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What changed in EMCOR Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of EMCOR Group, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+269 added−282 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-28)

Top changes in EMCOR Group, Inc.'s 2024 10-K

269 paragraphs added · 282 removed · 220 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOf such revenues, approximately 35% were generated by our electrical construction operations and approximately 65% were generated by our mechanical construction operations. 2 Table of Contents Our largest projects typically include those within: (a) the commercial market sector (including warehousing and distribution facilities, office or mixed-use buildings, and shopping malls); (b) the network and communications market sector (including data centers, data and fiber projects, and cabling); (c) the manufacturing and industrial market sector (including steel, pulp and paper mills, food processing and traditional automotive manufacturing facilities, power generation (including sustainable energy solutions such as solar and wind), oil and gas refineries, and chemical processing plants); (d) the high-tech manufacturing market sector (including semiconductor, biotech, life-sciences, and pharmaceutical facilities, as well as projects across the electric vehicle value chain); (e) the healthcare market sector (including hospitals, surgical centers, rehabilitation and nursing facilities, and medical offices); (f) the institutional market sector (including educational and correctional facilities and research laboratories); (g) the water and wastewater market sector; (h) the transportation market sector (including highways, bridges, airports, and transit systems); and (i) the hospitality and entertainment market sector (including resorts, hotels, gaming facilities, convention centers, and sports stadiums).
Biggest changeOf such revenues, approximately 34% were generated by our electrical construction operations and approximately 66% were generated by our mechanical construction operations. 2 Table of Contents Our largest projects include those within: (a) the network and communications market sector (including data centers, data and fiber projects, and cabling); (b) the high-tech manufacturing market sector (including semiconductor, biotech, life-sciences, and pharmaceutical facilities, as well as projects across the electric vehicle value chain); (c) the commercial market sector (including warehousing and distribution facilities and office or mixed-use buildings); (d) the manufacturing and industrial market sector (including steel, pulp and paper mills, food processing and traditional automotive manufacturing facilities, power generation (including sustainable energy solutions such as solar and wind), oil and gas refineries, and chemical processing plants); (e) the healthcare market sector (including hospitals, surgical centers, rehabilitation and nursing facilities, and medical offices); (f) the institutional market sector (including educational and correctional facilities and research laboratories); (g) the water and wastewater market sector; (h) the transportation market sector (including highways, bridges, airports, and transit systems); and (i) the hospitality and entertainment market sector (including resorts, hotels, gaming facilities, convention centers, and sports stadiums).
Our executive offices are located at 301 Merritt Seven, Norwalk, Connecticut 06851-1092, and our telephone number at those offices is (203) 849-7800. 1 Table of Contents Operations United States electrical and mechanical construction and facilities services operations: Our electrical and mechanical construction services primarily involve the design, integration, installation, start-up, operation and maintenance, and provision of services relating to: • Systems for electrical power transmission, distribution, and generation, including power cables, conduits, distribution panels, transformers, generators, uninterruptible power supply systems, and related switch gear and controls; • Sustainable energy solutions such as solar, photovoltaic, and wind, as well as the installation of electric vehicle charging stations; • Premises electrical and lighting systems, including fixtures and controls; • Process instrumentation in the refining, chemical processing, and food processing industries; • Low-voltage systems, such as fire alarm, security, and process control systems; • Voice and data communications, including fiber optic and low voltage cabling, distributed antenna systems, audiovisual systems, and wireless access points; • Roadway and transit lighting and signaling and fiber optic lines; • Computerized traffic control systems, and signal and communication equipment for mass transit systems; • Heating, ventilation, air conditioning, and refrigeration, including both traditional mechanical systems as well as geothermal solutions; • Clean-room process ventilation systems; • Fire protection and suppression systems; • Plumbing, process and high-purity piping systems; • Controls and filtration systems; • Water and wastewater treatment systems; • Central plant heating and cooling systems, including manufacturing and installing sheet metal air handling systems; • Crane and rigging services; • Millwright services; and • Steel fabrication, erection, and welding services.
Our executive offices are located at 301 Merritt Seven, Norwalk, Connecticut 06851-1092, and our telephone number at those offices is (203) 849-7800. 1 Table of Contents Operations United States electrical and mechanical construction and facilities services operations: Our electrical and mechanical construction services primarily involve the design, integration, installation, start-up, operation and maintenance, and provision of services relating to: • Systems for electrical power transmission, distribution, and generation, including power cables, conduits, distribution panels, transformers, generators, uninterruptible power supply systems, and related switch gear and controls; • Premises electrical and lighting systems, including fixtures and controls; • Process instrumentation in the refining, chemical processing, and food processing industries; • Low-voltage systems, such as fire alarm, security, and process control systems; • Voice and data communications, including fiber optic and low voltage cabling, distributed antenna systems, audiovisual systems, and wireless access points; • Sustainable energy solutions such as solar, photovoltaic, and wind, as well as the installation of electric vehicle charging stations; • Roadway and transit lighting and signaling and fiber optic lines; • Computerized traffic control systems, and signal and communication equipment for mass transit systems; • Heating, ventilation, air conditioning, and refrigeration, including both traditional mechanical systems as well as geothermal solutions; • Clean-room process ventilation systems; • Fire protection and suppression systems; • Plumbing, process and high-purity piping systems; • Controls and filtration systems; • Water and wastewater treatment systems; • Central plant heating and cooling systems, including manufacturing and installing sheet metal air handling systems; • Crane and rigging services; • Millwright services; and • Steel fabrication, erection, and welding services.
Such services include: (a) engineering and planning in advance of complex refinery and petrochemical turnarounds; (b) overhaul and maintenance of critical process units (including hydrofluoric alkylation units, fluid catalytic cracking units, coking units, heaters, heat exchangers, and related mechanical equipment) during refinery and petrochemical plant shut downs; (c) replacement and new construction capital projects for refineries and petrochemical plants; (d) instrumentation and electrical services for energy infrastructure; and (e) other related specialty services such as: (i) welding (including pipe welding) and fabrication; (ii) heater, boiler, and reformer repairs and replacements; converter repair and revamps; and vessel, exchanger and tower services; (iii) tower and column repairs in refineries and petrochemical plants; (iv) installation and repair of refractory materials for critical units in process plants to protect equipment from corrosion, erosion, and extreme temperatures; and (v) acid-proofing services to protect critical components at refineries from chemical exposure.
Such services include: (a) engineering and planning in advance of complex refinery and petrochemical turnarounds; (b) overhaul and maintenance of critical process units (including hydrofluoric alkylation units, fluid catalytic cracking units, coking units, heaters, heat exchangers, and related mechanical equipment) during refinery and petrochemical plant shut downs; (c) replacement and new construction capital projects for refineries and petrochemical plants; (d) instrumentation, controls, and electrical services for energy infrastructure; and (e) other related specialty services such as: (i) welding (including pipe welding) and fabrication; (ii) heater, boiler, and reformer repairs and replacements; converter repair and revamps; and vessel, exchanger and tower services; (iii) tower and column repairs in refineries and petrochemical plants; (iv) installation and repair of refractory materials for critical units in process plants to protect equipment from corrosion, erosion, and extreme temperatures; and (v) acid-proofing services to protect critical components at refineries from chemical exposure.
While the building services industry is also highly fragmented, with most competitors operating in a specific geographic region, a number of large corporations such as Amentum Services, Inc., IAP Worldwide Services, Inc., Fluor Corporation, J&J Worldwide Services, Cushman & Wakefield plc, CBRE Group, Inc., Jones Lang LaSalle Incorporated, Sodexo, Inc., Aramark, and ABM Industries Incorporated are engaged in this field, as are large original equipment manufacturers such as Carrier Global Corporation and Trane Technologies plc.
While the building services industry is also highly fragmented, with most competitors operating in a specific geographic region, a number of large corporations such as Amentum Services, Inc., IAP Worldwide Services, Inc., Fluor Corporation, Cushman & Wakefield plc, CBRE Group, Inc., Jones Lang LaSalle Incorporated, Sodexo, Inc., Aramark, and ABM Industries Incorporated are engaged in this field, as are large original equipment manufacturers such as Carrier Global Corporation and Trane Technologies plc.
We believe our financial position, operating results, access to bank credit and surety bonding, technical expertise including prefabrication and BIM capabilities, and safety record, among other factors, give us an advantage over many of our competitors. However, relatively few barriers exist to prevent entry into the electrical and mechanical construction services industry.
We believe our financial position, operating results, access to bank credit and surety bonding, technical expertise including prefabrication, VDC, and BIM capabilities, and safety record, among other factors, give us an advantage over many of our competitors. However, relatively few barriers exist to prevent entry into the electrical and mechanical construction services industry.
In the manufacture of heat exchangers, we compete with both U.S. and foreign manufacturers. Competitors within this industry include JVIC Catalyst Services, Universal Plant Services, Inc., Turner Industries Group, LLC, Team, Inc., Cust-O-Fab, Inc., Dunn Heat Exchangers, Inc., Turn2 Specialty Companies, and Wyatt Field Service Company, LLC, among others.
In the manufacture of heat exchangers, we compete with both U.S. and foreign manufacturers. Competitors within this industry include JVIC, Universal Plant Services, Inc., Turner Industries Group, LLC, Team, Inc., Cust-O-Fab, Inc., Dunn Heat Exchangers, Inc., Turn2 Specialty Companies, and Wyatt Field Service Company, LLC, among others.
Our electrical and mechanical construction services generally fall into one of three categories: (a) large installation projects, with contracts often in the multi-million dollar range, that involve: (i) the construction of manufacturing facilities, data centers, warehousing and distribution facilities, and commercial buildings, (ii) institutional and public works projects, or (iii) the fit-out of large blocks of space within commercial or mixed-use buildings, (b) large and medium sized capital and maintenance projects for commercial, manufacturing, pharmaceutical, healthcare, oil and gas, and industrial clients, and (c) smaller installation projects, of a short duration, typically involving fit-out, renovation, and retrofit work.
Our electrical and mechanical construction services generally fall into one of three categories: (a) large installation projects, with contracts often in the multi-million dollar range, that involve: (i) the construction of manufacturing facilities, data centers, warehousing and distribution facilities, hospitals, and commercial buildings, (ii) institutional, public works, and infrastructure projects, or (iii) the fit-out of large blocks of space within commercial or mixed-use buildings, (b) large and medium sized capital and maintenance projects for commercial, manufacturing, pharmaceutical, healthcare, oil and gas, and industrial clients, and (c) smaller installation projects, of a short duration, typically involving fit-out, renovation, and retrofit work.
Clients of our building services business include federal and state governments, institutional organizations, utilities, healthcare providers, and major corporations engaged in information technology, telecommunications, pharmaceuticals, financial services, and manufacturing, as well as large retailers and other businesses with geographically dispersed locations.
Clients of our building services business include major corporations engaged in information technology, telecommunications, pharmaceuticals, financial services, and manufacturing, institutional organizations, healthcare providers, large retailers and other businesses with geographically dispersed locations, as well as federal and state governments.
United States and United Kingdom building services operations: Our building services include: • Maintenance and services for mechanical, electrical, plumbing, fire safety, and building automation systems; • Modification and retrofit projects; • Program development, management, and maintenance for energy systems, including LEED and other sustainable solutions to assist our customers in reducing energy consumption; • Energy efficiency retrofit services, including HVAC, lighting, water, weatherization, and air flow management solutions: • Technical consulting and diagnostic services; • Services aimed at improving indoor air quality; • Installation and support for building systems; • Commercial and government site-based operations and maintenance; • Facility management, maintenance, and services; • Floor care and janitorial services, including enhanced cleaning and sanitization services; • Landscaping, lot sweeping, and snow removal; • Other building services, including reception, security, and catering services; • Vendor management and call center services; • Military base operations support services; and • Infrastructure and building projects for federal, state, and local governmental agencies.
United States and United Kingdom building services operations: Our building services include: • Maintenance and services for mechanical, electrical, plumbing, fire safety, and building automation systems; • Modification and retrofit projects; • Program development, management, and maintenance for energy systems, including LEED and other sustainable solutions to assist our customers in reducing energy consumption; • Energy efficiency retrofit services, including HVAC, lighting, water, weatherization, and air flow management solutions; • Technical consulting and diagnostic services; • Services aimed at improving indoor air quality; • Installation and support for building systems; • Commercial and government site-based operations and maintenance; • Facility management, maintenance, and services; • Floor care and janitorial services; • Landscaping, lot sweeping, and snow removal; • Other building services, including reception, security, and catering services; • Vendor management and call center services; • Military base operations support services; and • Infrastructure and building projects for federal, state, and local governmental agencies.
This represents our fifteenth consecutive year with a Total Recordable Incident Rate which was less than half the industry average. Our position as an industry leader in safety begins with a strong culture of care and vigilance embodied in our EMCOR Values and is supported by a comprehensive suite of training, resources, and analytics.
This represents our sixteenth consecutive year with a Total Recordable Incident Rate which was less than half the industry average. Our position as an industry leader in safety begins with a strong culture of care and vigilance embodied in our EMCOR Values and is supported by a comprehensive suite of training, resources, and analytics.
In addition, there are a number of larger public companies focused on providing electrical and/or mechanical construction services, such as APi Group Corporation, Comfort Systems USA, Inc., Dycom Industries, Inc., IES Holdings, Inc., MasTec, Inc., MYR Group Inc., and Tutor Perini Corporation.
In addition, there are a number of larger public companies focused on providing electrical and/or mechanical construction services, such as APi Group Corporation, Comfort Systems USA, Inc., Dycom Industries, Inc., Everus Construction Group, Inc., IES Holdings, Inc., MasTec, Inc., MYR Group Inc., Quanta Services, Inc., and Tutor Perini Corporation.
In addition to these traditional industrial services, we are beginning to leverage our expertise in industrial services to construct and maintain carbon capture technologies and renewable energy projects. 4 Table of Contents Competition Across our operations, we compete with national, regional, and local companies, many of which are small, owner-operated entities that carry on their businesses in a limited geographic area, as well as with certain foreign companies.
In addition to these traditional industrial services, we are leveraging our expertise in industrial services to construct and maintain carbon capture technologies and renewable energy projects. 4 Table of Contents Competition Across our operations, we compete with national, regional, and local companies, many of which are small, owner-operated entities that carry on their businesses in a limited geographic area, as well as with certain foreign companies.
United States industrial services operations: Our industrial services are primarily provided to customers within the oil, gas, and petrochemical industries and consist of: • Refinery turnaround planning and engineering services; • Specialty welding services; • Overhaul and maintenance of critical process units in refineries and petrochemical plants; • Specialty technical services for refineries and petrochemical plants; • Instrumentation and electrical services for energy infrastructure; • On-site repairs, maintenance, and service of heat exchangers, towers, vessels, and piping; • Design, manufacturing, repair, and hydro blast cleaning of shell and tube heat exchangers and related equipment; and • Renewable energy services, including large scale solar projects, energy storage, and waste to biogas solutions.
United States industrial services operations: Our industrial services are primarily provided to customers within the oil, gas, and petrochemical industries and consist of: • Refinery turnaround planning and engineering services; • Specialty welding services; • Overhaul and maintenance of critical process units in refineries and petrochemical plants; • Specialty technical services for refineries and petrochemical plants; • Instrumentation, controls, and electrical services for energy infrastructure; • Electrical panel design, fabrication, and installation; • On-site repairs, maintenance, and service of heat exchangers, towers, vessels, and piping; • Design, manufacturing, repair, and hydro blast cleaning of shell and tube heat exchangers and related equipment; and • Renewable energy services, including large scale solar projects, energy storage, and waste to biogas solutions.
We derive revenues from many different customers in numerous industries, which have operations in several different geographical areas. Of our 2023 revenues, approximately 97% were generated in the United States and approximately 3% were generated in foreign countries, substantially all in the United Kingdom.
We derive revenues from many different customers in numerous industries, which have operations in several different geographical areas. Of our 2024 revenues, approximately 97% were generated in the United States and approximately 3% were generated in foreign countries, substantially all in the United Kingdom.
Our building services operations have built upon our traditional electrical and mechanical construction operations and our client relationships to expand the scope of services being offered and to develop packages of services for customers on a local, regional, and national basis. 3 Table of Contents Our building services operations, which generated approximately 28% of our 2023 total revenues, provide services to owners, operators, tenants, and managers of all types of facilities both on a contractual basis for a specified period of time and on an individual task order basis.
Our building services operations have built upon our traditional electrical and mechanical construction operations and our client relationships to expand the scope of services being offered and to develop packages of services for customers on a local, regional, and national basis. 3 Table of Contents Our building services operations, which generated approximately 24% of our 2024 total revenues, provide services to owners, operators, tenants, and managers of all types of facilities both on a contractual basis for a specified period of time and on an individual task order basis.
Our Internet address is www.emcorgroup.com. We make available, free of charge, through www.emcorgroup.com our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We make available, free of charge, through www.emcorgroup.com our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Our industrial services business, which generated approximately 9% of our 2023 total revenues, is a recognized leader in the refinery turnaround market and has a presence in the petrochemical market. Demand for these services is highly dependent on the strength of the oil and gas and related industrial markets.
Our industrial services business, which generated approximately 9% of our 2024 total revenues, is a recognized leader in the refinery turnaround market and has a presence in the petrochemical and upstream markets. Demand for these services is highly dependent on the strength of the oil and gas and related industrial markets.
We provide building services at a number of prominent buildings in the United States, including those that house the National Archives and Records Administration, the Federal Deposit Insurance Corporation, the Government Accountability Office, and the Departments of Transportation, Education, Health and Human Services, Energy, and Homeland Security, as well as other government facilities, including the NASA Jet Propulsion Laboratory.
We provide building services at a number of prominent buildings in the United States, including those that house the National Archives and Records Administration, the Federal Deposit Insurance Corporation, the Government Accountability Office, and the Departments of Transportation, Education, Health and Human Services, Energy, and Homeland Security, as well as other government facilities.
Competitive factors in the electrical and mechanical construction services business include: (a) the availability of qualified and/or licensed personnel; (b) reputation for integrity and quality; (c) safety record; (d) cost structure and the ability to control project costs; (e) relationships with customers; (f) price; (g) geographic diversity; (h) experience in specialized markets; (i) the ability to obtain surety bonding; (j) adequate working capital or access to bank credit; and (k) the use of technology such as building information modeling (BIM).
Competitive factors in the electrical and mechanical construction services business include: (a) the availability of qualified and/or licensed personnel; (b) reputation for integrity and quality; (c) safety record; (d) cost structure and the ability to control project costs; (e) relationships with customers; (f) price; (g) geographic diversity; (h) experience in specialized markets; (i) the ability to obtain surety bonding; (j) adequate working capital or access to bank credit; and (k) the use of technology such as virtual design construction (“VDC”), building information modeling (“BIM”), robotics, and automation.
Our largest projects, which typically range in size from $10 million up to and occasionally exceeding $200 million, represented approximately 45% of our electrical and mechanical construction services revenues in 2023. These projects often involve new construction and a combination of design, installation, and start-up services.
Our largest projects, which typically range in size from $10 million up to and occasionally exceeding $200 million, represented approximately 54% of our electrical and mechanical construction services revenues in 2024. These projects often involve new construction and a combination of design, installation, and start-up services.
Of our building services revenues for 2023, approximately 88% were generated in the United States and approximately 12% were generated in the United Kingdom.
Of our building services revenues for 2024, approximately 88% were generated in the United States and approximately 12% were generated in the United Kingdom.
Additionally, based on such information, our U.S. employees had the following race and ethnicity demographics: Employee Demographic % of Total White 69 % Hispanic / Latino 18 % Black / African American 8 % Asian 2 % Multiracial, Native American, Native Hawaiian, and Pacific Islander 3 % 5 Table of Contents Approximately 60% of our employees are represented by various unions pursuant to nearly 450 collective bargaining agreements between our individual subsidiaries or trade associations and local unions, as well as two collective bargaining agreements that are national or regional in scope.
Additionally, based on such information, our U.S. employees had the following race and ethnicity demographics: Employee Demographic % of Total White 66 % Hispanic / Latino 21 % Black / African American 8 % Asian 2 % Multiracial, Native American, Native Hawaiian, and Pacific Islander 3 % 5 Table of Contents Approximately 63% of our employees are represented by various unions pursuant to approximately 425 collective bargaining agreements between our individual subsidiaries or trade associations and local unions, as well as two collective bargaining agreements that are national or regional in scope.
During a year in which our people worked over 80 million hours, the Company’s Total Recordable Incident Rate in 2023 was just under 1.2, which was approximately 50% lower than the U.S. Bureau of Labor Statistics’ most recently available industry average of 2.4 for NAICS Code 2382, Building Equipment Contractors.
During a year in which our people worked over 89 million hours, the Company’s Total Recordable Incident Rate in 2024 was just under 1.0, which was approximately 60% lower than the U.S. Bureau of Labor Statistics’ most recently available industry average of 2.4 for NAICS Code 2382, Building Equipment Contractors.
In 2023, we derived approximately 63% of our revenues from our construction operations, approximately 28% of our revenues from our building services operations, and approximately 9% of our revenues from our industrial services operations. For additional information regarding our revenues, see Note 3 - Revenue from Contracts with Customers of the notes to consolidated financial statements included in Item 8.
In 2024, we derived approximately 67% of our revenues from our construction operations, approximately 24% of our revenues from our building services operations, and approximately 9% of our revenues from our industrial services operations. For additional information regarding our revenues, see Note 3 - Revenue from Contracts with Customers of the notes to consolidated financial statements included in Item 8.
Our projects of less than $10 million accounted for approximately 55% of our electrical and mechanical construction services revenues in 2023. These projects are typically completed in less than one year.
Our projects of less than $10 million accounted for approximately 46% of our electrical and mechanical construction services revenues in 2024. These projects are typically completed in less than one year.
The demand for these services is typically driven by non-residential construction and renovation activity and, in recent years, has benefited from the re-shoring of the supply chain, the need for additional high-tech manufacturing facilities, and the energy transition/expansion throughout the United States, all of which have been bolstered by certain government incentives.
The demand for these services is typically driven by non-residential construction and renovation activity and, in recent years, has benefited from the re-shoring of the supply chain, the need for additional high-tech manufacturing facilities, and the energy transition/expansion throughout the United States.
Our United States electrical and mechanical construction operations accounted for approximately 63% of our 2023 total revenues.
Our United States electrical and mechanical construction operations accounted for approximately 67% of our 2024 total revenues.
Human Capital At December 31, 2023, we employed approximately 38,300 people, approximately 35,000 of whom were located within the United States and approximately 3,300 of whom were located in the United Kingdom. Based on the most recent information available from our latest filing with the U.S.
Human Capital At December 31, 2024, we employed approximately 40,400 people, approximately 37,500 of whom were located within the United States and approximately 2,900 of whom were located in the United Kingdom. Based on the most recent information available from our latest filing with the U.S.
In 2023, we had revenues of approximately $12.6 billion.
In 2024, we had revenues of approximately $14.6 billion.
In furtherance of our EMCOR Values, all EMCOR employees are required to complete inclusive workplace training, and our current and future leaders undergo implicit association training. Available Information We file annual, quarterly and current reports, proxy statements and other information with the SEC. These filings are available to the public over the internet at the SEC’s website at http://www.sec.gov.
Available Information We file annual, quarterly and current reports, proxy statements and other information with the SEC. These filings are available to the public over the internet at the SEC’s website at http://www.sec.gov. Our Internet address is www.emcorgroup.com.
These tools are evolving with the way our people work, including employees in the field. For example, we have deployed an online safety training program available to any employee on a mobile device. 6 Table of Contents A Diverse and Inclusive Workplace We believe that a diverse and inclusive workforce is important to the long-term success of our business.
For example, we have deployed an online safety training program available to any employee on a mobile device. 6 Table of Contents Mutual Respect and Trust In our workplace, we seek to foster a welcoming environment that reflects our EMCOR Values, including Mutual Respect and Trust.
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We actively seek to increase the diversity of our workforce and to practice our commitment to diversity and inclusion in hiring, development, and training, embracing diversity of experience, background, and personal characteristics.
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These tools are evolving with the way our people work, including employees in the field.
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This extends to our senior leadership and Board of Directors, where we require that any slate of recruited candidates for a named executive officer or other corporate officer position, and new management-supported director nominees, include a diverse group of individuals.
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We believe that a workforce, executive management team, and Board of Directors representing a broad array of experience, perspectives, background, and personal characteristics, are important to our future success. We strive to help all our employees realize their full potential with an equal opportunity to succeed.
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We have also designed and implemented policies and practices to promote a workplace free from discrimination, including our Affirmative Action and Equal Opportunity Policy, the implementation, effectiveness, and reporting requirements of which are overseen by our designated Affirmative Action Officer. We strive to help all our employees realize their full potential with an equal opportunity to succeed.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may be unable to achieve our current or future climate commitments and targets, or we may incur substantial costs in meeting such targets. To help mitigate the impacts of GHG emissions on climate change, EMCOR has established initial carbon-based fuel consumption and GHG emission reduction targets and committed to investigating the establishment of science-based GHG emissions targets.
Biggest changeAll of these risks could have a material adverse effect on our business, financial position, and/or stock price. We may be unable to achieve our current or future climate commitments and targets, or we may incur substantial costs in meeting such targets.
Increases in benchmark interest rates impact our interest expense and cost of capital, which may adversely impact our ability to make payments on future outstanding debt, raise funds through the issuance of debt, fund capital expenditures or other liquidity needs. Any of these impacts may adversely affect our liquidity, results of operations, and financial position.
Increases in benchmark interest rates impact our interest expense and cost of capital, which may adversely impact our ability to make payments on future outstanding debt, raise funds through the issuance of debt, fund capital expenditures or meet other liquidity needs. Any of these impacts may adversely affect our liquidity, results of operations, and financial position.
Legal Proceedings and Note 15 - Commitments and Contingencies of the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, for more information regarding any significant legal proceedings in which we are involved. We may incur liabilities or suffer negative financial impacts relating to occupational, health, and safety matters.
See Note 15 - Commitments and Contingencies of the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, for more information regarding any significant legal proceedings in which we are involved. We may incur liabilities or suffer negative financial impacts relating to occupational, health, and safety matters.
The factors that impact exchange rate fluctuation, including macroeconomic and geopolitical conditions, are outside the control of the Company. As part of our risk management strategy, we are effectively self-insured against certain potential liabilities.
The factors that impact exchange rate fluctuation, including macroeconomic and geopolitical conditions, are outside of our control. As part of our risk management strategy, we are effectively self-insured against certain potential liabilities.
In addition, new laws and regulations, stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination or leaks, exposure to or the release of materials subsequently identified as hazardous by a governmental authority, the imposition of new clean-up requirements, or the exposure of our employees or other contractors to hazardous materials, could require us to incur significant costs or become the basis for new or increased liabilities that could harm our financial position and results of operations, although certain of these costs might be covered by insurance.
New laws and regulations, stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination or leaks, exposure to or the release of materials subsequently identified as hazardous by a governmental authority, the imposition of new clean-up requirements, or the exposure of our employees or other contractors to hazardous materials, could require us to incur significant costs or become the basis for new or increased liabilities that could harm our financial position and results of operations, although certain of these costs might be covered by insurance.
These risks and uncertainties include, but are not limited to: (a) our ability to execute our operational strategies and achieve our goals within the currently projected costs and the expected timeframes; (b) the availability and cost of alternative fuels, electrical charging infrastructure, off-site renewable energy, and other materials and components; (c) unforeseen design, operational, and technological difficulties; (d) the outcome of research efforts and future technology developments, including alternate or more fuel efficient vehicles for our fleet, such as hybrid or electric vehicles, the availability of which has been impacted by the global shortage in supply of vehicles generally; (e) regulations and requirements that restrict or prohibit our ability to impose requirements on third party contractors; (f) an acquisition of or merger with another company that has not adopted similar targets and goals or whose progress towards reaching its goals is not as advanced as ours; and (g) exogenous macroeconomic or supply chain shocks, such as those experienced during the COVID-19 pandemic, which could result in fluctuations in our fuel consumption and GHG emissions in a given period.
These risks and uncertainties include, but are not limited to: (a) our ability to execute our operational strategies and achieve our goals within the currently projected costs and the expected timeframes; (b) the availability and cost of alternative fuels, electrical charging infrastructure, off-site renewable energy, and other materials and components; (c) unforeseen design, operational, and technological difficulties; (d) the outcome of research efforts and future technology developments, including alternate or more fuel efficient vehicles for our fleet, such as hybrid or electric vehicles, the availability of which has been impacted by the global shortage in supply of vehicles generally; (e) regulations and requirements that restrict or prohibit our ability to impose requirements on third-party contractors; (f) an acquisition of or merger with another company that has not adopted similar targets and goals or whose progress towards reaching its goals is not as advanced as ours; and (g) exogenous macroeconomic or supply chain shocks, which could result in fluctuations in our fuel consumption and GHG emissions in a given period.
For example, in 2023, our United States building services segment and our United Kingdom building services segment were unsuccessful in retaining certain contracts upon rebid.
For example, in 2024 and 2023, our United States building services segment and our United Kingdom building services segment were unsuccessful in retaining certain contracts upon rebid.
If we are not successful, we may not be able to achieve internal growth, expand operations, or grow our business. Fluctuating foreign currency exchange rates impact our financial results. We have operations in the United Kingdom, which in 2023 accounted for approximately 3% of our revenues.
If we are not successful, we may not be able to achieve internal growth, expand operations, or grow our business. Fluctuating foreign currency exchange rates impact our financial results. We have operations in the United Kingdom, which in 2024 accounted for approximately 3% of our revenues.
Our operations are subject to various laws, including environmental laws and regulations, among which many deal with the handling and disposal of hazardous or universal waste products, polychlorinated biphenyls (PCBs), per- and polyfluoroalkyl substances (PFAS), and fuel storage.
Our operations are subject to various laws, including environmental laws and regulations, among which many deal with the handling and disposal of hazardous or universal waste products, polychlorinated biphenyls, per- and polyfluoroalkyl substances, and fuel storage.
If we are unable to compete effectively, we may experience a loss of market share, reduced profitability, or both, which if significant, could have a material adverse effect on our business, financial condition, and results of operations. Refer also to “Business - Competition” in Item 1 of this Form 10-K. We are a decentralized company, which presents certain risks.
If we are unable to compete effectively, we may experience a loss of customers, reduced profitability, or both, which if significant, could have a material adverse effect on our business, financial condition, and results of operations. Refer also to “Business - Competition” in Item 1 of this Form 10-K. We are a decentralized company, which presents certain risks.
The actual cost of labor and materials, however, may vary from the costs we originally estimated, something which we have experienced and may continue to experience due to inflationary pressures, supply chain challenges, and rising interest rates.
The actual cost of labor and materials, however, may vary from the costs we originally estimated, something which we have experienced and may continue to experience due to inflationary pressures, supply chain challenges, and elevated interest rates.
Acts of terrorism and other catastrophic events, and the actions taken by the United States and/or other governments or actors in response to such events, may result in property damage, supply disruption, or economic dislocations throughout the country.
Acts of terrorism, war, conflicts, and other catastrophic events, and the actions taken by the United States and/or other governments or actors in response to such events, may result in property damage, supply disruption, or economic dislocations throughout the country.
New laws, rules, and regulations, or changes to existing laws or their interpretations, could 14 Table of Contents create added legal and compliance costs and uncertainty for us. In addition, our United Kingdom operations are subject to laws and regulations that are in some cases different from those of the United States, including labor laws such as the U.K.
New laws, rules, and regulations, or changes to existing laws or their interpretations, could create added legal and compliance costs and uncertainty for us. In addition, our United Kingdom operations are subject to laws and regulations that are in some cases different from those of the United States, including labor laws such as the U.K.
In addition, we could be required to expend amounts in future periods as we continue to work towards achieving our targets, which may have a material effect on our business, financial condition, results of operations, or liquidity. General Risk Factors Public health emergencies, epidemics, or pandemics impact our business.
In addition, we could be required to expend amounts in future periods as we continue to work towards achieving our targets, which may have a material effect on our business, financial condition, results of operations, or liquidity. 18 Table of Contents General Risk Factors Public health emergencies, epidemics, or pandemics impact our business.
When the general level of economic activity has been reduced from historical levels, certain of our ultimate customers have delayed or canceled projects or capital spending, especially with respect to more profitable private sector work, and such slowdowns adversely affect our ability to grow, reducing our revenues and profitability.
When the general level of economic activity has declined from historical levels, certain of our ultimate customers have delayed or canceled projects or capital spending, especially with respect to more profitable private sector work, and such slowdowns adversely affect our ability to grow, reducing our revenues and profitability.
If our remaining performance obligations fail to materialize, we could experience a decline in profitability, which could result in a deterioration of our financial position and liquidity. 12 Table of Contents We recognize revenue for the majority of our construction projects based on estimates; therefore, variations of actual results from our assumptions may reduce our profitability.
If our remaining performance obligations fail to materialize, we could experience a decline in profitability, which could result in a deterioration of our financial position and liquidity. We recognize revenue for the majority of our construction projects based on estimates; therefore, variations of actual results from our assumptions may reduce our profitability.
Depending upon the size of a particular project, variations from the estimated contract costs can have a significant impact on our operating results for any fiscal quarter or year. We could incur additional costs to cover certain guarantees or other contractual requirements.
Depending upon the size of a particular project, variations from the estimated contract costs can have a significant impact on our operating results for any fiscal quarter or year. 10 Table of Contents We could incur additional costs to cover certain guarantees or other contractual requirements.
We are dependent upon a workforce of approximately 38,300 employees, including our project managers and field supervisors who are responsible for managing our projects, and there can be no assurance that any individual will continue in his or her capacity for any particular period of time. The loss of such qualified employees could have an adverse effect on our business.
We are dependent upon a workforce of approximately 40,400 employees, including our project managers and field supervisors who are responsible for managing our projects, and there can be no assurance that any individual will continue in his or her capacity for any particular period of time. The loss of such qualified employees could have an adverse effect on our business.
Such changes could result in significant additional costs to us and could require the diversion of management’s attention from our existing businesses or other strategic initiatives. Amounts included in our remaining performance obligations may not result in actual revenues or translate into profits.
Such changes could result in significant additional costs to us and could require the diversion of management’s attention from our existing businesses or other strategic initiatives. 12 Table of Contents Amounts included in our remaining performance obligations may not result in actual revenues or translate into profits.
Further, realization of the anticipated benefits of an acquisition, and avoiding or mitigating the potential risks associated with an acquisition, will depend, among other things, upon our ability to: (a) effectively conduct due diligence to identify and mitigate potential problems at companies we propose to acquire, (b) recognize incompatibilities or other obstacles to the successful integration of the acquired business with our other operations, and (c) gain greater efficiencies and scale that will translate into reduced costs or anticipated synergies in a timely manner.
Further, realization of the anticipated benefits of an acquisition such as our acquisition of Miller Electric Company, and avoiding or mitigating the potential risks associated with an acquisition, will depend, among other things, upon our ability to: (a) effectively conduct due diligence to identify and mitigate potential problems at companies we propose to acquire, (b) recognize incompatibilities or other obstacles to the successful integration of the acquired business with our other operations, and (c) gain greater efficiencies and scale that will translate into reduced costs or anticipated synergies in a timely manner.
Strikes or work stoppages likely would adversely impact our relationships with our customers and could have a material adverse effect on our financial position, results of operations, and cash flows. 16 Table of Contents We contribute to approximately 200 multiemployer pension plans.
Strikes or work stoppages likely would adversely impact our relationships with our customers and could have a material adverse effect on our financial position, results of operations, and cash flows. We contribute to approximately 200 multiemployer pension plans.
In such case, adjustments may be required to increase our insurance liabilities in the period that the experience becomes known. 11 Table of Contents External market conditions, including catastrophic losses resulting from an increase in severe weather events, among other factors, have resulted in an insurance market that is characterized by higher premiums, diminished capacity, and more conservative underwriting.
In such case, adjustments may be required to increase our insurance liabilities in the period that the experience becomes known. External market conditions, including catastrophic losses resulting from an increase in severe weather events, among other factors, have resulted in an insurance market that is characterized by higher premiums, diminished capacity, and more conservative underwriting.
Accordingly, if our safety record were to substantially deteriorate over time, we might become ineligible to bid on certain work and our customers could cancel our contracts and/or not award us future business. 15 Table of Contents Our failure to comply with anti-bribery statutes, such as the Foreign Corrupt Practices Act and the U.K.
Accordingly, if our safety record were to substantially deteriorate over time, we might become ineligible to bid on certain work and our customers could cancel our contracts and/or not award us future business. Our failure to comply with anti-bribery statutes, such as the Foreign Corrupt Practices Act and the U.K.
Unsettled regulations and case law regarding the ownership of intellectual property generated or used by AI could also expose us to claims of copyright or license infringement or other liability resulting from our use of such tools.
Unsettled regulations and case law regarding the ownership of intellectual property generated or 13 Table of Contents used by AI could also expose us to claims of copyright or license infringement or other liability resulting from our use of such tools.
Volatility in the prices or availability of certain materials and equipment used in our businesses and those of our customers, including as a result of inflation, geopolitical instability, and protectionist trade measures, could adversely affect our businesses.
Volatility in the prices or availability of certain materials and equipment used in our businesses and those of our customers, including as a result of inflation, supply chain disruptions, geopolitical instability, and protectionist trade measures, could adversely affect our businesses.
We are exposed to market risk of increases in certain commodity prices of materials, such as copper and steel, which are used as components of supplies or materials utilized in our operations. We are also exposed to increases in energy prices, particularly as they relate to gasoline prices for our fleet of approximately 13,800 vehicles.
We are exposed to market risk of increases in certain commodity prices of materials, such as copper and steel, which are used as components of supplies or materials utilized in our operations. We are also exposed to increases in energy prices, particularly as they relate to gasoline prices for our fleet of approximately 14,000 vehicles.
In addition, compliance with legislation requiring us to increase the mix of electric vehicles within our fleet will be difficult as the electric vehicles 17 Table of Contents currently available do not meet our fleet requirements.
In addition, compliance with legislation requiring us to increase the mix of electric vehicles within our fleet will be difficult as the electric vehicles currently available do not meet our fleet requirements.
Although we maintain insurance policies with respect to a broad range of risks, including automobile liability, general liability, workers’ compensation, and employee-related healthcare, these policies do not cover all possible claims and certain of the policies are subject to large deductibles and retentions. In addition, we maintain a wholly-owned captive insurance subsidiary to manage certain of our insurance liabilities.
Although we maintain insurance policies with respect to a broad range of risks, including automobile liability, general liability, workers’ compensation, and property damage, these policies do not cover all possible claims and certain of the policies are subject to large deductibles and retentions. In addition, we maintain a wholly-owned captive insurance subsidiary to manage certain of our insurance liabilities.
For example, severe weather or a catastrophic natural disaster could negatively impact our and our customers’ offices, facilities, or job sites. Access to clean water and reliable energy where we conduct our business is also critical to our operations.
For example, severe weather or a catastrophic natural disaster could 17 Table of Contents negatively impact our and our customers’ offices, facilities, or job sites. Access to clean water and reliable energy where we conduct our business is also critical to our operations.
Fluctuations in the price of energy and commodity materials, whether resulting from fluctuations in market supply or demand, geopolitical conditions, including supply chain disruptions and sanctions on Russian exports as a result of Russia’s invasion of Ukraine and recent shipping lane disruptions following maritime attacks in the Gulf of Aden, an increase in trade protection measures such as tariffs, or the disruption, modification, or cancellation of multilateral trade agreements, may adversely affect our customers and as a result cause them to curtail the use of our services.
Fluctuations in the price of energy and commodity materials, whether resulting from fluctuations in market supply or demand, geopolitical conditions (including supply chain disruptions, sanctions on Russian exports as a result of Russia’s invasion of Ukraine, armed conflict between Israel and Iran, and shipping lane disruptions following maritime attacks in the Gulf of Aden and the Red Sea), an increase in trade protection measures such as tariffs, or the disruption, modification, or cancellation of multilateral trade agreements, may adversely affect our customers and as a result cause them to curtail the use of our services.
Our unionized workforce could adversely affect our operations; our participation in many multiemployer pension plans could result in substantial liabilities being incurred . As of December 31, 2023, approximately 60% of our employees were covered by collective bargaining agreements.
Our unionized workforce could adversely affect our operations; our participation in many multiemployer pension plans could result in substantial liabilities being incurred . As of December 31, 2024, approximately 63% of our employees were covered by collective bargaining agreements.
Continued volatility within these markets, including the impact of geopolitical instability, could negatively impact our financial position, results of operations, and cash flows. 8 Table of Contents Our business is vulnerable to the cyclical nature of the markets in which our clients operate and is dependent upon the timing and funding of new awards.
Volatility within these markets, including the impact of geopolitical instability (such as disruption of shipping lanes), could negatively impact our financial position, results of operations, and cash flows. 8 Table of Contents Our business is vulnerable to the cyclical nature of the markets in which our clients operate and is dependent upon the timing and funding of new awards.
For further discussion of our impairment testing, see Note 8 - Goodwill, Identifiable Intangible Assets, and Other Long-Lived Assets included in Item 8. Financial Statements and Supplementary Data.
For further discussion of our impairment testing, see Note 8 - Goodwill, Identifiable Intangible Assets, and Other Long-Lived Assets of the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data.
While we maintain insurance coverage for these types of cybersecurity incidents, such policies may not completely provide coverage for, or completely offset, the costs associated with such incidents, including losses from reputational harm or the costs to improve security against future similar threats.
While we maintain insurance coverage for these types of cybersecurity incidents, such policies may not completely provide coverage for, or completely offset, the costs associated with such incidents, including losses from delays in our ability to provide services to our customers, reputational harm, or the costs to improve security against future similar threats.
Significant reductions in spending aimed at reducing federal, state, or local budget deficits, the absence of a bipartisan agreement on the federal government's budget or raising the debt ceiling (and any disruption caused by a federal government shutdown as a result thereof), renewed focus on budget deficits following increases in government spending in response to the COVID-19 pandemic, personnel reductions, the closure of government facilities and offices, or other changes in budget priorities could result in the deferral, delay, disruption, or cancellation of projects or contracts that we might otherwise have sought to perform.
Significant reductions in spending aimed at reducing federal, state, or local budget deficits, the absence of a bipartisan agreement on the federal government's budget or raising the debt ceiling (and any disruption caused by a federal government shutdown as a result thereof), personnel reductions, elimination of government agencies or programs, the closure of government facilities and offices, or other changes in budget priorities could result in the deferral, delay, disruption, or cancellation of projects or contracts that we might otherwise have sought to perform.
Economic and Strategic Risk Factors Economic downturns have historically led to reductions in demand for our services. Negative conditions in the credit markets, including rising interest rates, may adversely impact our results of operations and our ability to operate our business.
Economic and Strategic Risk Factors Economic downturns, recessions, or periods of slow growth have historically led to reductions in demand for our services. Negative conditions in the credit markets, including elevated interest rates, may adversely impact our results of operations and our ability to operate our business.
We may be unable to attract and retain skilled employees. Our ability to grow and maintain productivity and profitability will be limited by our ability to employ, train, and retain skilled personnel necessary to meet our requirements.
Our ability to grow and maintain productivity and profitability will be limited by our ability to employ, train, and retain skilled personnel necessary to meet our requirements.
Any failure to comply with these laws and regulations, or an exposure or exfiltration of information covered by such laws and regulations, including, without limitation, in connection with a cybersecurity incident, could result in significant penalties and legal liability, and increased costs in this area could have a negative impact on our reputation and our financial condition, results of operations, and cash flow.
Any failure to comply with these laws and regulations, or an exposure or exfiltration of information covered by such laws and regulations, including, without limitation, in connection with a cybersecurity incident, could have a negative impact on our reputation or result in significant penalties and legal liability.
Proposed rules by the Federal Trade Commission to eliminate almost all non-competition agreements with employees, if implemented, may also impact retention of key employees by reducing barriers to individuals with such agreements leaving to work for our competitors.
Recent rules by the Federal Trade Commission to eliminate almost all non-competition agreements with employees, or similar regulations, if found to be enforceable and implemented, may also impact retention of key employees by reducing barriers to individuals with such agreements leaving to work for our competitors.
Our business may be adversely affected by significant reductions in government spending, delays or disruptions in the government appropriations process or the failure to fund or implement recent legislation, including the CHIPS and Science Act of 2022 and the Inflation Reduction Act, both of which could benefit our business.
Our business may be adversely affected by significant reductions in government spending, delays or disruptions in the government appropriations process or the failure to fully fund or implement legislation such as the CHIPS and Science Act of 2022 and the Inflation Reduction Act.
Additionally, our fixed price contracts generally do not allow us to adjust our prices and, as a result, increases in material or fuel costs could reduce our profitability with respect to projects in progress.
Further, the timing of our price increases may lag the timing of the underlying increases in commodity or material prices and our fixed price contracts generally do not allow us to adjust our prices. As a result, increases in material or fuel costs could reduce our profitability with respect to projects in progress.
While we believe we can increase our prices to adjust for some price increases in commodities, there can be no assurance that price increases of commodities, if they were to occur, would be recoverable. Further, the timing of our price increases may lag the timing of the underlying increases in commodity or material prices.
While we believe we can increase our prices to adjust for some price increases in commodities, there can be no assurance that price increases of commodities, if they were to occur, would be recoverable.
The availability and costs to adequately train and maintain a skilled labor force could be impacted by factors we cannot control, including changes in the unemployment rate, prevailing wage rates, benefit costs, potential labor force disruptions resulting from public health emergencies, such as those experienced in connection with the COVID-19 pandemic, and competition for labor from our competitors in the markets we serve.
The availability and costs to adequately train and maintain a skilled labor force could be impacted by factors we cannot control, including changes in the unemployment rate, prevailing wage rates, benefit costs, potential labor force disruptions, and competition for labor from our competitors in the markets we serve.
In addition, sanctions against foreign persons and entities have increased in recent years, especially as a result of the war in the Ukraine. Our policies require that all of our employees, subcontractors, vendors, and agents worldwide must comply with applicable anti-bribery and sanction laws.
In addition, sanctions against foreign persons and entities have increased in recent years, especially in connection with the war in Ukraine and ongoing trade and diplomatic disputes between the U.S. and China. Our policies require that all of our employees, subcontractors, vendors, and agents worldwide must comply with applicable anti-bribery and sanction laws.
Certain of our competitors have lower overhead cost structures and, therefore, are able to provide their services at lower rates than we are 9 Table of Contents currently able to provide. Our project and service work is frequently awarded through a competitive bidding process, which is standard in our industry.
Certain of our competitors have lower overhead cost structures and, therefore, are able to provide their services at lower rates than we are currently able to provide. Our project and service work is frequently awarded through a competitive bidding process, which is standard in our industry. We are constantly competing for contracts based on pricing, schedule, and technical expertise.
Labor shortages or increased labor costs, such as those currently being experienced throughout the United States and United Kingdom, could impair our ability to provide services to our customers, maintain our business, or grow our revenues.
Labor shortages or increased labor costs, such as those experienced in recent years throughout the United States and United Kingdom, could impair our ability to provide services to our customers (or the ability of third-party subcontractors to provide services to us), maintain our business, or grow our revenues.
Many of our customers employ personnel who perform some of the same types of building services that we do. We cannot be certain that our existing or prospective customers will continue to outsource building services in the future.
We may also face competition from the in-house service organizations of existing or prospective customers, particularly with respect to building services. Many of our customers employ personnel who perform some of the same types of building services that we do. We cannot be certain that our existing or prospective customers will continue to outsource building services in the future.
Business and Operational Risk Factors The loss of one or a few customers could have an adverse effect on us. Although we provide services to a diverse portfolio of end markets and have long-standing relationships with many of our significant customers, our customers may unilaterally reduce, fail to renew, or terminate their contracts with us at any time.
Although we provide services to a diverse portfolio of end markets and have long-standing relationships with many of our significant customers, our customers may unilaterally reduce, fail to renew, or terminate their contracts with us at any time.
The global spread of COVID-19, and the responses of governments, businesses, and individuals to combat it, caused significant volatility, uncertainty, and economic disruption, which adversely impacted our operations and those of our customers. A renewed significant spread of COVID-19, new variants thereof, or new infectious diseases, could lead to similar impacts.
The global spread of COVID-19, and the responses of governments, businesses, and individuals to combat it, caused significant volatility, uncertainty, and economic disruption, which adversely impacted our operations and those of our customers. A new public health emergency, such as an epidemic or pandemic, could lead to similar impacts.
In addition, in March 2022, the SEC proposed new rules that would require significant climate-related disclosures by public companies, including evaluation and disclosure of material climate-related risks and opportunities, GHG emissions inventory, climate-related targets and goals, and financial impacts of physical and transition risks. Subsequently, other legislation, including certain state laws, have been passed that would require similar climate-related disclosure.
In addition, in March 2024, the SEC finalized new rules that would require significant climate-related disclosures by public companies, including evaluation and disclosure of material climate-related risks and opportunities, GHG emissions inventory, climate-related targets and goals, and financial impacts of physical and transition risks.
Financial Risk Factors A material portion of our business depends on our ability to provide surety bonds. We may be unable to compete for or work on certain projects if we are not able to obtain the necessary surety bonds.
Increased costs in this area could adversely impact our financial condition, results of operations, and cash flow. Financial Risk Factors A material portion of our business depends on our ability to provide surety bonds. We may be unable to compete for or work on certain projects if we are not able to obtain the necessary surety bonds.
However, unknown or changing trends, risks, or circumstances, such as increases in claims, a weakening economy, increases in medical costs, changes in case law or legislation, or changes in the nature of the work we perform, could render our current estimates and accruals inadequate.
Our accruals are based upon known facts, historical trends and our reasonable estimate of future expenses, and we believe such accruals are adequate. 11 Table of Contents However, unknown or changing trends, risks, or circumstances, such as increases in claims, a weakening economy, increases in medical costs, changes in case law or legislation, or changes in the nature of the work we perform, could render our current estimates and accruals inadequate.
Such failure could additionally expose us to litigation and/or reputational harm, impair our ability to obtain financing, or increase the cost of any financing we obtain. All of these impacts could adversely affect the price of our common stock and our business overall.
Such failure could additionally expose us to litigation and/or reputational harm, impair our ability to obtain financing, or increase the cost of any financing we obtain.
Adverse resolution of litigation and other legal and regulatory proceedings may harm our operating results or financial position. From time to time, we are a party to lawsuits and other legal proceedings, most of which occur in the normal course of our business.
From time to time, we are a party to lawsuits and other legal proceedings, most of which occur in the normal course of our business.
An unfavorable resolution of a particular legal proceeding or claim, whether through a settlement, mediation, court judgment, or otherwise, could have a material adverse effect on our business, operating results, financial position, and cash flows, and in some cases, on our reputation or our ability to obtain projects from customers, including governmental entities. See Item 3.
In addition, plaintiffs in many types of actions may seek punitive damages, civil penalties, consequential damages or other losses, or injunctive or declaratory relief. 15 Table of Contents An unfavorable resolution of a particular legal proceeding or claim, whether through a settlement, mediation, court judgment, or otherwise, could have a material adverse effect on our business, operating results, financial position, and cash flows, and in some cases, on our reputation or our ability to obtain projects from customers, including governmental entities.
We and our customers and third-party providers rely on information technology systems, hardware, and software, including third party “cloud based” systems, to run critical accounting, project management, and financial information systems. We rely upon security measures, systems redundancy, and third-party products and services to attempt to secure our information technology systems and the confidential, proprietary, and sensitive information they contain.
We rely upon security measures, systems redundancy, and third-party products and services to attempt to secure our information technology systems and the confidential, proprietary, and sensitive information they contain.
We are subject to many laws and regulations, including various laws and regulations that apply specifically to U.S. public companies.
We are committed to upholding the highest standards of corporate governance and legal and ethical compliance. We are subject to many laws and regulations, including various laws and regulations that apply specifically to U.S. public companies.
However, achievement of such targets, or similar targets that may be established in the future, is subject to risks and uncertainties, many of which are outside of our control.
To help mitigate the impacts of GHG emissions on climate change, EMCOR has established initial carbon-based fuel consumption and GHG emission reduction targets. However, achievement of such targets, or similar targets that may be established in the future, is subject to risks and uncertainties, many of which are outside of our control.
Compliance with these new rules may increase our legal, accounting, and other compliance expenses and may divert management time and attention. We may also be exposed to legal or regulatory action or claims as a result of these new regulations. All of these risks could have a material adverse effect on our business, financial position, and/or stock price.
To the extent that such new rules become effective, our legal, accounting, and other compliance expenses may increase and may divert management time and attention. We may also be exposed to legal or regulatory action or claims as a result of these new regulations.
Congress, and there has been a wide-ranging policy debate, both in the United States and internationally, regarding the impact of these gases and possible means for their regulation.
Congress, and there has been a wide-ranging policy debate, both in the United States and internationally, regarding the impact of these gases and possible means for their regulation. Several states in the United States have proposed or adopted laws that require reporting of GHG emissions, or that a percentage of our fleet be comprised of electric vehicles.
For other arrangements, including those within our government services operations, the terms of our contracts may include provisions which require us to achieve certain minority participation or small or disadvantaged business “set-aside” goals. Such requirements have become more frequent in recent years and we expect them to be increasingly prevalent, especially under the current administration in Washington, D.C.
For other arrangements, including those within our government services operations, the terms of our contracts may include provisions which require us to achieve certain minority participation or small or disadvantaged business “set-aside” goals.
Some of our businesses derive a significant portion of their revenues from federal, state, and local governmental agencies. As a result, reduced or delayed spending by the federal government and/or state and local governments may have a material and adverse impact on our business, financial condition, results of operations, and cash flows.
As a result, reduced or delayed spending by the federal government and/or state and local governments, potentially including the reduction or elimination of funding for projects or other benefits under relevant legislation, may have a material and adverse impact on our business, financial condition, results of operations, and cash flows.
We are increasingly dependent on sophisticated information technology systems; our business and results of operations are subject to adverse impacts due to disruption, failure, and cybersecurity breaches of these systems.
We are increasingly dependent on sophisticated information technology systems; our business and results of operations are subject to adverse impacts due to the disruption, failure, or breaches of these systems. We and our customers and third-party providers rely on information technology systems, hardware, and software, including third-party “cloud based” systems, to run critical accounting, project management, and financial information systems.
Human Capital and Labor Risk Factors The departure of key personnel could disrupt our business. We depend on the continued efforts of our senior management. The loss of key personnel, including a temporary loss as a result of illness, or the inability to hire and retain qualified executives, could negatively impact our ability to manage our business.
Human Capital and Labor Risk Factors The departure, loss or incapacitation of key personnel could disrupt our business. We depend on the continued efforts of our senior management and other key employees.
Such operational disruptions and/or misappropriation or inappropriate disclosure of information could result in lost or reduced revenues, negative publicity, loss of customers or contracts, or business delays that could have a material adverse effect on our business, financial position, and results of operations. 13 Table of Contents In addition, new or evolving laws and regulations governing data privacy and the unauthorized disclosure of confidential information, including the European Union General Data Protection Regulation ("GDPR"), the California Consumer Privacy Act, the California Privacy Rights Act, state biometric laws, and other emerging U.S. state privacy laws pose increasingly complex compliance challenges and could potentially elevate our compliance costs.
In addition, laws and regulations governing data privacy and the unauthorized disclosure of confidential information, including the European Union General Data Protection Regulation ("GDPR"), the California Consumer Privacy Act, the California Privacy Rights Act, state biometric laws, and other emerging U.S. state privacy laws pose increasingly complex compliance challenges and could potentially elevate our compliance costs.
Legal and Regulatory Risk Factors We are subject to many laws and regulations in the jurisdictions in which we operate; changes to such laws and regulations may result in additional costs and impact our operations. We are committed to upholding the highest standards of corporate governance and legal and ethical compliance.
All of these impacts could adversely affect the price of our common stock and our business overall. 14 Table of Contents Legal and Regulatory Risk Factors We are subject to many laws and regulations in the jurisdictions in which we operate; changes to such laws and regulations may result in additional costs and impact our operations.
In addition, some of our competitors have greater resources than we do. We cannot be certain that our competitors will not develop the expertise, experience, and resources necessary to provide services that are superior in quality, and lower in price, to ours.
We cannot be certain that our competitors will not develop the expertise, experience, and resources necessary to provide services that are superior in quality, and lower in price, to ours. Similarly, we cannot be certain that we will be able to maintain or enhance our competitive position within our industries or maintain a customer base at current levels.
Additionally, circumstances beyond our control, such as rising interest rates, inflation and potential disruptions resulting from public health emergencies, such as those experienced in connection with the COVID-19 pandemic, may hinder our ability to pursue and complete acquisitions.
Additionally, circumstances beyond our control, such as elevated interest rates, inflation and potential macroeconomic disruptions, may hinder our ability to pursue and complete acquisitions.
A prolonged stagnation or weakening in financial and macroeconomic conditions, including rising interest rates, supply chain challenges, inflation, and any continuing impacts of the COVID-19 pandemic, could therefore have a significant adverse effect on our revenues and profitability.
A prolonged stagnation or weakening in financial and macroeconomic conditions, potentially including higher interest rates, supply chain challenges, inflation, or geopolitical impacts, could therefore have a significant adverse effect on our revenues and profitability. We are exposed to market risk for changes in interest rates for any borrowings under our credit facility, which bear interest at variable rates.
The impact to our business and operations in another public health emergency will depend in part on the severity and duration of those measures and the extent and pace of economic recovery, which are difficult to predict. Our workforce and operations were impacted by the COVID-19 pandemic. For example, we experienced disruptions that impacted our ability to perform our work.
The impact to our business and operations in another public health emergency will depend in part on the severity and duration of those measures and the extent and pace of economic recovery, which are difficult to predict. Terrorist attacks, wars, conflicts, and other catastrophic events could disrupt our operations and services .
To the extent that any of these events occur, the total costs of a project could exceed the original estimated costs, and we would experience reduced profits or, in some cases, a loss. 10 Table of Contents Many of our contracts, especially our building and industrial services contracts, may be canceled or delayed on short notice, and we may be unsuccessful in replacing such contracts if they are canceled or as they are completed or expire.
To the extent that any of these events occur, the total costs of a project could exceed the original estimated costs, and we would experience reduced profits or, in some cases, a loss.
Removed
We are exposed to market risk for changes in interest rates for any borrowings under our credit facility, which bear interest at variable rates. Throughout 2022 and much of 2023, the Federal Reserve Board increased the federal funds rate.
Added
Although the Federal Reserve Board began to decrease the federal funds rate in 2024 after increases in 2022 and much of 2023, the pace and extent of additional decreases are uncertain.
Removed
We are constantly competing for contracts based on pricing, schedule, and technical expertise.
Added
Some of our businesses derive a significant portion of their revenues from federal, state, and local governmental agencies.
Removed
Similarly, we cannot be certain that we will be able to maintain or enhance our competitive position within our industries or maintain a customer base at current levels. We may also face competition from the in-house service organizations of existing or prospective customers, particularly with respect to building services.
Added
Additionally, we rely on third-party vendors and manufacturers to supply much of the materials and equipment necessary for our operations. Disruptions, shortages, or delays in the availability of such materials and equipment have and may continue to adversely impact our result of operations, cash flows, and reputation with our customers.
Removed
Our accruals are based upon known facts, historical trends and our reasonable estimate of future expenses, and we believe such accruals are adequate.
Added
Changes in U.S. foreign trade policies, including as a result of the new presidential administration, could lead to the imposition of additional trade barriers and tariffs .
Removed
In addition, plaintiffs in many types of actions may seek punitive damages, civil penalties, consequential damages or other losses, or injunctive or declaratory relief.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have also implemented cybersecurity training. For example, key information technology and security personnel meet biweekly for training, updates on new cybersecurity threats, and implementation of new policies and all employees are required to undergo annual cybersecurity training, including email and password safety and phishing detection.
Biggest changeFor example, key information technology and security personnel meet biweekly for training, updates on new cybersecurity threats, and implementation of new policies and all employees are required to undergo annual cybersecurity training, including email and password safety and phishing detection. 19 Table of Contents We engage third-party cybersecurity firms to support our in-house cybersecurity initiatives and provide additional expertise with respect to our cybersecurity programs.
Governance, Risk Management, and Strategy. As part of our overall risk management process, we have established a cybersecurity program and dedicated teams to manage and assess material risks from cybersecurity threats, direct the policies and procedures in place to protect our information systems, and respond to cybersecurity incidents if they occur.
As part of our overall risk management process, we have established a cybersecurity program and dedicated teams to manage and assess material risks from cybersecurity threats, direct the policies and procedures in place to protect our information systems, and respond to cybersecurity incidents if they occur.
Risk Factors, including the risk factor titled “We are increasingly dependent on sophisticated information technology systems; our business and results of operations are subject to adverse impacts due to disruption, failure and cybersecurity breaches of these systems.”
Risk Factors, including the risk factor titled “We are increasingly dependent on sophisticated information technology systems; our business and results of operations are subject to adverse impacts due to the disruption, failure, or breaches of these systems.”
As of the date of this report, we have not experienced a cybersecurity incident that resulted in a material effect on our business strategy, results of operations, or financial condition. Like other companies, we are the target of cyberattacks.
As of the date of this report, we have not experienced a cybersecurity incident that resulted in, or is reasonably likely to result in, a material effect on our business strategy, results of operations, or financial condition. Like other companies, we are the target of cyberattacks.
Such firms are overseen by our General Counsel and Chief Information Security Officer and provide the following services: • On an annual basis, conduct penetration testing to evaluate the susceptibility of our information systems to cybersecurity threats and the effectiveness of our cybersecurity program; • On a biennial basis, conduct a comprehensive “tabletop” exercise to evaluate our incident response policies and procedures and provide relevant experience for our employees tasked with executing such response; and • On a biennial basis, conduct a cybersecurity assessment based on the National Institute of Standards and Technology’s Cybersecurity Framework. 19 Table of Contents We have also established a process to evaluate third-party vendors and suppliers for cybersecurity risk and compliance with our security standards.
Such firms are overseen by our General Counsel and Chief Information Security Officer and provide the following services: • On an annual basis, conduct penetration testing to evaluate the susceptibility of our information systems to cybersecurity threats and the effectiveness of our cybersecurity program; • On a biennial basis, conduct a comprehensive “tabletop” exercise to evaluate our incident response policies and procedures and provide relevant experience for our employees tasked with executing such response; and • On a biennial basis, conduct a cybersecurity assessment based on the National Institute of Standards and Technology’s Cybersecurity Framework.
Members of our Audit Committee, and certain of our executive officers, including our Chief Executive Officer, General Counsel, and Chief Information Security Officer, are participants in IANS, an industry leading cybersecurity education platform. Our Chief Information Security Officer has more than 40 years of experience in security practice, processes, and standards, and holds various cybersecurity certifications.
Members of our Audit Committee, and certain of our executive officers, including our Chief Executive Officer, General Counsel, and Chief Information Security Officer, are participants in IANS, an industry leading cybersecurity education platform. Governance, Risk Management, and Strategy.
As applicable, on an annual basis we review System and Organization Controls (SOC) 1 reports for all significant third-party vendors. In addition to the efforts discussed above, we have developed and maintain an Incident Response Plan to establish a process for addressing cybersecurity incidents.
In addition to the efforts discussed above, we have developed and maintain an Incident Response Plan to establish a process for addressing cybersecurity incidents.
Removed
We engage third party cybersecurity firms to support our in-house cybersecurity initiatives and provide additional expertise with respect to our cybersecurity programs.
Added
We have also established a process to evaluate third-party vendors and suppliers for cybersecurity risk and compliance with our security standards. As applicable, on an annual basis we review System and Organization Controls (SOC) 1 reports for all significant third-party vendors.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeMauricio , Age 52; General Counsel and Secretary of the Company since January 2016, Executive Vice President since February 2021, and Chief Administrative Officer since December 2023. Ms. Mauricio was a Senior Vice President of the Company from January 2016 to February 2021. From January 2012 to December 2015, Ms.
Biggest changeNalbandian joined the Company in May 2014 as Director of Accounting and Analysis. Prior to joining EMCOR, he worked in the assurance practice of Ernst & Young LLP. Maxine L. Mauricio , Age 53; General Counsel and Secretary of the Company since January 2016, Executive Vice President since February 2021, and Chief Administrative Officer since December 2023. Ms.
Guzzi, Age 59; President since October 2004, Chief Executive Officer since January 2011 and Chairman of the Board since June 2018. From October 2004 to January 2011, Mr. Guzzi served as Chief Operating Officer of the Company. From August 2001 until he joined the Company, Mr.
Guzzi, Age 60; President since October 2004, Chief Executive Officer since January 2011 and Chairman of the Board since June 2018. From October 2004 to January 2011, Mr. Guzzi served as Chief Operating Officer of the Company. From August 2001 until he joined the Company, Mr.
Guzzi was President of the North American Distribution and Aftermarket Division of Carrier Corporation (“Carrier”). Carrier is a manufacturer and distributor of commercial and residential HVAC and refrigeration systems and equipment and a provider of aftermarket services and components of its own products and those of other manufacturers in both the HVAC and refrigeration industries. Mark A.
Guzzi was President of the North American Distribution and Aftermarket Division of Carrier Corporation (“Carrier”). Carrier is a manufacturer and distributor of commercial and residential HVAC and refrigeration systems and equipment and a provider of aftermarket services and components of its own products and those of other manufacturers in both the HVAC and refrigeration industries. Jason R.
Mauricio was Vice President and Deputy General Counsel of the Company, and from May 2002 to December 2011, she served as Assistant General Counsel of the Company. Prior to joining the Company, Ms. Mauricio was an associate at Ropes & Gray LLP. 21 Table of Contents PART II
Mauricio was a Senior Vice President of the Company from January 2016 to February 2021. From January 2012 to December 2015, Ms. Mauricio was Vice President and Deputy General Counsel of the Company, and from May 2002 to December 2011, she served as Assistant General Counsel of the Company. Prior to joining the Company, Ms.
Pompa, Age 59; Executive Vice President and Chief Financial Officer of the Company since April 2006 and Treasurer of the Company from October 2019 to June 2020. From June 2003 to April 2006, Mr. Pompa was Senior Vice President-Chief Accounting Officer of the Company, and from June 2003 to January 2007, Mr. Pompa also served as Treasurer of the Company.
Nalbandian, Age 37; Chief Financial Officer of the Company since April 2024 and Senior Vice President and Chief Accounting Officer of the Company since January 2022. From February 2019 to January 2022, Mr. Nalbandian served as Controller of the Company and was Assistant Controller of the Company from January 2017 to February 2019. Mr.
Removed
From September 1994 to June 2003, Mr. Pompa was Vice President and Controller of the Company. On December 15, 2023, the Company announced that Mr. Pompa will step down as Executive Vice President and Chief Financial Officer and depart from the Company, effective as of April 1, 2024. Mr. Pompa will be succeeded by Jason R.
Added
Mauricio was an associate at Ropes & Gray LLP. 21 Table of Contents PART II
Removed
Nalbandian, the Company’s Senior Vice President and Chief Accounting Officer, who will be promoted to Chief Financial Officer effective April 1, 2024, as previously announced. R. Kevin Matz, Age 65; Executive Vice President-Shared Services of the Company since December 2007 and Senior Vice President-Shared Services from June 2003 to December 2007. From April 1996 to June 2003, Mr.
Removed
Matz served as Vice President and Treasurer of the Company and Staff Vice President-Financial Services of the Company from March 1993 to April 1996. On December 15, 2023, the Company announced that Mr. Matz will step down as Executive Vice President-Shared Services and depart from the Company, effective as of April 1, 2024. Maxine L.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchase of Equity Securities by the Issuer and Affiliated Purchasers The following table summarizes repurchases of our common stock made by us during the quarter ended December 31, 2023: Period Total Number of Shares Purchased (1) (2) Average Price Paid Per Share (3) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet be Purchased Under the Plan or Programs October 1, 2023 to October 31, 2023 114,292 $196.09 114,292 $261,064,294 November 1, 2023 to November 30, 2023 — — — $261,064,294 December 1, 2023 to December 31, 2023 — — — $261,064,294 Total 114,292 $196.09 114,292 _________ (1) In September 2011, our Board of Directors (the “Board”) authorized a share repurchase program allowing us to begin repurchasing shares of our outstanding common stock.
Biggest changePurchase of Equity Securities by the Issuer and Affiliated Purchasers The following table summarizes repurchases of our common stock made by us during the quarter ended December 31, 2024: Period Total Number of Shares Purchased (1) (2) Average Price Paid Per Share (3) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet be Purchased Under the Plan or Programs October 1, 2024 to October 31, 2024 — — — $351,825,754 November 1, 2024 to November 30, 2024 65,315 $455.43 65,315 $321,792,898 December 1, 2024 to December 31, 2024 132,265 $466.69 132,265 $259,481,704 Total 197,580 $462.97 197,580 _________ (1) In September 2011, our Board of Directors (the “Board”) authorized a share repurchase program allowing us to begin repurchasing shares of our outstanding common stock.
Financial Statements and Supplementary Data for further information regarding our share repurchase program. (2) Excludes 3,333 shares surrendered to the Company by participants in our share-based compensation plans to satisfy minimum tax withholdings for common stock issued under such plans. (3) Price paid per share excludes any applicable broker commission or excise tax due.
Financial Statements and Supplementary Data for further information regarding our share repurchase program. (2) Excludes 7,111 shares surrendered to the Company by participants in our share-based compensation plans to satisfy minimum tax withholdings for common stock issued under such plans. (3) Price paid per share excludes any applicable broker commission or excise tax due.
As of December 31, 2023, there remained authorization for us to repurchase approximately $261.1 million of our shares. No shares have been repurchased by us since the program was announced other than pursuant to such program. Refer to Note 12 - Common Stock of the notes to consolidated financial statements included in Item 8.
As of December 31, 2024, there remained authorization for us to repurchase approximately $259.5 million of our shares. No shares have been repurchased by us since the program was announced other than pursuant to such program. Refer to Note 12 - Common Stock of the notes to consolidated financial statements included in Item 8.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information. Our common stock trades on the New York Stock Exchange under the symbol “EME.” Holders. As of February 22, 2024, there were approximately 585 stockholders of record. Dividends. We have paid quarterly dividends since October 25, 2011.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information. Our common stock trades on the New York Stock Exchange under the symbol “EME.” Holders. As of February 24, 2025, there were approximately 1,300 stockholders of record. Dividends. We have paid quarterly dividends since October 25, 2011.
We expect that such quarterly dividends will be paid for the foreseeable future. Prior to October 25, 2011, no cash dividends had been paid on the Company’s common stock. We currently pay a regular quarterly dividend of $0.18 per share.
We expect that such quarterly dividends will be paid for the foreseeable future. Prior to October 25, 2011, no cash dividends had been paid on the Company’s common stock. We currently pay a regular quarterly dividend of $0.25 per share. Our 2023 Credit Agreement places limitations on the payment of dividends on our common stock.
Subsequently, the Board has from time to time increased the amount of our common stock that we may repurchase under such program. Since the inception of the repurchase program, the Board has authorized us to repurchase up to $2.15 billion of our outstanding common stock.
Subsequently, the Board has from time to time increased the amount authorized for repurchases under such program. Since the inception of the repurchase program, through December 31, 2024, the Board has authorized us to repurchase up to $2.65 billion of our outstanding common stock.
Removed
Subsequent to December 31, 2023, our Board of Directors announced its intention to increase the regular quarterly dividend to $0.25 per share commencing with the dividend to be paid in April 2024. Our 2023 Credit Agreement places limitations on the payment of dividends on our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

96 edited+28 added−42 removed61 unchanged
Biggest changeSuch acquisitions include: (a) a company that provides electrical construction services in the Greater Boston area, the results of operations of which have been included in our United States electrical construction and facilities services segment, and (b) five companies that enhance our presence in geographies where we have existing operations, the results of operations of which were de minimis, consisting of: (i) two companies that provide fire protection services in the Northeastern and Southern regions of the United States, respectively, and that have been included within our United States mechanical construction and facilities services segment, (ii) two companies that specialize in either building automation and controls or mechanical services in the Southwestern and Southern regions of the United States, respectively, and that have been included within our United States building services segment, and (iii) a company that provides electrical construction services in the Midwestern region of the United States and that has been included within our United States electrical construction and facilities services segment. 24 Table of Contents Discussion and Analysis of Results of Operations Revenues The following table presents our revenues for each of our operating segments and the approximate percentages that each segment’s revenues were of total revenues for the years ended December 31, 2023 and 2022 (in thousands, except for percentages): 2023 % of Total 2022 % of Total Revenues from unrelated entities: United States electrical construction and facilities services $ 2,783,723 22 % $ 2,433,114 22 % United States mechanical construction and facilities services 5,074,803 41 % 4,292,208 39 % United States building services 3,120,134 25 % 2,754,953 25 % United States industrial services 1,167,790 9 % 1,118,767 10 % Total United States operations 12,146,450 97 % 10,599,042 96 % United Kingdom building services 436,423 3 % 477,078 4 % Total operations $ 12,582,873 100 % $ 11,076,120 100 % As a result of strong demand for our services across the majority of the market sectors we serve, revenues for the year ended December 31, 2023 increased to $12.58 billion compared to revenues of $11.08 billion for the year ended December 31, 2022.
Biggest changeDiscussion and Analysis of Results of Operations Revenues The following table presents our revenues for each of our operating segments and the approximate percentages that each segment’s revenues were of total revenues for the years ended December 31, 2024 and 2023 (in thousands, except for percentages): 2024 % of Total 2023 % of Total Revenues from unrelated entities: United States electrical construction and facilities services $ 3,342,927 23 % $ 2,783,723 22 % United States mechanical construction and facilities services 6,405,657 44 % 5,074,803 41 % United States building services 3,114,817 21 % 3,120,134 25 % United States industrial services 1,277,190 9 % 1,167,790 9 % Total United States operations 14,140,591 97 % 12,146,450 97 % United Kingdom building services 425,525 3 % 436,423 3 % Consolidated revenues $ 14,566,116 100 % $ 12,582,873 100 % 24 Table of Contents As a result of strong demand for our services across most of the market sectors we serve, revenues for the year ended December 31, 2024 increased to $14.57 billion compared to revenues of $12.58 billion for the year ended December 31, 2023.
We refer to our United States electrical construction and facilities services segment and our United States mechanical construction and facilities services segment together as our United States construction segments. For a more complete description of our operations, refer to Item 1. Business.
We refer to our United States electrical construction and facilities services segment and our United States mechanical construction and facilities services segment together as our United States construction segments. For a more complete description of our operations, refer to Item 1.
Refer to Note 14 - Retirement Plans of the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data for more information regarding these multiemployer benefit plans.
Refer to Note 14 - Retirement Plans of the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data for more information regarding multiemployer benefit plans.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Form 10-K for the year ended December 31, 2022. Operating Activities – Operating cash flows generally represent our net income as adjusted for certain non-cash items and changes in assets and liabilities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Form 10-K for the year ended December 31, 2023. Operating Activities – Operating cash flows generally represent our net income as adjusted for certain non-cash items and changes in assets and liabilities.
For additional detail regarding our share repurchase program, refer to Note 12 - Common Stock of the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data. We currently pay a regular quarterly dividend of $0.18 per share.
For additional detail regarding our share repurchase program, refer to Note 12 - Common Stock of the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data. We currently pay a regular quarterly dividend of $0.25 per share.
Further, for each of our reporting units, a 10% decline in the estimated fair value of such reporting unit, due to other changes in our assumptions, including forecasted future cash flows, would not have significantly impacted the results of our 2023 impairment tests.
Further, for each of our reporting units, a 10% decline in the estimated fair value of such reporting unit, due to other changes in our assumptions, including forecasted future cash flows, would not have significantly impacted the results of our 2024 impairment tests.
There have been no significant changes to our critical accounting policies or methods for the year ended December 31, 2023. We believe the following critical accounting policies govern the more significant judgments and estimates used in the preparation of our financial statements.
There have been no significant changes to our critical accounting policies or methods for the year ended December 31, 2024. We believe the following critical accounting policies govern the more significant judgments and estimates used in the preparation of our financial statements.
Material Cash Requirements from Contractual and Other Obligations As of December 31, 2023, our short-term and long-term material cash requirements for known contractual and other obligations were as follows: Outstanding Debt and Interest Payments – As of December 31, 2023, there were no direct borrowings outstanding under our revolving credit facility.
Material Cash Requirements from Contractual and Other Obligations As of December 31, 2024, our short-term and long-term material cash requirements for known contractual and other obligations were as follows: Outstanding Debt and Interest Payments – As of December 31, 2024, there were no direct borrowings outstanding under our revolving credit facility.
Financial Statements and Supplementary Data for further disclosure regarding our remaining performance obligations. 2022 versus 2021 For discussion and analysis of results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to Item 7.
Financial Statements and Supplementary Data for further disclosure regarding our remaining performance obligations. 2023 versus 2022 For discussion and analysis of results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to Item 7.
Changes in our cash position from December 31, 2022 to December 31, 2023 are described in further detail below. For a discussion of the changes in our cash position from December 31, 2021 to December 31, 2022, refer to the Liquidity and Capital Resources section included in Item 7.
Changes in our cash position from December 31, 2023 to December 31, 2024 are described in further detail below. For a discussion of the changes in our cash position from December 31, 2022 to December 31, 2023, refer to the Liquidity and Capital Resources section included in Item 7.
Given the amounts by which the fair value exceeds the carrying value for each of our reporting units, the decreases in estimated fair values described above would not have significantly impacted the results of our 2023 impairment tests.
Given the amounts by which the fair value exceeds the carrying value for each of our reporting units, the decreases in estimated fair values described above would not have significantly impacted the results of our 2024 impairment tests.
Therefore, if our actual experience differs from the assumptions and estimates used for recording the liabilities, adjustments may be required and will be recorded in the period that the experience becomes known. In addition, as discussed above, an increase in the cost to settle insurance claims could result in higher insurance costs and deductibles.
Therefore, if our actual experience differs from the assumptions and estimates used for recording the liabilities, adjustments may be required and will be recorded in the period that the experience becomes known. In addition, an increase in the cost to settle insurance claims could result in higher insurance costs and deductibles.
In addition, we review for impairment of identifiable intangible assets that are being amortized as well as other long-lived assets whenever facts and circumstances indicate that their carrying values may not be fully recoverable. 35 Table of Contents As of October 1, 2023, we performed our annual impairment testing of all subsidiary trade names that are not subject to amortization and determined that there was no impairment of these assets.
In addition, we review for impairment of identifiable intangible assets that are being amortized as well as other long-lived assets whenever facts and circumstances indicate that their carrying values may not be fully recoverable. 34 Table of Contents As of October 1, 2024, we performed our annual impairment testing of all subsidiary trade names that are not subject to amortization and determined that there was no impairment of these assets.
Insurance Obligations – As described in further detail in Note 2 - Summary of Significant Accounting Policies of the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, we have loss payment deductibles and/or self-insured retentions for certain insurance matters. As of December 31, 2023, our insurance liabilities, net of estimated recoveries, were $220.1 million.
Insurance Obligations – As described in further detail in Note 2 - Summary of Significant Accounting Policies of the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, we have loss payment deductibles and/or self-insured retentions for certain insurance matters. As of December 31, 2024, our insurance liabilities, net of estimated recoveries, were $240.1 million.
As of December 31, 2023, 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 25% of our total remaining performance obligations.
As of December 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 $2.5 billion, which represents approximately 25% of our total remaining performance obligations.
During the quarter ended September 30, 2023, we identified facts and circumstances that indicated the carrying values of certain long-lived assets within our United States mechanical construction and facilities services segment may not be fully recoverable, necessitating a comparison of their carrying values to the undiscounted pre-tax cash flows estimated to result from the use of such assets.
During 2023, we identified facts and circumstances that indicated the carrying values of certain long-lived assets within our United States mechanical construction and facilities services segment may not be fully recoverable, necessitating a comparison of their carrying values to the undiscounted pre-tax cash flows estimated to result from the use of such assets.
For example, a 50 basis point increase or decrease in the estimated gross profit margin on our uncompleted construction projects, in the aggregate, as a result of a revision in estimated costs to complete a performance obligation or a revision in estimated transaction price, would have resulted in an increase or decrease to operating income of approximately $100 million for the year ended December 31, 2023.
For example, a 50 basis point increase or decrease in the estimated gross profit margin on our uncompleted construction projects, in the aggregate, as a result of a revision in estimated costs to complete a performance obligation or a revision in estimated transaction price, would have resulted in an increase or decrease to operating income of approximately $130 million for the year ended December 31, 2024.
Financial Statements and Supplementary Data for further detail surrounding our lease obligations and the timing of expected future payments. Open Purchase Obligations – As of December 31, 2023, we had $2.33 billion of open purchase obligations, of which payments totaling approximately $2.02 billion are expected to become due within the next 12 months.
Financial Statements and Supplementary Data for further detail surrounding our lease obligations and the timing of expected future payments. Open Purchase Obligations – As of December 31, 2024, we had $2.33 billion of open purchase obligations, of which payments totaling approximately $2.01 billion are expected to become due within the next 12 months.
We performed our annual impairment assessment of all reporting units as of October 1, 2023 and determined there was no impairment of goodwill.
We performed our annual impairment assessment of all reporting units as of October 1, 2024 and determined there was no impairment of goodwill.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Form 10-K for the year ended December 31, 2022. 29 Table of Contents Liquidity and Capital Resources The following section discusses our principal liquidity and capital resources, as well as our primary liquidity requirements and sources and uses of cash.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Form 10-K for the year ended December 31, 2023. 28 Table of Contents Liquidity and Capital Resources The following section discusses our principal liquidity and capital resources, as well as our primary liquidity requirements and sources and uses of cash.
If our estimated insurance liabilities for workers’ compensation, automobile liability, general liability, and property claims were to increase by 10%, it would have resulted in $22.0 million of additional expense for the year ended December 31, 2023.
If our estimated insurance liabilities for workers’ compensation, automobile liability, general liability, and property claims were to increase by 10%, it would have resulted in $24.0 million of additional expense for the year ended December 31, 2024.
Of this net amount, approximately $39.2 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.
Of this net amount, approximately $41.6 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.
Identifiable Intangible Assets and Other Long-Lived Assets As of December 31, 2023 and 2022, net identifiable intangible assets (primarily consisting of our customer relationships, subsidiary trade names, developed technology/vendor network, and contract backlog) arising out of the acquisition of businesses were $586.0 million and $594.0 million, respectively.
Identifiable Intangible Assets and Other Long-Lived Assets As of December 31, 2024 and 2023, net identifiable intangible assets (primarily consisting of our customer relationships, subsidiary trade names, developed technology/vendor network, and contract backlog) arising out of the acquisition of businesses were $648.2 million and $586.0 million, respectively.
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 December 31, 2023, the present value of expected future payments relating to these contingent consideration arrangements was $9.5 million.
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 December 31, 2024, the present value of expected future payments relating to these contingent consideration arrangements was $29.7 million.
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 during 2023 was $412.1 million compared to $710.1 million during 2022.
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 during 2024 was $555.4 million compared to $412.1 million during 2023.
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 $1.18 billion of available capacity as of December 31, 2023.
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 December 31, 2024.
As of December 31, 2023, we satisfied approximately $48.1 million and $71.1 million of the collateral requirements of our insurance programs by utilizing surety bonds and letters of credit, respectively. All such letters of credit were issued under our revolving credit facility, therefore reducing the available capacity of such facility.
As of December 31, 2024, we satisfied approximately $61.7 million and $71.1 million of the collateral requirements of our insurance programs by utilizing surety bonds and letters of credit, respectively. All such letters of credit were issued under our revolving credit facility, therefore reducing the available capacity of such facility.
Our estimated net insurance liabilities for workers’ compensation, automobile liability, general liability, and property claims increased by $18.6 million for the year ended December 31, 2023 compared to the year ended December 31, 2022, partially as a result of greater potential exposures and an increase in certain of our deductibles or self-insured retentions.
Our estimated net insurance liabilities for workers’ compensation, automobile liability, general liability, and property claims increased by $20.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, partially as a result of greater potential exposures and an increase in certain of our deductibles or self-insured retentions.
During 2023, 2022, and 2021, contributions made to these plans were $502.3 million, $449.9 million, and $399.5 million, respectively; however, our future contributions to the multiemployer plans are dependent upon a number of factors. Amounts of future contributions that we would be contractually obligated to make pursuant to these plans cannot be reasonably estimated.
During 2024, 2023, and 2022, contributions made to these plans were $577.0 million, $502.3 million, and $449.9 million, respectively; however, our future contributions to the multiemployer plans are dependent upon a number of factors. Amounts of future contributions that we would be contractually obligated to make pursuant to these plans cannot be reasonably estimated.
Selling, general and administrative expenses The following table presents selling, general and administrative expenses (“SG&A”) and selling, general and administrative expenses as a percentage of revenues (“SG&A margin”) for the years ended December 31, 2023 and 2022 (in thousands, except for percentages): 2023 2022 Selling, general and administrative expenses $ 1,211,233 $ 1,038,717 SG&A margin 9.6 % 9.4 % Our selling, general and administrative expenses for the year ended December 31, 2023 were $1,211.2 million, or 9.6% of revenues, compared to selling, general and administrative expenses of $1,038.7 million, or 9.4% of revenues, for the year ended December 31, 2022.
Selling, general and administrative expenses The following table presents selling, general and administrative expenses (“SG&A”) and selling, general and administrative expenses as a percentage of revenues (“SG&A margin”) for the years ended December 31, 2024 and 2023 (in thousands, except for percentages): 2024 2023 Selling, general and administrative expenses $ 1,420,188 $ 1,211,233 SG&A margin 9.7 % 9.6 % Our selling, general and administrative expenses for the year ended December 31, 2024 were $1,420.2 million, or 9.7% of revenues, compared to selling, general and administrative expenses of $1,211.2 million, or 9.6% of revenues, for the year ended December 31, 2023.
Therefore, the $18.9 million variance between the years ended December 31, 2023 and 2022 was a direct result of favorable exchange rate movements for the British pound versus the United States dollar.
Therefore, the $9.0 million variance between the years ended December 31, 2024 and 2023 was a direct result of exchange rate movements for the British pound versus the United States dollar.
As a result of this test, we determined that these assets were impaired, and, during the third quarter of 2023, recognized a $2.4 million impairment charge as calculated using a discounted cash flow model.
As a result of this test, we determined that these assets were impaired, and recognized a $2.4 million impairment charge as calculated using a discounted cash flow model.
Operating income for 2023 was $875.8 million, or 7.0% of revenues, establishing new annual records for the Company with respect to both operating income and operating margin. This compares to operating income of $564.9 million, or 5.1% of revenues, in 2022.
Operating income for 2024 was $1,344.9 million, or 9.2% of revenues, establishing new annual records for the Company with respect to both operating income and operating margin. This compares to operating income of $875.8 million, or 7.0% of revenues, in 2023.
The weighted average cost of capital used in our annual impairment testing was 10.9% for our United States construction segments, 11.2% for our United States building services segment, and 11.0% for our United States industrial services segment.
The weighted average cost of capital used in our annual impairment testing was 10.6% for our United States construction segments, 10.9% for our United States building services segment, and 10.5% for our United States industrial services segment.
Excluding incremental acquisition contribution of $18.6 million, the $346.6 million increase in this segment’s revenues was primarily attributable to its 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, 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.
With respect to this segment’s mechanical services division, revenue growth was experienced from: (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, 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.
Future payments for such leases, excluding leases with initial terms of one year or less, were $381.7 million at December 31, 2023, with $89.7 million payable within the next 12 months. Refer to Note 16 - Leases of the notes to consolidated financial statements included in Item 8.
Future payments for such leases, excluding leases with initial terms of one year or less, were $390.1 million at December 31, 2024, with $96.9 million payable within the next 12 months. Refer to Note 16 - Leases of the notes to consolidated financial statements included in Item 8.
Excluding incremental expenses from businesses acquired, the increase in selling, general and administrative expenses, and SG&A margin, was predominantly attributable to increases in incentive compensation expense across the majority of our reportable segments, due to higher operating results than in the prior year, and 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.
Excluding incremental expenses from businesses acquired, the increase in selling, general and administrative expenses 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 at certain of our operating subsidiaries, due to higher operating results than in the prior year.
As of December 31, 2023, approximately 18.6% of our goodwill related to our United States electrical construction and facilities services segment, approximately 33.3% related to our United States mechanical construction and facilities services segment, approximately 36.2% related to our United States building services segment, and approximately 11.9% related to our United States industrial services segment. 34 Table of Contents Absent any earlier identified impairment indicators, we perform our annual goodwill impairment assessment on October 1 each fiscal year.
As of December 31, 2024, approximately 18.8% of our goodwill related to our United States electrical construction and facilities services segment, approximately 33.8% related to our United States mechanical construction and facilities services segment, approximately 35.2% related to our United States building services segment, and approximately 12.2% related to our United States industrial services segment. 33 Table of Contents Absent any earlier identified impairment indicators, we perform our annual goodwill impairment assessment on October 1 each fiscal year.
Operating income of our United States building services segment for the year ended December 31, 2023 was $183.0 million, or 5.9% of revenues, compared to operating income of $146.6 million, or 5.3% of revenues, for the year ended December 31, 2022.
Operating income of our United States building services segment for the year ended December 31, 2024 was $176.7 million, or 5.7% of revenues, compared to operating income of $183.0 million, or 5.9% of revenues, for the year ended December 31, 2023.
For example, keeping all other assumptions constant, a 50 basis point increase in the weighted average cost of capital would cause the estimated fair values of our United States electrical construction and facilities services segment, our United States mechanical construction and facilities services segment, our United States building services segment, and our United States industrial services segment to decrease by approximately $115.2 million, $249.9 million, $84.2 million, and $25.2 million, respectively.
For example, keeping all other assumptions constant, a 50 basis point increase in the weighted average cost of capital would cause the estimated fair values of our United States electrical construction and facilities services segment, our United States mechanical construction and facilities services segment, our United States building services segment, and our United States industrial services segment to decrease by approximately $226.5 million, $383.7 million, $93.5 million, and $32.5 million, respectively.
Goodwill, Identifiable Intangible Assets, and Other Long-Lived Assets Goodwill As of December 31, 2023 and 2022, we had goodwill of $956.5 million and $919.2 million, respectively, arising out of the acquisition of businesses.
Goodwill, Identifiable Intangible Assets, and Other Long-Lived Assets Goodwill As of December 31, 2024 and 2023, we had goodwill of $1,018.4 million and $956.5 million, respectively, arising out of the acquisition of businesses.
Operating income of our United States electrical construction and facilities services segment for the year ended December 31, 2023 was $230.6 million, or 8.3% of revenues, compared to operating income for the year ended December 31, 2022 of $148.7 million, or 6.1% of revenues.
Operating income of our United States electrical construction and facilities services segment for the year ended December 31, 2024 was $447.2 million, or 13.4% of revenues, compared to operating income for the year ended December 31, 2023 of $230.6 million, or 8.3% of revenues.
In addition, keeping all other assumptions constant, a 50 basis point reduction in the perpetual growth rate would cause the estimated fair values of our United States electrical construction and facilities services segment, our United States mechanical construction and facilities services segment, our United States building services segment, and our United States industrial services segment to decrease by approximately $56.5 million, $137.1 million, $40.4 million, and $9.3 million, respectively.
In addition, keeping all other assumptions constant, a 50 basis point reduction in the perpetual growth rate would cause the estimated fair values of our United States electrical construction and facilities services segment, our United States mechanical construction and facilities services segment, our United States building services segment, and our United States industrial services segment to decrease by approximately $123.2 million, $210.1 million, $46.0 million, and $13.0 million, respectively.
As of December 31, 2023, we had cash and cash equivalents of $789.8 million, which are maintained in depository accounts and highly liquid investments with original maturity dates of three months or less.
As of December 31, 2024, we had cash and cash equivalents, excluding restricted cash, of $1,339.6 million, which are maintained in depository accounts and highly liquid investments with original maturity dates of three months or less.
For 2023, net cash provided by operating activities was approximately $899.7 million compared to approximately $497.9 million of net cash provided by operating activities in 2022.
For 2024, net cash provided by operating activities was approximately $1,407.9 million compared to approximately $899.7 million in 2023.
However, if we experience changes in our bonding relationships or if there are adverse changes in the surety industry, we may: (a) seek to satisfy certain customer requests for surety bonds by posting other forms of collateral in lieu of surety bonds, such as letters of credit, parent company guarantees, or cash, in order to convince customers to forego the requirement for surety bonds, (b) increase our activities in our businesses that rarely require surety bonds, and/or (c) refrain from bidding for certain projects that require surety bonds. 32 Table of Contents There can be no assurance that we would be able to effectuate alternatives to providing surety bonds to our customers or to obtain, on favorable terms, sufficient additional work that does not require surety bonds.
However, if we experience changes in our bonding relationships or if there are adverse changes in the surety industry, we may: (a) seek to satisfy certain customer requests for surety bonds by posting other forms of collateral in lieu of surety bonds, such as letters of credit, parent company guarantees, or cash, in order to convince customers to forego the requirement for surety bonds, (b) increase our activities in our businesses that rarely require surety bonds, and/or (c) refrain from bidding for certain projects that require surety bonds.
Our income tax provision for the year ended December 31, 2023 was $239.5 million, based on an income tax rate of 27.5%, compared to an income tax provision and an income tax rate of $152.6 million and 27.3%, respectively, for the year ended December 31, 2022.
Our income tax provision for the year ended December 31, 2024 was $370.2 million, based on an income tax rate of 26.9%, compared to an income tax provision and an income tax rate of $239.5 million and 27.5%, respectively, for the year ended December 31, 2023.
Net income of $633.0 million, or $13.31 per diluted share, for the year ended December 31, 2023, compares favorably to net income of $406.1 million, or $8.10 per diluted share, for the year ended December 31, 2022.
Net income of $1,007.1 million, or $21.52 per diluted share, for the year ended December 31, 2024, compares favorably to net income of $633.0 million, or $13.31 per diluted share, for the year ended December 31, 2023.
Revenues of our United States electrical construction and facilities services segment were $2,783.7 million for the year ended December 31, 2023 compared to revenues of $2,433.1 million for the year ended December 31, 2022. This segment’s results included $88.5 million of incremental acquisition revenues for the year ended December 31, 2023.
Revenues of our United States electrical construction and facilities services segment were $3,342.9 million for the year ended December 31, 2024, a $559.2 million increase compared to revenues of $2,783.7 million for the year ended December 31, 2023. This segment’s results for 2024 included $2.7 million of incremental acquisition revenues.
Of this amount, $6.1 million is estimated as being payable during 2024, with the remainder due in 2025. In addition, material cash requirements for other potential obligations, for which we cannot reasonably estimate future payments, include the following: Legal Proceedings – We are involved in several legal proceedings in which damages and claims have been asserted against us.
Of this amount, $20.4 million is estimated as being payable during 2025, with the remainder due pursuant to the terms of our contractual agreements, some of which extend into 2027. 30 Table of Contents In addition, material cash requirements for other potential obligations, for which we cannot reasonably estimate future payments, include the following: Legal Proceedings – We are involved in several legal proceedings in which damages and claims have been asserted against us.
Cash Flows The following table presents a summary of our operating, investing, and financing cash flows (in thousands): 2023 2022 Net cash provided by operating activities $ 899,655 $ 497,933 Net cash used in investing activities $ (161,291) $ (140,800) Net cash used in financing activities $ (412,054) $ (710,118) Effect of exchange rate changes on cash, cash equivalents, and restricted cash $ 6,372 $ (12,515) Increase (decrease) in cash, cash equivalents, and restricted cash $ 332,682 $ (365,500) During the year ended December 31, 2023, our cash balance, including cash equivalents and restricted cash, increased by $332.7 million from $457.1 million at December 31, 2022 to $789.8 million at December 31, 2023.
Cash Flows The following table presents a summary of our operating, investing, and financing cash flows (in thousands): 2024 2023 Net cash provided by operating activities $ 1,407,894 $ 899,655 Net cash used in investing activities $ (299,284) $ (161,291) Net cash used in financing activities $ (555,365) $ (412,054) Effect of exchange rate changes on cash, cash equivalents, and restricted cash $ (2,600) $ 6,372 Increase in cash, cash equivalents, and restricted cash $ 550,645 $ 332,682 During the year ended December 31, 2024, our cash balance, including cash equivalents and restricted cash, increased by $550.6 million from $789.8 million at December 31, 2023 to $1,340.4 million at December 31, 2024.
Based on these impairment assessments, the fair values of our United States electrical construction and facilities services segment, our United States mechanical construction and facilities services segment, our United States building services segment, and our United States industrial services segment exceeded their carrying values by approximately $1,724.3 million, $4,411.7 million, $1,048.0 million, and $89.1 million, respectively.
Based on these impairment assessments, the fair values of our United States electrical construction and facilities services segment, our United States mechanical construction and facilities services segment, our United States building services segment, and our United States industrial services segment exceeded their carrying values by approximately $3,940.5 million, $6,852.3 million, $1,143.8 million, and $163.1 million, respectively.
For the year ended December 31, 2023, selling, general and administrative expenses included $17.3 million of incremental expenses directly related to companies acquired in 2023 and 2022, including amortization expense attributable to identifiable intangible assets of $4.6 million.
Selling, general and administrative expenses for 2024 included $32.8 million of incremental expenses directly related to companies acquired in 2024 and 2023, including amortization expense attributable to identifiable intangible assets of $6.7 million.
Remaining Unsatisfied Performance Obligations The following table presents the transaction price allocated to remaining unsatisfied performance obligations (“remaining performance obligations”) for each of our reportable segments and their respective percentage of total remaining performance obligations (in thousands, except for percentages): December 31, 2023 % of Total December 31, 2022 % of Total Remaining performance obligations: United States electrical construction and facilities services $ 2,387,844 27 % $ 2,014,079 27 % United States mechanical construction and facilities services 4,940,519 56 % 3,987,134 53 % United States building services 1,264,818 14 % 1,172,816 16 % United States industrial services 113,291 1 % 124,653 2 % Total United States operations 8,706,472 98 % 7,298,682 98 % United Kingdom building services 140,949 2 % 160,617 2 % Total operations $ 8,847,421 100 % $ 7,459,299 100 % Our remaining performance obligations at December 31, 2023 were $8.85 billion compared to $7.46 billion at December 31, 2022.
Remaining Unsatisfied Performance Obligations The following table presents the transaction price allocated to remaining unsatisfied performance obligations (“remaining performance obligations”) for each of our reportable segments and their respective percentage of total remaining performance obligations (in thousands, except for percentages): December 31, 2024 % of Total December 31, 2023 % of Total Remaining performance obligations: United States electrical construction and facilities services $ 3,068,396 31 % $ 2,387,844 27 % United States mechanical construction and facilities services 5,463,096 54 % 4,940,519 56 % United States building services 1,246,642 12 % 1,264,818 14 % United States industrial services 138,599 1 % 113,291 1 % Total United States operations 9,916,733 98 % 8,706,472 98 % United Kingdom building services 185,466 2 % 140,949 2 % Total operations $ 10,102,199 100 % $ 8,847,421 100 % Our remaining performance obligations at December 31, 2024 were $10.10 billion compared to $8.85 billion at December 31, 2023.
The increase in annual interest income resulted from greater returns on our invested cash, due to the previously referenced interest rate environment, as well as an increase in average bank deposits.
The increase in annual interest income resulted from greater returns on our invested cash, due to an increase in our average daily invested cash balance.
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.
For the years ended December 31, 2024 and 2023, cash payments related to dividends were $43.4 million and $32.7 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.
Our United States mechanical construction and facilities services segment revenues for the year ended December 31, 2023 were $5,074.8 million, a $782.6 million increase compared to revenues of $4,292.2 million for the year ended December 31, 2022.
Our United States mechanical construction and facilities services segment revenues for the year ended December 31, 2024 were $6,405.7 million, a $1,330.9 million increase compared to revenues of $5,074.8 million for the year ended December 31, 2023. This segment’s results included $172.5 million of incremental acquisition revenues for the year ended December 31, 2024.
Revenues of our United States building services segment were $3,120.1 million and $2,755.0 million for the years ended December 31, 2023 and 2022, respectively.
Revenues of our United States building services segment were $3,114.8 million for the year ended December 31, 2024 compared to $3,120.1 million for the year ended December 31, 2023.
Generally, we are liable under such an arrangement only if our subsidiary fails to perform its obligations under the contract. Historically, we have not incurred any substantial liabilities as a consequence of these guarantees. We do not have any other material financial guarantees or off-balance sheet arrangements other than those disclosed herein.
In the ordinary course of business, we, at times, guarantee obligations of our subsidiaries under certain contracts. Generally, we are liable under such an arrangement only if our subsidiary fails to perform its obligations under the contract. Historically, we have not incurred any substantial liabilities as a consequence of these guarantees.
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.
Demand for our services continues to be strong across most of the market sectors we serve and, as described in further detail below, we experienced revenue growth within the majority of our reportable segments. Revenues for the year ended December 31, 2024 included incremental acquisition contribution of approximately $251.5 million.
This segment’s operating income for the year ended December 31, 2023 was positively impacted by $0.5 million related to the effect of favorable exchange rate movements. Our corporate administration expenses were $127.2 million for 2023 compared to $110.4 million in 2022.
Operating income of this segment for 2024 was positively impacted by $0.5 million as a result of favorable exchange rate movements for the British pound versus the United States dollar. Our corporate administration expenses were $144.4 million for 2024 compared to $127.2 million in 2023.
Any of these events could result in reduced demand for our services or affect our ability to collect payment, and therefore, have a material adverse effect on our business, financial condition, and/or results of operations. 23 Table of Contents 2023 versus 2022 Overview The following table presents selected financial data for the fiscal years ended December 31, 2023 and 2022 (in thousands, except percentages and per share data): 2023 2022 Revenues $ 12,582,873 $ 11,076,120 Revenues increase from prior year 13.6 % 11.8 % Gross profit $ 2,089,339 $ 1,603,594 Gross profit as a percentage of revenues 16.6 % 14.5 % Operating income $ 875,756 $ 564,877 Operating income as a percentage of revenues 7.0 % 5.1 % Net income attributable to EMCOR Group, Inc. $ 632,994 $ 406,122 Diluted earnings per common share $ 13.31 $ 8.10 Revenues of $12.58 billion for the year ended December 31, 2023 set a new annual record for the Company and represent an increase of 13.6% from revenues of $11.08 billion for the year ended December 31, 2022.
Business. 2024 versus 2023 Overview The following table presents selected financial data for the fiscal years ended December 31, 2024 and 2023 (in thousands, except percentages and per share data): 2024 2023 Revenues $ 14,566,116 $ 12,582,873 Revenues increase from prior year 15.8 % 13.6 % Gross profit $ 2,765,051 $ 2,089,339 Gross profit as a percentage of revenues 19.0 % 16.6 % Operating income $ 1,344,863 $ 875,756 Operating income as a percentage of revenues 9.2 % 7.0 % Net income attributable to EMCOR Group, Inc. $ 1,007,145 $ 632,994 Diluted earnings per common share $ 21.52 $ 13.31 Revenues of $14.57 billion for the year ended December 31, 2024 set a new annual record for the Company and represent an increase of 15.8% from revenues of $12.58 billion for the year ended December 31, 2023.
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. 31 Table of Contents 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.
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.
Cost of sales and gross profit The following table presents cost of sales, gross profit (revenues less cost of sales), and gross profit as a percentage of revenues (“gross profit margin”) for the years ended December 31, 2023 and 2022 (in thousands, except for percentages): 2023 2022 Cost of sales $ 10,493,534 $ 9,472,526 Gross profit $ 2,089,339 $ 1,603,594 Gross profit margin 16.6 % 14.5 % Our gross profit for the year ended December 31, 2023 was $2,089.3 million, or 16.6% of revenues, compared to gross profit of $1,603.6 million, or 14.5% of revenues, for the year ended December 31, 2022.
Revenues of this segment for 2024 were positively impacted by $11.4 million as a result of favorable exchange rate movements for the British pound versus the United States dollar. 25 Table of Contents Cost of sales and gross profit The following table presents cost of sales, gross profit (revenues less cost of sales), and gross profit as a percentage of revenues (“gross profit margin”) for the years ended December 31, 2024 and 2023 (in thousands, except for percentages): 2024 2023 Cost of sales $ 11,801,065 $ 10,493,534 Gross profit $ 2,765,051 $ 2,089,339 Gross profit margin 19.0 % 16.6 % Our gross profit for the year ended December 31, 2024 was $2,765.1 million, or 19.0% of revenues, compared to gross profit of $2,089.3 million, or 16.6% of revenues, for the year ended December 31, 2023.
The year-over-year increase in this segment’s revenues was primarily attributable to revenue growth within: (a) the high-tech manufacturing market sector, as a result of increased 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, and (c) the manufacturing and industrial market sector, due in part to continued re-shoring of critical supply chain by certain of our customers.
This segment experienced notable increases in revenues 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 or university projects which were active during 2024, (d) the manufacturing and industrial market sector largely as a result of the re-shoring of critical supply chain by certain of our customers, (e) the water and wastewater market sector, driven by several projects within the Southeast region of the United States, and (f) the healthcare market sector, due to an increase in projects throughout several of the regions in which we operate.
In addition to these increases in employment costs, our SG&A for 2023 included incremental: (a) computer hardware and software costs, as a result of various information technology and cybersecurity initiatives currently in process, (b) travel and entertainment expenses, and (c) rent and other occupancy costs driven by: (i) the expansion or addition of certain fabrication facilities, which support our operations, and (ii) the impact of inflation on the real estate market. 26 Table of Contents Operating income (loss) The following table presents by segment our operating income (loss) and each segment’s operating income (loss) as a percentage of such segment’s revenues (“operating margin”) for the years ended December 31, 2023 and 2022 (in thousands, except for percentages): 2023 % of Segment Revenues 2022 % of Segment Revenues Operating income (loss): United States electrical construction and facilities services $ 230,640 8.3 % $ 148,728 6.1 % United States mechanical construction and facilities services 530,644 10.5 % 330,325 7.7 % United States building services 182,995 5.9 % 146,639 5.3 % United States industrial services 35,375 3.0 % 19,787 1.8 % Total United States operations 979,654 8.1 % 645,479 6.1 % United Kingdom building services 25,681 5.9 % 29,838 6.3 % Corporate administration (127,229) — (110,440) — Impairment loss on long-lived assets (2,350) — — — Total operations 875,756 7.0 % 564,877 5.1 % Other items: Net periodic pension (cost) income (1,119) 4,311 Interest expense (17,199) (13,199) Interest income 15,415 2,761 Income before income taxes $ 872,853 $ 558,750 Operating income for the year ended December 31, 2023 was $875.8 million, an increase of $310.9 million compared to operating income of $564.9 million for the year ended December 31, 2022.
Operating income (loss) The following table presents by segment our operating income (loss) and each segment’s operating income (loss) as a percentage of such segment’s revenues (“operating margin”) for the years ended December 31, 2024 and 2023 (in thousands, except for percentages): 2024 % of Segment Revenues 2023 % of Segment Revenues Operating income (loss): United States electrical construction and facilities services $ 447,186 13.4 % $ 230,640 8.3 % United States mechanical construction and facilities services 799,613 12.5 % 530,644 10.5 % United States building services 176,720 5.7 % 182,995 5.9 % United States industrial services 44,213 3.5 % 35,375 3.0 % Total United States operations 1,467,732 10.4 % 979,654 8.1 % United Kingdom building services 21,485 5.0 % 25,681 5.9 % Corporate administration (144,354) — (127,229) — Impairment loss on long-lived assets — — (2,350) — Consolidated operating income 1,344,863 9.2 % 875,756 7.0 % Other items: Net periodic pension income (cost) 894 (1,119) Interest expense (3,779) (17,199) Interest income 35,404 15,415 Income before income taxes $ 1,377,382 $ 872,853 26 Table of Contents Operating income for the year ended December 31, 2024 was $1,344.9 million, an increase of $469.1 million compared to operating income of $875.8 million for the year ended December 31, 2023.
Impact of Acquisitions In order to provide a more meaningful period-over-period discussion of our operating results, we may discuss amounts generated or incurred (revenues, gross profit, selling, general and administrative expenses, and operating income) from companies acquired.
Further, our diluted earnings per share for the year ended December 31, 2024 was positively impacted by a reduced weighted average share count due to common stock repurchases made by us throughout 2023 and 2024. 23 Table of Contents Impact of Acquisitions In order to provide a more meaningful period-over-period discussion of our operating results, we may discuss amounts generated or incurred (revenues, gross profit, selling, general and administrative expenses, and operating income) from companies acquired.
The year-over-year increase in interest expense was a result of higher interest rates, partially offset by reduced average outstanding borrowings. Interest income was $15.4 million and $2.8 million for the years ended December 31, 2023 and 2022, respectively.
The year-over-year decrease in interest expense was a result of the repayment, in December of 2023, of all previously outstanding direct borrowings under our credit facility. Interest income was $35.4 million and $15.4 million for the years ended December 31, 2024 and 2023, respectively.
These improvements were due in part to favorable project execution, greater absorption of indirect costs, and favorable contractual terms. Our United States industrial services segment’s operating income for the year ended December 31, 2023 was $35.4 million, or 3.0% of revenues, compared to operating income of $19.8 million, or 1.8% of revenues, for the year ended December 31, 2022.
Our United States industrial services segment’s operating income for the year ended December 31, 2024 was $44.2 million, or 3.5% of revenues, compared to operating income of $35.4 million, or 3.0% of revenues, for the year ended December 31, 2023.
Other Items To help mitigate the impacts of greenhouse gas emissions on climate change, EMCOR has established initial carbon-based fuel consumption and greenhouse gas emission reduction targets, and has committed to investigating the establishment of science-based greenhouse gas emissions targets.
We do not have any other material financial guarantees or off-balance sheet arrangements other than those disclosed herein. 31 Table of Contents Other Items To help mitigate the impacts of greenhouse gas emissions on climate change, EMCOR has established initial carbon-based fuel consumption and greenhouse gas emission reduction targets.
This increased annual operating performance was 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, (b) the commercial market sector, including various fire protection projects, and (c) the manufacturing and industrial market sector, which continues to benefit from customer initiatives to re-shore their critical supply chain.
Excluding the impact of acquisitions, the increases in operating income and 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 engaged in either the design or manufacturing of semiconductors or the production and development of electric vehicles and/or lithium batteries, and (b) the network and communications market sector.
Financial Statements and Supplementary Data for further information about our goodwill and identifiable intangible assets as well as our impairment testing. No impairment of our goodwill, identifiable intangible assets, or other long-lived assets was recognized during the years ended December 31, 2022 or 2021. 36 Table of Contents
Refer to Note 8 - Goodwill, Identifiable Intangible Assets, and Other Long-Lived Assets of the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data for further information about our goodwill and identifiable intangible assets as well as our impairment testing.
For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, or changes in the estimate of transaction prices, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. 33 Table of Contents Based on an evaluation of individual projects that had revisions to total estimated costs, or anticipated contract value, which resulted in a reduction of profitability in excess of $1.0 million, our operating results were negatively impacted during the years ended December 31, 2023, 2022, and 2021, as summarized in the following table (in thousands): 2023 2022 2021 United States electrical construction and facilities services $ 12,535 $ 33,463 $ 4,627 United States mechanical construction and facilities services 10,864 13,679 2,264 United States building services 5,658 1,261 — Total impact $ 29,057 $ 48,403 $ 6,891 During the year ended December 31, 2023, we recognized revenue of approximately $16.5 million on individual projects that were substantially complete in prior periods but had revisions to total estimated cost or anticipated contract value, which resulted in an increase to profitability in excess of $1.0 million.
Based on an evaluation of individual projects that had revisions to total estimated costs or anticipated contract value that resulted in a reduction of profitability in excess of $1.0 million, our operating results were negatively impacted during the years ended December 31, 2024, 2023, and 2022, as summarized in the following table (in thousands): 2024 2023 2022 United States electrical construction and facilities services $ 27,977 $ 12,535 $ 33,463 United States mechanical construction and facilities services 38,342 10,864 13,679 United States building services — 5,658 1,261 Total impact $ 66,319 $ 29,057 $ 48,403 Due to the significant judgments utilized in the estimation process described above, if subsequent actual results and/or updated assumptions, estimates, or projections related to our underlying project positions were to change from those utilized at December 31, 2024, it could result in a material impact to our results of operations.
The amounts discussed reflect the acquired companies’ operating results in the current reported period only for the time period these entities were not owned by EMCOR in the comparable prior reported period. During 2023, we acquired eight companies for total consideration of $99.6 million.
The amounts discussed reflect the acquired companies’ operating results in the current reported period only for the time period these entities were not owned by EMCOR in the comparable prior reported period. For further discussion regarding our acquisitions, refer to Note 4 - Acquisitions of Businesses of the notes to consolidated financial statements included in Item 8.
It is not possible at this time to determine if any future impairment charge will result or, if it does, whether such a charge would be material to our results of operations. Refer to Note 8 - Goodwill, Identifiable Intangible Assets, and Other Long-Lived Assets of the notes to consolidated financial statements included in Item 8.
These assumptions and estimates may change in future periods. Significant adverse changes to external market conditions or our internal forecasts, if any, could result in future impairment charges. It is not possible at this time to determine if any future impairment charge will result or, if it does, whether such a charge would be material to our results of operations.
Operating margin of this segment for the year ended December 31, 2023 was 10.5%, a 280 basis point improvement over its operating margin for the year ended December 31, 2022 of 7.7%.
Operating margin of this segment for the year ended December 31, 2024 was 12.5%, a 200 basis point improvement over its operating margin for the year ended December 31, 2023 of 10.5%. This segment’s operating income for 2024 included incremental acquisition contribution of $14.4 million net of amortization expense attributable to identifiable intangible assets of $10.3 million.
The $401.7 million increase in operating cash flows during 2023, when compared to 2022, was largely a result of increased income, coupled with customer deposits and advanced payments on certain construction contracts, as evidenced by the growth in our contract liabilities. 30 Table of Contents Investing Activities – Investing cash flows consist primarily of payments for the acquisition of businesses, capital expenditures, and proceeds from the sale or disposal of property, plant, and equipment.
The $508.2 million year-over-year increase in operating cash flows was primarily a result of: (a) our improved operating performance and the corresponding increase in our net income and (b) the timing of cash receipts from our customers. 29 Table of Contents 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.
For the year ended December 31, 2023, there were no other indicators of impairment with respect to identifiable intangible assets that are being amortized as well as other long-lived assets.
With respect to identifiable intangible assets that are being amortized as well as other long-lived assets, we did not identify any circumstances indicating that their carrying values may not be fully recoverable and, therefore, no impairment testing was required for these assets during the year ended December 31, 2024.
In 2023, acquisitions contributed incremental gross profit of approximately $15.9 million, inclusive of amortization expense attributable to identifiable intangible assets of $3.6 million. Refer to the operating income section below for further discussion regarding the operating performance of each of our reportable segments.
Refer to the operating income section below for further discussion regarding the operating performance of each of our reportable segments.
In addition, we have experienced increases in: (a) salaries, as a result of annual cost of living adjustments and an increase in headcount to support our operations, (b) computer hardware and software costs, due to various information technology and cybersecurity initiatives currently in process, and (c) travel and entertainment expenses, given a greater level of travel and business meals. 28 Table of Contents Other items Interest expense was $17.2 million and $13.2 million for the years ended December 31, 2023 and 2022, respectively.
The increase in corporate expenses was primarily due to: (a) greater employment compensation and related costs, including salaries and benefits, incentive compensation, and share-based compensation, (b) certain severance expenses which were recorded during the first quarter of the year, and (c) higher computer hardware and software costs, due to various information technology and cybersecurity initiatives currently in process. 27 Table of Contents Other items Interest expense was $3.8 million and $17.2 million for the years ended December 31, 2024 and 2023, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe are exposed to market risk for changes in interest rates for borrowings under our revolving credit facility. Borrowings under such facility bear interest at variable rates and, as a result of the actions referenced above, such rates have increased throughout 2022 and 2023.
Biggest changeWe are exposed to market risk for changes in interest rates for any borrowings under our revolving credit facility, which bear interest at variable rates. Although the Federal Reserve Board began to decrease the federal funds rate in 2024 after increases in 2022 and much of 2023, the pace and extent of additional decreases are uncertain.
We are also exposed to increases in energy prices, particularly as they relate to gasoline prices for our fleet of approximately 13,800 vehicles. While we believe we can increase our contract prices to adjust for some price increases in commodities, there can be no assurance that such price increases, if they were to occur, would be recoverable.
We are also exposed to increases in energy prices, particularly as they relate to gasoline prices for our fleet of approximately 14,000 vehicles. While we believe we can increase our contract prices to adjust for some price increases in commodities, there can be no assurance that such price increases, if they were to occur, would be recoverable.
Additionally, our fixed price contracts generally do not allow us to adjust our prices and, as a result, increases in material costs could reduce our profitability with respect to projects in progress. Refer to Item 7.
Additionally, our fixed price contracts generally do not allow us to adjust our prices and, as a result, increases in material costs could reduce our profitability with respect to projects in progress. 36 Table of Contents
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have not used any derivative financial instruments during the years ended December 31, 2023 and 2022, including trading or speculating on changes in interest rates or commodity prices of materials used in our business. Throughout 2022 and much of 2023, the Federal Reserve Board increased the federal funds rate.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have not used any derivative financial instruments during the years ended December 31, 2024 and 2023, including trading or speculating on changes in interest rates or commodity prices of materials used in our business.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion regarding the impact of fluctuations in commodity and material prices on our results of operations. 37 Table of Contents

Other EME 10-K year-over-year comparisons