Good morning. My name is Carmen and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group Fourth Quarter and Full Year 2015 Earnings Call. [Operator Instructions] I would now like to turn the call over to Max Dutcher. Sir, the floor is yours.

Thank you, Carmen and good morning everyone. Welcome to the EMCOR Group conference call. We are here today to discuss the company’s 2015 fourth quarter and full year results, which were reported this morning. I would like to turn the call over to Kevin Matz, Executive Vice President of Shared Services, who will introduce management. Kevin, please go ahead.

Thank you, Max and good morning everyone. Welcome to EMCOR Group’s earnings conference call for the fourth quarter of 2015. For those of you who are accessing the call via the Internet and our website, welcome to you as well and we hope you have arrived at the beginning of our slide presentation that will accompany our remarks today. Please advance to Slide 2. Slide 2 has the executives who are with me to discuss the quarter and the 12-month results. They are Tony Guzzi, President and Chief Executive Officer; Mark Pompa, our Executive Vice President and Chief Financial Officer; Maxine Mauricio, our Senior Vice President and General Counsel and welcome to your first of many calls with us and our Vice President, Marketing and Communications, Mava Heffler. 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 us 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 guarantee of future performance. Such risks and uncertainties include, but are not limited to adverse effects of general economic conditions, changes in the political environment, changes in the specific market for EMCOR services, adverse business conditions, increased competition, mix of business and risks associated with foreign operations. Certain other risks and factors associated with EMCOR’s business are also discussed in the company’s 2015 Form 10-K and 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 I will be covering Pages 3 through 5. Well, good morning and thanks for your interest in EMCOR and welcome to our quarterly call and the 2015 year end call. I am going to mainly discuss 2015 full year results here in the front end, but I will spend some time talking about the highlights of the quarter. Mark will take us through the results of the quarter and also the year in detail. I will also cover at the end of this call our expectations for 2016. I will compare EMCOR’s performance to the pro forma numbers and Mark will provide the adjustments. 2015 has no items that warrant attention. Our fourth quarter of 2015 ended about where we expected. We earned $0.80 per diluted share from continuing operations on $1.78 billion of revenue and we had organic revenue growth of 3.1%. Operating margins expanded to 4.7% in 2015 from 4.4% in 2014. We expected and achieved organic growth in our U.S. construction operations, with very strong growth in the Mechanical Construction segment and essentially a flat fourth quarter compared to the fourth quarter of 2014 in the Electrical Construction segment. We earned a blended 7.2% operating margin in our U.S. construction operations. However, the electrical segment had an uncharacteristically weak quarter versus prior year at 4.1% and mechanical was very strong at 8.9%. We did have some issues in the quarter in some transportation and infrastructure work in our Electrical Construction segment that cost us about $8.2 million in operating income in the quarter. Those issues center on labor productivity, access and schedule delays. We will try to recoup some of these losses as the job progresses. In the Mechanical Construction segment, we had very strong underlying performance, but it was bolstered by $12.1 million…

Thank you, Tony and good morning to everyone participating on the call today. For those accessing this presentation via the webcasts, we are now on Slide 6. As Tony indicated in his opening commentary, I will begin with a detailed discussion of our fourth quarter 2015 results before moving to our full year 2015 performance, some of which Tony just outlined during his executive summary and is included in our consolidated financial statements within both our earnings release announcement and Form 10-K filed with the Securities and Exchange Commission earlier this morning. So, let’s cover the fourth quarter performance. Consolidated revenues of $1.78 billion in quarter four are up $63 million, or 3.7%. All reportable segments are reporting increased revenues quarter-over-quarter, except their U.S. Industrial Services segment. Fourth quarter revenues attributable to businesses acquired in 2015 were $10.6 million and primarily impacted our U.S. Mechanical Construction Services segment. Excluding such acquisition revenues, our organic revenue growth in the quarter is 3.1%. U.S. electrical construction revenues increased 1.1% to $357.6 million. Increased project activity within commercial, manufacturing and hospitality generated revenue increases which were partially offset by a decline in quarterly transportation revenues. U.S. Mechanical Construction fourth quarter revenues increased $75.8 million or 13%. Excluding acquisition revenues, this segment grew organically 11.2%. Our mechanical construction revenue growth was broad based from a market sector perspective, with both the industrial and institutional market sectors’ project activity contributing the largest dollar revenue growth quarter-over-quarter. This segment is reporting double digit revenue growth across six of the seven market sectors that we track and report, other than the commercial market sector, which experienced a minor revenue contraction this quarter. Tony will review our backlog by market sector after the completion of my commentary during this morning’s presentation. EMCOR’s total domestic construction business fourth quarter…

Mark, please take a well earned drink of water. And you did all that without having to do it in between. That’s for the record. I am on Page 15. I am going to talk about backlog. As you can see on the graph, total backlog at the end of 2015 is at the highest level on the chart at $3.8 billion, up almost 4% from December of 2014 and flat with September of 2015. We had a very good booking year at EMCOR, with the book-to-bill over one. And we had both revenue and backlog growth year-over-year. And most non-residential sector growth predictions of mid single-digit growth happened. And we think that’s going to happen in ‘16 also. Worried a little bit about the back half of the year, but that’s just because we don’t have visibility. We are very well positioned in our domestic construction and building services operations and we are very well positioned in our Industrial Services segment, although I think we all know what the headwind exist there from just bottom line lower crude prices. As I mentioned earlier, if you really look at this chart and we would have put 2007 on there, this would be in second place to the end of the year 2007. And at that time, for those that have followed us for a long period of time, you may recall we had both $1 billion in commercial and gaming and hospitality. Commercial still remains our largest sector of 32% of total backlog. It has had really good growth since 2012. We continue to see stronger opportunities there. However, we are also seeing growth in water and wastewater, institutional, some hospitality and gaming and industrial projects. And these are the industrial projects beyond just our industrial segments backlog and healthcare…

Certainly. [Operator Instructions] Your first question comes from the line of John Rogers with D.A. Davidson.

Good morning, John.

Tony, just talking about the visibility into the second half of the year, I know it’s difficult and we are all trying to figure out what’s going on with the economy, but how much of your electrical mechanical growth or low growth is dependent on new build activity that you are waiting to see happen or is it just executing the small or refurbishment projects?

Again, if you go historically in our electrical and mechanical segments, our construction segments – and we are doing about 60% of that work is either new build or pretty significant renovation. And a lot of that’s in backlog. I mean, I think with just any momentum at all we will grow because of the backlog book. The visibility is challenging, John, always, but lot of noise going on around the economy. That’s the caution, I think, around our low end of the range. It’s visibility in the back end of the year. Anything that’s going to take us to the low end is going to be a macro event, not internally driven at this time.

Okay. And then the other question sort of bigger picture, I mean, it sounds like if I run the math right, your guidance is essentially assuming flat overall or flattish operating margins. Is there an opportunity at some point to improve those or do we really just need the top line growth to get us there?

The improvement will come from better execution than what we expect today really in our project portfolio. We are still battling that mix shift for the first part of this year, with respect to the shop versus field mix. That can be sizeable. That can be 20 or 30 basis points of headwind we entered the year with. We do expect electrical to come up, back to over 6.5%. We do expect building services to jump up, but we had exceptionally strong performance in mechanical, some of it driven by that claim settlement in the back half – in fourth quarter, but it’s 6% blended. We are operating a pretty good construction business. So, if you put it together, we expect a little bit of a tick up there, but not wholesale movement at this point based on the portfolio of work we have. I will say, in general, pricing has not come back in most markets to where it was in 2007. And so what we are doing now is we are executing. And Mark, you have something to add on that?

Yes. And John, it’s to build on Tony’s comments, when you look at our history which I am sure most people on this call have at their fingertips, on a combined basis our construction operations, back in the ‘08, ‘09, ‘10 range were kind of hovering in the mid 7s to low 7s, but we had some – we still have a lot going on in the gaming and hospitality markets. We had a lot of larger projects that were approaching completion at that time. When you look at the last 5 years or so we have kind of capped ourselves out at 6.3, 6.4 in there and as Tony said, we would certainly like to get back there. That’s once again kind of fighting the headwind of pricing. Pricing is better than it’s been. But as Tony said, it’s certainly not back to ‘07 and ‘08 levels. And we have adapted to that, because we have no choice. And I think our field level management is the best it’s ever been. And certainly, you could see that in the results. I think the only thing that’s been a little bit different with us the last few years is that we have had a few projects that have provided some unpleasant surprises, but we could bore you for all the reasons, but I wouldn’t say it’s certainly a recurring pattern at this point. But in light of the fact that pricing isn’t as robust as it has been historically, those types of things do impact the margin much more significantly than they would have say, 5, 8, 10 years ago. So, I think everybody has their mission in front of them to continue to do better. The great thing about completing a year is that we started new again for ‘16, but having said that it’s a battle everyday as you know in this industry and I think we are doing an excellent job of it.

Okay. I appreciate the color.

Thanks, John.

Your next question comes from the line of Adam Thalhimer with BB&T Capital Markets.

Good morning, Adam.

Hey, good morning guys. Congrats on the good Q4. On the transportation projects, I guess, first of all, do you expect any further charges this year? And then second of all I mean, what are the anticipated margins if that work ramps up?

Well, look we don’t expect any further charges or we would have taken them. And we think we got it all and it tends to be one of our better executing companies, a couple of them, where the charges happened. It’s more timing and productivity than anything else and 80% of it is not driven by us. And we will seek recovery. Just to calibrate, some of the most successful work we have ever done at EMCOR has been on transportation infrastructure work. And with our portfolio of projects we have right now, we expect that to continue to hold true. We are just ramping up some of the bigger transportation infrastructure work we have and we expect that to be successful. So, it’s a good market for us. It will continue to be a good market for us. We had a little bump here. And we will be aggressive in seeking recovery where we had the bump.

Okay, perfect. And then the $12.1 million mechanical that you recovered in Q4, is there anything else left there and how does that compare to your expectations?

It’s about where we expected. When we finished that work in…

Early ‘14.

Early ‘14, most of – the charges were all in 2013. We thought we would recover about two-thirds of what the problems were and that’s about what we did.

And then, snow removal in Q1?

It’s okay. I mean, there is a good chance you could play golf in Connecticut this weekend. So, not the strongest snow removal weather there has been, but it hasn’t been bad either.

And then just general thoughts on Houston non-res, then I will turn it over.

Houston non-res had a terrific 2015. We will do okay in 2016. We are blessed to be – have great healthcare capability in Houston, but clearly, the oil and gas customers that were doing tenant fit-out and retrofit work and building campuses – that will tail off here at the end of this year in ‘16.

Okay, thank you.

Your next question comes from the line of Tahira Afzal with KeyBanc Capital Markets.

Good morning, T.

Good morning. How are you doing?

I am doing fine. How are you?

I am doing well. Congrats. Decent quarter given all the puts and takes.

Yes, we are pleased with it.

First question is, Tony, how do I – if I look at that sort of slightly over $900 million in revenues from industrial, could you break out roughly how much came from heat exchangers, some traditional short cycle industrial work and turnaround?

The way we think of the business, T, is about 80% of that business is in the field, 20% of that business is in the shops. Half of that shop business is with the new build heat exchanger capital work. Half of that shop business, so 8% to 10%, depending on the year.

Yes. So, it seems like the turnarounds might have hurt the year more in a sense. I know that the heat exchanger business is higher margin, but it seems to be a pretty small part.

Yes, well, it’s – I like to say for every $1 we lose in our shops with absorption and everything else, we have to go make $2 somewhere else in EMCOR in revenue. All of that being said we had a pretty good fall turnaround season. We had an exceptional fall turnaround season in 2014. And we didn’t think we were going to repeat that and we have said that.

Yes. And T, this is Mark. Clearly, we never recouped the lost revenues from the first quarter that didn’t get executed pursuant to the refinery operator strike.

Got it. Okay. I mean, it seems like we are probably at the point where we – even with all the capital spending cuts and pressure on spending, maybe start seeing a secular refinery maintenance cycle come back to some extent. It seems you are assuming a good spring and fall turnaround; but it seems just given your traditional nature, you are still building it in with some measure?

Yes. We are building it in with a measure of confidence, I mean, conservatism and confidence I guess, because it is in the conservatism, right. I look at it the other way. We never had a maintenance downturn, if you look at the last 2 years, in our refinery maintenance business in the field.

Right.

We have grown if you take all that together, up 40% in Q4 last year, up this year, high-teens, up the year before, low 20s. I mean, we have had very strong underlying growth, but for this refinery operator strike, we would have had growing earnings in industrial, despite what happened in – but we lost about $30 million of revenue give or take. And that’s not even taking any pull-through revenue. That’s stuff we pretty much knew we were going to do. And we have estimated then I think $0.06 or $0.08 a share. The reality was probably higher than that, because we got no pull-through work either in the shops out of those turnarounds. So, we had a pretty good 2 to 3-year run in refinery maintenance. We see no reason, with the utilization rates that, that’s not going to continue on the maintenance side. The question is how does drive driven miles today, there is an article that it’s up that the refinery profitability in the Midwest is down. That will all wash itself out. It’s cyclical. I would always remind people though it depends on what your customers are doing during that time period and less than what’s actually going on in the overall market. Some people want to draw big conclusions, because one company is up, one company is down. Big picture, the market grows about 3% to 7% a year depending on the year on the maintenance side. That’s what it’s been doing. We took a lot of share here over the last couple of years. It shows the strength of the RepconStrickland acquisition and how after the first 4 or 5 months, we were again able to hit the ground running. We feel really good about that. And quite frankly, it might be an opportunity now to be okay to look for assets in that business long-term, because we are bullish on the petrochemical and the refinery business in the U.S. for as far as we can see. There will be hiccups along the way, but it’s a good business.

Right. Well, I mean the base is already growing 25% with all the petrochem that’s already under construction, so that would make sense. But Tony, last question is really on the transportation side, you saw some execution hiccups. How do we prevent these going forward? Because there are some pretty compelling large projects coming up in some of your sweet spots, regionally speaking. Any comfort around that in terms of what you have changed around the processes?

Yes. Look, the places where we had execution issues here in the third and fourth quarter are the same places that have executed some of the best projects that we have ever executed. Sometimes you get in a situation on these larger projects where schedule – we are a subcontractor. And when designs start changing and conditions start changing on the job and schedules get elongated, what really happens on some of these jobs are you have a set of general conditions you are operating in. You are paying for all that infrastructure in those general conditions on those jobs. You are going to be entitled to a chunk of that money after. It’s going to be a fight to get it, but it’s pretty clear that if the job expands 9 months and you are spending $500,000 a month to have people at the job site doing the administration and the project management and everything else that you are going to recoup that. We tend to be – some people aren’t – we tend to be very conservative in our estimate of that recovery, because we like people to see where we stand today versus the execution of those jobs. So, we don’t build big unbilled sections. We don’t build big claim portfolios. And so we may be a little different than other people as you can see with the recovery in the mechanical. I will take our execution in the transportation sector over time against anybody’s in the industry.

Fair enough. Thank you, Tony. That was helpful.

And your next question is from the line of Nick Coppola with Thompson Research Group.

Good morning, Nick.

Good morning. This is Steven Ramsey on for Nick. My first question centers around what you alluded to in pricing, how we are still off the high watermark of 2007. Is there any way to quantify that and are there any barriers to getting back to that high watermark in the next couple of years?

There is a couple of things going on there. One is just flat mix of work. When we were doing the fast turn hospitality work, where everyday you can get it open is worth millions of dollars to the operator, it means a lot to get it done in prices. And when you are able to take your whole company and dedicate it to a separate large – those large jobs and get 100% absorption on your SG&A almost, because everybody is leaning forward and out into the field focused on those projects, you tend to get better pricing. I think you have got a mix issue right now. And I think also it’s just – it’s just a tougher market. This has been a very slow recovery. And in a very slow recovery, I guess we are all learning. Non-residential construction, I think through history tends to snapback a lot quicker. With this slow recovery, it’s had a long time to absorb the work. And as a result, labor has been able to come on. Are there spot labor shortages? Sure, but nothing like you would have experienced in 2007 or 2008. So, how you get better pricing is your resources become more valuable. Your resources, which is ours is labor becomes more valuable, you are able to get an up-sell on the price. We have spots in the country where we can do that, but it’s not wholesale.

Thank you. And my second question was going to center around labor shortages which you addressed. I don’t know if you have anything else you want to add to that? Thanks.

Yes. I just think in general, when you look at labor, it’s still very competitive in the Gulf Coast for the right kinds of labor. As one of the other analysts pointed out, we are having a 25% capacity increase in our petrochemical base. That needs a lot upstream guys aren’t downstream guys – aren’t builders, they are different kinds of people. That’s not an easy migration to make for most of the skilled trades. You have very busy markets in parts of the country like Boston and New York and California right now on the trade side. But at EMCOR, we don’t – we like labor tightness and shortage. We are one of the biggest in the country. And I always go back to what I think really skilled people and supervision care about. The first thing is, are you going to work for a company that’s going to make sure you get paid every week? We are check, check on that. Are you going to work for a company where the supervision is competent? Forget about the five people around the table here today or the six people around the table here today. Is the supervision in the field competent? We get triple checks on that. Maybe the most important thing then is are you going to keep us safe? And we have – everyday we wake up and knock on wood and are very thankful that we have the focus on safety and the supervision that focuses on safety that we do. And so we can resoundingly answer yes to that. And are you going to provide me the equipment I need to be safe? And we can resoundingly say yes to that. So, we tend to attract the best trades people and supervision in the industry. So, we wish labor would even get tighter. So, thanks.

Thank you.

And there are no other questions. Gentlemen, do you have any closing remarks?

Yes. Thanks for your interest in EMCOR. We are coming off a very good 2015 and have cautious optimism as we look to 2016. Thank you.