Good morning. My name is Betsy. I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group, Inc. fourth quarter and full year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star then two. I would now like to turn the call over to Andy Backman, Vice President of Investor Relations. Mr. Backman, you may begin.

Thank you, Betsy, and good morning, everyone, and welcome to EMCOR's fourth quarter and full year 2024 earnings conference call. Those of you joining us by webcast, we are at the beginning of our slide presentation. This presentation will be archived in the Investor Relations section of our website at emcorgroup.com. With me today are Tony Guzzi, our Chairman, President, and Chief Executive Officer; Jason Nalbandian, Senior Vice President and EMCOR's Chief Financial Officer; and Maxine Maurizio, Executive Vice President, Chief Administrative Officer, and General Counsel. For today's call, Tony will provide comments on our fourth quarter and the full year 2024. Jason will then review our fourth quarter and full year numbers, before turning it back to Tony to discuss our recent acquisition of Miller Electric Company, our RPOs, as well as reviewing our 2025 guidance before we open it up for Q&A. Before we begin, as a reminder, this presentation and discussion contain certain forward-looking statements and may contain certain non-GAAP financial information. Slide two of our presentation describes in detail these forward-looking statements and the non-GAAP financial information disclosures. I encourage everyone to review both disclosures in conjunction with our financial statements. And finally, as a reminder, all financial information discussed during this morning's call is included in our consolidated financial statements within both our earnings press release issued this morning and in our Form 10-K filed with the Securities and Exchange Commission. And with that, let me turn the call over to Tony.

Thanks, Andy. And good morning, and welcome to our fourth quarter 2024 earnings call. In my opening comments today, I will primarily highlight our performance in 2024, discuss what went well, and the challenges we faced. I will also provide some brief remarks on the quarter before turning it over to Jason, who is going to cover the quarter in detail. I'll then close by outlining our 2025 outlook and guidance. For my initial comments, I'd ask you to turn to pages four and five. For the fourth quarter of 2024, we again had record performance on nearly every relevant financial metric including diluted earnings per share of $6.32, operating income of $389 million, operating margin of 10.3%, operating cash flow of $469 million, and revenues of $3.77 billion, a 9.6% year-over-year increase. It was a great quarter finishing an exceptional year. For 2024, we are at $14.6 billion in revenues, achieving year-over-year revenue growth of 15.8%, had diluted earnings per share of $21.52, operating income of $1.3 billion, and an operating margin of 9.2%. We had operating cash flow of $1.4 billion. It was a terrific year with strong execution across our business, supported by well-timed long-term investments that position us to serve growing, diverse, and technically sophisticated end markets. Our performance culture, centered on mission first, people always, enables us to attract, develop, retain, and reward an exceptional workforce, which in turn drives our strong performance for both our customers and our shareholders. So this morning, rather than providing a segment-by-segment recap of the year, what I thought I'd do is provide an overview of what went well in 2024 and really what has gone well over the last three to five years, as well as some of the challenges we overcame to deliver an exceptional 2024. First,…

Thank you, Tony, and good morning, everyone. Starting on slide six, I'm going to review our operating performance for each of our segments, as well as some of the key financial data for the fourth quarter of 2024, as compared to the fourth quarter of 2023. I'll also touch on some of the highlights for our full year performance, in addition to our acquisition of Miller Electric, and the impact on our guidance for 2025. As Tony mentioned, consolidated revenues were a record $3.77 billion, an increase of $330.8 million or 9.6%, which was led by our construction segments, as we continue to execute well and demand remains strong across most of the key sectors that we serve. On an organic basis, revenues grew 7.4%. We look at each of our segments, revenues of US electrical construction were $933.2 million, an increase of just over 22%. The most significant growth in this segment was experienced in the network and communications market sector due to a number of data center projects. But beyond data centers, demand within this segment continues to be broad-based with notable revenue increases within high-tech and traditional manufacturing, transportation, and institutional. US mechanical construction generated revenues of $1.66 billion, increasing 12.8%. Similar to electrical construction, the largest growth during the quarter was seen within network and communications. In addition, this segment experienced revenue increases within a number of the other sectors in which we operate, including high-tech manufacturing and healthcare. Revenues of the mechanical segment also benefited from higher levels of service work, as we continue to grow our mechanical and fire protection maintenance base. As expected and consistent with my comments the last several quarters, partially offsetting the growth in both of our construction segments was a decrease in revenues from the commercial market sector due…

Yes. Thank you, Jason. And look, we couldn't be more excited. We finally got into a deal with the team for Miller Electric, Henry Brown, his brother and family, and the ESOP shareholders of that company. You know, we first started talking to each other almost six years ago to get to know each other because they're a leader in our space. And we're a leader in this space. They've always had this unbelievable reputation for professionalism, care for their employees, and excellent execution for their customers. And also disciplined capital allocators much like we are. It is really an acquisition that positions us to serve our customers better throughout the southeast. And also provide opportunity to expand opportunity for the team at Miller and grow the business substantially. It's already grown substantially over the past five to ten years, but to even grow more. I think when Henry and I talked about the acquisition, it was not an acquisition based on big changes in their operation because quite frankly, they already look a lot like EMCOR. They're an IBEW leader and contractor. They run their company very much like a public company, with the care and fiduciary responsibility of what a public company does. They have training programs. They have an inclusive culture. Their values almost identically match our values of mission first, people always. And you've heard me talk in the past about when EMCOR does an acquisition, we first look at their excellence and acceptable field execution. Without a question, the folks at Miller Electric and the team there are excellent in field execution and really deliver for the customers in a safe, productive manner. Then we also go back to the main office and say, do they share our values? And we can say, conclusively, that…

If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. First question today comes from Brent Thielman with D.A. Davidson.

Hey. Thanks. Good morning. Congrats on the strong year and the Miller deal.

Thanks, Brent. Appreciate it.

Yeah. Hey, Tony. Maybe just on Miller. I mean, I take from your comments it sounds like a really well-run business. I guess more so wondering if there are opportunities or future revenue synergies to gain when you can sort of combine it with some of your existing operations in the Southeast?

Yeah. We really only have overlap in two markets of any size, and we think of net additive in both. We have some overlap in Texas. We have some overlap in mid to southern Virginia. And in both places, we think that's additive. But that's part of the opportunity. The other part of the opportunity with Miller is, you know, we share customers. And they're going to want us to do more. We're Miller's customers, have confidence in them, and we may not have the relationships or we have relationships where they're going to want to bring Miller into play. Especially as you expand to some of these larger projects, whether that be data centers, manufacturing plants, or healthcare services. Those are the places where I think we have the most synergies in the near term. Then look, Miller, you know, in EMCOR, we think of some of our bigger companies as platform companies. And Miller will serve as a platform company for us through the southeast. We think it opens a window into acquisitions in the Southeast. Not large electrical contractors, but small to midsize ones. Who will allow us to build scale and serve our customers better and more Southeastern markets.

And, Tony, I mean, it looks like data centers may be approaching sort of 30% of your RPOs. Maybe to what degree you're seeing the influence of new AI data centers in your bookings now? I know it hasn't really been influential to revenue yet.

Yeah. I think that's a fair comment. The way we think about it now, do we know exactly what our customers are going to use those data centers for? No. But the way we know that is because of the kind of systems they're putting in and the kind of megawatts they're using. I would still say based on the mix of work, we expect most of 2025 to still be building cloud storage data centers with a little AI. But the mix has started to come in with some AI data centers. And I said the only way we know that is through the megawatt and systems they're using. They need more cooling. They need more power. You know, it's always, you know, I always, like, take a step back when I think of things and people react to up markets. There's been a couple of these through the last three years. The reality of all this is I still believe we're in the early innings. Like most major capital expansions, nothing's ever linear. I know that, you know, where we were building on three sites and there were maybe only three or four or five sites doing data centers in the country in 2019, Danny Gail, today, you would say we're building hyperscale data centers electrically at about fifteen different locations, geography-wise. And we talked about how we did that. So clearly, and I think these are some of the smartest planning people that I've had the privilege of watching work. You know, they, you know, I don't think Deep Sheet caught them by surprise. I think they have a plan. They're executing. And they're, and what they've been in, if you think about that expansion of sites, there's two things. They're mitigating their risk, and it allows…

Really helpful. Tony, last one that I guess I have to ask on margins. Appreciate your opening comments. But, I mean, the move in electrical margins here has just been phenomenal here in the last few years. And I, you know, I guess the question I get is, you know, how do you build upon this? Are there still opportunities from, you know, execution, efficiencies, and utilization that field, you know, open-ended question, but love to hear.

Yeah. Look. I would be cautious to say we're going to build on these margins. Right? Especially the margins you saw in the fourth quarter. I will say though, we obviously believe in the stability of margins based on our guidance. And if you combine the margin profile we have, with the efficiency of capital, we're operating the business from a return on net asset basis right now in our construction businesses. They're doing great. And, you know, if you told me I could run an 8.5% to 10% EMCOR forever, I would take that deal from you. It'll bounce around quarter to quarter. Right? If you could tell me I could generate cash flow between 70% and 100% of EBITDA, I would take that deal. Right? And if you told me that we're going to continue to move the mix and continue to have opportunities to expand our mechanical service business, which also has leading margins, will solidify that site-based business at a smaller size. We'll take that deal. So when I look at what we have, why we're achieving those margins, in my estimation, very little of it has to do with price. We still have some of the most difficult customers in the world. They're demanding. They're not paying us one more nickel than they have to. We're being innovative in our means and methods. We're sharing those means and methods, how to get things done more efficiently for customers around the country. We have great data center peer groups, both mechanically, electrically, and in our fire life safety business. People come to us because they know they're going to get it done efficiently, safe, productively, and it's going to work. We also know how to integrate further upstream with our VDC capabilities to know that we…

The only thing I think I'd add on margins. Right? We obviously provided our expectations for the full year on a consolidated basis. If you think of our segments and you think quarter to quarter, I would just say if you look at trailing twelve, eighteen, twenty-four months, that gives you a good look at where the margins will bounce around between quarters.

Yeah. Good point, Jason. I just I gotta make a comment though. I think it was early 2022. We had some not to sort of bring up, you know, bad news, but in early 2022, we had some late starts on some data center projects. It was switch gears specifically wasn't getting delivered on time. We held on to a little bit of excess labor. And no offense, Brent, but, you know, our analysts' hair were on fire about margin in the quarter, and we said, we're pretty sure we're still the leading electric contractor. They can execute better than anybody in the field. Here's what's going on. And so will that happen again? I don't think anytime soon. But there's variables of control, but you can bet we're going to always take the opportunity to hold on to our best field supervision and not react to a short-term blip. And that's why margins aren't a core I'm not foretelling anything here. This is not a quarter-to-quarter business with margins.

Understood. Appreciate you taking all the questions. I'll pass it on.

Thanks, Brent. Next question, Betsy.

Next question comes from Adam Thalhimer with Thompson Davis. Please go ahead.

Morning, Adam.

Good morning, guys. Congrats on the year and the Miller acquisition. And then you could add it on the Outlook?

Right? It's a pretty good Outlook. I was trying to be brief, but congrats on the I'm trying to get your high-level thoughts on capital allocation.

Yep. So would you guys be willing to hold a little bit of net debt, you know, if you found another Miller or if you really wanted to lean into the buyback? Quickly.

I think on the former, not the latter. I think we would take on net debt or look, I think we're comfortable between one and two times for a short period of time. And we're comfortable really at point five to one on a sustained basis if we needed to fund the business. If we found another Miller, which I'm not sure there's another one exactly like Miller, yes. We would lean in and do that. Because the synergies and the profile of that company if you go from field execution back to the values they run that company by, was a perfect fit. There's not that many out there like that. There that don't create problems for us with too much overlap. And then it's a destructive acquisition. There are still a few out there. That are smaller but still sizable. So the answer to that is yes. And I think, Jason, that you agree with on this. Right? Deals happen when they happen. And you just try to make sure your balance sheet is flexible enough to take advantage of that. And so the buyback for us is where excess capital goes. And we're not afraid to do that. But would we lever up to do a buyback? No. I don't think that would be a good use of capital.

Agree, Tony.

And then wanted to ask about how we should think about the building services segment from a high level. I'm curious. Is that kind of slow growth, slow growth with better margins over time?

I think we still have a couple tough compare we have a tough comparison probably through the middle of the year as that contract the year over year rolls off. I think growth will return sort of maybe fourth quarter of this coming year. I think it will be more weighted towards always been weighted towards mechanical service. I think we in their term, we won't be building the site-based business to the level it was. We won't win that kind of contract anytime soon. Also, it's a smart management team in site-based. They're not going to chase the real estate people down to the bottom. If someone values our technical capability, our program management capability, and really understanding how the equipment actually works in their buildings. Then we're the right solution for them. If they want a fast buck turn with the real estate guy, they can knock themselves out.

I think that's part of the reason why even when, like, a quarter like this one where we're seeing a decline in revenue, we're still seeing strength or expansion in margins. Right? We're focused on higher margin work and letting revenue.

And we still see, you know, we have quietly built out that mechanical service business to a leading position. Through organic growth and small tuck-in acquisitions, we see still a world of opportunity in front of us to do that. And we'll continue to buy mechanical service companies, which for us means real service companies. Right? They do small project works, HVAC retrofits. We'll continue to look for the opportunity in every one of our markets to add building controls capability.

Alright. Thanks, guys. Good luck in Q1.

Thanks, Adam. Next question, Betsy.

The next question comes from Brian Bofe with Stifel. Please go ahead.

Thanks. Good morning, everybody. I would extend my congratulations as well. Very nice quarter, very nice margin performance. Wanted to ask on healthcare. That was another strong area of RPO performance in the quarter. I guess, could you talk about what you're seeing there in terms of demand dynamics you're currently?

Yeah. The demand dynamics we're seeing there are really centered around new hospitals, new operating suites, in the podium, new patient towers. And I think some of this is being accelerated a little bit because of COVID. And they had outdated hospitals and outdated patient towers. And they realized they didn't have enough patient rooms. And so there's a balance going on there. Expansion, you know, the growth in places like Florida in the southeast, and in the Southwest, you're also seeing the growth there in Texas. You know, just demographically growing. And in the northeast, you're just seeing old hospitals being rehabbed and rebuilt. I mean, doing some work up in Boston right now. It's magical how they're putting this project together while they keep the hospital going. Of one of the leading healthcare hospitals in the world. And so we're good at that stuff. And if you think about a hospital, and if you would stand at the bottom of the hospital and look up, it's a system-rich environment. Data center, much like a semiconductor plant, much like a manufacturing plant. Hospitals tend to be a little heavier. Like, data centers are more electrically heavy for us sometimes. Hospitals tend to be more mechanically heavy. Because you think about you're bringing med gases in, you're bringing HVAC in, you have air purification systems. You're doing, you know, positive and negative pressure rooms, and you're trying to make them flexible. You have air changes that have to happen not within the patient rooms. You have to isolate things. You have to have constant humidity. I mean, there's a lot of things that go into it. And that's where, you know, working with the engineers, we don't design them. But working with the engineers to figure out which system's going to work best and then being able to commission it the right way, very complex commissioning. And then a lot of times, you know, we usually have service operations in those markets. After a year or so, maybe we can get lucky and hand it off to them.

Yeah. That's really helpful. Thank you. And then green shoots there. Curious if you're seeing similar. And can you kind of remind us how important of an end market that is for you guys?

Look. Again, go back. We're contractors. And so quite frankly, when warehousing came down, we were pivoting to data centers anyway. And from our perspective, the kind of fire and warehousing for us was mainly a fire life safety. And on the margins, only where the high substation where they were trying where people like Amazon were building substations for electric vehicles, major, you know, power input where we're doing gate electrical work at a warehouse. So the reality is, FireLife Safety, that's an easy pivot from us, from warehousing to data centers, we were underway anyway. We are seeing some green shoots in warehousing. I would offer a lot of it sort of smaller scale. Cold storage warehouses have been where it's been picking up for us lately. And secondarily, there's a lot of reracking going on in these major warehouses. They're becoming much more automated. That has become much more automated. We do some of that work. But also, when you do that, you have to bring more fire protection to bear into those projects. Because now there's more fire protection within the racks because the racks are stacked much closer. And therefore, you need more fire life safety in them.

Yeah. That's helpful. And then one other one for me real quickly here. You called out tariffs as a risk factor. Can you remind us how you may potentially be impacted there and talk about how you guys have managed through that in the past?

Yeah. So let's just rewind to 2021. Very quick price increases from just about everything we did. I don't think it'll be that unplanned and that abrupt already isn't? And, of course, we're prepared for it. So how do we think about it? Well, first, if we can get the contract terms in place, which we've been working on since 2021, to say, hey, if there's a sudden change in prices, we're going to pass that on to you. Secondarily, if we're on a large project and think about EMCOR. I'd say it's a third, a third, a third. Right? A third of our businesses, small projects and service, that's continuously getting repriced. Any pricing that goes up, that's what's going to happen. So this is material pricing is what tariffs are going to impact us. That part of the business isn't really going to be impacted at all. And if it is, not going to be able to find it on the income statement in any meaningful way. Second part of EMCOR projects are sort of a million to ten million dollar projects give or take. That's about a third of our EMCOR business. Right? That's across the whole business. And if you look at that, that's a little quick return. We may get nicked a little bit. Again, probably not material, what will happen. And then you get to the third, just the larger projects. Then let's bifurcate that third. When we're doing data center work, semiconductor work, these big manufacturing jobs, at one time, rewind ten years ago, we would have bought all the major end systems. We'd have brought the chillers, the air handlers, we would have bought the switch gear. Because of the lousy lead times in the supply chain, the owners of the GCs purchased that. Now mainly the owners, even if they're buying through the GCs, and they basically send the equipment to us and we get a handling fee. So that's probably of that 33%, that's probably half of our or more of our material cogs. We're really not exposed much at all there. And then the balance is on pipe, wire, and conduit. It's up to us and our local folk working with distribution to protect our prices when we've got a long-term commitment. And right now, we may have a little bit of inventory uptick. Then we've got that's small compared to the overall size of EMCOR. Have a little bit of import inventory uptick where we lock in the price. On certain pipe and conduit wire, to be able to build a project. Jason, do you have anything to add on that?

I think you summarized it, Tony. So you can tell we spend a lot of time thinking about this?

And absolutely. Our team's ready. And again, go back to we're contractors. We get paid to adapt to really difficult situations. Figure out a solution how to overcome it.

Yeah. Very very helpful, Tony. I will pass it on. Congrats again.

Alright. Thank you. Thanks, Brian. Next question, Betsy.

The next question comes from Alex Dwyer with KeyBanc Capital Markets. Please go ahead.

Hi, guys. Good morning. Thanks for taking my questions.

Of course. Yep.

So I just wanted to start and ask about your data center business and if you're seeing any shifts in geographies where projects are being bid? I'm just wondering if data center investment moves to these more, like, remote areas, it could be harder to hire a labor force. If this is something you're planning for and are there any investments that you can make ahead of this to better position EMCOR in this scenario?

So the answer would be yes, yes, and yes. If you were to rewind, yeah. Rewind to 2019, we were serving about three data center markets electrically. One and a half or so mechanically. Today, that's the addition of Miller about fifteen or sixteen electrically. And most of the expansion has happened in secondary markets. And by secondary market means, you know, not Metro DC, not Metro Atlanta, not, you know, market we've worked in forever and Portland, Washington. And a little bit of Texas. So what happened? Right? There's been this quest for power, the search for power. These are really smart planning people. And so they said, where are we going to be able to build for the next five years without having a dearth of power? That we're pretty going to have a surety of power. And so you're seeing them go to places over time, over the last three years, really. And I think they feel a little better because they're not as worried about cash generation. You know, you're never going to power this expansion with renewable intermittent power. It was going to be part of the solution, but that's not a solution for something that needs to run twenty-four hours a day. At fifty to a hundred megawatts. So if you think you weren't going to have surety of power, you were out looking for pockets of power where you know where they were going to be. That's why data centers were coming into parts of Indiana. That's why data centers were expanding more in Columbus, Ohio. Think about Ohio River. Right? And if you didn't have coal power coming up, you still had some nuclear, it'd be all going to be able to build gas generation. That's why data centers expanded Northern Virginia…

Thanks, Tony. That was a super helpful answer. And then, I guess my second and last question is just on the industrial services outlook for this year and kind of think about what is built into guidance from a revenue growth and margin perspective. I know there's room for the margins to continue to perform here, and how meaningful do you think of an impact it could be with a more oil and gas-friendly administration the next couple of years.

I think the real benefit will be 2026 and beyond. I think what you're seeing this year is a more traditional turnaround market. With the caveat is the first quarter got off to a little bit of a slow start because of, you know, the snowstorm in Texas, which delayed everything a week. Which means we ate a little bit of labor, nothing significant. We had a little bit of labor for a week as we were geared up to start turnaround season, and then everything got stuck in place in Texas for a week. See a normal turnaround season, probably a little more back half loaded than we should but that happens year to year thing. But we continue to see the force marks to normal demand. We do see, you know, hopefully, somewhere around, you know, back half 2025 going to the 2026. Or we have a great electrical business as the team at Ardent down in Louisiana. It's for Texas up into North Dakota in the Mid Con area. They're some of the best upstream and midstream people. That is really where we have the exposure. And if there's opportunity there, they'll take advantage of it. And that should come in the form of more compressor stations, and also bringing electrical services to the wellsite.

Yeah. The only thing I would say in terms of what's baked into guidance, I would say there's nothing extreme in terms of growth assumptions for 2025. The one thing I'd point out is we did have an acquisition in industrial services this year. Some of the growth we saw this year came from an acquisition. So we would expect a more normal level of organic growth next year.

And that acquisition was focused on upstream, and it was focused on really helping control solutions around methane. And that's why we bought it. It expands our services and puts it with a great team down at Ardent. I will say as we look from the middle of 2026 through the middle of 2028 and a half, we're hoping that be glad we own that asset. In the out years. I mean, the whole industrial services segment. In the out years coming up.

Got it. Thank you. I'll turn it over.

Thanks, Alex. Betsy, next question?

The last question today comes from Adam Buck with Goldman Sachs. Please go ahead.

Hi. Good morning.

Good morning, Adam.

Hey. I think the midpoint of your guide assumes around 7.5% organic growth. Can you just help us bifurcate 2025 organic growth between your highest growth end markets data centers, and high-tech manufacturing and how that compares to the balance of the business?

Yeah. I'm going to kick us over, Jason. I don't think we see significant growth because we'll have to get it into RPOs first. I will see the growth there first before we have growth in revenues in high-tech manufacturing. We do see data center growth but Jason, I'll throw it over to you, but it's sort of fifty-fifty, isn't it?

I think that's fair, Tony. I mean, I think when you look at this year and you look at our growth, again, traditional non-res, we probably grew a hundred to a hundred and fifty basis points in excess of non-res. And so when we think about next year and we say what's the assumptions for the high growth sectors versus what's the assumptions for the rest of the business. I think we'll continue to grow somewhere between one hundred to two hundred basis points in excess of non-res.

That's EMCOR overall.

EMCOR overall. But in our electrical mechanical segment, it's almost twice that. Right?

Got it. Appreciate the color there. And then how are you thinking about your ability to continue to grow employee count in 2025 and how much of that, you know, 7.5% organic growth would be driven by employee capacity versus room for further utilization improvements?

You know, our headcount clearly hasn't been growing as fast as our revenues. Right? Our man hours grew eight or nine percent in 2024. They've been growing probably man hours if you take it over a three or four-year period has been growing about sixty to sixty-five percent of our revenue growth. We expect to be able to continue that trend going. And that goes to what our folks are doing in prefab, what they're doing in planning, what they're doing in estimating, and all those things. We always complain, you know, in the field about not being able to find the people. But our folks do a wonderful job of finding the people. And I always go back to what I always say, right? At the end of the day, how do you attract great tradespeople to come and want to work for you? Sometimes for a project with someone for a career. I think it gets down to four or five things. Right? I think and these are no particular order. First, they want to know they're going to get paid every week. And if they're union employees, they want to know that also you're paying into the benefits fund. The second thing, right, again, no particular order, they want to know that you're going to make the investments to keep them safe. That's not only in the means and methods to make sure the job's well planned, but also they have the equipment they need to be successful. In my twenty-plus years at EMCOR, we have never turned down a safety and then we never will. The third thing they really care about, am I being led by people at the local level? And above, but mainly the local level? From the foreman through the superintendent to…

And just to add on to Tony's comment about headcount, you know, not growing as fast as revenues, if you look over a ten-year period, our revenue CAGRs round number is ten percent. Our headcount CAGR is three, three and a half percent. Right? And kind of a three to one ratio in if you look at even just this year alone, headcount's up five, five and a half percent. Revenue growth is up almost sixteen percent. So that ratio is holding true even today and we expect those to be at sixty-five percent.

We go back. Right? We expect to only have to grow headcount a third and a half as much as we grow revenue. And we still see no reason why that would be. Yeah. We're trying to say sixty-five percent sort of is covered.

And then last one for me, really strong margins in the quarter and understand margins can bounce around quarter to quarter, but any specific driver of the positive variance in margins versus your expectation heading into the quarter? And any other major puts and takes driving the margin outlook? You mentioned incremental intangible amortization, but any other moving pieces we should keep in mind in terms of mix or any other pieces in 2025.

Yeah. I think in terms of the quarter, there's really no anomalies. I think we beat our expectations when it came to execution, particularly in the electrical segment. Right? Which had a north of fifteen percent margin. When we look to 2025, outside of the intangible asset amortization, I don't think there's any anomalies or any one-offs to be considered.

No. I think also, you know, at these levels of margin, heard me say before, if I could run EMCOR forever between eight and a half to ten percent combined margins with good growth, where we are right now, we are very cognizant in keeping good margins. But, also, we're more worried about margin dollars right now than margin percentages. Right? At these levels, we want to grow margin dollars. And if we had to give up ten basis points to do that, we would do that.

Great. Appreciate all the color.

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

Look, thank you all for your interest in EMCOR. I know there's a lot more than the analysts that ask questions. Hopefully, you got most of your questions answered. You know, we expect another good year excited about the future. And to our team, let's work safe and productively in 2025 or even better than we did in 2024. Well, then, Andy, I'll throw it back to you to close out the call.

Great. Thanks. Thanks, Tony. Thanks, Jason. And thank you all for joining us today. If you should have any follow-up questions, please do not hesitate to reach out to me directly. Thank you all again, and have a great day. And Betsy, will you please close the call?

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