EMCOR Group (NYSE:EME) released first-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.
Benzinga APIs provide real-time access to earnings call transcripts and financial data. Visit https://www.benzinga.com/apis/ to learn more.
View the webcast at https://edge.media-server.com/mmc/p/9qgwe89b/
Summary
EMCOR Group reported strong financial performance for Q1 2026 with revenues of $4.63 billion, marking a 19.7% year-over-year growth and an operating income of $404 million with an 8.7% operating margin.
The company achieved significant growth in its construction segments, with electrical construction revenues up by 33.1% and mechanical construction revenues increasing by 28.9%.
EMCOR Group’s remaining performance obligations (RPOs) totaled $15.62 billion, reflecting a 32.9% year-over-year increase, driven by robust demand in sectors like data centers, healthcare, and water and wastewater.
The company raised its full-year 2026 guidance, expecting revenues between $18.5 and $19.25 billion and diluted EPS between $28.25 and $29.75, citing strong market momentum and operational excellence.
Management highlighted strategic priorities such as enhancing training and productivity, maintaining contract management discipline, and focusing on field leadership excellence as key drivers of sustainable growth.
Full Transcript
Cindy (Conference Operator)
Good morning. My name is Cindy and I will be your conference operator today. At this time I would like to welcome everyone to the EMCOR Group first quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press Star, then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. I will now turn the call over to Lucas Sullivan, Director, Financial planning and analysis. Mr. Sullivan, you may begin.
Lucas Sullivan (Director, Financial Planning and Analysis)
Thank you, Cindy. Good morning everyone and welcome to EMCOR’s first quarter 2026 earnings conference call. For those of you joining us by webcast, we are at the beginning of our slide presentation that will accompany our remarks today. This presentation will be archived in the Investor Relations section of our website at emcor-group.com with me today are Tony Guzzi, our Chairman, President and Chief Executive Officer Jason Albandian, Senior Vice President and Chief Financial Officer and Maxine Mauricio, Executive Vice President, Chief Administrative Officer and General Counsel. For today’s call, Tony will provide comments on our first quarter 2026 and discuss our RPOs. Jason will then review the first quarter numbers then turn it back to Tony to discuss our guidance before we open it up for Q and A. Before we begin, a quick reminder that this presentation and discussion contain certain forward looking statements and may contain certain non GAAP financial information. Slide 2 of our presentation describes in detail these forward looking statements and the non GAAP financial information disclosures. I encourage everyone to review both disclosures in conjunction with our discussion and accompanying slides. And finally, as a reminder, all financial information discussed during this morning’s call is included in our consolidated financial statements within both our earnings press release issued this morning and and in our Form 10Q filed with the securities and Exchange Commission. And with that, let me turn the call over to Tony.
Tony Guzzi (Chairman, President and Chief Executive Officer)
Tony? Yeah. Thanks Lucas. And I’m going to start my discussion on pages three and four. Good morning and thanks for joining us today. I’m pleased to report another outstanding quarter for EMCOR. Our first quarter 2026 results demonstrate the sustained momentum we have built over many years with strong execution across our business segments and continued growth in our core market sectors and geographies. In the first quarter we generated revenues of 4.63 billion representing year over year growth of 19.7% and organic growth of 16.8% when adjusting for incremental acquisition contribution and the sale of Emcor UK operating income reached 404 million with an 8.7% operating margin while diluting earnings per share of $6.84 represents an increase of 30% versus the first quarter of 2025. This reflects our strategic positioning in high growth markets and operational excellence across our construction and services platforms. These results demonstrate our customers continued confidence in EMCOR as one of their partners of choice for complex mission critical projects. Our construction segments once again performed extremely well in the quarter. The electrical construction segment generated year over year revenue growth of 33.1% with a 12.1% operating margin while the mechanical construction segment achieved 28.9% revenue growth with a 10.9% operating margin. This performance reflects the range of our capabilities across both trades and geographies. It also takes into account increased customer scope and our reputation as one of the premier specialty contractors for complex, fast paced projects. Our construction segment’s growth was driven primarily by increased activity in network and communications which is where our data center business rests institutional, manufacturing and industrial, healthcare and water and wastewater market sectors within our mechanical construction segment. We also benefited from increased commercial market sector revenues driven primarily by the resumption of demand for warehousing, distribution and logistics projects. Our teams continue to leverage our prefabrication and our virtual design and construction capabilities, excellence in labor management and planning, large project coordination and execution and a disciplined focus on contract negotiation, administration and the adherence to those terms. The U.S. building Services segment delivered solid results led by impressive performance in our mechanical services division. While we still face slight revenue headwinds within our site based business, we we’ve begun to see the benefits of the restructuring on the cost side which reduced overhead costs and we have a more profitable contract portfolio mix. Our industrial services segment generated revenue growth of 6.4% and that was driven by our field services division. Now I’m going to turn to page five. Our remaining performance obligation position strengthened significantly during the quarter providing excellent visibility for sustained growth. Our RPOs totaled $15.62 billion at the end of the quarter versus $11.75 billion in the year ago period and $13.25 billion as of December 31, 2025. This represents year over year growth of 32.9% and sequential growth of 17.9%. These diverse RPOs reflect continued strong demand across many market sectors with particularly robust activity in network accumulations or data centers where we continue to expand our geographic footprint and scope of services to better serve our customers. We see no sign of slowing demand in this vertical where customer investments in AI infrastructure, cloud infrastructure and overall digital transformation are driving unprecedented levels of activity. We are pleased with the quality and diversity of our work outside booked outside of the data center space, including notable awards within water and wastewater as we continue to win new projects in Florida. Institutional Driven by demand for upgraded lab space by certain colleges and universities and healthcare as our customers continue to modernize their facilities while seeking to make them more flexible and responsive, the strong operational and financial performance I’ve outlined demonstrate the effectiveness of our strategic initiatives and the depth of our execution capabilities. Our teams continue to deliver exceptional results for our customers while maintaining disciplined financial management and operational excellence and continued good contract negotiation and adherence to the contract terms we negotiate. With that context, I will turn it over to Jason who will provide a detailed review of our first quarter financial results.
Jason Albandian (Senior Vice President and Chief Financial Officer)
Thank you Tony and good morning everyone. Starting with Slide 6, which shows revenues, I’m going to cover the operating performance for each of our segments as well as some of the key financial Data for the first quarter of 2026 as compared to the first quarter of 2025. As Tony mentioned, revenues of $4.63 billion established a quarterly record for EMCOR, increasing 19.7% or 16.8% on an organic basis when excluding acquisitions and adjusting for the sale of emcor.uk revenues of electrical construction were $1.45 billion, increasing just over 33%. This segment generated increased revenues from the majority of the market sectors we serve, with the most significant growth coming from network and communications, where revenues increased by nearly 50% driven by strong demand for data centers. While this accounted for two thirds of the segment’s growth, we did experience notable revenue increases across a number of other sectors including hospitality and entertainment, due in part to progress made on a stadium project and institutional as a result of certain public sector projects in the quarter. Our electrical construction segment also benefited from greater levels of short duration projects and service work. Mechanical Construction revenues of 2.03 billion are up nearly 29%. Similar to electrical, this segment once again experienced the greatest growth from the network and communications market sector, where revenues increased by 86%. Increased cooling requirements and advancements in liquid cooling, particularly for AI data centers continue to drive opportunities for this segment. Beyond data centers, Mechanical generated quarterly revenue growth from the majority of the other sectors in which we operate, notably institutional. Revenues doubled year over year. Manufacturing and industrial, including food processing, was up 34% and commercial increased by 33%, driven by warehousing, distribution and logistics projects, largely within fire protection during the quarter. The segment also benefited from increased service revenues as we continued to expand our maintenance and inspection base both within traditional mechanical services as well as our fire life safety offerings. On a combined basis, our construction segments generated revenues of 3.47 billion, an increase of 30.6%. I should note that this performance established new quarterly revenue records for each of these segments. Moving to building services, revenues of 772.6 million grew by 4%, driven by our mechanical services division, which generated a 6% increase in revenues. From a service line perspective, the most significant growth was seen in repair, service service maintenance and building automation and controls. Revenues of our industrial services segment were $381.8 million, an increase of 6.4%. Greater contribution from our field services operations due primarily to progress made on a large solar project was partially offset by a reduction in revenues within our shop services division due to lower heat exchanger sales and related services. I’ll turn to Slide 7. For operating income, we generated operating income of 403.8 million or 8.7% of revenues, both of which are records for EMCOR. For a first quarter, this represents an increase in operating income of 26.7% and operating margin expansion of 50 basis points versus the prior year. When adjusting for the acquisition transaction costs which were incurred in Q1 of 2025, operating income grew by 23.1% and operating margin increased by 25 basis points. Once again, if we look at each of our segments due to the growth in revenues, operating income for electrical Construction increased by 28.2% to a quarterly record of 174.5 million. Operating margin of 12.1% compares to 12.5% a year ago. With consistent gross profit margins, this segment continues to execute well across its project portfolio, with the year over year decrease in operating margin primarily resulting from an increase in intangible asset amortization. Given the one month of incremental expense from the Miller acquisition, Mechanical Construction had operating income of 221.6 million and 18.7% increase. From an end market standpoint, this segment generated greater gross profit across many of the sectors in which we operate, with the largest increases generally tracking in line with the growth in its revenues. Operating margin of 10.9% compares to 11.9% in last year’s first quarter. As we anticipated when we exited 2025, operating margin in this segment decreased due to a shift in mix that included a greater percentage of revenues from projects where we’re acting as either a construction manager or prime contractor and which inherently carry lower than average gross profit margins due to reduced markups on materials, equipment and subcontractor costs. In addition, we had an increase in the number of GMP or cost plus projects, particularly in newer geographies around projects where scope or design are still evolving. Together, our construction segments grew operating income by nearly 23% and earned a combined operating margin of 11.4%. Building services generated operating income of 40.4 million, which represents an 11.1% increase. An operating margin of 5.2% expanded by 30 basis points. This segment benefited from strong performance within its mechanical services division which experienced a favorable mix given the greater volume of higher margin service and controls projects. Also, as Tony mentioned, while we do face some headwinds within our site based business, the restructuring we did last year has proven to be successful resulting in both reduced overhead costs and a more profitable contract portfolio. And lastly, operating income for industrial services was 12.8 million, an increase of 89.1% and operating margin of 3.3% expanded by 140 basis points. As a reminder and contributing to the favorable year over year comparison, the results for this segment in last year’s first quarter were negatively impacted by a $4 million increase in the allowance for credit losses which negatively impacted operating margin for Q1 of 25 by 110 basis points. Excluding this impact, the remaining increase in operating income and operating margin was primarily a result of greater gross profit and greater gross profit margin within its field services division. If we quickly turn to page eight, I’ll cover a few items not included on the previous slides. Gross profit of $864 million increased by 19.5% and our gross profit margin of 18.7% remained consistent with that of the prior year, which represents a record level of performance for a first quarter. SGA was 460.1 million or 9.9% of revenues, compared to 404 million or 10.4% of revenues a year ago. With the top line growth we experienced during the quarter, we are pleased with the operating leverage we attained as evidenced by the decrease in our SGA margin. And finally on this page, diluted earnings per share was $6.84, which represents an increase of 30% or 26.4% when excluding the transaction costs in last year’s first quarter. And finally for me, let’s turn to Slide 9 which covers our balance sheet. Our balance sheet, including 916 million of cash on hand and 1.25 billion of working capital, remains strong and liquid and enables us to continue to fund organic growth, pursue strategic MA and return capital to shareholders. During the quarter, we returned 105 million of cash to our shareholders through stock repurchases and our quarterly dividend. Although not shown on this page, due to an increase in accounts receivable, given our strong organic revenue growth and coupled with the payment of the prior year’s incentive compensation awards, cash flows from operations in the first quarter were essentially neutral. However, for the full year we remain confident in our ability to generate operating cash flow at least equivalent to net income or up to 80 to 85% of operating income consistent with previous years. With that, I’ll turn the call back over to Tony.
Tony Guzzi (Chairman, President and Chief Executive Officer)
Yeah, thanks Jason and I’m going to be on pages 10 and 11 given our strong start to the year and the strength of our remaining performance obligations, we are raising our full year 2026 guidance. We are increasing our revenue and diluted earnings per share guidance to a range that reflects our confidence and in the sustained operational excellence that we have exhibited and strong market momentum. Such guidance reflects the demand that we are seeing and our success of winning and executing large scale projects across many geographies and market sectors. We now expect to earn revenues of between 18.5 and $19.25 billion and diluted earnings per share of between $28.25 and $29.75. As a reminder, EMCOR’s business is characterized by project cycles and timing then can create quarterly variability. However, our guidance reflects our current expectation of continued strong operating margins throughout 2026, supported by disciplined project selection and execution. We are focused on maintaining pricing discipline while delivering exceptional value to our customers. Our sustained success is built on focused execution across a number of key priorities that differentiate Emcor and position us for continued growth. I’m now going to highlight four of them. The first one is our training, peer learning and our productivity initiatives. We continue to leverage our training programs, our virtual design and construction capabilities, prefabrication facilities and capabilities, and advanced project planning and delivery methodologies. We are committed to improving our means and methods every day, sharing knowledge across our organization and investing in workforce training, retention and expansion. The second item is contract management discipline and negotiation. We deliver exceptional results for our customers. However, we do protect our rights and interests through careful contract management negotiation, particularly on complex, fast paced projects. Third, we’re known for field service, field leadership excellence, one could argue that is our core product. Our field leadership excellence, from frontline foremen and superintendents to project managers and executives and subsidiary and segment leaders make Emcor an employer, a choice in our industry. And finally, supporting all that is our commitment to invest with discipline and for the long term, we maintain a disciplined approach for how we grow organically and through acquisition. This, coupled with the return of cash to shareholders through dividends and share repurchases, has provided the foundation for our compounding record of success over the past decade and provides balance to our approach to capital allocation. These interconnected priorities create a sustainable competitive advantage that drives superior, durable performance across many diverse geographies and market sectors. The fundamentals of our business remain strong with sustained demand across several key market sectors. We will continue to always face macroeconomic challenges. In fact, I can’t remember a time when we haven’t had them, such as geopolitical events, rising commodity prices, but our team has consistently demonstrated the ability to navigate complexity and continue to deliver results. Our success is a direct result of their dedication, their resilience expertise, which results in executional excellence and from our teammates across the organization, I want to thank every member of the EMCOR team for their contributions to our outstanding first quarter performance and over the long term and for everything you do to serve our customers, keep each other safe and drive our success every day. Thank you for your time this morning. We will now open the line for questions and Cindy, I will turn the call over to you.
Cindy (Conference Operator)
We will now begin the question and answer session. To ask a question, you may press Star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then two. At this time we will pause momentarily to assemble our roster. Our first question comes from Adan Thalheimer of Thompson Davis. Go ahead please.
Adan Thalheimer (Equity Analyst)
Hey, good morning guys. Congrats on the strong Q1 and the record orders. I guess I wanted to start on the book to bill and orders. I mean I think at 1.5 times that was a record book to bill for you guys. And Tony, you broadly talked about the pipeline, but I’m just curious if you can give more detail on the pipeline and what the expectation should be for orders for the rest of the year.
Tony Guzzi (Chairman, President and Chief …
This post was originally published here
