UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2017~~2018



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-8267

EMCOR GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)



Delaware		11-2125338
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

301 Merritt Seven Norwalk, Connecticut		06851-1092
(Address of Principal Executive Offices)		(Zip Code)

(203) 849-7800

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o No x

Applicable Only To Corporate Issuers

Number of shares of Common Stock outstanding as of the close of business on ~~October~~July 23, ~~2017: 58,813,795~~2018: 58,180,056 shares.

Table of Contents

EMCOR Group, Inc.

INDEX



		Page No.
PART I. - Financial Information.
Item 1.	Financial Statements.
	Condensed Consolidated Balance Sheets - as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017	1
	Condensed Consolidated Statements of Operations - three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017	2
	Condensed Consolidated Statements of Comprehensive Income - three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017	3
	Condensed Consolidated Statements of Cash Flows - ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017	4
	Condensed Consolidated Statements of Equity - ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	1826
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	3141
Item 4.	Controls and Procedures.	3241
PART II. - Other Information.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3242
Item 4.	Mine Safety Disclosures.	3242
Item 6.	Exhibits.	3242

Table of Contents

PART I. – FINANCIAL INFORMATION.

ITEM 1. FINANCIAL STATEMENTS.

EMCOR Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	September 30, 2017 (Unaudited)			December 31, 2016			June 30, 2018 (Unaudited)			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	480,496		$	464,617		$	306,624		$	467,430
Accounts receivable, less allowance for doubtful accounts of $16,948 and $12,252, respectively	1,537,819			1,495,431
Costs and estimated earnings in excess of billings on uncompleted contracts	135,602			130,697
Accounts receivable, less allowance for doubtful accounts of $16,099 and $17,230, respectively							1,635,289			1,607,922
Contract assets							156,134			122,621
Inventories	43,653			37,426			43,665			42,724
Prepaid expenses and other	34,402			40,944			48,511			43,812
Total current assets	2,231,972			2,169,115			2,190,223			2,284,509
Investments, notes and other long-term receivables	7,604			8,792			4,180			2,309
Property, plant and equipment, net	126,563			127,951			124,993			127,156
Goodwill	1,010,399			979,628			978,303			964,893
Identifiable intangible assets, net	497,278			487,398			481,577			495,036
Other assets	92,505			79,554			90,125			92,001
Total assets	$	3,966,321		$	3,852,438		$	3,869,401		$	3,965,904
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt and capital lease obligations	$	15,364		$	15,030		$	15,625		$	15,364
Accounts payable	485,701			501,213			505,379			567,840
Billings in excess of costs and estimated earnings on uncompleted contracts	532,386			489,242
Contract liabilities							551,614			524,156
Accrued payroll and benefits	309,237			310,514			282,159			322,865
Other accrued expenses and liabilities	209,591			195,775			150,153			220,727
Total current liabilities	1,552,279			1,511,774			1,504,930			1,650,952
Borrowings under revolving credit facility	125,000			125,000			25,000			25,000
Long-term debt and capital lease obligations	273,506			283,296			262,492			269,786
Other long-term obligations	397,671			394,426			341,846			346,049
Total liabilities	2,348,456			2,314,496			2,134,268			2,291,787
Equity:
EMCOR Group, Inc. stockholders’ equity:
Preferred stock, $0.10 par value, 1,000,000 shares authorized, zero issued and outstanding	—			—			—			—
Common stock, $0.01 par value, 200,000,000 shares authorized, 59,850,983 and 60,606,825 shares issued, respectively	599			606
Common stock, $0.01 par value, 200,000,000 shares authorized, 60,041,910 and 59,870,980 shares issued, respectively							600			599
Capital surplus	4,343			52,219			13,054			8,005
Accumulated other comprehensive loss	(100,559		)	(101,703		)	(93,600		)	(94,200		)
Retained earnings	1,748,100			1,596,269			1,912,430			1,796,556
Treasury stock, at cost 1,044,474 and 659,841 shares, respectively	(35,471		)	(10,302		)
Treasury stock, at cost 1,868,802 and 1,072,552 shares, respectively							(98,201		)	(37,693		)
Total EMCOR Group, Inc. stockholders’ equity	1,617,012			1,537,089			1,734,283			1,673,267
Noncontrolling interests	853			853			850			850
Total equity	1,617,865			1,537,942			1,735,133			1,674,117
Total liabilities and equity	$	3,966,321		$	3,852,438		$	3,869,401		$	3,965,904

See Notes to Condensed Consolidated Financial Statements.

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EMCOR Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)(Unaudited)


	Three months ended September 30,						Nine months ended September 30,						Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Revenues	$	1,886,691		$	1,923,174		$	5,674,360		$	5,601,560		$	1,953,886		$	1,895,937		$	3,854,274		$	3,787,669
Cost of sales	1,591,621			1,655,130			4,838,449			4,835,667			1,663,042			1,621,436			3,294,311			3,246,828
Gross profit	295,070			268,044			835,911			765,893			290,844			274,501			559,963			540,841
Selling, general and administrative expenses	188,565			181,441			552,903			530,654			189,907			181,745			380,932			365,132
Restructuring expenses	46			539			954			1,271			374			343			464			908
Impairment loss on identifiable intangible assets													907			—			907			—
Operating income	106,459			86,064			282,054			233,968			99,656			92,413			177,660			174,801
Net periodic pension (cost) income													717			408			1,454			794
Interest expense	(3,324		)	(3,479		)	(9,464		)	(8,973		)	(3,457		)	(3,069		)	(6,453		)	(6,140		)
Interest income	277			161			607			518			634			73			1,178			330
Income from continuing operations before income taxes	103,412			82,746			273,197			225,513			97,550			89,825			173,839			169,785
Income tax provision	38,608			30,783			98,473			82,663			26,529			33,019			47,162			59,865
Income from continuing operations	64,804			51,963			174,724			142,850			71,021			56,806			126,677			109,920
Loss from discontinued operation, net of income taxes	(207		)	(406		)	(729		)	(1,584		)	(205		)	(18		)	(487		)	(522		)
Net income including noncontrolling interests	64,597			51,557			173,995			141,266			70,816			56,788			126,190			109,398
Less: Net income attributable to noncontrolling interests	—			(26		)	—			(7		)	—			(30		)	—			—
Net income attributable to EMCOR Group, Inc.	$	64,597		$	51,531		$	173,995		$	141,259		$	70,816		$	56,758		$	126,190		$	109,398
Basic earnings (loss) per common share:
From continuing operations attributable to EMCOR Group, Inc. common stockholders	$	1.10		$	0.85		$	2.94		$	2.35		$	1.22		$	0.96		$	2.16		$	1.85
From discontinued operation	(0.00		)	(0.01		)	(0.01		)	(0.03		)	(0.00		)	(0.00		)	(0.01		)	(0.01		)
Net income attributable to EMCOR Group, Inc. common stockholders	$	1.10		$	0.84		$	2.93		$	2.32		$	1.22		$	0.96		$	2.15		$	1.84
Diluted earnings (loss) per common share:
From continuing operations attributable to EMCOR Group, Inc. common stockholders	$	1.09		$	0.85		$	2.93		$	2.33		$	1.21		$	0.95		$	2.15		$	1.84
From discontinued operation	(0.00		)	(0.01		)	(0.01		)	(0.03		)	(0.00		)	(0.00		)	(0.01		)	(0.01		)
Net income attributable to EMCOR Group, Inc. common stockholders	$	1.09		$	0.84		$	2.92		$	2.30		$	1.21		$	0.95		$	2.14		$	1.83

Dividends declared per common share	$	0.08		$	0.08		$	0.24		$	0.24		$	0.08		$	0.08		$	0.16		$	0.16

See Notes to Condensed Consolidated Financial Statements.

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EMCOR Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)(Unaudited)


	Three months ended September 30,						Nine months ended September 30,						Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Net income including noncontrolling interests	$	64,597		$	51,557		$	173,995		$	141,266		$	70,816		$	56,788		$	126,190		$	109,398
Other comprehensive income, net of tax:
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(39		)	(255		)	(730		)	(1,056		)	(875		)	(577		)	(380		)	(691		)
Post retirement plans, amortization of actuarial loss included in net income ⁽¹⁾	640			440			1,874			1,393			595			625			980			1,234
Other comprehensive income	601			185			1,144			337
Other comprehensive (loss) income													(280		)	48			600			543
Comprehensive income	65,198			51,742			175,139			141,603			70,536			56,836			126,790			109,941
Less: Comprehensive income attributable to noncontrolling interests	—			(26		)	—			(7		)	—			(30		)	—			—
Comprehensive income attributable to EMCOR Group, Inc.	$	65,198		$	51,716		$	175,139		$	141,596		$	70,536		$	56,806		$	126,790		$	109,941

_________


(1)	Net of tax of $~~0.2~~0.1 million and $~~0.1~~0.2 million for the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017, respectively, and net of tax of $0.5 million and ~~$0.4~~$0.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

See Notes to Condensed Consolidated Financial Statements.

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EMCOR Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)(Unaudited)


	Nine months ended September 30,						Six months ended June 30,
	2017			2016			2018			2017
Cash flows - operating activities:
Net income including noncontrolling interests	$	173,995		$	141,266		$	126,190		$	109,398
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	30,235			29,117			19,233			20,354
Amortization of identifiable intangible assets	36,320			30,678			21,352			24,257
Provision for doubtful accounts	6,027			3,962			7			2,543
Deferred income taxes	(5,991		)	(830		)	4,855			(6,410		)
Excess tax benefits from share-based compensation	(1,565		)	(2,062		)	(1,065		)	(1,554		)
Equity income from unconsolidated entities	(1,132		)	(719		)	(290		)	(758		)
Other non-cash items	4,735			6,844
Non-cash expense for impairment of identifiable intangible assets							907			—
Distributions from unconsolidated entities	2,308			863			1,847			1,829
Other reconciling items							6,531			2,208
Changes in operating assets and liabilities, excluding the effect of businesses acquired	(6,648		)	(80,195		)	(212,217		)	(49,204		)
Net cash provided by operating activities	238,284			128,924
Net cash (used in) provided by operating activities							(32,650		)	102,663
Cash flows - investing activities:
Payments for acquisitions of businesses, net of cash acquired	(82,724		)	(232,883		)	(25,207		)	(82,724		)
Proceeds from sale of property, plant and equipment	2,125			1,850			605			1,629
Purchase of property, plant and equipment	(26,113		)	(29,306		)	(15,914		)	(17,668		)
Investments in and advances to unconsolidated entities							(3,484		)	—
Distributions from unconsolidated entities							83			—
Net cash used in investing activities	(106,712		)	(260,339		)	(43,917		)	(98,763		)
Cash flows - financing activities:
Proceeds from revolving credit facility	—			220,000
Repayments of revolving credit facility	—			(95,000		)
Borrowings from long-term debt	—			400,000
Repayments of long-term debt and debt issuance costs	(11,401		)	(317,987		)	(7,634		)	(7,601		)
Repayments of capital lease obligations	(1,079		)	(1,144		)	(696		)	(716		)
Dividends paid to stockholders	(14,266		)	(14,598		)	(9,381		)	(9,531		)
Repurchase of common stock	(90,944		)	(34,805		)	(60,508		)	(65,775		)
Proceeds from exercise of stock options	—			508
Payments to satisfy minimum tax withholding	(3,376		)	(4,166		)
Taxes paid related to net share settlements of equity awards							(3,745		)	(2,637		)
Issuance of common stock under employee stock purchase plan	3,459			3,583			2,758			2,191
Payments for contingent consideration arrangements	(1,017		)	—			(3,298		)	(1,017		)
Distributions to noncontrolling interests	—			(2,050		)
Net cash (used in) provided by financing activities	(118,624		)	154,341
Effect of exchange rate changes on cash and cash equivalents	2,931			(5,199		)
Increase in cash and cash equivalents	15,879			17,727
Cash and cash equivalents at beginning of year	464,617			486,831
Cash and cash equivalents at end of period	$	480,496		$	504,558
Net cash used in financing activities							(82,504		)	(85,086		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash							(1,121		)	1,739
Decrease in cash, cash equivalents and restricted cash							(160,192		)	(79,447		)
Cash, cash equivalents and restricted cash at beginning of year ⁽¹⁾							469,388			466,660
Cash, cash equivalents and restricted cash at end of period ⁽²⁾							$	309,196		$	387,213
Supplemental cash flow information:
Cash paid for:
Interest	$	8,507		$	7,920		$	5,824		$	5,600
Income taxes	$	95,584		$	98,176		$	71,593		$	67,652
Non-cash financing activities:
Assets acquired under capital lease obligations	$	1,133		$	1,738		$	903		$	688

_________


(1)	Includes $2.0 million of restricted cash classified as “Prepaid expenses and other” in the Condensed Consolidated Balance Sheet as of December 31, 2017 and 2016.


(2)	Includes $2.6 million and $1.8 million of restricted cash classified as “Prepaid expenses and other” in the Condensed Consolidated Balance Sheet as of June 30, 2018 and 2017, respectively.

See Notes to Condensed Consolidated Financial Statements.

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EMCOR Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)(Unaudited)


				EMCOR Group, Inc. Stockholders																					EMCOR Group, Inc. Stockholders
	Total			Common stock			Capital surplus			Accumulated other comprehensive (loss) income ⁽¹⁾			Retained earnings			Treasury stock			Noncontrolling interests			Total			Common stock			Capital surplus			Accumulated other comprehensive (loss) income ⁽¹⁾			Retained earnings			Treasury stock			Noncontrolling interests
Balance, December 31, 2015	$	1,480,056		$	617		$	130,369		$	(76,953	)	$	1,432,980		$	(10,302	)	$	3,345
Balance, December 31, 2016																						$	1,537,942		$	606		$	52,219		$	(101,703	)	$	1,596,269		$	(10,302	)	$	853
Net income including noncontrolling interests	141,266			—			—			—			141,259			—			7			109,398			—			—			—			109,398			—			—
Other comprehensive income	337			—			—			337			—			—			—			543			—			—			543			—			—			—
Common stock issued under share-based compensation plans ⁽²⁾	1,492			3			498			—			991			—			—			1			2			(1		)	—			—			—			—
Tax withholding for common stock issued under share-based compensation plans	(4,166		)	—			(4,166		)	—			—			—			—			(3,354		)	—			(3,354		)	—			—			—			—
Common stock issued under employee stock purchase plan	3,583			—			3,583			—			—			—			—			2,191			—			2,191			—			—			—			—
Common stock dividends	(14,598		)	—			143			—			(14,741		)	—			—			(9,531		)	—			84			—			(9,615		)	—			—
Repurchase of common stock	(29,028		)	(6		)	(29,022		)	—			—			—			—			(63,430		)	(10		)	(55,646		)	—			(7,774		)	—			—
Distributions to noncontrolling interests	(2,050		)	—			—			—			—			—			(2,050		)
Share-based compensation expense	7,000			—			7,000			—			—			—			—			5,169			—			5,169			—			—			—			—
Balance, September 30, 2016	$	1,583,892		$	614		$	108,405		$	(76,616	)	$	1,560,489		$	(10,302	)	$	1,302
Balance, December 31, 2016	$	1,537,942		$	606		$	52,219		$	(101,703	)	$	1,596,269		$	(10,302	)	$	853
Balance, June 30, 2017																						$	1,578,929		$	598		$	662		$	(101,160	)	$	1,688,278		$	(10,302	)	$	853
Balance, December 31, 2017																						$	1,674,117		$	599		$	8,005		$	(94,200	)	$	1,796,556		$	(37,693	)	$	850
Net income including noncontrolling interests	173,995			—			—			—			173,995			—			—			126,190			—			—			—			126,190			—			—
Other comprehensive income	1,144			—			—			1,144			—			—			—			600			—			—			600			—			—			—
Cumulative-effect adjustment ⁽²⁾																						(854		)	—			—			—			(854		)	—			—
Common stock issued under share-based compensation plans	1			2			(1		)	—			—			—			—			—			1			(1		)	—			—			—			—
Tax withholding for common stock issued under share-based compensation plans	(3,376		)	—			(3,376		)	—			—			—			—			(3,745		)	—			(3,745		)	—			—			—			—
Common stock issued under employee stock purchase plan	3,459			1			3,458			—			—			—			—			2,758			—			2,758			—			—			—			—
Common stock dividends	(14,266		)	—			124			—			(14,390		)	—			—			(9,381		)	—			81			—			(9,462		)	—			—
Repurchase of common stock(3)	(88,599		)	(10		)	(55,646		)	—			(7,774		)	(25,169		)	—			(60,508		)	—			—			—			—			(60,508		)	—
Distributions to noncontrolling interests	—			—			—			—			—			—			—
Share-based compensation expense	7,565			—			7,565			—			—			—			—			5,956			—			5,956			—			—			—			—
Balance, September 30, 2017	$	1,617,865		$	599		$	4,343		$	(100,559	)	$	1,748,100		$	(35,471	)	$	853
Balance, June 30, 2018																						$	1,735,133		$	600		$	13,054		$	(93,600	)	$	1,912,430		$	(98,201	)	$	850

_________


(1)	Represents cumulative foreign currency translation adjustments and post retirement liability adjustments.


(2)	~~Includes a~~ ~~$1.0 million~~Represents adjustment to retained earnings ~~to recognize net operating loss carryforwards attributable to excess tax benefits on stock compensation~~ upon the adoption of Accounting Standards ~~Update No. 2016-09.~~ Codification Topic 606.


(3)	Beginning June 1, 2017, shares of common stock repurchased are held as treasury stock by the Company.

See Notes to Condensed Consolidated Financial Statements.

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Consequently, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. References to the “Company,” “EMCOR,” “we,” “us,” “our” and similar words refer to EMCOR Group, Inc. and its consolidated subsidiaries unless the context indicates otherwise. Readers of this report should refer to the consolidated financial statements and the notes thereto included in our latest Annual Report on Form 10-K filed with the Securities and Exchange Commission.

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of those of a normal recurring nature) necessary to present fairly our financial position and the results of our operations. The results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2017~~2018.

NOTE 2 New Accounting Pronouncements

On January 1, ~~2017,~~2018, we adopted the accounting pronouncement issued by the Financial Accounting Standards Board (“FASB”) to ~~simplify~~clarify existing guidance on revenue recognition. This guidance includes the ~~presentation of deferred income taxes within~~required steps to achieve the ~~balance sheet. This pronouncement eliminates~~core principle that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the ~~requirement that deferred tax assets and liabilities are presented as current~~consideration to which the company expects to be entitled in exchange for those goods or noncurrent based on the nature of the underlying assets and liabilities. Instead, the pronouncement requires that all deferred tax assets and liabilities, including valuation allowances, be classified as noncurrent.services. We adopted this pronouncement on a modified retrospective ~~basis.~~basis, and its impact on our financial position and results of operations, as well as required additional disclosures, are included in Note 3 - Revenue from Contracts with Customers. As a result of ~~such~~the adoption ~~approximately $41.7 million~~ of ~~net deferred tax assets, which were previously presented as “Prepaid expenses and other” in~~this standard, certain changes have been made to the Condensed Consolidated Balance ~~Sheet as~~Sheets. The accounts previously named “Costs and estimated earnings in excess of billings on uncompleted contracts” and “Billings in excess of costs and estimated earnings on uncompleted contracts” have been renamed “Contract assets” and “Contract liabilities”, respectively. In addition, for periods beginning after December 31, ~~2016,~~2017, amounts representing deferred revenues on services contracts, which were previously included in “Other accrued expenses and liabilities” within the Condensed Consolidated Balance Sheets, have been reclassified as ~~a reduction to “Other long-term obligations.~~“Contract liabilities.”

On January 1, ~~2017,~~2018, we adopted the accounting pronouncement issued by the FASB to ~~simplify~~clarify how entities should present restricted cash and restricted cash equivalents in the ~~accounting for goodwill impairment.~~statement of cash flows. This guidance ~~eliminates~~requires entities to show changes in the ~~requirement that an entity calculate~~total of cash, cash equivalents and restricted cash in the ~~implied fair value~~statement of ~~goodwill when measuring an impairment charge. Instead, an entity would record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. We~~cash flows. This guidance was adopted ~~this pronouncement~~ on a ~~prospective basis. The~~retrospective basis, and such adoption ~~of this guidance~~ did not have a material impact on our financial position and/or results of operations.

In February 2016, an accounting pronouncement was issued by the FASB to replace existing lease accounting guidance. This pronouncement is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet for most leases. Expenses associated with leases will continue to be recognized in a manner similar to current accounting guidance. This pronouncement is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The adoption is required to be applied on a modified retrospective basis for each prior reporting period presented. WeAlthough we have not yet ~~determined~~quantified the ~~effect~~impact that the adoption of this pronouncement ~~may~~will have on our financial position and/or results of ~~operations.~~

~~In May 2014,~~operations, we have begun a process to identify a complete population of our leases. Such process includes reviewing various contracts to identify whether such arrangements convey the right to control the use of an identified asset. We continue to evaluate the impact of the new accounting pronouncement, ~~was issued by the FASB to clarify existing guidance~~including enhanced disclosure requirements, on ~~revenue recognition. This guidance includes the required steps to achieve the core~~our business processes, controls and systems.

NOTE 3 Revenue from Contracts with Customers

The Company adopted Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“ASC 606”) on January 1, 2018. The adoption of ASC 606 represents a change in accounting principle that ~~a company should recognize~~aligns revenue recognition with the timing of when ~~it transfers~~ promised goods or services are transferred to customers in an amount that reflects the consideration to which the ~~company~~Company expects to be entitled in exchange for those goods or services. ~~This pronouncement~~To achieve this core principle, the Company applies the following five steps in accordance with ASC 606:

(1) Identify the contract with a customer

A contract with a customer exists when: (a) the parties have approved the contract and are committed to perform their respective obligations, (b) the rights of the parties can be identified, (c) payment terms can be identified, (d) the arrangement has commercial substance, and (e) collectibility of consideration is ~~effective~~probable. Judgment is required when determining if the contractual

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 3 Revenue from Contracts with Customers - (Continued)

criteria are met, specifically in the earlier stages of a project when a formally executed contract may not yet exist. In these situations, the Company evaluates all relevant facts and circumstances, including the existence of other forms of documentation or historical experience with our customers that may indicate a contractual agreement is in place and revenue should be recognized. In determining if the collectibility of consideration is probable, the Company considers the customer’s ability and intention to pay such consideration through an evaluation of several factors, including an assessment of the creditworthiness of the customer and our prior collection history with such customer.

(2) Identify the performance obligations in the contract

At contract inception, the Company assesses the goods or services promised in a contract and identifies, as a separate performance obligation, each distinct promise to transfer goods or services to the customer. The identified performance obligations represent the “unit of account” for ~~fiscal years~~purposes of determining revenue recognition. In order to properly identify separate performance obligations, the Company applies judgment in determining whether each good or service provided is: (a) capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and ~~interim periods beginning after December 15, 2017,~~(b) distinct within the context of the contract, whereby the transfer of the good or service to the customer is separately identifiable from other promises in the contract.

In addition, when assessing performance obligations within a contract, the Company considers the warranty provisions included within such contract. To the extent the warranty terms provide the customer with ~~early adoption permitted.~~ an additional service, other than assurance that the promised good or service complies with agreed upon specifications, such warranty is accounted for as a separate performance obligation. In determining whether a warranty provides an additional service, the Company considers each warranty provision in comparison to warranty terms which are standard in the industry.

Our contracts are often modified through change orders to account for changes in the scope and price of the goods or services we are providing. Although the Company evaluates each change order to determine whether such modification creates a separate performance obligation, the majority of our change orders are for goods or services that are not distinct within the context of our original contract, and therefore, are not treated as separate performance obligations.

(3) Determine the transaction price

The ~~guidance permits~~transaction price represents the ~~use~~amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to our customers. The consideration promised within a contract may include fixed amounts, variable amounts, or both. To the extent the performance obligation includes variable consideration, including contract bonuses and penalties that can either increase or decrease the transaction price, the Company estimates the amount of variable consideration to be included in the transaction price utilizing one of two ~~retrospective transition methods. We anticipate adopting~~prescribed methods, depending on which method better predicts the ~~standard on January 1, 2018 using~~amount of consideration to which the ~~modified retrospective method. We have substantially completed~~entity will be entitled. Such methods include: (a) the ~~process~~expected value method, whereby the amount of variable consideration to ~~evaluate~~be recognized represents the ~~impact~~sum of probability weighted amounts in a range of possible consideration amounts, and (b) the most likely amount method, whereby the amount of variable consideration to be recognized represents the single most likely amount in a range of possible consideration amounts. When applying these methods, the Company considers all information that is reasonably available, including historical, current and estimates of future performance. The expected value method is typically utilized in situations where a contract contains a large number of possible outcomes while the most likely amount method is typically utilized in situations where a contract has only two possible outcomes.

Variable consideration is included in the transaction price only to the extent it is probable, in the Company’s judgment, that a significant future reversal in the amount of cumulative revenue recognized under the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved. This threshold is referred to as the variable consideration constraint. In assessing whether to apply the variable consideration constraint, the Company considers if factors exist that could increase the likelihood or the magnitude of a potential reversal of revenue, including, but not limited to, whether: (a) the amount of consideration is highly susceptible to factors outside of the ~~new pronouncement on our~~Company’s influence, such as the actions of third parties, (b) the uncertainty surrounding the amount of consideration is not expected to be resolved for a long period of time, (c) the Company’s experience with similar types of contracts ~~including identifying potential differences~~is limited or that ~~will result~~experience has limited predictive value, (d) the Company has a practice of either offering a broad range of price concessions or changing the payment terms and conditions of similar contracts in similar circumstances, and (e) the contract has a large number and broad range of possible consideration amounts.

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 3 Revenue from ~~applying the requirements~~Contracts with Customers - (Continued)

Pending change orders represent one of the ~~new guidance. As~~most common forms of variable consideration included within contract value and typically represent contract modifications for which a ~~result~~change in scope has been authorized or acknowledged by our customer, but the final adjustment to contract price is yet to be negotiated. In estimating the transaction price for pending change orders, the Company considers all relevant facts, including documented correspondence with the customer regarding acknowledgment and/or agreement with the modification, as well as historical experience with the customer or similar contractual circumstances. Based upon this assessment, the Company estimates the transaction price, including whether the variable consideration constraint should be applied.

Contract claims are another form of variable consideration which is common within our industry. Claim amounts represent revenue that has been recognized for contract modifications that are not submitted or are in dispute as to both scope and price. In estimating the transaction price for claims, the Company considers all relevant facts available. However, given the uncertainty surrounding claims, including the potential long-term nature of dispute resolution and the broad range of possible consideration amounts, there is an increased likelihood that any additional contract revenue associated with contract claims is constrained. The resolution of claims involves negotiations and, in certain cases, litigation. In the event litigation costs are incurred by us in connection with claims, such litigation costs are expensed as incurred, although we may seek to recover these costs.

For some transactions, the receipt of consideration does not match the timing of the ~~review~~transfer of goods or services to the customer. For such contracts, the Company evaluates whether this timing difference represents a financing arrangement within the contract. Although rare, if a contract is determined to contain a significant financing component, the Company adjusts the promised amount of consideration for the effects of the time value of money when determining the transaction price of such contract. Although our customers may retain a portion of the contract price until completion of the project and final contract settlement, these retainage amounts are not considered a significant financing component as the intent of the withheld amounts is to provide the customer with assurance that we will complete our obligations under the contract rather than to provide financing to the customer. In addition, although we may be entitled to advanced payments from our customers on certain contracts, these advanced payments generally do not represent a significant financing component as the payments are used to meet working capital demands that can be higher in the early stages of a contract, as well as to protect us from our customer failing to meet its obligations under the contract.

Changes in the estimates of transaction prices are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. Such changes in estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in prior periods. Such changes in estimates may also result in the reversal of previously recognized revenue if the ultimate outcome differs from the Company’s previous estimate. For the three and six months ended June 30, 2018, there were no significant amounts of revenue recognized during the period related to performance obligations satisfied in prior periods. For the three and six months ended June 30, 2017, we recognized $11.6 million and $18.1 million of gross profit associated with the recovery of certain contract costs previously disputed on a project completed in 2016. In addition, for the three and six months ended June 30, 2018 and 2017, there were no significant reversals of revenue recognized associated with the revision to transaction prices.

(4) Allocate the transaction price to performance obligations in the contract

For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on a relative standalone selling price. The Company determines the standalone selling price based on the price at which the performance obligation would have been sold separately in similar circumstances to similar customers. If the standalone selling price is not observable, the Company estimates the standalone selling price taking into account all available information such as market conditions and internal pricing guidelines. In certain circumstances, the standalone selling price is determined using an expected profit margin on anticipated costs related to the performance obligation.

(5) Recognize revenue as performance obligations are satisfied

The Company recognizes revenue at the time the related performance obligation is satisfied by transferring a promised good or service to its customers. A good or service is considered to be transferred when the customer obtains control. The Company can transfer control of a good or service and satisfy its performance obligations either over time or at a point in time. The Company transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognizes revenue over time if one of the following three criteria are met: (a) the customer simultaneously receives and consumes the benefits provided by the Company’s performance as we perform, (b) the Company’s performance creates or enhances an asset that the customer controls

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 3 Revenue from Contracts with Customers - (Continued)

as the asset is created or enhanced, or (c) the Company’s performance does not create an asset with an alternative use to us, and we have an enforceable right to payment for performance completed to date.

For our performance obligations satisfied over time, we recognize revenue by measuring the progress toward complete satisfaction of that performance obligation. The selection of the method to measure progress towards completion can be either an input method or an output method and requires judgment based on the nature of the goods or services to be provided.

For our construction contracts, revenue is generally recognized over time as our performance creates or enhances an asset that the customer controls. Our fixed price construction projects generally use a cost-to-cost input method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. For our unit price construction contracts, progress towards complete satisfaction is measured through an output method such as the amount of units produced or delivered, when our performance does not produce significant amounts of work in process or finished goods prior to complete satisfaction of such performance obligations.

For our services contracts, revenue is also generally recognized over time as the customer simultaneously receives and consumes the benefits of our ~~various types~~performance as we perform the service. For our fixed price service contracts with specified service periods, revenue is generally recognized on a straight-line basis over such service period when our inputs are expended evenly, and the customer receives and consumes the benefits of our performance throughout the contract term.

The timing of revenue ~~arrangements, we do not anticipate that~~recognition for the ~~adoption will have a material impact on our financial position and/or results~~manufacturing of ~~operations, particularly as it relates to revenues generated from long-term construction, service maintenance, and time and materials contracts. With respect to our shop services operations~~new build heat exchangers within our United States industrial services segment depends on the payment terms of the contract, as our performance does not create an asset with an alternative use to us. For those contracts which ~~currently~~we have a right to payment for performance completed to date at all times throughout our performance, inclusive of a cancellation, we recognize revenue over time. These performance obligations use a cost-to-cost input method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer. However, for those contracts for which we do not have a right, at all times, to payment for performance completed to date, we recognize revenue at the point in time when control is transferred to the customer. For bill-and-hold arrangements, revenue is recognized when the customer obtains control of the heat exchanger, which may be prior to shipping, if the criteria of ASC 606 are met.

For certain of our revenue streams, such as call-out repair and service work, outage services, refinery turnarounds and specialty welding services that are performed under time and materials contracts, our progress towards complete satisfaction of such performance obligations is measured using an output method as the customer receives and consumes the benefits of our performance completed to date.

Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. When the current estimate of total costs for a performance obligation indicate a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident. For the three and six months ended June 30, 2018 and 2017, there were no changes in total estimated costs that had a significant impact to our operating results. In addition, for the three and six months ended June 30, 2018 and 2017, there were no significant losses recognized.

Disaggregation of Revenues

Our revenues are principally derived from contracts to provide construction services relating to electrical and mechanical systems, as well as to provide a number of building services and industrial services to our customers. Our contracts are with many different customers in numerous industries. Refer to Note 14 - Segment Information of the notes to the condensed consolidated financial statements for additional information on how we disaggregate our revenues by reportable segment, as well as a more complete description of our business.

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 3 Revenue from Contracts with Customers - (Continued)

The following tables provide further disaggregation of our revenues by categories we use to evaluate our financial performance within each of our reportable segments (in thousands):



	For the three months ended June 30, 2018			% of Total		For the six months ended June 30, 2018			% of Total
United States electrical construction and facilities services:
Commercial market sector	$	199,283		41	%	$	383,665		41	%
Institutional market sector	31,060			6	%	59,068			6	%
Hospitality market sector	7,289			2	%	12,805			1	%
Manufacturing market sector	94,018			20	%	179,812			19	%
Healthcare market sector	36,679			8	%	75,186			8	%
Transportation market sector	72,511			15	%	143,775			16	%
Water and wastewater market sector	6,140			1	%	10,753			1	%
Short duration projects ⁽¹⁾	25,195			5	%	54,725			6	%
Service work	8,836			2	%	17,004			2	%
	481,011					936,793
Less intersegment revenues	(1,469		)			(2,499		)
Total segment revenues	$	479,542				$	934,294



United States mechanical construction and facilities services:
Commercial market sector	$	263,660		35	%	$	495,511		34	%
Institutional market sector	78,079			11	%	143,706			10	%
Hospitality market sector	21,191			3	%	47,718			3	%
Manufacturing market sector	99,047			13	%	198,923			14	%
Healthcare market sector	60,006			8	%	126,120			9	%
Transportation market sector	4,724			1	%	9,930			1	%
Water and wastewater market sector	42,519			6	%	79,270			5	%
Short duration projects ⁽¹⁾	76,114			10	%	160,009			11	%
Service work	98,301			13	%	184,526			13	%
	743,641					1,445,713
Less intersegment revenues	(2,984		)			(6,209		)
Total segment revenues	$	740,657				$	1,439,504

________


(1)	Represents those projects which generally are completed within three months or less.



United States building services:
Commercial site-based services	$	119,043	26	%	$	265,804	29	%
Government site-based services	55,147		12	%	110,556		12	%
Mechanical services	260,249		56	%	487,591		53	%
Energy services	26,594		6	%	51,834		6	%
Total segment revenues	$	461,033			$	915,785

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 3 Revenue from Contracts with Customers - (Continued)



	For the three months ended June 30, 2018		% of Total		For the six months ended June 30, 2018		% of Total
United States industrial services:
Field services	$	125,527	75	%	$	273,617	78	%
Shop services	41,620		25	%	78,677		22	%
Total segment revenues	$	167,147			$	352,294

Total United States operations	$	1,848,379			$	3,641,877



United Kingdom building services:
Service work	$	54,998	52	%	$	110,273	52	%
Projects & extras	50,509		48	%	102,124		48	%
Total segment revenues	$	105,507			$	212,397

Total worldwide operations	$	1,953,886			$	3,854,274

Contract Assets and Contract Liabilities

Accounts receivable are recognized in the period when our right to consideration is unconditional. Accounts receivable are recognized net of an allowance for doubtful accounts. A considerable amount of judgment is required in assessing the likelihood of realization of receivables.

The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets include unbilled amounts from our long-term construction projects when revenue recognized under the cost-to-cost measure of progress exceed the amounts invoiced to our customers, as the amounts cannot be billed under the terms of our contracts. Such amounts are recoverable from our customers based upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of a contract. In addition, many of our time and materials arrangements, as well as our contracts to perform turnaround services within the United States industrial services segment, are billed in arrears pursuant to contract terms that are standard within the industry, resulting in contract assets and/or unbilled receivables being recorded, as revenue is recognized in advance of billings. Also included in contract assets are amounts we seek or will seek to collect from customers or others for errors or changes in contract specifications or design, contract change orders or modifications in dispute or unapproved as to both scope and/or price, or other customer-related causes of unanticipated additional contract costs (claims and unapproved change orders). Our contract assets do not include capitalized costs to obtain and fulfill a contract. Contract assets are generally classified as current within the Condensed Consolidated Balance Sheets.

Contract liabilities from our long-term construction contracts occur when amounts invoiced to our customers exceed revenues recognized under the cost-to-cost measure of progress. Contract liabilities additionally include advanced payments from our customers on certain contracts. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation and are recorded as either current or long-term, depending upon when we expect to recognize such revenue. The long-term portion of contract liabilities is included in “Other long-term obligations” in the Condensed Consolidated Balance Sheets.

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 3 Revenue from Contracts with Customers - (Continued)

Net contract liabilities consisted of the following (in thousands):



	June 30, 2018			December 31, 2017
Contract assets, current	$	156,134		$	122,621
Contract assets, non-current	—			—
Contract liabilities, current	(551,614		)	(524,156		)
Contract liabilities, non-current	(3,327		)	—
Deferred revenue ⁽¹⁾	—			(47,328		)
Net contract liabilities	$	(398,807	)	$	(448,863	)

________


(1)	Represents deferred revenue on service contracts, which was included in “Accrued expenses and other” and “Other long-term liabilities” in the Condensed Consolidated Balance Sheet as of December 31 2017. For the periods after December 31, 2017, these amounts are included within “Contract liabilities.”

The $50.1 million decrease in net contract liabilities for the six months ended June 30, 2018 was attributable to a decrease in the net contract liability balance on our uncompleted long-term construction contracts as a result of the completion or substantial completion of certain large projects which were previously billed ahead pursuant to contract terms. Contract assets and contract liabilities increased by approximately $0.3 million and $2.1 million, respectively, as a result of acquisitions made in 2018. There was no significant impairment of contract assets recognized during the period.

Transaction Price Allocated to Remaining Unsatisfied Performance Obligations

The following table presents the transaction price allocated to remaining unsatisfied performance obligations (“remaining performance obligations”) for each of our reportable segments and their respective percentages of total remaining performance obligations (in thousands, except for percentages):



	June 30, 2018		% of Total
Remaining performance obligations:
United States electrical construction and facilities services	$	1,037,796	28	%
United States mechanical construction and facilities services	1,970,393		54	%
United States building services	451,960		12	%
United States industrial services	82,640		2	%
Total United States operations	3,542,789		96	%
United Kingdom building services	130,342		4	%
Total worldwide operations	$	3,673,131	100	%

Our remaining performance obligations at June 30, 2018 were $3.67 billion. Remaining performance obligations increase with awards of new contracts and decrease as we perform work and recognize revenue on existing contracts. We include a project within our remaining performance obligations at such time the project is awarded and agreement on contract terms has been reached. Our remaining performance obligations include amounts related to contracts for which a fixed price contract value is not assigned when a reasonable estimate of total transaction price can be made.

Remaining performance obligations include unrecognized revenues to be realized from uncompleted construction contracts. Although many of our construction contracts are subject to cancellation at the ~~engineering, manufacturing~~election of our customers, in accordance with industry practice, we do not limit the amount of unrecognized revenue included within remaining performance obligations due to the inherent substantial economic penalty that would be incurred by our customers upon cancellation. We believe our reported remaining performance obligations for our construction contracts are firm and ~~repair~~contract cancellations have not had a material adverse effect on us.

Remaining performance obligations also include unrecognized revenues expected to be realized over the remaining term of ~~shell~~service contracts. However, to the extent a service contract includes a cancellation clause which allows for the termination of such

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EMCOR Group, Inc. and ~~tube heat exchangers~~Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 3 Revenue from Contracts with Customers - (Continued)

contract by either party without a substantive penalty, the remaining contract term, and therefore, the amount of unrecognized revenues included within remaining performance obligations, is limited to the notice period required for the termination.

Our remaining performance obligations are comprised of: (a) original contract amounts, (b) change orders for which we have received written confirmations from our customers, (c) pending change orders for which we expect to receive confirmations in the ordinary course of business, (d) claim amounts that we have made against customers for which we have determined we have a legal basis under existing contractual arrangements and as to which the variable consideration constraint does not apply, and (e) other forms of variable consideration to the extent that such variable consideration has been included within the transaction price of our contracts. Such claim and other variable consideration amounts were immaterial for all periods presented.

Refer to the table below for additional information regarding our remaining performance obligations, including an estimate of when we expect to recognize such remaining performance obligations as revenue (in thousands):



	Within one year		Greater than one year
Remaining performance obligations:
United States electrical construction and facilities services	$	910,676	$	127,120
United States mechanical construction and facilities services	1,453,161		517,232
United States building services	436,102		15,858
United States industrial services	82,640		—
Total United States operations	2,882,579		660,210
United Kingdom building services	78,659		51,683
Total worldwide operations	$	2,961,238	$	711,893

Impact of the ~~product is shipped and all other revenue recognition criteria have been met,~~Adoption of ASC 606 on our Financial Statements

The Company adopted ASC 606 on a modified retrospective basis. As part of such adoption, the new standard was applied only to those contracts which were not completed as of the date of adoption. Additionally, the Company has not retrospectively restated contract positions for contract modifications made prior to the adoption of ASC 606. The cumulative effect of applying the new ~~standard will accelerate~~guidance was recorded on January 1, 2018 as a reduction to retained earnings in the amount of $0.9 million, net of tax. The majority of this adjustment related to: (a) a change in the measurement of our progress towards complete satisfaction of performance obligations for certain of our contracts within the United States electrical construction and facilities services segment, (b) a change in the timing of revenue recognition ~~for certain contracts for which control is transferred to our customers over time instead of at~~from a point in ~~time. We have also drafted revised accounting policies~~time to over time for certain repair projects within the United Kingdom building services segment, (c) the recognition of revenue for certain bill-and-hold arrangements within our United States industrial services segment that was not allowed under previous revenue recognition guidance, (d) the recognition of variable consideration for contract bonuses within certain of our construction contracts, and ~~have evaluated~~(e) a change in the ~~enhanced disclosure requirements on~~timing of revenue recognition from a point in time to over time for certain of our ~~business processes, controls and systems.~~contracts within our United States industrial services segment to manufacture or repair heat exchangers. These adjustments were not material to our financial position either individually or in the aggregate.

613

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 3 Revenue from Contracts with Customers - (Continued)

The following tables compare the differences between our reported and pro forma results under previous revenue guidance for each financial statement line item within our reported Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations, as of and for the three and six months ended June 30, 2018 (in thousands):



	As reported		Pro forma
	June 30, 2018 (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	306,624	$	306,624
Accounts receivable	1,635,289		1,631,976
Contract assets	156,134		158,341
Inventories	43,665		49,060
Prepaid expenses and other	48,511		45,314
Total current assets	2,190,223		2,191,315
Investments, notes and other long-term receivables	4,180		4,180
Property, plant and equipment, net	124,993		124,993
Goodwill	978,303		978,303
Identifiable intangible assets, net	481,577		481,577
Other assets	90,125		90,125
Total assets	$	3,869,401	$	3,870,493
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt and capital lease obligations	$	15,625	$	15,625
Accounts payable	505,379		505,379
Contract liabilities	551,614		503,811
Accrued payroll and benefits	282,159		282,159
Other accrued expenses and liabilities	150,153		198,789
Total current liabilities	1,504,930		1,505,763
Borrowings under revolving credit facility	25,000		25,000
Long-term debt and capital lease obligations	262,492		262,492
Other long-term obligations	341,846		342,037
Total liabilities	2,134,268		2,135,292
Total equity	1,735,133		1,735,201
Total liabilities and equity	$	3,869,401	$	3,870,493

Table of Contents

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 3 Revenue from Contracts with Customers - (Continued)



	As reported			Pro forma			As reported			Pro forma
	For the three months ended June 30, 2018 (Unaudited)						For the six months ended June 30, 2018 (Unaudited)
Revenues	$	1,953,886		$	1,955,456		$	3,854,274		$	3,854,946
Cost of sales	1,663,042			1,664,330			3,294,311			3,296,062
Gross profit	290,844			291,126			559,963			558,884
Selling, general and administrative expenses	189,907			189,907			380,932			380,932
Restructuring expenses	374			374			464			464
Impairment loss on identifiable intangible assets	907			907			907			907
Operating income	99,656			99,938			177,660			176,581
Net periodic pension (cost) income	717			717			1,454			1,454
Interest expense	(3,457		)	(3,457		)	(6,453		)	(6,453		)
Interest income	634			634			1,178			1,178
Income from continuing operations before income taxes	97,550			97,832			173,839			172,760
Income tax provision	26,529			26,604			47,162			46,869
Income from continuing operations	71,021			71,228			126,677			125,891
Loss from discontinued operation, net of income taxes	(205		)	(205		)	(487		)	(487		)
Net income including noncontrolling interests	70,816			71,023			126,190			125,404
Less: Net income attributable to noncontrolling interests	—			—			—			—
Net income attributable to EMCOR Group, Inc.	$	70,816		$	71,023		$	126,190		$	125,404

Basic earnings per common share:
From continuing operations attributable to EMCOR Group, Inc. common stockholders	$	1.22		$	1.22		$	2.16		$	2.15
Diluted earnings per common share:
From continuing operations attributable to EMCOR Group, Inc. common stockholders	$	1.21		$	1.21		$	2.15		$	2.14

The adoption of ASC 606 had no impact on the Company’s cash flows from operations.

The differences between our reported operating results and the pro forma operating results presented in the above tables for the three and six months ended June 30, 2018 primarily related to the previously referenced items identified upon adoption of ASC 606.

Table of Contents

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 34 Acquisitions of Businesses

During the second quarter of 2018, we acquired two companies, each for an immaterial amount. One company provides mobile mechanical services within the Western region of the United States, and the other company provides mobile mechanical services and fire protection services within the Southern region of the United States. Both of their results have been included in our United States building services segment.

On January 4, 2017, March 1, 2017 and ~~March~~November 1, 2017, we acquired ~~two~~three companies for a total consideration of ~~$84.8~~$109.3 million. One company provides fire protection and alarm services primarily in the Southern region of the United ~~States, and its~~States. The second company provides millwright services for manufacturing companies throughout the United States. Both of their results have been included in our United States mechanical construction and facilities services segment. The ~~other~~third company provides mobile mechanical services within the Western region of the United States, and its results have been included in our United States building services segment. In connection with these acquisitions, we acquired working capital of $9.6 million and other net assets of ~~$0.3~~$2.3 million and have preliminarily ascribed ~~$28.7~~$40.8 million to goodwill and ~~$46.2~~$56.6 million to identifiable intangible assets. We expect that all of the acquired goodwill will be deductible for tax purposes.

The purchase price ~~allocations~~allocation for the businesses acquired in 2018 and the business acquired in November of 2017 are still preliminary and subject to change during their respective measurement periods. The purchase price allocations for the businesses acquired in January and March of 2017 were finalized during the first quarter of 2018 with an insignificant impact. The acquisition of ~~these businesses~~each business was accounted for by the acquisition method, and the prices paid for them have been allocated to their respective assets and liabilities, based upon the estimated fair value of their assets and liabilities at the dates of their respective acquisitions by us.

On April 15, 2016, we completed the acquisition of Ardent Services, L.L.C. and Rabalais Constructors, LLC (collectively, “Ardent”). This acquisition has been included in our United States electrical construction and facilities services segment. Ardent provides electrical and instrumentation services to the energy infrastructure market in North America, and this acquisition further strengthens our position in electrical construction and services and broadens our capabilities across the industrial and energy sectors, especially in the Gulf Coast, Midwest and Western regions of the United States. Under the terms of the transaction, we acquired 100% of Ardent’s equity interests for total consideration of $201.4 million. In connection with the acquisition of Ardent, we acquired working capital of $34.1 million and other net assets of $3.9 million and have ascribed $121.9 million to goodwill and $41.5 million to identifiable intangible assets. We expect that $99.7 million of the acquired goodwill will be deductible for tax purposes. The weighted average amortization period for the identifiable intangible assets is approximately 13.5 years. We completed the final allocation of Ardent’s purchase price during the first quarter of 2017 with an insignificant impact.

On April 1, 2016, we acquired a company for an immaterial amount. This company provides mobile mechanical services within the Southeastern region of the United States, and its results have been included in our United States building services segment. The purchase price for this acquisition was finalized in 2016.

NOTE 45 Disposition of Assets

Due to a historical pattern of losses in the construction operations of our United Kingdom segment and our negative assessment of construction market conditions in the United Kingdom for the foreseeable future, we ceased construction operations in the United Kingdom during the third quarter of 2014. The results of the construction operations of our United Kingdom segment for all periods are presented in the Condensed Consolidated Financial Statements as discontinued operations.

The results of discontinued operations are as follows (in thousands):


	For the three months ended September 30,						For the nine months ended September 30,						For the three months ended June 30,						For the six months ended June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Revenues	$	(81	)	$	40		$	863		$	108		$	—		$	944		$	—		$	944
Loss from discontinued operation, net of income taxes	$	(207	)	$	(406	)	$	(729	)	$	(1,584	)	$	(205	)	$	(18	)	$	(487	)	$	(522	)
Diluted loss per share from discontinued operation	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)

The loss from discontinued operations ~~for the three~~in 2018 and ~~nine months ended September 30,~~ 2017 was primarily due to legal costs related to the settlement of final contract balances on certain construction projects completed in prior ~~years, partially offset by revenues recognized in the second quarter of 2017 upon the settlement of a previously outstanding contract claim.~~

~~Table of Contents~~

~~EMCOR Group, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~NOTE 4 Disposition of Assets - (Continued)~~

years.

Included in the Condensed Consolidated Balance Sheets at ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017 are the following major classes of assets and liabilities associated with the discontinued operation (in thousands):


	September 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017
Assets of discontinued operation:
Current assets	$	360	$	1,233	$	110	$	242

Liabilities of discontinued operation:
Current liabilities	$	3,511	$	4,036	$	2,038	$	2,811

At ~~September~~June 30, ~~2017,~~2018, the assets and liabilities of the discontinued operation consisted of accounts receivable, contract retentions and contract warranty obligations that are expected to be collected or fulfilled in the ordinary course of business. Additionally at ~~September~~June 30, ~~2017,~~2018, there remained less than $0.1 million of obligations related to employee severance, which are expected to be paid induring the remainder of 2018. The settlement of the remaining assets and liabilities may result in additional income and/or expenses. Such income and/or expenses are expected to be immaterial and will be reflected as discontinued operations as incurred.

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 56 Earnings Per Share

Calculation of Basic and Diluted Earnings (Loss) per Common Share

The following tables summarize our calculation of Basic and Diluted Earnings (Loss) per Common Share (“EPS”) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017 (in thousands, except share and per share data):

For the three months ended September 30,
2017 2016
Numerator:
Income from continuing operations attributable to EMCOR Group, Inc. common stockholders $ 64,804
$ 51,937
Loss from discontinued operation, net of income taxes (207 ) (406 )
Net income attributable to EMCOR Group, Inc. common stockholders $ 64,597
$ 51,531
Denominator:
Weighted average shares outstanding used to compute basic earnings (loss) per common share 59,061,768
60,889,484
Effect of dilutive securities—Share-based awards 357,432
428,573
Shares used to compute diluted earnings (loss) per common share 59,419,200
61,318,057
Basic earnings (loss) per common share:
From continuing operations attributable to EMCOR Group, Inc. common stockholders $ 1.10
$ 0.85
From discontinued operation (0.00 ) (0.01 )
Net income attributable to EMCOR Group, Inc. common stockholders $ 1.10
$ 0.84
Diluted earnings (loss) per common share:
From continuing operations attributable to EMCOR Group, Inc. common stockholders $ 1.09
$ 0.85
From discontinued operation (0.00 ) (0.01 )
Net income attributable to EMCOR Group, Inc. common stockholders $ 1.09
$ 0.84

~~Table of Contents~~

~~EMCOR Group, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~NOTE 5 Earnings Per Share - (Continued)~~



	For the three months ended June 30,
	2018			2017
Numerator:
Income from continuing operations attributable to EMCOR Group, Inc. common stockholders	$	71,021		$	56,776
Loss from discontinued operation, net of income taxes	(205		)	(18		)
Net income attributable to EMCOR Group, Inc. common stockholders	$	70,816		$	56,758
Denominator:
Weighted average shares outstanding used to compute basic earnings (loss) per common share	58,332,934			59,290,420
Effect of dilutive securities—Share-based awards	337,661			348,641
Shares used to compute diluted earnings (loss) per common share	58,670,595			59,639,061
Basic earnings (loss) per common share:
From continuing operations attributable to EMCOR Group, Inc. common stockholders	$	1.22		$	0.96
From discontinued operation	(0.00		)	(0.00		)
Net income attributable to EMCOR Group, Inc. common stockholders	$	1.22		$	0.96
Diluted earnings (loss) per common share:
From continuing operations attributable to EMCOR Group, Inc. common stockholders	$	1.21		$	0.95
From discontinued operation	(0.00		)	(0.00		)
Net income attributable to EMCOR Group, Inc. common stockholders	$	1.21		$	0.95


	For the nine months ended September 30,						For the six months ended June 30,
	2017			2016			2018			2017
Numerator:
Income from continuing operations attributable to EMCOR Group, Inc. common stockholders	$	174,724		$	142,843		$	126,677		$	109,920
Loss from discontinued operation, net of income taxes	(729		)	(1,584		)	(487		)	(522		)
Net income attributable to EMCOR Group, Inc. common stockholders	$	173,995		$	141,259		$	126,190		$	109,398
Denominator:
Weighted average shares outstanding used to compute basic earnings (loss) per common share	59,371,672			60,866,532			58,531,150			59,527,863
Effect of dilutive securities—Share-based awards	349,513			423,856			331,355			345,553
Shares used to compute diluted earnings (loss) per common share	59,721,185			61,290,388			58,862,505			59,873,416
Basic earnings (loss) per common share:
From continuing operations attributable to EMCOR Group, Inc. common stockholders	$	2.94		$	2.35		$	2.16		$	1.85
From discontinued operation	(0.01		)	(0.03		)	(0.01		)	(0.01		)
Net income attributable to EMCOR Group, Inc. common stockholders	$	2.93		$	2.32		$	2.15		$	1.84
Diluted earnings (loss) per common share:
From continuing operations attributable to EMCOR Group, Inc. common stockholders	$	2.93		$	2.33		$	2.15		$	1.84
From discontinued operation	(0.01		)	(0.03		)	(0.01		)	(0.01		)
Net income attributable to EMCOR Group, Inc. common stockholders	$	2.92		$	2.30		$	2.14		$	1.83

~~There were 500 anti-dilutive~~The number of outstanding share-based awards that were excluded from the computation of diluted EPS for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017. There~~2018 because they would be anti-dilutive were ~~no anti-dilutive~~500 and 550, respectively. The number of outstanding share-based awards that were excluded from the computation of diluted EPS for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016.~~

~~NOTE 6 Inventories~~

~~Inventories in the accompanying Condensed Consolidated Balance Sheets consisted of the following amounts (in thousands):~~

September 30,
2017 December 31,
2016
Raw materials and construction materials $ 25,709
$ 21,997
Work in process 17,944
15,429
Inventories $ 43,653
$ 37,426

2017 because they would be anti-dilutive were 47,200 and zero, respectively.

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 7 Inventories

Inventories in the accompanying Condensed Consolidated Balance Sheets consisted of the following amounts (in thousands):



	June 30, 2018		December 31, 2017
Raw materials and construction materials	$	27,188	$	23,924
Work in process	16,477		18,800
Inventories	$	43,665	$	42,724

NOTE 78 Debt

Debt in the accompanying Condensed Consolidated Balance Sheets consisted of the following amounts (in thousands):


	September 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
Revolving credit facility	$	125,000		$	125,000		$	25,000		$	25,000
Term loan	288,608			300,000			277,215			284,810
Unamortized debt issuance costs	(4,548		)	(5,437		)	(3,658		)	(4,251		)
Capitalized lease obligations	4,788			3,732			4,546			4,571
Other	22			31			14			20
Total debt	413,870			423,326			303,117			310,150
Less: current maturities	15,364			15,030			15,625			15,364
Total long-term debt	$	398,506		$	408,296		$	287,492		$	294,786

Credit Agreement

~~Until August 3, 2016, we had~~We have a credit agreement dated as of November 25, 2013 (as amended, the “2013 Credit Agreement”), which provided for a revolving credit facility of $750.0 million (the “2013 Revolving Credit Facility”) and a term loan of $350.0 million (the “2013 Term Loan”). On August 3, 2016, ~~we amended and restated the 2013 Credit Agreement to provide~~which provides for a $900.0 million revolving credit facility (the “2016 Revolving Credit Facility”) and a $400.0 million term loan (the “2016 Term Loan”) (collectively referred to as the “2016 Credit Agreement”) expiring August 3, 2021. ~~The proceeds of the 2016 Term Loan were used to repay amounts drawn under the 2013 Term Loan, as well as a portion of the outstanding balance under the 2013 Revolving Credit Facility.~~ We may increase the 2016 Revolving Credit Facility to $1.3 billion if additional lenders are identified and/or existing lenders are willing to increase their current commitments. We may allocate up to $300.0 million of available capacity under the 2016 Revolving Credit Facility to letters of credit for our account or for the account of any of our subsidiaries. Obligations under the 2016 Credit Agreement are guaranteed by most of our direct and indirect subsidiaries and are secured by substantially all of our assets. The 2016 Credit Agreement contains various covenants providing for, among other things, maintenance of certain financial ratios and certain limitations on payment of dividends, common stock repurchases, investments, acquisitions, indebtedness and capital expenditures. We were in compliance with all such covenants as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016.~~2017. A commitment fee is payable on the average daily unused amount of the 2016 Revolving Credit Facility, which ranges from 0.15% to 0.30%, based on certain financial tests. The fee was 0.15% of the unused amount as of ~~September~~June 30, ~~2017.~~2018. Borrowings under the 2016 Credit Agreement bear interest at (1) a base rate plus a margin of 0.00% to 0.75%, based on certain financial tests, or (2) United States dollar LIBOR (~~1.24%~~2.09% and 2.33% at ~~September~~June 30, ~~2017~~2018) for our 2016 Revolving Credit Facility and our 2016 Term Loan, respectively) plus 1.00% to 1.75%, based on certain financial tests. The base rate is determined by the greater of (a) the prime commercial lending rate announced by Bank of Montreal from time to time ~~(4.25%~~(5.00% at ~~September~~June 30, ~~2017)~~2018), (b) the federal funds effective rate, plus ½ of 1.00%, (c) the daily one month LIBOR rate, plus 1.00%, or (d) 0.00%. The interest ~~rate~~rates in effect at ~~September~~June 30, ~~2017 was 2.24%.~~2018 were 3.09% and 3.33% for our 2016 Revolving Credit Facility and our 2016 Term Loan, respectively. Fees for letters of credit issued under the 2016 Revolving Credit Facility range from 1.00% to 1.75% of the respective face amounts of outstanding letters of credit and are computed based on certain financial tests. ~~We capitalized an additional~~ ~~$3.0 million~~ ~~of debt issuance costs associated with the 2016 Credit Agreement.~~ Debt issuance costs are amortized over the life of the agreement and are included as part of interest expense. The 2016 Term Loan previously required us to make principal payments of $5.0 million on the last day of March, June, September and December of each year, which commenced with the calendar quarter ended December 31, 2016. On December 30, 2016, we made a payment of $100.0 million, of which $5.0 million represented our required quarterly payment and $95.0 million represented a prepayment of outstanding principal. Such prepayment was applied against the remaining mandatory quarterly payments on a ratable basis. As a result, commencing with the calendar quarter ended March 31, 2017, our required quarterly payment has been reduced to $3.8 million. All unpaid principal and interest is due on August 3, 2021. As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the balance of the 2016 Term Loan was ~~$288.6~~$277.2 million and ~~$300.0~~$284.8 million, respectively. As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017, we had approximately $~~111.8~~110.3 million and~~$91.9 million~~ ~~of letters of credit outstanding, respectively. There were $125.0 million in borrowings outstanding under the 2016 Revolving Credit Facility as of September 30, 2017 and December 31, 2016.~~

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 8 Debt - (Continued)

$110.1 million of letters of credit outstanding, respectively. There were $25.0 million in borrowings outstanding under the 2016 Revolving Credit Facility as of June 30, 2018 and December 31, 2017.

NOTE 89 Fair Value Measurements

We use a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy, which gives the highest priority to quoted prices in active markets, is comprised of the following three levels:

Level 1 – Unadjusted quoted market prices in active markets for identical assets and liabilities.

Level 2 – Observable inputs, other than Level 1 inputs. Level 2 inputs would typically include quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3 – Prices or valuations that require inputs that are both significant to the measurement and unobservable.

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017 (in thousands):


	Assets at Fair Value as of September 30, 2017								Assets at Fair Value as of June 30, 2018
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents ⁽¹⁾	$	480,496	$	—	$	—	$	480,496	$	306,624	$	—	$	—	$	306,624
Restricted cash ⁽²⁾	2,082		—		—		2,082		2,572		—		—		2,572
Deferred compensation plan assets ⁽³⁾	20,372		—		—		20,372		24,159		—		—		24,159
Total	$	502,950	$	—	$	—	$	502,950	$	333,355	$	—	$	—	$	333,355


	Assets at Fair Value as of December 31, 2016								Assets at Fair Value as of December 31, 2017
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents ⁽¹⁾	$	464,617	$	—	$	—	$	464,617	$	467,430	$	—	$	—	$	467,430
Restricted cash ⁽²⁾	2,043		—		—		2,043		1,958		—		—		1,958
Deferred compensation plan assets ⁽³⁾	12,153		—		—		12,153		22,054		—		—		22,054
Total	$	478,813	$	—	$	—	$	478,813	$	491,442	$	—	$	—	$	491,442

________


(1)	Cash and cash equivalents include money market funds with original maturity dates of three months or less, which are Level 1 assets. At ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017, we had $~~187.0~~167.2 million and $~~154.6~~194.2 million, respectively, in money market funds.


(2)	Restricted cash is classified as “Prepaid expenses and other” in the Condensed Consolidated Balance Sheets. Restricted cash primarily represents cash held in account for use on customer contracts.


(3)	Deferred compensation plan assets are classified as “Other assets” in the Condensed Consolidated Balance Sheets.

We believe that the carrying values of our financial instruments, which include accounts receivable and other financing commitments, approximate their fair values due primarily to their short-term maturities and low risk of counterparty default. The carrying value of our debt associated with the 2016 Credit Agreement approximates its fair value due to the variable rate on such debt.

NOTE 910 Income Taxes

On December 22, 2017, the U.S. government enacted comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%, effective January 1, 2018.

As a result of the reduction of the U.S. corporate tax rate to 21%, U.S. generally accepted accounting principles require companies to re-value their deferred tax assets and liabilities as of the date of enactment, with the resulting tax effects accounted for in the reporting period of enactment. Based on currently available information, the Company’s estimated value of its net deferred federal and state tax liability balances have been reduced by approximately $39.3 million, which was recorded as a reduction of income tax expense in the Company’s Consolidated Statements of Operations for the year ended December 31, 2017. Such estimate will be finalized upon the completion of the 2017 federal and state income tax returns as the Company continues to evaluate any further guidance that may be issued related to the Tax Act.

Table of Contents

EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 10 Income Taxes - (Continued)

The Tax Act provides for a change from a worldwide to a territorial tax system and requires a one-time transition tax on certain deferred foreign income of specified foreign corporations. Staff Accounting Bulletin 118 provides a measurement period for companies to evaluate the effects of the Tax Act, and the Company made a provisional estimate at December 31, 2017 that the impact of such transition tax was expected to be immaterial. The Company has concluded, after completion of its analysis during the first quarter of 2018 that it is not subject to such transition tax. Our income tax provision for the three and six months ended June 30, 2018 also included an estimate of the minimum tax on global intangible low-taxed income for certain earnings of our foreign subsidiaries, as required under the Tax Act. The Company continues to evaluate the effects of the Tax Act related to the repatriation of certain foreign earnings and believes that such effects are immaterial.

For the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017, our income tax provision from continuing operations was $~~38.6~~26.5 million and $~~30.8~~33.0 million, respectively, based on an effective income tax rate, before discrete items and less amounts attributable to noncontrolling interests, of ~~37.1%~~27.8% and ~~38.1%~~37.5%, respectively. The actual income tax rate on income from continuing operations, less amounts attributable to noncontrolling interests, for the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017, inclusive of discrete items, was ~~37.3%~~27.2% and ~~37.2%~~36.8%, respectively. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017, our income tax provision from continuing operations was ~~$98.5~~$47.2 million and ~~$82.7~~$59.9 million, respectively, based on an effective income tax ~~rates,~~rate, before discrete items and less amounts attributable to noncontrolling interests, of ~~37.4%~~27.7% and ~~37.8%~~37.7%, respectively. The actual income tax ~~rates~~rate on income from continuing operations, less amounts attributable to noncontrolling interests, for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017, inclusive of discrete items, ~~were 36.0%~~was 27.1% and ~~36.7%~~35.3%, respectively. ~~The increase in the 2017 income tax provision was primarily due to increased income from continuing operations.~~ The decrease in the ~~2017~~2018 income tax provision and the 2018 actual income tax rate on income from continuing operations was primarily due to the ~~net impact of discrete items, inclusive~~enactment of the ~~reversal of reserves for previously unrecognized income tax benefits in the first quarter of 2017.~~Tax Act.

~~Table of Contents~~

~~EMCOR Group, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~NOTE 9 Income Taxes - (Continued)~~

As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017, the amount of unrecognized income tax benefits was ~~$1.9 million and $4.0 million (of which $0.7 million and $2.2 million, if recognized, would favorably affect our effective income tax rate), respectively.~~$0.8 million.

We report interest expense and/or income related to unrecognized income tax benefits in the income tax provision. As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017, we had approximately ~~$0.2~~$0.1 million ~~and $0.5 million, respectively,~~ of accrued interest expense related to unrecognized income tax benefits included as a liability in the Condensed Consolidated Balance Sheets. Total income tax reserves included in “Other long-term liabilities” were $0.9 million as of June 30, 2018 and December 31, 2017. For the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, less than $0.1 million ~~of interest expense~~ and ~~less than~~ $0.1 million of interest ~~income,~~expense, respectively, was recognized in the income tax provision. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016, $0.3 million and~~2017, less than $0.1 million of interest expense and $0.3 million of interest income, respectively, was recognized in the income tax provision.

We do not anticipate any significant changes to our reserves for uncertain tax positions in the next twelve months.

We file income tax returns with the Internal Revenue Service and various state, local and foreign tax agencies. The Company is currently under examination by various taxing authorities for the years 2012 through 2015. During the first quarter of 2017, the Company settled an examination with a taxing authority which resulted in ~~the recognition of~~a $3.3 million ~~of income tax benefits upon the~~ reversal of reserves for previously uncertain tax positions.

NOTE 1011 Common Stock

As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017, there were ~~58,806,509~~58,173,108 and ~~59,946,984~~58,798,428 shares of our common stock outstanding, respectively.

During the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017, we issued ~~19,679~~72,777 and ~~47,050~~76,347 shares of common stock, respectively, primarily upon: (a) the purchase of common stock pursuant to our employee stock purchase plan and (b) the satisfaction of required conditions under certain of our share-based compensation plans.respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017, we issued ~~213,060~~170,930 and ~~353,116~~193,381 shares of common stock, ~~respectively,~~respectively. These shares were issued primarily upon: (a) the satisfaction of required conditions under certain of our share-based compensation plans and (b) the purchase of common stock pursuant to our employee stock purchase ~~plan and (c) the exercise of stock options.~~plan.

On September 26, 2011, our Board of Directors authorized us to repurchase up to $100.0 million of our outstanding common stock. On December 5, 2013, October 23, 2014, ~~and~~ October 28, 2015 and October 25, 2017, our Board of Directors authorized us to repurchase up to an additional $100.0 million, $250.0 million, $200.0 million and ~~$200.0~~$100.0 million of our outstanding common stock, respectively. During ~~2017,~~2018, we have repurchased ~~approximately 1.4 million~~796,250 shares of our common stock for approximately ~~$88.6~~$60.5 million. Since the inception of the repurchase programs through ~~September~~June 30, ~~2017,~~2018, we have repurchased approximately ~~12.8~~13.6 million shares of our common stock for approximately $~~573.0~~635.8 million. As of ~~September~~June 30, ~~2017,~~2018, there remained authorization for us to repurchase approximately ~~$77.0~~$114.2 million of our shares. ~~Subsequent to September 30, 2017, our Board of Directors authorized us to repurchase up to an additional $100.0 million of our outstanding common stock.~~ The repurchase programs have no expiration date and do not obligate the Company to acquire any particular amount of common stock and may be suspended, recommenced or discontinued at any time or from time to time without prior notice. We may repurchase our shares from time to time to the extent permitted by securities laws and other legal requirements, including provisions in our 2016 Credit Agreement placing limitations on such repurchases. The repurchase programs have been and will be funded from our operations.

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1112 Retirement Plans

Our United Kingdom subsidiary has a defined benefit pension plan covering all eligible employees (the “UK Plan”); however, no individual joining the company after October 31, 2001 may participate in the UK Plan. On May 31, 2010, we curtailed the future accrual of benefits for active employees under such plan.

~~Table of Contents~~

~~EMCOR Group, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~NOTE 11 Retirement Plans - (Continued)~~

We also sponsor three domestic retirement plans in which participation by new individuals is frozen.

Components of Net Periodic Pension Cost

The components of net periodic pension cost of the UK Plan for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017 were as follows (in thousands):


	For the three months ended September 30,						For the nine months ended September 30,						For the three months ended June 30,						For the six months ended June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Interest cost	$	2,162		$	2,465		$	6,331		$	7,846		$	2,045		$	2,124		$	4,144		$	4,169
Expected return on plan assets	(3,388		)	(3,398		)	(9,919		)	(10,816		)	(3,490		)	(3,327		)	(7,071		)	(6,531		)
Amortization of unrecognized loss	738			489			2,160			1,556			665			724			1,347			1,422
Net periodic pension cost (income)	$	(488	)	$	(444	)	$	(1,428	)	$	(1,414	)	$	(780	)	$	(479	)	$	(1,580	)	$	(940	)

The net periodic pension cost associated with the domestic plans was approximately $0.1 million for each of the three and six months ended June 30, 2018 and 2017.

Employer Contributions

For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018, our United Kingdom subsidiary contributed approximately $~~3.5~~2.2 million to the UK Plan and anticipates contributing an additional $~~1.3~~2.5 million during the remainder of ~~2017.~~2018. Contributions to the domestic plans were approximately $0.1 million for the six months ended June 30, 2018.

NOTE 1213 Commitments and Contingencies

Government Contracts

As a government contractor, we are subject to U.S. government audits and investigations relating to our operations, ~~including claims for~~ fines, penalties and compensatory and treble damages, and possible suspension or debarment from doing business with the government. Based on currently available information, we believe the outcome of ongoing government disputes and investigations will not have a material impact on our financial position, results of operations or liquidity.

Legal Matters

One of our subsidiaries was a subcontractor to a mechanical contractor (“Mechanical Contractor”) on a construction project where an explosion occurred in 2010. The Mechanical Contractor has asserted claims, in the context of an arbitration proceeding against our subsidiary, alleging that our subsidiary is responsible for a portion of the damages for which the Mechanical Contractor may be liable as a result of: (a) personal injury suffered by individuals as a result of the explosion and (b) the Mechanical Contractor’s legal fees and associated management costs in defending against any and all such claims. The Mechanical Contractor previously asserted claims under the Connecticut and Massachusetts Unfair and Deceptive Trade Practices Acts, but such claims ~~were recently~~have been withdrawn. The general contractor (as assignee of the Mechanical Contractor) on the construction project, and for whom the Mechanical Contractor worked, has alleged that our subsidiary is responsible for losses asserted by the owner of the project and/or the general contractor because of delays in completion of the project and for damages to the owner’s property. We believe, and have been advised by counsel, that we have a number of meritorious defenses to all such matters. We believe that the ultimate outcome of such matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity. Notwithstanding our assessment of the final impact of this matter, we are not able to estimate with any certainty the amount of loss, if any, which would be associated with an adverse resolution.

We are involved in several other proceedings in which damages and claims have been asserted against us. We believe that we have a number of valid defenses to such proceedings and claims and intend to vigorously defend ourselves. Other potential claims may exist that have not yet been asserted against us. We do not believe that any such matters will have a material adverse effect on our financial position, results of operations or liquidity. Litigation is subject to many uncertainties and the outcome of litigation is not predictable with assurance. It is possible that some litigation matters for which liabilities have not been recorded could be decided unfavorably to us, and that any such unfavorable decisions could have a material adverse effect on our financial position, results of operations or liquidity.

~~Restructuring expenses~~

Restructuring expenses, primarily relating to employee severance obligations, were less than $0.1 million and $1.0 million for the three and nine months ended September 30, 2017, respectively, and $0.5 million and $1.3 million for the three and nine months ended September 30, 2016, respectively. As of ~~September 30, 2017, the balance of these restructuring obligations yet to be paid was less than~~ ~~$0.1 million~~ ~~and is expected to be paid during the remainder of 2017. No material expenses in connection with restructuring from continuing operations are expected to be incurred during the remainder of 2017.~~

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1213 Commitments and Contingencies - (Continued)

Restructuring expenses

Restructuring expenses, relating to employee severance obligations, were $0.4 million and $0.5 million for the three and six months ended June 30, 2018, respectively, and $0.3 million and $0.9 million for the three and six months ended June 30, 2017, respectively. As of June 30, 2018, the balance of these restructuring obligations yet to be paid was $0.4 million, and the majority of such amount is expected to be paid during the remainder of 2018. No material expenses in connection with restructuring from continuing operations are expected to be incurred during the remainder of 2018.

The changes in restructuring activity by reportable segments during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017 were as follows (in thousands):


	United States mechanical construction and facilities services segment			United States building services segment			Total			United States electrical construction and facilities services segment			United States mechanical construction and facilities services segment			United States building services segment			Total
Balance at December 31, 2015	$	—		$	81		$	81
Charges	401			870			1,271
Payments	(108		)	(770		)	(878		)
Balance at September 30, 2016	$	293		$	181		$	474
Balance at December 31, 2016	$	188		$	13		$	201		$	—		$	188		$	13		$	201
Charges	181			773			954			—			218			690			908
Payments	(369		)	(737		)	(1,106		)	—			(316		)	(621		)	(937		)
Balance at September 30, 2017	$	—		$	49		$	49
Balance at June 30, 2017										$	—		$	90		$	82		$	172
Balance at December 31, 2017										$	452		$	—		$	40		$	492
Charges										—			—			464			464
Payments										(239		)	—			(305		)	(544		)
Balance at June 30, 2018										$	213		$	—		$	199		$	412

NOTE 1314 Segment Information

Our reportable segments reflect certain reclassifications of prior year amounts from our United States mechanical construction and facilities services segment to our United States building services segment due to changes in our internal reporting structure.

We have the following reportable segments, which provide services associated with the design, integration, installation, start-up, operation and maintenance of various systems: (a) United States electrical construction and facilities services (involving systems for electrical power transmission and distribution; premises electrical and lighting systems; process instrumentation in the refining, chemical process, food process and mining industries; low-voltage systems, such as fire alarm, security and process control; voice and data communication; roadway and transit lighting; and fiber optic lines); (b) United States mechanical construction and facilities services (involving systems for heating, ventilation, air conditioning, refrigeration and clean-room process ventilation; fire protection; plumbing, process and high-purity piping; controls and filtration; water and wastewater treatment; central plant heating and cooling; cranes and rigging; millwrighting; and steel fabrication, erection and welding); (c) United States building services; (d) United States industrial services; and (e) United Kingdom building services. The “United States building services” and “United Kingdom building services” segments principally consist of those operations which provide a portfolio of services needed to support the operation and maintenance of ~~our~~ customers’ facilities, including commercial and government site-based operations and maintenance; facility maintenance and services, including reception, security and catering services; outage services to utilities and industrial plants; military base operations support services; mobile maintenance and services; floor care and janitorial services; landscaping, lot sweeping and snow removal; facilities management; vendor management; call center services; installation and support for building systems; program development, management and maintenance for energy systems; technical consulting and diagnostic services; infrastructure and building projects for federal, state and local governmental agencies and bodies; and small modification and retrofit projects, which services are not generally related to customers’ construction programs. The “United States industrial services” segment principally consists of those operations which provide industrial maintenance and services, including those for refineries and petrochemical plants, including on-site repairs, maintenance and service of heat exchangers, towers, vessels and piping; design, manufacturing, repair and hydro blast cleaning of shell and tube heat exchangers and related equipment; refinery turnaround planning and engineering services; specialty welding services; overhaul and maintenance of critical process units in refineries and petrochemical plants; and specialty technical services for refineries and petrochemical plants.

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1314 Segment Information - (Continued)

The following tables present information about industry segments and geographic areas for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017 (in thousands):


	For the three months ended September 30,						For the three months ended June 30,
	2017			2016			2018			2017
Revenues from unrelated entities:
United States electrical construction and facilities services	$	457,919		$	458,553		$	479,542		$	449,222
United States mechanical construction and facilities services	760,084			691,818			740,657			741,817
United States building services	437,107			460,715			461,033			438,264
United States industrial services	145,679			239,052			167,147			187,476
Total United States operations	1,800,789			1,850,138			1,848,379			1,816,779
United Kingdom building services	85,902			73,036			105,507			79,158
Total worldwide operations	$	1,886,691		$	1,923,174		$	1,953,886		$	1,895,937

Total revenues:
United States electrical construction and facilities services	$	460,066		$	465,476		$	481,379		$	451,124
United States mechanical construction and facilities services	767,398			696,549			750,326			750,442
United States building services	451,396			475,106			476,775			453,849
United States industrial services	147,133			239,489			167,868			187,610
Less intersegment revenues	(25,204		)	(26,482		)	(27,969		)	(26,246		)
Total United States operations	1,800,789			1,850,138			1,848,379			1,816,779
United Kingdom building services	85,902			73,036			105,507			79,158
Total worldwide operations	$	1,886,691		$	1,923,174		$	1,953,886		$	1,895,937


	For the nine months ended September 30,						For the six months ended June 30,
	2017			2016			2018			2017
Revenues from unrelated entities:
United States electrical construction and facilities services	$	1,350,157		$	1,227,474		$	934,294		$	892,238
United States mechanical construction and facilities services	2,173,030			1,925,793			1,439,504			1,412,946
United States building services	1,315,401			1,366,973			915,785			878,294
United States industrial services	591,694			830,064			352,294			446,015
Total United States operations	5,430,282			5,350,304			3,641,877			3,629,493
United Kingdom building services	244,078			251,256			212,397			158,176
Total worldwide operations	$	5,674,360		$	5,601,560		$	3,854,274		$	3,787,669

Total revenues:
United States electrical construction and facilities services	$	1,355,206		$	1,249,681		$	938,548		$	895,140
United States mechanical construction and facilities services	2,197,231			1,937,089			1,456,206			1,429,833
United States building services	1,360,189			1,407,361			946,874			908,793
United States industrial services	593,648			831,111			353,588			446,515
Less intersegment revenues	(75,992		)	(74,938		)	(53,339		)	(50,788		)
Total United States operations	5,430,282			5,350,304			3,641,877			3,629,493
United Kingdom building services	244,078			251,256			212,397			158,176
Total worldwide operations	$	5,674,360		$	5,601,560		$	3,854,274		$	3,787,669

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1314 Segment Information - (Continued)


	For the three months ended September 30,						For the three months ended June 30,
	2017			2016			2018			2017
Operating income (loss):
United States electrical construction and facilities services	$	46,583		$	30,927		$	35,985		$	32,118
United States mechanical construction and facilities services	57,484			38,890			57,583			53,073
United States building services	25,981			23,125			22,430			20,237
United States industrial services	(4,844		)	14,586			1,068			4,373
Total United States operations	125,204			107,528			117,066			109,801
United Kingdom building services	3,933			2,591			4,601			3,018
Corporate administration	(22,632		)	(23,516		)	(20,730		)	(20,063		)
Restructuring expenses	(46		)	(539		)	(374		)	(343		)
Impairment loss on identifiable intangible assets							(907		)	—
Total worldwide operations	106,459			86,064			99,656			92,413
Other corporate items:
Net periodic pension (cost) income							717			408
Interest expense	(3,324		)	(3,479		)	(3,457		)	(3,069		)
Interest income	277			161			634			73
Income from continuing operations before income taxes	$	103,412		$	82,746		$	97,550		$	89,825

For the nine months ended September 30,
2017 2016
Operating income (loss):
United States electrical construction and facilities services $ 109,735
$ 70,645
United States mechanical construction and facilities services 150,971
100,607
United States building services 60,375
55,658
United States industrial services 16,573
66,600
Total United States operations 337,654
293,510
United Kingdom building services 9,109
9,160
Corporate administration (63,755 ) (67,431 )
Restructuring expenses (954 ) (1,271 )
Total worldwide operations 282,054
233,968
Other corporate items:
Interest expense (9,464 ) (8,973 )
Interest income 607
518
Income from continuing operations before income taxes $ 273,197
$ 225,513



	For the six months ended June 30,
	2018			2017
Operating income (loss):
United States electrical construction and facilities services	$	71,836		$	63,152
United States mechanical construction and facilities services	97,175			93,525
United States building services	39,507			34,502
United States industrial services	4,537			21,417
Total United States operations	213,055			212,596
United Kingdom building services	8,371			4,236
Corporate administration	(42,395		)	(41,123		)
Restructuring expenses	(464		)	(908		)
Impairment loss on identifiable intangible assets	(907		)	—
Total worldwide operations	177,660			174,801
Other corporate items:
Net periodic pension (cost) income	1,454			794
Interest expense	(6,453		)	(6,140		)
Interest income	1,178			330
Income from continuing operations before income taxes	$	173,839		$	169,785

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EMCOR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1314 Segment Information - (Continued)


	September 30, 2017		December 31, 2016		June 30, 2018		December 31, 2017
Total assets:
United States electrical construction and facilities services	$	595,680	$	631,581	$	622,290	$	617,471
United States mechanical construction and facilities services	1,055,857		954,633		1,093,404		1,097,240
United States building services	774,449		753,434		804,025		764,085
United States industrial services	840,757		850,434		778,030		772,899
Total United States operations	3,266,743		3,190,082		3,297,749		3,251,695
United Kingdom building services	121,659		105,081		144,959		131,806
Corporate administration	577,919		557,275		426,693		582,403
Total worldwide operations	$	3,966,321	$	3,852,438	$	3,869,401	$	3,965,904

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ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

We are one of the largest electrical and mechanical construction and facilities services firms in the United States. In addition, we provide a number of building services and industrial services. Our services are provided to a broad range of commercial, industrial, utility and institutional customers through approximately 75 operating subsidiaries and joint venture entities. Our offices are located in the United States and the United Kingdom.

~~Impact of Acquisitions~~

In order to provide a more meaningful period-over-period discussion of our operating results, we may discuss amounts generated or incurred (revenues, gross profit, selling, general and administrative expenses and operating income) from companies acquired. The amounts discussed reflect the acquired companies’ operating results in the current reported period only for the time period these entities were not owned by EMCOR in the comparable prior reported period.

~~Overview~~

~~The following table presents selected financial data for the three months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~ ~~(in thousands, except percentages and per share data):~~

For the three months ended
September 30,
2017 2016
Revenues $ 1,886,691
$ 1,923,174
Revenues (decrease) increase from prior year (1.9 )% 13.2 %
Operating income $ 106,459
$ 86,064
Operating income as a percentage of revenues 5.6 % 4.5 %
Net income attributable to EMCOR Group, Inc. $ 64,597
$ 51,531
Diluted earnings per common share from continuing operations $ 1.09
$ 0.85

The results for the 2017 third quarter set new company records in terms of quarterly operating income, net income attributable to EMCOR Group, Inc. and diluted earnings per common share from continuing operations, despite the challenges faced by our United States industrial services segment during the quarter. In addition, our operating margin (operating income as a percentage of revenues) was a new company record for a third quarter. The decrease in revenues for the 2017 third quarter was primarily attributable to our field services operations within our United States industrial services segment due to: (a) decreased demand for our specialty services offerings, including large project activity, and (b) a decrease in turnaround activities, as the third quarter of 2017 was negatively impacted by Hurricane Harvey, which resulted in the deferral of, and may lead to the potential cancellation of, previously scheduled turnaround projects. In addition, revenues decreased within our United States building services segment, primarily attributable to: (a) the loss of certain contracts not renewed pursuant to rebid within our commercial and government site-based services operations and (b) a reduction in large project activity within our energy services operations. These decreases were partially offset by an increase in revenues from our United States mechanical construction and facilities services segment due to increased activity within the healthcare, hospitality and commercial market sectors. In addition, companies acquired in 2017, which are reported in our United States mechanical construction and facilities services segment and our United States building services segment, generated incremental revenues of $34.7 million.

Operating income and operating margin increased within all of our reportable segments, except for our United States industrial services segment. The overall increase in operating income and operating margin was mainly attributable to the results of our domestic construction segments, which were favorably impacted by an increase in gross profit within the majority of the market sectors in which we operate. In addition, the results of our United States electrical construction and facilities services segment for the 2016 third quarter were negatively impacted by $6.9 million of losses incurred on a transportation construction project. Companies acquired in 2017 contributed incremental operating income of $1.3 million, inclusive of $2.3 million of amortization expense associated with identifiable intangible assets.

Operating Segments

Impact of Acquisitions

In order to provide a more meaningful period-over-period discussion of our operating results, we may discuss amounts generated or incurred (revenues, gross profit, selling, general and administrative expenses and operating income) by companies acquired. The amounts discussed reflect the acquired companies’ operating results in the current reported period only for the time period these entities were not owned by EMCOR in the comparable prior reported period.

Overview

The following table presents selected financial data for the three months ended June 30, 2018 and 2017 (in thousands, except percentages and per share data):



	For the three months ended June 30,
	2018			2017
Revenues	$	1,953,886		$	1,895,937
Revenues increase (decrease) from prior year	3.1		%	(1.9		)%
Operating income	$	99,656		$	92,413
Operating income as a percentage of revenues	5.1		%	4.9		%
Net income attributable to EMCOR Group, Inc.	$	70,816		$	56,758
Diluted earnings per common share from continuing operations	$	1.21		$	0.95

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The results for the 2018 second quarter represented strong operating performance from the majority of our reporting segments, which culminated in new company records in terms of quarterly revenues, operating income, net income attributable to EMCOR Group, Inc. and diluted earnings per common share from continuing operations.

The increase in revenues for the 2018 second quarter was primarily attributable to revenue growth within all of our reportable segments, except for our United States industrial services segment and our United States mechanical construction and facilities services segment. In addition, companies acquired in 2018 and 2017, which are reported in our United States mechanical construction and facilities services segment and our United States building services segment, generated incremental revenues of $16.5 million.

The overall increase in operating income and operating margin (operating income as a percentage of revenues) was attributable to the results of all of our reportable segments, except for our United States industrial services segment. Companies acquired in 2018 and 2017 contributed incremental operating income of $1.6 million, inclusive of $0.5 million of amortization expense associated with identifiable intangible assets. The results for the 2017 second quarter included the recovery of certain contract costs previously disputed on a project that was completed in 2016 within our United States mechanical construction and facilities services segment, which resulted in $11.6 million of gross profit and favorably impacted consolidated operating margin by 0.6%.

The increase in net income attributable to EMCOR Group, Inc. and diluted earnings per common share from continuing operations for the second quarter of 2018 was due to an increase in operating income and the reduction in the U.S federal corporate tax rate due to the enactment of the Tax Cuts and Jobs Act legislation (the “Tax Act”).

We acquired two companies in 2018, each for an immaterial amount. One company provides mobile mechanical services and fire protection services within the Southern region of the United States, and its results of operations have been included in our United States building services segment. The results of operations for the other company acquired, which have also been included in our United States building services segment, were de minimis.

Results of Operations

Revenues

The following tables present our operating segment revenues from unrelated entities and their respective percentages of total revenues (in thousands, except for percentages):


	For the three months ended September 30,								For the three months ended June 30,
	2017		% of Total		2016		% of Total		2018		% of Total		2017		% of Total
Revenues:
United States electrical construction and facilities services	$	457,919	24	%	$	458,553	24	%	$	479,542	25	%	$	449,222	24	%
United States mechanical construction and facilities services	760,084		40	%	691,818		36	%	740,657		38	%	741,817		39	%
United States building services	437,107		23	%	460,715		24	%	461,033		24	%	438,264		23	%
United States industrial services	145,679		8	%	239,052		12	%	167,147		9	%	187,476		10	%
Total United States operations	1,800,789		95	%	1,850,138		96	%	1,848,379		95	%	1,816,779		96	%
United Kingdom building services	85,902		5	%	73,036		4	%	105,507		5	%	79,158		4	%
Total worldwide operations	$	1,886,691	100	%	$	1,923,174	100	%	$	1,953,886	100	%	$	1,895,937	100	%


	For the nine months ended September 30,								For the six months ended June 30,
	2017		% of Total		2016		% of Total		2018		% of Total		2017		% of Total
Revenues:
United States electrical construction and facilities services	$	1,350,157	24	%	$	1,227,474	22	%	$	934,294	24	%	$	892,238	24	%
United States mechanical construction and facilities services	2,173,030		38	%	1,925,793		34	%	1,439,504		37	%	1,412,946		37	%
United States building services	1,315,401		23	%	1,366,973		24	%	915,785		24	%	878,294		23	%
United States industrial services	591,694		10	%	830,064		15	%	352,294		9	%	446,015		12	%
Total United States operations	5,430,282		96	%	5,350,304		96	%	3,641,877		94	%	3,629,493		96	%
United Kingdom building services	244,078		4	%	251,256		4	%	212,397		6	%	158,176		4	%
Total worldwide operations	$	5,674,360	100	%	$	5,601,560	100	%	$	3,854,274	100	%	$	3,787,669	100	%

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As described below in more detail, our revenues for the three months ended ~~September~~June 30, ~~2017 decreased~~2018 increased to ~~$1.89~~$1.95 billion compared to ~~$1.92~~$1.90 billion for the three months ended ~~September~~June 30, ~~2016,~~2017, and our revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 increased to ~~$5.67~~$3.85 billion compared to ~~$5.60~~$3.79 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The ~~decrease~~increase in revenues for the three months ended ~~September~~June 30, ~~2017~~2018 was primarily attributable to ~~a decrease in~~increased revenues from all of our reportable segments, except for our United States industrial services segment and ~~our United States building services segment, partially offset by an increase in revenues from~~ our United States mechanical construction and facilities services segment. The increase in revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was primarily attributable to increased revenues from ~~both~~all of our ~~domestic construction segments.~~reportable segments, except for our United States industrial services segment. Companies acquired in ~~2017~~2018 and ~~2016,~~2017, which are reported in ~~our United States electrical construction and facilities services segment,~~ our United States mechanical construction and facilities services segment and our United States building services segment, generated incremental revenues of ~~$34.7~~$16.5 million and ~~$156.5~~$36.0 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, respectively.

Revenues of our United States electrical construction and facilities services segment were ~~$457.9~~$479.5 million and ~~$1,350.2~~$934.3 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, respectively, compared to revenues of ~~$458.6~~$449.2 million and ~~$1,227.5~~$892.2 million for the three and ~~nine~~six months ended ~~September 30, 2016, respectively. The decrease in revenues for the three months ended September~~June 30, 2017, was primarily attributable to a decrease in revenues from electrical construction projects with customers in the industrial and power generation industries, partially offset by an increase in revenues from institutional and commercial construction projects.respectively. The increase in revenues for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2018 was primarily attributable to an increase in revenues from institutional, commercial and water and wastewater construction projects, partially offset by a decrease in revenues from transportation construction projects. ~~The~~In addition, revenues for the six months ended June 30, 2018 benefited from a significant increase in revenues ~~within the commercial market sector for both periods was primarily as a result of work performed on numerous telecommunication~~from healthcare construction projects. The results for the nine months ended September 30, 2017 included $50.4 million of incremental revenues generated by the acquisition of Ardent Services, L.L.C. and Rabalais Constructors, LLC (collectively, “Ardent”).

Our United States mechanical construction and facilities services segment revenues for the three months ended ~~September~~June 30, ~~2017~~2018 were ~~$760.1~~$740.7 million, a ~~$68.3~~$1.2 million decrease compared to revenues of $741.8 million for the three months ended June 30, 2017. Revenues of this segment for the six months ended June 30, 2018 were $1,439.5 million, a $26.6 million increase compared to revenues of ~~$691.8~~$1,412.9 million for the six months ended June 30, 2017. The decrease in revenues for the three months ended ~~September~~June 30, ~~2016. Revenues~~2018 was primarily attributable to a decrease in revenues from large food processing construction projects that were substantially complete at the end of ~~this segment for the nine months ended September 30,~~ 2017, ~~were $2,173.0 million, a $247.2 million~~partially offset by an increase ~~compared to~~in revenues ~~of $1,925.8 million for the nine months ended September 30, 2016.~~from commercial construction projects. The increase in revenues for ~~both periods~~the six months ended June 30, 2018 was primarily attributable to an increase in revenues from ~~healthcare,~~ commercial, institutional and ~~hospitality construction projects. In addition, revenues for the nine months ended September 30, 2017 benefited from an increase in revenues from water and wastewater~~healthcare construction projects, partially offset by a decrease in revenues from ~~institutional~~large food processing construction projects. The results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 included ~~$17.9~~$10.3 million and ~~$55.7~~$20.5 million, respectively, of incremental revenues generated by a company acquired in 2017. This segment’s results for the three and six months ended June 30, 2017 included $11.6 million and $18.1 million of revenues as a result of the recovery of certain contract costs previously disputed on a project that was completed in 2016.

Revenues of our United States building services segment for the three months ended ~~September~~June 30, ~~2017 decreased~~2018 increased by ~~$23.6~~$22.8 million compared to the three months ended ~~September~~June 30, ~~2016,~~2017, and revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased~~2018 increased by ~~$51.6~~$37.5 million compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The ~~decrease~~increase in revenues for both periods was ~~primarily attributable~~due to: (a) greater project and repair service activities within our mobile mechanical services operations, (b) large project activity within our energy services operations, (c) increased activity from government site-based operations, partially as a result of new project awards, and (d) an increase in snow removal activity within our commercial site-based services operations. These increases were partially offset by a decrease in revenues due to the loss of certain contracts not renewed pursuant to rebid within our commercial and government site-based services operations and (b) a reduction in large project activity within our energy services operations. In addition, the decrease in revenues for the nine months ended September 30, 2017 was partially due to a reduction in snow removal activities within our commercial site-based services operations. ~~These decreases were partially offset by an increase in revenues from our mobile mechanical services operations as a result of greater project, service and controls activities.~~ The results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 included ~~$16.8~~$6.2 million and ~~$50.4~~$15.5 million, respectively, of incremental revenues generated by companies acquired in ~~2017~~2018 and ~~2016.~~

2017.

Revenues of our United States industrial services segment for the three months ended ~~September~~June 30, ~~2017~~2018 decreased by ~~$93.4~~$20.3 million compared to the three months ended ~~September~~June 30, ~~2016,~~2017, and revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 decreased by ~~$238.4~~$93.7 million compared to the ~~nine~~six months ended ~~September~~June 30, 2016. This segment’s results for the three months ended September 30, 2017 were negatively impacted by Hurricane Harvey, which resulted in the deferral of, and may lead to the potential cancellation of, previously scheduled turnaround projects. In addition, the2017. The decrease in revenues for the three and six months ended June 30, 2018 was attributable to a decrease in revenues from our field services operations, as the results of 2017 included large turnaround project activity that did not repeat in 2018. In addition, revenues for the six months ended June 30, 2018 from our field services operations were impacted by the effects of Hurricane Harvey in 2017, which altered the timing of previously scheduled maintenance activities with our customers in 2018. The decrease in turnaround activities from our field services operations for both periods was ~~attributable to decreased large project activity~~partially offset by an increase in revenues from our ~~specialty~~shop services ~~offerings within~~operations due to an increase in demand for our ~~field services operations.~~cleaning and repair services.

Our United Kingdom building services segment revenues were ~~$85.9~~$105.5 million for the three months ended ~~September~~June 30, ~~2017~~2018 compared to revenues of ~~$73.0~~$79.2 million for the three months ended ~~September~~June 30, ~~2016.~~2017. For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, revenues for this segment were ~~$244.1~~$212.4 million compared to revenues of ~~$251.3~~$158.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. This segment’s increase in revenues for both periods was the result of increased project activity with existing customers, as well as new contract awards within the commercial, institutional and water and wastewater market sectors. In addition, this segment’s revenues for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 were ~~negatively~~positively impacted by ~~$0.3~~an increase of $6.4 million and ~~$22.1~~$18.9 million, respectively, related to the effect of ~~unfavorable~~favorable exchange rates for the British pound versus the United States dollar. The unfavorable exchange rates for the nine months ended September 30, 2017 resulted, in part, from the decision by the United Kingdom to exit the European Union. Excluding the impact of unfavorable exchange rates, the increase in revenues for both periods was the result of increased revenues from new contract awards within the commercial and institutional market sectors, partially offset by a decrease in project activity with existing customers.

~~Backlog~~

~~The following table presents our operating segment backlog from unrelated entities and their respective percentages of total backlog (in thousands, except for percentages):~~

September 30, 2017
% of
Total
December 31, 2016
% of
Total
September 30, 2016
% of
Total
Backlog:
United States electrical construction and facilities services $ 1,219,755
31 % $ 1,221,237
31 % $ 1,154,939
30 %
United States mechanical construction and facilities services 1,816,413
46 % 1,818,536
47 % 1,834,335
47 %
United States building services 701,569
18 % 663,340
17 % 706,188
18 %
United States industrial services 57,476
1 % 50,279
1 % 51,200
1 %
Total United States operations 3,795,213
96 % 3,753,392
96 % 3,746,662
96 %
United Kingdom building services 167,955
4 % 149,530
4 % 156,032
4 %
Total worldwide operations $ 3,963,168
100 % $ 3,902,922
100 % $ 3,902,694
100 %

Our backlog at September 30, 2017 was $3.96 billion compared to $3.90 billion at both December 31, 2016 and September 30, 2016. The increase in backlog at September 30, 2017 compared to backlog at December 31, 2016 was attributable to an increase in backlog from our United States building services segment, our United Kingdom building services segment and our United States industrial services segment, inclusive of acquisitions. Backlog increases with awards of new contracts and decreases as we perform work on existing contracts. Backlog is not a term recognized under United States generally accepted accounting principles; however, it is a common measurement used in our industry. We include a project within our backlog at such time as a contract is awarded and agreement on contract terms has been reached. Backlog includes unrecognized revenues to be realized from uncompleted construction contracts plus unrecognized revenues expected to be realized over the remaining term of services contracts. However, we do not include in backlog contracts for which we are paid on a time and material basis and a fixed amount cannot be determined, and if the remaining term of a services contract exceeds 12 months, the unrecognized revenues attributable to such contract included in backlog are limited to only the next 12 months of revenues provided for in the contract award. Our backlog also includes amounts related to services contracts for which a fixed price contract value is not assigned when a reasonable estimate of total revenues can be made from budgeted amounts agreed to with our customer. Our backlog is comprised of: (a) original contract amounts, (b) change orders for which we have received written confirmations from our customers, (c) pending change orders for which we expect to receive confirmations in the ordinary course of business and (d) claim amounts that we have made against customers for which we have determined we have a legal basis under existing contractual arrangements and as to which we consider recovery to be probable. Such claim amounts were immaterial for all periods presented. Our backlog does not include anticipated revenues from unconsolidated joint ventures or variable interest entities nor anticipated revenues from pass-through costs on contracts for which we are acting in the capacity of an agent and which are reported on the net basis. We believe our backlog is firm, although many contracts are subject to cancellation at the election of our customers. Historically, cancellations have not had a material adverse effect on us.

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Cost of sales and Gross profit

The following table presents our cost of sales, gross profit (revenues less cost of sales) and gross profit margin (gross profit as a percentage of revenues) (in thousands, except for percentages):


	For the three months ended September 30,						For the nine months ended September 30,						For the three months ended June 30,						For the six months ended June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Cost of sales	$	1,591,621		$	1,655,130		$	4,838,449		$	4,835,667		$	1,663,042		$	1,621,436		$	3,294,311		$	3,246,828
Gross profit	$	295,070		$	268,044		$	835,911		$	765,893		$	290,844		$	274,501		$	559,963		$	540,841
Gross profit, as a percentage of revenues	15.6		%	13.9		%	14.7		%	13.7		%	14.9		%	14.5		%	14.5		%	14.3		%

Our gross profit increased by ~~$27.0~~$16.3 million for the three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016.~~2017. Gross profit increased by ~~$70.0~~$19.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. Our gross profit margin was ~~15.6%~~14.9% and ~~13.9%~~14.5% for the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, respectively. Gross profit margin was ~~14.7%~~14.5% and ~~13.7%~~14.3% for the ~~nine~~six months ended ~~September~~June 30, 2018 and 2017, ~~and 2016,~~ respectively. ~~Gross profit and~~The increase in gross profit ~~margin~~ for both periods ~~were favorably impacted by~~was primarily attributable to improved operating performance within all of our ~~domestic~~reportable segments, except for our United States industrial services segment. The ~~Company’s gross profit and~~increase in gross profit margin for the three ~~and nine~~ months ended ~~September~~June 30, ~~2016 were negatively impacted by $6.9 million~~2018 was primarily attributable to improved operating performance within all of our reportable segments, except for our United States industrial services segment and ~~$17.4 million, respectively, of losses incurred on a transportation construction project within~~ our United States electrical construction and facilities services ~~segment, which resulted~~segment. The increase in ~~a 0.3% negative impact on~~gross profit margin for the ~~Company’s~~six months ended June 30, 2018 was primarily attributable to improved operating performance within all of our reportable segments, except for our United States industrial services segment. In addition, the increase in gross profit margin for both ~~prior year periods. In addition, gross~~periods was partially due to the favorable resolution of uncertainties on certain construction projects at or nearing completion. Gross profit and gross profit margin within our United States mechanical construction and facilities services segment for the ~~nine months ended September 30,~~ 2017 periods were favorably impacted by the recovery of certain contract costs previously disputed on a project that was completed in 2016, resulting in $11.6 million and $18.1 million of gross profit and a ~~0.2%~~0.5% and a 0.4% favorable impact on the Company’s gross profit ~~margin.~~margin for the three and six months ended June 30, 2017, respectively.

Selling, general and administrative expenses

The following table presents our selling, general and administrative expenses and SG&A margin (selling, general and administrative expenses as a percentage of revenues) (in thousands, except for percentages):


	For the three months ended September 30,						For the nine months ended September 30,						For the three months ended June 30,						For the six months ended June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Selling, general and administrative expenses	$	188,565		$	181,441		$	552,903		$	530,654		$	189,907		$	181,745		$	380,932		$	365,132
Selling, general and administrative expenses, as a percentage of revenues	10.0		%	9.4		%	9.7		%	9.5		%	9.7		%	9.6		%	9.9		%	9.6		%

Our selling, general and administrative expenses for the three months ended ~~September~~June 30, ~~2017~~2018 increased by ~~$7.1~~$8.2 million to ~~$188.6~~$189.9 million compared to ~~$181.4~~$181.7 million for the three months ended ~~September~~June 30, ~~2016.~~2017. Selling, general and administrative expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 increased by ~~$22.2~~$15.8 million to ~~$552.9~~$380.9 million compared to ~~$530.7~~$365.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The increase in selling, general and administrative expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 included ~~$3.8~~$2.7 million and ~~$20.0~~$4.8 million, respectively, of incremental expenses directly related to companies acquired in ~~2017~~2018 and ~~2016,~~2017, including amortization expense attributable to identifiable intangible assets of ~~$0.7~~$0.3 million and ~~$3.1~~$0.5 million, respectively. In addition to the impact of acquisitions, selling, general and administrative expenses increased ~~in both periods~~ due to: (a) an increase in incentive compensation expense, due to higher projected annual operating results than in the same prior year periods, (b) an increase in salaries, ~~primarily within our United States mechanical construction and facilities segment,~~ partially as a result of an increase in headcount due to higher revenues than in the same prior year periods, ~~(b) an increase in the provision for doubtful accounts, primarily within our United States building services segment~~ and (c) ~~an increase~~increases in medical insurance costs. These increases were partially offset by lower incentive compensation expense for both periods partially due to the lower projected annual operating results for our United States industrial services segment than in the same prior year period, which resulted in decreased accruals for this segment’s incentive compensation plans. In addition,other selling, general and administrative expenses, ~~for the nine months ended September 30, 2016 included $3.8 million of transaction costs associated with the acquisition of Ardent.~~such as legal, information technology and medical costs. Selling, general and administrative expenses as a percentage of revenues were ~~10.0%~~9.7% and ~~9.7%~~9.9% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, respectively, compared to ~~9.4% and 9.5%~~9.6% for both the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, respectively.~~2017. The increase in SG&A margin for the three and six months ended ~~September~~June 30, ~~2017~~2018 was partially due ~~to: (a)~~to unabsorbed overhead costs within our United States industrial services segment due to the ~~deferral~~lack of ~~certain~~significant turnaround ~~activity as a result of Hurricane Harvey and (b) an increase in both the provision for doubtful accounts and medical insurance costs as discussed above.~~activity.

Table of Contents

Restructuring expenses

Restructuring expenses, ~~primarily~~ relating to employee severance obligations, were ~~less than $0.1~~$0.4 million and ~~$1.0~~$0.5 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, respectively, and ~~$0.5~~$0.3 million and ~~$1.3~~$0.9 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, respectively. As of ~~September~~June 30, ~~2017,~~2018, the balance of these restructuring obligations yet to be paid was ~~less than $0.1~~$0.4 million, and the majority of such amount is expected to be paid during the remainder of ~~2017.~~2018. No material expenses in connection with restructuring from continuing operations are expected to be incurred during the remainder of ~~2017.~~2018.

Operating income

The following tables present our operating income (loss) and operating income (loss) as a percentage of segment revenues from unrelated entities (in thousands, except for percentages):


	For the three months ended September 30,										For the three months ended June 30,
	2017			% of Segment Revenues		2016			% of Segment Revenues		2018			% of Segment Revenues		2017			% of Segment Revenues
Operating income (loss):
United States electrical construction and facilities services	$	46,583		10.2	%	$	30,927		6.7	%	$	35,985		7.5	%	$	32,118		7.1	%
United States mechanical construction and facilities services	57,484			7.6	%	38,890			5.6	%	57,583			7.8	%	53,073			7.2	%
United States building services	25,981			5.9	%	23,125			5.0	%	22,430			4.9	%	20,237			4.6	%
United States industrial services	(4,844		)	(3.3	)%	14,586			6.1	%	1,068			0.6	%	4,373			2.3	%
Total United States operations	125,204			7.0	%	107,528			5.8	%	117,066			6.3	%	109,801			6.0	%
United Kingdom building services	3,933			4.6	%	2,591			3.5	%	4,601			4.4	%	3,018			3.8	%
Corporate administration	(22,632		)	—		(23,516		)	—		(20,730		)	—		(20,063		)	—
Restructuring expenses	(46		)	—		(539		)	—		(374		)	—		(343		)	—
Impairment on identifiable intangible assets											(907		)	—		—			—
Total worldwide operations	106,459			5.6	%	86,064			4.5	%	99,656			5.1	%	92,413			4.9	%
Other corporate items:
Net periodic pension (cost) income											717					408
Interest expense	(3,324		)			(3,479		)			(3,457		)			(3,069		)
Interest income	277					161					634					73
Income from continuing operations before income taxes	$	103,412				$	82,746				$	97,550				$	89,825


	For the nine months ended September 30,										For the six months ended June 30,
	2017			% of Segment Revenues		2016			% of Segment Revenues		2018			% of Segment Revenues		2017			% of Segment Revenues
Operating income (loss):
United States electrical construction and facilities services	$	109,735		8.1	%	$	70,645		5.8	%	$	71,836		7.7	%	$	63,152		7.1	%
United States mechanical construction and facilities services	150,971			6.9	%	100,607			5.2	%	97,175			6.8	%	93,525			6.6	%
United States building services	60,375			4.6	%	55,658			4.1	%	39,507			4.3	%	34,502			3.9	%
United States industrial services	16,573			2.8	%	66,600			8.0	%	4,537			1.3	%	21,417			4.8	%
Total United States operations	337,654			6.2	%	293,510			5.5	%	213,055			5.9	%	212,596			5.9	%
United Kingdom building services	9,109			3.7	%	9,160			3.6	%	8,371			3.9	%	4,236			2.7	%
Corporate administration	(63,755		)	—		(67,431		)	—		(42,395		)	—		(41,123		)	—
Restructuring expenses	(954		)	—		(1,271		)	—		(464		)	—		(908		)	—
Impairment on identifiable intangible assets											(907		)	—		—			—
Total worldwide operations	282,054			5.0	%	233,968			4.2	%	177,660			4.6	%	174,801			4.6	%
Other corporate items:
Net periodic pension (cost) income											1,454					794
Interest expense	(9,464		)			(8,973		)			(6,453		)			(6,140		)
Interest income	607					518					1,178					330
Income from continuing operations before income taxes	$	273,197				$	225,513				$	173,839				$	169,785

Table of Contents

As described below in more detail, operating income was ~~$106.5~~$99.7 million and ~~$282.1~~$177.7 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, respectively, compared to ~~$86.1~~$92.4 million and ~~$234.0~~$174.8 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, respectively. Operating margin was ~~5.6%~~5.1% and ~~5.0%~~4.6% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, respectively, compared to ~~4.5%~~4.9% and ~~4.2%~~4.6% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, respectively. Operating income and operating margin for the ~~nine months ended September 30,~~ 2017 periods benefited from the recovery of certain contract costs previously

disputed on a project completed in 2016 within our United States mechanical construction and facilities services segment, which resulted in a ~~0.3%~~0.6% and a 0.4% favorable impact on the Company’s operating ~~margin.~~margin for the three and six months ended June 30, 2017, respectively.

Operating income of our United States electrical construction and facilities services segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~$46.6~~$36.0 million and ~~$109.7~~$71.8 million, respectively, compared to operating income of ~~$30.9 million~~$32.1million and ~~$70.6~~$63.2 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, respectively. The increase in operating income for both periods was attributable to an increase in gross profit ~~from: (a) the transportation market sector, due to large project activity, (b) the~~from manufacturing, hospitality and commercial ~~market sector, primarily as a result of work performed on numerous telecommunication~~ construction ~~projects, and (c) construction projects within the institutional market sector.~~projects. In addition, ~~the results~~operating income for the ~~three and nine~~six months ended ~~September~~June 30, ~~2016 included losses of $6.9 million and $17.4 million, respectively, incurred on~~2018 benefited from a significant increase in gross profit from transportation construction ~~project in the Northeastern United States.~~projects. The increase in operating margin for ~~both 2017 periods~~the three months ended June 30, 2018 was attributable to a decrease in the ratio of selling, general and administrative expenses to revenues. The increase in operating margin for the six months ended June 30, 2018 was attributable to improved operating performance, partially as a result of increased gross profit margin from ~~numerous~~ construction projects within the ~~commercial and~~ transportation market sectors. Operating margin for the prior year periods was negatively impacted by 1.4% and 1.3% for the three and nine months ended September 30, 2016, respectively, as a result of the losses incurred on the construction project discussed above.sector.

Our United States mechanical construction and facilities services segment operating income for the three months ended ~~September~~June 30, ~~2017~~2018 was ~~$57.5~~$57.6 million, ~~an $18.6~~a $4.5 million increase compared to operating income of ~~$38.9~~$53.1 million for the three months ended ~~September~~June 30, ~~2016.~~2017. Operating income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~$151.0~~$97.2 million, a ~~$50.4~~$3.7 million increase compared to operating income of ~~$100.6~~$93.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The increase in operating income for both periods was attributable to an increase in gross profit from commercial, hospitality and manufacturing construction projects, partially offset by a decrease in gross profit from institutional construction projects. A company acquired in 2017 contributed incremental operating income of $1.1 million and $2.0 million, inclusive of $0.2 million and $0.5 million of amortization expense associated with identifiable intangible assets, for the ~~majority of the market sectors in which we operate. Additionally, this~~three and six months ended June 30, 2018, respectively. This segment’s operating income for the ~~nine months ended September 30,~~ 2017 periods benefited from the recovery of certain contract costs previously disputed on a project completed in 2016, which resulted in $11.6 million and $18.1 million of gross profit. A company acquired in 2017 contributed incremental operating income of $0.1 million and $1.3 million, net of $2.0 million and $6.1 million of amortization expense associated with identifiable intangible assets,profit for the three and ~~nine~~six months ended ~~September~~June 30, 2017, respectively. The increase in operating margin for both periods was attributable to an increase in gross profit margin. In addition, the increase in gross profit margin for both periods was partially due to the favorable resolution of uncertainties on certain construction projects at or nearing completion. The recovery of the disputed contract costs in 2017 discussed above favorably impacted this segment’s operating margin by ~~0.7%~~1.5% and 1.2% for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017.~~2017, respectively.

Operating income of our United States building services segment for the three months ended ~~September~~June 30, ~~2017~~2018 increased by ~~$2.9~~$2.2 million compared to operating income for the three months ended ~~September~~June 30, ~~2016,~~2017, and its operating income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 increased by ~~$4.7~~$5.0 million compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The increase in operating income for ~~the three months ended September 30, 2017~~both periods was primarily attributable to increases in operating income from: (a) our government site-based services operations, partially as a result of new contract awards, (b) our energy services operations, due to large project activity, and ~~(b)~~(c) our commercial site-based services operations, partially as a result of ~~decreased selling, general and administrative expenses due to restructuring activities. The~~an increase in ~~operating income for the nine months ended September 30, 2017 was due to increases in operating income from: (a)~~snow removal activities from our mobile mechanical services operations, as a result of increases in gross profit from project, service and control activities, and (b) our energy services operations. The increase in operating income for our energy services operations for both periods primarily resulted from improved operating performance, as the results for the three months ended September 30, 2016 included a loss incurredcontracts that are based on a ~~large project.~~per snow event basis. Additionally, companies acquired in ~~2017~~2018 and ~~2016~~2017 within our mobile mechanical services operations, contributed incremental operating income of ~~$1.2~~$0.5 million and ~~$2.6~~$1.0 million, ~~net~~inclusive of $0.3 million and ~~$1.2~~$0.5 million of amortization expense associated with identifiable intangible assets, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, respectively. The increase in operating income for the nine months ended September 30, 2017 was partially offset by a decrease in gross profit from our commercial site-based services operations partially due to a reduction in snow removal activities. The increase in operating margin for both periods was attributable to an increase in gross profit margin.

Our United States industrial services segment operating ~~loss~~income for the three months ended ~~September~~June 30, ~~2017~~2018 was ~~$4.8~~$1.1 million compared to operating income of ~~$14.6~~$4.4 million for the three months ended ~~September~~June 30, ~~2016.~~2017. Operating income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~$16.6~~$4.5 million ~~a $50.0 million decrease~~ compared to operating income of ~~$66.6 million~~$21.4 for the ~~nine~~six months ended ~~September~~June 30, 2016. This segment’s results for the three months ended September 30, 2017 were negatively impacted by Hurricane Harvey, which resulted in the deferral of, and may lead to the potential cancellation of, previously scheduled turnaround projects. In addition, the2017. The decrease in operating income for both periods was attributable to a ~~decrease in gross profit from specialty services offerings~~lack of large turnaround projects within our field services operations. In addition, gross profit was negatively impacted by the mix of work in our field services operations, aswhich included a ~~result~~higher percentage of ~~reduced large project activity.~~small capital projects that generate lower gross profit margins than our typical turnaround work. Lastly, operating income for the six months ended June 30, 2018 was negatively impacted by Hurricane Harvey in 2017, which altered the timing of previously scheduled maintenance activities with our customers during the first quarter of 2018. The decrease in operating income from our field services operations was partially offset by an increase in operating income from our shop services operations, due to an increase in demand for our cleaning and repair services. The decrease in operating margin for both periods was attributable to a decrease in gross profit margin and an increase in the ratio of selling, general and administrative expenses to revenues. The increase in SG&A margin for the three and six months ended ~~September~~June 30, ~~2017~~2018 was primarily the result of unabsorbed overhead costs ~~as a result of the project deferrals~~ due to ~~Hurricane Harvey and lower specialty services revenues.~~the lack of significant turnaround projects.

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Our United Kingdom building services segment operating income was ~~$3.9~~$4.6 million for the three months ended June 30, 2018 compared to operating income of $3.0 million for the three months ended June 30, 2017. Operating income was $8.4 million for the six months ended June 30, 2018 compared to operating income of $4.2 million for the six months ended June 30, 2017. Operating income for both periods increased primarily due to an increase in gross profit from project activity with existing customers, as well as gross profit from new contract awards. This segment’s results included increases in operating income of $0.3 million and ~~$9.1~~$0.7 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, respectively, ~~compared to operating income of $2.6 million and $9.2 million for the three and~~

~~nine months ended September 30, 2016, respectively. This segment’s results included a decrease in operating income of $0.7 million for the nine months ended September 30, 2017~~ relating to the effect of ~~unfavorable~~favorable exchange rates for the British pound versus the United States dollar. Excluding the impact of exchange rates, operating income increased in both periods, primarily due to an increase in gross profit from new contract awards, partially offset by a decrease in gross profit from project activity. The increase in operating margin for the three and six months ended ~~September~~June 30, ~~2017~~2018 was attributable to an increase in gross profit margin and a decrease in SG&A margin.

Our corporate administration operating loss for the three months ended ~~September~~June 30, ~~2017~~2018 was ~~$22.6~~$20.7 million compared to ~~$23.5~~$20.1 million for the three months ended ~~September~~June 30, ~~2016.~~2017. Our corporate administration operating loss for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~$63.8~~$42.4 million compared to ~~$67.4~~$41.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The ~~decrease~~increase in corporate administration expenses for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2018 was ~~primarily~~ due to ~~a decrease~~an increase in ~~other professional fees,~~certain employment costs, such as ~~the same prior year period included $3.8 million of transaction costs associated with the acquisition of Ardent.~~salaries and incentive compensation, as well as an increase in information technology and legal costs.

Interest expense for the three months ended ~~September~~June 30, 2018 and 2017 ~~and 2016~~ was ~~$3.3~~$3.5 million and ~~$3.5~~$3.1 million, respectively.Interest expense for the ~~nine~~six months ended ~~September~~June 30, 2018 and 2017 ~~and 2016~~ was ~~$9.5~~$6.5 million and ~~$9.0~~$6.1 million, respectively.The increase in interest expense for the nine months ended September 30, 2017 was primarily due to increased outstanding borrowings in the first quarter of 2017 and a higher United States dollar LIBOR rate. Interest income for the three months ended ~~September~~June 30, 2018 and 2017 ~~and 2016~~ was ~~$0.3~~$0.6 million and ~~$0.2~~$0.1 million, respectively. Interest income for the ~~nine~~six months ended ~~September~~June 30, 2018 and 2017 ~~and 2016~~ was ~~$0.6~~$1.2 million and ~~$0.5~~$0.3 million, respectively. The increases in interest expense and interest income for both periods resulted from higher interest rates. The increase in interest expense was partially offset by the impact of reduced average outstanding borrowings.

For the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, our income tax provision from continuing operations was ~~$38.6~~$26.5 million and ~~$30.8~~$33.0 million, respectively, based on an effective income tax rate, before discrete items and less amounts attributable to noncontrolling interests, of ~~37.1%~~27.8% and ~~38.1%~~37.5%, respectively. The actual income tax rate on income from continuing operations, less amounts attributable to noncontrolling interests, for the three months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017, inclusive of discrete items, was ~~37.3%~~27.2% and ~~37.2%~~36.8%, respectively. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, our income tax provision from continuing operations was ~~$98.5~~$47.2 million and ~~$82.7~~$59.9 million, respectively, based on an effective income tax ~~rates,~~rate, before discrete items and less amounts attributable to noncontrolling interests, of ~~37.4%~~27.7% and ~~37.8%~~37.7%, respectively. The actual income tax ~~rates~~rate on income from continuing operations, less amounts attributable to noncontrolling interests, for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017, inclusive of discrete items, ~~were 36.0%~~was 27.1% and ~~36.7%~~35.3%, respectively. ~~The increase in the 2017 income tax provision was primarily due to increased income from continuing operations.~~ The decrease in the ~~2017~~2018 income tax provision and the 2018 actual income tax rate on income from continuing operations was primarily due to the ~~net impact of discrete items, inclusive~~enactment of the ~~reversal of reserves for previously unrecognized income tax benefits in the first quarter of 2017.~~Tax Act.

Discontinued operations

Remaining Unsatisfied Performance Obligations

The following table presents the transaction price allocated to remaining unsatisfied performance obligations (“remaining performance obligations”) in accordance with Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“ASC 606”) for each of our reportable segments and their respective percentage total of remaining performance obligations (in thousands, except for percentages):



	June 30, 2018		% of Total		March 31, 2018		% of Total
Remaining performance obligations:
United States electrical construction and facilities services	$	1,037,796	28	%	$	1,133,811	31	%
United States mechanical construction and facilities services	1,970,393		54	%	1,822,381		51	%
United States building services	451,960		12	%	424,196		12	%
United States industrial services	82,640		2	%	64,450		2	%
Total United States operations	3,542,789		96	%	3,444,838		96	%
United Kingdom building services	130,342		4	%	158,905		4	%
Total worldwide operations	$	3,673,131	100	%	$	3,603,743	100	%

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Our remaining performance obligations at June 30, 2018 were $3.67 billion. Remaining performance obligations increase with awards of new contracts and decrease as we perform work and recognize revenue on existing contracts. We include a project within our remaining performance obligations at such time as the project is awarded and agreement on contract terms has been reached. Our remaining performance obligations include amounts related to contracts for which a fixed price contract value is not assigned when a reasonable estimate of total transaction price can be made.

Remaining performance obligations include unrecognized revenues to be realized from uncompleted construction contracts. Although many of our construction contracts are subject to cancellation at the election of our customers, in accordance with industry practice, we do not limit the amount of unrecognized revenue included within remaining performance obligations due to the inherent substantial economic penalty that would be incurred by our customers upon cancellation. We believe our reported remaining performance obligations for our construction contracts are firm and contract cancellations have not had a material adverse effect on us.

Remaining performance obligations also include unrecognized revenues expected to be realized over the remaining term of service contracts. However, to the extent a service contract includes a cancellation clause which allows for the termination of such contract by either party without a substantive penalty, the remaining contract term, and therefore, the amount of unrecognized revenues included within remaining performance obligations, is limited to the notice period required for the termination.

Our remaining performance obligations at June 30, 2018 were $3.67 billion compared to $3.60 billion at March 31, 2018. The increase in remaining performance obligations at June 30, 2018 compared to March 31, 2018 was attributable to an increase in remaining performance obligations from all of our reportable segments, except for our United States electrical construction and facilities services segment and our United Kingdom building services segment.

Liquidity and Capital Resources

The following table presents our net cash ~~provided by (used in)~~used in operating activities, investing activities and financing activities (in thousands):

For the nine months ended
September 30,
2017 2016
Net cash provided by operating activities $ 238,284
$ 128,924
Net cash used in investing activities $ (106,712 ) $ (260,339 )
Net cash (used in) provided by financing activities $ (118,624 ) $ 154,341
Effect of exchange rate changes on cash and cash equivalents $ 2,931
$ (5,199 )



	For the six months ended June 30,
	2018			2017
Net cash (used in) provided by operating activities	$	(32,650	)	$	102,663
Net cash used in investing activities	$	(43,917	)	$	(98,763	)
Net cash used in financing activities	$	(82,504	)	$	(85,086	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	$	(1,121	)	$	1,739

Our consolidated cash balance, ~~increased~~including cash equivalents and restricted cash, decreased by approximately ~~$15.9~~$160.2 million from ~~$464.6~~$469.4 million at December 31, ~~2016~~2017 to ~~$480.5~~$309.2 million at ~~September~~June 30, ~~2017.~~2018. Net cash ~~provided by~~used in operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~$238.3~~$32.7 million compared to net cash provided by operating activities of ~~$128.9~~$102.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The ~~increase~~reduction in cash ~~provided by~~flows from operating activities was primarily due ~~to a $32.7 million~~to: (a) timing of cash receipts from our customers, including payments of advanced billings on our long-term construction contracts, (b) an increase in ~~net income~~payments for incentive awards, and ~~improved cash flows from accounts receivable.~~(c) an increase in payments to our vendors. Net cash used in investing activities was ~~$106.7~~$43.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to net cash used in investing activities of ~~$260.3~~$98.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. The decrease in net cash used in investing activities was primarily due to a reduction in payments for acquisitions of

businesses. Net cash flows from financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 decreased by approximately ~~$273.0~~$2.6 million compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016 primarily as a result of borrowings of $220.0 million under our revolving credit facility~~2017. The decrease in ~~the prior year. Net~~net cash used in financing activities ~~for the nine months ended September 30, 2017~~ was primarily due to a decrease in funds used for the repurchase of common ~~stock.~~stock, partially offset by payments for contingent consideration arrangements. Cash flows from discontinued operations were immaterial and are not expected to significantly affect future liquidity.

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The following is a summary of material contractual obligations and other commercial commitments (in millions):


			Payments Due by Period										Payments Due by Period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		After 5 years		Total		Less than 1 year		1-3 years		3-5 years		After 5 years
Revolving credit facility (including interest at 2.24%) ⁽¹⁾	$	135.9	$	2.8	$	5.7	$	127.4	$	—
Term loan (including interest at 2.24%)⁽¹⁾	311.4		21.6		42.2		247.6		—
Revolving credit facility (including interest at 3.09%) ⁽¹⁾											$	27.4	$	0.8	$	1.6	$	25.0	$	—
Term loan (including interest at 3.33%)⁽¹⁾											304.0		24.4		47.2		232.4		—
Capital lease obligations	5.1		1.5		3.0		0.6		—		4.7		1.7		2.6		0.4		—
Operating leases	293.6		67.0		111.0		67.1		48.5		298.3		74.8		117.6		63.4		42.5
Open purchase obligations ⁽²⁾	1,059.7		892.8		166.2		0.7		—		1,142.3		926.8		215.2		0.3		—
Other long-term obligations, including current portion ⁽³⁾	416.9		64.5		342.5		9.9		—		376.2		65.5		301.0		9.7		—
Liabilities related to uncertain income tax positions ⁽⁴⁾	2.1		—		—		—		2.1		0.9		—		—		—		0.9
Total Contractual Obligations	$	2,224.7	$	1,050.2	$	670.6	$	453.3	$	50.6	$	2,153.8	$	1,094.0	$	685.2	$	331.2	$	43.4

			Amount of Commitment Expiration by Period
Other Commercial Commitments	Total Committed		Less than 1 year		1-3 years		3-5 years		After 5 years
Letters of credit	$	112.1	$	112.1	$	—	$	—	$	—



			Amount of Commitment Expiration by Period
Other Commercial Commitments	Total Committed		Less than 1 year		1-3 years		3-5 years		After 5 years
Letters of credit	$	110.3	$	110.3	$	—	$	—	$	—

_________

(1)

On August 3, 2016, we entered into a $900.0 million revolving credit facility (the “2016 Revolving Credit Facility”) and a $400.0 million term loan (the “2016 Term Loan”) (collectively referred to as the “2016 Credit Agreement”). The proceeds of the 2016 Term Loan were used to repay amounts drawn under our prior credit agreement. As of ~~September~~June 30, ~~2017,~~2018, the amount outstanding under the 2016 Term Loan was ~~$288.6~~$277.2 million. As of ~~September~~June 30, ~~2017,~~2018, there were borrowings outstanding of ~~$125.0~~$25.0 million under the 2016 Revolving Credit Facility.


(2)	Represents open purchase orders for material and subcontracting costs related to construction and services contracts. These purchase orders are not reflected in EMCOR’s Condensed Consolidated Balance Sheets and should not impact future cash flows, as amounts should be recovered through customer billings.

(3)

Represents primarily insurance related liabilities and liabilities for deferred income taxes, incentive compensation and deferred compensation, classified as other long-term liabilities in the Condensed Consolidated Balance Sheets. Cash payments for insurance and deferred compensation related liabilities may be payable beyond three years, but it is not practical to estimate these payments; therefore, these liabilities are reflected in the 1-3 years payment period. We provide funding to our post retirement plans based on at least the minimum funding required by applicable regulations. In determining the minimum required funding, we utilize current actuarial assumptions and exchange rates to forecast estimates of amounts that may be payable for up to five years in the future. In our judgment, minimum funding estimates beyond a five year time horizon cannot be reliably estimated and, therefore, have not been included in the table.


(4)	Includes ~~$0.2~~$0.1 million of accrued interest.

the 2016 Credit Agreement bear interest at (1) a base rate plus a margin of 0.00% to 0.75%, based on certain financial tests, or (2) United States dollar LIBOR (~~1.24%~~2.09% and 2.33% at ~~September~~June 30, ~~2017~~)2018 for our 2016 Revolving Credit Facility and our 2016 Term Loan, respectively) plus 1.00% to 1.75%, based on certain financial tests. The base rate is determined by the greater of (a) the prime commercial lending rate announced by Bank of Montreal from time to time ~~(4.25%~~(5.00% at ~~September~~June 30, ~~2017)~~2018), (b) the federal funds effective rate, plus ½ of 1.00%, (c) the daily one month LIBOR rate, plus 1.00%, or (d) 0.00%. The interest ~~rate~~rates in effect at ~~September~~June 30, ~~2017 was 2.24%.~~2018 were 3.09% and 3.33% for our 2016 Revolving Credit Facility and our 2016 Term Loan, respectively. Fees for letters of credit issued under the 2016 Revolving Credit Facility range from 1.00% to 1.75% of the respective face amounts of outstanding letters of credit and are computed based on certain financial tests. ~~We capitalized an additional $3.0 million of debt issuance costs associated with the 2016 Credit Agreement.~~ Debt issuance costs are

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amortized over the life of the agreement and are included as part of interest expense. The 2016 Term Loan previously required us to make principal payments of $5.0 million on the last day of March, June, September and December of each year, which commenced with the calendar quarter ended December 31, 2016. On December 30, 2016, we made a payment of $100.0 million, of which $5.0 million represented our required quarterly payment and $95.0 million represented a prepayment of outstanding principal. Such prepayment was applied against the remaining mandatory quarterly payments on a ratable basis. As a result, commencing with the calendar quarter ended March 31, 2017, our required quarterly payment has been reduced to $3.8 million. All unpaid principal and interest is due on August 3, 2021. As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, the balance of the 2016 Term Loan was ~~$288.6~~$277.2 million and ~~$300.0~~$284.8 million, respectively. As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, we had approximately $~~111.8~~110.3 million and $~~91.9~~110.1 million of letters of credit outstanding, respectively. There were ~~$125.0~~$25.0 million in borrowings outstanding under the 2016 Revolving Credit Facility as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016.~~2017.

The terms of our construction contracts frequently require that we obtain from surety companies (“Surety Companies”) and provide to our customers payment and performance bonds (“Surety Bonds”) as a condition to the award of such contracts. The Surety Bonds secure our payment and performance obligations under such contracts, and we have agreed to indemnify the Surety Companies for amounts, if any, paid by them in respect of Surety Bonds issued on our behalf. In addition, at the request of labor unions representing certain of our employees, Surety Bonds are sometimes provided to secure obligations for wages and benefits payable to or for such employees. Public sector contracts require Surety Bonds more frequently than private sector contracts and, accordingly, our bonding requirements typically increase as the amount of public sector work increases. As of ~~September~~June 30, ~~2017,~~2018, based on the percentage-of-completion of our projects covered by Surety Bonds, our aggregate estimated exposure, assuming defaults on all our then existing contractual obligations, was approximately $1.1 billion. Surety Bonds are issued by Surety Companies in return for premiums, which vary depending on the size and type of bond.

From time to time, we discuss with our current and other Surety Bond providers the amounts of Surety Bonds that may be available to us based on our financial strength and the absence of any default by us on any Surety Bond issued on our behalf and believe those amounts are currently adequate for our needs. However, if we experience changes in our bonding relationships or if there are adverse changes in the surety industry, we may (i) seek to satisfy certain customer requests for Surety Bonds by posting other forms of collateral in lieu of Surety Bonds, such as letters of credit, parent company guarantees or cash, in order to convince customers to forego the requirement for Surety Bonds, (ii) increase our activities in our business segments that rarely require Surety Bonds, such as our building and industrial services segments, and/or (iii) refrain from bidding for certain projects that require Surety Bonds. There can be no assurance that we would be able to effectuate alternatives to providing Surety Bonds to our customers or to obtain, on favorable terms, sufficient additional work that does not require Surety Bonds. Accordingly, if we were to experience a reduction in the availability of Surety Bonds, we could experience a material adverse effect on our financial position, results of operations and/or cash flows.

In the ordinary course of business, we, at times, guarantee obligations of our subsidiaries under certain contracts. Generally, we are liable under such an arrangement only if our subsidiary fails to perform its obligations under the contract. Historically, we have not incurred any substantial liabilities as a consequence of these guarantees.

We do not have any other material financial guarantees or off-balance sheet arrangements other than those disclosed herein.

We are a party to lawsuits and other proceedings in which other parties seek to recover from us amounts ranging from a few thousand dollars to over $10.0 million. We do not believe that any such matters will have a material adverse effect on our financial position, results of operations or liquidity.

On September 26, 2011, our Board of Directors authorized us to repurchase up to $100.0 million of our outstanding common stock. On December 5, 2013, October 23, 2014, ~~and~~ October 28, 2015 and October 25, 2017, our Board of Directors authorized us to repurchase up to an additional $100.0 million, $250.0 million, $200.0 million and ~~$200.0~~$100.0 million of our outstanding common stock, respectively. During ~~2017,~~2018, we have repurchased ~~approximately 1.4 million~~796,250 shares of our common stock for approximately ~~$88.6~~$60.5 million. Since the inception of the repurchase programs through ~~September~~June 30, ~~2017,~~2018, we have repurchased approximately ~~12.8~~13.6 million shares of our common stock for approximately $~~573.0~~635.8 million. As of ~~September~~June 30, ~~2017,~~2018, there remained authorization for us to repurchase approximately $~~77.0~~114.2 million of our shares. ~~Subsequent to September 30, 2017, our Board of Directors authorized us to repurchase up to an additional $100.0 million of our outstanding common stock.~~ The repurchase programs have no expiration date and do not obligate

the Company to acquire any particular amount of common stock and may be suspended, recommenced or discontinued at any time or from time to time without prior notice. We may repurchase our shares from time to time to the extent permitted by securities laws and other legal requirements, including provisions in our 2016 Credit Agreement placing limitations on such repurchases. The repurchase programs have been and will be funded from our operations.

We have paid quarterly dividends since October 25, 2011. We currently pay a regular quarterly dividend of $0.08 per share. Our 2016 Credit Agreement places limitations on the payment of dividends on our common stock. However, we do not believe that the terms of such agreement currently materially limit our ability to pay a quarterly dividend of $0.08 per share for the foreseeable future. The payment of dividends has been and will be funded from our operations.

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Our primary source of liquidity has been, and is expected to continue to be, cash generated by operating activities. We also maintain our 2016 Revolving Credit Facility that may be utilized, among other things, to meet short-term liquidity needs in the event cash generated by operating activities is insufficient or to enable us ~~to seize opportunities~~ to participate in joint ventures or to make acquisitions that may require access to cash on short notice or for any other reason. Negative macroeconomic trends may have an adverse effect on liquidity. During economic downturns, there have typically been fewer small discretionary projects from the private sector, and our competitors have aggressively bid larger long-term infrastructure and public sector contracts. Short-term liquidity is also impacted by the type and length of construction contracts in place and large turnaround activities in our United States industrial services segment that are billed in arrears pursuant to contractual terms that are standard within the industry. Performance of long duration contracts typically requires greater amounts of working capital. While we strive to ~~maintain a net over-billed position with~~negotiate favorable billing terms which allow us to invoice in advance of costs incurred on certain of our ~~customers,~~contracts, there can be no assurance that ~~a net over-billed position can~~such terms will be maintained. Our net over-billings, defined as the balance sheet accounts “Billings in excess of costs and estimated earnings on uncompleted contracts” less “Cost and estimated earnings in excess of billings on uncompleted contracts”, were ~~$396.8 million~~ ~~and~~ ~~$358.5 million~~ ~~as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, respectively.~~agreed to by our customers.

Long-term liquidity requirements can be expected to be met initially through cash generated from operating activities and our 2016 Revolving Credit Facility. Based upon our current credit ratings and financial position, we can reasonably expect to be able to incur long-term debt to fund acquisitions. Over the long term, our primary revenue risk factor continues to be the level of demand for non-residential construction services and for building and industrial services, which is influenced by macroeconomic trends including interest rates and governmental economic policy. In addition, our ability to perform work is critical to meeting long-term liquidity requirements.

We believe that our current cash balances and our borrowing capacity available under our 2016 Revolving Credit Facility or other forms of financing available to us through borrowings, combined with cash expected to be generated from operations, will be sufficient to provide short-term and foreseeable long-term liquidity and meet our expected capital expenditure requirements.

Certain Insurance Matters

As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017, we utilized approximately ~~$111.4~~$110.0 million and ~~$91.5~~$109.7 million, respectively, of letters of credit obtained under our 2016 Revolving Credit Facility as collateral for our insurance obligations.

New Accounting Pronouncements

We review new accounting standards to determine the expected financial impact, if any, that the adoption of such standards will have. See ~~Part I. Item 1, “Financial Statements – Notes to Condensed Consolidated Financial Statements –~~ Note 2 - New Accounting ~~Pronouncements”,~~Pronouncements of the notes to condensed consolidated financial statements included in Item 1. Financial Statements for further information regarding new accounting standards, including the anticipated dates of adoption and the effects on our consolidated financial position, results of operations or liquidity.

Application of Critical Accounting Policies

Our condensed consolidated financial statements are based on the application of significant accounting policies, which require management to make significant estimates and assumptions. Our significant accounting policies are described in Note 2 – Summary of Significant Accounting Policies of the notes to consolidated financial statements included in Item 8 of our annual report on Form 10-K for the year ended December 31, ~~2016.~~2017. We believe that some of the more critical judgment areas in the application of accounting policies that affect our financial condition and results of operations are the impact of changes in the estimates and judgments pertaining to: (a) revenue recognition from ~~(i) long-term construction~~ contracts ~~for which the percentage-of-completion method of accounting is used and (ii) services contracts;~~with our customers; (b) collectibility or valuation of accounts receivable; (c) insurance liabilities; (d) income taxes; and (e) goodwill and identifiable intangible assets.

Revenue Recognition ~~for Long-term Construction~~from Contracts ~~and Services Contracts~~with our Customers

We believe our most critical accounting policy is revenue recognition from long-term construction contracts for which we use the percentage-of-completion method of accounting. Percentage-of-completion accounting is the prescribed method of accounting for long-term contracts in accordance with ~~Accounting Standard Codification (“ASC”) Topic 605-35, “Revenue Recognition – Construction-Type~~ASC 606. ASC 606 aligns revenue recognition with the timing of when promised goods or services are transferred to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This core principle is achieved through the application of the following five step model: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to performance obligations in the contract, and ~~Production-Type Contracts”,~~(5) recognize revenue as performance obligations are satisfied.

The Company recognizes revenue at the time the related performance obligation is satisfied by transferring a promised good or service to its customers. A good or service is considered to be transferred when the customer obtains control. The Company can transfer control of a good or service and ~~accordingly,~~satisfy its performance obligations either over time or at a point in time. The Company transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognizes revenue over time if one of the following three criteria are met: (a) the customer simultaneously receives and consumes the benefits provided by the Company’s performance as we perform, (b) the Company’s performance creates or enhances an asset that the customer

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controls as the asset is created or enhanced, or (c) the Company’s performance does not create an asset with an alternative use to us, and we have an enforceable right to payment for performance completed to date.

For our performance obligations satisfied over time, we recognize revenue by measuring the progress toward complete satisfaction of that performance obligation. The selection of the method ~~used for~~to measure progress towards completion can be either an input method or an output method and requires judgment based on the nature of the goods or services to be provided.

For our construction contracts, revenue ~~recognition within~~is generally recognized over time as our ~~industry. Percentage-of-completion~~performance creates or enhances an asset that the customer controls as it is created or enhanced. Our fixed price construction projects generally use a cost-to-cost input method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured ~~principally by~~based on the ~~percentage~~ratio of costs incurred to date ~~for each contract~~ to the total estimated costs at completion of the performance obligation. For our unit price construction contracts, progress towards complete satisfaction is measured through an output method such as the amount of units produced or delivered, as this method most faithfully depicts the transfer of control to the customer.

For our services contracts, revenue is also generally recognized over time as the customer simultaneously receives and consumes the benefits of our performance as we perform the service. For our fixed price service contracts with specified service periods, revenue is generally recognized on a straight-line basis over such service period when our inputs are expended evenly, and the customer receives and consumes the benefits of our performance throughout the contract term.

The timing of revenue recognition for the manufacturing of new build heat exchangers within our United States industrial services segment depends on the payment terms of the contract, as our performance does not create an asset with an alternative use to us. For those contracts which we have a right to payment for performance completed to date at all times throughout our performance, inclusive of a cancellation, we recognize revenue over time. These performance obligations use a cost-to-cost input method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. However, for those contracts for which we do not have a right, at all times, to payment for performance completed to date, we recognize revenue at the point in time when control is transferred to the customer. For bill-and-hold arrangements, revenue is recognized when the customer obtains control of the heat exchanger, which may be prior to shipping, if the criteria of ASC 606 are met.

Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. When the current estimate of total costs for ~~such contract at completion. Certain~~a performance obligation indicate a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident. For the three and six months ended June 30, 2018 and 2017, there were no changes in total estimated costs that had a significant impact to our operating results. In addition, for the three and six months ended June 30, 2018 and 2017, there were no significant losses recognized.

The timing of ~~our electrical contracting business units measure percentage-of-completion by~~revenue recognition may differ from the ~~percentage~~timing of ~~labor costs incurred~~invoicing to ~~date for each contract to the estimated total labor costs for such contract. Pre-contract costs~~customers. Contract assets include unbilled amounts from our long-term construction projects ~~are generally expensed~~when revenue recognized under the cost-to-cost measure of progress exceed the amounts invoiced to our customers, as incurred. Application of percentage-of-completion accounting results in the recognition of costs and estimated earnings in excess of billings on uncompleted contracts in the Condensed Consolidated Balance Sheets. Costs and estimated earnings in excess of billings on uncompleted contracts reflected in the Condensed Consolidated Balance Sheets arise when revenues have been recognized but the amounts cannot be billed under the terms of our contracts. Such amounts are recoverable from our customers based upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of a contract.

~~Costs~~ In addition, many of our time and ~~estimated earnings~~materials arrangements, as well as our contracts to perform turnaround services within the United States industrial services segment, are billed in ~~excess~~arrears pursuant to contract terms that are standard within the industry, resulting in contract assets and/or unbilled receivables being recorded, as revenue is recognized in advance of ~~billings on uncompleted contracts also include~~billings. Also included in contract assets are amounts we seek or will seek to collect from customers or others for errors or changes in contract specifications or design, contract change orders or modifications in dispute or unapproved as to both scope ~~and~~and/or price, or other customer-related causes of unanticipated additional contract costs (claims and unapproved change orders). ~~Such~~Our contract assets do not include capitalized costs to obtain and fulfill a contract. Contract assets are generally classified as current within the Condensed Consolidated Balance Sheets.

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customers on certain contracts. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation and are recorded ~~at estimated net realizable value and take into account factors that may affect our ability~~as either current or long-term, depending upon when we expect to ~~bill and ultimately collect unbilled revenues.~~recognize such revenue. The ~~profit associated with claim amounts~~long-term portion of contract liabilities is not recognized until the claim has been settled and payment has been received. During 2017, we recognized $18.1 million of gross profit associated with the recovery of certain contract costs previously disputed on a project completedincluded in “Other long-term obligations” in the ~~prior year. There were no other material amounts recognized associated~~Condensed Consolidated Balance Sheets.

See Note 3 - Revenue from Contracts with ~~claim settlements during~~Customers of the ~~periods presented. Due~~notes to uncertainties inherent in estimates employed in applying percentage-of-completion accounting, estimates may be revised as project work progresses. Application of percentage-of-completion accounting requires that the impact of revised estimates be reported prospectively in the condensed consolidated financial statements. In addition to revenue recognition for long-term construction contracts, we recognize revenues from the performance of services for maintenance, repair and retrofit work consistent with the performance of services, which are generally on a pro-rata basis over the life of the contractual arrangement. Expenses related to all services arrangements are recognized as incurred. Revenues related to the engineering, manufacturing and repairing of shell and tube heat exchangers are recognized when the product is shipped and all other revenue recognition criteria have been met. Costs related to this work arestatements included in ~~inventory until the product is shipped. Provisions~~Item 1. Financial Statements for the entirety of estimated losses on uncompleted contracts are made in the period in which such losses are determined. During the three and nine months ended September 30, 2016, we incurred $6.9 million and $17.4 million, respectively, of losses on a transportation project within our United States electrical construction and facilities services segment as a result of productivity issues attributable to unfavorable job-site conditions. There were no other significant losses recognized during the three and nine months ended September 30, 2017 and 2016.further disclosure regarding revenue recognition.

Accounts Receivable

Accounts receivable are recognized in the period we deliver goods or provide services to our customers or when our right to consideration is unconditional. We are required to estimate the collectibility of accounts receivable. A considerable amount of judgment is required in assessing the likelihood of realization of receivables. Relevant assessment factors include the creditworthiness of the customer, our prior collection history with the customer and related aging of the past due balances. At ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017, our accounts receivable of $~~1,537.8~~1,635.3 million and $~~1,495.4~~1,607.9 million, respectively, included allowances for doubtful accounts of $~~16.9~~16.1 million and $~~12.3~~17.2 million, respectively. The ~~increase~~decrease in our allowance for doubtful accounts was due to ~~an increase in our provision for doubtful accounts, partially offset by~~ the write-off of previously reserved ~~for~~ accounts receivable. Specific accounts receivable are evaluated when we believe a customer may not be able to meet its financial obligations due to deterioration of its financial condition or its credit ratings. The allowance for doubtful accounts requirements are based on the best facts available and are re-evaluated and adjusted on a regular basis as additional information is received.

Insurance Liabilities

We have loss payment deductibles for certain workers’ compensation, automobile liability, general liability and property claims, have self-insured retentions for certain other casualty claims and are self-insured for employee-related healthcare claims. Losses are recorded based upon estimates of our liability for claims incurred and for claims incurred but not reported. The liabilities are derived from known facts, historical trends and industry averages utilizing the assistance of an actuary to determine the best estimate for the majority of these obligations. We believe the liabilities recognized on our balance sheets for these obligations are adequate. However, such obligations are difficult to assess and estimate due to numerous factors, including severity of injury, determination of liability in proportion to other parties, timely reporting of occurrences and effectiveness of safety and risk management programs. Therefore, if our actual experience differs from the assumptions and estimates used for recording the liabilities, adjustments may be required and will be recorded in the period that the experience becomes known. Our estimated net

insurance liabilities for workers’ compensation, automobile liability, general liability and property claims increased by ~~$2.8~~$4.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to the year ended December 31, ~~2016,~~2017, primarily due to ~~higher revenues, including~~a change in the ~~impact of acquired companies.~~actuarial assumptions for the most recent policy year. If our estimated insurance liabilities for workers’ compensation, automobile liability, general liability and property claims had increased by 10%, it would have resulted in ~~$15.9~~$16.2 million of additional expense for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018.

Income Taxes

We had net deferred income tax liabilities at ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017 of ~~$110.9~~$69.8 million and ~~$117.4~~$64.7 million, respectively, primarily resulting from differences between the carrying value and income tax basis of certain identifiable intangible assets and depreciable fixed assets, which will impact our taxable income in future periods. Included within these net deferred income tax liabilities are $101.1 million and $105.6 million of deferred income tax ~~assets.~~assets as of June 30, 2018 and December 31, 2017, respectively. A valuation allowance is required when it is more likely than not that all or a portion of a deferred income tax asset will not be realized. As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017, the total valuation allowance on deferred income tax assets, related to state net operating carryforwards, was approximately ~~$3.5~~$3.8 million.

Goodwill and Identifiable Intangible Assets

As of ~~September~~June 30, ~~2017~~2018, we had $~~1,010.4~~978.3 million and $~~497.3~~481.6 million, respectively, of goodwill and net identifiable intangible assets (primarily consisting of our contract backlog, developed technology/vendor network, customer relationships, non-competition agreements and trade names), ~~primarily~~ arising out of the acquisition of companies. As of December 31, ~~2016~~2017, goodwill and net identifiable intangible assets were $~~979.6~~964.9 million and $~~487.4~~495.0 million, respectively. As of June 30, 2018, approximately 33.4% of our goodwill related to our United States industrial services segment, approximately 26.2% related to our United States mechanical construction and facilities services segment, approximately 27.5% related to our United States building services segment, and approximately 12.9% related to our United States electrical construction and facilities services segment. The changes to goodwill since December 31, ~~2016~~2017 were related to ~~the acquisition of~~ two ~~companies~~acquisitions in ~~2017~~2018 and a purchase price adjustment related to ~~the Ardent~~a prior acquisition. The determination of related estimated useful lives for identifiable intangible assets and whether those assets are impaired involves significant judgments based upon short and long-term projections of future performance. These forecasts reflect assumptions regarding the ability to successfully integrate acquired companies, as well as macroeconomic conditions. ASC Topic 350, “Intangibles – Goodwill and Other” (“ASC 350”) requires that goodwill and other identifiable intangible assets with indefinite

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useful lives not be amortized, but instead tested at least annually for impairment (which we test each October 1, absent any impairment indicators), and be written down if impaired. ASC 350 requires that goodwill be allocated to its respective reporting unit and that identifiable intangible assets with finite lives be amortized over their useful lives.

We test for impairment of our goodwill at the reporting unit level. Our reporting units are consistent with the reportable segments identified in Note ~~13,~~14, “Segment Information”, of the notes to condensed consolidated financial statements. In assessing whether our goodwill is impaired, we compare the fair value of the reporting unit ~~determined based upon discounted estimated future cash flows,~~ to the carrying amount, including goodwill. If the fair value exceeds the carrying amount, no impairment loss is recognized. However, if the carrying amount of the reporting unit exceeds the fair value, the goodwill of the reporting unit is impaired and an impairment loss in the amount of the excess is recognized and charged to operations. ~~No impairment~~The fair value of each of our ~~goodwill was recognized during the three and nine months ended September 30, 2017 and 2016.~~reporting units is generally determined using discount estimated future cash flows; however, in certain circumstances, consideration is given to a market approach whereby fair value is measured based on a multiple of earnings.

~~As of~~ ~~September 30, 2017, we had~~ ~~$1,010.4 million~~ of goodwill on our balance sheet and, of this amount, 38.1% relates to our United States industrial services segment, 25.3% relates to our United States building services segment, 24.2% relates to our United States mechanical construction and facilities services segment and 12.4% relates to our United States electrical construction and facilities services segment. As of the date of our latest impairment test ~~October~~(October 1, ~~2016,~~2017), the carrying values of ~~our United States industrial services segment,~~ our United States building services segment, our United States mechanical construction and facilities services segment and our United States electrical construction and facilities services segment were approximately ~~$695.1~~$471.8 million, ~~$462.4 million, $277.3~~$313.9 million and ~~$268.8~~$214.1 million, respectively. The fair values of ~~our United States industrial services segment,~~ our United States building services segment, our United States mechanical construction and facilities services segment and our United States electrical construction and facilities services segment exceeded their carrying values by approximately ~~$69.2~~$408.9 million, ~~$268.6 million, $791.4~~$1,013.3 million and ~~$526.3~~$673.2 million, respectively.

During our annual impairment testing procedures as of October 1, 2017, and as a result of continued adverse market conditions, we tempered our expectations regarding the strength of a near-term recovery within our United States industrial services segment. As a result of our revised projections, the fair value of this segment fell short of its carrying value of $666.7 million and resulted in the recognition of a non-cash impairment charge of $57.5 million for the year ending December 31, 2017. There were no other goodwill impairment charges recognized during 2017.

The weighted average cost of capital used in testing goodwill for impairment as of October 1, 2017 was ~~11.4%~~10.6%, ~~11.0%~~10.0% and ~~11.5%~~11.0% for our domestic construction segments, our United States building services segment and our United States industrial services segment, respectively. The perpetual growth rate used for our annual testing was 2.7% for all of our domestic segments. Unfavorable changes in these key assumptions may affect future testing results. For example, keeping all other assumptions constant, a 50 basis point increase in the weighted average costs of capital would cause the estimated fair values of our United States electrical construction and facilities services segment, our United States mechanical construction and facilities services segment, our United States building services segment and our United States industrial services segment to decrease by approximately $51.1 million, $74.9 million, $53.3 million, and $20.0 million, respectively. In addition, keeping all other assumptions constant, a 50 basis point reduction in the perpetual growth rate would cause the estimated fair values of our United States electrical construction and facilities services segment, our United States mechanical construction and facilities services segment, our United States building services segment, and our United States industrial services segment to decrease by approximately $25.1 million, $41.0 million, $28.1 million, and $10.0 million, respectively.

We also test for the impairment of trade names that are not subject to amortization by calculating the fair value using the “relief from royalty payments” methodology. This approach involves two steps: (a) estimating reasonable royalty rates for each trade name and (b) applying these royalty rates to a net revenue stream and discounting the resulting cash flows to determine fair value. This fair value is then compared with the carrying value of each trade name. If the carrying amount of the trade name is greater than the implied fair value of the trade name, an impairment in the amount of the excess is recognized and charged to operations. No impairment of our indefinite-lived trade names was recognized during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016.~~

2017.

In addition, we review for the impairment of other identifiable intangible assets that are being amortized whenever facts and circumstances indicate that their carrying values may not be fully recoverable. This test compares their carrying values to the undiscounted pre-tax cash flows expected to result from the use of the assets. If the assets are impaired, the assets are written down to their fair values, generally determined based on their future discounted cash flows. During the three and six months ended June 30, 2018, we recorded a $0.9 million non-cash impairment charge associated with a finite-lived trade name within our United States industrial services segment. No additional impairment of our other identifiable intangible assets was recognized during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016.~~2017.

WeAs referenced above, we have certain businesses, particularly within our United States industrial services segment, whose results are highly impacted by the demand for some of our offerings within the industrial and oil and gas markets. Future performance of this segment, along with a continued evaluation of the conditions of its end user markets, will be important to ongoing impairment assessments. Should this segment’s actual results suffer a further decline or expected future results be revised downward, the risk of goodwill impairment or impairment of other identifiable intangible assets would increase.

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Our development of the present value of future cash flow projections used in impairment testing is based upon assumptions and estimates by management from ~~reviews, among other things,~~a review of our operating results, business plans, anticipated growth rates and margins, and weighted average cost of ~~capital.~~capital, among others. Those assumptions and estimates can change in future periods, and other factors used in assessing fair value are outside the control of management, such as interest rates. There can be no assurance that estimates and assumptions made for purposes of our goodwill and identifiable asset impairment testing will prove to be accurate predictions of the future. If our assumptions regarding future business performance or anticipated growth rates and/or margins are not achieved, or there is a rise in interest rates, we may be required to record goodwill and/or identifiable asset impairment charges in future periods.

~~Although we have not yet conducted our October 1, 2017 goodwill and other impairment tests, there have been no impairments recognized through the first nine months of 2017.~~ It is not possible at this time to determine if any ~~such~~ future impairment charge ~~would~~will result or, if it does, whether such a charge would be material.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We have not used any derivative financial instruments during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018, including trading or speculating on changes in interest rates or commodity prices of materials used in our business.

We are exposed to market risk for changes in interest rates for borrowings under the 2016 Credit Agreement, which provides for a revolving credit facility and a term loan. Borrowings under the 2016 Credit Agreement bear interest at variable rates. As of ~~September~~June 30, ~~2017~~2018, there were borrowings of ~~$125.0~~$25.0 million outstanding under the 2016 Revolving Credit Facility and the balance of the 2016 Term Loan was ~~$288.6~~$277.2 million. This instrument bears interest at (1) a base rate plus a margin of 0.00% to 0.75%, based on certain financial tests, or (2) United States dollar LIBOR (~~1.24%~~2.09% and 2.33% at ~~September~~June 30, ~~2017~~2018) for our 2016 Revolving Credit Facility and our 2016 Term Loan, respectively) plus 1.00% to 1.75%, based on certain financial tests. The base rate is determined by the greater of (a) the prime commercial lending rate announced by Bank of Montreal from time to time ~~(4.25%~~(5.00% at ~~September~~June 30, ~~2017)~~2018), (b) the federal funds effective rate, plus ½ of 1.00%, (c) the daily one month LIBOR rate, plus 1.00%, or (d) 0.00%. The interest ~~rate~~rates in effect at ~~September~~June 30, ~~2017~~2018 ~~was~~were ~~2.24%~~3.09%. and 3.33% for our 2016 Revolving Credit Facility and our 2016 Term Loan, respectively. Based on the ~~$413.6~~$302.2 million borrowings outstanding under the 2016 Credit Agreement, if overall interest rates were to increase by 100 basis points, interest expense, net of income taxes, would increase by approximately ~~$2.5~~$2.2 million in the next twelve months. Conversely, if overall interest rates were to decrease by 100 basis points, interest expense, net of income taxes, would decrease by approximately ~~$2.5~~$2.2 million in the next twelve months. Fees for letters of credit issued under the 2016 Revolving Credit Facility range from 1.00% to 1.75% of the respective face amounts of outstanding letters of credit and are computed based on certain financial tests. The 2016 Credit Agreement expires on August 3, 2021. There is no guarantee that we will be able to renew the 2016 Credit Agreement at its expiration.

We are also exposed to construction market risk and its potential related impact on accounts receivable or ~~costs and estimated earnings in excess of billings~~contract assets on uncompleted contracts. The amounts recorded may be at risk if our customers’ ability to pay these obligations is negatively impacted by economic conditions. We continually monitor the creditworthiness of our customers and maintain on-going discussions with customers regarding contract status with respect to change orders and billing terms. Therefore, we believe we take appropriate action to manage market and other risks, but there is no assurance that we will be able to reasonably identify all risks with respect to collectibility of these assets. See also the previous discussions of Revenue Recognition from ~~Long-term Construction~~ Contracts ~~and Services Contracts~~with our Customers and Accounts Receivable under the heading, “Application of Critical Accounting Policies” in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Amounts invested in our foreign operations are translated into U.S. dollars at the exchange rates in effect at the end of the period. The resulting translation adjustments are recorded as accumulated other comprehensive (loss) income, a component of equity, in the Condensed Consolidated Balance Sheets. We believe the exposure to the effects that fluctuating foreign currencies may have on our consolidated results of operations is limited because the foreign operations primarily invoice customers and

collect obligations in their respective local currencies. Additionally, expenses associated with these transactions are generally contracted and paid for in their same local currencies.

In addition, we are exposed to market risk of fluctuations in certain commodity prices of materials, such as copper and steel, which are used as components of supplies or materials utilized in our construction, building services and industrial services operations. We are also exposed to increases in energy prices, particularly as they relate to gasoline prices for our fleet of over 10,000 vehicles. While we believe we can increase our contract prices to adjust for some price increases in commodities, there can be no assurance that such price increases, if they were to occur, would be recoverable. Additionally, our fixed price contracts do not allow us to adjust our prices and, as a result, increases in material ~~or fuel~~ costs could reduce our profitability with respect to projects in progress.

ITEM 4. CONTROLS AND PROCEDURES.

Based on an evaluation of our disclosure controls and procedures (as required by Rule 13a-15(b) of the Securities Exchange Act of 1934), our President and Chief Executive Officer, Anthony J. Guzzi, and our Executive Vice President and Chief Financial Officer, Mark A. Pompa, have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchanges Act of 1934) are effective as of the end of the period covered by this report.

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the fiscal quarter ended ~~September~~June 30, ~~2017~~2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. – OTHER INFORMATION.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following table summarizes repurchases of our common stock made by us during the quarter ended ~~September~~June 30, ~~2017~~2018:

Period
Total Number of
Shares Purchased⁽¹⁾

Average Price
Paid Per Share

Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs

Approximate Dollar Value
of Shares That May Yet be
Purchased Under
the Plan or Programs
July 1, 2017 to
July 31, 2017
None None None $102,141,865
August 1, 2017 to
August 31, 2017
384,633 $65.44 384,633 $76,972,856
September 1, 2017 to
September 30, 2017
None None None $76,972,856



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet be Purchased Under the Plan or Programs
April 1, 2018 to April 30, 2018	166,394	$74.26	166,394	$127,909,131
May 1, 2018 to May 31, 2018	183,960	$74.29	183,960	$114,243,454
June 1, 2018 to June 30, 2018	None	None	None	$114,243,454
Total	350,354	$74.28	350,354

(1)

On September 26, 2011, our Board of Directors authorized us to repurchase up to $100.0 million of our outstanding common stock. On December 5, 2013, October 23, 2014, ~~and~~ October 28, 2015 and October 25, 2017, our Board of Directors authorized us to repurchase up to an additional $100.0 million, $250.0 million, $200.0 million and ~~$200.0~~$100.0 million of our outstanding common stock, respectively. As of ~~September~~June 30, ~~2017,~~2018, there remained authorization for us to repurchase approximately ~~$77.0~~$114.2 million of our shares. ~~Subsequent to September 30, 2017, our Board of Directors authorized us to repurchase up to an additional $100.0 million of our outstanding common stock.~~ No shares have been repurchased by us since the programs have been announced other than pursuant to these publicly announced programs. The repurchase programs have no expiration date and do not obligate the Company to acquire any particular amount of common stock and may be suspended, recommenced or discontinued at any time or from time to time without prior notice. We may repurchase our shares from time to time asto the extent permitted by securities laws and other legal ~~requirements.~~requirements, including provisions in our credit agreement placing limitations on such repurchases.

ITEM 4. MINE SAFETY DISCLOSURES.

Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this quarterly report.

ITEM 6. EXHIBITS.

For the list of exhibits, see the Exhibit Index immediately following the signature page hereof, which Exhibit Index is incorporated herein by reference.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: ~~October~~July 26, ~~2017~~2018



	EMCOR GROUP, INC.
	(Registrant)

BY:	/s/ ANTHONY J. GUZZI
	Anthony J. Guzzi
	Chairman, President and Chief Executive Officer (Principal Executive Officer)

BY:	/s/ MARK A. POMPA
	Mark A. Pompa
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Table of Contents

EXHIBIT INDEX



Exhibit No.	Description	Incorporated By Reference to or Filed Herewith, as Indicated Below

2(a-1)	Purchase Agreement dated as of February 11, 2002 by and among Comfort Systems USA, Inc. and EMCOR-CSI Holding Co.	Exhibit 2.1 to EMCOR Group, Inc.’s (“EMCOR”) Report on Form 8-K dated February 14, 2002
2(a-2)	Purchase and Sale Agreement dated as of August 20, 2007 between FR X Ohmstede Holdings LLC and EMCOR Group, Inc.	Exhibit 2.1 to EMCOR’s Report on Form 8-K (Date of Report August 20, 2007)
2(a-3)	Purchase and Sale Agreement, dated as of June 17, 2013 by and among Texas Turnaround LLC, a Delaware limited liability company, Altair Strickland Group, Inc., a Texas corporation, Rep Holdings LLC, a Texas limited liability company, ASG Key Employee LLC, a Texas limited liability company, Repcon Key Employee LLC, a Texas limited liability company, Gulfstar MBII, Ltd., a Texas limited partnership, The Trustee of the James T. Robinson and Diana J. Robinson 2010 Irrevocable Trust, The Trustee of the Steven Rothbauer 2012 Descendant’s Trust, The Co-Trustees of the Patia Strickland 2012 Descendant’s Trust, The Co-Trustees of the Carter Strickland 2012 Descendant’s Trust, and The Co-Trustees of the Walton 2012 Grandchildren’s Trust (collectively, “Sellers”) and EMCOR Group, Inc.	Exhibit 2.1 to EMCOR’s Report on Form 8-K (Date of Report June 17, 2013)
3(a-1)	Restated Certificate of Incorporation of EMCOR filed December 15, 1994	Exhibit 3(a-5) to EMCOR’s Registration Statement on Form 10 as originally filed March 17, 1995 (“Form 10”)
3(a-2)	Amendment dated November 28, 1995 to the Restated Certificate of Incorporation of EMCOR	Exhibit 3(a-2) to EMCOR’s Annual Report on Form 10-K for the year ended December 31, 1995 (“1995 Form10-K”)
3(a-3)	Amendment dated February 12, 1998 to the Restated Certificate of Incorporation of EMCOR	Exhibit 3(a-3) to EMCOR’s Annual Report on Form 10-K for the year ended December 31, 1997 (“1997 Form 10-K”)
3(a-4)	Amendment dated January 27, 2006 to the Restated Certificate of Incorporation of EMCOR	Exhibit 3(a-4) to EMCOR’s Annual Report on Form 10-K for the year ended December 31, 2005 (“2005 Form 10-K”)
3(a-5)	Amendment dated September 18, 2007 to the Restated Certificate of Incorporation of EMCOR	Exhibit A to EMCOR’s Proxy Statement dated August 17, 2007 for Special Meeting of Stockholders held September 18, 2007
3(b)	Amended and Restated By-Laws and Amendments thereto	Exhibit 3(b) to EMCOR’s Annual Report on Form 10-K for the year ended December 31, 2016 (“2016 Form 10-K”)
4(a)	Fifth Amended and Restated Credit Agreement dated as of August 3, 2016 by and among EMCOR Group, Inc. and a subsidiary and Bank of Montreal, as Agent and the lenders listed on the signature pages thereof (the “Credit Agreement”)	Exhibit 4(a) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (“September 2016 Form 10-Q”)
4(b)	Fifth Amended and Restated Security Agreement dated as of August 3, 2016 among EMCOR, certain of its U.S. subsidiaries, and Bank of Montreal, as Agent	Exhibit 4(b) to the September 2016 Form 10-Q
4(c)	Fifth Amended and Restated Pledge Agreement dated as of August 3, 2016 among EMCOR, certain of its U.S. subsidiaries, and Bank of Montreal, as Agent	Exhibit 4(c) to the September 2016 Form 10-Q
4(d)	Fourth Amended and Restated Guaranty Agreement dated as of August 3, 2016 by certain of EMCOR’s U.S. subsidiaries in favor of Bank of Montreal, as Agent	Exhibit 4(d) to the September 2016 Form 10-Q

Table of Contents

EXHIBIT INDEX



Exhibit No.	Description	Incorporated By Reference to or Filed Herewith, as Indicated Below

10(a)	Form of Severance Agreement (“Severance Agreement”) between EMCOR and each of Sheldon I. Cammaker, R. Kevin Matz and Mark A. Pompa	Exhibit 10.1 to the April 2005 Form 8-K
10(b)	Form of Amendment to Severance Agreement between EMCOR and each of Sheldon I. Cammaker, R. Kevin Matz and Mark A. Pompa	Exhibit 10(c) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 (“March 2007 Form 10-Q”)
10(c)	Letter Agreement dated October 12, 2004 between Anthony Guzzi and EMCOR (the “Guzzi Letter Agreement”)	Exhibit 10.1 to EMCOR’s Report on Form 8-K (Date of Report October 12, 2004)
10(d)	Form of Confidentiality Agreement between Anthony Guzzi and EMCOR	Exhibit C to the Guzzi Letter Agreement
10(e)	Form of Indemnification Agreement between EMCOR and each of its officers and directors	Exhibit F to the Guzzi Letter Agreement
10(f-1)	Severance Agreement (“Guzzi Severance Agreement”) dated October 25, 2004 between Anthony Guzzi and EMCOR	Exhibit D to the Guzzi Letter Agreement
10(f-2)	Amendment to Guzzi Severance Agreement	Exhibit 10(g-2) to the March 2007 Form 10-Q
10(g-1)	Continuity Agreement dated as of June 22, 1998 between Sheldon I. Cammaker and EMCOR (“Cammaker Continuity Agreement”)	Exhibit 10(c) to the June 1998 Form 10-Q
10(g-2)	Amendment dated as of May 4, 1999 to Cammaker Continuity Agreement	Exhibit 10(i) to the June 1999 Form 10-Q
10(g-3)	Amendment dated as of March 1, 2007 to Cammaker Continuity Agreement	Exhibit 10(m-3) to the March 2007 Form 10-Q
10(h-1)	Continuity Agreement dated as of June 22, 1998 between R. Kevin Matz and EMCOR (“Matz Continuity Agreement”)	Exhibit 10(f) to the June 1998 Form 10-Q
10(h-2)	Amendment dated as of May 4, 1999 to Matz Continuity Agreement	Exhibit 10(m) to the June 1999 Form 10-Q
10(h-3)	Amendment dated as of January 1, 2002 to Matz Continuity Agreement	Exhibit 10(o-3) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 (“March 2002 Form 10-Q”)
10(h-4)	Amendment dated as of March 1, 2007 to Matz Continuity Agreement	Exhibit 10(n-4) to the March 2007 Form 10-Q
10(i-1)	Continuity Agreement dated as of June 22, 1998 between Mark A. Pompa and EMCOR (“Pompa Continuity Agreement”)	Exhibit 10(g) to the June 1998 Form 10-Q
10(i-2)	Amendment dated as of May 4, 1999 to Pompa Continuity Agreement	Exhibit 10(n) to the June 1999 Form 10-Q
10(i-3)	Amendment dated as of January 1, 2002 to Pompa Continuity Agreement	Exhibit 10(p-3) to the March 2002 Form 10-Q
10(i-4)	Amendment dated as of March 1, 2007 to Pompa Continuity Agreement	Exhibit 10(o-4) to the March 2007 Form 10-Q
10(j-1)	Change of Control Agreement dated as of October 25, 2004 between Anthony Guzzi (“Guzzi”) and EMCOR (“Guzzi Continuity Agreement”)	Exhibit E to the Guzzi Letter Agreement
10(j-2)	Amendment dated as of March 1, 2007 to Guzzi Continuity Agreement	Exhibit 10(p-2) to the March 2007 Form 10-Q
10(j-3)	Amendment to Continuity Agreements and Severance Agreements with Sheldon I. Cammaker, Anthony J. Guzzi, R. Kevin Matz and Mark A. Pompa	Exhibit 10(q) to EMCOR’s Annual Report on Form 10-K for the year ended December 31, 2008 (“2008 Form 10-K”)

Table of Contents

EXHIBIT INDEX



Exhibit No.	Description	Incorporated By Reference to or Filed Herewith, as Indicated Below

10(k-1)	Amendment dated as of March 29, 2010 to Severance Agreement with Sheldon I. Cammaker, Anthony J. Guzzi, R. Kevin Matz and Mark A. Pompa	Exhibit 10.1 to Form 8-K (Date of Report March 29, 2010) (“March 2010 Form 8-K”)
10(k-2)	Third Amendment to Severance Agreement dated June 4, 2015 between EMCOR and Sheldon I. Cammaker	Exhibit 10(k-2) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (“June 2015 Form 10-Q”)
10(l-1)	Severance Agreement dated as of October 26, 2016 between EMCOR and Maxine L. Mauricio	Exhibit 10(l-1) to the September 2016 Form 10-Q
10(l-2)	Continuity Agreement dated as of October 26, 2016 between EMCOR and Maxine L. Mauricio (“Mauricio Continuity Agreement”)	Exhibit 10(l-2) to the September 2016 Form 10-Q
10(l-3)	Amendment dated April 10, 2017 to Mauricio Continuity Agreement	Exhibit 10(l-3) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017
10(m-1)	EMCOR Group, Inc. Long-Term Incentive Plan (“LTIP”)	Exhibit 10 to Form 8-K (Date of Report December 15, 2005)
10(m-2)	First Amendment to LTIP and updated Schedule A to LTIP	Exhibit 10(s-2) to 2008 Form 10-K
10(m-3)	Second Amendment to LTIP	Exhibit 10.2 to March 2010 Form 8-K
10(m-4)	Third Amendment to LTIP	Exhibit 10(q-4) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 (“March 2012 Form 10-Q”)
10(m-5)	Fourth Amendment to LTIP	Exhibit 10(l-5) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013
10(m-6)	Form of Certificate Representing Stock Units issued under LTIP	Exhibit 10(t-2) to EMCOR’s Annual Report on Form 10-K for the year ended December 31, 2007 (“2007 Form 10-K”)
10(m-7)	Fifth Amendment to LTIP	Exhibit 10(l-7) to EMCOR’s Annual Report on Form 10-K for the year ended December 31, 2015 (“2015 Form 10-K”)
10(m-8)	Sixth Amendment to LTIP	Exhibit 10(l-8) to 2015 Form 10-K
10(n)	Key Executive Incentive Bonus Plan, as amended and restated	Exhibit B to EMCOR’s Proxy Statement for its Annual Meeting held June 13, 2013
10(o-1)	~~2007 Incentive Plan~~	~~Exhibit B to EMCOR’s Proxy Statement for its Annual Meeting held June 20, 2007~~
~~10(o-2)~~	~~Form of Option Agreement under 2007 Incentive Plan between EMCOR and each non-employee director electing to receive options as part of annual retainer~~	~~Exhibit 10(h)(h-3) to 2007 Form 10-K~~
~~10(p-1)~~	Amended and Restated 2010 Incentive Plan	Exhibit 10(q-1) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015
~~10(p-2)~~10(o-2)	Form of Option Agreement under 2010 Incentive Plan between EMCOR and each non-employee director with respect to grant of options upon re-election at June 11, 2010 Annual Meeting of Stockholders	Exhibit 10(i)(i-2) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010
~~10(p-3)~~10(o-3)	Form of Option Agreement under 2010 Incentive Plan, as amended, between EMCOR and each non-employee director electing to receive options as part of annual retainer	Exhibit 10(q)(q) to 2011 Form 10-K
~~10(q)~~10(p)	EMCOR Group, Inc. Employee Stock Purchase Plan	Exhibit C to EMCOR’s Proxy Statement for its Annual Meeting held June 18, 2008
~~10(r)~~10(q)	Director Award Program Adopted May 13, 2011, as amended and restated December 14, 2011	Exhibit 10(n)(n) to 2011 Form 10-K
~~10(s)~~10(r)	Amendment to Option Agreements	Exhibit 10(r)(r) to 2011 Form 10-K
10(s)	Form of Non-LTIP Stock Unit Certificate	Exhibit 10(p)(p) to the March 31, 2012 Form 10-Q
10(t)	Form of Director Restricted Stock Unit Agreement	Exhibit 10(k)(k) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 (“June 2012 Form 10-Q”)

Table of Contents

EXHIBIT INDEX



Exhibit No.	Description	Incorporated By Reference to or Filed Herewith, as Indicated Below

~~10(t)~~	~~Form of Non-LTIP Stock Unit Certificate~~	~~Exhibit 10(p)(p) to the March 31, 2012 Form 10-Q~~
10(u)	~~Form of Director Restricted Stock Unit Agreement~~	~~Exhibit 10(k)(k) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 (“June 2012 Form 10-Q”)~~
~~10(v)~~	Director Award Program, as Amended and Restated December 16, 2014	Exhibit 10(z) to EMCOR’s Annual Report on Form 10-K for the year ended December 31, 2014
~~10(w)~~10(v)	EMCOR Group, Inc. Voluntary Deferral Plan	Exhibit 10(e)(e) to 2012 Form 10-K
~~10(x)~~10(w)	First Amendment to EMCOR Group, Inc. Voluntary Deferral Plan	Exhibit 10(e)(e) to 2013 Form 10-K
~~10(y)~~10(x)	Form of Executive Restricted Stock Unit Agreement	Exhibit 10(f)(f) to 2012 Form 10-K
~~10(z)~~10(y)	Restricted Stock Unit Award Agreement dated October 23, 2013 between EMCOR and Stephen W. Bershad	Exhibit 10(g)(g) to 2013 Form 10-K
~~10(a)(a)~~10(z)	Restricted Stock Unit Award Agreement dated June 11, 2014 between EMCOR and Stephen W. Bershad	Exhibit 10(g)(g) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014
~~10(b)(b)~~10(a)(a)	Restricted Stock Unit Award Agreement dated June 11, 2015 between EMCOR and Stephen W. Bershad	Exhibit 10(f)(f) to the June 30, 2015 Form 10-Q
~~10(c)(c)~~10(b)(b)	Restricted Stock Unit Award Agreement dated October 29, 2015 between EMCOR and Steven B. Schwarzwaelder	Exhibit 10.1 to Form 8-K (Date of Report October 30, 2015)
~~10(d)(d)~~10(c)(c)	Restricted Stock Unit Award Agreement dated June 2, 2016 between EMCOR and Stephen W. Bershad	Exhibit 10(c)(c) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016
~~10(e)(e)~~10(d)(d)	Executive Compensation Recoupment Policy	Exhibit 10(h)(h) to 2015 Form 10-K
~~10(f)(f)~~10(e)(e)	Restricted Stock Unit Award Agreement dated June 30, 2017 between EMCOR and Mark A. Pompa	Exhibit 10(f)(f) to EMCOR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017
11	Computation of Basic EPS and Diluted EPS for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017	Note 56 of the Notes to the Condensed Consolidated Financial Statements
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Anthony J. Guzzi, the President and Chief Executive Officer	Filed herewith
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Mark A. Pompa, the Executive Vice President and Chief Financial Officer	Filed herewith
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the President and Chief Executive Officer	Furnished
32.2	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Executive Vice President and Chief Financial Officer	Furnished
95	Information concerning mine safety violations or other regulatory matters	Filed herewith
101	The following materials from EMCOR Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2017,~~2018, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Equity and (vi) the Notes to Condensed Consolidated Financial Statements.	Filed

3747



	September 30, 2017		% of Total		December 31, 2016		% of Total		September 30, 2016		% of Total
Backlog:
United States electrical construction and facilities services	$	1,219,755	31	%	$	1,221,237	31	%	$	1,154,939	30	%
United States mechanical construction and facilities services	1,816,413		46	%	1,818,536		47	%	1,834,335		47	%
United States building services	701,569		18	%	663,340		17	%	706,188		18	%
United States industrial services	57,476		1	%	50,279		1	%	51,200		1	%
Total United States operations	3,795,213		96	%	3,753,392		96	%	3,746,662		96	%
United Kingdom building services	167,955		4	%	149,530		4	%	156,032		4	%
Total worldwide operations	$	3,963,168	100	%	$	3,902,922	100	%	$	3,902,694	100	%