EMCOR Group Inc

Previous wording

Revenues of $3.43 billion for the quarter ended March 31, 2024 set a new first quarter record for the Company and represent an increase of 18.7% from revenues of $2.89 billion for the quarter ended March 31, 2023. Demand for our services continues to be strong across the majority of the market sectors we serve and, as described in further detail below, we experienced revenue growth within all of our reportable segments except for our United Kingdom building services segment. Revenues for the first quarter of 2024 included incremental acquisition contribution of approximately $7.9 million.

Current wording

Revenues of $3.67 billion for the quarter ended June 30, 2024 set a new quarterly record for the Company and represent an increase of 20.4% from revenues of $3.05 billion for the quarter ended June 30, 2023. Demand for our services continues to be strong across the majority of the market sectors we serve and, as described in further detail below, we experienced revenue growth within all of our reportable segments. Revenues for the second quarter of 2024 included incremental acquisition contribution of approximately $80.9 million.

Previous wording

Operating income for the quarter ended March 31, 2024 was $260.0 million, or 7.6% of revenues, establishing new first quarter records for the Company with respect to both operating income and operating margin. This compares to operating income of $154.9 million, or 5.4% of revenues, for the quarter ended March 31, 2023. The $105.0 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.

Current wording

Operating income for the quarter ended June 30, 2024 was $332.8 million, or 9.1% of revenues, establishing new quarterly records for the Company with respect to both operating income and operating margin. This compares to operating income of $196.7 million, or 6.5% of revenues, for the quarter ended June 30, 2023. The $136.1 million increase in operating income, and corresponding 260 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. Operating income for the quarter ended June 30, 2024 included incremental acquisition contribution of $4.6 million, net of amortization expense attributable to identifiable intangible assets of $5.0 million.

Previous wording

Net income of $197.1 million, or $4.17 per diluted share, for the quarter ended March 31, 2024, compares favorably to net income of $111.5 million, or $2.32 per diluted share, for the quarter ended March 31, 2023. While the majority of the increase in our diluted earnings per share was a result of the increased operating income referenced above, diluted earnings per share for the quarter ended March 31, 2024 additionally benefited from a reduced weighted average share count given the impact of common stock repurchases made by us throughout 2023 and the first quarter of 2024.

Current wording

Net income of $247.6 million, or $5.25 per diluted share, for the quarter ended June 30, 2024 compares favorably to net income of $140.6 million, or $2.95 per diluted share, for the quarter ended June 30, 2023. While the majority of the increase in our diluted earnings per share was a result of the increased operating income referenced above, diluted earnings per share for the quarter ended June 30, 2024 additionally benefited from a reduced weighted average share count given the impact of common stock repurchases made by us throughout 2023 and the first half of 2024.

Previous wording

The following table presents our operating segment revenues from unrelated entities and their respective percentages of total revenues (in thousands, except for percentages):

Current wording

The following tables present our operating segment revenues from unrelated entities and their respective percentages of total revenues (in thousands, except for percentages):

Previous wording

As described below in more detail, as a result of revenue growth within the majority of our reportable segments, our consolidated revenues for the first quarter of 2024 increased to $3.43 billion compared to $2.89 billion for the first quarter of 2023.

Current wording

As described below in more detail, our consolidated revenues for the three months ended June 30, 2024 increased to $3.67 billion compared to $3.05 billion for the three months ended June 30, 2023, and our consolidated revenues for the six months ended June 30, 2024 increased to $7.10 billion compared to $5.94 billion for the six months ended June 30, 2023.

Previous wording

Revenues of our United States electrical construction and facilities services segment were $764.7 million for the three months ended March 31, 2024 compared to revenues of $644.7 million for the three months ended March 31, 2023. The $120.0 million increase in this segment’s revenues was primarily a result of revenue growth within the network and communications market sector, predominantly due to our data center projects. Increased demand for cloud computing, data storage, and the emergence of artificial intelligence has resulted in a greater number of construction project opportunities for us in several of the geographies in which we operate.

Current wording

Revenues of our United States electrical construction and facilities services segment were $800.0 million and $1,564.7 million for the three and six months ended June 30, 2024, respectively, compared to revenues of $678.2 million and $1,322.9 million for the three and six months ended June 30, 2023, respectively. The increase in this segment’s revenues for both 2024 periods was primarily a result of growth within the network and communications market sector, predominantly due to our data center 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 construction project opportunities for us in several of the geographies in which we operate. In addition, this segment benefited from revenue growth within: (a) the transportation market sector, due to certain infrastructure projects currently underway, (b) the high-tech manufacturing market sector, inclusive of construction projects for customers engaged in the design and manufacturing of semiconductors, and (c) the manufacturing and industrial market sector, driven by increased activity with various energy sector customers. 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.

Previous wording

Our United States mechanical construction and facilities services segment revenues for the three months ended March 31, 2024 were $1,427.7 million, a $349.1 million increase compared to revenues of $1,078.6 million for the three months ended March 31, 2023. The increase in this segment’s revenues was attributable to revenue growth within the majority of the market sectors in which we operate, most notably including: (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 manufacturing and industrial market sector, due to continued re-shoring of critical supply chain by certain of our customers as well as an increase in food processing project revenue, (c) the institutional market sector, given several public sector projects which were active during the first quarter of 2024, and (d) 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. In addition, revenues of this segment were positively impacted by greater levels of short duration projects and service work.

Current wording

Our United States mechanical construction and facilities services segment revenues for the three months ended June 30, 2024 were $1,655.2 million, a $461.1 million increase compared to revenues of $1,194.1 million for the three months ended June 30, 2023. Revenues of this segment for the six months ended June 30, 2024 were $3,082.8 million, an $810.2 million increase compared to revenues of $2,272.7 million for the six months ended June 30, 2023. This segment’s results for both 2024 periods included $56.2 million of incremental acquisition revenues. Excluding the impact of acquisitions, the increases in this segment’s revenues were attributable to revenue growth within the majority of the market sectors in which we operate, as well as greater levels of short-duration projects and service work. From a market sector perspective, we experienced notable increases 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 projects which were active during the first half of 2024, (d) the manufacturing and industrial market sector, due to continued re-shoring of critical supply chain by certain of our customers as well as an increase in food processing project revenue, (e) the healthcare market sector, given an increase in projects throughout several of the regions in which we operate, and (f) the water and wastewater market sector, driven by construction activity on several projects within the Southeast region of the United States. 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, which were active in 2023.

Previous wording

Revenues of our United States building services segment were $781.2 million for the three months ended March 31, 2024 compared to revenues of $725.4 million for the three months ended March 31, 2023. Included in this segment’s results for the first quarter of 2024 were $7.9 million of incremental acquisition revenues. Excluding such acquisition contribution, the $47.9 million increase in revenues was primarily attributable to this segment’s mechanical services division, due to increased: (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 period, 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.

Current wording

Revenues of our United States building services segment for the three months ended June 30, 2024 were $781.1 million compared to revenues of $775.0 million for the three months ended June 30, 2023. Excluding incremental revenues from acquired companies of $13.0 million, this segment’s revenues for the three months ended June 30, 2024 decreased modestly by $6.9 million, as revenue growth from 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. Revenues of this segment for the six months ended June 30, 2024 were $1,562.3 million compared to revenues of $1,500.4 million for the six months ended June 30, 2023. Excluding incremental revenues from acquired companies of $20.9 million, this segment’s revenues for the six months ended June 30, 2024 increased by $41.0 million as the revenue growth within its mechanical services division more than offset the aforementioned contract losses within the commercial site-based services and government site-based services divisions. Within both 2024 periods, this segment’s mechanical services division benefited from increased: (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 period, 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.

Previous wording

Our United Kingdom building services segment revenues were $104.7 million for the three months ended March 31, 2024 compared to revenues of $110.9 million for the three months ended March 31, 2023. The decrease in this segment’s revenues was a result of: (a) the loss of certain facilities maintenance contracts not renewed pursuant to rebid, and (b) a reduction in project activity, notably within the network and communications market sector. Partially offsetting these decreases was the impact of favorable exchange rate movements for the British pound versus the United States dollar, which positively impacted this segment’s revenues by $4.4 million during the first quarter of 2024.

Current wording

Our United Kingdom building services segment revenues were $106.6 million and $211.3 million for the three and six months ended June 30, 2024, respectively, compared to revenues of $106.0 million and $216.9 million for the three and six months ended June 30, 2023, respectively. The decrease in this segment’s revenues for the six months ended June 30, 2024 was a result of: (a) a reduction in project activity, notably within the network and communications market sector, and (b) the loss of certain facilities maintenance contracts not renewed pursuant to rebid. Revenues of this segment for the three and six months ended June 30, 2024 were positively impacted by $0.9 million and $5.2 million, respectively, as a result of favorable exchange rate movements for the British pound versus the United States dollar.

Previous wording

Our gross profit for the three months ended March 31, 2024 was $589.3 million, or 17.2% of revenues, compared to gross profit of $436.1 million, or 15.1% of revenues, for the three months ended March 31, 2023. The increase in gross profit and the expansion in gross profit margin were the result of stronger operating performance within the majority of our reportable segments due to an improved revenue mix, excellent project execution, and/or favorable pricing. Our gross profit for the first quarter of 2024 included incremental acquisition contribution of $1.8 million.

Current wording

Our gross profit for the three months ended June 30, 2024 was $684.0 million, or 18.7% of revenues, compared to gross profit of $490.1 million, or 16.1% of revenues, for the three months ended June 30, 2023. Gross profit for the six months ended June 30, 2024 was $1,273.3 million, or 17.9% of revenues, compared to gross profit of $926.1 million, or 15.6% of revenues, for the six months ended June 30, 2023. The increase in gross profit and the expansion in gross profit margin for both 2024 periods were the result of stronger operating performance across each of our domestic reportable segments due to an improved revenue mix, excellent project execution, and/or favorable pricing. Our gross profit for the three and six months ended June 30, 2024 included incremental acquisition contribution of $14.8 million and $16.5 million, respectively, net of amortization expense attributable to identifiable intangible assets of $3.0 million in each period.

Previous wording

Our selling, general and administrative expenses for the three months ended March 31, 2024 were $329.4 million, or 9.6% of revenues, compared to selling, general and administrative expenses of $281.2 million, or 9.7% of revenues, for the three months ended March 31, 2023. Selling, general and administrative expenses for the first quarter of 2024 included $3.0 million of incremental expenses directly related to companies acquired in 2023, including amortization expense attributable to identifiable intangible assets of $1.0 million.

Current wording

Our selling, general and administrative expenses for the three months ended June 30, 2024 were $351.2 million, or 9.6% of revenues, compared to selling, general and administrative expenses of $293.4 million, or 9.6% of revenues, for the three months ended June 30, 2023. Selling, general and administrative expenses for the six months ended June 30, 2024 were $680.5 million, or 9.6% of revenues, compared to selling, general and administrative expenses of $574.5 million, or 9.7% of revenues, for the six months ended June 30, 2023. Selling, general and administrative expenses for the three and six months ended June 30, 2024 included $10.2 million and $13.1 million, respectively, of incremental expenses directly related to companies acquired in 2024 and 2023, including amortization expense attributable to identifiable intangible assets of $2.0 million and $3.1 million, respectively.

Previous wording

Excluding incremental expenses from businesses acquired, the increase in selling, general and administrative expenses period-over-period was predominantly attributable to increases in: (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, (b) incentive compensation expense across the majority of our reportable segments, due to higher projected annual operating results, and (c) the provision for credit losses, primarily due to a reserve taken for a specific customer bankruptcy within our United States building services segment.

Current wording

Excluding incremental expenses from businesses acquired, the increase in selling, general and administrative expenses for both 2024 periods 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 across the majority of our reportable segments, due to higher projected annual operating results. In addition, the increase in selling, general and administrative expenses for the six months ended June 30, 2024 was partially a result of an increase in the provision for credit losses, primarily due to a reserve taken in the first quarter of 2024 for a specific customer bankruptcy within our United States building services segment.

Previous wording

The following table presents our operating income (loss) and operating income (loss) as a percentage of segment revenues (“operating margin”) (in thousands, except for percentages):

Current wording

The following tables present our operating income (loss) and operating income (loss) as a percentage of segment revenues (“operating margin”) (in thousands, except for percentages):

Previous wording

Operating income for the three months ended March 31, 2024 was $260.0 million, an increase of $105.0 million compared to operating income of $154.9 million for the three months ended March 31, 2023. Operating margin for the three months ended March 31, 2024 was 7.6% compared to an operating margin of 5.4% for the three months ended March 31, 2023. As described in more detail below, this increase in profitability was 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.

Current wording

Operating income for the three months ended June 30, 2024 was $332.8 million, an increase of $136.1 million compared to operating income of $196.7 million for the three months ended June 30, 2023. Operating margin for the three months ended June 30, 2024 was 9.1% compared to an operating margin of 6.5% for the three months ended June 30, 2023. For the six months ended June 30, 2024, operating income was $592.8 million, an increase of $241.2 million compared to operating income of $351.6 million for the six months ended June 30, 2023. Operating margin for the six months ended June 30, 2024 was 8.3% compared to an operating margin of 5.9% for the six months ended June 30, 2023. 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.

Previous wording

Operating income of our United States electrical construction and facilities services segment was $91.6 million, or 12.0% of revenues, for the three months ended March 31, 2024, compared to $40.5 million, or 6.3% of revenues, for the three months ended March 31, 2023. The $51.1 million increase in operating income and the 570 basis point improvement in operating margin of this segment were largely 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 quarterly revenues as well as a more favorable mix of work. The most notable increases in gross profit were experienced within the network and communications market sector, the commercial market sector, and the manufacturing and industrial market sector.

Current wording

Operating income of our United States electrical construction and facilities services segment was $88.6 million, or 11.1% of revenues, for the three months ended June 30, 2024, compared to $50.7 million, or 7.5% of revenues, for the three months ended June 30, 2023. Operating income of this segment for the six months ended June 30, 2024 was $180.2 million, or 11.5% of revenues, compared to $91.2 million, or 6.9% of revenues, for the six months ended June 30, 2023. The increases in operating income and operating margin of this segment for both 2024 periods 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 transportation, institutional, high-tech manufacturing, and manufacturing and industrial market sectors.

Previous wording

Our United States mechanical construction and facilities services segment’s operating income for the three months ended March 31, 2024 was $150.7 million, or 10.6% of revenues, compared to operating income of $86.2 million, or 8.0% of revenues, for the three months ended March 31, 2023. The $64.5 million increase in operating income and the 260 basis point improvement in 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: (i) engaged in either the design or 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, and (b) the commercial market sector, including various fire protection projects. While the most significant increases in gross profit were seen within the above referenced market sectors, this segment also experienced increases in gross profit within the majority of the other market sectors in which we operate.

Current wording

Our United States mechanical construction and facilities services segment’s operating income for the three months ended June 30, 2024 was $213.4 million, or 12.9% of revenues, compared to operating income of $119.8 million, or 10.0% of revenues, for the three months ended June 30, 2023. Operating income of this segment for the six months ended June 30, 2024 was $364.2 million, or 11.8% of revenues, compared to $206.1 million, or 9.1% of revenues, for the six months ended June 30, 2023. This segment’s operating income for the three and six months ended June 30, 2024 included incremental acquisition contribution of $4.8 million, net of amortization expense attributable to identifiable intangible assets of $3.4 million. Excluding the impact of acquisitions, the increases in operating income and operating margin of this segment for both 2024 periods 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, (b) the network and communications market sector, and (c) the commercial market sector, including various fire protection projects. While the most significant increases in gross profit were seen within the above referenced market sectors, this segment also experienced increases in gross profit within the majority of the other market sectors in which we operate. In addition to the increases in gross profit margin referenced above, operating margin of our United States mechanical construction and facilities services segment for both 2024 periods benefited from a reduction in the ratio of selling, general and administrative expenses to revenues given an increase in revenues without a commensurate increase in certain overhead costs.

Previous wording

Operating income of our United States building services segment was $33.5 million, or 4.3% of revenues, for the three months ended March 31, 2024 compared to $37.7 million, or 5.2% of revenues, for the three months ended March 31, 2023. The operating results of this segment for the first quarter of 2024 were positively impacted by increased gross profit and gross profit margin, primarily from continued strength in its mechanical services division, including greater profitability from HVAC projects and retrofits. However, operating income and operating margin decreased when compared to the same prior year period, due to an $11.0 million reserve taken within this segment’s commercial site-based services division for a specific customer bankruptcy, which negatively impacted the operating margin of this segment by 140 basis points for the three months ended March 31, 2024.

Current wording

Operating income of our United States building services segment was $46.8 million, or 6.0% of revenues, for the three months ended June 30, 2024 compared to $46.1 million, or 6.0% of revenues, for the three months ended June 30, 2023. Operating income of this segment for the six months ended June 30, 2024 was $80.3 million, or 5.1% of revenues, compared to $83.8 million, or 5.6% of revenues, for the six months ended June 30, 2023. For both 2024 periods, increased gross profit and gross profit margin from this segment’s mechanical services division, due to greater profitability across the majority if its service lines, was partially offset by reductions in gross profit and gross profit margin 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. Operating income and operating margin for the six months ended June 30, 2024 were negatively impacted by an $11.0 million reserve recorded during the first quarter of 2024 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 the first half of 2024 by 70 basis points.

Previous wording

Our corporate administration expenses for the three months ended March 31, 2024 were $39.2 million compared to $29.9 million for the three months ended March 31, 2023. This increase in corporate expenses was primarily due to greater employment compensation costs, including certain severance expenses as well as an increase in share-based compensation expense. In addition to the above, we have experienced an increase in computer hardware and software costs, due to various information technology and cybersecurity initiatives currently in process.

Current wording

Our corporate administration expenses for the three months ended June 30, 2024 of $34.6 million were generally consistent with the $33.9 million reported for the three months ended June 30, 2023. For the six months ended June 30, 2024, our corporate administrative expenses were $73.7 million, compared to $63.8 million for the six months ended June 30, 2023. The increase in corporate expenses for the first six months of 2024 was primarily due to greater employment compensation costs, including certain severance expenses recorded during the first quarter of 2024 as well as an increase in share-based compensation expense. In addition, we experienced an increase in computer hardware and software costs, due to various information technology and cybersecurity initiatives currently in process.

Previous wording

As a result of an increase in our average daily invested cash balance, coupled with the repayment, in December of 2023, of all previously outstanding borrowings under our credit facility, we generated net interest income for the three months ended March 31, 2024 of $7.5 million compared to net interest expense of $1.8 million for the three months ended March 31, 2023.

Current wording

As a result of an increase in our average daily invested cash balance, coupled with the repayment, in December of 2023, of all previously outstanding borrowings under our credit facility, we generated net interest income for the three and six months ended June 30, 2024 of $6.1 million and $13.6 million, respectively, compared to net interest expense of $2.7 million and $4.5 million for the three and six months ended June 30, 2023, respectively.

Previous wording

For the three months ended March 31, 2024, our income tax provision was $70.6 million compared to an income tax provision of $41.3 million for the three months ended March 31, 2023. Our effective income tax rate for the three months ended March 31, 2024 was 26.4% compared to an effective income tax rate for the three months ended March 31, 2023 of 27.0%. Refer to Note 9 - Income Taxes of the notes to consolidated financial statements for further discussion regarding our income tax provision and effective income tax rate.

Current wording

For the three and six months ended June 30, 2024, our income tax provision was $91.6 million and $162.1 million, respectively, compared to an income tax provision of $53.1 million and $94.4 million for the three and six months ended June 30, 2023, respectively. Our effective income tax rate for the three and six months ended June 30, 2024 was 27.0% and 26.7%, respectively, compared to an effective income tax rate for the three and six months ended June 30, 2023 of 27.4% and 27.3%, respectively. Refer to Note 9 - Income Taxes of the notes to consolidated financial statements for further discussion regarding our income tax provision and effective income tax rate.

Previous wording

As of March 31, 2024, we had cash and cash equivalents, excluding restricted cash, of $841.0 million, 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. Our credit agreement provides for a $1.30 billion revolving credit facility, for which there is $1.21 billion of available capacity as of March 31, 2024.

Current wording

As of June 30, 2024, we had cash and cash equivalents, excluding restricted cash, of $807.3 million, 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. Our credit agreement provides for a $1.30 billion revolving credit facility, for which there was $1.23 billion of available capacity as of June 30, 2024.

Previous wording

During the three months ended March 31, 2024, our cash balance, including cash equivalents and restricted cash, increased by approximately $52.7 million from $789.8 million at December 31, 2023 to $842.5 million at March 31, 2024. Changes in our cash position from December 31, 2023 to March 31, 2024 are described in further detail below.

Current wording

During the six months ended June 30, 2024, our cash balance, including cash equivalents and restricted cash, increased by approximately $18.4 million from $789.8 million at December 31, 2023 to $808.2 million at June 30, 2024. Changes in our cash position from December 31, 2023 to June 30, 2024 are described in further detail below.

Previous wording

Operating Activities – Operating cash flows generally represent our net income as adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by operating activities for the three months ended March 31, 2024 was approximately $132.3 million compared to approximately $84.6 million of net cash used in operating activities for the three months ended March 31, 2023. In addition to the increase in our income, the favorable operating cash flow performance period-over-period was largely a result of the timing of cash receipts from our customers and payments to our vendors as we continue to effectively manage our working capital.

Current wording

Operating Activities – Operating cash flows generally represent our net income as adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by operating activities for the six months ended June 30, 2024 was approximately $412.0 million compared to approximately $214.9 million for the six months ended June 30, 2023. The favorable operating cash flow performance period-over-period was almost entirely a result of our improved operating performance and the corresponding increase in our net income.

Previous wording

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 the three months ended March 31, 2024 decreased by approximately $6.0 million compared to the three months ended March 31, 2023, primarily due to a decrease in payments for acquired businesses, partially offset by a reduction in proceeds from the sale or disposal of property, plant, and equipment.

Current wording

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 the six months ended June 30, 2024 increased by approximately $162.7 million compared to the six months ended June 30, 2023, primarily due to an increase in payments for acquisitions.

Previous wording

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 for the three months ended March 31, 2024 was $58.9 million compared to net cash provided by financing activities for the three months ended March 31, 2023 of $71.5 million. The $130.5 million variance was primarily due to: (a) the impact in the first quarter of 2023 of $100.0 million of proceeds from our revolving credit facility and (b) a $23.0 million increase in common stock repurchases made by us during the first quarter of 2024. 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. For additional detail regarding our share repurchase program, refer to Note 10 - Common Stock of the notes to consolidated financial statements.

Current wording

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 for the six months ended June 30, 2024 was $181.4 million compared to net cash used in financing activities for the six months ended June 30, 2023 of $126.4 million. The $55.1 million variance was primarily due to an increase in common stock repurchases made by us during the first half of 2024. 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. For additional detail regarding our share repurchase program, refer to Note 10 - Common Stock of the notes to consolidated financial statements.

Previous wording

We currently pay a regular quarterly dividend, which, commencing with the dividend to be paid on April 30, 2024, will increase from $0.18 per share to $0.25 per share. For the three months ended March 31, 2024 and 2023, cash payments related to dividends were $8.5 million and $7.2 million, respectively. 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.

Current wording

We currently pay a regular quarterly dividend of $0.25 per share. For the six months ended June 30, 2024 and 2023, cash payments related to dividends were $20.2 million and $15.7 million, respectively. 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.

Previous wording

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. Therefore, the $3.4 million variance between the three months ended March 31, 2024 and 2023 was a direct result of exchange rate movements for the British pound versus the United States dollar.

Current wording

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. Therefore, the $6.8 million variance between the six months ended June 30, 2024 and 2023 was a direct result of exchange rate movements for the British pound versus the United States dollar.

Previous wording

Operating and Finance Leases – In the normal course of business, we lease real estate, vehicles, and equipment under various arrangements which are classified as either operating or finance leases. Future payments for such leases, excluding leases with initial terms of one year or less, were $394.2 million at March 31, 2024, with $91.0 million payable within the next 12 months.

Current wording

Operating and Finance Leases – In the normal course of business, we lease real estate, vehicles, and equipment under various arrangements which are classified as either operating or finance leases. Future payments for such leases, excluding leases with initial terms of one year or less, were $410.4 million at June 30, 2024, with $94.7 million payable within the next 12 months.

Previous wording

Open Purchase Obligations – As of March 31, 2024, we had $2.30 billion of open purchase obligations, of which payments totaling approximately $1.92 billion are expected to become due within the next 12 months. These obligations represent open purchase orders to suppliers and subcontractors related to our construction and services contracts. These purchase orders are not reflected in the Consolidated Balance Sheets and are not expected to impact future liquidity as amounts should be recovered through customer billings.

Current wording

Open Purchase Obligations – As of June 30, 2024, we had $2.32 billion of open purchase obligations, of which payments totaling approximately $1.93 billion are expected to become due within the next 12 months. These obligations represent open purchase orders to suppliers and subcontractors related to our construction and services contracts. These purchase orders are not reflected in the Consolidated Balance Sheets and are not expected to impact future liquidity as amounts should be recovered through customer billings.

Previous wording

Insurance Obligations – As described in further detail in Note 12 - Commitments and Contingencies of the notes to consolidated financial statements, we have loss payment deductibles and/or self-insured retentions for certain insurance matters. As of March 31, 2024, our insurance liabilities, net of estimated recoveries, were $225.4 million. Of this net amount, approximately $40.1 million is estimated to be payable within the next 12 months. Due to many uncertainties inherent in resolving these matters, it is not practical to estimate these payments beyond such period. To the extent that the amount required to settle claims covered by insurance continues to increase, the cost of our insurance coverage, including premiums and deductibles, is likely to increase.

Current wording

Insurance Obligations – As described in further detail in Note 12 - Commitments and Contingencies of the notes to consolidated financial statements, we have loss payment deductibles and/or self-insured retentions for certain insurance matters. As of June 30, 2024, our insurance liabilities, net of estimated recoveries, were $227.4 million. Of this net amount, approximately $41.4 million is estimated to be payable within the next 12 months. Due to many uncertainties inherent in resolving these matters, it is not practical to estimate these payments beyond such period. To the extent that the amount required to settle claims covered by insurance continues to increase, the cost of our insurance coverage, including premiums and deductibles, is likely to increase.

Previous wording

Contingent Consideration Liabilities – We have incurred liabilities related to contingent consideration arrangements associated with certain acquisitions, payable in the event discrete performance objectives are achieved by the acquired businesses during designated post-acquisition periods. The aggregate amount of these liabilities can change due to additional business acquisitions, settlement of outstanding liabilities, changes in the fair value of amounts owed based on performance during such post-acquisition periods, and accretion in present value. As of March 31, 2024, the present value of expected future payments relating to these contingent consideration arrangements was $8.5 million. Of this amount, $5.0 million is estimated as being payable within the next 12 months, with the remainder due before the end of 2025.

Current wording

Contingent Consideration Liabilities – We have incurred liabilities related to contingent consideration arrangements associated with certain acquisitions, payable in the event discrete performance objectives are achieved by the acquired businesses during designated post-acquisition periods. The aggregate amount of these liabilities can change due to additional business acquisitions, settlement of outstanding liabilities, changes in the fair value of amounts owed based on performance during such post-acquisition periods, and accretion in present value. As of June 30, 2024, the present value of expected future payments relating to these contingent consideration arrangements was $27.2 million. Of this amount, $15.5 million is estimated as being payable within the next 12 months, with the remainder due pursuant to the terms of our contractual agreements, some of which extend into 2027.

Previous wording

The terms of our construction contracts frequently require that we obtain from surety companies, and provide to our customers, surety bonds as a condition to the award of such contracts. These surety bonds are issued in return for premiums, which vary depending on the size and type of the bond, and secure our payment and performance obligations under such contracts. We have agreed to indemnify the surety companies for amounts, if any, paid by them in respect of surety bonds issued on our behalf. As of March 31, 2024, based on the percentage-of-completion of our projects covered by surety bonds, our aggregate estimated exposure, assuming defaults on all our then existing contractual obligations, was approximately $2.2 billion, which represents approximately 24% of our total remaining performance obligations.

Current wording

The terms of our construction contracts frequently require that we obtain from surety companies, and provide to our customers, surety bonds as a condition to the award of such contracts. These surety bonds are issued in return for premiums, which vary depending on the size and type of the bond, and secure our payment and performance obligations under such contracts. We have agreed to indemnify the surety companies for amounts, if any, paid by them in respect of surety bonds issued on our behalf. As of June 30, 2024, based on the percentage-of-completion of our projects covered by surety bonds, our aggregate estimated exposure, assuming defaults on all our then existing contractual obligations, was approximately $2.1 billion, which represents approximately 23% of our total remaining performance obligations.

Previous wording

The preparation of our consolidated financial statements is based on the application of significant accounting policies, which require management to make estimates and assumptions. Our significant accounting policies are described further in Note 2 - Summary of Significant Accounting Policies of the notes to consolidated financial statements included in Item 8 of our Form 10-K for the year ended December 31, 2023. We base our estimates on historical experience, known or expected trends, third-party valuations, and various other assumptions that we believe to be reasonable under the circumstances. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. There have been no significant changes to our critical accounting policies or methods during the three months ended March 31, 2024.

Current wording

The preparation of our consolidated financial statements is based on the application of significant accounting policies, which require management to make estimates and assumptions. Our significant accounting policies are described further in Note 2 - Summary of Significant Accounting Policies of the notes to consolidated financial statements included in Item 8 of our Form 10-K for the year ended December 31, 2023. We base our estimates on historical experience, known or expected trends, third-party valuations, and various other assumptions that we believe to be reasonable under the circumstances. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. There have been no significant changes to our critical accounting policies or methods during the six months ended June 30, 2024.