EMCOR Group Inc Stock

EMCOR Group, Inc. operates as a specialty contractor in the United States. The company is a leading provider of electrical and mechanical construction and facilities services, building services, and industrial services.

The company’s services are provided to a broad range of commercial, technology, manufacturing, industrial, healthcare, utility, and institutional customers through approximately 100 operating subsidiaries, which specialize principally in providing construction services relating to electrical and mechanical systems in all types of facilities and in providing various services relating to the operation, maintenance, and management of those facilities. Such operating subsidiaries are organized into the following segments: United States electrical construction and facilities services; United States mechanical construction and facilities services; United States building services; United States industrial services; and United Kingdom building services.

The company’s operating subsidiaries offer comprehensive and diverse solutions on a broad scale and have many long-standing customer relationships. The company provides construction services and building services directly to corporations, municipalities and federal and state governmental entities, owners/developers, and tenants of buildings. The company also provides its construction services indirectly by acting as a subcontractor to general contractors, systems suppliers, construction managers, developers, property managers, and other subcontractors. The company generally provides industrial services directly to refineries and petrochemical plants.

The company derives revenues from many different customers in numerous industries, which have operations in several different geographical areas. Of its 2023 revenues, approximately 97% were generated in the United States and approximately 3% were generated in foreign countries, substantially all in the United Kingdom. In 2023, the company derived approximately 63% of its revenues from its construction operations, approximately 28% of its revenues from its building services operations, and approximately 9% of its revenues from its industrial services operations.

The company’s strategies of expanding its portfolio of service offerings for existing and potential customers and increasing or enhancing its presence in core end markets and geographies, along with its commitment to industry-leading best practices and technological and training capabilities, place it in the position to capitalize on opportunities and trends in the industries it serves and continues to grow its business.

Increasingly, the company’s services are focused on delivering sustainable energy solutions, enhancements in energy efficiency, reductions in waste and emissions, and improvements in the safety and comfort of its customers’ facilities.

Operations

United States Electrical and Mechanical Construction and Facilities Services Operations

The company’s 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.

The company’s electrical and mechanical construction services generally fall into one of three categories: large installation projects, with contracts often in the multi-million dollar range, that involve: the construction of manufacturing facilities, data centers, warehousing and distribution facilities, and commercial buildings, institutional and public works projects, or the fit-out of large blocks of space within commercial or mixed-use buildings, large and medium sized capital and maintenance projects for commercial, manufacturing, pharmaceutical, healthcare, oil and gas, and industrial clients, and smaller installation projects, of a short duration, typically involving fit-out, renovation, and retrofit work.

The company’s United States electrical and mechanical construction operations accounted for approximately 63% of its 2023 total revenues. Of such revenues, approximately 35% were generated by the company’s electrical construction operations and approximately 65% were generated by its mechanical construction operations.

The company’s largest projects typically include those within: the commercial market sector (including warehousing and distribution facilities, office or mixed-use buildings, and shopping malls); the network and communications market sector (including data centers, data and fiber projects, and cabling); 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); the high-tech manufacturing market sector (including semiconductor, biotech, life-sciences, and pharmaceutical facilities, as well as projects across the electric vehicle value chain); the healthcare market sector (including hospitals, surgical centers, rehabilitation and nursing facilities, and medical offices); the institutional market sector (including educational and correctional facilities and research laboratories); the water and wastewater market sector; the transportation market sector (including highways, bridges, airports, and transit systems); and the hospitality and entertainment market sector (including resorts, hotels, gaming facilities, convention centers, and sports stadiums). The company’s largest projects, which typically range in size from $10 million up to and occasionally exceeding $200 million, represented approximately 45% of its electrical and mechanical construction services revenues in 2023. These projects often involve new construction and a combination of design, installation, and start-up services. Depending on the size and complexity of these projects, they may span multiple years and typically require significant technical and management skills and the financial strength to obtain performance bonds, which are often a condition to bidding for and winning these projects.

The company’s projects of less than $10 million accounted for approximately 55% of its electrical and mechanical construction services revenues in 2023. These projects are typically completed in less than one year.

United States and United Kingdom Building Services Operations

The company’s 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 its 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.

The company provides building services throughout the United States and United Kingdom. The company’s building services operations have built upon its traditional electrical and mechanical construction operations and its 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.

The company’s building services operations, which generated approximately 28% of its 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. Of its building services revenues for 2023, approximately 88% were generated in the United States and approximately 12% were generated in the United Kingdom.

Demand for the company’s building services is often driven by customers’ decisions to focus on their core competencies, customers’ programs to reduce costs, the increasing technical complexity of customers’ facilities, including their mechanical, electrical, building automation, voice and data, and other systems, and the need for increased reliability, energy efficiency, and air filtration and sanitization. Clients of the company’s 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.

The company provides 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. The company also provides building services, as a prime contractor or a subcontractor, to U.S. military bases and various other governmental agencies. The agreements pursuant to which this division provides services to the federal government are frequently for a base period and a number of option years exercisable at the sole discretion of the government, are often subject to modification or renegotiation by the government in terms of scope of services, and are subject to termination by the government prior to the expiration of the applicable term.

United States Industrial Services Operations

The company’s 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.

The company’s industrial services business, which generated approximately 9% of its 2023 total revenues, is a recognized leader in the refinery turnaround market and has a presence in the petrochemical market. The company’s industrial services operations perform turnaround and maintenance services for critical units of refineries and petrochemical plants to upgrade, repair, and maintain them. Such services include engineering and planning in advance of complex refinery and petrochemical turnarounds; 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; replacement and new construction capital projects for refineries and petrochemical plants; instrumentation and electrical services for energy infrastructure; and other related specialty services such as welding (including pipe welding) and fabrication; heater, boiler, and reformer repairs and replacements; converter repair and revamps; and vessel, exchanger and tower services; tower and column repairs in refineries and petrochemical plants; installation and repair of refractory materials for critical units in process plants to protect equipment from corrosion, erosion, and extreme temperatures; and acid-proofing services to protect critical components at refineries from chemical exposure. These businesses also design and manufacture highly engineered shell and tube heat exchangers and provide maintenance, repair, and cleaning services for heat exchangers both in the field and at the company’s own shops, including tube and shell repairs, bundle repairs, and extraction services.

In addition to these traditional industrial services, the company is beginning to leverage its expertise in industrial services to construct and maintain carbon capture technologies and renewable energy projects.

Competition

The company competes with several regional firms serving all or portions of the markets it targets, such as BrightView Holdings, Inc.; Kellermeyer Bergensons Services, LLC; and SMS Assist, L.L.C.

The company’s principal competitors in the United Kingdom include CBRE Group, Inc.; ISS UK Ltd.; Equans Services Limited; OCS Group UK Limited; and Mitie Group PLC.

In the manufacture of heat exchangers, the company competes with both the 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.

History

EMCOR Group, Inc. was incorporated in 1987.