EMCOR Group Q3 Earnings Call Highlights

Key Points

• Record third-quarter performance: Revenue rose 28.8% year over year to $5.54 billion, while adjusted EPS increased 46.1% to $9.60 and adjusted operating margin expanded to 10.5%.
• Data centers drove construction growth: Electrical and Mechanical Construction revenue surged 44.3% and 43.1%, respectively, with data center revenue rising sharply and total remaining performance obligations reaching a record $18.57 billion.
• EMCOR raised its 2026 outlook: The company now expects revenue of $20.6 billion to $21 billion and adjusted diluted EPS of $34.50 to $35.50, supported by strong demand, acquisitions and planned share repurchases.

EMCOR Group NYSE: EME reported record third-quarter revenue and remaining performance obligations, citing continued demand for data center construction alongside growth in healthcare, water and wastewater, institutional, manufacturing and industrial markets.

Revenue for the third quarter of 2026 rose 28.8% year over year to a record $5.54 billion, including 25.5% organic growth. Adjusted diluted earnings per share increased 46.1% to $9.60, while adjusted operating income rose 43% to $579.8 million and adjusted operating margin expanded 110 basis points to 10.5%.

On a GAAP basis, operating income was $545.8 million, or 9.8% of revenue, and diluted earnings per share was $9.04. The results included a $34 million non-cash intangible asset impairment charge in the Building Services segment related to a prior acquisition. Chief Financial Officer Jason Nalbandian said the affected business represents less than 1% of Building Services revenue and operates in energy-efficiency contracting outside EMCOR's traditional mechanical services and site-based offerings.

Construction segments drive growth

Electrical Construction revenue increased 44.3% to $1.85 billion, while Mechanical Construction revenue climbed 43.1% to $2.55 billion. The two construction segments generated a combined $4.4 billion in quarterly revenue and a combined operating margin of 12.6%, up 40 basis points from a year earlier.

Electrical Construction operating income rose more than 70% to $247 million, with operating margin reaching 13.3%. Nalbandian said the improvement reflected stronger project execution, a more favorable project mix and lower SG&A as a percentage of revenue.

Mechanical Construction produced operating income of $308.2 million and a 12.1% operating margin. The margin was down 80 basis points from the prior-year quarter due to a larger share of projects where EMCOR acts as construction manager or prime contractor, as well as more guaranteed maximum price and cost-plus contracts. Nalbandian said those arrangements carry lower percentage margins because of reduced markups on materials, equipment and subcontractor costs, though they remain strong contributors to margin dollars.

Network and communications, largely data center work, was a major growth driver. Electrical Construction revenue in the sector increased 68%, while Mechanical Construction revenue increased nearly 130%, aided by expanded cooling requirements on data center projects.

Building Services revenue grew 4.7% to a record $852.4 million, and operating income increased 11.5% to $66.2 million. Its operating margin reached a quarterly record of 7.8%, supported by favorable mix, improved project execution and SG&A leverage. Industrial Services revenue was roughly flat year over year at $287.5 million, while operating income declined to $5.1 million from $6.3 million.

Record RPOs led by data centers

Remaining performance obligations, or RPOs, reached a record $18.57 billion at quarter-end, up 47% from a year earlier, 40% from year-end 2025 and 8.3% sequentially. Guzzi said most of the increase was organic despite the company’s strong revenue growth during the quarter.

• Data center RPOs totaled $8.74 billion, more than double the prior-year level and up 13% sequentially.
• Healthcare RPOs were $1.71 billion, up 31% year over year.
• Water and wastewater RPOs were $1.42 billion, up 38% year over year.
• Institutional RPOs reached $1.72 billion, up 25% year over year.
• Manufacturing and industrial RPOs were $1.18 billion, up 10% year over year and nearly 27% sequentially.

Guzzi said the company continues to see data center opportunities across electrical, mechanical and fire life safety work. He said EMCOR primarily serves large hyperscalers and companies supporting them, rather than the “neocloud” or more speculative data center market.

While data centers represented about one-third of year-to-date revenue, Nalbandian said that business is diversified across numerous customers. Guzzi added that EMCOR remains focused on serving long-standing healthcare, institutional and manufacturing customers even in markets with significant data center demand.

Cash flow, acquisitions and outlook

Operating cash flow was $796.7 million in the third quarter and $1.1 billion year to date. EMCOR ended the quarter with $775 million of cash and $1.03 billion of working capital. Nalbandian said the company expects full-year operating cash flow of roughly $1.5 billion to $1.7 billion.

Through Sept. 30, EMCOR invested nearly $800 million in acquisitions and returned $510 million to shareholders through dividends and share repurchases. The board also authorized an additional $500 million for common-stock repurchases.

During the quarter, EMCOR closed acquisitions of Schmidt Electric in Austin, Texas, and Connelly Electric in the Chicago area. Guzzi said the integrations were on track, though near-term earnings contribution from acquisitions is moderated by acquisition-related backlog amortization.

For 2026, EMCOR raised its outlook and now expects revenue between $20.6 billion and $21 billion and adjusted diluted earnings per share between $34.50 and $35.50. The company said its outlook assumes continued demand and execution across its core end markets, while acknowledging uncertainty tied to geopolitical conflict, supply-chain disruptions and policy or regulatory changes.

About EMCOR Group (NYSE:EME)

EMCOR Group, Inc provides construction, engineering, and building services through a network of specialty contracting businesses. Its core activities include electrical and mechanical construction, energy infrastructure, building systems, facilities services, and industrial maintenance. The company serves commercial, institutional, industrial, manufacturing, healthcare, education, government, and infrastructure customers.

Its services cover the design, installation, operation, maintenance, and upgrading of electrical, heating, ventilation, air-conditioning, plumbing, fire protection, and building automation systems.

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