EMCOR (NYSE:EME) Q3 2025 Earnings Call October 30, 2025 10:30 AM ET Company ParticipantsLucas Sullivan - Director of Financial Planning and AnalysisJason Nalbandian - Senior VP and CFOBrian Brophy - Associate VPAdam Bubes - VP of Equity ResearchSam Kusswurm - Equity Research Senior AssociateTony Guzzi - Chairman, President, and CEOAdam Thalhimer - Director of ResearchConference Call ParticipantsAvi Jaroslawicz - Director and Equity Research AnalystBrent Thielman - Managing Director and Senior Research Analy ...

Core Insights - Golden Triangle Ventures, Inc. has acquired Deep South Electrical Contractors, enhancing its construction division and operational capacity [1][2][3] - The acquisition is valued at $4 million and is part of a strategy to create a vertically integrated construction and infrastructure platform [2][4] - Deep South Electrical Contractors is projected to exceed $10 million in annual revenue by 2026, currently managing over 600,000 square feet of active projects [1][3] Company Overview - Golden Triangle Ventures is a diversified holding company focused on high-growth operating businesses, with subsidiaries in construction, consumer brands, and manufacturing [10] - Deep South Electrical Contractors is recognized as a leading electrical construction firm in Texas, serving major national brands and having completed over 400 multifamily developments [3][4] Strategic Implications - The acquisition strengthens GoldenEra Development's market presence in the rapidly growing construction sector, allowing for self-performance of electrical scopes in various projects [6][7] - The integration of Deep South is expected to improve project efficiency, enhance margins, and accelerate completion timelines [6][7] Leadership and Management - Leo Garza, President of Deep South, will continue to lead the company and join the Board of Directors of Golden Triangle Ventures, contributing to operational growth strategies [5][6] - The acquisition is structured with performance milestones and incentives to ensure sustainable growth without diluting equity [6] Future Outlook - Golden Triangle Ventures plans to disclose transaction details in its Q3 financial report, alongside announcements regarding its share structure and debt restructuring [9]

Financial Data and Key Metrics Changes - The company's second quarter 2025 revenues were $900 million, an increase of $71 million or 8.6% compared to the same period last year [10] - Net income for the second quarter was $27 million compared to a net loss of $15 million for the same period last year [14] - EBITDA for the second quarter was $56 million compared to negative $5 million for the same period last year [14] - Operating cash flow was $33 million compared to $23 million for the same period last year [15] - Free cash flow was $12 million compared to $3 million for the same period last year [15] - Total backlog as of June 30, 2025, was $2.64 billion, 4% higher than a year ago [14] Business Line Data and Key Metrics Changes - Transmission and Distribution (T&D) revenues were $506 million, an increase of 10% compared to the same period last year, with $305 million from transmission and $201 million from distribution [10] - Commercial and Industrial (C&I) revenues were $394 million, an increase of 6% compared to the same period last year [11] - T&D operating income margin was 8% for 2025 compared to an operating loss margin of 1.8% for the same period last year [12] - C&I operating income margin was 5.6% for 2025 compared to 0.4% for the same period last year [12] Market Data and Key Metrics Changes - The demand for electricity continues to drive healthy bidding activity across both business segments [8] - A Deloitte report forecasts $1.4 trillion of capital investments in the U.S. power sector from 2025 to 2030, with power demand expected to increase by 10% to 17% from 2024 levels [18][19] - Non-residential construction spending in the U.S. increased by 3.9% from February 2024 to February 2025 [22] Company Strategy and Development Direction - The company emphasizes grid modernization and hardening as strong market drivers [9] - The focus remains on collaborating closely with customers and delivering safe, quality, and consistent results [9] - The company is strategically pursuing new opportunities while maintaining strong customer relationships [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing success of chosen markets due to increased electrification and investments in electrical infrastructure [9] - The company remains proactive and disciplined in adapting to market conditions and responding to industry changes [26] - Management highlighted the importance of investing in teams to drive value for customers and communities [26] Other Important Information - The company authorized a new $75 million share repurchase program, replacing the prior program [16] - The funded debt to EBITDA leverage ratio was 0.46x as of June 30, 2025 [16] Q&A Session Summary Question: Clarification on the new MSA with Xcel Energy - Management confirmed that the MSA is new scope and additional to existing agreements [29][30] Question: Inquiry about C&I backlog and its sequential decline - Management explained that the backlog is typically lumpy and reflects the normal progression of work [31][32] Question: Discussion on business footprint expansion and future MSA announcements - Management indicated that they are always looking for MSA opportunities while also pursuing other project types [36] Question: Update on solar market contributions to revenue - Management noted that solar work has declined to 4% of T&D revenues, with ongoing selective engagement in solar projects [49] Question: Capital allocation outlook regarding M&A versus buybacks - Management stated they are looking for the right acquisition opportunities while also considering stock buybacks [52][53] Question: Inquiry about investment spending in response to demand - Management confirmed they are monitoring capital expenditures but do not anticipate a significant increase [59] Question: Impact of tariffs and supply chain on project timelines - Management reported that while clients are issuing early notices to proceed, they have not seen significant project delays [60] Question: Update on growth expectations for T&D - Management maintained expectations for high single-digit growth in T&D for the year, excluding certain headwinds [66]

Financial Performance - MYR Group achieved record revenue of $3.64 billion in 2023, a 21% increase from $3.01 billion in 2022[14, 15] - The company's net income for the full year 2023 was $91 million, or $5.40 per diluted share, also a record high[19, 65] - MYR Group's EBITDA for 2023 reached $188.2 million, another record high[19, 65] - The company's backlog stood at $2.51 billion[62] Segment Performance - Transmission & Distribution (T&D) revenue reached a record $2.09 billion in 2023[21, 23] - Commercial & Industrial (C&I) revenue also hit a record of $1.55 billion in 2023[31, 34] - T&D segment backlog was $960 million as of December 31, 2023[23] - C&I segment backlog was $1.55 billion as of December 31, 2023[34] Market Outlook - Investor-owned electric companies plan to invest approximately $121 billion in transmission construction between 2023 and 2026[26] - The Infrastructure Investment and Jobs Act (IIJA) includes $73 billion for the electric grid and energy infrastructure[29] - Combined federal spending planned for energy between the IIJA and Inflation Reduction Act (IRA) is over $300 billion over the next 5-10 years[29]

Financial Performance - MYR Group's total revenue for 2024 was $336 billion[72] - The Transmission & Distribution (T&D) segment contributed $188 billion to the total revenue in 2024[72] - The Commercial & Industrial (C&I) segment generated $148 billion in revenue for 2024[72] - The company's backlog stood at $258 billion[70] - Net income for the full year 2024 was $303 million, resulting in earnings per diluted share of $183[73] - EBITDA for 2024 reached $1178 million[73] Growth and Market Outlook - The T&D segment experienced a revenue Compound Annual Growth Rate (CAGR) of 106%[24] - The C&I segment saw a revenue CAGR of 96%[35] - Investor-owned utilities (IOUs) plan to invest approximately $158 billion on transmission construction between 2024 and 2027[30] - The Dodge Momentum Index grew 56% in January, reaching 2257 (2000=100), driven by diversified growth in nonresidential planning[43]

Core Insights - Shimmick Corporation has launched Axia Electric LLC, a dedicated electrical subsidiary to address the increasing market demand for specialized electrical and power distribution solutions [1][3] - The company has secured electrical contracts totaling $42 million, with over $380 million in active electrical construction projects under contract [1][4] Company Overview - Axia Electric builds on Shimmick's 20 years of experience in delivering complex electrical systems across various sectors, including public and private entities [2] - The new subsidiary will focus on low- and medium-voltage markets, as well as commissioning and operations and maintenance (O&M) services [2] Market Positioning - Axia Electric aims to enhance Shimmick's capabilities in critical infrastructure markets such as water, industrial, aviation, transportation, transit, and energy [3] - The subsidiary's self-perform model and strong safety culture are designed to provide clients with optimal budget and schedule outcomes [3][4] Leadership and Growth - Under the leadership of President Fernando DeLeon, Axia Electric is positioned for growth with a skilled workforce of over 150 employees [4] - The company is prepared to meet the increasing demands from clients for specialized electrical expertise and agile service delivery [4]

Group 1: Stocks with Increased Earnings Estimates - E.W. Scripps Company (SSP) has seen a 14.3% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - MYR Group Inc. (MYRG) has experienced a nearly 6% increase in the Zacks Consensus Estimate for its next year earnings over the last 60 days [1] - Swedbank AB (publ) (SWDBY) has had a 9.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Postal Realty Trust, Inc. (PSTL) has seen a 5.2% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Peakstone Realty Trust (PKST) has experienced a 14.7% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3]

Financial Data and Key Metrics Changes - The company's first quarter 2025 revenues were $834 million, an increase of $18 million or 2.2% compared to the same period last year [10] - Net income for the first quarter was $23 million, compared to $19 million for the same period last year, with net income per diluted share increasing by 29% to $1.45 [15] - EBITDA for the first quarter was $50 million, up from $40 million in the same period last year [15] - Operating cash flow was $83 million, significantly higher than $8 million for the same period last year [16] - Free cash flow was $70 million, compared to negative free cash flow of $18 million for the same period last year [16] Business Segment Data and Key Metrics Changes - Transmission and Distribution (T&D) revenues were $462 million, a decrease of 5.8% year-over-year, with transmission revenues at $270 million and distribution revenues at $192 million [10] - Commercial and Industrial (C&I) revenues were $372 million, an increase of 14.4% year-over-year, driven by fixed price contracts and T&E contracts [11] - T&D operating income margin improved to 7.8% from 6.1% year-over-year, while C&I operating income margin increased to 4.7% from 3.5% [12] Market Data and Key Metrics Changes - Total backlog as of March 31, 2025, was $2.64 billion, a 9% increase from the previous year, with T&D segment backlog at $873 million and C&I segment backlog at $1.77 billion [15] - The utility market is seeing significant investments, with new transmission projects approved amounting to $5.9 billion and additional plans of $6.7 billion [18][19] Company Strategy and Development Direction - The company aims to remain a strong partner by executing projects with superior quality and strategically pursuing new opportunities [8] - There is a commitment to operational consistency and long-term growth, with a focus on maintaining strong customer relationships [8][26] - The company is monitoring and pursuing project opportunities related to electrical infrastructure expansion in the U.S. and Canada [19] Management's Comments on Operating Environment and Future Outlook - Management noted that there have been no significant pullbacks from clients despite discussions around tariffs and inflation [30] - The company remains optimistic about the market, expecting continued growth in core segments, particularly in data centers and clean energy [23][24] - Management emphasized the importance of balancing organic growth, acquisitions, and share repurchase strategies [31][39] Other Important Information - The effective tax rate for the first quarter was 28.9%, up from 18% in the same period last year, primarily due to the absence of stock compensation excess tax benefits [14] - The company has a strong funded debt to EBITDA leverage ratio of 0.68 times as of March 31, 2025, indicating a solid financial position [17] Q&A Session Summary Question: How is the backlog and pipeline of opportunities on the C&I side? - Management reported active conversations with clients and no signs of pullback, indicating a positive outlook for the market [30] Question: What are the capital allocation priorities for the rest of the year? - The focus remains on supporting organic growth and being positioned for potential acquisitions, with no new share repurchase program announced at this time [31][32] Question: Can you confirm the margin targets for the year? - Management expects to maintain margins in the mid-range of their target of 7% to 10.5% [42] Question: How are tariffs impacting the cost profile, particularly on the C&I side? - Management acknowledged potential impacts from tariffs but emphasized that they are monitoring the situation closely [66] Question: What is the outlook for revenue growth in the T&D segment? - Management anticipates higher single-digit growth for the core T&D segment, excluding solar projects, which are expected to be a headwind [57][58]

Financial Data and Key Metrics Changes - The company's first quarter 2025 revenues were $834 million, an increase of $18 million or 2.2% compared to the same period last year [10] - Net income for the first quarter was $23 million, compared to $19 million for the same period last year, with net income per diluted share increasing by 29% to $1.45 [15] - EBITDA for the first quarter was $50 million, up from $40 million year-over-year [15] - Operating cash flow was $83 million, significantly higher than $8 million for the same period last year [16] - Free cash flow was $70 million, compared to negative free cash flow of $18 million for the same period last year [16] Business Segment Data and Key Metrics Changes - Transmission and Distribution (T&D) revenues were $462 million, a decrease of 5.8% year-over-year, with transmission revenues at $270 million and distribution revenues at $192 million [10] - Commercial and Industrial (C&I) revenues were $372 million, an increase of 14.4% year-over-year, driven by fixed price contracts and T&E contracts [11] - T&D operating income margin improved to 7.8% from 6.1% year-over-year, while C&I operating income margin increased to 4.7% from 3.5% [12] Market Data and Key Metrics Changes - Total backlog as of March 31, 2025, was $2.64 billion, a 9% increase from the previous year, with T&D segment backlog at $873 million and C&I segment backlog at $1.77 billion [15] - The utility market is seeing significant investments, with new transmission projects approved amounting to $5.9 billion and additional plans of $6.7 billion [18][19] Company Strategy and Development Direction - The company aims to remain a strong partner while executing projects with superior quality, focusing on operational consistency and long-term growth [8][9] - There is a commitment to strategically pursue new opportunities in response to growing electrification demand [8] - The company plans to continue investing in the safety and development of its teams, which are seen as critical to success [26] Management's Comments on Operating Environment and Future Outlook - Management noted that conversations with clients remain active, with no significant pullback observed despite discussions around tariffs and inflation [31] - The company expects to maintain a mid-range margin profile for the year, targeting 7% to 10.5% [43] - Management remains optimistic about growth opportunities in core markets, particularly in data centers and clean energy [23][24] Other Important Information - The company has a strong funded debt to EBITDA leverage ratio of 0.68 times as of March 31, 2025, indicating a solid financial position [17] - The company has exhausted its current share repurchase program, with no new program announced at this time, focusing instead on organic growth and potential acquisitions [32][33] Q&A Session Summary Question: Inquiry about C&I backlog and pipeline of opportunities - Management indicated active conversations with clients and no observed pullback in the market, maintaining a positive outlook [31] Question: Capital allocation priorities and share repurchase plans - The company prioritizes growth and is open to share repurchase if market conditions allow, but no new program is currently in place [32][33] Question: Impact of tariffs on cost profile and margins - Management acknowledged potential impacts from tariffs but emphasized that current contracts have stronger language to mitigate risks [67][68] Question: Future revenue growth expectations - Management expects higher single-digit growth for the core T&D segment, excluding solar, with a focus on maintaining margin profiles [57][58] Question: Details on a sizable transmission project in Virginia - The project is classified as midsized, with revenue expected to be recognized by the end of the year or early next year [66]

Financial Data and Key Metrics Changes - The company's first quarter 2025 revenues were $834 million, an increase of $18 million or 2.2% compared to the same period last year [8] - First quarter net income was $23 million, compared to $19 million for the same period last year, with net income per diluted share increasing 29% to $1.45 from $1.12 [14] - EBITDA for the first quarter was $50 million, up from $40 million year-over-year [14] - Operating cash flow was $83 million, significantly higher than $8 million for the same period last year [15] - Free cash flow was $70 million, compared to negative free cash flow of $18 million for the same period last year [15] Business Line Data and Key Metrics Changes - Transmission and Distribution (T&D) revenues were $462 million, a decrease of 5.8% year-over-year, with transmission revenues at $270 million and distribution revenues at $192 million [9] - Commercial and Industrial (C&I) revenues were $372 million, an increase of 14.4% year-over-year, driven by fixed price contracts and T&E contracts [10] - T&D operating income margin improved to 7.8% from 6.1% year-over-year, while C&I operating income margin increased to 4.7% from 3.5% [11][12] Market Data and Key Metrics Changes - Total backlog as of March 31, 2025, was $2.64 billion, a 9% increase from the previous year, with T&D segment backlog at $873 million and C&I segment backlog at $1.77 billion [14] - The utility market is seeing significant opportunities, including $5.9 billion in new transmission projects approved by PJM and $6.7 billion in MISO transmission planning [17][18] Company Strategy and Development Direction - The company remains committed to operational consistency and expanding customer relationships through master service agreements and strategic pursuits [6] - There is a focus on capturing growth opportunities in electrical infrastructure due to increasing demand for electrification [6] - The company plans to continue investing in the development and safety of its teams, which are seen as critical to success [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the active market and ongoing conversations with clients, indicating no current pullback in project commitments [31] - The company is monitoring macroeconomic factors such as tariffs and inflation but has not seen significant impacts on its core business [50] - Future growth is anticipated in core markets, particularly in data centers, healthcare, and clean energy, with positive forecasts for 2025 [22] Other Important Information - The company has maintained a strong funded debt to EBITDA leverage ratio of 0.68 times as of March 31, 2025 [16] - SG&A expenses increased to $62.5 million, primarily due to higher employee-related expenses [12] Q&A Session Summary Question: Inquiry about C&I backlog and pipeline of opportunities - Management noted active conversations with clients and no signs of pullback, indicating a positive outlook for the market [31] Question: Capital allocation priorities and share repurchase plans - The company is prioritizing growth and is not announcing another share repurchase program at this time, but remains flexible to market conditions [32][33] Question: Impact of tariffs on clean energy projects - Management acknowledged potential pauses in some geographic areas but emphasized that the core business remains strong [50] Question: Free cash flow expectations for the rest of the year - Management highlighted a strong financial position but noted variability in free cash flow conversion due to project timing and payment terms [36] Question: CapEx decisions and purchasing strategies - The company indicated that lower CapEx in the first quarter was due to timing and that they continue to use a mix of purchasing and rental strategies for equipment [55] Question: Expectations for T&D revenue growth and solar project impacts - Management confirmed expectations for mid-single-digit growth in the core T&D segment, with solar projects presenting a headwind [58][61]