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 Second Quarter 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star and the number 1 on your telephone keypad. If you would like to withdraw your question, please press star and the number two. I will now turn the call over to Lucas Sullivan, Director, Financial Planning and Analysis. Mr. Sullivan, you may begin.

Thank you, Dave. Good morning, everyone, and welcome to MCOR's second 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 mcorpgroup.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 second quarter and discuss our RPOs. Jason will then review the second 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 contains certain forward-looking statements and may contain certain non-GAAP financial information. Slide 2 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 accompanying 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 10-Q filed with the Securities and Exchange Commission.

And with that, let me turn the call over to Tony. Yeah, thank you, Lucas, and good morning, and thanks for joining us today. I'm going to start my remarks on MCOR delivered another outstanding quarter highlighted by exceptional organic growth, strong conversion of revenue into operating income and cash flow, continued booking strength, and record remaining performance obligations or RPOs. These results reflect the consistent execution, operational discipline, and customer focus. Importantly, our strong performance during the first half of 2026, combined with the visibility provided by our record RPOs, supports a substantial increase to our full year 2026 earnings guidance. As we will discuss in more detail later in the call, we also continue to execute our balanced capital allocation strategy, returning significant cash to shareholders while investing in strategic acquisitions to strengthen our capabilities and deepen our position in attractive end markets. In the second quarter, revenues were $5.15 billion, an increase of 19.8% over the prior year. Excluding the impact of acquisitions and the divestiture of MCOR UK, organic revenue growth was 19.6%. Operating income reached $547 million, resulting in an operating margin of 10.8% while diluted earnings per share increased by $39.06. These results demonstrate the strength of our business model, the quality of our execution, and the sustained demand that we continue to see across many of our core markets. Electrical construction generated revenue growth of 24% year-over-year, while delivering an impressive operating margin of 13.9%. Mechanical construction achieved revenue growth of 31% year-over-year, with a strong operating margin of 12.5%. These results reflect our ability to execute complex projects, geographies, and trades, and expand our scope with existing customers, and consistently on mission-critical projects. Growth across our construction businesses continues to be supported by the end of the quarter. The largest revenue increases were generated in network and communications, which is where our data center business is, institutional, manufacturing and industrial, and warehousing and distribution within commercial. Our teams are leveraging industry-leading prefabrication capabilities, virtual design and construction technologies, which we refer to as VDC many times, and advanced project planning to execute these projects safely, efficiently, and productively for our customers. Our U.S. building services segment also delivered solo performance. Revenues increased 5.5% while operating income grew 26.6%. Our mechanical services divisions continues to perform exceptionally well, benefiting from an increased service base, as well as customer investments in HVAC retrofits, control systems upgrades, indoor air quality improvements, and energy efficiency initiatives. In addition, the restructuring actions we implemented last year in our site-based services business are generating meaningful benefits through a leaner cost structure and a more profitable portfolio of contracts. Our industrial services segment generates year-over-year, led by strong performance within field services, while also delivering year-over-year improvement in profitability. Now I'll ask you to turn to Clyde 5. One of the most significant indicators of future growth continues to remain our RPO position. Total RPOs reached a record 17.14 billion, an increase of 44% from the prior year, 29% from December, and despite the record organic growth in the quarter, 10% sequenced. Notably, 95% of this growth was organic. This record position provides visibility into future revenue and reflects the strength of customer demand across several sectors. Demand within the network and communication sector, led by data centers, remains. We continue to see expanding opportunities as customers invest in AI infrastructure and digital transformation initiatives. Equally important, our RIP growth is broad-based with strong bookings in water and wastewater, healthcare, and the institutional sectors. Customers continue to place trust in MCOR. As we successfully execute projects and we consistently meet our commitments, many customers are expanding across geographies and scope in the facilities, geographies, trades, and other technical disciplines like our previous. This ability to deepen relationships and grow alongside our customers remains a significant competitive advantage for MCOR, and with that, I'll turn the call over to Jason to go through the numbers. Thank you, Tony, and good morning, everyone.

Over the next two slides, I will cover the operating performance for each of our segments, as well as some of the key financial data for the second quarter of 2026, as compared to the second quarter of 2025. I'm going to start on slide six. News of $5.15 billion established a quarterly record for MCOR, increasing 19.8% or 19.6% on an organic basis when excluding acquisitions and adjusting for the sale of MCOR-UK. Each of our segments experienced meaningful revenue growth. Revenues of electrical construction were $1.66 billion, increasing 24%. While this segment did experience increased activity across a number of the market sectors we serve, the majority of its growth in the quarter resulted from greater data center projects within the network and communications market sector, where revenues increased by 45%. Mechanical construction revenues of $2.3 billion grew by just over 31%. Similar to electrical, this segment experienced the greatest growth from the network and communications market sector, where revenues more than doubled. Increased cooling requirements for data centers, coupled with our expansion into newer adjacent geographies, continue to drive more opportunities for this. In addition to data centers, mechanical construction generated notable revenue growth from several other sectors in which we operate. Specifically, institutional revenues increased 77 percent. Commercial increased by 26 percent due to resumption in demand for warehousing, distribution, and logistics projects, largely within fire protection. And manufacturing and industrial, including food processing, was up seeking. On a combined basis, our construction segments generated revenues of $3.96 billion, an increase of 28%, establishing new quarterly revenue records. Building services, revenues of $837.7 million, increased by five points. Mechanical services division, increased by $30 million, or nearly 5%, driven by broad-based The division returned to growth, experiencing a $14 million, or roughly 11% increase in revenues. These maintenance contracts, construction segments, the performance of building services represents a quarterly record. Industrial services revenues were $353.8 million, reflecting an increase of nearly 26%, driven by our field services, greater turnaround activity, higher petrochemical project volume, and progress made on a large solar project. Let's move to slide 7 for operating income. We generated operating income of $547.3 million, or 10.6% of revenues, both of which are records for MCOR for a second quarter. Operating income increased nearly 32%, and operating margin expanded by 100 basis points. Looking at each of our segments, operating income of electrical construction increased by 46.8% to a quarterly record of $231.4 million due to the revenue growth I previously mentioned, coupled with 210 basis points of operating margin expansion. While the segment did benefit from a 20 basis point reduction in SG&A margin, the vast majority of the increase in operating margin was a result of greater gross profit margin, given exceptional field execution and a more favorable project mix. Mechanical construction had operating income of $286.6 million, which represents a 20.1% increase. As with electrical, operating income for this segment represents a quarterly record. Although down 110 basis points, mechanical construction earned a solid 12.5% operating margin, which is in line with the segment's average margin over both the last 12 and 24 month periods. Similar to the first quarter, and very much as we anticipated, the reduction in operating margin of this segment resulted from a shift in mix that included a greater percentage of revenues from projects where we are acting as either the construction manager or prime contractor and which inherently carry lower than average gross profit margins due to reduced markups on materials, equipment, and subcontractor costs, as well as an increase in the number of GMP or cost-plus contracts. Together, our construction segments grew operating income by over 30 percent and earned a combined operating margin of 13.1%, an increase of 30 basis points. Services generated operating income of $63.4 million, an increase of 26.6%. In addition to the impact of greater revenues, the segment achieved 130 basis points of margin expansion, with operating margin reaching an impressive 7.6%. Given a more favorable project mix, coupled with improved execution, gross profit margin increased by 70 basis points, and due to the restructuring actions we completed within our site-based businesses, SG&A margin decreased by 60%. Operating income for industrial services was $9.6 million, a significant improvement versus the year-ago period, driven by the increased return to page 8. I'll quickly cover a few highlights not included on the previous slides. Our gross profit of $1.02 billion increased by 22.6%, and our gross profit margin of 19.8% increased by 40 basis points. All of our operating segments contributed to the greater gross profit dollars. The improvement in gross profit margin resulted from the performance of electrical construction and building services. 5 million, or 9.2 percent of revenues, compared to 418. Revenues grew nearly 20 percent, with a meaningful operating leverage during the quarter, with SG&A increasing by only 13.5 percent, resulting in a 50 basis point reduction. And lastly on this page, diluted earnings per share was $9.06, which represents an increase of nearly 35 percent when compared to the $6.72 earned in last year's second quarter. If we briefly look at slide 9, you can see the strength of our performance for the first half of the year. Revenues have grown by 19.7%, or 18.3% organically. Our gross profit margin has improved by 30 basis points, and we successfully leveraged our overhead cost structure, reducing SG&A margin by 50%. This resulted in operating income, which has grown by nearly 30%, along with a record operating margin of 9.7%. Let's turn to slide 10. Our balance sheet, including $924 million of cash on hand and $1.45 billion of working capital, continues to provide us with a competitive advantage and enables us to fund organic growth, pursue strategic M&A, and return capital to shareholders. All of which you'll see as shown on this slide, we did generate $289.4 million of operating cash flow in the quarter, and on a year-to-date basis, our operating cash flow is now relatively comparable to that of the year-ago period, despite our growth, and with that, I'll turn the call back over to...

Now, I'm going to go to page 11, and this is a great page, by the way, and so before I get into the guidance, Jason and I are going to talk about the acquisitions. I want to briefly highlight on this page some of our business development activity. We continue to execute our acquisition strategy with a focus on transactions that expand our capabilities. These acquisitions deepen our trade and technical expertise and broaden our geographic reach. These acquisitions actually showcase our playbook and mindset with acquisitions. We look to create a cumulative and compounding impact with our acquisitions that provide durable performance. We know that we have both costs. In these cases, in most of the cases over the last five, eight years, our revenue synergies that we create far outweigh the cost synergies over time. If you like each of these acquisitions in turn, B&B Electric provides a really good capability in Wisconsin. They are a good industrial contractor that can do highly complex work. Sydney Electric in Sydney, Ohio, complements the capability we have in Ohio that came through our Quibi acquisition over five years ago. We learned with things like Sydney, who are great industrial contractors and can do healthcare care work, then we can pivot them if the data center opportunities become available, and then we can grow them pretty significantly. Giles was actually acquired with our Miller team and provides access to the Daytona Beach Market and will allow us to go down through the growing space market in Florida. Schmidt Electric, market leader in Central Texas and Austin, it opens up that market to us. They have the ability to do data center market, but that's where we're going to be able to bring some real capability they can do the most complex work known and we've learned that they can pivot into data center work to our customer relationship so keep the base grow that and put the data centers on top of it likewise Conley Electric we have great businesses in Chicagoland area this is purely complimentary and the locals they operate there too great contracting ability they bring a design build capability sticks work and we think we can pivot them we know we can pivot them also to the expanding data center market in the southern and western Chicago suburbs we feel really good I'm gonna let Jason go through and what's important about all this you look at this page and they're just names on a page right each one of them have a story of a great operator or a great operating family that have owned the businesses for a long time and now they've trusted us to take that with them they're still going to be here with them take these businesses to the next level with how we know to grow our customer relationships and we're going to learn from them too we talked about the design build capabilities some of the prefabrication techniques that they have on specific products so this is a two-way street but I know we feel the pressure to continue to build and make these companies successful and now up to 70 years in some cases family legacy and ownership legacy have now entrusted us to take it to the next level and we don't take that likely.

As Tony noted, these businesses will all be included in our electrical construction segment, and we do anticipate funding the acquisitions through a combination of cash on hand and to the extent necessary to borrowing capacity. The slide shows here that these five businesses collectively generated $625 million of revenues and $105 million of EBITDA during the trailing 12-month end of June 30th. And when considering the closing dates for Schmidt and Connelly, which collectively represent approximately 75% of the aggregate revenues in EBITDA presented. Our guidance, which Tony will discuss shortly, assumes between $250 and $275 million of revenue contribution anticipated in tangible asset amortization, as well as a reduction in net interest income. The impact of diluted earnings per share rolls off over the- If you look on slide 12, we've provided a summary of our capital allocation, both year-to-date, As that slide shows, when you factor in these pending acquisitions, we expect the mix for full year 2026 to be comparable to that of full year 2025 as the percentage deployed towards M&A.

Jason, I'm going to be on page 13 to close this out. Given our strong first half performance and the visibility provided by our record RPO position, we're going to raise full year 2026 guidance. Our updated guidance reflects continued demand across several key markets. our success in winning and executing large-scale projects, and our confidence in the operational capabilities of our teams. As a reminder, while acquisitions strengthen our long-term earnings power, as Jason just said, the earnings contribution near-term on a diluted EPS basis remains moderated by acquisition-related backlog amortization. We expect to earn revenue of between $20 and $20.5 billion and diluted earnings per share of between $32 and $33.25. sense. Our outlook assumes strong continued operating performance and margins, disciplined project execution, and sustained demand across our core market sectors. We remain focused on maintaining pricing discipline, carefully selecting opportunities, and delivering those opportunities to provide exceptional value to our customers. I've said these things before, and I always think they merit reiterating. We have four enduring fundamentals that we build our company on. First, our commitment to training, innovation, and safety. We continue to invest in workforce development, prefabrication, virtual design and construction or VDC, project delivery methods that improve productivity and strengthen execution. Our disciplined approach to contract management. Our teams consistently balance customer service with prudent risk management, particularly on large dedication and expertise of our foremen, superintendents, project managers, project engineers and operating leaders at the subsidiary level and segment level remain an important differentiator for MCOR and a major reason why customers continue to choose us. And finally, disciplined capital allocation. We continue to fit us in organic growth, execute strategic acquisitions, and return capital to shareholders while maintaining financial flexibility. Together these strengths create a durable competitive advantage and position us for continued success. You know, I put this line in here, this paragraph in here all the time. I don't know when there hasn't been macroeconomic uncertainties that continue to exist, including geopolitical conflicts, commodity cost fluctuations, equipment lead time volatility. However, our teams have always repeatedly demonstrated their ability to manage through confidence in our ability to continue creating value for our customers and our shareholders. And finally, and probably most importantly, I want to thank all my teammates for their commitment to safety, discipline execution. Your dedication has been continued to drive M-Course performance and our long-term success. Thank you for joining us today and with that I will turn the questions over to Dave to open the line so that you can ask Jason and I questions, innumerable questions.

We will now begin the question and answer session. To ask a question you may press star then one on your telephone keypad. If you're using a speakerphone please take up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2. Our first question comes from Adam Thalheimer with Thompson Davis. Please go ahead.

Hey, good morning, guys. Great quarter.

Thanks, Adam.

I'm going to try not to ask about data centers. I actually wanted to ask more in the semiconductor space, which maybe that's the high-tech manufacturing. But can you talk about any bookings in the quarter or upcoming bids in that sector?

We continue to see opportunities there. Fire life safety has been particularly strong in the data center space. Mechanically, we're doing some important work in Arizona, you know, on top of the fire. We're doing that in multiple locations. And we continue to see opportunities. We're very capable in that market. You know, it's always balancing those opportunities. That's high-tech manufacturing also and EV battery.

Yeah, I think if you look at where we stand today versus both year-end and sequentially so from March, we've had strong bookings. RPOs are up, and that's both sequentially and from year-end. I think the compares get a little bit easier for us as the year goes on. So as we continue to book some of this work and the first phase, the completion of the first phase of semiconductors is behind us in prior years, I think you'll see some growth here either.

Our life safety, I think, on just about every important site that's being built right now. And mechanically, we're on a couple of them in electric. You know, like anything else in contract, the data center market might be stronger and provide us more near-term earnings power.

Got it. Okay, super helpful. And then with all the acquisitions, a lot of other contractors entering your in-markets via acquisition, I thought maybe it would be helpful for you to just break down how your capacity, the machine that you guys have built over decades, compares to some of the competitors out there.

Yeah, I think for the most part, page 11, the page 13, 11, 11, is a great example of our machine. First thing we look for is can we do anything different today than we do? If they can't execute in the field, whether they're a $5 million acquisition, we're not touching it. Then the second part is, you know, do they share our values? The smaller ones, that's hard to, you know, $10 billion acquisition, maybe that's less important because we're going to mold that into one of our existing operations. But if we're going to do a significant acquisition, like some of the ones on page 11, they've got to look at the world the way we do. You know, we're a values-driven company. We have a disciplined operating model. And they have to be willing to share learning and put learning and be willing to accept learning and best practices. And so that hasn't changed. You know, when you look at others in the space, you know, I don't know how they do acquisition or whatever, But, you know, to buy into this space cold and not know how it operates and think you're going to generate synergy, here's some things I do know over a long period of time. Other than the relationships, like that does help. Bundling mechanical and electrical together at a local site, we are plenty of sites where we're together. We don't very rarely combine a bid. That's the trays together typically. The other thing I know, I'm pretty sure about is, you know, no one's asking the contractor that's doing the utility work, then that'll do the data center work because you're doing the utility work, and I'm pretty sure the site contractor is not the electrical contractor. These trades are very distinct with strong expertise, and I would say that's going to remain that way for a long time. So we're looking for people that are very good at what they do, and in some of them, we think we have substantial growth because what we've learned over time, especially the sort of mid-sized $50 to $100 million contractor, if they can do complex work, if they've been working in industrial plants, if they've been working in health care facilities, and let's say there's a data center adjacency with a relationship we have, we're pretty sure we can put them in the data center market in addition to that. And our folks have been great about sharing knowledge, and that knowledge starts all the way back, or how you're going to estimate it, how you're going to bid it, what do the contractual negotiations look like, all the way through to how do you set up the VDC models, how does that work, all the way through to means and methods in the field. What we've learned through time, we learn a lot from that basic.

I think quickly, if you look at that package of acquisitions we put together, the thing that sets this apart is they're fairly diverse, both in terms of geography, when you look at them together, and markets they can serve. So I think that diversity gives them the opportunity to grow similar to the way MCOR has grown.

Great color. Thanks, Gus. The next question comes from Brent Thielman with Oppenheimer. please go ahead.

Hey, thanks. Good morning. Hey, I guess first question, the mechanical margin comparisons obviously reflect some mixed effects, which always seems to be the case, Tony, but Jason, I think you mentioned performance as a prime and higher proportion of cost plus contracts as some of the factors in the quarter. Is there any sort of change in philosophy here with that business and just something more nuanced.

We talked about this in Q1 as well, Brenton. It's very much some of the water and wastewater work that we're doing, some of the food processing work that we're doing. So we had more bookings in that space. It really is more of those dynamics remain throughout the rest of the year, but I don't think it's an indication of the philosophical change in terms of what we're doing. It's just the way we always have.

And then you mentioned with a few of these transactions, maybe some plans to pivot some or more of their business toward kind of the data center opportunities that might be within their kind of respective territories. Obviously, you bring the customer relationships to the table, but could you just talk about the capabilities of these operations to do that work? Is it going to require more resources from you to do that effectively? I guess what gets you comfortable with those businesses potentially pivoting toward that kind of business?

If you're good businesses in their own right serving the markets that they serve, like Dacian said, that's what makes it.

I'll pass it on.

And the next question comes from Justin Hawk with Faird. Please go ahead.

I've got two here. I guess the first one, just clarifying, and I'm assuming it's probably the case, but the acquisitions, are these all still union contractors, like your typical electrical construction markets or the mix?

Yes, they're all union, IVW contractors.

I figured they were. And then I guess, you know, the other question I had was just I wanted to understand the dynamics on, you know, raising the margin guidance. Obviously, electric was really strong here. And I know you guys don't manage to margin. You manage to, you know, gross profits and, you know, risk and everything else. But with the mechanical drag and then the incremental improvisation from these deals, I guess we're just surprised that the guidance was raised, given that you've been relatively conservative on that. So just, you know, can you walk through what's the difference that drove that?

I think one of the biggest factors is you can see the acceleration we've had in revenue, and that revenue acceleration is really absorbing a lot of overhead. both some of our indirects, we have really, really good execution from electrical, and then we saw greater contribution from building and industrial. And so when you kind of look at the first half of this year, we see no reason why the back half should have.

Got it.

And the next question comes from Abby Daroslawicks with UBS. Please go ahead.

Hey, good morning, guys. So, yeah, the really strong electrical margins here in Q2. Just wondering if there was anything kind of more unique that drove that strength, or was it really more just everything going right?

Well, I don't know if everything went right, but what it is, it's just the ebb and flow of the business. We had a good point in the business. We're at a pretty good place. We're at the midpoint of what that band would be right now. And we always say margins will fluctuate quarter to quarter. but in our guidances, pretty strong performance for electric.

Yeah, I was wondering if, you know, I know last quarter we spoke about how there was contract mix that was kind of restraining some of the margin percentages, and so I'm wondering.

More mechanical.

Gotcha.

Okay.

And then just thinking about the second half of the year, and I know margins move in bands, and this was a nice quarter, but is there any, you know, potential that we could see them stay in kind of the 10% plus range, or is that?

If you look at our guidance, right, the way we're looking at it is this is a phenomenal quarter, and so I think you really need to take the first half of the year together. And if you look at our guidance, effectively, if you take the low end, what we believe can happen there on margins is that it's really comparable to the vacation there, is that that guidance implies that we continue to see some better execution and we continue to get more SG&A leverage. But I wouldn't suspect that, you know, it's certainly not baked into our guidance, is that it's 10.6% margin repeated. It's more like the first half of the year collectively.

There's some seasonal things that work against that, too. The second quarter is always a strong building services quarter, services that we typically have. And, look, I'm just going to, I think when you look at industrial services, we talked about the geopolitical risks. It has nothing to do with the business, but the refiners can't shut down for the most part in any substantial way in the back half of the year. So we had a pretty good turnaround season in February and March. I think the turnaround season will not be as strong as it normally can be because of what's happening in the Middle East because they have to keep open and keep producing oil and gas. Now it's a small impact on margins, but it's likely to impact margins.

Appreciate the time.

And the next question goes to Brian Brophy with Stiefel. Please go ahead.

Yeah. Good morning, everybody. Congrats on a great quarter. I'll ask a data center question. Obviously, public market investors seem concerned about something as it relates to data centers. But just curious, your discussion with your customers, have you seen any change at all in the demand profile from that end market?

Yeah, short answer, none. The demand profile remains the same. I do think, you know, there are some places we're going to build more, right? Northern Virginia will continue to be strong. We have less of a share of them because just the law of large numbers. Other places are building them. Northwest Indiana and Chicago land continue to be important markets. Arizona and then Georgia and the Carolinas. And they all have one thing in common. They have power and are willing to build power. And the sort of not-in-your-backyard thing, that's going to get play. It's the same people that were against fracking. They really don't want data centers because they don't want natural gas to continue to keep this going. And if you look at we've done some work on power and where power is going to become available and all that, we are in really good shape to continue to serve those markets. It's sort of laughable that New York put a data center ban on because there's – Yeah, that's great.

And then a question on the GMP makes some attention. But in terms of your contract mix, can you give us a sense of how much has actually shifted to GMP versus fixed price? Are we talking hundreds of basis points, thousands of base points? Can you just give us a sense of the overall percentage?

Mechanical. It's probably shifted mechanical 9% to 10%, which can be meaningful because they're large contracts. And to go back to the point I make about careful contract negotiation, a lot of that's driven by the owners, and a lot of that's driven on the mechanical side because these mechanical systems, and a lot of times are being done for the first time or being done. They're fairly complex, and a lot of that GMP mix is shifted. There's always been an element of more GMP and mechanical, but the shift is really coming into the AI data centers. The end customer, the owner, and that's proven from us to be. Understood.

I'll pass on. Thank you.

And the next question comes from Tim Mulroney with William Blair. Please go ahead.

Yeah, thank you. Good morning. I have two questions. My first one is kind of building on your last conversation around state moratoriums and, you know, data center bans. As you think about some of these proposals in place at the state and local level, they're just mostly proposals at this point. But can you help us think about how flexible and transportable your labor is when it comes to these types of projects? Like, are there enough of these projects in the works where you can have people drive a few towns over, or do you have to house these workers in new states, depending on where these projects are moving forward? Curious about your ability around labor capacity and flexibility.

That's one of the benefits of being a union contractor. Because of the demand in some of these states, there's a capacity to bring in people to do the work. and then that local gets to know what their capabilities are, they check into the local union hall, and we go to work. And we can help facilitate that in some cases. And so there's that. That's the more traditional way of doing it. And then you get to some of the rural markets which we're participating in, whether it be in some of the fabrication. You can do it from – if you're going to do union, in some cases you'll permit non-union people to be union for a short period. Flexible and do all of the above. I think about these moratoriums, and we've done some work on that. We're by part, we're not lobbyists, we're not experts. But when you start to see the level of tax revenues that come into some of these counties, like Ludin County, Ludin County, Virginia, 95% I think of the property receipts are now from the data center people. Pretty hard to take a step back when that's been driving your local tax base and your education systems. We think there's plenty of opportunities and at the end of the day, when we talk to the owners, they're gonna find the places and we are well positioned to do that in the places I appreciate that extra color there, Tony, on the moratoriums, too.

It's an interesting dynamic that's happening right now. Switching gears, I wanted to ask about your backlog, your RPOs. You know, as I look at this, I look at your one-year RPOs to be completed within a year. It typically represents about 50% of your next 12-month revenue. Yeah, that was true every year, basically for the last four years, plus or minus a percentage point or two. It's basically 50 percent in a very tight range. Is there any practical reason? And I don't know, but is there any practical reason that you could think of for why that might not be the case anymore?

No. Yeah, I think the one thing we have to just, we've booked a lot of work. I think some of it will be the timing of ramp-up and the timing of mobilization. So if you're looking at growth rates in RPO versus growth rates in guidance, and there's obviously a disconnect rather than we're saying our revenues are going to grow, some of that is just the timing of mobilization. It used to be that we'd have to go and book and earn 60% of our annual revenue in that year. That radically, it dropped to 50, 45. I think this year it was 40% of the revenue we had to go book and earn. So I think that's the new norm right now. We do have some projects that are skewing out a little bit longer, right? Historically, we would say that was burned in 12 months. Water and wastewater mix.

This will be project size, Jason.

Absolutely. Project size. 100%.

Okay. Hey, thank you very much.

And the next question comes from Manish Samaya with Cantor. Please go ahead.

Good morning and congratulations, everybody. Thank you. Tony, I wanted to go back to 11, seems to be your favorite slide on M&A. If you could just help us get a better sense as to going forward, you know, what the missing pockets of exposure might be by sector, by market, you know, that would be helpful. And what does a pipeline look like as you look ahead?

The pipeline's strong. We've met existing capability to one of our largest subsidiaries. A great example that we're at at Geographic Market is Giles in the Miller and Sidney teaming up with Quibi in Ohio. Those are, you know, classic examples of what we do. We will always do that, and that's a big part of what we do. And then there's the sort of standalone capability, which would be a B&B, Schmidt, and Conley. A B&B, we were not in that part of Wisconsin. It's a good industrial part of Wisconsin. they have the ability to travel some and do some industrial work and they did really good executors Schmidt brings more Texas to us, we have a fairly strong business in Texas mechanically and electrically, this just adds to it and it's in a sort of operating team that's known for their technical sophistication and just great values, right, like all these companies, they all have great values And in Conley, you know, if you put a chessboard together of what's going on in northwest Indiana, Illinois, we have two great companies, Gibson Electric, which is one of the founding MCOR companies, Lions Pinner, and now Conley, and it's like a mosaic chessboard around the city of Chicago, northwest Indiana, and the southern suburbs. And it really allows us to serve our customers better. That's what drives most of this is our customers look for us to continue to expand capability. I think when I think of acquisitions, you know, we're going to continue to focus on what we do well, which is mechanical and electrical construction, you know, and adding on both companies like Sydney, Giles, B&B, and also the bigger ones like Schmidt and Conley, and then also mechanical services, branch network. Are we looking to invest in things that we don't know as well? Probably not. we see plenty of white space yet both to do the what we've done over a long company and we're looking you know there's a sentence I put in there we're looking for the cumulative and compounding impact but we want to pay a fair price but we're very cautious when you think about some companies that are one market companies exposure to one end market to one of our bases and grow

pretty strongly in some of those markets and Tony the 750 up purchase price that you outlined. Should we think of these acquisitions having any earnouts?

There's another up to $90 million.

And then, Jason, we think about in second half, and I guess if you will kind of give some sense as to how we should think about $27,000 as well.

Yeah, so I obviously won't comment on that. If we look at $26,000 and we just look at as equivalent to net income. So if you look back over the last several years, let's just take the operating cash flow.

Okay, wonderful. Congratulations again. Good luck.

Next question comes from Adam Bubbs with Goldman Sachs. Please go ahead.

Hi, good morning. Just wondering if you could touch on the size of the data center project you're seeing in the pipeline. How does that compare to, you know, what's in backlog, what you're executing against today? And then to what extent do larger project sizes create opportunities for higher workforce utilization, increased revenue per employee?

That actually depends on more the mix. So in general, we're going to get more revenue per employee in the mechanical side than we are in the electrical side. And also the mechanical side allows us to do more prefabrication on modules that have higher value content, especially in the AI data center. When you look at trending up, that's been going on over time, right? If you've been back in 2019, a 20 megawatt data center was considered large. And the way I think about it today, when we're doing cloud storage, give or take, and when there's an AI, people have all kinds of different things. When they get much above 200, 250, then I think most people are talking about campuses. So two things have happened. The site has gone up over the last five years, are one and a half. So they're getting bigger. They're getting more complex.

And then you touched on it a little bit earlier, but could you just expand on the opportunity to move into maybe traditionally non-union regions to serve data centers? It seems to be expanding into more rural markets, and then maybe Texas in particular. You acquired the electrical contractor there but what what's the exposure to the state today and you know how big could that exposure get over time the center market mechanically you

can have a large prefabrication component when you go electrically we have a range of options being in the DFW market I would say market to work in those data centers with our skill and the capability I talked about our ability to come down and do that the team really did a great job learning how to do that we've expanded that capacity and I would say we're a significant player in the Dallas-Fort Worth area market and the data center market. Schmidt gives us the opportunity to expand that. Schmidt's a terrific pool line contractor run by, we feel really good about our ability. So we're fairly well positioned now in Texas. We'll be I think better positioned after these acquisitions and we'll look to continue to do add-on acquisitions in Texas to support this growth. I mean, if you look at our non-oil and gas is an important market in Texas, a healthcare contractor, the bachelor of Kimball expanded, we mechanically, which helped get us to know the electrical, quite frankly.

Appreciate all the detail. Thanks so much.

This concludes our question and answer session. I would like to turn the conference back over to Tony Guzzi for any closing remarks.

First, again, I want to reiterate and thank my teammates for everybody stay safe.

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