Good morning. My name is Pauli and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group First Quarter 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will a question-and-answer session. [Operator Instructions] Thank you. I will now turn the conference over toe Mr. Bradley Vitou with FTI Consulting. Sir, you may begin.

Thank you, Pauli, and good morning, everyone. Welcome to the EMCOR Group conference call. We are here today to discuss the Company’s 2017 first 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 the management. Kevin, please go ahead.

Thank you, Brad, and good morning, everyone. Welcome to EMCOR Group’s earnings conference call for the first quarter of 2017. For those of you, who are accessing the call via the Internet on 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. We are on Slide 2. Slide 2 depicts the executives who are with me to discuss the quarter's results. They are Tony Guzzi, our 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 our Vice President of Marketing & 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 this at EMCORgroup.com. Before we begin, I want to remind you that this discussion may contain certain forward-looking statements. 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 markets for EMCOR 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 2016 Form 10-K and in other reports filed from time-to-time with the Securities and Exchange Commission. With that out the way, please let me turn the call over to Tony Guzzi. Tony.

Yes. Good morning and thanks Kevin. I’ll move you on pages two to four. As I go through these opening remarks. Good morning and thanks for joining us on this conference call, we are off to a good start this year. And we had a very strong first quarter with revenues of $1.89 billion, earnings per diluted share from continuing operations of $0.88 per share and operating income margins of 4.4%. It was our best first quarter ever in terms of revenues, operating income and earnings per diluted share from continuing operations. It also it was our eight consecutive quarter of record revenue growth versus the year ago periods. We had 8.4% revenue growth nearly half of our revenue growth with organic revenue growth. Our success this quarter was driven by excellent execution in our electrical and mechanical construction segments. We had strong underlying execution across these segments and benefitted from the absence of the avenues and clearly one of our most popular phrases here at EMCOR. Our electrical construction segment grew revenues 27.2% versus the year ago period. Posted 7.0% operating income margins and grew operating income by approximately 86% versus the year ago period. Our mechanical construction segment grew revenue by 10.3% versus the year ago period posted 6% operating income margins and grew operating income by 70%. Our quarter was driven by strong execution across all end-markets with particular strength in commercial, manufacturing, healthcare and transportation. Our building services segment held us down in the quarter and it had a good quarter despite receiving no help from the weather. We continue to have strong underlying strength in our mechanical services business and are starting up several new contracts in commercial site based business and with that a mild weather in this segment which is now something we…

Thank you Tony and good morning to everyone participating on the call today. For those accessing this presentation via the webcast we are on Slide 6. Over the four slides, I will augment Tony's opening commentary and cover each of our reportable segments first quarter operating performance in a little more detail as well as other key financial data derived from the consolidated financial statements including in both our earnings release announcement and Form 10-Q filed with the Securities and Exchange Commission earlier this morning. So let's get started. Consolidated revenues of $1.89 billion are up $146.8 million or 8.4% over Q1, 2016. Incremental revenues attributable to businesses acquired at $77.7 million pertaining to the period of time that such businesses were not owned by EMCOR on last year's first quarter positively impacted our U.S. electrical construction, U.S. building services and U.S. mechanical construction segments. Excluding such acquisition revenues , our organic revenue growth in the quarter is 4%. U.S. electrical construction revenues of $443 million increased $94.7 million or 27.2% from Quarter 1 2016. Excluding acquisition revenues of $43.9 million this segment's revenue grew $50.8 million or 14.6% organically. Quarterly revenue growth was primarily driven by project activity within the commercial and transportation market sectors inclusive of certain large scale telecommunication projects partially offset by quarter-over-quarter revenue declines within the healthcare and hospitality market sectors due to certain project completions that occurred in late 2016. U.S. Mechanical Construction first quarter revenues of $671.1 million increased $62.7 million or 10.3%. Excluding acquisition revenues of $16.8 million the segments revenues grew 7.5% organically quarter-over-quarter. Our mechanical construction revenue growth continues to be broad based from a market sector perspective as was the case throughout 2016. Specifically during the first quarter commercial healthcare of water and industrial market sector activities contributed the…

Thank you, Mark. And it was a god brief in first quarter right. Look I'm going to go on pages 10 and 11 and I'm going to talk about backlog. As you can see on the schedule, total backlog at the end of the first quarter is just under $4 billion at $3.97 billion. It's up by $122 million or 3.2% from March 2016, and up from year-end by $71 million or 1.8%. The book-to-bill for the quarter was 1.04. So we had another strong quarter of project bookings on top of strong revenue growth. Our market continue to give us bidding opportunities across most sectors and our construction segments are executing well. Focusing on these market sectors and it sounds like a bit of broker record from 2016 our backlog is lead by commercial sector projects. Commercial sector backlog is stands at almost $1.4 billion, by the way our highest level ever, we said that few times last couple of years and it grew 9.2% from the year ago quarter and increased 5.1% from December 31. Commercial backlog now stands at 35% of our total backlog. While the commercial sector and why in terms of projects our project really grow from anything from the new commercial building to telecommunications and data center work to a large retrofit work to a simple tenant retrofit projects. We execute well in all of those sectors. It's now five consecutive quarters that we have seen the increase in healthcare backlog and over $400 million it's at a level not seeing since 2010. We have recent project wins in New York Cincinnati, Indiana and Boston. U.S. Healthcare is influx and so an uncertain market from the legislative perspective in all of our long-term is good market for us. these progresses are technically challenging and…

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

Thank you very much and congratulations Tony, great execution this quarter.

I’ll thank the people in the field.

So I guess first question is, if you are looking at the healthcare side and that Tony you talked about it more than you have in the past. Do you think this could be turning potentially into a longer cycle and it could play an important role going forward? Or do you think the commercial side of the business remains where you should focus on the more broad base level?

I think the commercial side is on more broad base level. I think healthcare for the next three to five quarters would be important for us, we have backlog, we have to execute. Healthcare has become much more episodic than it was prior to the Affordable Care Act as far as big jobs happened there is not a steady bidding activity for large healthcare jobs like there were, but we are well position to take advantage of them when they are. But the commercial markets and the breadth that we can serve there is probably a more steady and steadily increasing market for us than the healthcare market.

Got it, Tony. And then you talked about the non-res market and your ability to grow at least the alongside back in the mid-single digit. If you look how everything is shaping up over the last few months and I know it's too early. Do you think to that growth rate could be sustained into next year at this point or it's too early to say?

I think it's little early. but I see nothing right now based on the bidding activity that doesn't tell to me that the market is not strong. And I will say there is definitely over the last four months an up tuck in our customer sentiment broadly.

Right.

And They are willing to spend money.

Got it okay. And it seems like that showing up a leading indicator again as well, so really support what you are saying. Thank you Tony, I'll hop back into queue.

Thank you.

And your next question comes from the line of Noelle Dilts with Stifel.

Good morning Noelle.

Hi good morning thanks. Just given the headwind that you are facing in industrial services in the second quarter, could you maybe go back and revisit and give us a sense of maybe how much the petrochem work and the one off work benefited you last year either from a revenue or profitability standpoint. And then my second question would be just as we look at the underlying turnaround market, what do you think starts to change the behavior of the refineries and just if you could expand upon your expectations for the back half of the year and into next year.

God. You know next year is always hard, but back half of the year, I mean we will be a lot smarter in July than we are today, but we are expecting a fairly busy fall turnaround season. The reality we have been very fortunate with our customer mix and I think with our broad array of more capabilities. Absent the strength we really had a series of I would say good turnaround seasons. We believe I don't if we are taking share we are just getting enhanced scope or there are capabilities we are able to put more labor on the job and do it quickly really skilled people. we have had a pretty good success with a lot of people saying there is a tough market and we believe it is a slower growing market we are just doing fairly well in it. We won't be specific about petrochemical work, but we do expect second and third quarter to be more challenging for us. we don’t give quarterly guidance, but clearly it would be very difficult for us to achieve the level of success we have in the second quarter of last year. that would be a tough thing for us to do.

Great, okay. And then in your Q you talked about certain telecom project benefiting you in the quarter. could you just talk about what you are seeing in telecom, how you are participating in and how you are thinking about that going forward?

Well I mean telecom work, data center work is system rich work. It is something we did very well. Very demanding customers, top customers, not only is the most profitable customers at times, but also in contract structure they are very sophisticated. But we line up with them well and we have customers that we can I don't say move across the country, but they can use our capabilities in different parts of the country. What we are seeing is strong market and it's a market that we are well positioned to take advantage of in the markets where we participate in it.

Okay. And then my last question is just on M&A, you spoke about some of your targets there, but could you talk about what you are seeing in terms of just I guess asset or target pricing in the market general interest levels of selling by potential smaller private firms?

We have done two very, we think a very good deals during the first quarter. that being said, who knows, I mean some people have expectations that are outrages, others understand that it takes two sides to actually get to a deal. Our private equity in a lot of ways will always be and even today in my mind it's crazy the base at the bar but with cheap debt, they can pay a turn or turn and a half sometimes even two turns of all what the assets really were. So for us to be able to compete with them in a significant way and that should be appropriate fit by like [Indiscernible] so much and we were able to have one synergy that we got first grade team that had all rate that came in industrial services. So we will be careful, we will be smart about it, we won’t get [indiscernible] with anything that we will buy it our own cost. But we do see enough opportunities and one of the best companies that we have it is the one we spent over $50 million on to the first quarter, if acquisitions aren’t there, we have a great company, we can buy at a multiple sometimes lower than those acquisitions in EMCOR.

Makes sense. Thanks.

And your next question comes from the line of Tate Sullivan with Sidoti.

Good morning. More on M&A enough seeing the two deals in the course of the quarter and that more to the specific question on business segment I mean I believe always associated your building services is more recurring in maintenance and it looks like one that might have been in the larger acquisition as a mechanical business in the Western U.S. and why to put it in buildings services and can you just go over the difference between the two and.

Sure. If you look at or segment probably the electrical and mechanical construction segments is broadly tend to be bigger projects, and 80% plus to the time they are working for general contractors. We do have a couple of businesses within our mechanical segment that have our large services business, but the construction business is in those businesses to work and services businesses. To get to the building services business and mechanical services is the other way around. The services business we are working for the owners directly tends to be 70%, 80% of the revenue and we introduce project work for those owners and their maybe a general contract from all the times. Their most times they have been directed by the owner and try to work the dealing off with us and one of the times we have an underlying base service agreement where we are doing service work and repair service. We have a technician base in those businesses that are fairly significant and we go over the things you would expect the service to business to do from GPS to very efficient truck [indiscernible] so one is a little more owner and service led, one is a little more construction led and [Indiscernible].

Okay, perfect that makes perfect sense and thanks for that. And then you mentioned petrochemical in addition to refineries to I mean going back last cycle and as on getting by mean buying Ardent. I mean do you look or do you benchmark where you want to be in terms of your total energy exposure.

No. Again we would never tell them not to - just like we don’t benchmark for our total construction exposure. We tend to focus on our opportunities and where we can find the best opportunities to continue to sustain growth for our shareholders. Ardent is a good example. Ardent has a fairly significant for a lack of a better word electrician and intendance business or lot of refineries they call nested. And also has the ability to do work especially in the [indiscernible] part of that business can do a lot of different fixed price work. So we look at opportunities and look a long-term growth in those markets and try to find the right point to enter it or grow it organically.

Okay. thank you very much. Have a great day.

And your next question comes from the line of Adam Thalhimer with Thompson Davis.

Good morning guys, great quarter. I'm trying to understand in the industrial service segment the revenue can you give us a little bit more color if I look two years ago back in 2015 for Q2 and Q3 you did $467 million of revenue in that segment. Is that a good benchmark kind of for I guess think about Q2, Q3 this year?

Well I’ll kick it over to Mark, but my view is our revenue our performance in Q2 and Q3 of 2015 probably looks a lot more like this year than 2016.

Yes. The only difference Adam is as Tony mentioned earlier, we have the impact of the strike at the beginning of the 2015 and unfortunately some of that work loss is discreet nature as we roll through the year. So that number that you are drawing out is probably a reasonable number, but we actually could be a little bit lower than that once again based on the fact that there were some spillover from the strike that work was executed as we went throughout the remainder of 2015?

Okay perfect.

And right now we are not factoring not any specialty services work, reality is we can get a call this afternoon and we can mobilize we won’t know that. As it tends to be more emergency related work sometimes.

Okay. And then in the building services business, you talked about a couple of projects that are just starting up. So you are going to have year-over-year revenue growth in that segment from those projects that are ramping up?

Probably we wouldn't see until late in the fourth quarter until it really ramps up, it takes a long time, the way we typically do it in the U.S. is it may end up into a large contract, but we start with pilots. So that we all set expectations about what the funding is going to be, what the execution is going to be. So I think it would be probably towards the end of the year until we would expecting any large impact from those what we just spoke of.

Yes and Adam this is Mark again, the other thing is with some of the maintenance contracts that we do not carry forward into 2017, they were still burning revenue in Q2, Q3 of 2016.

Okay that could be. So I mean in general I guess what I'm trying to get you to the comment on is rising [indiscernible].

We think we have a revenue whole year-over-year in the industrial services segment in Q2, and Q3. And we have although not nearly as profitable not even in the zip code that’s profitable. We have the affirmation projects Mark talked about and our projects and contracts of building services were significant revenue contracts that we had for such a long period of time, then became a lot less possible that's why you don't hear us winding about profitability in building services is much of the revenue.

And then just lastly , I mean you had it was great to see you guys put up great margins in the domestic construction business again. It seems like there is really no project issues that emerged just curious why that margin performance wouldn't continue going forward. I assume that you expect that basically.

Well if we are going to hit our guidance, we have to have growth in margins here because we don't expect based on our guidance today much growth in revenue. The reality of the whole thing is that's basically underlying performance absence the badness of last year, the business underlying, 98.9% of our projects or more is been exceptional over the last 18 months.

Got it. Okay. That's all helpful. Thank you.

[Operator Instructions]. Your next question comes from the line of Brent Thielman with D. A. Davidson.

Good morning Brent.

Good quarter.

Thank you.

Let me just a couple of last questions on the backlog by market sector, one the dip in the transportation sector, do you look at that as kind of just timing of new work coming in. it just seems like it’s moving in the wrong direction relative to what is been talked about out there at least in terms of funding and support?

Well, I think they talked about and letting contracts disconnected from each other right now right. So again to remind everybody what our backlog is it's actual signed contracts or signed change orders for one year of the signed service agreement of a multiyear service agreement, we don’t take all three years and lump it into the backlog all at once. We also make no estimations on turnaround volume as all that work is [indiscernible] which is why industrial would be so low. Transportation and general tends to be an episodic market, we booked a work. We execute that they work, we may book another one in between there. Part of it is we have resources that execute that work and so to some of its timing of the resources of when they will go off those jobs and timing of those within the next award. Some of that is we have been on some work and we didn’t win it because the price or the terms weren’t right, for others is some of it hasn’t been elect yet in the markets where we really participate significantly in transportation market. Transportation work for the most part at EMCOR to the most part is an electrically [indiscernible] the function. It's bridges, tunnels, airports, ports in general, we did a lot of work on Southern Californian airports in subways. On the mechanical side it's much more than what we would do. On the mechanical side it would be stations, it would be tunnel their relation and things like that so when we book a big transportation work at EMCOR for the most part it's typically a electrical job and we have broad base capability there and we were also typically unless we are part of a design build team, will design and assist team a lot of other people will be booking that work ahead of when we would be booking that work.

Okay, that's helpful. Maybe just on the institutional piece of the market, looking back 2010 to 2012 certainly a bigger piece of the pie. Is that to the work is isn’t there right now obviously it's much smaller or is it just the highway commercial to healthcare steps just more attractive deal.

It's a combination of both. But a lot of that institutional work we saw back in 2011 or 2012 when we large was really housing our building services segment and it was very significant base off agreements that we had for the navy. Quite frankly we won all the award here as we performed exceptionally well, when it came for rebid, we decided we couldn’t do work with all across. So we moved on.

Okay, alright. Thanks guys.

At this time there are no further questions. Now we will return the call back to management for closing remarks.

Thank you all very much, I think through the questions I think we have a pretty good picture of what we are anticipating over the next couple of quarters. Here is basically and to summarize this. We expect strong execution of our electrical and mechanical construction segments and we do expect revenue growth there. Or going to be a lower revenue challenge here in Q2 and Q3 we are going to execute we are doing pretty well. In industrial services and building services we will improve. Revenues might not be as strong because we have two large contracts that came out, but they were relatively well profitability. So through your questions and through our commentary, I think we have a pretty good picture o what is hold here. We feel good about taking the lower end of the range up because we are over performed I think versus even our expectations in the first quarter. With that, we look forward to seeing you all and thank you for your interest in EMCOR.

Thank you. This concludes today's conference. You may now disconnect.