Good morning. My name is Alan, and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group Fourth Quarter and Year End 2023 Earnings Call. Please note, this event is being recorded. I'd like to hand things over to Mr. Blake Mueller with FTI Consulting. You may begin.

Thank you, Alan, and good morning, everyone. Welcome to the EMCOR Group conference call. We are here today to discuss the company's 2023 fourth quarter and full year results, which were reported this morning. I would like to turn the call over to Kevin Matz, Executive Vice President of Shared Services, who will introduce management. Kevin, please go ahead.

Thanks, Blake. Good morning, everyone. And as always, thank you for your interest in EMCOR and welcome to our earnings conference call for the fourth quarter and full year 2023. For those of you who are accessing the call via the Internet and our website, welcome to you as well, and you've arrived at the beginning of our slide presentation that will accompany our remarks today. We are on Slide 2. This presentation contains certain forward-looking statements and may also contain certain non-GAAP financial information. Page 2 describes in detail the forward-looking statements and the non-GAAP financial information disclosures. I encourage everyone to review both disclosures in conjunction with our discussion and accompanying slides. Slide 3 depicts the executives who are with me to discuss the quarter and full year 2023 results. They are, Tony Guzzi, our Chairman, President and Chief Executive Officer; Mark Pompa, Executive Vice President and Chief Financial Officer; Jason Nalbandian, our Senior Vice President and Chief Accounting Officer; Maxine Mauricio, Chief Administrative Officer, our Executive Vice President and General Counsel; and Andy Backman, Vice President, Investor Relations. For call participants not accessing the conference call via the Internet, this presentation, including the slides, will be archived in the Investor Relations section of our website under Presentations. You can always find us at emcorgroup.com. And with that said, please let me turn the call over to Tony. Tony?

Thanks, Kevin. Good morning. And thank you for joining us for our 2023 full year and fourth quarter earnings call. Before we begin, though, I would like to recognize two of our executives, Mark Pompa and Kevin Matz. As we have previously announced, Mark and Kevin will close out two remarkable EMCOR careers on April 1st. I want to thank them for their hard work and dedication to EMCOR; you've been great teammates. I know they both share our excitement about the future at EMCOR, as Jason will take the helm as our CFO. Andy will take over Kevin's Investor Relations responsibilities. I also want to recognize the promotion of Maxine Mauricio to Chief Administrative Officer, as she assumes some of the oversight duties previously held by Kevin. Thank you again to Kevin and Mark, congratulations to Jason and Maxine, and a continued warm welcome to Andy, who joined us this last fall. Now I'd like to turn you to Page 4 to 6, and that's where I'm going to start my comments. I'm going to focus most of my comments on our full year 2023 results, and Mark will go into more detail about our fourth quarter. We had a great fourth quarter at EMCOR. We outperformed our expectations, earning $4.47 per share on $3.44 billion in revenue, which represented 16.2% organic revenue growth. Our fourth quarter operating margin was exceptional at 8.4%. Fourth quarter rounded out an excellent 2023 by any measure. We did have an incredible 2023 with revenue of $12.6 billion, representing growth of 13.6% and organic revenue growth of 12.6%. Our earnings per share increased by approximately 65% and our operating income up $875.8 million grew 55% over that of 2022 with record annual operating margin of 7%. Operating cash flow of $900 million represented a conversion in excess of 100% of operating income. We had a lot go right for us in EMCOR in 2023, and this incredible performance is a testament to our leadership at all levels of our company, including our segment and subsidiary leaders, who have delivered exceptional results for our customers, shareholders, and teammates over an extended period of time. Over the last three years, we have more than doubled our earnings per share with a compound annual growth rate of 28% in a difficult and uncertain business environment. Our teams drive our results through a relentless focus on long-term growth, productivity, and innovation, balanced capital allocation, and we live our EMCOR values of mission first, people always, and they've been embraced throughout our company. We also have strong workforce training and development programs. We're fortunate to operate in large, growing market sectors like high-tech manufacturing, network and communications, manufacturing, and industrial. These sectors as well as our energy retrofit projects are benefiting from long-term secular trends that require excellence in specialty trade contracting. We have challenges, but we have met them and will continue to meet those challenges with resolve and with strong focused execution at every turn. We finished the year with our RPOs at an all-time high of $8.85 billion, which represents 2.5% sequential growth from September 30, 2023, and 18.6% growth over the year-ago period. Now I'm going to probably share some highlights from our segments. We had excellent performance in both our mechanical and electrical construction and US Building Services segments. Mechanical construction had an especially stellar 2023. The operating results of our Industrial Services segment continue to improve at a measured pace. And despite unfavorable economic conditions, our UK Building Services segment is reporting solid operating income and operating margin. The continued strength of our electrical and mechanical construction segment is evidenced by 2023 revenue growth, up 14.4% and 18.2% respectively. With 2023 electrical construction operating margin of 8.3% and mechanical construction operating margin of 10.5%, the conversion from revenue to operating income by these segments has exceeded our expectations and really is a result of excellent execution, adaptability, smart project selection, and favorable contract terms. In the construction segments, we selected key market sectors, estimated, negotiated, and won meaningful projects, planned, and executed such projects well, and safely deployed our highly skilled labor with strong productivity. Our teams have increased productivity by deploying BIM, or building information modeling, and prefabrication at scale while sharing best practices on construction means and methods across our company. Said simply, we have learned from both our successes and failures. We then deploy those learnings across our company to drive excellent results for our customers and ensure financial returns for our shareholders. In our construction segments, we continue to win and complete some of the most sophisticated projects in markets such as high-tech manufacturing, which includes semiconductors, the EV value chain, biotech, life sciences, and pharmaceuticals. The network and communications sector encompasses our data center work, and the manufacturing sector has been driven by reshoring domestic capacity expansion and also includes the renewable energy projects we're working on. We have continued to see growth in our healthcare sector. As a reminder, our mechanical product offering is brought across applications such as HVAC, process plumbing, fire protection, and life safety. We are operating in key geographies where such projects are in process, and our life safety group has the capability to move across the country. We are positioned well with the right resources in the right market sectors and geographies to continue to win complex projects that allow us to perform well for our customers. Our electrical and mechanical construction teams have deep expertise in the data center market, which allows us to serve our customers with the right solutions, delivered under the most demanding schedules with excellent outcomes for our customers. As I have mentioned on earlier calls, our segment and subsidiary management teams are leading in an exceptional way and allocating resources in a thoughtful and pragmatic way. We continue to strive to optimize our project mix to produce great financial results. Our US Building Services segment continues its record of steady and impressive performance, and it has a strong mix of work across the service lines. This segment's revenues grew 13.3% in 2023 with an operating margin of 5.9%. Demand persists in our mechanical services division with excellent execution across retrofit projects, building controls, and maintenance and repairs. We are working across a variety of end markets, and our customers remain focused on energy efficiency and indoor air quality upgrades. The mechanical services business drove the robust performance of this segment in 2023, due in part to a strong repair service season this past summer as heat and humidity blanketed most parts of the country. The site-based services division continues to deliver, entering into multi-year facility maintenance contracts to leverage our self-perform operating model for skilled tradespeople and operating engineers. While opportunities for growth remain in this area, these facility services contracts take some time to ramp up. And the scope for these contracts can reduce, expand, or be terminated over time and upon rebid. We have seen some contract degradations as the real estate facility providers are especially aggressive on price and scope on some of these contracts as they are struggling in their commercial real estate businesses. However, we will remain disciplined and not take any low price, low opportunity contracts. Our Industrial Services segment improved in 2023 and had sustained performance improvement over the last two years. Operating income improved by nearly 80% in the year, albeit from a low base. We had a more turnaround season in 2023, and we had strong results from our niche services like heater repair. We are experiencing greater levels of capital spending within our shop services division in the form of increased new build heat exchanger orders and have benefited during the year from certain renewable fuel projects. We are just starting to see the resumption of demand for utility-scale solar projects currently impacted by supply chain and permitting issues. Our Industrial Services and electrical team has us positioned well in the solar market, and that position should continue to improve. Our UK segment performed in a manner consistent with the available market opportunities in 2023. The competition on some contracts is fierce as the UK economy is not strong. And similar to the US facility services market, we see the real estate companies bidding on contracts a bit aggressively due to weakness in the UK commercial real estate market. However, we have a normal base of facility services contracts; we'll build on that base and serve our customers well. And though we experienced a reduction in annual revenues in this segment, we are executing well as shown by the 5.9% operating margin for the year. Our balance sheet remains strong. It supports our organic growth and provides us with the capital needed to expand our prefabrication capabilities, an investment in BIM, automation, and robotics. We also have the firepower to continue to make strategic acquisitions, and I'm going to discuss that in more detail later.

Great. Tony, thank you for those kind words you said earlier. And good morning to everyone participating in our call today. For those accessing this presentation via the webcast, we are now on Slide 7. Over the next several slides, I will provide a detailed discussion of our fourth quarter 2023 results as well as a summary of our full year performance, some of which Tony just outlined during his opening commentary. As a reminder, all financial information discussed during this morning's call is included in our consolidated financial statements within both our earnings release announcement and Form 10-K filed with the Securities and Exchange Commission earlier today. With that, let's begin our review of EMCOR's fourth quarter. Consolidated revenues of $3.44 billion increased $489.4 million or 16.6% from the fourth quarter of 2022. Each of our domestic reportable segments experienced revenue growth during the fourth quarter, which was the case for all four quarters of 2023. Revenues attributable to businesses acquired during the quarter were just under $11 million. So substantially all of our quarter-over-quarter revenue growth was due to organic activities. Our fourth quarter's consolidated revenues established a new all-time quarterly revenue record for the company and eclipses our previous record set during the third quarter of 2023. The specifics to each of our reportable segment's fourth quarter revenue performance is as follows: United States electrical construction segment revenues of $763.4 million increased $49.8 million or 7% from quarter four of 2022. This segment continues to experience revenue growth across the majority of the market sectors that we serve, with the most significant fourth quarter revenue increases being generated within the manufacturing and industrial and high-tech manufacturing market sectors. Revenues of our United States mechanical construction segment of $1.47 billion increased $339.3 million or approximately 30% from the year-ago period. This segment experienced revenue growth across all market sectors in which we operate, with the most significant growth occurring within the high-tech manufacturing market sector. In addition, notable increases were seen within the manufacturing and industrial, network and communications, healthcare, and water and wastewater market sectors. As communicated throughout the year, driven by customer projects supporting the design and manufacturing of semiconductors as well as production and development of electric vehicles and/or related battery technologies. This segment is experiencing strong demand for both fire and life safety as well as traditional mechanical services. This is in conjunction with continued data center development and the domestic reshoring of critical supply chains by certain of our customers, all contributing factors to this segment's significant organic growth. Both our electrical and mechanical construction segments established new all-time quarterly revenue records with their fourth quarter performance. Revenues of EMCOR's combined domestic construction segments totaled $2.24 billion for the fourth quarter of 2023, an increase of $389.1 million or just over 21%. United States Building Services quarterly revenues of $802 million increased $88.6 million or 12.4%. Excluding incremental acquisition contribution, this segment's revenues grew 10.9% organically given increases across each of its operating divisions with the most significant growth being generated by mechanical services. Within mechanical services, we are benefiting from strong demand for HVAC projects and retrofits as well as building automation and control services, while customer initiatives to improve energy efficiency and/or indoor air quality are certainly contributing to this demand, with our opportunities remaining broad-based and further enhanced by mandated refrigerant phaseouts. In addition, our service volume continues to grow given an increase in our customer base as well as our geographic footprint. EMCOR's Industrial Services segment revenues of $292.5 million increased $16.2 million or 5.9% quarter-over-quarter. This marks this segment's fourth consecutive quarter of top-line growth. In addition to more normal maintenance demand, we experienced the resumption in capital spending by our customers in the form of new build heat exchanger orders and participation in several renewable fuel projects. United Kingdom Building Services segment revenues of $108.8 million represents a reduction of $4.5 million or 4% from last year's fourth quarter. As referenced throughout 2023, this segment's revenues have declined due to the nonrenewal of certain facilities maintenance contracts, which were still active in 2022, as well as the reduction in project work from certain of its customers who slowed their capital spending programs in response to macroeconomic headwinds within the United Kingdom. Please turn to Slide 8. Reported operating income for the quarter was $289.2 million or 8.4% of revenues and favorably compares to $177.2 million of operating income or 6% of revenues a year ago. Consistent with my revenue commentary, our fourth quarter operating income and operating margin both established new all-time quarterly records for EMCOR. This was achieved through increased operating income in each of our reportable segments, as well as expansion in operating margin in all but one of our segments. Specific fourth quarter operating performance by segment is as follows: Our US electrical construction segment earned operating income of $76.3 million, an increase of $18.2 million or 31.3% from the comparable 2022 period. The reported operating margin of 10% represents an improvement from 8.1% in last year's quarter. Increased gross profit and gross profit margin within the institutional commercial and high-tech manufacturing market sectors were the primary drivers of this improved performance. As a reminder, the results of this segment during the fourth quarter of 2022 were negatively impacted by certain discrete project write-downs, which totaled $10 million and reduced this segment's operating margin by 140 basis points in the 2022 fourth quarter. Operating income of our United States mechanical construction services segment of $186.1 million represents a substantial increase of $81.3 million from last year's quarter, and operating margin of 12.6% represents an all-time high for this segment. Greater gross profit dollars and gross profit margin in the majority of market sectors in which we operate, driven by a favorable revenue mix, successful project closeouts, and better execution were the factors behind this segment's improved performance. Operating income for US Building Services was $42.1 million or 5.2% of revenues, which represents a 10.8% increase. The improved year-over-year performance was primarily due to the segment's mechanical services division, given the volume growth referenced during my revenue commentary, coupled with favorable execution on both our HVAC project and repair service activities. Our US Industrial Services segment operating income of $12.6 million or 4.3% of revenues represents an increase of just over $11 million from the corresponding 2022 period, led in the quarter by improved pricing within a shop services division, we are continuing to see operating margins of this segment move in an upward direction. UK Building Services is reporting operating income of $5.5 million or 5% of revenues, which compares favorably to that of the prior year period. The decrease in the segment's revenues was more than offset by increased operating margin as the segment continues to execute well across its portfolio of facilities, maintenance contracts, and add-on project work. We are now on Slide 9. Additional financial items of significance for the quarter not addressed on the previous slides are as follows. Quarter four gross profit of $617.7 million represents an all-time quarterly record for the company, and is higher than the comparable 2022 period by approximately $163 million or merely 36%. Gross margin of 18% has improved 260 basis points period-over-period. Selling, general, and administrative expenses of $328.5 million represent 9.6% of revenues and reflect an increase of approximately $51 million from quarter four of 2022. SG&A for the current year's quarter includes $2.7 million of incremental expenses from businesses acquired, inclusive of intangible asset amortization, resulting in an organic increase of just over $48 million, which was largely driven by personnel costs. In addition to annual cost of living adjustments and greater employee benefit costs, our strong organic revenue growth has necessitated increased headcount across many of our businesses. Further, the operating income outperformance across the majority of our reportable segments during the fourth quarter and full year 2023 periods resulted in incremental incentive compensation expense. Diluted earnings per common share in the fourth quarter of 2023 is $4.47 compared to $2.63 per diluted share in the prior year. This fourth quarter EPS performance, like many of our financial metrics this quarter, eclipses EMCOR's prior all-time quarterly diluted earnings per share record, which was previously established during the third quarter of 2023. Please turn to Slide 10. With the quarterly commentary complete, I will now supplement Tony's comprehensive introductory remarks at EMCOR's annual performance. Consolidated revenues of $12.6 billion represent an increase of $1.5 billion or 13.6% when compared to 2022. Our full year results include $107.1 million of incremental revenues attributable to businesses acquired pertaining to the time that such businesses were not owned by EMCOR in 2022. Excluding the impact of acquisitions, annual revenues increased a strong 12.6%, with all of our reportable segments other than our United Kingdom Building Services segment generating strong revenue growth during the full year period. Operating income of $875.8 million or 7% of revenues represents a 55% increase from calendar year 2022, along with a 190 basis point improvement in operating margin. Each of our domestic reportable segments, as Tony commented, achieved double-digit increases in full year operating income along with meaningful improvements in operating margin. Full year diluted earnings per share was $13.31 and compares to $8.10 in the corresponding 2022 period. Adjusting 2023 to exclude a third quarter impairment charge related to certain long-lived assets within our United States mechanical construction segment results in an adjusted non-GAAP diluted earnings per share of $13.34 for the year. This represents a 65% improvement over 2022's reported diluted EPS. Not surprising, with our strong performance throughout the last 12 months, full year 2023 represents a record year for EMCOR, surpassing the company's previous all-time performance achieved in 2022. We are now on Slide 11. The strength of EMCOR's balance sheet continues to differentiate us from our competition and provides our customers with confidence as we bid on large scale and demanding projects. Given our balance sheet, coupled with the borrowing capacity available to us under our recently amended and extended revolving credit facility, we remain well positioned to fund organic growth, pursue strategic M&A opportunities, and return capital to shareholders. Our commitment to shareholder return is evidenced in part by today's announcement that our Board of Directors has approved an increase in our quarterly dividend of almost 40%. The notable fluctuations in our balance sheet when compared to December of 2022 are as follows: Cash on hand is $790 million and represents an increase of just over $333 million. Our exceptional operating cash flow performance of $900 million, which Tony commented on earlier, was partially offset by cash used for financing activities of just over $412 million, given the repayment of all amounts previously outstanding under our term loan and the return of $160 million to stockholders through share repurchases and dividends, as well as cash used in investing activities of $161 million for acquisitions and capital expenditures. Resulting primarily from the increase in cash just referenced, our working capital balance has increased by just over $220 million from December of last year. Goodwill has increased by $37.4 million as a result of the eight acquisitions completed by us in calendar 2023, while net identifiable intangible assets have decreased by $7.9 million as the additional intangible assets recognized in connection with these acquisitions was more than offset by $67.1 million of the amortization expense in 2023. Total debt, exclusive of operating lease liabilities, has decreased by $241.9 million, almost entirely as a result of the aforementioned repayments made on our previously outstanding term loan. After considering outstanding letters of credit, there remains $1.2 billion of capacity available to us under our renewed $1.3 billion revolving credit facility, the maturity of which now has been extended to December of 2028. Our stockholders' equity balance has increased by almost $500 million as our net income for the year exceeded our share repurchases and dividend payments made throughout 2023. EMCOR's debt-to-capitalization ratio has reduced to 0.2% from 11.1% at year end 2022 given the full repayment of our term loan as well as the increase in stockholders' equity. With my portion of this morning's prepared comments complete, I will now give the call thankfully back to Tony.

Thanks, Mark. I'm going to start on Page 12. The way we discuss earnings focuses on past performance, while this next section is about the future. On Page 12, we've referenced this chart several times over the past three quarters. I view this as a resource allocation chart that guides our organic growth and informs our capital allocation decisions, which we will address later. As we analyze the chart from left to right, the first part highlights the electrification EV value chain, which represents a trend. Recently, there has been much discussion in the news regarding its potential stagnation. However, in our experience, this is not the case due to our positioning in the market. Our focus has been primarily on fire and life safety, utility-scale charging stations, and an emerging interest in solar. This signifies a considerable transformation, regardless of whether EV adoption reaches 10%, 15%, or 30% of vehicles. While policy advancements may have outpaced technology, ultimately, the development of necessary infrastructure is inevitable. Regardless of penetration rates, battery infrastructure will be essential. The utility-scale charging stations in which we are involved are strategically located at major transportation hubs, and projects are advancing, particularly for lighter delivery vehicles. Our engagement with solar is also reviving, mainly within our electrical segment and sub-utility scale building services, with further growth anticipated in our Industrial Services sector backed by government incentives like the IRA. We are fortunate to work with union labor where possible and have the requisite prevailing wage experience and apprenticeship programs in non-union settings. The high-tech manufacturing aspect, particularly within electrification and the EV value chain, represents a strong market for us. We plan to continue building in this area, acknowledging that all significant markets experience fluctuations, but we believe the long-term trend remains favorable. Even a modest share of the solar market could significantly enhance our Industrial Services segment. Moving to high-tech manufacturing, life sciences, and the reshoring and nearshoring trends, we recognize the lessons learned during COVID about supply chain resilience. Our clients are actively shifting their supply chains back onshore, a trend that began prior to the pandemic due to wage differentials, transportation concerns, and the advantages of automation. The semiconductor manufacturing sector is a primary area where we have expanded our capabilities, going from operating in a few markets to now serving four to six. Our input is primarily mechanical, though we also contribute in fire and life safety across trades. In the pharmaceutical, biotech, and life sciences sectors, reshoring and the surge of new drug developments, particularly in weight loss, are driving growth. Major tech companies are establishing hubs outside Silicon Valley in areas where we are well-positioned, such as the Research Triangle, Texas, and Arizona. Government incentives are aimed at ensuring skilled labor is adequately trained. Our experience extends to understanding how to operate within a prevailing wage environment, enabling us to meet clients' requirements and help them qualify for incentives. As we progress to the right, it's also important to note that high-tech manufacturing growth is fueled by advancements in AI and data center development. We have a long history of successfully engaging in this sector, having begun our efforts in the early 2000s, and we maintained this capability through market fluctuations. Our leadership in both electrical and mechanical segments, along with our specialty contractors in data centers, highlights our expertise. Demand is driven by our clients increasing their service needs, with many migrating to the cloud, fueled by AI proliferation that necessitates more robust systems. Data centers have significantly increased in capacity, moving from typical office building or hospital energy needs to those demanding much higher power, necessitating upgrades to existing infrastructure. EMCOR has a strong legacy in constructing world-class healthcare facilities, evident in cities across the country. The pandemic has underscored that these facilities often require updates for greater flexibility. There are notable similarities between hospital construction and high-tech manufacturing environments, allowing us to leverage our capabilities effectively. Ultimately, EMCOR focuses strategically on resource allocation to pursue opportunities that enhance performance, ensure worker safety, and yield superior returns for shareholders. Our diverse capabilities across sectors allow us to optimize our skilled trades and supervision. Additionally, our engineering team's design assist and value engineering approaches make construction more efficient, facilitated by BIM and prefabrication. Lastly, energy efficiency and sustainability must be prioritized. Given the ongoing energy transformation and increased demand from high-tech facilities, managing energy costs is essential for owners. Reducing emissions is not only a responsible choice but also increasingly cost-effective. Our EMCOR mechanical services excel in this domain, particularly in Building Services and mechanical construction. We lead in advanced HVAC design and building control systems, underscoring our commitment to provide high-quality mechanical solutions. Recent acquisitions have bolstered our ability to address water and waste reduction, as well as enhance energy efficiency. We often integrate alternative and cogeneration energy solutions, providing significant expertise in achieving energy efficiency and exceptional results for our clients. So I could stop there. We could stop talking about the future, but we're going to go now shift to Page 13 and talk about RPOs and how that page, Page 12, manifests itself into RPOs. I mean ultimately, great trends, but you don't know how to capitalize and turn it into projects. If you look on Page 13, you can see the impact of those major trends in our RPOs. Total company RPOs at the end of 2023 were over $8.8 billion, up almost $1.4 billion or almost 19% over the December 2022 total of $7.5 billion. Additionally, fourth quarter project bookings were strong with RPOs increasing $212 million from September 30, 2023. Domestic construction services RPOs stand at $7.3 billion, a record, up $1.3 billion from December 2022, in line with strong project demand across most of the market sectors in which we operate, and we’ve seen that throughout the year. Building Services, which are anchored by energy efficiency projects and retrofit projects ends 2023 with a healthy project pipeline and also exemplified by almost $1.3 billion of RPOs. RPOs by market sectors are balanced end market segmentation, bridging back to the previous page of organic growth trends in the marketplace. Looking into the actual activity, high-tech manufacturing, which includes semiconductor, pharma, biotech, life sciences, R&D and the electric vehicle value chain stands at $1.5 billion, up $686 million or 89% from year-end 2022. Network and communications, which includes hyperscale data center work, stands at almost $1.6 billion, up $578 million or 59% from December 31, 2022. Healthcare project demand continues to be strong as we have over $1 billion in healthcare RPOs, primarily made up of new hospital construction or expansion projects. We also currently have RPOs of nearly $650 million in water and wastewater projects, which for us are predominantly located in Florida's Miami Dade County and also the West Coast of Florida from targeted projects from Tampa to Naples. Reshoring and nearshoring trends continue for our manufacturing and industrial customers, reflected in $808 million in project RPOs. During the year, we also saw increases in transportation and short duration projects. Partially offsetting these RPOs were decreases in commercial, primarily driven by warehouse and hospitality projects. However, with respect to warehouses, we are seeing an uptick in activity for cold storage warehouses and upgrades in those cold storage warehouses for our fire and life safety services and projects as customers introduce more automation and change warehouse configuration. As the calendar moves into 2024, we continue to see strong multiyear growth characteristics in many of the market sectors we serve. Our scale and operational excellence sets us apart from others in the marketplace and make our operating companies some of the most capable partners for our customers. As the diversity in our RPOs demonstrates, we have the flexibility and capability to move across these sectors to address trends in the markets as they arise. As we progress through 2024, the pace and compositions of RPOs may change based on the way our customers contract with us and become more familiar and part of their site build-up. Once we are on a customer site frequently, or sometimes subsequent portions of the project at the site are awarded in scopes of work that are smaller than the initial award. Secondly, supply chain issues and lead times are now being factored into the initial planning, thus avoiding the previous delay that led to some of the buildup in RPOs, especially in Building Services. With respect to capital allocation, which I'm going to show to you on Slide 14, our Board has approved an increase in our quarterly dividend from $0.18 per share to $0.25 per share. We have a good acquisition pipeline and tend to use some of our firepower to execute deals. We recently signed definitive agreements to purchase a company in Texas and one in the Greater Atlanta area, both of which add capabilities to our mechanical construction segment. We also bought a company or signed an agreement for a company, which will be a bolt-on for our mechanical services division. We expect to spend around $140 million in aggregate upfront purchase price in connection with these acquisitions. We expect to close these acquisitions as we move further into 2024. We'll take the opportunity to expand our capabilities and increase our geographic reach to better serve our customers when we can purchase companies with the right skills and culture. We like our pipeline of deals, but as I always said, deals happen when they happen. Now let's turn to Pages 15 and 16. Our strong performance in 2023 led to three significant increases in guidance for the year, largely driven by our improved operating margin as we efficiently managed complex projects. Many of these projects had favorable contract terms, meaning we did not engage in prolonged disputes with clients and instead collaborated to complete the work, resolving several outstanding issues in 2023. As we establish our guidance for 2024, it's crucial to recall what I mentioned at the beginning of this call. We are coming off a three-year compound annual growth rate of nearly 28% and experienced a 65% increase in earnings per share last year. We do expect to keep growing our earnings for shareholders this year. For 2024, we're projecting guidance of $13.5 billion to $14 billion in revenue and $14 to $15 in diluted earnings per share. This guidance is based on strong anticipated operating margin performance, as previously mentioned. At the start of the year, we had solid RPOs in our electrical and mechanical construction segments and a decent RPO base in our mechanical services division within our US Building Services segment. However, we are facing nearly $300 million in revenue challenges in the US and UK Building Services segments due to losing facility services contracts during rebid processes, despite receiving positive customer feedback on our service delivery. Nonetheless, we still expect low to mid-single-digit revenue growth in US Building Services. As indicated by our RPOs and earlier discussions, we are continuing to secure work in key strategic market sectors. Our project execution is efficient and precise, as evidenced by our operating margins. We are employing BIM prefabrication in our labor and supply management strategies to deliver excellent results for our customers and shareholders. However, as noted in past calls, it's important to recognize that operating margins can vary from quarter to quarter based on project mix, execution, and timing. We assess our operating margin performance in ranges over several quarters. In 2023, we achieved operating margins in most segments at or above the upper end of our historical ranges, particularly in our mechanical construction segment. We have shown considerable resilience in managing supply chain challenges and are developing strong bench strength from project managers to senior leadership. Additionally, we are successfully attracting talented individuals across skilled labor, project management, and operations management. Our outlook for 2024 is optimistic. Achieving the high end of our guidance range will depend on macroeconomic conditions and various other factors. We are particularly mindful of the financial risks some customers face due to persistently high interest rates, economic uncertainties in Europe, conflicts in the Middle East affecting global energy markets and supply chains, and potential dysfunction within the US Government which might result in a shutdown or delays in key legislation. We also recognize that our clients may adjust the scope and timing of long-term projects based on their immediate, intermediate, and long-term needs. Despite these hurdles, we believe we can manage these uncertainties, as we have demonstrated resilience in the past. We remain aware of the external factors and their possible effects on our execution and performance. We will continue to allocate capital judiciously. Specifically, as discussed earlier, we see opportunities in our acquisition pipeline, and we have just raised our quarterly dividend to $0.25 per share. We will persist in seeking profitable growth opportunities, both organically and through acquisitions, and our share repurchase program is ongoing. As previously mentioned, we believe our robust balance sheet gives us a competitive advantage in securing large, complex projects, as clients view our financial stability as a compelling reason to choose EMCOR. I want to express my gratitude to the entire EMCOR team for their commitment and hard work. We appreciate everything you do daily for our customers.

I will now turn the conference back over to Tony Guzzi for any closing remarks.

Thank you all. We look forward to hearing from you and working with you all in 2024. And with that, we now put a wrap on 2023.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Tony, I heard you say twice, guidance assumes strong margin performance. Have heard you mention for quarters now favorable contract terms is it really sort of one factor here for the really strong margins, but I don't imagine that's changing with the new work you're taking into the business. But are those better terms broad-based, is it confined to a few of the really hot areas and markets within the business? I just wanted to hear you maybe talk about that.

Well, the better terms are mainly focused around liquidity in the project, right, cash flow, and keeping the project moving. That wouldn't be an issue with us but we negotiate hard for those because the better the cash flow on the project is typically the project is moving well. Secondarily, the better terms around, okay, if we're going to expand scope with the method for which we're going to expand the scope, so we don't get into the change order discussions that are extended and really affect productivity. Some of it's around general conditions, the realization that we want people to have the right general conditions to be able to execute the project well. Finally, I think the better contractual terms around how things convert, whether they go from a fee-based contract, GMP, to a fixed price and what would be the mechanism to do that? You put all that together, yes, I think the larger the project right now, the more are those terms favorable for both the owner and for us because there's a clear eye view of how we're going to work together.

And then comparing your RPOs to last year, the RPOs to be executed within a lot, the RPO is kind of beyond one year's down compared to that same number last year. And I guess, Tony, the question is, is the response there, what you said in the opening commentary that you may be on these customer sites already and so you can essentially sort of turn the work faster, or is there more to it than that?

No, that's basically it, coupled with the pace and timing of some of this large work. Time is money, especially in the data center space. As a result, you must be a big sophisticated contractor that has the financial resources to mobilize on the site, being able to assemble a trained workforce with the right training on a job that might have been in planning. We get it, we may have a month and a half to mobilize within four months; we're at full production, and within nine months, some of these big data center jobs are done. If you go to the other side, if you’re already at a significant semiconductor site, EV site, healthcare facility, or any manufacturing site, there's a lot of work that has to get done initially to set the utility infrastructure and mobilize and get everybody to say, okay, we're going to be here. But then as they build the other parts of the site, add tooling, other things, you may get that in an award that will build to something almost the same size in chunks that are 15% to 20% of what you ultimately overdo on that scope.

And then I thought it was interesting to see employee headcount saw a bigger increase last year than we've seen since the onset of the pandemic for the company. I guess, Tony, do you feel like you have the right amount of human capital to address the opportunities you see out there or is it an impediment to you by any means? Just curious…

It hasn't been a problem so far, Brent. We always keep that in mind and have had good success in developing it. The real challenge we face is finding skilled tradespeople. It's about how quickly we can train foremen and project managers to transition from being assistants or workers on the job to managing larger projects. We've also been successful in attracting skilled foremen and project managers from different regions and industries when setting up these sites.

Just last one, Mark. The free cash conversion noticeably strong this year just compared to the last five years, taking away 2020 COVID. But can we think this conversion rate can continue off the guidance you've given here?

Unfortunately, not, Brent. I think as Tony mentioned, with regards to some of our contract negotiations for some of our larger, more sophisticated work, we've been successful in making sure that we're staying ahead of the curve with regards to being provided the necessary working capital to complete those jobs based on advanced billings and payments. We cannot continue the cycle of collecting more cash than income earned. I don't think any company can. So I suspect 2024 is going to look more normal. I think an appropriate benchmark would be 2022 or 2021, plus or minus, yes. A lot of that, once again, not to sound like a broken record is highly determined based on the progression of work. But at the end of the day, we much rather be in the position we're currently in than on the other side of the curve regarding trying to chase collections once a project is complete.

We've always looked at cash flow. If you're earning net income, it means the business is in pretty good shape, right? If we're in the construction businesses, Jason, what do you think, 75%?

75% to 80%.

Operating income means our project portfolio is usually pretty good and that we don't have a lot of jobs that are eating cash because they're in some form of dispute or they're delayed or anything. When you're overperforming like we did this year versus operating, like Mark said, it's because specifically due to the mobilization we had on some of these big sites. We negotiate very hard upfront to make sure that we're not having a big cash drain as we mobilize on these sites, and sometimes that takes a long time to negotiate that. Also, sometimes we'll start on that, the one form of contract structure. Over time, that contract structure will change from a fee-based or T&M plus to more of a fixed price because now we know what it costs to put labor on the site and we know the composition of the workforce we’re going to work with for the next three or four or five years. We know the owner and the GCs and engineering firms we're going to work with how they get change orders down, how they get add moved. We have great folks on the ground that know this art. It's not a science; it's an art, and they do it really well. The power of our corporate segment and subsidiary teams working together brings that home on site and brings the cash flow home.

Tony, not to belabor the point, but when we look at kind of a normalized historical cash flow over the last couple of years and we adjust for some of the impacts we saw with COVID, whether it was deferred FICA payments, I think a reasonable kind of historical average is somewhere between 70% and 80% of operating on a consolidated basis.

Which gets you at net income or a little bit above. Does that make sense, Brent?

That makes sense. Appreciate all the help.

I guess I wanted to start on RPOs. So commercial is obviously down year-over-year. My question would be, do you think these other segments can continue to offset commercial weakness?

I think, Adam, with our guidance set between $13.5 billion and $14 billion, we recognize that our revenues and RPOs may not fully align, but we are confident that these trends will persist throughout the year. Regarding RPOs, there may be some inconsistencies in specific segments as projects start, but we are optimistic about the key factors driving our business and believe we will continue to succeed. The positive aspect for us is our balanced presence across various market sectors. As I mentioned, in skilled trades, we handle complex projects effectively by leveraging our company’s shared knowledge on construction processes. This enables our teams to deploy skilled trades across different industries once projects get underway. This has been EMCOR's strength for years, and we anticipate it will remain so. To put it simply, Adam, in the last seven to eight years, aside from a couple of mixed-use buildings, we have primarily constructed only two commercial skyscrapers where we were involved in the core building activities, excluding tenant fit-outs. Currently, we are working on one delayed project from 2017, which is progressing well. However, commercial skyscrapers haven’t been at the center of EMCOR's business for quite some time. We continue to focus significantly on tenant fit-outs, as we typically operate and perform in Class A office spaces for those projects, while occupying Class B and C spaces due to the nature of our work. Our operations remain strong in this area, as there is still a lot of activity in reconfiguring workspaces and new buildings. On the other hand, the Class B and C spaces present an opportunity for searching for space at this time.

Tony, fire and life safety, do you think it makes sense to break that out as a segment for us?

No, I don't think…

I mean, clearly, you're seeing good trends. I'm curious about the forward trends there.

It's such an integral part of mechanical and how mechanical jobs thought about, and it's such a heart of our shops and everything. It would be hard to break out because it's ingrained in some of the companies and how they operate. That being said, it's an important part of our business. It has a real success factor with our customers to deliver results on very complicated facilities across the country. That has some unique characteristics that make it on a trade delivery standpoint. It has a national union, right? Most trade businesses don't have a national union. Like the rest of the mechanical business, it's gravitated more towards prefabrication. Like the rest of the mechanical business, you have to have excellence in craft in the field and multi-discipline; they can do multi-size pipe and really engineer. It also has more of a design assist element as the rest of the mechanical business has gravitated towards. So that's why it's so integral to that mechanical business, and it really wouldn't make sense to have it look different than the rest of the mechanical business.

And then just the last one on data centers. One big tech company said US data center capacity, I think they said will double in the next five years. I'm curious if your funnel kind of matches that comment?

We've done a lot of work around it. We think it grows high single digits to mid-teens for a while. So yes.

Can you talk about the semiconductor and the CHIPS Act opportunity set? We're seeing more grant funding coming to market recently, but there have also been some significant delays in major fab projects. I'm wondering how we should consider the opportunity set over the next 12 months in light of these two diverging signals.

Next 12 months? Good. I mean the next 12 months, we have most of it already in RPOs, and we know what the work we'll be doing on some of these critical sites. When you think about the delays, actually, that's not bad for us in some cases. We're building the infrastructure around that; they have to staff them. It allows the sites to become much more solid after the initial build; they start to winnow down to the contractors that are the winners on that site that have done great work for them. We’ve emphatically shown we are those contractors.

And then how would you compare and contrast the semiconductor build-out versus the data center build-out in terms of duration of the cycle and based on what you're hearing from your customers about discussion on plans? I'm just trying to wonder, is one a five-year cycle, is one a ten-year cycle? Just any thoughts on duration of the two cycles?

I don't really have a specific timeframe, but as contractors, we typically view projects in three to five-year cycles. Looking ahead, we feel positive about that. We can allocate our resources to where the best opportunities lie. For example, if the semiconductor market is performing well in an area where we have some work, even if we aren’t involved in that sector, the surrounding infrastructure, like warehousing or healthcare, tends to thrive. We might take on various jobs beyond just semiconductor work, focusing on how to best allocate our resources to serve those projects. The data center market looks particularly strong for the next three to five years, and it generally offers more stability in staffing. Companies need to get their technology right, which most understand, and they are considering redesigns. The operational aspect of data centers requires only a few personnel, allowing them to focus on capacity planning once everything is launched. In contrast, the semiconductor sector often has established workforces that facilitate easier expansion. New entrants might find they need to hire more workers initially for production compared to existing companies. A carefully planned approach over the next few phases leads to a more organized construction site, allowing us to collaborate effectively. We prefer that they take the necessary time to staff correctly and achieve success rather than just focusing on quick builds. This strategy benefits our planning and theirs as well. Overall, I am optimistic about both markets, though data centers do not face the same human resource challenges post-construction as semiconductors do.

This concludes our question-and-answer session. Thank you for attending today's presentation. You may now disconnect.