EMCOR Group, Inc.

Good morning. My name is Dave, and I will be your conference operator today. At this time, I would like to welcome everyone to the MCOR Group third quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star and then two. I will now turn the call over to Lucas Sullivan, Director, Financial Planning and Analysis. Mr. Sullivan, you may begin.

Thanks, Dave. Good morning, everyone, and welcome to MCOR's third quarter 2026 earnings conference call. For those of you joining us by webcast, we are at the beginning of our slide presentation that will accompany our remarks today. This presentation will be archived in the Investor Relations section of our website at mcorgroup.com. With me today are Tony Guzzi, our Chairman, President, and Chief Executive Officer, Jason Nalbandian, Senior Vice President and MCOR's Chief Financial Officer, and Maxine Mauricio, Executive Vice President, Chief Administrative Officer, and General Counsel. For today's call, Tony will provide comments on our third quarter 2026 and discuss our RPOs. Jason will then review the third quarter numbers, then turn it back to Tony to discuss our guidance before we open it up for Q&A. Before we begin, a quick reminder that this presentation and discussion contain certain forward-looking statements and may contain certain non-GAAP financial information. Slide two of our presentation describes in detail these forward-looking statements and the non-GAAP financial information disclosures. I encourage everyone to review both disclosures in conjunction with our discussion and Company, Inc. slides. and finally, as a reminder, all financial information discussed during this morning's call is included in our consolidated financial statements within both our earnings press release issued this morning and in our Form 10Q filed with the Securities and Exchange Commission. And with that, let me turn the call over to Tony.

Yeah, thanks, Lucas. And good morning and thank you for joining us. I'm going to begin here on slide four. MCOR delivered another quarter of exceptional growth, margin performance, operating cash flow, and Capital Allocation. Revenue increased 28.8% or 25.5% organically. This growth coupled with strong field executions and improved SG&A leverage resulted in meaningful expansion of our operating margin. Operating cash flow in the quarter was $797 million and remaining performance obligations reached a record $18.57 billion. Up 47% year-over-year, 40% from year-end 2025, and 8.3% sequentially, despite the strong revenue growth we had in the quarter. Most of the RPO growth was organic, reinforcing the depth of demand across multiple end markets. On an adjusted basis, our third quarter operating margin was 10.5%. reflecting the strength of our execution and operating model. And we earned $9.60 in adjusted diluted earnings per share, a 46% increase versus the year-ago period. Our construction segments continued to deliver outstanding performance. Both our electrical and mechanical segments grew revenues by more than 40%, with approximately 75% of such growth being generated organically. Our electrical construction segment delivered a 13.3% operating margin, and mechanical construction delivered a 12.1% operating margin, resulting in combined margin expansion of 40 basis points. Demand remains broad-based, with particular strength in the network and communications, which is data centers for the most part, healthcare, manufacturing and industrial, water and wastewater, and institutional sectors. We continue to outgrow the broader non-residential construction market. Building services also posted a strong quarter. Revenue grew nearly 5%, operating income increased 11.5%, and operating margin expanded 50 basis points, driven by a favorable revenue mix and improved SG&A leverage. Industrial services performed as expected and relatively in line with the third quarter of 2025. Importantly, we saw expanding opportunities in LNG maintenance and petrochemical work, which supports our continued broadening of the markets that we will serve with this segment. As I previously mentioned, and this will be on slide five now, as I previously mentioned, our RPO position strengthened considerably during the quarter, reaching a record $18.57 billion. This growth reflects strong demand across the majority of our market sectors. led by Network and Communications, or data centers, as well as continued strength in healthcare, water and wastewater, institutional, manufacturing, industrial, and now I'm going to take a deeper look at each of these sectors. Data center RPOs totaled a record $8.74 billion, more than double the year-ago level, and an increase of 13% sequentially. This growth demonstrates our broad capabilities in this sector, which includes electrical, mechanical, and fire, life, safety, construction, and service. Healthcare RPOs total 1.71 billion, an increase of 31% year-over-year, reflecting the strength of this long-standing core market for MCOR. Water and wastewater RPOs total 1.42 billion, an increase of 38% year-over-year, as we continue to capitalize on opportunities throughout Florida, Institutional RPOs totaled $1.72 billion, an increase of 25% year-over-year, driven by strong demand from many of our education customers, especially at the higher level education. And finally, manufacturing and industrial RPOs totaled $1.18 billion, an increase of 10% year-over-year, and nearly 27% sequentially, as we are benefiting from a broad range of investments across this sector. The size, quality, and diversity of our RPOs remains very strong. Before I turn the call over to Jason, I want to underscore what these results demonstrate. Our field leaders continue to exhibit discipline and precision as they execute some of the industry's largest and most technically complex projects for our highly sophisticated and very demanding customers. That execution is translating into strong margins, cash generation, record RPOs, and growth well above the underlying market.