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EMCOR Group, Inc. (EME)·Q2 2025 Earnings Summary

Executive Summary

  • EMCOR delivered record Q2 results: revenue $4.30B (+17.4% YoY), diluted EPS $6.72 (+28.0% YoY), operating margin 9.6%, and record RPO of $11.91B (+32.4% YoY), driven by strength in Electrical and Mechanical Construction and robust data center demand .
  • Results beat Wall Street consensus: EPS $6.72 vs $5.72*; revenue $4.30B vs $4.11B*, with 7 EPS estimates and 8 revenue estimates; beat catalysts were mix, execution, and VDC/prefab productivity .
  • Guidance raised: 2025 revenue narrowed to $16.4–$16.9B and operating margin to 9.0–9.4% (from 8.5–9.2%); non-GAAP EPS lifted to $24.50–$25.75 (from $22.65–$24.00), reflecting sustained margin strength and visibility from RPOs .
  • Tactical watch items: industrial services weakness (operating loss in Q2), SG&A up with growth and amortization from Miller Electric; management reiterated discipline on contract mix and capital allocation (buybacks $432M YTD; revolver balance $250M) .

What Went Well and What Went Wrong

  • What Went Well

    • Record top-line and profitability: “quarterly revenue growth of 17.4% and an exceptional 9.6% operating margin…new records in key financial and operational metrics” (Tony Guzzi) .
    • Construction segments outperformed: Electrical revenue +67.5% to $1.34B with 11.8% margin; Mechanical revenue +6% to $1.76B with a record 13.6% margin, aided by data centers and productivity via VDC/BIM/prefab .
    • RPO momentum and sector breadth: RPOs $11.91B with growth across Network & Communications (data centers $3.8B), Healthcare ($1.4B), Manufacturing/Industrial ($1.0B), Institutional ($1.4B), Hospitality/Entertainment (+72% YoY) .

  • What Went Wrong

    • Industrial Services softness: revenues -13.3% YoY to $281.1M; operating loss of $0.4M due to lower field volumes, unabsorbed overhead, and fewer shop sales .
    • SG&A pressure: Q2 SG&A +$67.4M YoY with $28.9M from acquired companies and +$5.5M amortization; organic increases tied to headcount and incentive comp for higher projected results .
    • High-tech manufacturing RPO down YoY (project progress), though up sequentially (+$126M, ~+15%) on a phase-two semiconductor award (> $100M) signaling episodic timing risk .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$3.77 $3.87 $4.30
Diluted EPS ($)$6.32 $5.26 $6.72
Operating Margin (%)10.3% 8.2% 9.6%
Gross Profit ($USD Millions)$757.0 $722.7 $833.8
Gross Margin (%)20.1% 18.7% 19.4%
SG&A ($USD Millions)$368.5 $404.0 $418.6
SG&A Margin (%)9.8% 10.4% 9.7%
Actual vs ConsensusQ2 2025
Revenue ($USD Billions)Actual: $4.304 vs Consensus: $4.109*
Diluted EPS ($)Actual: $6.72 vs Consensus: $5.72*
EPS - # of Estimates7*
Revenue - # of Estimates8*
Values marked with * retrieved from S&P Global.
Segment Revenues ($USD Millions)Q2 2024Q1 2025Q2 2025
U.S. Electrical Construction & Facilities Services$800.0 $1,087.8 $1,340.2
U.S. Mechanical Construction & Facilities Services$1,655.2 $1,572.6 $1,755.3
U.S. Building Services$781.1 $742.6 $793.3
U.S. Industrial Services$324.0 $359.0 $281.1
U.K. Building Services$106.6 $105.3 $134.6
Total$3,666.9 $3,867.4 $4,304.4
Segment Operating Income ($USD Millions) and MarginQ2 2024Q2 2025
U.S. Electrical Construction & Facilities Services$88.6; 11.1% $157.6; 11.8%
U.S. Mechanical Construction & Facilities Services$213.4; 12.9% $238.7; 13.6%
U.S. Building Services$46.8; 6.0% $50.0; 6.3%
U.S. Industrial Services$12.7; 3.9% $(0.4); (0.1)%
U.K. Building Services$5.8; 5.4% $8.4; 6.3%
Consolidated$332.8; 9.1% $415.2; 9.6%
KPIsQ1 2025Q2 2025
Remaining Performance Obligations ($USD Billions)$11.75 $11.91
Operating Cash Flow ($USD Millions)$108.5 (Q1) $193.7 (Q2)
Cash & Cash Equivalents ($USD Millions)$576.7 $486.0
Revolver Borrowings ($USD Millions)$250.0 $250.0
Share Repurchases YTD ($USD Millions)$224.8 (Q1) $432.2 (YTD)
Dividend per Share ($)$0.25 (declared) $0.25 (paid 7/31/25)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenuesFY 2025$16.1–$16.9B (4/30/25) $16.4–$16.9B (7/31/25) Narrowed up; raised low-end
Operating MarginFY 20258.5%–9.2% (4/30/25) 9.0%–9.4% (7/31/25) Raised
Non-GAAP Diluted EPSFY 2025$22.65–$24.00 (4/30/25) $24.50–$25.75 (7/31/25) Raised
DividendQ2 2025—$0.25 per share (paid 7/31/25) Maintained regular dividend

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Data centers (Network & Communications)Strong demand; Electrical segment strength tied to data centers ; growing RPOs RPO in Network & Communications at $3.8B; high double-digit organic growth; multi-site, evolving contract mix (GMP vs fixed) Strengthening with broader footprint and innovation
High-tech manufacturing2024 growth; timing episodic RPO down YoY but up sequentially on $100M+ phase-two semi award; episodic awards Mixed; sequential improvement
VDC/BIM & PrefabricationKey productivity drivers in 2024, 2025 Q1 Sustained focus; expanding prefab capacity, particularly Electrical; CapEx doubling toward prefab assets Scaling execution capabilities
Industrial servicesImproving at measured pace in 2024 ; slow Q1 turnaround start Q2 revenue decline and operating loss; expected improvement later in year; downstream turnaround timing Near-term headwind; potential H2 recovery
M&A pipeline & integrationMiller Electric closed 2/3/25 [21]; integration on track Q1 Active environment; disciplined criteria, cultural fit; Miller contributing revenues and amortization Ongoing consolidation opportunity
Macro/tariffsGuidance contemplated tariff impact (Q1, Q4) Persisting uncertainty noted; guidance reflects potential impact Risk monitored within guidance

Management Commentary

  • “We had an outstanding second quarter…record revenue growth of 17.4% and an exceptional 9.6% operating margin…RPOs again at an all-time high…pipeline continues to be strong…reinforcing our increase in financial guidance for full-year 2025.” — Tony Guzzi .
  • “Electrical generated record revenues…11.8% margin; Mechanical achieved a record 13.6% margin…excellent project execution, enhanced productivity, and more favorable mix.” — Jason Nalbandian .
  • “RPOs have increased by 32% YoY…excluding acquisitions, organically up 22%…driven by long-term secular trends across key markets.” — Tony Guzzi .
  • “We remain disciplined capital allocators…$432.2M repurchases YTD and $887.2M M&A spend; ~$980M credit capacity remains.” — Jason Nalbandian .
  • “Contract mix (GMP vs fixed price) and evolving designs drive risk allocation; margins are earned job-by-job, not generalized by sector.” — Management Q&A .

Q&A Highlights

  • Bookings/outlook: EMCOR does not manage bookings quarter-to-quarter; sees continued strength across manufacturing, high-tech manufacturing (episodic), network/communications, and retrofit commercial .
  • Industrial services: Near-term weakness driven by turnaround timing; potential strengthening midstream and LNG-related activity; downstream exposure tied to utilization and schedules .
  • M&A: Active environment with larger deals; focus on execution, cultural fit, fair value for shareholders; Miller Electric and prior large acquisitions cited as models .
  • Margins sustainability: Construction margins expected in a 12.25%–13.25% rolling range (combined segments); drivers include larger project sizes and indirect leverage .
  • Prefabrication capacity: Expanding Electrical and Mechanical prefab; ~95% for internal projects; CapEx focus on prefab and BIM/VDC integration to reduce onsite labor and improve safety/productivity .
  • Pharma/GLP-1: Active pipeline in pharma manufacturing onshoring and GLP-1/weight-loss drugs; EMCOR participating across geographies .
  • Semiconductors: Phase-two award >$100M; sequential RPO increase in high-tech manufacturing .

Estimates Context

  • Q2 2025 results exceeded S&P Global consensus: EPS $6.72 vs $5.72* (beat ~$1.00); revenue $4.304B vs $4.109B* (beat ~$195M); 7 EPS and 8 revenue estimates contributed to consensus .
  • Estimate implications: Raise margin and EPS trajectories for FY 2025 toward the updated $24.50–$25.75 non-GAAP range given sustained construction margins and RPO visibility; revenue range narrowed up (low-end raised) .
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Beat and raise quarter: Double beat on EPS and revenue alongside upward guidance revisions; narrative anchored in sustained margin quality and RPO breadth across data centers, healthcare, institutional, and manufacturing .
  • Mix and execution matter: Margin expansion driven by larger projects, disciplined contract structures, and productivity via VDC/BIM/prefab; expect continued outperformance vs non-residential benchmarks per management .
  • Watch industrial services: Segment headwinds pressured profitability; management expects improvement later in 2025—monitor turnaround schedules and midstream/LNG opportunities .
  • Contract mix risk: GMP vs fixed-price balance and evolving designs influence margin variability; monitor site-specific transitions and customer procurement behaviors in data centers .
  • Capital allocation: Strong liquidity with $486M cash, $250M revolver utilized, $432M buybacks YTD, $887M M&A; capacity remains for balanced deployment .
  • Backlog durability: Record $11.91B RPO with sector diversity supports FY guide and margin assumptions (9.0–9.4%) .
  • Dividend steady: Quarterly dividend of $0.25 maintained and paid on 7/31/25; complements repurchases within capital returns .