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    EME
    Earnings call· Jun 2026(Q2 FY26)

    EMCOR Group Q2 FY26 earnings call EME

    Jul 30, 2026 Source

    Executive summary

    EMCOR Group Q2 FY26 — Record RPOs and Strong Organic Growth Drive Increased Full-Year Guidance

    EMCOR delivered an outstanding second quarter, marked by exceptional organic revenue growth and record remaining performance obligations, providing strong visibility. This performance, coupled with strategic acquisitions, led to a substantial increase in full-year earnings guidance, reflecting the company's operational discipline and sustained demand across core markets, particularly data centers.

    Highlights

    5

    • Record Remaining Performance Obligations (RPOs) of $17.14 billion, up 44% year-over-year and 29% from December.

    • Organic revenue growth of 19.6% in Q2 FY26, excluding acquisitions and divestitures.

    • Diluted earnings per share increased 35% year-over-year to $9.06.

    • Record operating income of $547.3 million, resulting in a 10.6% operating margin.

    • Electrical Construction segment delivered an impressive 13.9% operating margin, while Mechanical Construction achieved a strong 12.5% operating margin.

    Concerns

    2

    • Mechanical Construction operating margin decreased 110 basis points year-over-year due to a mix shift towards construction manager/prime contractor roles and GMP/cost-plus contracts.

    • Industrial Services segment may face a weaker turnaround season in the second half of the year due to geopolitical conflicts impacting refiner shutdowns, potentially affecting Q4 margins.

    Guidance & targets

    3
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $20 billion to $20.5 billion
    high materiality
    High
    Full-year 2026 Diluted Earnings Per Share
    $32 to $33.25
    high materiality
    High
    Revenue Contribution from Acquisitions
    $250 million to $275 million
    medium materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Electrical Construction
    Revenue growth driven by increased data center projects within the network and communications market sector. Operating margin expanded by 210 basis points due to exceptional field execution and a more favorable project mix.
    Network and communications revenue growth: 45%
    		$1.66 billion24%—13.9%
    Mechanical Construction
    Strongest growth from network and communications (data centers) due to increased cooling requirements and geographic expansion. Operating margin decreased by 110 basis points due to a mix shift towards construction manager/prime contractor roles and GMP/cost-plus contracts, which carry lower gross profit margins.
    Network and communications revenue growth: >100%Institutional revenues increased: 77%Commercial revenues increased: 26%Manufacturing and industrial revenues increased: 18%
    		$2.3 billion31%—12.5%
    Construction (Combined)
    Combined construction segments achieved record quarterly revenues and grew operating income by over 30%, with a combined operating margin increase of 30 basis points.
    		$3.96 billion28%—13.1%
    U.S. Building Services
    Delivered solid performance with record revenues. Operating income grew 26.6%. Operating margin expanded by 130 basis points due to a more favorable project mix, improved execution, and a 60 basis point reduction in SG&A margin from restructuring actions.
    Mechanical Services revenue increase: $30 million (5%)Commercial site-based services revenue increase: $14 million (11%)
    		$837.7 million5.6%—7.6%
    Industrial Services
    Revenue growth driven by strong field services performance, greater turnaround activity, higher petrochemical project volume, and progress on a large solar project. Operating income showed significant improvement year-over-year.
    		$353.8 million26%——

    Operational metrics

    22
    Operating Income
    $547.3 millionup nearly 32% YoY
    Q2 FY26

    GAAP operating income.

    Operating Margin
    10.6%expanded 100 bps YoY
    Q2 FY26

    GAAP operating margin.

    Gross Profit
    $1.02 billionup 22.6% YoY
    Q2 FY26

    Increased due to contributions from all operating segments.

    Gross Profit Margin
    19.8%up 40 bps YoY
    Q2 FY26

    Improvement resulted from performance of Electrical Construction and Building Services.

    SG&A Expense
    $475 millionup 13.5% YoY
    Q2 FY26

    Achieved meaningful operating leverage with SG&A increasing less than revenue growth.

    SG&A Expense (Prior Year)
    $48.6 million
    Q2 FY25

    Transcription note: This figure ($48.6 million) appears to be an ASR error. Given the current quarter's $475 million and 9.2% of $5.15B revenue, the prior year's 9.7% of revenue (approx. $4.29B) would be approximately $416 million. The speaker likely meant $486 million.

    SG&A Margin
    9.2%down 50 bps YoY
    Q2 FY26

    Reduction in quarterly SG&A margin.

    Diluted Earnings Per Share (GAAP)
    $9.06up nearly 35% YoY from $6.72
    Q2 FY26

    GAAP diluted EPS.

    Cash on Hand
    $924 million
    Q2 FY26

    Balance sheet strength.

    Working Capital
    $1.45 billion
    Q2 FY26

    Balance sheet strength.

    Revenue Growth
    19.7%YoY
    H1 FY26

    First half of the year performance.

    Organic Revenue Growth
    18.3%YoY
    H1 FY26

    First half of the year performance.

    Gross Profit Margin Improvement
    30 bpsYoY
    H1 FY26

    First half of the year performance.

    SG&A Margin Reduction
    50 bpsYoY
    H1 FY26

    First half of the year performance, leveraging overhead cost structure.

    Operating Income Growth
    nearly 30%YoY
    H1 FY26

    First half of the year performance.

    Operating Margin
    9.7%record
    H1 FY26

    First half of the year performance.

    RPO Growth (Semiconductor)
    7%sequentially and from year-end
    Q2 FY26

    RPOs in the semiconductor space.

    RPO Burn Rate (Historical)
    85%
    12 months

    Historically, the percentage of RPOs expected to convert to revenue within 12 months.

    RPO Burn Rate (Current)
    75% or 76%
    12 months

    Current percentage of RPOs expected to convert to revenue within 12 months, influenced by water and wastewater mix and volume of bookings.

    AI Data Center Revenue Multiplier (Mechanical)
    1.5 to 2
    current

    Multiplier for revenue per employee on the mechanical side for AI data centers, due to higher value content and prefabrication.

    AI Data Center Revenue Multiplier (Electrical)
    1.5
    current

    Multiplier for revenue per employee on the electrical side for AI data centers, driven by the size of electrical power needed.

    Texas Non-Oil & Gas Revenue
    $1 billionbefore Schmidt, before any acquisitions
    today

    Revenue from non-oil and gas business in Texas, highlighting existing presence.

    Industry KPIs

    7
    MetricValueDetails
    Total backlog$17.14 billionUSD
    12 month backlog—
    Book to bill ratio—
    End market pipeline—
    Acquisition contribution$625 millionUSD
    Same store organic revenue growth19.6%%
    Craft skilled labor headcount capacity—

    Orderbook & backlog

    1
    Total Remaining Performance Obligations (RPOs)$17.14 billionQ2 FY26

    up 44% from prior year, up 29% from December, up 10% sequentially from March

    95% organic growth

    Deals & partnerships

    6
    B&B ElectricProvides capability in Wisconsin, good industrial contractor for complex work.

    Will be included in Electrical Construction segment. Funded through cash on hand and credit facility.

    Sidney ElectricComplements existing capability in Ohio, industrial contractor capable of healthcare work and pivoting to data centers.

    Will be included in Electrical Construction segment. Funded through cash on hand and credit facility.

    GilesProvides access to the Daytona Beach market and the growing space market in Florida.

    Acquired with the Miller team. Will be included in Electrical Construction segment. Funded through cash on hand and credit facility.

    Schmidt ElectricMarket leader in Central Texas and Austin, opens up the market, capable of complex work and pivoting to data centers.

    Will be included in Electrical Construction segment. Funded through cash on hand and credit facility.

    Connelly ElectricComplementary to existing Chicago land area businesses, brings design-build capability for warehousing and logistics, can pivot to data centers.

    Will be included in Electrical Construction segment. Funded through cash on hand and credit facility.

    Multiple Acquisitions (Combined)Five acquisitions expanding capabilities and strengthening core competencies in Electrical Construction.$750 million upfront, up to $90 million in earnouts

    The $750 million upfront purchase price is for the five acquisitions. Up to $90 million in earnouts for two of the deals.

    Risks & headwinds

    5
    Geopolitical Conflictsongoing

    macroeconomic uncertainties

    Mitigation: EMCOR teams have repeatedly demonstrated their ability to manage through complexity and deliver results.

    Commodity Cost Fluctuationsongoing

    macroeconomic uncertainties

    Mitigation: EMCOR teams have repeatedly demonstrated their ability to manage through complexity and deliver results.

    Equipment Lead Time Volatilityongoing

    macroeconomic uncertainties

    Mitigation: EMCOR teams have repeatedly demonstrated their ability to manage through complexity and deliver results.

    Industrial Services Turnaround Season WeaknessH2 FY26, likely Q4

    turnaround season will not be as strong as it normally can be

    Mitigation: Due to geopolitical conflicts requiring refiners to stay open and producing oil and gas. Expected to have a small impact on margins.

    Data Center Moratoriums/Bansongoing

    some places are going to build more

    Mitigation: Owners will find places to build where power is available and communities are willing. Local tax revenue benefits often outweigh opposition. EMCOR is well-positioned in key growth markets.

    What to watch in Q3 FY26

    5

    Schmidt Electric and Connelly Electric Closings

    Q3 FY26
    Currentexpected to close in Q3 FY26
    TargetClosed

    Why it matters

    These acquisitions represent approximately 75% of the aggregate revenues and EBITDA of the recently announced deals and are key to EMCOR's growth strategy in Electrical Construction.

    We look forward to closing Schmidt and Connelly here in the third quarter.

    Q&A highlights

    7

    Can you discuss bookings or upcoming bids in the semiconductor space?

    EMCOR sees continued opportunities in the semiconductor market, particularly in fire life safety and mechanical work in Arizona. Semiconductor RPOs are up 7% sequentially and year-over-year. The company balances these opportunities with data center work, which may offer stronger near-term earnings.

    “We continue to see opportunities there. Fire life safety has been particularly strong in the data center space. Mechanically, we're doing some important work in Arizona, on top of the fire, life safety work.”

    asked by Adam Thalhimer · answered by Anthony Guzzi

    2 min read5 chapters

    Detailed Narrative

    01

    Record RPO Position and Organic Growth

    EMCOR reported record Remaining Performance Obligations (RPOs) of $17.14 billion at quarter-end, marking a 44% increase from the prior year, 29% from December, and 10% sequentially from March. Notably, 95% of this growth was organic, providing strong visibility into future revenue. This growth was broad-based, with significant demand from the network and communications sector (driven by data centers), water and wastewater, healthcare, and institutional sectors.

    02

    Strategic Acquisitions and Market Expansion

    The company continued its acquisition strategy, announcing five deals (B&B Electric, Sidney Electric, Giles, Schmidt Electric, Connelly Electric) primarily within the Electrical Construction segment. These acquisitions, with a combined TTM revenue of $625 million and EBITDA of $105 million, are expected to contribute $250 million to $275 million in revenue in the second half of FY26. They aim to expand capabilities, deepen trade expertise, and broaden geographic reach, particularly in high-growth sectors like data centers in Wisconsin, Ohio, Florida, Texas, and Chicago.

    03

    Data Center Market Dynamics and Project Complexity

    Demand in the network and communications sector, especially data centers, remains exceptionally strong, fueled by AI infrastructure and digital transformation. Project sizes are trending larger, with cloud storage data centers now ranging from 40-75 megawatts, and AI-driven data centers exceeding 100-200 megawatts, often forming campuses of multiple buildings. EMCOR sees a 1.5x to 2x revenue multiplier on mechanical work and 1.5x on electrical work for AI data centers due to increased complexity and power requirements.

    04

    Labor Flexibility and Execution Capabilities

    EMCOR leverages its union contractor model to ensure labor flexibility, allowing skilled workers to be deployed to high-demand regions. The company also utilizes advanced techniques like prefabrication and Virtual Design and Construction (VDC) technology to improve productivity and manage complex projects efficiently. This approach enables them to serve both metro and rural markets, including those with potential labor constraints or where non-union capacity might be utilized.

    05

    Balanced Capital Allocation and Financial Strength

    The company maintains a balanced capital allocation strategy, focusing on organic growth, strategic acquisitions, and returning capital to shareholders. The recent acquisitions are expected to be funded through a combination of cash on hand and borrowing capacity. While near-term diluted EPS impact from acquisitions is moderated by backlog amortization, these deals are anticipated to provide further accretion as amortization rolls off, supported by their strong margin profiles.

    AI-generated summary of the company’s earnings call. Not investment advice.