EMCOR Group NYSE: EME reported what executives repeatedly described as a record-setting start to fiscal 2026, driven by continued strength in data center-related work and broad-based construction demand across multiple end markets. Management also raised full-year guidance on the back of strong first-quarter execution and a significant sequential increase in remaining performance obligations.
First-quarter results set records for revenue and operating income
Chairman, President, and CEO Tony Guzzi said the company delivered “another outstanding quarter,” pointing to “strong execution across our business segments and continued growth in our core market sectors and geographies.”
EMCOR generated first-quarter revenue of $4.63 billion, up 19.7% year over year, which Guzzi said equated to 16.8% organic growth when adjusting for acquisition contribution and the sale of EMCOR U.K. Operating income reached $404 million, producing an 8.7% operating margin. Diluted earnings per share rose to $6.84, up 30% versus the first quarter of 2025.
Senior Vice President and CFO Jason R. Nalbandian said first-quarter results were records for EMCOR for a first quarter, including operating income and operating margin. Gross profit totaled $864 million, up 19.5%, while gross margin was 18.7%, which he called “a record level of performance for a Q1.”
SG&A expenses rose to $460.1 million, but fell as a percentage of sales to 9.9% from 10.4% a year earlier, which Nalbandian attributed to operating leverage on higher revenue.
Construction segments fueled by data centers and diverse end markets
Both construction segments posted strong growth, supported by network and communications work tied to data centers and by other markets including institutional, manufacturing and industrial, healthcare, and water and wastewater.
- Electrical Construction: Revenue of $1.45 billion increased just over 33%. Nalbandian said network and communications revenue rose nearly 50%, driving about two-thirds of the segment’s growth. He also cited contributions from hospitality and entertainment (including progress on a stadium project) and institutional public sector work. Operating income rose 28.2% to $174.5 million, with operating margin of 12.1% versus 12.5% a year ago; Nalbandian attributed the margin decline primarily to higher intangible amortization related to the Miller acquisition timing.
- Mechanical Construction: Revenue of $2.03 billion increased nearly 29%. Network and communications revenue grew 86%, which Nalbandian linked to higher cooling requirements and “advancements in liquid cooling, particularly for AI data centers.” Institutional revenue doubled, manufacturing and industrial revenue rose 34%, and commercial increased 33%, driven by warehousing, distribution, and logistics projects largely within fire protection. Operating income rose 18.7% to $221.6 million, while operating margin declined to 10.9% from 11.9%, primarily due to mix shifts toward construction manager/prime contractor roles and more GMP and cost-plus project structures.
On a combined basis, EMCOR’s construction segments generated $3.47 billion in revenue, up 30.6%, and produced a combined operating margin of 11.4%, Nalbandian said.
In Q&A, Guzzi emphasized that the company does not “bundle” electrical and mechanical scopes into a single bid package, although EMCOR may have multiple operating companies on the same site. Nalbandian added that increased data center-related bookings were coming from both mechanical and electrical, and noted that, in network and communications revenue growth, “electrical’s up $240 million, and mechanical’s up $280 million.”
Services results: building services steady, industrial services improves
In U.S. building services, revenue was $772.6 million, up 4%, driven by a 6% increase in mechanical services revenue. Nalbandian said the strongest service line growth came from “repair service maintenance, and building automation and controls.” Operating income was $40.4 million, up 11.1%, and operating margin expanded 30 basis points to 5.2%. Both Guzzi and Nalbandian referenced the benefits of last year’s restructuring in site-based operations, including reduced overhead and a more profitable contract portfolio.
Industrial services revenue increased 6.4% to $381.8 million. Nalbandian said field services growth—helped by progress on a large solar project—was partially offset by lower shop services revenue due to reduced heat exchanger sales and related services. Operating income rose to $12.8 million, up 89.1%, with operating margin of 3.3%. Nalbandian noted that the year-ago quarter was weighed down by a $4 million increase in allowance for credit losses.
RPO climbs sharply; data centers remain a key driver
EMCOR ended the quarter with remaining performance obligations (RPO) of $15.62 billion, up from $11.75 billion a year earlier and $13.25 billion at year-end 2025. Guzzi said the total reflected 32.9% year-over-year growth and 17.9% sequential growth, calling it “excellent visibility for sustained growth.”
Guzzi said EMCOR was seeing “no sign of slowing demand” in data centers, citing customer investments in AI infrastructure, cloud infrastructure, and digital transformation. He also pointed to bookings outside data centers, including awards in Florida water and wastewater, institutional projects tied to upgraded lab space at colleges and universities, and healthcare facility modernization.
Asked whether backlog was extending further out, Nalbandian said the company still expects most RPO to convert within a year. He noted that at year-end 2025, EMCOR expected 82% of RPO to burn within 12 months, while at the end of the first quarter it expected 78% within 12 months—“a little bit longer… but not in a significant way.”
Guidance raised; cash flow expected to follow typical seasonal pattern
Based on the first-quarter performance and RPO levels, Guzzi said EMCOR is raising full-year 2026 guidance to revenue of $18.5 billion to $19.25 billion and diluted EPS of $28.25 to $29.75. He said the outlook assumes continued strong operating margins supported by disciplined project selection, execution, and “pricing discipline.”
In discussing the revenue outlook, management stressed that project timing can create quarterly variability. Nalbandian said that using the midpoint of the revenue guidance range, the company still needs to “go out and book about 30% of our work” for the remainder of the year, and added that where revenue lands will depend on how quickly newly booked jobs mobilize and begin generating revenue.
On profitability, Nalbandian said mix dynamics—including a higher share of construction manager/prime contractor roles and GMP or cost-plus project structures—could persist, but he maintained that execution is expected to remain strong. Guzzi cautioned against “false precision” on margins and reiterated management’s focus on “margin dollars” and risk-adjusted returns rather than any single margin percentage target.
Nalbandian said the balance sheet remained “strong and liquid,” ending the quarter with $916 million in cash and $1.25 billion in working capital. The company returned $105 million to shareholders through share repurchases and its quarterly dividend. Cash flow from operations was “essentially neutral” in the quarter due to higher accounts receivable from strong growth and the payout of prior-year incentive compensation. Nalbandian said EMCOR still expects full-year operating cash flow of at least net income or 80% to 85% of operating income, consistent with prior years, and he described Q1 as typically the weakest quarter for cash flow while Q4 tends to be strongest.
Management also discussed capacity considerations. Guzzi said the primary constraint on growth is not major equipment procurement for data centers, but rather “field leadership”—including developing more foremen, general foremen, and project managers. On labor, he said EMCOR has not seen “notable changes” in craft labor tightness and continues to recruit with unions in several regions, while also expanding training initiatives such as the pro-trade program associated with the Miller acquisition.
Looking to investment priorities, Nalbandian said EMCOR expects 2026 capex of $115 million to $125 million, with “a significant part” directed toward fitting out or upgrading fabrication facilities. On M&A, Guzzi said the acquisition pipeline is “good,” with primary interest in electrical construction focused on low- to mid-voltage capabilities and geographic expansion, while also citing opportunities in mechanical construction, fire protection, and mechanical services, including building controls and automation.
About EMCOR Group NYSE: EME
EMCOR Group, Inc is a provider of mechanical and electrical construction, industrial and energy infrastructure, and facilities services to commercial, institutional and industrial clients. The company delivers a broad range of services that include design-build and traditional construction of mechanical, electrical and plumbing systems; ongoing facilities maintenance and operations; and specialized industrial services for sectors such as manufacturing, data centers, healthcare and utilities.
EMCOR's service offerings encompass HVAC, plumbing, electrical installation and maintenance, fire protection, building automation and controls, commissioning, testing and balancing, and energy management solutions.
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