margin was 10.1% and 9.2% in 2025 and 2024, respectively.

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 2024 included incremental acquisition contribution of $13.4 million net of amortization expense attributable to identifiable intangible assets of $15.3 million.

Operating income of our United States electrical construction and facilities services segment for the year ended December 31, 2024 was $447.2 million, or 13.4% of revenues, compared to operating income for the year ended December 31, 2023 of $230.6 million, or 8.3% of revenues.

The $216.5 million increase in operating income and 510 basis point improvement in operating margin of this segment were a result of greater gross profit and gross profit margin from projects within the majority of the market sectors in which we operate, due to both an increase in revenues as well as a more favorable mix of work.

While the most significant increase in gross profit was experienced within the network and communications market sector, this segment additionally benefited from greater gross profit recognized on projects within the manufacturing and industrial, transportation, institutional, and high-tech manufacturing market sectors.

Our United States mechanical construction and facilities services segment’s operating income for the year ended December 31, 2024 was $799.6 million, a $269.0 million increase compared to operating income of $530.6 million for the year ended December 31, 2023.

Operating margin of this segment for the year ended December 31, 2024 was 12.5%, a 200 basis point improvement over its operating margin for the year ended December 31, 2023 of 10.5%.

This segment’s operating income for 2024 included incremental acquisition contribution of $14.4 million net of amortization expense attributable to identifiable intangible assets of $10.3 million.

Excluding the impact of acquisitions, the increases in operating income and operating margin of this segment were primarily a result of contribution from projects within:

(a) the high-tech manufacturing market sector, including certain mechanical construction or fire protection projects for customers engaged in either the design or manufacturing of semiconductors or the production and development of electric vehicles and/or lithium batteries, and (b) the network and communications market sector.

While the most significant increases in gross profit were seen within the above referenced market sectors, this segment also experienced increases in gross profit across all of the other market sectors in which we operate, with notable increases generated within institutional, manufacturing and industrial, and commercial.

Our operating results for the year ended December 31, 2025 included a $144.9 million gain on the sale of our United Kingdom operations, which positively impacted operating margin by 85 basis points.

Excluding the impact of such gain, operating income increased by $223.7 million, predominantly as a result of greater contribution from our United States construction segments, as described in further detail below.

Operating income for the year ended December 31, 2025 included incremental acquisition contribution of $24.4 million net of amortization expense attributable to identifiable intangible assets of $50.6 million.

Operating income of our United States electrical construction and facilities services segment for the year ended December 31, 2025 was $612.0 million compared to operating income for the year ended December 31, 2024 of $447.2 million.

Largely driven by Miller Electric, this segment’s operating income for 2025 included incremental acquisition contribution of $22.1 million, net of amortization expense attributable to identifiable intangible assets of $42.0 million.

The year-over-year increase in operating income of this segment resulted from greater gross profit given its growth in revenues.

Although the most significant increase in gross profit was experienced within the network and communications market sector, increased gross profit was generated within the majority of the other market sectors in which we operate, generally in line with the revenue trends described above.

While below the record 13.4% operating margin earned in 2024, operating margin of our United States electrical construction and facilities services segment for 2025 of 12.1% remained above its historical average and reflects the overall strength of our project portfolio.

Operating margin for the year ended December 31, 2025 was negatively impacted by:

(a) lower profitability on certain projects in new geographies where we encountered reduced labor productivity or availability while investing in the development of a workforce and (b) the incremental intangible asset amortization expense resulting from the acquisition of Miller Electric, which reduced operating margin by approximately 80 basis points.

Our United States mechanical construction and facilities services segment’s operating income for the year ended December 31, 2025 was $905.3 million, or 12.8% of revenues, compared to operating income of $799.6 million, or 12.5% of revenues, for the year ended December 31, 2024.

In addition to the impact of greater revenues, the operating results of this segment for 2025 benefited from 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.

From a market sector perspective, greater profitability was experienced 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 year ended December 31, 2025 included incremental acquisition contribution of $3.7 million, net of amortization expense attributable to identifiable intangible assets of $6.4 million.

Partially offsetting this increased profitability was a decrease in gross profit from the commercial and high-tech manufacturing market sectors, primarily as a result of the reduced revenues within these sectors, as referenced above.

Operating income of our United States building services segment for the year ended December 31, 2025 was $187.2 million, or 6.0% of revenues, compared to operating income of $176.7 million, or 5.7% of revenues, for the year ended December 31, 2024.

Increased gross profit from this segment’s mechanical services division, due primarily to greater profitability across its portfolio of HVAC and building automation and controls projects and retrofits, was partially offset by reductions in gross profit from its commercial site-based services and government site-based services divisions, given the loss of certain facilities maintenance contracts not renewed pursuant to rebid.

In addition, operating income and operating margin for the year ended December 31, 2024 were negatively impacted by an $11.0 million reserve recorded during the first quarter for a specific customer bankruptcy within this segment’s commercial site-based services division.

Such reserve negatively impacted the operating margin of this segment for 2024 by approximately 30 basis points.

For 2025, 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 year.

The results of this segment for the year ended December 31, 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 30 basis points in such prior year period.

Our United States industrial services segment’s operating income for the year ended December 31, 2025 was $25.0 million, or 2.0% of revenues, compared to operating income of $44.2 million, or 3.5% of revenues, for the year ended December 31, 2024.

Operating income of this segment benefited from greater gross profit generated within its:

(a) field services division due to the increase in revenues referenced above, and (b) shop services division as a result of an improvement in gross profit margin given favorable pricing.

The increase in operating margin of this segment was attributable to the increased gross profit margin within the shop services division.

Operating income of our United Kingdom building services segment for the year ended December 31, 2024 was $21.5 million, or 5.0% of revenues, compared to operating income of $25.7 million, or 5.9% of revenues, for the year ended December 31, 2023.

The decrease in operating income and operating margin was due to a decline in gross profit and gross profit margin.

In addition to the impact of lower facilities maintenance revenues, gross profit and gross profit margin were negatively affected by a less favorable mix of work when compared to the prior year, which included a greater number of higher margin projects.

The year-over-year decrease in operating income and operating margin of this segment was primarily a result of a less favorable revenue mix when compared to the prior year period, which benefited from:

(a) turnaround projects of a greater size, (b) a large renewable fuel project, and (c) a greater amount of indirect labor absorption.

As referenced above, on December 1, 2025, we sold our United Kingdom operations, the results of which are reported within our United Kingdom building services segment through the date of sale.

Operating income of this segment for the applicable 2025 period was $21.0 million, or 4.4% of revenues, compared to operating income of $21.5 million, or 5.0% of revenues, for the year ended December 31, 2024.

Operating income for the 2025 period included $3.7 million of transaction related costs incurred in connection with the sale, which reduced operating margin of the segment by approximately 80 basis points.

Excluding these expenses, the increase in this segment’s operating income and operating margin was due to the revenue growth it experienced, which resulted in:

(a) greater gross profit and (b) a reduction in SG&A margin due to the leverage gained on its overhead cost structure.

Operating income of this segment for 2025 was positively impacted by $0.7 million as a result of favorable exchange rate movements for the British pound versus the United States dollar.

Our corporate administration expenses were $144.4 million for 2024 compared to $127.2 million in 2023.

The increase in corporate expenses was primarily due to:

(a) greater employment compensation and related costs, including salaries and benefits, incentive compensation, and share-based compensation, (b) certain severance expenses which were recorded during the first quarter of the year, and (c) higher computer hardware and software costs, due to various information technology and cybersecurity initiatives currently in process.

Interest expense was $3.8 million and $17.2 million for the years ended December 31, 2024 and 2023, respectively.

The year-over-year decrease in interest expense was a result of the repayment, in December of 2023, of all previously outstanding direct borrowings under our credit facility.

Interest income was $35.4 million and $15.4 million for the years ended December 31, 2024 and 2023, respectively.

The increase in annual interest income resulted from greater returns on our invested cash, due to an increase in our average daily invested cash balance.

Our corporate administration expenses for the year ended December 31, 2025 were $181.9 million compared to $144.4 million for the year ended December 31, 2024.

Corporate expenses for 2025 included $9.4 million of transaction related costs incurred in connection with the acquisition of Miller Electric as well as $7.0 million of transaction related costs incurred in connection with the sale of our United Kingdom operations.

Excluding these items, the increase in corporate expenses for 2025 was primarily a result of greater:

(a) computer hardware and software costs, due to various information technology and cybersecurity initiatives currently in process, and (b) employment expenses, partially due to additional headcount to support our growth as well as annual cost of living adjustments.

Interest expense was $12.0 million for the year ended December 31, 2025, an increase of $8.2 million compared to interest expense of $3.8 million for the year ended December 31, 2024.

Such year-over-year increase was due to the temporary utilization of our revolving credit facility during 2025.

For the year ended December 31, 2025, interest income was $20.0 million, a decrease of $15.4 million compared to interest income of $35.4 million for the year ended December 31, 2024.

This year-over-year decrease was a result of a lower average daily invested cash balance in 2025.

Our income tax provision for the year ended December 31, 2025 was $448.8 million, based on an income tax rate of 26.1%, compared to an income tax provision and an income tax rate of $370.2 million and 26.9%, respectively, for the year ended December 31, 2024.

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Total operations $ 13,253,664 100 % $ 10,102,199 100 %

Our remaining performance obligations at December 31, 2024 were $10.10 billion compared to $8.85 billion at December 31, 2023.

Remaining performance obligations increased within all of our reportable segments, with the exception of our United States building services segment, which experienced a modest decline.

The most significant growth was experienced within our United States construction segments, largely as a result of the award of several data center construction contracts within the network and communications market sector.

These segments also experienced increases in remaining performance obligations across a number of the other sectors we serve, most notably within healthcare.

Remaining performance obligations increased by $178.8 million as a result of acquisitions made by us during 2024.

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 and electric vehicle manufacturing construction projects within our United States mechanical construction and facilities services segment.

Our remaining performance obligations at December 31, 2025 were $13.25 billion, a $3.15 billion increase compared to remaining performance obligations of $10.10 billion at December 31, 2024.

Acquisitions, including Miller Electric, account for approximately $1.61 billion of the year-over-year increase, with the remaining growth resulting from new contract awards, notably within our United States construction segments.

Remaining performance obligations decreased by $185.5 million due to the sale of our United Kingdom operations.

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, predominantly as a result of several data center construction contracts, (b) institutional, largely as we continue to see demand for our services from education customers, including a number of colleges and universities, (c) water and wastewater, given recent project awards in the Southeast region of the United States, (d) hospitality and entertainment, due to select project opportunities, (e) manufacturing and industrial, resulting from certain:

(i) food processing construction projects and (ii) renewable energy projects, and (f) commercial, including various warehousing and distribution projects.

Partially offsetting these increases was a reduction in remaining performance obligations from the high-tech manufacturing market sector, primarily due to the completion of certain semiconductor manufacturing construction projects.

See Note 3 - Revenue from Contracts with Customers of the notes to consolidated financial statements included in Item 8.

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The following section discusses our principal liquidity and capital resources, as well as our primary liquidity requirements and sources and uses of cash.

We are focused on the efficient conversion of operating income into cash to provide for the Company’s material cash requirements, including working capital needs, investment in our growth strategies through business acquisitions and capital expenditures, satisfaction of contractual commitments, including principal and interest payments on any outstanding indebtedness, and shareholder return through dividend payments and share repurchases.

We strive to maintain a balanced approach to capital allocation in order to achieve growth, deliver value, and minimize risk.

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.

Our liquidity is also impacted by:

(a) the type and length of construction contracts in place, as performance of long duration contracts typically requires greater amounts of working capital, (b) the level of turnaround activities within our United States industrial services segment, as such projects are billed in arrears pursuant to contractual terms that are standard within the industry, and (c) the billing terms of our maintenance contracts, including those within our United States and United Kingdom building services segments.

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 December 31, 2024, we had cash and cash equivalents, excluding restricted cash, of $1,339.6 million, which are maintained in depository accounts and highly liquid investments with original maturity dates of three months or less.

As of December 31, 2025, we had cash and cash equivalents of $1.11 billion, 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.

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Effect of exchange rate changes on cash, cash equivalents, and restricted cash $ 6,857 $ (2,600)

Increase in cash, cash equivalents, and restricted cash $ 550,645 $ 332,682

During the year ended December 31, 2024, our cash balance, including cash equivalents and restricted cash, increased by $550.6 million from $789.8 million at December 31, 2023 to $1,340.4 million at December 31, 2024.

(Decrease) increase in cash, cash equivalents, and restricted cash

$ (228,427) $ 550,645

During the year ended December 31, 2025, our cash balance, including cash equivalents and restricted cash, decreased by $228.4 million from $1.34 billion at December 31, 2024 to $1.11 billion at December 31, 2025.

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

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

For 2024, net cash provided by operating activities was approximately $1,407.9 million compared to approximately $899.7 million in 2023.

The $508.2 million year-over-year increase in operating cash flows was primarily a result of:

(a) our improved operating performance and the corresponding increase in our net income and (b) the timing of cash receipts from our customers.

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 2024 increased by approximately $138.0 million compared to 2023, primarily due to an increase in payments for acquisitions.

For 2025, net cash provided by operating activities was approximately $1.30 billion compared to approximately $1.41 billion in 2024.

The $105.8 million decrease in our operating cash flow 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 a year-over-year increase in our net income.

Net cash used in investing activities for 2025 increased by approximately $574.3 million compared to 2024, primarily due to an increase in payments for acquisitions, including Miller Electric, partially offset by the proceeds from the sale of our United Kingdom operations.

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 during 2025 was $663.8 million compared to $555.4 million during 2024.

The $143.3 million variance was primarily due to an increase in common stock repurchases made by us during 2024, partially offset by the impact of repayments on our outstanding debt in the prior year period.

The $108.4 million variance was primarily due to an increase in common stock repurchases made by us.

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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Financial Statements and Supplementary Data.

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

During 2025, we paid a regular quarterly dividend of $0.25 per share.

For the years ended December 31, 2025 and 2024, cash payments related to dividends were $45.0 million and $43.4 million, respectively.

In December 2025, our Board of Directors announced its intention to increase the regular quarterly dividend to $0.40 per share commencing with the dividend to be paid in January 2026.

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

However, we do not believe that the terms of such agreement currently materially limit our ability to pay such quarterly dividends for the foreseeable future.

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.

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash – Prior to the sale of our United Kingdom operations in December of 2025, we were exposed to fluctuations in foreign currency exchange rates with respect to the British pound.

Therefore, the $9.5 million variance between the years ended December 31, 2025 and 2024 was a direct result of exchange rate movements for the British pound versus the United States dollar.

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As of December 31, 2025, the present value of expected future payments relating to these contingent consideration arrangements was $8.8 million.

Of this amount, $20.4 million is estimated as being payable during 2025, with the remainder due pursuant to the terms of our contractual agreements, some of which extend into 2027.

Of this amount, $7.3 million is estimated as being payable during 2026.

In addition, material cash requirements for other potential obligations, for which we cannot reasonably estimate future payments, include the following:

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Based on an evaluation of individual projects that were substantially complete in prior periods but had revisions to total estimated costs or anticipated contract value (inclusive of the settlement of previously outstanding change orders and claims) that resulted in an increase to profitability in excess of $1.0 million, we recognized revenue during the years ended December 31, 2025, 2024, and 2023 as summarized in the following table (in thousands):

2025 2024 2023

United States electrical construction and facilities services $ 2,513 $ 14,006 $ 3,350

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Total impact $ 16,347 $ 24,557 $ 16,464

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

Included in our results for the year ended December 31, 2024 was $12.3 million of gross profit recognized on two contracts, which are currently in process, as a result of favorable developments on certain claims.

In addition, included in our results for the year ended December 31, 2024 was $12.3 million of gross profit recognized on two contracts as a result of favorable developments on certain 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.

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In addition, an increase in the cost to settle insurance claims could result in higher insurance costs and deductibles.

Our estimated net insurance liabilities for workers’ compensation, automobile liability, general liability, and property claims increased by $20.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, partially as a result of greater potential exposures and an increase in certain of our deductibles or self-insured retentions.

As of December 31, 2025, our estimated net insurance liabilities for workers’ compensation, automobile liability, general liability, and property claims increased by $50.8 million when compared to December 31, 2024.

Such increase was a result of greater potential exposures, including the impact of acquired companies, and an increase in certain of our deductibles or self-insured retentions.

If our estimated insurance liabilities for workers’ compensation, automobile liability, general liability, and property claims were to increase by 10%, it would have resulted in $29.1 million of additional expense for the year ended December 31, 2025.

Goodwill, Identifiable Intangible Assets, and Other Long-Lived Assets

As of December 31, 2024 and 2023, we had goodwill of $1,018.4 million and $956.5 million, respectively, arising out of the acquisition of businesses.

As of December 31, 2025 and 2024, we had goodwill of $1.41 billion and $1.02 billion, respectively, arising out of the acquisition of businesses.

Goodwill is not amortized but instead allocated to its respective reporting unit and evaluated for impairment annually, or more frequently if events or circumstances indicate that the carrying amount of goodwill may be impaired.

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We performed our annual impairment assessment of all reporting units as of October 1, 2025 and determined there was no impairment of goodwill.

Based on these impairment assessments, the fair values of our United States electrical construction and facilities services segment, our United States mechanical construction and facilities services segment, our United States building services segment, and our United States industrial services segment exceeded their carrying values by approximately $3,940.5 million, $6,852.3 million, $1,143.8 million, and $163.1 million, respectively.

Based on these impairment assessments, the fair values of our United States electrical construction and facilities services segment, our United States mechanical construction and facilities services segment, our United States building services segment, and our United States industrial services segment exceeded their carrying values by approximately $6.43 billion, $10.11 billion, $1.27 billion, and $120.3 million, respectively.

As part of such annual testing, we compared the aggregate fair value of our reporting units to our market capitalization, noting that such comparison supported the reasonableness of the key assumptions utilized in determining the fair value of each of our reporting units.

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Identifiable Intangible Assets and Other Long-Lived Assets

As of December 31, 2024 and 2023, net identifiable intangible assets (primarily consisting of our customer relationships, subsidiary trade names, developed technology/vendor network, and contract backlog) arising out of the acquisition of businesses were $648.2 million and $586.0 million, respectively.

The determination of related estimated useful lives for identifiable intangible assets and whether those assets are impaired involves significant judgments based upon short- and long-term projections of future performance.

As of December 31, 2025 and 2024, net identifiable intangible assets (primarily consisting of our customer relationships, subsidiary trade names, contract backlog, and developed technology/vendor network) arising out of the acquisition of businesses were $1.11 billion and $648.2 million, respectively.

The determination of identifiable intangible asset values, related estimated useful lives, and whether those assets are impaired involves significant judgments based upon short- and long-term projections of future performance.

These forecasts reflect assumptions regarding anticipated macroeconomic conditions as well as our ability to successfully integrate acquired businesses.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis