Good morning. My name is Jamie, 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 2025 Earnings Conference Call. [Operator Instructions]. At this time, I'd like to turn the floor over to Lucas Sullivan, Director, Financial Planning and Analysis. Mr. Sullivan, you may begin.

Thanks, Jamie. Good morning, everyone, and welcome to EMCOR's fourth quarter and full year 2025 earnings conference call. For those of you joining us by webcast, we are at the beginning of our slide presentation that will accompany our remarks today. 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 Mauricio, Executive Vice President, Chief Administrative Officer and General Counsel. For today's call, Tony will provide comments on our fourth quarter and full year and discuss our RPOs. Jason will then review the fourth quarter and full year numbers, then turn it back to Tony to discuss our guidance before we open it up for Q&A. Before we begin, a quick reminder that this presentation and discussion contains certain forward-looking statements and may contain certain non-GAAP financial information. Slide 2 of our presentation describes in detail these forward-looking statements and the non-GAAP financial information disclosures. I encourage everyone to review both the disclosures in conjunction with our discussion and accompanying slides. 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. Tony?

Yes. Thanks, Lucas. Good morning, and welcome to our fourth quarter 2025 earnings call. I'm going to speak briefly to the fourth quarter in my opening comments, but we'll focus my introductory remarks on what drove our continued success in 2025. So I'm going to start on Pages 4 through 5 of our earnings presentation. We had an excellent close to the year with our fourth quarter results. In the fourth quarter, we generated revenues of $4.5 billion, which represents 19.7% growth. We earned adjusted earnings per share of $7.19 per diluted share, a 13.8% increase from 2024 and delivered adjusted operating income of $440 million, a 13.1% increase from 2024. We did this while achieving strong adjusted operating margins of 9.7%. Our adjusted results for the fourth quarter exclude the gain on the sale of our U.K. business and the transaction costs related to such sale. For the full year, our adjusted results include these items as well as the transaction costs incurred in the first quarter due to the acquisition of the Miller Electric company. By any measure, 2025 was a tremendous year for us. We had record revenues of nearly $17 billion and record adjusted full year operating margin of 9.4% and at the high end of our guidance range. We also had record adjusted diluted earnings per share of $25.87 per share, an increase of 20% from 2024. With operating cash flow of $1.3 billion, we continued our exceptional record of cash conversion. Our success once again demonstrates our ability to execute with discipline across our business as we drive innovation and efficiency to achieve exceptional outcomes for our customers. We have delivered sustained strong results despite the fact that we are working on the most technically sophisticated fast-paced and demanding projects in our history. We…

Thank you, Tony, and good morning, everyone. Before we dive into our results for the fourth quarter, I thought it made sense to step back and take a look at how we performed for the full year, which is summarized on Slide 8. In 2025, we earned revenues of $16.99 billion, operating income of $1.71 billion and operating margin of 10.1% and diluted earnings per share of $28.19. When excluding the transaction costs incurred in connection with both the acquisition of Miller Electric and the sale of EMCOR U.K. as well as the gain on sale of EMCOR U.K., we are non-GAAP operating income of $1.59 billion, operating margin of 9.4% and diluted earnings per share of $25.87. All of which were records for EMCOR. We performed extremely well in 2025, benefiting from some of the best execution in our history and a favorable mix of work, both of which allowed us to deliver a full year operating margin at the high end of the guidance we previously provided and in excess of our expectations when we began the year. If we turn to Slide 9, I will now review the operating performance for each of our segments during the quarter, starting with revenues. $4.5 billion represents a quarterly record for EMCOR, with revenues increasing 19.7% or 9.5% organically. Revenues of U.S. Electrical Construction were a quarterly record of $1.36 billion, increasing 45.8% due to a combination of strong organic growth and the acquisition of Miller. Similar to recent quarters, the most significant growth in this segment was generated from our data center projects within the network and communications market sector, where revenues increased nearly 50% year-over-year. While this represents the greatest increase during the quarter, almost all other sectors experienced growth. Health care, institutional and hospitality and entertainment represent…

Thanks, Jason. And I'm going to close on Pages 13 and 14. As discussed, we are well positioned to continue to deliver excellent results in 2026. We expect to earn revenues of $17.75 billion to $18.5 billion and achieve diluted earnings per share from $27.25 to $29.25 with a full year operating margin between 9% and 9.4%. As we set guidance, and I have stated this many times over the years, we have always thought about it the following way. From the low end to the midpoint, we have a high degree of confidence that we will deliver that outcome absent a major economic event. From the midpoint to the high end of our range, we need to execute very well from a margin standpoint, and we need to book 40% to 45% of new work to allow us to hit the mid to high point of our revenue range. Easily said, the better our margins, the higher revenue, the more we move to the higher end of our range. As we look at the composition of our RPOs, we began the year with a strong mix of work, with estimated gross margins in line with those experienced over the last few years. We have a strong foundation across diverse geographies and sectors. At this time, we see no slowing of demand for most of our end markets and continue to see exceptional prospects in our data center markets. As we move into 2026, we need to keep leveraging our training, BDC, fabrication and project planning and delivery capabilities. We must not only continue to incrementally improve, but also innovate in our internal processes and delivery. We must also continue to protect ourselves through careful contract negotiation, execution and compliance. We deliver for our customers, and we will continue to do so, but we also strive to protect our rights as we deliver these complex projects. We will always face some macroeconomic challenge of some kind and some headwinds, but our team has excelled over these challenge -- overcoming these challenges over a very long period of time. I do believe that we are an employer of choice because of our excellence in field leadership. From our frontline foremen, superintendents, project managers and executives to our subsidiary and segment leadership. We will continue to execute a balanced capital allocation strategy, focused on organic investment, strategic acquisitions and returning cash to shareholders through share repurchases and dividends, which we show on Page 14. Our balanced capital allocation strategy has provided the foundation for our compounding record of success over the last 10 to 15 years. As I close, I want to thank my teammates. I appreciate all you do for EMCOR every day and for our customers and appreciate the safe and productive way you execute our work. With that, Jamie, I'll turn the call over to you for questions.

[Operator Instructions]. And our first question today comes from Brent Thielman from D.A. Davidson.

Tony or Jason, if you could comment just on some of the initiatives that compressed margins a bit last quarter, 3Q. I think you moved into some new territories that caused a little pressure there. Like what lingering impact that had in the fourth quarter, if any? And are you sort of beyond that at this stage here in 2026?

You always have to be careful to say we're beyond that because we're starting projects all the time and we execute really well, and we write projects up. We write them down. But on balance, I think the headwinds we've experienced in that particular market are behind us now. And we had a little bit of that spillover into the fourth quarter. Some of it also is just mix of work. We didn't finish as much fixed price work in our Electrical segment as we did the year before. And we started some work that was more target price or GMP. And hopefully, we'll convert some of that to fixed price, but we don't know that. But the underlying margins in the business, which you can see from our gross margins is pretty strong.

Yes. And I would echo what Tony said. The only thing I would add to that, right, is I tried to say this in my prepared remarks. If you look at the gross profit margin for electrical and you adjust for the amortization impact, it performed relatively consistent year-over-year. So any impacts that we did have from those project start-ups was offset by just execution within the segment.

Yes. Brent, and you could see it in our numbers, right? Are we a little disappointed we coughed up 50 or 60 basis points this year in electrical operationally? Sure, we are. Some of the headwind was from amortization. That's not a cash expense. But when you look over a 12- to 24-month period, that's a pretty good snapshot of our margins. We expect to operate somewhere mid- to low 12s to 14-or-so percent electrically. And mid- to low 12s. So 13.5% or so mechanically, and it's going to bounce around there. But if we can operate this business between 12.5% and 13.5% on a sustained basis across our construction segments, I think we'd be pretty pleased with that.

Tony, maybe just to follow up, I mean, an interesting chart there on Slide 7. So on the network communications, data center side, you talked about good visibility here for the next 2 to 3 years. I think it would be hard to dispute that. Maybe one of the questions that oftentimes comes up is just like your regional exposure. Do you see yourself having to move into different regions to get more of this work? Or maybe you could just talk about what's happening, where you're already at, where you -- where you're positioned today that is going to continue to spend...

I don't have [indiscernible] markets electrically. But the way I look at it is we have a strong -- we have a solid position in the Midwest. We'd like to make that a little bit stronger in some of the markets. We think we can do that either through acquisition investment or organic growth. Arizona, we continue to build that out. We've just built a better position mechanically in Arizona that we look to take advantage of it. And electrically, we moved into that market 2 years ago, and we're starting to hit full ramp right now. Texas, we're pretty strong. Mechanically, we'll take some of our first significant jobs in Texas. And there's a mixed management decision, right? We had that capability there doing semiconductor work. We'll continue to do some of that. But quite frankly, we think some of the rural data center work is better for us to do and it allows us to sort of get more productivity in our prefab shops also by doing that. And we've invested ahead of that. The semiconductor work we did there in a lot of ways with the beachhead to participate more broadly in the market and especially in the data center market mechanically. Electrically, we have a very good position in the Dallas-Fort Worth area. We'll look to expand out of that. Atlanta, we have a very strong position mechanically and we have a secondary position electrically, and we'll look to continue to strengthen that. The Carolinas were pretty strong, both mechanically and electrically, more so mechanically, but still pretty strong electrically. Northern Virginia, quite frankly, were terrific, both mechanically and electrically. And then as you get to Oregon, we're very strong electrically, and Iowa very strong electrically. We will continue to round that capability. You can tell we're in more markets electrically than mechanically. Some of that is -- we found it advantageous to be able to take our electricians that were very skilled in our management teams and doing something that still don't work at one time, and they've proven to be very good data center builders also. And we've been able to take that scale from our -- some of our companies and move it to others. And it takes about 18 months to ramp them up to get to full production where they can hit the kind of margins, our traditional data center company mechanically. And there's no real reason that we haven't expanded as much. It's just the footprint of where we are and what it takes mechanically to build the capability because of the prefab and all the other things are a little more extensive. And in fire life safety, we can cover the entire market, and we do.

Got it. I appreciate that, Tony. And just last one. I mean, your balance sheet, you sort of have a war chest here. How do you think about like total excess liquidity here, assuming you want to keep some level of cash on the balance sheet, also understand your revolvers untapped. Just thoughts there. It seems like you can do a lot.

I'll hit a macro level on that, and then Jason will get into some specifics about what cash we'd probably like to have on hand. I think in general, we're never going to have a highly leveraged balance sheet on a sustained basis to think of who we're working for. One of our competitive differentiators, especially on this large project work is we're not a leverage company. And think about the hyperscalers, they're not looking to do business with leverage companies. And it's also when you look to the bonding line, it's a nice ability to be able to have a surety bond without question when you need it, and we've had that luxury. But we also would be willing to lever up for the right acquisitions or series of acquisitions to go to 1 to 1.5x, maybe 2x and then leverage back down to 1x. What I wouldn't do is borrow a bunch of money to buy back stock. We like to do the buyback through excess liquidity. And if we're going to borrow money, it's because we're building a -- we're buying into an asset that's going to return cash to us over an extended period of time. That sort of macro level, Jason, maybe get to the specifics.

I would say if you go to that Slide 14 that Tony referenced earlier and you look at what we've done this year, last year and even over the last 10 years, I think that's what our playbook looks like going forward, right? It continues to be a balanced approach towards capital allocation. We think we have a strong M&A pipeline as we move into next year. We'll continue to return capital to shareholders, and you saw that in the repurchases this year, and you saw that in the increase in dividend. In terms of minimal cash balance for our balance sheet, it's probably somewhere in the neighborhood of $300 million to $400 million. So obviously, our balance sheet positions us to continue to deploy cash strategically as we move into 2026.

Yes. I think if you ask any of our management team down through the segment level, we would love to replicate 2025 here in '26 and '27. However, you've heard me say many times, deals happen when they happen. And what we are going to do is maintain discipline. We're not going to -- I think people on the line know me well enough and know this management team well enough that we don't buy into hype and we don't buy into frenzy. We have to believe there's a long sustained business case for why we would do something and we have to believe that we can add value. And our acquisition record is pretty darn good. I always say I never give anybody an A, but that give us a strong B+ over an extended period of time. And we're going to continue to do that. We're not private equity guys. We're not averaging multiples down. We're looking to buy and build for the long term and build sustainable positions. And how we got from some of these places to serve 17 electrical data center markets is we bought companies who were in the business, we're able to strengthen it through peer learning, transferring people for short periods of time to help it and really doing a great job of taking our best practices and means and methods and sharing it across the company, especially as it comes to virtual design construct, VDC, BIM and prefabrication.

Our next question comes from Adam Thalhimer from Thompson, Davis.

Congrats on the strong quarter and the year. Tony, I wanted to ask you first about RPO. The 33% in network and communications, obviously, some others in your space are even higher than that. And I'm just curious if that was a conscious decision on your part to stay more diversified? Or if that reflects something else like geographic mix?

It's funny. I'll go to the second thing. You said it's geographic and sector mix. We're not passing up great data center opportunities because we're doing the other work. However, we're not going to go away from our existing customers. We have very strong companies in markets that have limited and no data center exposure. We have one of the best electrical contractors in the country in San Diego that generates great returns, serves our customers well, does it through a mix of pharma and high-tech manufacturing work, some defense work and health care work. There's not a data center opportunity there for them to do, but they earn returns that are as good or better than our segment averages. And we have a chunk of our business that exists just like that in places like California, some of the Intermountain states, some of the Midwestern towns. And as you go to like something as specific as water and wastewater, we're not walking away from opportunities in Florida to do data centers, although the first ones are going to get built, and we will participate in that. But the teams that do that water and wastewater work are very specialized. Could they do chiller plant work and things like that? Sure. But they're very specialized on that customer base and in that product offering. So yes, some of it is intentional. It's been intentional, Adam, beyond the last 4 or 5 years. It's been intentional over a very long period of time to build diversity of demand. But that being said, I'll give you a great example. We had a very good industrial electrical contractor in the Midwest that are in middling returns for years, but very technically capable. When the opportunity presented itself in Northwest Indiana to do data center work, we were able to take some of our skill base on the supervision side and our estimating side, train the people there to do the work, estimate the work, and now they're one of the best data center builders we have. And so we have the ability to do that when the opportunity and we create the opportunity presents ourselves and our customers need us to do that. So I'd say, yes, part of it has been intentional as a long-term strategy. But are we shooting to say we're only going to do 33% data center work in RPOs, could be 40% for a part of a period of time, could be 45%, could go down to 30%. It's just the overall demand and the mix of work and margin we have out there.

Yes. The only other thing I would add, too, is just remember that for us, what we show as RPOs are the funded phases of a contract. So we're working on a data center campus where there's multiple buildings and we have even a verbal for the Phase II. We're only showing that first phase in our RPO. So others may be doing it differently, which could skew percentages. But for us, this is funded, contracted work that we have in hand and 82% of this will burn over the next 12 months.

Yes.

Got it. Okay. So -- but you're saying if the outlook for data centers is strong, -- don't be surprised if it goes to 40%, 45%.

Yes, it could. If you look at our Electrical segment, where we've been able to get into 17 markets, it's 40% to 50% on a -- I think it will stay there for a while. It may even go up a little bit because we have found that, that scale is the most -- we have the most ability to take that electrical skill and translate that into other markets from other work that they have done.

Okay. Last one for me. I was curious on semiconductors when the next wave of awards might be in that space?

We're seeing some of it now. They're just getting awarded in smaller chunks. We're very ingrained in for one of the customers, 2 of the customers in Arizona. And we're also there in Arizona and the Mountain States fire life safety. I don't know if -- because you're already on site, I'm not sure you'll see the magnitude of the awards that we saw initially because they can leave it out to us some pieces. And I think that's an important delineation with us. We have a pretty good idea of the work we're going to be doing there, which is some of that 40% to 45% we have to book a year. But Jason made a really important point, right? Everything we do goes back to GAAP, right? So our RPOs are funded contracts, signed purchase orders, non-cancelable portion of a service agreement. I mean that is different than some of our peers do things. I mean we know that we may be at a data center site for 2 or 3 years. We're pretty sure the buildings we're going to get. But a, the work isn't contracted to us yet. And so therefore, we'll plan for it. But we certainly -- and on a semiconductor site, we know that maybe 2 years ago, we might have got $150 million award and it's going to look like that $150 million award again, but they're letting it out to us to $30 million, $50 million at a time because they know that that's how their funding is going to work, and that's how they did the actual contract for that piece of the work. So we've been that way forever. It's a little different when you have these huge projects. And we just have chosen to stay very consistent and not guess on what the future holds and keep it to that kind of dimension. And I'd to say the same thing about our operating margin performance. The only thing to get added back here are hard things like transaction costs, like the sale of the U.K. or a significant impairment. We have restructuring going on in the business all the time where we're restructuring subsidiaries. We don't do that. We don't try to add back amortization. We figure our investors are smart enough to do that themselves. It's a noncash expense. We figure once we go down that rabbit hole, we become adjusted on adjusted, on adjusted, and we just chose to stay pure to the GAAP numbers, both for RPOs and operating income and revenue recognition, Jason.

Agreed.

Yes, I think it's just easier.

The numbers are very clean. We appreciate that.

Appreciate it sometimes because you salivate over other people that have 5%...

I can't speak for everybody else. I appreciate it.

Our next question comes from Brian Brophy from Stifel.

So your data center work has been growing a bit faster on the mechanical side than on the electrical side for a few quarters now. Can you talk about what are the drivers behind that? And do you expect that to sustain itself in the next or this year?

It could. It could because we -- first with the basis, right, in comparison to the segment. And so we've opened up a couple of new markets on the data center side. And also, I think one of the growth areas in that is it's a little different on the scope. We're benefiting more from the AI data center, even though we're building the AI data centers electrically, but the scope doesn't increase as much going from a 100-megawatt cloud storage data center to a 200-megawatt AI data center on the electrical side. But on the mechanical side, it can be a 1.5 to 2x multiplier on the mechanical systems that will go in. And what's interesting about that, that in either cases that usually include the major end equipment.

Yes. I think Tony's point on the base is very important as well, right? Mechanical is up more on a percentage basis. But on a dollars basis Electrical grew $1 billion this year Mechanical grew $850 million. So Electrical is still growing more in terms of dollars. It's just off a larger base gives you a smaller perceptive.

I think one way to look at it, too, electrically, we, about 2 years ago, established ourselves as more of a national player in data centers. Mechanically, I would still would say we're still a super regional player in data centers. So you may see that growth because of the base and how we're continuing to penetrate new markets mechanically. And it takes a little longer to penetrate mechanically, and we're starting to see some of the investments return to us now from what we made 2 or 3 years ago mechanically.

That's helpful. And then related, I think you mentioned 17 electrical markets on the data center side, you're up to now 7 mechanical and it's grown nicely over time. Where can that go over time?

I actually don't know. I think we'll stop counting soon because they're now becoming -- you start counting the state of Ohio versus the 4 submarkets in Ohio and things like that, do you take the state of Indiana versus the 2 or 3 submarkets. I think the way I think about it is we are now starting to build scale in some critical infrastructure places. So if you think about how this has happened and why it's happened, it's because it's been this quest for power, right, quest for stranded power. And that's how we -- that's how our great industrial electrical got into the data center business in Indiana because they went and chase the stranded power from the steel mills and auto plants that had been there before. And so you think about that over time, there's still stranded power out there, and that should keep -- that's why we say 2- to 3-year pretty good outlook because our customers are telling us that, and they may even be a little bit beyond that, they feel pretty good, maybe a little longer, but we're contractors, we always discount that back a little bit. And -- but I will say this, the markets are now dependent on where they can get power in place. My gut is there'll be a couple more markets added and then in the markets they're in, they're going to start to build even more density, just like they did in Northern Virginia right outside of Columbus, Ohio, what they've done in Chicago, what they've done in Arizona. They built in Atlanta, they're building density in those markets. And they do that for a reason in Dallas. They do that for a reason because they think there's a good view on power in the long term and also the connections there are really, really good. And the latency becomes important in some of those major metro areas for the knowledge workers long time. Now do I understand how the latency works everything? Not really, but that's how it all works when you put it all together. So it will go up, it's not going to grow like it did because now they're starting to build critical mass in those markets.

Our next question comes from Justin Hauke from Baird.

Yes. Great. I guess, first one, I mean, you've talked about the fire life safety projects being strong for a while. I think you made some comments here about kind of the uniqueness of what you're doing on the data center specifically. But can you just elaborate a little bit more on your capabilities there? And how you're different in that market?

Yes. Are we different? Yes, because I think we have some of the best fire -- we have critical mass on design, and we have a very strong position with the road local in the UA for sprinkler fitters. So if you take the business first and you take a step back and those that have been with us for, I'll be patient for a second, as I answer this question, it's one of the few trades that we do, that the actual implementation of that part of the specification is a design build product. The way the specification is written, it says provide a fire-life safety system in accordance with the code at both the national standard and then their state and local standards. And our guys are experts at that. And what they do then is we design it. And then fire life safety has a fairly significant prefabrication component. And we have some pretty at-scale fabrication shops to support our fire life safety business. And then it's -- for union other than 16 closed locals, it's a road local that will travel. And so our people can travel across the country. And it also tends to get connected to think of in other word, like LEGOs or tinkers -- it's a connected system, and we prefab most of it in the shops. And then finally, it has a nice aftermarket component, and we have a nice aftermarket business. And that is one of the places where if we build it, we have a pretty good shot at getting the long-term service agreement post building. So it's a national business and scope. It's a design build business and scope on that specific trade. We have a great workforce, and we're at scale in that business and probably as good as anybody else in that business. I'll never say we're the only ones, but we're one of the few that can operate on a national basis.

Okay. I appreciate more of the history lesson on that. I guess my second one is, I guess, for Jason here, and it's just more of a model question. But the Danforth acquisition, obviously much smaller than the Miller was, but I know it's going to have an intangible component with it as well. Now that it's closed, I think Miller, that was like $40 million for the year, that was kind of a drag. What's kind of the similar magnitude for Danforth, just so we can kind of think about what's running through?

So I'll hit a couple of things on amortization first. So if we look just at Danforth, in 2025, round numbers, it's about $2.7 million of amortization. In 2026, it's going to be around $14.2 million. So you got about $11.5 million of incremental amortization from Danforth in '26. Just a refresher on Miller, we said in year 1, so 2025, it'd be about $40.5 million of amortization. In 2026, it's going to be about $33 million. So you should see about $7.5 million drop off. So if you just look across EMCOR, while we may have a little bit of amortization benefit in electrical, it's going to be offset in mechanical. So if you really net the 2, it's near neutral.

And our next question comes from Avi Jaroslawicz from UBS.

So you've noted in the past that how much more of your revenue has grown than your headcount. Is that something that you expect is going to be able to continue this year? Or are some of those productivity gains maybe slowing down and requiring some more headcount to support the revenue?

I think we'll keep the trend going.

Yes. I think over time, we've said revenue is growing 2 to 3x faster than the headcount. We saw that again for the full year of '25. Our revenue outpaced headcount by 2x, and I think that model holds for the future.

Yes. And we'll continue to get the productivity gains, and we'll continue to do the means and method sharing across the country to allow even more productivity gains.

Okay. That is helpful. And then just as we think about the margin guidance for this year, I appreciate that you give that color on the intangible amortization. But just without the U.K. business and with large projects continuing to grow and productivity continuing to grow, would have expected maybe a starting point of around flat for the year for operating margins. So maybe if you could just help us think through that...

Yes, at the high end of our range, it is flat. And so then it becomes a revenue. If we do come in flat. So on the size business we have with 12,000 projects, we're giving you a 40 basis point range. It's pretty tight. And could we come in at the high end of that range? Sure. But if we don't hit the midpoint of the guidance, that allow us -- it's a revenue margin thing, and it's really contract mix is probably the biggest thing in there. We think we'll maybe pick up a little better on project write-downs year-over-year. And so all that comes together, that's how we get to the range. It's a pretty tight range. And I think the bottom is pretty safe. Could there be upside on the top? A lot of things would go right? Sure. But we gave you the 9.4%, we think we have a probability of hitting the 9.4%.

Yes. The way I view the range is at the high end, we're essentially saying we could replicate the record margins that we achieved in 2024. That midpoint of that range somewhere around our rolling 12- to 24-month average, more or less, that is equivalent to that midpoint. And at the low end, we're saying, this is what margins could look like if we have a different mix. So we talked about the water and wastewater work that we have ahead of us. It's great work. We're not turning down data center work to do it. It's a different margin profile. We're acting as a prime contractor. There's more subcontract component. There's more material and equipment component, so lower margins. So what we're saying is as we do some of that work and potentially revenue skews upward, it could have an impact on margins, but we still think in a fairly high band and a band that is at record levels for EMCOR over the last 2 years.

Our next question comes from Tim Mulrooney from William Blair.

I'm looking at the time here, I'm just going to ask one question. And I really just want to build on that last question, you guys because maybe though, Tony, from like a more -- a higher level, a more conceptual standpoint. So bear with me. Because as I step back and I think about the situation that we're in, like this really is a renaissance for blue collar trade labor, American unionized labor in this country. So as I look at your guide for '26, I wonder what is the fair value? What is a fair burden for the critical services that you provide? Is it 12% to 13% margin in the Construction business? Like why can't that go higher?

I think it's a mixed question. And I think this whole thing is about risk and return for us, too, Tim. Clearly, where we make our most margin is where we take the most risk on a contracting basis, which is where we take fixed price risk. And the more our mix skews to that, especially on these large projects, and we do well, the more money we can make. However, there are certain operating conditions on the ground that doesn't allow us to do that. And a classic example would have been the job that happened last year, we went a new market. We felt pretty sure of ourselves on the fixed price. We reevaluate that now today. We probably should have went into that market on that project with that design and with the schedule they gave us. We probably should have pushed harder for a GMP contract, which would have maybe not taken some of the upside away from us. If we've executed the way we thought we could, but would have protected us on the downside. I think the other thing that -- I think you're right. But remember, part of that renaissance actually goes back to labor, too. I think they've been very good with us on labor increases. But the packages you put together on a job here puts pressure on the budgets of our end customers, and that's how you get into some of these target price GMP type projects because they're saying, okay, we're not exactly how you're going to put this labor force together in this remote market in this section of Iowa or this section of Texas. So there's some underlying things going on here. But generally, I agree with you. I don't think our customers pay us enough for what we do, and we're going to continue to ask us to pay more. I don't disagree. We have the best skilled labor in the country, I don't disagree with you.

Our next question comes from Adam Bubes from Goldman Sachs.

One more on the outlook, and sorry if I missed this, but can you help us break out the revenue growth outlook between organic and acquisition? I know there's a few moving pieces with divestitures, and the acquisitions you did last year?

Yes. I guess my first comment there, right, is you have to remember, the U.K. basically gives us a 3% headwind on the revenue growth. So if you look at our guidance, and let's say, at the low end, it's 4.5% and at the high end, it's 9%. It's really equivalent to 7.5% and 12%. When you consider the 1 month of incremental contribution we have from Miller and the 10 months from Danforth, you put that together, it really offsets the U.K. impact, the lost revenues from the U.K. So if you look at it and you say, what's the guidance? How much of that is organic? How much of that is acquisition. I would say really all of it is organic because the lost revenue from the U.K. is just offset by the acquisitions.

Got it. Understood. Helpful. And then can you update us on the M&A pipeline today? I know it's hard to predict timing of M&A. But can you talk about how active your M&A pipeline is maybe compared to this time last year? And any way to characterize the pipeline of opportunities in terms of size of businesses, region or technical exposure?

Sure. First of all, we have as good or better pipeline sitting here today than we did at the end of 2020 -- because we knew we were already going to do Miller, right? We were in negotiation. So if you look at the pipeline beyond Miller, our pipeline today is broader and more diverse than it was at the end '24. And the universe of them is where we like to buy, right? Mechanical and Electrical segments, building service, focus on mechanical service and building controls companies. That's where we're going to buy for the most part. And there's some spattering around mill right work and maybe some of the handling work we do in our mechanical business to supplement what else we do there. But that's what we'll do. Deals happen when they happen. I know we're landing -- here's who are a landing site. We're landing site for someone that's selling their life's work or their family's life work. That's proven very good for us. There typically it might be a broker, but it's not a brokered sale. Very much like Miller, very much like Quebe, very much like Batchelor & Kimball, very much a years ago, these are sort of landmark businesses that we're going to hopefully get to a deal. In other places, ESOP, that was Danforth. We're a great place for ESOPs long term, and part of Miller was a ESOP. Why? Because we have an operational culture that's focused on the trades. And that's really how that ESOP started at one time when that family moved that business into an ESOP. What we don't do particularly well in is auctions against private equity. We're not -- I don't have enough on my team with the vest that can go in and rip a company apart and tell me what it's worth. So we're not as good there, and we're not playing the average multiple game down. We're actually buying companies for the long term. And our deal size could be everything from $2 million, where we by some HVAC technicians, and it augments a smaller branch we have, all the way up to Miller at $865 million. We'll do anything along those lines. Could we do a couple, $500 million acquisitions this year, $300 million to $500 million? Sure, we could. And we could do $400 million, $500 -- I mean, $100 million acquisitions. Just don't know sitting here today, but I feel as good about our pipeline today at this point in the year as I have at any time in the last 3 or 4 years.

And with that, everyone, we will be ending today's question-and-answer session. I would like to turn the floor back over to Tony for any closing remarks.

Thanks, Jamie. And thanks to all the analysts. I thought this was a great question-and-answer session today. I think you got to the heart of what we wrestle with every day. I want to thank my colleagues from EMCOR and my teammates for what was a great '25. Reality is most of us already forgot about '25. We're here in the third week of February. We've all been focused on '26 really since probably the fourth quarter of '25. We have a great outlook. We're in all the right sectors. We're playing with the right team, and we have a terrific capital allocation strategy. Thanks for your interest in EMCOR. And thank you to all my teammates.

And with that, everyone, we'll be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.