EMCOR Raises Outlook as Revenue Growth Accelerates
Remaining performance obligations climbed 43.9% to $17.14 billion.
EMCOR Group Inc. (EME), the specialty contractor, posted second-quarter revenue of $5.15 billion, up 19.8% from a year earlier, as diluted earnings rose 34.8% to $9.06 a share. Revenue growth edged up from 19.7% in the first quarter, while earnings increased from $6.84 a share sequentially.
The quarter extended an acceleration in EMCOR's underlying business. Organic revenue growth reached 19.6%, compared with 16.8% in the first quarter and 9.5% in the fourth quarter of 2024. Acquisitions added 3.9 percentage points to reported growth, while the sale of the U.K. business reduced the comparison by 3.7 points.
Operating income increased 31.8% to $547.3 million, and the operating margin widened to 10.6% from 9.6% a year earlier. The margin also rebounded from 8.7% in the first quarter as gross-margin improvement and lower selling, general and administrative expense as a share of revenue supported profitability.
U.S. mechanical construction and facilities-services revenue rose 31.1% to $2.30 billion, expanding its share of company revenue to 45%. U.S. electrical revenue increased 24.0% to $1.66 billion, while the segment's operating margin widened 210 basis points to 13.9%. Mechanical margin narrowed 110 basis points to 12.5%.
The order pipeline also broadened beyond the quarter's revenue gains. Remaining performance obligations increased 9.7% from the first quarter, with the strongest growth coming from Network and Communications, Water and Wastewater, Institutional, and Healthcare work. Those sectors had also driven backlog growth in the preceding quarter.
EMCOR now expects 2026 revenue of $20.00 billion to $20.50 billion, up from its previous range of $18.50 billion to $19.25 billion. The company also projects an operating margin of 9.5% to 9.8% and diluted earnings of $32.00 to $33.25 a share, raising the earnings midpoint 12.5% from its prior outlook.
Cash conversion lagged the rise in profit. First-half operating cash flow declined 4.1% to $289.9 million even as net income increased 30.7%, as changes in operating assets and liabilities used $525.9 million.
Acquisition spending fell to $95.0 million in the first half from $887.2 million a year earlier, while share repurchases declined to $268.5 million. EMCOR increased its quarterly dividend 60% to $0.40 a share, directing more cash toward the payout as its backlog and outlook moved higher.