Good morning. My name is Polly, and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group Fourth Quarter Year-end 2014 Earnings Conference Call. [Operator Instructions] Thank you. Mr. Elwell, sir, you may begin.

Thank you, Polly, and good morning, everyone. Welcome to the EMCOR Group Conference Call. We are here today to discuss the company's 2014 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 the rest of the team. Kevin, please go ahead.

Thank you, Nathan, and we hear you're in snowy Chicago. I hope it snows for a long time out there. For those of you who are accessing our call via the Internet and our website, welcome, and we hope you have arrived at the beginning of our slide presentation that will accompany our remarks today. We're now on Slide 2. With me to discuss the quarter and the 12 months results are Tony Guzzi, our President and Chief Executive Officer; Mark Pompa, Executive Vice President and Chief Financial Officer; Mava Heffler, Vice President of Marketing and Communications; and our Executive Vice President and General Counsel, Sheldon Cammaker. 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 find this at emcorgroup.com. Before we begin, I want to remind you that this discussion may contain certain forward-looking statements. Any such statements are based upon information available to EMCOR management's perception as of this date, and EMCOR assumes no obligation to update any such forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Accordingly, these statements are no future guarantee of performance. Such risks and uncertainties include, but are not limited to, adverse effects of general economic conditions, changes in the political environment, specific changes in EMCOR's market for services, adverse business conditions, increased competition, mix of business and risks associated with foreign operations. Certain of the risks and factors associated with EMCOR's business are also discussed in the company's 2014 Form 10-K, which was issued this morning, and in other reports filed from time to time with the Securities and Exchange Commission. With that said, please let me turn the call over to Tony. Tony?

Thanks, Kevin, and good morning. And I'll be speaking to Pages 3 through 5. I want to open by saying we had a very good 2014, and I'm pleased to be able to make that statement at the open here. What I'm going to do in my part of the call here at the beginning is I'm going to speak to full year 2014 results for the most part. Mark is going to cover Q4 2014 and full year 2014 in detail. I'm going to speak to pro forma numbers. We're going to adjust for the building sale, the Repcon acquisition costs from the previous year, 2013, and some small restructuring and impairment charges. Now when you look at the year, the U.K. Construction business closure is now in discontinued operations and therefore, it is not in my commentary. I am going to make one comment with respect to Q4 2014. It's the first organic revenue growth quarter we've had in 6 and we grew 3.9% organically. And it was our largest revenue quarter in our history. Now I'll cover 2014 in a little more detail. We generated revenues of $6.42 billion. We generated $2.49 in diluted EPS on a pro forma basis. We generated a stellar $246 million in operating cash flow and expanded pro forma operating margins from 3.9% to 4.4%. I thought I'd spend some time covering some of the good things that happened to us in 2014, some of it of our own doing and we had some help from some markets, and I will talk about some of the headwinds we encountered in 2014. Some of the headwinds relate to our performance and others relate to the markets we execute and operate in. Let's talk about some of the positives. With the results that we…

Thank you, Tony, and good morning to everyone participating on the call today. For those accessing this presentation via the webcast, we are now on Slide 6. As Tony indicated in his opening commentary, I will begin with a detailed discussion of our fourth quarter 2014 results before moving to year-to-date financial information, some of which Tony just summarized and is included in our consolidated financial statements in both our earnings release announcement and Form 10-K filed with the Securities and Exchange Commission earlier this morning. So let's get started on quarter 4's financial results. EMCOR was successful in generating organic revenue growth during the quarter, which is our first quarter of organic growth since quarter 1 of 2013. Consolidated revenues of $1.71 billion are up 4% from the fourth quarter of 2013. Revenues attributable to businesses acquired, pertaining to the period of time that such businesses were not owned by EMCOR and last year's fourth quarter, impacted the current year's quarterly revenues by approximately $1 million, clearly not as significant as it's been over the past several quarters. Therefore, EMCOR's organic revenue growth for the fourth quarter is 3.9%. Our quarterly revenue growth was driven by exceptional revenue performance within our U.S. Industrial Services segment, which is reporting a $74.3 million or 40.4% quarter-over-quarter increase. Strong demand for our field services offerings were the primary driver behind this quarterly growth. However, our shop services also are reporting revenue growth within the fourth quarter. Our one additional reportable segment that had fourth quarter revenue growth is our U.K. Building Services segment, which is reporting an $8.8 million or 10.7% increase despite the impact of negative exchange rate movements quarter-over-quarter. Incremental project work for our maintenance contract base is the primary reason for such growth, and we are cautiously optimistic about…

Thanks, Mark. Before I begin, I'm on Page 15. I'm going to cover backlog by market sector. As I mentioned last quarter, the historical backlog figures have been adjusted for the discontinued treatment of the U.K. Construction operations. So as you look back, all the backlog associated with U.S. -- U.K. Construction operations are out. Total backlog at the end of December is $3.63 billion, we're up $290 million or approximately 9% from December 2013, giving us a book-to-bill ratio for the year of over 1.04. Even though total backlog ticked down a tick in the quarter, which I believe is more timing versus anything else, we continue to see bidding opportunities. And given the 2015 forecast I've seen and what our view is on private non-residential construction, we do expect backlog to grow in 2015, all things being equal. So I do expect, at the end of 2015, that our backlog will be greater than where it is at the end of 2014. It will likely not get there on a straight-line basis, but if you do the year-over-year, that's likely what it will look like. For the year, commercial and transportation backlog had increases of 16% and 62% respectively. And as I've noted previously, our commercial backlog is close to -- I think it was at the highest level in our history at 34% of total backlog, it's close, and it's comprised of projects, really, broad-based across the country and includes increases from not only our Construction operations, but from our Mechanical Services businesses, which performed project work alongside their service contract base and it's more energy retrofit and project -- small project retrofit work. In 2014, we had some major transportation infrastructure projects, and that has lifted the transportation backlog to over $700 million, which is its…

[Operator Instructions] And your first question comes from the line of Tahira Afzal with KeyBanc Capital Markets.

First question is, Tony, if I look back, your backlog growth on an organic basis has really mirrored your revenue growth in the past. So as you end the year with 8% year-on-year backlog growth, why are we still -- why are we looking at only 3% or so revenue growth? It seems you've taken some pretty cautious assumptions this year versus last year in regards to incremental work, so I would love to get a little more of your thoughts around that?

Yes. Sure, T. About half of that backlog growth is in longer-term projects, half of 60%, and because of that, we'll be at the front end of that work. Take Tappan Zee and some of the other infrastructure work that we're doing in New York in 2015 and we'll revenue a lot more in 2016. So that's part of the reason. The second part is, really, we had a very strong organic growth year in our Industrial business, and so the comps get tougher and tougher. We'd be happy for 3% to 5% growth on that in the year, and -- with all that's going on with the strike. But the major reason is the longer-term nature of some of the projects in our backlog right now.

Okay. That's actually pretty helpful. And then, Tony, you mentioned in your prepared commentary you're always vigilant on costs, yet we have seen G&A creep up to probably the highest level as a percentage of revenues that we've seen in many years. Can you kind of put that in perspective? We've been seeing small noise every quarter, just in general. And is that noise in these costs? How do we look at this going forward? Is it going to take away from some of your earnings power?

So T, I'm going to let Mark go into detail on this, but let me hit the high level. So one of the things we watch is number of people. So organic SG&A people creep, that's less than 1% or 2%. The second thing we look at is fixed costs. What are you doing with facilities, infrastructure? That's about flat. So those are the real fixed cost numbers. But when you buy a business like RepconStrickland and bring it in and it has a higher SG&A percentage versus the Construction business and you haven't done anything in the Construction acquisition in a while and your Construction business didn't actually grow in 2014, that drives that percentage higher. And I think the other thing is we had some noise on the legal expenses settlement line, and all that rests in SG&A for the most part. And because of that, you're seeing an abnormal, which on an absolute basis, could be 20 -- 15 or 20 basis points. So Mark, are you going to add to that?

Yes. And T, to continue that thought, clearly, what I mentioned with regards to Industrial Services, the mix of revenues is different in '14 than it certainly has been in any period -- or comparable period prior to that. And as Tony mentioned, where we've had revenue growth and resulting profitability growth has been in some of our higher overhead operations. So that is driving part of it. As Tony mentioned, we've been relatively fortunate up until 2014 and really having nothing unusual happening on the legal litigation front. And unfortunately, in '14, as we both have mentioned in our commentary, we had some significant activity, a lot of which occurred in the fourth quarter. We clearly are very sensitive to it. We clearly are continuing to watch it, and we'll do what we can to drive it down. To be quite honest with you, 2014 was somewhat of an abnormal result from the perspective of percentage of revenues with regards to SG&A expense.

Okay. We'd like to get it in to the 9.5 to 9.8 range.

Your next question comes from the line of Alex Rygiel with FBR. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: First question, as it relates to sort of your outlook for 2015, backlog's up nice organically, revenue guidance is positive. It seems like your margin guidance is a little flattish. Any obvious reasons for that?

I think the biggest part of it, Alex, to me, is we're at 4.4% pro forma margins overall, Alex. Yes, clearly, mix would drive us -- is a thing we can leverage to drive us higher. I think with Mark, I think we're thinking at across the guidance range, unless we get a better mix out of Industrial and Electrical, our margins are sort of mid-4s for the year, and that's why.

Yes. The range in the guidance range from the low end is 4.3% to the high end at 4.7% compared to the 4.4% pro forma number that Tony just mentioned.

Big margins, Alex, we've executed very well. Other than the projects in '13, we really haven't had any significant losses in a while. So what you're seeing is what you get especially out of the Construction business where that matters. And so we're executing well, but we're not seeing, from '13 to '14 in our backlog, a significant uptick in margins that we put into backlog. The market is still fairly competitive out there. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: The Building Services segment 15 years ago, when that business started, it definitely was additive to sort of margin and margin stabilization. Strategically...

Actually, 15 years ago, we lost money. Up until 7 years -- 6 or 7 years ago, we lost money. Look, it did pro forma about 4.1 when you adjust for the legal expenses. We certainly don't think it will be, over the next year or 2, to track to -- from EMCOR at the mid-4s. You've got to remember in that business that it has a fairly significant amount of pass-through revenue, probably close to $100 million, $110 million, so that dilutes the margin. I will tell you the Mechanical Services business is certainly additive, the Governments certainly doesn't hurt us, and the site based, with just a little more revenue, will be dead on to our margins.

As well as Energy.

And Energy is dead on. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: But does the Building Services business still provide the strategic advantage that you were hopeful for a dozen years ago?

Well, I think it's -- I think if you look out in the market, companies that do that work have very good multiples. It's not as volatile as the construction business. I think it gives us definite advantages. We get national account customers as a result of it. We're in the business. We do it very well, and our margins compare as well or better than anybody else's in the business.

And Alex, just to state the obvious, just to make sure everybody's clear, Building Services as a standalone reporting segment didn't exist until last year. So if you're looking back at history, you're looking at the total Facilities Services segment, and certainly from 2007 to periods thereafter, Industrial is embedded in that segment. So that clearly, Industrial's margins, as you can see in our current reporting, are significantly higher. So... Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: And lastly, sort of as it relates to your Industrial Services segment, obviously, that segment's rebounded nicely and over time, I think, very strategic in your strategy long-term. Is the environment ripe right now from an acquisition standpoint to maybe double-down on that market? Or is it still a little bit too early and does the sort of the outlook for oil need to stabilize first?

I think if you're in it for the long term and the fundamentals for the downstream market, which is where we play, as far as we can see, are going to be very good. So what drives it? They operate on a spread between what they can sell it for or what they can buy the crude for, right, if they can sell the processed product or not. Three things have to remain good and they look like they're going to remain. We spent a lot of time and effort and we used outside experts to help us think about this. One is, is natural gas prices going to stay low. Well, that looks like it's yes, as far as we can see. That's 40% or more of their cost structure. Second thing you look at, what's the price of crude and the mix of crude that are going to be available to them. The Gulf Coast refineries, which is where most of our business is, or a majority of our business, are well positioned to operate on any slates in crude. And so they have a natural advantage there. The third part of it is, will the U.S. have an export advantage for finished product. And right now, the Gulf Coast refiners look like they're the low-cost producer because of the mix of crudes they can be in and the other factors I said with Energy. We're long-term or even short-term bullish on this sector. Could you have a dislocation this quarter because of the strike? Sure. But is that work likely to come back? Yes, most of it. Would we like to expand our shop network like we did with Redman? Yes, the answer to that is yes. Would we like to add specialty capability like we did with RepconStrickland in a couple of important product lines like Turnaround Welding and healthy [ph] out units? The answer to that is yes. Do we see opportunities for us to continue to grow organically like we did with the washstand in La Porte and like we are doing with the start-up of the specialty torquing business? The answer to that is yes. So we are long-term bullish on it. We think it takes advantage of our skills. We think the safety programs, we think the ability to attract highly technical labor is something that's an advantage for us. Might this be an opportunity to buy because people, especially private equity, that own some of these companies aren't sure of the outlook or can't work through the cycle like we can? I think internally, we've been starting to think that there may be an opportunity here to build some attractive assets for the long term. We'll see. I mean, we don't control the pace and timing of those. So yes, we do like it and we like what we did with RepconStrickland. We like what we did with Ohmstede. And we like what we did with Redman.

Your next question comes from the line of John Rogers. John B. Rogers - D.A. Davidson & Co., Research Division: A couple of clarifications. First of all, talking about 2015, I think Tony, in your comments, one of the things that you said that had to go right was snow. And I mean, haven't we seen that?

No, I said in the fourth quarter. So the first quarter is okay. Remember, we had a wonderful snow season in the first quarter last year. So we're fighting to get back to par with 2014 right now in 2015. We did nothing other than our seasonal contracts in December, so we need -- yes, I'm talking to go from the midpoint of the range to the high point of the range. One of the things that would help us, could help us a couple of cents, would be a good snow in December '15. John B. Rogers - D.A. Davidson & Co., Research Division: Right. Right. Just -- okay. And then the other question is just in terms of your comments about the overall market -- or I guess is the nonresidential market growing, would you say, 3% to 5%?

That's what we expect, yes. John B. Rogers - D.A. Davidson & Co., Research Division: I mean, it seems in that kind of a market, at least historically, you've been able to grow on your Construction side a little quicker than that or quicker than the market and pick up some share.

Yes. John B. Rogers - D.A. Davidson & Co., Research Division: And is that still possible? I mean, in the guidance, it seems like -- or it's being offset by something else?

And I think that is part of the upside we have, right? I talked about how you go to that higher end of the range. One of them is the better non-res growth, and that's growing better than the market. On a total revenue basis, we had to get through the headwind of these 2 government contracts that we lost, and that could be $70 million of revenue to the Building Services space, not very profitable once you eliminate the joint ventures, but well, that a couple of pennies. But you got to get through that, so that's part of the caution in the total. But one of the things that we're balancing is this year, backlog grew 9% but revenues on a combined basis were actually down on our U.S. Construction business. So we need to get more quick-turn revenues. We need some food processing plants. We can move through the year pretty quickly where the customer wants it up and running as quick as we can. But yes, we usually do grow better than the market. And if the cycle is starting to grow at around 5%, we should start seeing growth in excess of that if we can get more quick-turn backlog. John B. Rogers - D.A. Davidson & Co., Research Division: Okay. And then lastly, just in terms of share repurchases, I mean, you talked about potentially maybe some opportunities in acquisitions, but timing's always tough on that. I mean, should -- x acquisition, should we look for the same sort of investment level in 2015 than the $200 million that we saw in 2014?

We don't really set any target for share repurchase above making sure we don't dilute from where we are. One of the reasons we got aggressive in the fourth quarter is we saw that we were having a pretty good cash year. And we thought we'd take advantage of that in the fourth quarter to do share repurchases and reduce the base going into '15. So yes, we tend to be opportunistic based on how we're performing and other opportunities that are out there like acquisitions. We do like to run a conservative balance sheet. And there's a lot of reasons we've talked about a long -- over a long period of time for that, and -- but share repurchase is definitely part of our capital deployment. It's here and it's likely here to stay.

Your next question comes from the line of Adam Thalhimer. Adam R. Thalhimer - BB&T Capital Markets, Research Division: Hey, Mark, just curious what share count you're using for 2015 guidance.

We're using approximately 64 million. Adam R. Thalhimer - BB&T Capital Markets, Research Division: And then -- okay. And then Tony, what -- I'm still trying to get a sense for, I mean, are you -- I'm just talking kind of pure non-res Construction. Are you more optimistic than you were, say, 3 months ago?

I am probably the same as I was 3 months ago because I was fairly positive 3 months ago. I will tell you, the one caution I think we all need to work through, we only see it in Houston. But the impact of oil and gas on non-res construction could be -- could dampen, if you look at the markets and how they all play out, you take Texas and Oklahoma and Louisiana, it could dampen a point or 2. Now the only place we play in that in the non-res side directly is in Houston, but it definitely could have an impact. So I'm not negative. I think there is markets that are strong. I think it's been gaining momentum. I think commercial's been gaining momentum. I think high-rise residential continues to gain momentum. I think non-res continues to gain momentum. I think infrastructure work, especially in around some of the major cities like New York, we're still bullish on the data center work. And I think we'll see some potential power gen opportunities as the year unfolds. So I think it's a fairly good market right now. It's not a great market. We're not back in 2007 or '08, and we're still 10-or-15-at-least percent below that as you finish the year in '15. But there's enough growth in the right places in the country. I think you will see a dampening in the first quarter, maybe not versus first quarter in '14 as you look at the industry, I'm talking, because of the severe cold. In construction workers really can't work in the U.S. in the severe cold. People send them home because of productivity. So I'd say I'm about the same. And I wasn't negative 3 months ago, so that might be the right way to answer it.

And your next question comes from the line of Noelle Dilts. Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division: I just wanted to circle back to the comment on M&A and kind of your view on the oil and gas markets right now. But I think when we talked a few quarters ago, you mentioned that multiples in the market for acquisitions overall were pretty hefty. Are you already starting to see some of those multiples come down, particularly in the oil and gas space? And then have you seen any change on the non-res side?

Yes. Look, multiples, in my mind, finished 2014 at a ridiculous level when you read any of the M&A reports. When you're talking 10x on average for any size deal, that's sort of crazy. And we don't like to pay that, at least knowingly. For us to get even to the 8 to 9x that we paid for RepconStrickland, it has to be that kind of acquisition. It has to be something that strategically is going to move the needle for us, and is something that we know we can create incremental value. The way I think about acquisitions, and I think our team does, is really in 3 big buckets. So the first big bucket is, would you do a public market deal? Well, we never have, and I don't think we have it listed here of the 4 public companies that we're going to buy tomorrow, and so I would try that: unlikely and would take a real special circumstance. Then you get to this whole new category that's been developed over the last 7 or 8 years, and it's called private equity, high leverage, ridiculous leverage that the banks give them on their EBITDA, low interest, free money, no covenants, high-valuations market. We played in that 2 times. We bought Ohmstede and we bought RepconStrickland, and we're glad we did. But it takes a special circumstance for us to be competitive in that size deal, and that would be the $40 million to $70 million EBITDA deal. It is very pricey. It is extremely competitive. And nothing has changed there. As long as there is light covenants, high leverage and cheap money, these guys will buy anything. Then you get to the third bucket, which has really been how we build a lot of EMCOR. It's either…

Yes. Yes, Noelle. Yes, Noelle, I think they've done a very good job of balancing maintenance and high utilization. And we were actually, and still okay, but we were actually in the midst of a very good turnaround season until the strike made its way to the Gulf Coast in a more pronounced way. So in our customer base, and the things we were doing, we weren't seeing big deferrals. What we were seeing is -- I told you the first 6 weeks of the year, which is not something we usually comment on, were very good. And we saw -- we're still strong, but we're seeing people now do planning to say, look, the strike going, our operator -- our management is actually operating the plant, we can't supervise you and actually write the permitting you need to get the jobs done. We need to think about how we're going to wind this down in such a way we can start it back up. I think the answer is 2 things drive, I think, maintenance in refineries: high utilization and good refining margins. And I don't know which one drives it more, but high utilization looks like it's going to be here a while, and good refining margins, especially for the refining-only-focused companies look very good. So I think that thesis would be right. And I think that we expect maintenance spending to remain strong.

And at this time, there are no further audio questions.

Good. Thank you. Look, we did have a very good 2014, but that's in the rearview mirror. And all we take from that is, we did a good job with cash-free deployment in 2014. We entered the year with a great balance sheet. We have good market prospects. Our job is to go out and execute and try to get that guidance to at least the midpoint of that range and see how we go from there. So thank you, all, very much. We'll be back to talk to you in April. And some of you we'll be talking to here over the next 2 or 3 weeks as some of you have conferences. Thanks for your interest in EMCOR. And I hope everybody has a warmer March than we had February. But it would be okay if it snowed a little bit. Goodbye.

And thank you. And thank you for your participation. This concludes today's conference. You may now disconnect.