Earnings Call Transcript - EME Q2 2022

Operator, Operator

Good morning. My name is Andrea, and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group Second Quarter 2022 Earnings Call.

Brad Newman, FTI Consulting

Thank you, Andrea, and good morning, everyone. Welcome to the EMCOR Group Conference Call. We are here today to discuss the company's 2022 second quarter 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.

Kevin Matz, Executive Vice President of Shared Services

Thanks, Brad, and good morning, everyone. As always, thanks for your interest in EMCOR, and welcome to our earnings presentation for the second quarter. For those of you who are accessing the call via the Internet and our website, welcome as well, and we hope you arrived at the beginning of our slide presentation that we'll use to guide our remarks today. This presentation and discussion contains forward-looking statements and may contain certain non-GAAP financial information. Page 2 of our presentation 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. On Slide 3, we have the executives who are with me to discuss the quarter and six months results. They are Tony Guzzi, our Chairman, President and Chief Executive Officer; Mark Pompa, Executive Vice President and Chief Financial Officer; and our Vice President and General Counsel, Maxine Mauricio. For call participants not accessing the conference call via the Internet, this presentation slides will be archived in the Investor Relations section of our website under Presentations, and you can always find us at emcorgroup.com.

Tony Guzzi, Chairman, President, and CEO

Yes. Thanks. Good morning to everybody, and thanks for your interest in EMCOR. My initial comments will focus on Pages 4 through 6 of the presentation. We had a strong second quarter at EMCOR with revenues of $2.7 billion and diluted earnings per share of $1.99. We delivered overall quarterly revenue growth of 11.1%, with organic revenue growth of 9.7%. We had operating income margins of 5.1% which is especially strong when considering the headwinds we faced with supply chain issues. We generated quarterly operating cash flow of $77 million and exited the quarter with very strong remaining performance obligations or RPOs of $6.5 billion, which represent nearly 27% growth from the year ago period and 15% from year-end 2021. We remain committed to our capital allocation strategy, returning a record $458 million in cash to our shareholders through June 30, 2022, in a volatile operating environment. Our team has resilience and flexibility as we continue to drive successful results for our customers and our business. Our forward momentum this quarter was driven by these key factors. We are seeing strong demand for our specialty Contracting and Construction Services across a variety of sectors where we can differentiate ourselves, which are health care, water and waste, commercial, and industrial/manufacturing. We also continue to see strong forward demand for our data center and high-tech manufacturing construction services. Our Construction segments reported a combined operating income margin of 6.9% in the quarter. Our Mechanical Construction segment operating income margins were a strong 7.2% and Electrical Construction segment operating income margins rebounded to a much improved 6.2% versus first quarter performance. Performance in both segments continues to be impacted by ongoing supply chain issues related to equipment lead times and deliveries. And most of these issues that impacted our margins were from projects we booked over 2 to 3 years ago prior to the emergence of inflationary and supply chain challenges. Every day, we are making improvements to our planning and scheduling and workforce scheduling to better position us to navigate a volatile supply chain environment, which remains as difficult as it was in the first quarter. Our strategy is now proving useful as we work with our suppliers to keep moving and obtain the most comprehensive delivery timelines possible. In the United States Building Services segment, we faced the ongoing supply chain issues as in the Construction segment with respect to our project work, where we have record RPOs, and where the growth in RPOs is more than 20% on a year-over-year basis. Our results are being driven to a large extent, very strong growth for our HVAC repair service, our highest-margin product line in the U.S. Building Services segment. This strong repair service growth makes sense as we are not able to execute some equipment replacement work because of very extended lead times for the HVAC equipment. If our customers cannot replace aging and inefficient equipment, they demand we fix it for them. We also performed very well in our commercial site-based business, which continues to provide stable performance through excellent execution and smart account selection. The Industrial Services segment is performing about how we expected on a year-to-date basis. We execute turnaround services as anticipated and continue to see opportunities to improve operating margins. Demand is steady but our customers are under considerable pressure to keep their facilities operating at what is extraordinarily high utilization. Our United Kingdom Building Services segment continues to deliver steady performance and continues to serve some of the most important and sophisticated customers and sectors in the U.K. Before I turn the call over to Mark, I just want to emphasize that following a record return of cash to shareholders, we left the second quarter with a strong balance sheet. This strong balance sheet serves as an important catalyst to win work from some of our most sophisticated customers, executing large and complex projects. Record RPOs of $6.5 billion is a testament to not only our execution, but also our financial strength.

Mark Pompa, Executive Vice President and CFO

Thank you, Tony, and good morning to everyone participating in the call today. For those accessing this presentation on webcast, now on Slide 7. As Tony indicated, over the next several slides, I will supplement Tony's opening commentary on EMCOR's second quarter performance as well as provide a brief update on our year-to-date results through the second quarter. All financial information referenced this morning is derived from our consolidated financial statements in both our earnings release announcement and Form 10-Q filed with the Securities and Exchange Commission earlier this morning. So let's revisit and expand our review of EMCOR's second quarter performance. Consolidated revenues of $2.71 billion are up $269.7 million or 11.1% over quarter 2 2021. Our second quarter results include $33.7 million of revenues attributable to businesses acquired, pertaining to those businesses that were not owned by EMCOR in last year's second quarter. Acquisition revenues positively impacted our United States Construction segment within the second quarter. Before reviewing the operating results of our individual segments, I would like to highlight that our $2.71 billion of quarterly revenues represents a new all-time quarterly revenue record for the company despite the decline in the United Kingdom Building Services segment revenues which was largely due to unfavorable foreign exchange rate movements. The specifics to each of our reportable segments are as follows: United States Electrical Construction segment revenues of $564.1 million increased $72 million or 14.6% from 2021's comparable quarter. Excluding incremental acquisition revenues, this segment's revenues grew organically quarter-over-quarter. Increased project activity within the commercial market sector, inclusive of the telecommunications and high-tech submarket sectors as well as growth in health care, manufacturing, water, and wastewater market sectors were the primary drivers of the period-over-period improvement. Partially offsetting these increases was a decline in revenues from the institutional market sector due to the completion or substantial completion of certain projects performed in the corresponding 2021 period. United States Mechanical Construction segment revenues of $1.066 billion increased $97.7 million or 10.1% from quarter 2 2021. The revenue growth during the quarter was derived strictly from organic activities within the majority of the market sectors we serve, the manufacturing, water and wastewater and institutional market sectors are experiencing the most significant period-over-period increases. We also continue to see revenue growth within the commercial market sector, driven by demand from customers within the semiconductor and life sciences industries. The revenues for EMCOR's combined United States construction businesses of $1.63 billion increased $169.7 million or 11.6% from quarter 2 2021. United States Services quarterly revenues of $677.8 million increased $66 million or 10.8%. Revenue growth was generated within the segment's commercial site-based and Mechanical Services divisions. With respect to commercial site-based activity, expansions and scope or site expansion with existing customers were the drivers of the quarterly increase in revenues. Within Mechanical Services, we have seen a continuation of the trends that existed in quarter 1. Notably, we have experienced an increase in service repair and maintenance volumes partially as supply chain delays have resulted in the need to extend the useful lives of HVAC equipment in instances when new equipment is not readily available. In addition, there continues to be a high demand for building automation solutions, with an emphasis on improving building efficiency, energy consumption and indoor air quality. Industrial Services segment revenues of $284.5 million increased $49.3 million or 21%. Revenue in the segment has grown in comparison for the comparable prior year period for each of the last four quarters as we are expecting some stabilization in demand for our downstream focused services. This has led to an increase in field services with some spring turnarounds as well as greater maintenance and capital project activity. This growth is despite the headwinds within the upstream and midstream energy sectors, which is impacting certain of our service lines. We have also seen an increase in shop services revenue to new equipment, as well as pull-through repair projects resulting from ongoing turnarounds. With refinery utilization levels in excess of 90%, we remain hopeful that the last six months of 2022 will provide market conditions that can perpetuate this segment's recent trend of improved results. United Kingdom Building Services revenues of $114.6 million decreased $15.3 million. This revenue contraction was predominantly attributable to unfavorable exchange movements. Excluding the impact of foreign exchange, the growth in project activity within the segment was more than offset by a reduction in service contract revenues due to the loss of certain contracts not successfully obtained at rebid. Selling, general and administrative expenses of $245.4 million represent a 9.1% increase of $2.4 million from quarter 2 2021. For incremental expenses attributable to companies acquired of $3.1 million, inclusive of intangible asset amortization, EMCOR's SG&A expenses for the quarter declined slightly on an organic basis. As a reminder, the second quarter of 2021 included a $4.1 million provision for credit loss within our U.S. Industrial Services segment related to a customer bankruptcy. Our credit loss activity in the current year's second quarter is substantially less, contributing to the period-over-period organic SG&A decline. Despite adding personnel to support strong organic revenue growth and travel and entertainment expenses continuing to trend higher as business travel resumes, we have been successfully leveraging our cost structure, resulting in a reduction in our SG&A margin. We remain disciplined with overhead investment and will seek efficiencies and economies of scale as we drive future revenue growth. Reported operating income for the quarter of $137.6 million favorably compares to $133.4 million operating income from the second quarter of 2021. Quarter 2 operating margins of 5.1% is down approximately 40 basis points from 2021 second quarter and is largely due to a less favorable revenue mix within our U.S. construction operations. Operating income of our U.S. Electrical Construction Services segment of $35.1 million decreased $7.9 million from the comparable 2021 period. Reported operation of 6.2% represents a reduction from the 8.7% in last year's second quarter. The decrease in both operating income and operating margin is due to a less favorable project mix within the commercial, institutional and transportation market sectors when compared to the prior year period. In addition, we did experience certain discrete project write-downs this quarter that reduced this segment's operating income. Further, from quarter 1, we continue to experience labor productivity and efficiency challenges due to supply chain difficulties resulting in equipment delivery delays, which have impacted project timelines. Although this segment continues to lag in 2022 performance, we are reporting substantial sequential improvement in both margin and operating income dollars when compared to the first quarter of this year. Second, operating income of our U.S. Mechanical Construction segment of $76.9 million was essentially flat with the comparable 2021 period. Reported operating margin of 7.2% represents a 70 basis point reduction from the 7.9% earned a year ago. As referenced during the last two quarters, our Mechanical Construction segment has a larger number of active projects within the manufacturing and water and wastewater market sectors where we are either acting as a construction manager or general contractor. In these cases, the percentage of our self-performed labor is less than a typical mechanical construction project, thereby impacting our gross margin profile. This segment additionally experienced certain project write-downs during the quarter, which negatively impacted operating margin. Consistent with our Electrical Construction quarterly performance, U.S. Mechanical Construction sequentially improved in both reported operating margin and operating income dollars from quarter 1 of this year. Operating income for the U.S. Building Services is $38.2 million or 5.6% of revenues, which represents a $5.6 million increase in operating income. Operating performance within the segment's Mechanical Services division, both favorable project execution as well as the impact of certain price adjustments aimed at better aligning our billing rates with the increased costs we have experienced were the key drivers of this segment's increases in operating income and operating income margin. Our U.S. Industrial Services segment operating income of $6.5 million represents a $6.7 million improvement from the operating loss reported in the second quarter of 2021. This is our Industrial segment's third consecutive operating profit since reporting periods prior to the pandemic, albeit at an operating margin that remains lower than historical levels as we continue to battle a competitive pricing environment and higher cost inflationary headwinds. On a positive note, anticipated projects are either occurring or scheduled for the remainder of 2022. United Kingdom Building Services operating income of $6.4 million or 5.6% of revenues represents a slight decrease from the quarter of 2021 due to the unfavorable exchange rates for the pound sterling versus the United States dollar. We continue to experience strong project demand within this segment as our customer base advances capital investment programs, which is contributing to the 20 basis points of operating margin expansion per year. Additional financial items of significance for the quarter are as follows: quarter 2 gross profit of $383 million is higher than the comparable 2021 by $6.7 million or just under 2%, however, gross margin of 14.1% is lower than last year's second quarter due to the reasons covered during my operating expense commentary, including project mix, supply chain difficulties and construction project write-downs. Incremental revenues helped us achieve a new second quarter gross profit record, but prevailing macroeconomic headwinds are hindering our ability to maximize profit conversion. Diluted earnings per common share in the second quarter of 2022 is $1.99 compared to $1.78 per diluted share for the prior year period. This second quarter EPS performance represents a quarterly earnings per share record due to a combination of greater net income and a reduction in our weighted average shares outstanding given the new share activity. With the quarterly commentary complete, I will touch on the highlights with respect to EMCOR's results for the first six months of 2022. Revenues of $5.3 billion represent an increase of $558 million or 11.8%, with all of that generated organically. Operating income of $237.6 million or 4.5% of revenues represents a 5.1% reduction from the results for the first six months of 2021 as our improved second quarter 2022 performance was not enough to offset a slow start in quarter 1. Turning to Slide 11. Headed by the strength of our balance sheet, EMCOR remains in a position to invest in our business, return capital to shareholders, and achieve our strategic objectives. Our cash on hand has declined from year-end 2021 levels as we have allocated $454.3 million towards the repurchase of our common stock during the first months of calendar 2022. Approximately $272.5 million of this amount was expended during the second quarter as equity market volatility continued due to inflationary and interest rate pressures. The midpoint of this year then doubled our previous high for share repurchases. Our quarterly dividend, which amounted to $13.6 million during the year-to-date period has been maintained when evaluating the working capital investment necessary to sustain our strong organic revenue growth as well as our future opportunities. In addition to our share repurchase and dividend activity, additional factors for the period-over-period decline in our reported cash balance include $26.6 million in payments for acquisitions and $27.7 million in capital expenditures. In addition to cash, other movements in our balance sheet of note are as follows: working capital has decreased by nearly $307 million. The decrease in cash just referenced coupled with an increase in our net contract liability position was partially offset by an increase in accounts receivable given the revenue growth during the period. Goodwill has increased marginally since December of last year, given the acquisitions completed by us thus far in 2022. Net identifiable intangible assets have decreased by approximately $12 million during 2022 as amortization expense has more than offset the additional intangible assets recognized in connection with our year-to-date acquisition activity. Total debt, exclusive of operating liabilities, remains fairly consistent with that as of December, and EMCOR's debt to capitalization ratio has increased from 10.4% at year-end 2021 to 11.8% at June 30, 2022, given the reduction in our shareholders' equity resulting from our share repurchase activity during the first six months. To pick up from both Tony and my earlier comments, EMCOR remains committed to our capital allocation strategy supported by both our share repurchase activity to date as well as today's announcement that our Board of Directors has approved an additional $500 million authorization under our share repurchase program and an increase in dividend of approximately 15%.

Tony Guzzi, Chairman, President, and CEO

Thanks, Mark. And I'm going to be on Page 12, remaining performance obligations by segment and market sector. Much like the last quarter, the second quarter was another strong project bookings quarter for the company. We continue to experience core demand across all our segments and many of our market sectors. Total company RPOs at the end of the second quarter was $6.4 million, indicating good performance over June 30, 2021's total of $5.1 billion. Measuring from the end of 2021, RPO increased by $862 million thus far this year or a strong 15.4%. Additionally, second quarter project bookings were likely strong by an increase of RPOs of $508 million from this year's first quarter. Almost all of the RPO increase this quarter was organic. Growth was broad-based, with each of the 5 segments growing RPO totals from both the year-ago and 2021 periods. We are positioned in active non-residential market sectors and continue to see velocity in our business. The one-two punch we highlighted in our first quarter call continued this quarter, where we experienced both strong revenue growth and total RPO growth. While some RPO growth thus far could be attributable costs due to outside factors, we continue to see an active bidding environment despite current supply disruptions and inflation challenges. Together, our domestic construction segments experienced strong project growth year-over-year, RPOs increasing over $1 billion or 25% from June 2021. The Mechanical Construction segments' RPOs increased by 23% while the Electrical Construction segment saw an increase of $350 million or nearly 30%. Since September '21, our domestic RPOs have increased over $600 million. U.S. Building Services RPO levels increased $328 million or 44% from the year-ago quarter and now is over $1 billion in quality projects and service opportunities. As I mentioned earlier, extended lead times for HVAC equipment, combined with a continued push for energy efficiency and improving building wellness is resulting in our customers asking us to retrofit and repair their equipment. Additionally, strained equipment availability is driving our repair service, which is enhancing the gross margin work that we do at EMCOR. Moving to the right side of the page, we show RPOs broken down by market segment. Continuing to trend, RPO growth was based in the second quarter across market sectors with RPOs increasing almost $1.1 billion. $700 million of which was booked in the first half of 2022. Also, moving to this $1.1 billion increase for projects in the hyperscale data center, high-tech semiconductor arena as well as projects within life sciences and the pharma businesses. All of this shows the diversity and strength of EMCOR's end markets. Finishing our sector RPO growth year-over-year, health care RPOs are up 10%, institutional and short-duration projects, which includes much of the HVAC retrofit project work are up 26%. Partially offsetting this was a reduction in transportation RPOs and as well as minor decreases in water and wastewater and industrial and manufacturing. From both a business segment and market perspective, I continue to like the balance and breadth of our RPOs.

Anthony Guzzi, Chairman, President, and CEO

We still believe that we are well positioned in growing non-residential markets. I am excited about the opportunities arising in the data centers and semiconductor fabrication markets. We anticipate strong electrical, mechanical, and fire protection demand across all those opportunities in semiconductors.

Tony Guzzi, Chairman, President, and CEO

In the industrial and manufacturing areas, we are also poised to respond with expertise in plant relocations and food fabrication sectors. Health care will continue to be a core market for us as we expand our capabilities to retrofit and enhance our service offerings. Mechanical Services continues to be a top performer, focusing on enhancing building efficiency and resilience while addressing our clients' wellness initiatives. Fire protection is led by our Shambaugh & Son teams, who excel in delivering solutions for complex construction jobs. This segment's performance and continuing demand for renewables and carbon reduction projects position us well for future opportunities. While certain aspect of our market signals vertical movements, the long-term outlook remains strong. And with that, we're encouraged by our ongoing impact as we refine our focus and resource allocation towards these key opportunities and challenges. We expect to update our guidance range accordingly with earnings per diluted share projected between $7.30 to $7.80 and at least $10.8 billion in revenue. We will continue to face headwinds related to supply chain challenges, but we are optimistic given our capabilities and experienced workforce to navigate these issues. Thank you for your continued support of EMCOR, and now I will turn the call over to our operator for questions.

Operator, Operator

And our first question will come from Sean Eastman of KeyBanc Capital Markets.

Sean Eastman, Analyst

Hi, Tim. I just wanted to get an update here. Great update. First one, more of a clarification question. You mentioned how you really like the diversity in RPOs. But of course, per the disclosures, it shows over 45% of the mix is commercial. None of the end markets we're talking about are what I would sort of think of as commercial, and that piece is rapidly growing and is a lot bigger than it was in, say, 2007, 2008. So can we just get some clarity on what that piece really is?

Anthony Guzzi, Chairman, President, and CEO

It's growing, and we mentioned it in our commentary. The growth is driven by the historical context of how it evolved. Many years ago, it wasn't a major part of our business and focused on light manufacturing and enterprise data systems. Now, it has become a more significant aspect of our operations, with data centers leading the growth, along with high-tech manufacturing and more substantial projects like life sciences, pharmaceuticals, and other manufacturing types. The demand supporting this growth remains strong, particularly in building services, which is primarily commercial. This demand supports HVAC retrofit projects, most of which are within typical commercial settings.

Mark Pompa, Executive Vice President and CFO

Yes. I mean just to reemphasize what Tony just said. Not to go for the reasons again, that Tony just mentioned, but included in our commercial RPO disclosure are all those things that Tony has highlighted as major growth areas and have been major contributors to our profitability over the last several years. We're reticent to change how we're categorizing that at a midpoint in a year, but it's something that we need to evaluate internally as we go forward to provide more transparency with regards to what those represent.

Sean Eastman, Analyst

Okay. I think that's really important. I appreciate that. And then on the margins, also just to clarify, I think, Tony, you said you guys have built in a 5% operating margin for the second half. I'm kind of struggling to get to the midpoint of the guidance with that number. So maybe, I heard that wrong. And also just broadly in terms of thinking about the progression of margins, we saw this really nice sequential improvement from Q1 to Q2. Maybe you can talk about that bridge, and I would have thought that into the second half, there would have been a lot of opportunity to continue to improve just in terms of some of the new construction work getting to later stages, driving a tailwind even if we're assuming the supply chain remains challenging.

Anthony Guzzi, Chairman, President, and CEO

Yes. So I'm going to kick this to Mark in a minute. But broadly, I said it would be around 5% to 20 basis points, you're right we can move that. But Sean, most of our caution in saying that number is around the macro environment and supply chain. It's hard for me today to tell you that the supply chain is all fixed and clear. Lead times are terrible. OEMs are routinely missing those terrible lead times. And that has implications for us. And then secondarily, we have work that's now going to be starting that's favorable to our mix. That should be further along than it is. And we're not exactly sure. A month means a lot when you start up a large project on equipment deliveries. And most of those larger projects, we're working in concert with our customers ordering that equipment. They're actually buying it ahead of time. And we will start up when that equipment is there which could be delayed.

Mark Pompa, Executive Vice President and CFO

Tony's point, obviously, to the extent that we've identified the necessity to take a write-down. We've taken 100% of it in the second quarter, but we can't defer it to later periods. The projects that were written down are well over 50% complete, so they are still going to create a little bit of margin headwind in that segment because we're going to be recognizing profit on the remaining revenues at a margin profile lower than what the segment traditionally achieves. This will be the negative aspect of it. So we can't really forecast it definitively. The fact is, with regard to the projects that were written down, both in electric production and mechanical construction, they are still active projects and should not be the preponderance of revenues that are recognized in these segments as we work through the last six months of 2022.

Sean Eastman, Analyst

I almost mentioned that as well, because it's been 8 years since I think the last time we discussed a problematic project was in 2014. So it's a different approach.

Anthony Guzzi, Chairman, President, and CEO

That's fair. These aren't big giant project write-downs. This is more like Mark said, we're getting to the end of the project. Two of them were specifically stopped and started not only through the pandemic, but because of the supply chain. That's never good for a contractor. As you reassemble the team and get going again. And look, what we're known for at EMCOR is we will finish the work. But what we're also known for, is our ability to go win what we think will have partial entitlement. Because customers haven't made an offer back the other way, we're putting together the case. Our guys are pretty persuasive, and we'll see what happens. but I wouldn't term these on the same magnitude as what we had 8 years ago on a specific job.

Brent Thielman, Analyst

Tony, on the data center work, it seems like it's keeping you really active. We hear some rumblings out there that things might pull back in that market vertical. Any commentary in terms of what you're seeing in that market would be great.

Anthony Guzzi, Chairman, President, and CEO

We don't see that. Could there be a short-term disruption? We don't see that. But anything we study or talk to major builders, we don't see a pullback. I think anything you're hearing around pullback is their frustration around the supply chain. As they try to think how to sequence these data centers to come on, they have to take that in their planning. The lead times for certain key equipment can take too long and they're running into challenges completing these projects due to that. However, we have performed well despite these obstacles, and as they begin to resolve, we anticipate a favorable mix for us in the future.

Brent Thielman, Analyst

Okay. Really helpful, Tony. Appreciate that. And then, it sounds like on the building services side, sort of the delays in getting big equipment maybe, some seasonal factors? Or it sounds like you guys think that's going to drive a pretty, maybe unusually stronger second half for that segment. Is that a fair characterization of everything you're seeing out there?

Anthony Guzzi, Chairman, President, and CEO

It should, coupled with repair service demand. Our team right now is closely monitoring equipment deliveries. I'm not 100% sure that all of these manufacturers are going to meet their commitments. It has definitely been a challenge.

Brent Thielman, Analyst

Okay. Appreciate it, Tony. Thank you.

Noelle Dilts, Analyst

Congrats on the quarter. So maybe a little bit on how you're thinking about M&A with the share repurchase announcement you discussed. In terms of priorities, what you're seeing in the market, how you're approaching the potential for M&A?

Anthony Guzzi, Chairman, President, and CEO

In general, nothing has changed in our philosophy. We've been balanced capital allocators for a while here at EMCOR. In any given situation, we prioritize organic growth when we have it. We spent a little more on capital. We know that sometimes investment somewhere in the middle of a project is necessary. And our conservative balance sheet allows us to navigate those challenges without worry. And if we do make acquisitions, we do so thoughtfully, ensuring that they align with our existing operations. We've always said that acquisitions happen when they happen. We've remained open to assessing potential opportunities continuing to focus on enhancing our capabilities and geographic presence. I appreciate the opportunity to reiterate our commitment to long-term growth and the careful approach we take to capital allocation, balancing investments between growth initiatives, share repurchases, and dividends.

Operator, Operator

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

Anthony Guzzi, Chairman, President, and CEO

Yes. So I'm just going to finish the way I started. I'd like to thank all the folks that continue to support us and have listened to and supported our growth story over a long period. I would really like to thank our segment and field leadership and our corporate staff. It's been great execution over a long period. These last three years have been tough. But we've learned not to make excuses, and we will continue to press on. We think carefully and rarely go off track. With that, we live by our set of values: mission first, people always—and our people love to execute for their customers and take care of their coworkers. We will continue to do that. Thank you, and we look forward to talking in the third quarter.

Operator, Operator

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