EMCOR Group (EME) 10-K risk factor changes: FY2019 vs FY2018

[removed: Economic] [added: *Economic] downturns have [added: historically] led to reductions in demand for our services.

Negative conditions in the credit markets may adversely impact our ability to operate our [removed: business.][added: business.* The level of demand from our clients for our services has been, in the past, adversely impacted by slowdowns in the industries we service, as well as in the economy in general.]

[added: When the general level of economic] activity has been reduced from historical levels, certain of our ultimate customers have delayed or cancelled projects or capital spending, especially with respect to more profitable private sector work, and such slowdowns adversely affect our ability to grow, reducing our revenues and profitability.

[added: *The loss of one or a few customers could have an adverse effect on us.*] Although we have long-standing relationships with many of our significant clients, our clients may unilaterally reduce, fail to renew or terminate their contracts with us at any time.

A loss of business from a significant [removed: client] [added: client, or a number of significant clients,] could have a material adverse effect on our business, financial position and results of operations.

[added: *Our business is vulnerable to the cyclical nature of the markets in which our clients operate and is dependent upon the timing and funding of new awards.*] We provide construction and maintenance services to ultimate customers operating in a number of markets which have been, and we expect will continue to be, cyclical and subject to significant fluctuations due to a variety of factors beyond our control, including economic conditions and changes in client spending.

[removed: Our] [added: *Our] business may be adversely affected by significant reductions in government spending or delays or disruptions in the government appropriations [removed: process.][added: process.* Some of our businesses derive a significant portion of their revenues from federal, state and local governmental agencies.]

Significant reductions in spending aimed at reducing federal, state or local budget deficits, the absence of a bipartisan agreement on the federal government's budget, the impact of sequestration or other changes in budget priorities could result in the deferral, delay, disruption or cancellation of projects or contracts that we might otherwise have sought to perform, personnel [removed: reductions] [added: reductions,] or the closure of government facilities and offices.

[removed: These potential events could impact the level of demand for our services and our ability to] execute, complete and receive compensation for our current contracts, or bid for and enter into new contracts with governmental agencies.

[removed: An] [added: *An] increase in the prices of certain materials used in our businesses and protectionist trade measures could adversely affect our [removed: businesses.][added: businesses.* We are exposed to market risk of increases in certain commodity prices of materials, such as copper and steel, which are used as components of supplies or materials utilized in our operations.]

[removed: volatility] [added: Volatility] in the price of oil has [added: historically] caused some of our refinery customers to curtail or delay maintenance or capital projects.

[removed: Continued] [added: Prolonged] volatility in the price of oil may adversely affect some of our refinery customers causing them to defer maintenance and/or capital projects performed by companies in our United States industrial services segment or delay purchases or repairs of heat exchangers that are manufactured and repaired by some of our companies.

[added: *Our industry is highly competitive.*] Our industry is served by numerous small, owner-operated private companies, a few public companies and several large regional companies.

[removed: We] [added: *We] are subject to many laws and regulations in the jurisdictions in which we operate; changes to such laws and regulations may result in additional costs and impact our [removed: operations.][added: operations.* We are committed to upholding the highest standards of corporate governance and legal and ethical compliance.]

Our efforts to comply with evolving laws, regulations and reporting standards may increase our general and administrative expenses, divert management time and attention or limit our operational flexibility, all of which could have a material adverse effect on our [added: business,] financial [removed: position] [added: position,] and results of operations.

[removed: The] [added: *The] Tax Cuts and Jobs Act of 2017 could have negative or unexpected consequences for our customers; reduced government spending may adversely affect our own [removed: business.][added: business.* The long-term impact of the Tax Cuts and Jobs Act of 2017 on the general economy cannot be reliably predicted at this time.]

To the extent that certain of our customers are negatively affected by the new tax [removed: law and/or any uncertainty around the changes in the law or how it will be enforced,] [added: law,] they may reduce spending and defer, delay or cancel projects or contracts.

Reduced government revenues resulting from the new tax law may also lead to reduced [added: long-term] government spending, which may negatively impact our government contracting business.

[added: *We are a decentralized company, which presents certain risks.*] While we believe decentralization has enhanced our growth and enabled us to remain responsive to opportunities and to our customers’ needs, it necessarily places significant control and decision-making powers in the hands of local management.

[added: *Our business may be affected by weather conditions.*] Adverse weather conditions, particularly during the winter season, could impact our construction services operations as those conditions affect our ability to perform efficient work outdoors in certain regions of the United States, adversely affecting the revenues and profitability of those operations.

[removed: Natural] [added: *Natural] disasters, terrorist attacks and other catastrophic events could disrupt our operations and [removed: services.][added: services*.]

[added: *Our business may be affected by the work environment.*] We perform our work under a variety of conditions, including but not limited to, difficult terrain, difficult site conditions and busy urban centers where delivery of materials and availability of labor may be impacted, clean-room environments where strict procedures must be followed, and sites which contain harsh or hazardous conditions, especially at chemical plants, refineries and other process facilities.

Performing work under these conditions can [added: increase the cost of such work or] negatively affect efficiency and, therefore, our profitability.

[removed: Our] [added: *Our] dependence upon fixed price contracts could adversely affect our [removed: business.][added: business.* We currently generate, and expect to continue to generate, a significant portion of our revenues from fixed price contracts.]

[added: *We could incur additional costs to cover certain guarantees or other contractual requirements.*] In some instances, we guarantee completion of a project by a specific date or price, cost savings, achievement of certain performance standards or performance of our services at a certain standard of quality.

If we subsequently fail to meet such guarantees, [added: or comply with such provisions,] we may be held responsible for costs resulting from such [removed: failures.][added: failures, including payment of penalties or liquidated or other damages.]

[removed: Many] [added: *Many] of our contracts, especially our building services contracts for governmental and non-governmental entities, may be canceled on short notice, and we may be unsuccessful in replacing such contracts if they are canceled or as they are completed or [removed: expire.][added: expire.* We could experience a decrease in revenues, net income and liquidity if any of the following occur:]

[added: *We may be unsuccessful in generating internal growth.*] Our ability to generate internal growth will be affected by, among other factors, our ability to:

In addition, existing and potential customers [removed: in the past have reduced, and] may [removed: continue to reduce,] [added: reduce] the number or size of projects available to us because of general economic conditions or due to their inability to obtain capital or pay for services we provide.

[removed: The] [added: *The] departure of key personnel could disrupt our [removed: business.][added: business.* We depend on the continued efforts of our senior management.]

[added: *We may be unable to attract and retain skilled employees.*] Our ability to grow and maintain productivity and profitability will be limited by our ability to employ, train and retain skilled personnel necessary to meet our requirements.

We cannot be certain that we will be able to maintain an adequate skilled labor force necessary [added: to operate efficiently and to support our business strategy or that labor expenses will not increase as a result of a shortage in the supply of these skilled personnel.]

[removed: Our] [added: *Our] unionized workforce could adversely affect our [removed: operations, and we participate] [added: operations; our participation] in many multiemployer union pension plans [removed: which] could result in substantial liabilities being [removed: incurred.][added: incurred*.]

As of December 31, [removed: 2018,] [added: 2019,] approximately [removed: 57%] [added: 59%] of our employees were covered by collective bargaining agreements.

Strikes or work stoppages [added: likely] would adversely impact our relationships with our customers and could have a material adverse effect on our financial position, results of operations and cash flows.

[removed: Fluctuating] [added: *Fluctuating] foreign currency exchange rates impact our financial [removed: results.][added: results.* We have operations in the United Kingdom, which in 2019 accounted for approximately 5% of our revenues.]

It is unclear at this time what effect, if any, the United Kingdom’s [removed: potential] exit from the European Union may have on such exchange rates.

[added: *Our failure to comply with environmental laws could result in significant liabilities.*] Our operations are subject to various laws, including environmental laws and regulations, among which many deal with the handling and disposal of asbestos and other hazardous or universal waste products, PCBs and fuel storage.

[removed: Adverse] [added: *Adverse] resolution of litigation and other legal and regulatory proceedings may harm our operating results or financial [removed: position.][added: position.* From time to time, we are a party to lawsuits and other legal proceedings, most of which occur in the normal course of our business.]

[removed: Opportunities] [added: *Opportunities] within the government sector could lead to increased governmental rules and regulations applicable to [removed: us.][added: us.* As a government contractor we are subject to a number of procurement rules and other regulations, any deemed violation of which could lead to fines or penalties or a loss of business.]

These potential events could impact the level of demand for our services and our ability to

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For other arrangements, including those within our government services operations, the terms of our contracts may include provisions which require us to achieve certain minority participation or small or disadvantaged business “set-aside” goals.

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In addition, while we work to rapidly implement or maintain our internal controls and financial reporting standards and procedures in the businesses we acquire, including integrating such acquired businesses into our consolidated financial reporting systems and controls, we cannot be certain that such implementation and integration will be quickly and effectively completed.

Our internal control processes and procedures with respect to such businesses may need to be adjusted or enhanced in order to ensure that such businesses are in compliance with the regulations we are subject to as well as our internal policies and standards.

Such changes could result in significant additional costs to us and could require the diversion of management’s attention from our existing businesses.

In addition, estimates of the weighted average cost of capital for each reporting unit are developed with the assistance of a third-party valuation specialist.

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*Failure to maintain effective internal controls over financial reporting could adversely impact our ability to timely and accurately report financial results and comply with our reporting obligations, which could materially affect our business.* We maintain robust internal control over financial reporting.

However, regardless of how internal control systems are designed, implemented, and enforced, they cannot ensure with absolute certainty that our policy objectives will be met in every instance.

Because of the inherent limitations of all such systems, our internal controls over financial reporting may not always prevent or detect misstatements.

Failure to maintain effective internal control over financial reporting could adversely affect our ability to accurately and timely report financial results, to prevent or detect fraud, or to comply with the requirements of the SEC or the Sarbanes-Oxley Act of 2002, which could necessitate a restatement of our financial statements, and/or result in an investigation, or the imposition of sanctions, by regulators.

Such failure could additionally expose us to litigation and/or reputational harm, impair our ability to obtain financing, or increase the cost of any financing we obtain.

All of these impacts could adversely affect the price of our common stock and our business overall.

On February 15, 2020, for example, we became aware of an infiltration and encryption of portions of our information technology network.

This attack disrupted our operations that utilize the impacted portions of the network.

We continue to assess the magnitude of the consequences and we are actively seeking to mitigate the effects.

As of the date of this filing, the Company continues its efforts to restore the portions of such systems that remain impacted and is unable to predict when the entire network will be functional.

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The level of demand from our clients for our services has been, in the past, adversely impacted by slowdowns in the industries we service, as well as in the economy in general.

When the general level of economic

The loss of one or a few customers could have an adverse effect on us.

A few clients have in the past and may in the future account for a significant portion of our revenues in any one year or over a period of several consecutive years.

Our business is vulnerable to the cyclical nature of the markets in which our clients operate and is dependent upon the timing and funding of new awards.

Some of our businesses derive a significant portion of their revenues from federal, state and local governmental agencies.

We are exposed to market risk of increases in certain commodity prices of materials, such as copper and steel, which are used as components of supplies or materials utilized in all of our operations.

Prolonged

Our industry is highly competitive.

We are committed to upholding the highest standards of corporate governance and legal and ethical compliance.

The long-term impact of the Tax Cuts and Jobs Act of 2017 on the general economy cannot be reliably predicted at this time and will require rule-making and interpretation in a number of areas.

We are a decentralized company, which presents certain risks.

Our business may be affected by weather conditions.

Our business may be affected by the work environment.

We currently generate, and expect to continue to generate, a significant portion of our revenues from fixed price contracts.

We could incur additional costs to cover certain guarantees.

Such a failure could result in our payment of liquidated or other damages.

We could experience a decrease in revenues, net income and liquidity if any of the following occur:

We may be unsuccessful in generating internal growth.

We depend on the continued efforts of our senior management.

We may be unable to attract and retain skilled employees.

to operate efficiently and to support our business strategy or that labor expenses will not increase as a result of a shortage in the supply of these skilled personnel.

We have operations in the United Kingdom, which in 2018 accounted for approximately 5% of our revenues.

Our failure to comply with environmental laws could result in significant liabilities.

From time to time, we are a party to lawsuits and other legal proceedings, most of which occur in the normal course of our business.

As a government contractor we are subject to a number of procurement rules and other regulations, any deemed violation of which could lead to fines or penalties or a loss of business.

Our construction contracts frequently require that we obtain from surety companies and provide to our customers payment and performance bonds as a condition to the award of such contracts.

We are effectively self-insured against many potential liabilities.

Our operations are subject to extensive laws and regulations relating to the maintenance of safe conditions in the workplace.

As part of our growth strategy, we acquire companies that expand, complement and/or diversify our businesses.

with our other operations and gain greater efficiencies and scale that will translate into reduced costs in a timely manner.

When we acquire a business, we record an asset called “goodwill” equal to the excess amount paid for the business, including liabilities assumed, over the fair value of the tangible and identifiable intangible assets of the business acquired.

Many contracts are subject to cancellation or suspension on short notice at the discretion of the client, and the contracts in our remaining performance obligations are subject to changes in the scope of services to be provided as well as adjustments to the costs relating to the contract.

In accordance with United States generally accepted accounting principles, we record revenue as work on the contract progresses.

We are increasingly dependent on sophisticated information technology systems; disruption, failure or cyber-security breaches of these systems could adversely affect our business and results of operations.

or disruption as a result of power outages, natural disasters, or computer network failures.

The U.S. Foreign Corrupt Practices Act (the “FCPA”), the U.K. Bribery Act of 2010 (the “Bribery Act”) and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business or securing an improper advantage.

Certain provisions of our corporate governance documents could make an acquisition of us, or a substantial interest in us, more difficult.

[removed: Operating Segments][added: Operating Segments]

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 [removed: segment] [added: and our United States industrial services segments] due to changes in our internal reporting structure.

[removed: The “United States industrial services” segment principally consists] [added: Services] of [removed: those operations which provide industrial maintenance] [added: this segment include refinery turnaround planning] and [removed: services, including those for refineries] [added: engineering; specialty welding; overhaul] and [removed: petrochemical plants, including] [added: maintenance of critical process units; specialty technical services;] on-site repairs, maintenance and service of heat exchangers, towers, vessels and piping; design, manufacturing, [removed: repair] [added: repair,] and hydro blast cleaning of shell and tube heat exchangers and related equipment; [removed: refinery turnaround planning] and [removed: engineering services; specialty welding services; overhaul and maintenance of critical process units in refineries and petrochemical plants;] [added: construction, maintenance,] and [removed: specialty technical] [added: other support] services for [removed: refineries] [added: customers within the upstream] and [removed: petrochemical plants.][added: midstream sectors.]

[removed: 2018] [added: 2018] versus [removed: 2017][added: 2017]

[removed: Overview][added: Overview]

| | [removed: 2018] [added: 2018] | | | | [removed: 2017] [added: 2017] | | |

The results of our operations for [removed: 2018] [added: 2019] set new company records in terms of revenues, operating income, [removed: operating margin (operating income as a percentage of revenues),] net income attributable to EMCOR Group, [removed: Inc.] [added: Inc.,] and diluted earnings per common share from continuing operations.

The strong operating results were due to revenue growth [removed: within all of our reportable segments] and an increase in operating income within [removed: the majority] [added: all] of our reportable [removed: segments.][added: segments, as well as operating margin expansion across all such segments, except for our United States mechanical construction and facilities services segment due to a change in revenue mix compared to the prior year.]

Operating income [removed: and operating margin] increased within all of our [removed: domestic] reportable segments, except for our United States electrical construction and facilities services [added: segment and our United States industrial services] segment.

The decrease in operating income and operating margin within our United States electrical construction and facilities services segment was attributable to $10.0 million of losses incurred [added: in 2018] on a transportation construction project in the Western region of the United States, which negatively impacted [added: operating margin of this segment by 0.6% and] our consolidated operating margin by 0.1%.

[removed: The] [added: Operating income and operating margin within our United States industrial services segment declined as the] results for [added: the year ended December 31,] 2017 [removed: also included] [added: benefited from $18.1 million of gross profit related to] the recovery of certain contract costs previously disputed on a project [removed: that was] completed in [removed: 2016 within our United States mechanical construction and facilities services segment,] [added: 2016,] which [removed: resulted in $18.1 million of gross profit and] favorably impacted [added: operating margin of this segment by 2.1%, and] consolidated operating margin by [removed: 0.2%.][added: 0.2%, in 2017.]

The increase in net income attributable to EMCOR Group, Inc. and diluted earnings per common share from continuing operations in 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 [removed: Cuts and Jobs Act (the “Tax Act”).][added: Act.]

[removed: Impact] [added: Impact] of [removed: Acquisitions][added: Acquisitions]

[removed: Both] [added: This acquisition strengthens our position and broadens our capabilities in the Southern and Southeastern regions] of [removed: their] [added: the United States, and the] results [added: of its operations] have been included [removed: in] [added: within] our United States mechanical construction and facilities services segment.

The [removed: third] [added: fourth] company provides [removed: mobile mechanical] [added: electrical construction and maintenance] services [removed: within the Western region of the United States,] [added: for industrial] and [added: commercial buildings in North Texas, and] its results have been included in our United States [removed: building] [added: electrical construction and facilities] services segment.

[removed: Discussion] [added: Discussion] and Analysis of Results of [removed: Operations][added: Operations]

[removed: Revenues][added: *Revenues*]

| | [removed: 2018] [added: 2018] | | | | [removed: % of Total] [added: % of Total] | | | [removed: 2017] [added: 2017] | | | | [removed: % of Total] [added: % of Total] | |

| United States mechanical construction and facilities services | [removed: 3,020,307] [added: 3,340,337] | | | | [removed: 37] [added: 36] | % | | [removed: 2,963,815] [added: 2,962,843] | | | | [removed: 39] [added: 37] | % |

Companies acquired in 2018 and 2017, which are reported in our United States electrical construction and facilities services segment, our United States mechanical construction and facilities services [removed: segment] [added: segment,] and our United States building services segment, generated incremental revenues of $90.1 million in 2018.

Our United States mechanical construction and facilities services segment revenues for the year ended December 31, 2018 were [removed: $3,020.3] [added: $2,962.8] million, [removed: a $56.5] [added: an $82.7] million increase compared to revenues of [removed: $2,963.8] [added: $2,880.1] million for the year ended December 31, 2017.

Revenues of our United States industrial services segment for the year ended December 31, 2018 increased by [removed: $66.5] [added: $40.3] million compared to the year ended December 31, 2017.

[removed: Cost] [added: *Cost] of sales and Gross [removed: profit][added: profit*]

The following table presents cost of sales, gross profit (revenues less cost of sales), and gross profit margin (gross profit as a percentage of revenues) for the years ended December 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] (in thousands, except for percentages):

| | [removed: 2018] [added: 2018] | | | | [removed: 2017] [added: 2017] | | |

Gross profit and gross profit margin for the year ended December 31, 2017 were favorably impacted by the recovery of certain contract costs previously disputed on a project that was completed in 2016 within our United States [removed: mechanical construction and facilities] [added: industrial] services segment, resulting in $18.1 million of gross profit and a 0.2% favorable impact on the Company’s 2017 gross profit margin.

[removed: Selling,] [added: *Selling,] general and administrative [removed: expenses][added: expenses*]

The following table presents selling, general and administrative expenses and SG&A margin (selling, general and administrative expenses as a percentage of revenues) for the years ended December 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] (in thousands, except for percentages):

| | [removed: 2018] [added: 2018] | | | | [removed: 2017] [added: 2017] | | |

In addition to the impact of acquisitions, selling, general and administrative expenses increased due to: (a) an increase in salaries, partially as a result of an increase in headcount due to higher revenues than in the prior year, (b) an increase in incentive compensation expense, due to higher annual operating results than in the prior [removed: year ,] [added: year,] and (c) increases in other selling, general and administrative expenses, such as information technology, consulting and other professional fees.

[removed: Restructuring expenses][added: *Restructuring expenses*]

The [removed: majority of] obligations outstanding as of December 31, [removed: 2018] [added: 2019] will be paid [added: pursuant to our contractual obligations] throughout [removed: 2019] [added: 2020] and [removed: 2020.][added: 2021.]

No material expenses in connection with restructuring from continuing operations are expected to be incurred during [removed: 2019.][added: 2020.]

[removed: Impairment] [added: *Impairment] loss on goodwill and identifiable intangible [removed: assets][added: assets*]

[removed: Operating] [added: *Operating] income [removed: (loss)][added: (loss)*]

| | [removed: 2018] [added: 2018] | | | | [removed: % of Segment Revenues] [added: % of Segment Revenues] | | | [removed: 2017] [added: 2017] | | | | [removed: % of Segment Revenues] [added: % of Segment Revenues] | |

| United States mechanical construction and facilities services | [removed: 219,352] [added: 225,040] | | | | [removed: 7.3] [added: 6.7] | % | | [removed: 212,396] [added: 219,853] | | | | [removed: 7.2] [added: 7.4] | % |

Operating income [removed: and operating margin] increased within all of our [removed: domestic] reportable segments, except for our United States electrical construction and facilities services [added: segment and our United States industrial services] segment.

[removed: In addition, operating income increased] [added: Operating margin remained flat] within our United Kingdom building services [removed: segment, while operating margin remained flat.][added: segment.]

Operating income and operating margin for the year ended December 31, 2017 benefited from the recovery of certain contract costs previously disputed on a project completed in 2016 within our United States [removed: mechanical construction and facilities] [added: industrial] services segment, which resulted in a 0.2% favorable impact on the Company’s operating margin.

The “United States industrial services” segment principally consists of those operations which provide industrial maintenance and services for refineries, petrochemical plants, and other customers within the oil and gas industry.

2019 versus 2018

| | 2019 | | | | 2018 | | |

| Revenues | $ | 9,174,611 | | | $ | 8,130,631 | |

| Operating income | $ | 460,892 | | | $ | 403,083 | |

| Income from continuing operations | $ | 325,140 | | | $ | 285,922 | |

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Operating margin (operating income as a percentage of revenues) for 2019 remained consistent with our previously established annual record of 5.0%.

Revenues increased by 12.8% from $8.1 billion for the year ended December 31, 2018 to $9.2 billion for the year ended December 31, 2019.

Operating income for 2019 of $460.9 million, or 5.0% of revenues, increased by $57.8 million compared to operating income of $403.1 million, or 5.0% of revenues, in 2018.

During 2019, we completed the acquisition of Batchelor & Kimball, Inc. (“BKI”), a leading full service provider of mechanical construction and maintenance services.

In addition to BKI, during 2019, we acquired: (a) a company which provides electrical contracting services in central Iowa, the results of operations of which have been included within our United States electrical construction and facilities services segment, (b) a company which provides mechanical contracting services in south-central and eastern Texas, the results of operations of which have been included within our United States mechanical construction and facilities services segment, and (c) four companies included within our United States building services segment, consisting of: (i) a company which provides mobile mechanical services in the Southern region of the United States and (ii) three companies, the results of operations of which were de minimis, which bolster our presence in geographies where we have existing operations and provide either mobile mechanical services or building automation and controls solutions.

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| | 2019 | | | | % of Total | | | 2018 | | | | % of Total | |

| United States building services | 2,106,872 | | | | 23 | % | | 1,875,485 | | | | 23 | % |

| United States industrial services | 1,087,543 | | | | 12 | % | | 923,109 | | | | 11 | % |

| Total United States operations | 8,751,352 | | | | 95 | % | | 7,715,760 | | | | 95 | % |

| United Kingdom building services | 423,259 | | | | 5 | % | | 414,871 | | | | 5 | % |

| Total worldwide operations | $ | 9,174,611 | | | 100 | % | | $ | 8,130,631 | | | 100 | % |

As described in more detail below, revenues for the year ended December 31, 2019 increased to $9.2 billion compared to $8.1 billion for the year ended December 31, 2018, with all reportable segments experiencing revenue growth year over year.

These increases were partially offset by a decrease in revenues due to the completion or substantial completion of certain large construction projects within the transportation, healthcare, and hospitality market sectors.

The increase in revenues was primarily attributable to an increase in revenues from the majority of the market sectors in which we operate, including: (a) the manufacturing market sector, due to several food processing construction projects, (b) the commercial market sector, primarily as a result of certain telecommunication and technology construction projects currently in process, and (c) the healthcare, water and wastewater, and institutional market sectors due to increased project activity.

These increases were partially offset by decreased revenues within the hospitality market sector as a result of the completion of certain large projects.

The $231.4 million increase in this segment’s revenues was due to: (a) incremental revenues of $106.7 million generated by companies acquired in 2019 and 2018 within our mobile mechanical services operations, (b) greater project, controls, and service repair and maintenance activities within our mobile mechanical services operations, (c) an increase in revenues within our commercial site-based services operations, partially as a result of: (i) scope expansion on certain contracts with existing customers and (ii) new contract awards, and (d) increased large project activity within our energy services operations.

These increases were partially offset by revenue declines within our government site-based services operations due to the loss of certain contracts not renewed pursuant to rebid, which resulted in a reduction in both base maintenance and indefinite-delivery, indefinite-quantity project revenues.

The increase in revenues was primarily due to increased maintenance and capital project activity within our field services operations.

In addition, the results for the year ended December 31, 2019 benefited from a more normalized demand pattern for our turnaround services as compared to the prior year, which was negatively impacted by the lingering effects of Hurricane Harvey, which led to the cancellation or deferral of certain previously scheduled maintenance activities with our customers in the first half of 2018.

The increased revenues for the

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year ended December 31, 2019 were partially offset by a decrease in revenues from our shop services operations, primarily as a result of a reduction in new build heat exchanger sales.

Unfavorable exchange rates for the British pound versus the United States dollar negatively impacted this segment’s revenues for the year ended December 31, 2019 by $19.5 million.

| | 2019 | | | | 2018 | | |

| Cost of sales | $ | 7,818,743 | | | $ | 6,925,178 | |

| Gross profit | $ | 1,355,868 | | | $ | 1,205,453 | |

The increase in consolidated gross profit was due to an increase in gross profit from all of our reportable segments, partially as a result of an increase in revenues within each segment during 2019.

| | 2019 | | | | 2018 | | |

| Selling, general and administrative expenses | $ | 893,453 | | | $ | 799,157 | |

The decrease in SG&A margin for the year ended December 31, 2019 was primarily due to an increase in revenues without commensurate increases in our overhead cost structure.

No impairment of our goodwill was recognized for the years ended December 31, 2019 and 2018.

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The improved operating results were primarily attributable to: (a) our United States industrial services segment, as this segment's results were negatively impacted by Hurricane Harvey during the second half of 2017, and (b) improved operating performance within all divisions of our United States building services segment.

We acquired three companies during 2017.

One company provides fire protection and alarm services primarily in the Southern region of the United States.

The second company provides millwright services for manufacturing companies throughout the United States.

| United States industrial services | 865,645 | | | | 11 | % | | 799,169 | | | | 10 | % |

The majority of obligations outstanding as of December 31, 2017 were paid during 2018.

In conjunction with our 2017 annual impairment test, we recognized $57.8 million of non-cash impairment charges.

The goodwill impairment primarily resulted from both lower forecasted revenues and operating margins from our United States industrial services segment, which had been adversely affected by poor market conditions, predominately within its shop services operations due to: (a) a prolonged curtailment in capital

spending from customers, (b) increased foreign competition and (c) economic uncertainty within certain South American markets which caused us to limit our pursuit of opportunities within such countries.

| United States industrial services | 28,172 | | | | 3.3 | % | | 19,084 | | | | 2.4 | % |

This segment’s operating

The increase in operating income for the year ended December 31, 2018 was attributable to an increase in demand and improved operating performance within both our shop and field services operations.

The increase in operating income from our shop services operations was due to increases in demand for new build heat exchangers, as well as our cleaning, repair and maintenance services.

Our remaining performance obligations at December 31, 2018 were $3.96 billion compared to $3.97 billion at September 30, 2018.

2017 versus 2016

| | 2017 | | | | 2016 | | |

| Revenues | $ | 7,686,999 | | | $ | 7,551,524 | |

| Operating income | $ | 328,902 | | | $ | 306,929 | |

| Income from continuing operations | $ | 228,050 | | | $ | 185,295 | |

Excluding the effect of these acquisitions, revenues for 2017 decreased due to lower revenues from: (a) our United States industrial services segment, due to: (i) a decrease in large project activity from our specialty services offerings within our field services operations, (ii) the negative impact of Hurricane Harvey, which resulted in the deferral and cancellation of previously scheduled turnaround projects, and (iii) our industrial shop services operations and (b) our United States building services segment, primarily attributable to: (i) the loss of certain contracts not renewed pursuant to rebid within our commercial and government site-based services operations and (ii) a reduction in large project activity within their energy services operations.

These decreases in revenues were partially offset by an increase in revenues from both of our domestic construction segments and our United Kingdom building services segment.

During 2017, as a result of continued adverse market conditions, we experienced a decrease in demand for the offerings within our United States industrial services segment.

Consequently, we recorded a non-cash goodwill impairment charge of $57.5 million during the fourth quarter of 2017.

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, our 2016 operating results were negatively impacted by: (a) $27.9 million of aggregate losses incurred on two construction projects reported within our United States mechanical construction and facilities services segment and (b) $19.4 million of losses incurred on a transportation construction project in the Northeastern region of the United States reported within our United States electrical construction and facilities services segment

We completed the acquisition of Ardent Services, L.L.C. and Rabalais Constructors, LLC (collectively, “Ardent”) during 2016.

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.

Additionally during 2016, we acquired another company for an immaterial amount.

| | 2017 | | | | % of Total | | | 2016 | | | | % of Total | |

| United States building services | 1,753,703 | | | | 23 | % | | 1,810,229 | | | | 24 | % |

| United States industrial services | 799,169 | | | | 10 | % | | 1,067,315 | | | | 14 | % |

| Total United States operations | 7,346,254 | | | | 96 | % | | 7,225,268 | | | | 96 | % |

| United Kingdom building services | 340,745 | | | | 4 | % | | 326,256 | | | | 4 | % |

| Total worldwide operations | $ | 7,686,999 | | | 100 | % | | $ | 7,551,524 | | | 100 | % |

As described in more detail below, revenues for 2017 were $7.7 billion compared to $7.6 billion for 2016.

Increases in revenues within both of our domestic construction segments and our United Kingdom building services segment were partially offset by decreases within our United States industrial services segment and our United States building services segment.

The increase in revenues within the commercial market sector was primarily a result of work performed on numerous telecommunication construction projects.

The increase in revenues was primarily attributable to an increase in revenues from healthcare, commercial and hospitality construction projects.

The decrease in revenues was primarily attributable to: (a) the loss of certain contracts not renewed pursuant to rebid within our commercial and government site-based services operations, (b) a reduction in large project activity within our energy services operations and (c) a reduction in snow removal activities within our commercial site-based services operations.

We have not used any derivative financial instruments during the years ended December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] including trading or speculating on changes in interest rates or commodity prices of materials used in our business.

As of December 31, [removed: 2018,] [added: 2019,] there were borrowings of [removed: $25.0] [added: $50.0] million outstanding under the 2016 Revolving Credit Facility and the balance of the 2016 Term Loan was [removed: $269.6] [added: $254.4] million.

Based on the [removed: $294.6] [added: $304.4] 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 $2.2 million [removed: for] [added: 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 $2.2 million [removed: for] [added: in] the next twelve months.

We are [removed: also] exposed to construction market risk and its potential related impact on accounts receivable or contract assets on uncompleted contracts.

We continually monitor the creditworthiness of our customers and maintain [removed: ongoing] [added: on-going] discussions with customers regarding contract status with respect to change orders and billing terms.

See also the previous discussions of Revenue Recognition from Contracts with Customers and Accounts Receivable under [removed: Application] [added: the heading “Application] of Critical Accounting [removed: Policies] [added: Policies”] in Item 7.

The resulting translation adjustments are recorded as accumulated other comprehensive [removed: income (loss),] [added: (loss) income,] a component of equity, in the Consolidated Balance Sheets.

It is expected that a number of banks currently reporting information used to set LIBOR will stop doing so after 2021, which could either cause LIBOR to stop publication or cause LIBOR to no longer be representative of the underlying market.

We believe our exposure to market risk associated with the discontinuation of LIBOR is limited as our 2016 Credit Agreement expires prior to the end of 2021 and given that we are not exposed to any other material contracts that reference LIBOR.

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

[removed: General][added: *General*]

In [removed: 2018,] [added: 2019,] we had revenues of approximately [removed: $8.1] [added: $9.2] billion.

| • | Overhaul and maintenance of critical process units in refineries and petrochemical plants; [removed: and] |

| • | Specialty technical services for refineries and petrochemical [removed: plants.] [added: plants; and] |

[removed: Worldwide, as] [added: As] of December 31, [removed: 2018,] [added: 2019,] we had approximately [removed: 33,000] [added: 36,000] employees.

Of our [removed: 2018] [added: 2019] revenues, approximately 95% were generated in the United States and approximately 5% were generated in foreign countries, substantially all in the United Kingdom.

In [removed: 2018,] [added: 2019,] approximately [removed: 61%] [added: 60%] of revenues were derived from our construction operations, approximately 28% of revenues were derived from our building services operations and approximately [removed: 11%] [added: 12%] of revenues were derived from our industrial services operations.

For information regarding the revenues, operating income and total assets of each of our segments with respect to each of the last three years, and our revenues and assets attributable to the United States and the United Kingdom for the last three years, see Note [removed: 18] [added: 19] - Segment Information of the notes to consolidated financial statements included in Item 8.

[removed: Operations][added: *Operations*]

In addition, [removed: advanced voice and data communication systems] [added: facilities of all types] require [added: extensive electrical distribution systems,] sophisticated power [removed: supplies] [added: supplies,] and [removed: extensive] [added: networks of] low-voltage and fiber-optic communications cabling.

Moreover, the need for substantial environmental controls within a building, due to the heightened need [removed: for climate control] to maintain extensive computer systems at optimal temperatures, and the demand for energy [removed: savings and environmental controls in individual spaces] [added: savings,] have over the years expanded opportunities for our electrical and mechanical services businesses.

Our electrical and mechanical construction services generally fall into one of three categories: (a) large installation projects with contracts often in the multi-million dollar range that involve [added: the] construction of manufacturing and commercial buildings and institutional and public works projects or the fit-out of large blocks of space within commercial buildings, (b) large and medium sized capital and maintenance projects for manufacturing, petrochemical, [removed: oil,] [added: oil and gas,] industrial and commercial clients and (c) smaller installation projects typically involving fit-out, renovation and retrofit work.

Our United States electrical and mechanical construction operations accounted for about [removed: 61%] [added: 60%] of our [removed: 2018 worldwide] [added: 2019 total] revenues.

Of such revenues, approximately [removed: 39%] [added: 40%] were generated by our electrical construction operations and approximately [removed: 61%] [added: 60%] were generated by our mechanical construction operations.

Our largest projects have included those: (a) for institutional purposes (such as educational and correctional facilities and research laboratories); (b) for manufacturing purposes (such as pharmaceutical plants, steel, pulp and paper mills, [removed: chemical, food,] [added: food processing,] automotive and semiconductor manufacturing facilities and power generation); (c) for transportation purposes (such as highways, bridges, airports and transit systems); (d) for commercial purposes (such as office buildings, data centers, convention centers, sports stadiums and shopping malls); (e) for hospitality purposes (such as resorts, hotels and gaming facilities); (f) for water and wastewater purposes; (g) for healthcare purposes; (h) for process facilities (such as oil and gas refineries and chemical processing plants); and (i) for oil and gas pipeline compressor stations and terminal and metering facilities.

Our largest projects, which typically range in size from $10.0 million up to and occasionally exceeding $150.0 million and are frequently multi-year projects, represented approximately [removed: 30%] [added: 34%] of our [removed: worldwide] [added: electrical and mechanical] construction services revenues in [removed: 2018.][added: 2019.]

Our projects of less than $10.0 million accounted for approximately [removed: 70%] [added: 66%] of our [removed: worldwide] [added: electrical and mechanical] construction services revenues in [removed: 2018.][added: 2019.]

We perform construction services pursuant to contracts with owners (such as corporations, municipalities and other governmental entities), general contractors, systems suppliers, construction managers, developers, other [removed: subcontractors] [added: subcontractors,] and tenants of commercial properties.

Our United States building services segment offers a broad range of services, including operation, maintenance and service of [removed: electrical] [added: mechanical, electrical, plumbing,] and [removed: mechanical] [added: building automation] systems; commercial and government site-based operations and maintenance; facility maintenance and services, including outage services to utilities and manufacturing facilities; military base operations support services; mobile mechanical 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, [added: management and maintenance with respect to energy systems; technical consulting and diagnostic]

[removed: management and maintenance with respect to 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.

Our building services operations, which generated approximately 28% of our [removed: 2018 worldwide] [added: 2019 total] revenues, provide services to owners, operators, tenants and managers of all types of facilities both on a contractual basis for a specified period of time and on an individual task order basis.

Of our [removed: 2018] [added: 2019] building services revenues, approximately [removed: 82%] [added: 83%] were generated in the United States and approximately [removed: 18%] [added: 17%] were generated in the United Kingdom.

Demand for our building services is often driven by customers’ decisions to focus on their core competencies, customers’ programs to reduce costs, the increasing technical complexity of their facilities and their mechanical, electrical, [added: building automation,] voice and [removed: data] [added: data,] and other systems, and the need for increased reliability, especially in [removed: electrical] [added: mechanical, electrical,] and [removed: mechanical] [added: building automation] systems.

We provide building services at a number of [removed: preeminent] [added: prominent] buildings, including those that house the Secret Service, the Federal Deposit Insurance Corporation, the [removed: National Foreign Affairs Training Center,] [added: General Accountability Office (GAO),] and the Department of Health and Human Services, as well as other government facilities, including the NASA Jet Propulsion Laboratory.

We also provide building [removed: services] [added: services, as a prime contractor or a subcontractor,] to a number of military bases, including base operations support services to the Navy National Capital Region and the Army’s [removed: Fort Huachuca] [added: Carlisle Barracks] in [removed: Arizona,] [added: Pennsylvania,] and are involved in a joint venture providing building services to NASA’s Armstrong Flight Research Center in Edwards, California.

Our industrial services [removed: business,] [added: operations,] which generated approximately [removed: 11%] [added: 12%] of our [removed: 2018 worldwide] [added: 2019 total] revenues, is a recognized leader in the refinery turnaround market and has a growing presence in the petrochemical market.

[removed: Our industrial services business:] [added: In addition, these businesses:] (a) [removed: provides] [added: provide] maintenance, repair and cleaning services for highly engineered shell and tube heat exchangers for refineries and petrochemical plants both in the field and at our own shops, including tube and shell repairs, bundle repairs, and extraction [removed: services, and] [added: services;] (b) [removed: designs] [added: design] and [removed: manufactures] [added: manufacture] new highly engineered shell and tube heat [removed: exchangers.][added: exchangers; and (c) provide construction, maintenance, and support services to customers within the upstream and midstream sectors.]

[removed: We also] [added: Our industrial services businesses] perform a broad range of turnaround and maintenance services for critical units of refineries [added: and petrochemical plants] so as to upgrade, [removed: repair] [added: repair,] and maintain them.

Such services include turnaround and maintenance services relating to: [removed: (i)] [added: (a)] engineering and planning services in advance of complex refinery turnarounds; [removed: (ii)] [added: (b)] overhaul and maintenance of critical process units (including hydrofluoric alkylation units, fluid catalytic cracking units, coking units, heaters, heat exchangers and related mechanical equipment) during refinery and petrochemical plant shut downs; [removed: (iii)] [added: (c)] replacement and new construction capital projects for refineries and petrochemical plants; and [removed: (iv)] [added: (d)] other related specialty services such as [removed: (a)] [added: (i)] welding (including pipe welding) and fabrication; [removed: (b)] [added: (ii)] heater, boiler, and reformer repairs and replacements; converter repair and revamps; and vessel, exchanger and tower services; [removed: (c)] [added: (iii)] tower and column repairs in refineries and petrochemical [removed: facilities; (d)] [added: plants; (iv)] installation and repair of refractory materials for critical units in process plants so as to protect equipment from corrosion, erosion, and extreme temperatures; and [removed: (e)] [added: (v)] acid-proofing services to protect critical components at refineries from chemical exposure.

[removed: Competition][added: *Competition*]

However, there are relatively few significant barriers to entry to several types of our construction [removed: services business.][added: services.]

While the building services industry is also highly fragmented, with most competitors operating in a specific geographic region, a number of large United States based corporations such as AECOM Technology Corporation, Johnson Controls, Inc., Fluor Corp., J&J Worldwide Services, Cushman & Wakefield Inc., [removed: CB Richard Ellis,] [added: CBRE Group,] Inc., Jones Lang LaSalle Incorporated, Sodexo, Inc., Aramark Corporation and ABM Industries Incorporated are engaged in this field, as are large original equipment manufacturers such as Carrier Corp. and Trane Inc. In addition, we compete with several regional firms serving all or portions of the markets we target, such as Brickman Valley Crest, Inc., Kellermeyer Bergensons Services, Inc., SMS Assist, LLC and Ferandino & Sons, Inc. Our principal services competitors in the United Kingdom include [added: CBRE Group, Inc., Bouygues UK Ltd.,] ISS UK [removed: Ltd.] [added: Ltd.,] and MITIE Group plc.

[removed: The market for providing these services and products to refineries and petrochemical plants is highly fragmented and includes large national industrial services providers, as well as numerous regional companies, including] [added: Competitors within this industry include] JV Industrial Companies Ltd., Matrix Service Company, [removed: Starcon,] [added: United Plant Services, Inc.,] Turner Industries, Team, Inc., Cust-O-Fab, Dunn Heat, [removed: and] Wyatt Field Service Company, [added: and DeepWell Energy Services, LLC,] among others.

In the manufacture of heat exchangers, we compete with both U.S. and foreign [removed: manufacturers.][added: manufactures.]

The key competitive factors in the industrial services market [removed: include] [added: consist of] service, quality, ability to respond quickly, technical expertise, price, safety record and availability of qualified personnel.

[removed: Employees][added: *Employees*]

At December 31, [removed: 2018,] [added: 2019,] we employed approximately [removed: 33,000] [added: 36,000] people, approximately [removed: 57%] [added: 59%] of whom are represented by various unions pursuant to approximately 400 collective bargaining agreements between our individual subsidiaries and local unions.

[removed: Remaining] [added: *Remaining] Unsatisfied Performance [removed: Obligations][added: Obligations*]

Our remaining unsatisfied performance obligations (“remaining performance obligations”) at December 31, [removed: 2018] [added: 2019] were [removed: $3.96] [added: $4.04] billion.

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 [added: for these contracts] due to the [added: inherent substantial economic penalty that would be incurred by our customers upon cancellation.]

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

Our industrial services are primarily provided to customers within the oil and gas industry and consist of:

| | |

| --- | --- |

| • | Construction, maintenance, and support services within the upstream and midstream sectors. |

The electrical and mechanical construction services industry continues to experience growth due principally to the increased content, complexity, and sophistication of electrical and mechanical systems resulting, in part, from growth in digital processing, and cloud computing and data storage.

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

The market for providing industrial services includes large national providers, as well as numerous regional companies.

We believe our

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

Our industrial services are provided to refineries and petrochemical plants and include:

The electrical and mechanical construction services industry has grown over the years due principally to the increased content, complexity and sophistication of electrical and mechanical systems, as well as the installation of more technologically advanced voice and data communications, lighting, and environmental control systems in all types of facilities, in large part due to the integration of digital processing and information technology.

For these reasons, buildings need extensive electrical distribution systems.

In our industrial services business, we are one of the leading North American providers of maintenance and repair services for, and manufacturing of, highly engineered shell and tube heat exchangers and related equipment and a leader in providing specialized services to refineries and petrochemical plants.

inherent substantial economic penalty that would be incurred by our customers upon cancellation.

We are involved in several [added: legal] proceedings in which damages and claims have been asserted against us.

See Note 16 - Commitments and Contingencies of the notes to consolidated financial statements included in Item 8.

Financial Statements and Supplementary Data for a discussion regarding certain legal proceedings.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

| [removed: FORM 10-K] [added: FORM] | [added: 10-K |]

| [removed: x] [added: ☒] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the fiscal year ended December 31, [removed: 2018][added: 2019]

| [removed: ¨] [added: ☐] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

| [removed: EMCOR] [added: EMCOR] Group, [removed: Inc.] [added: Inc.] |

| [removed: Delaware] [added: Delaware] | | [removed: 11-2125338] | [added: | 11-2125338 |]

| (State or other jurisdiction of incorporation or organization) | | [added: | |] (I.R.S. Employer Identification Number) |

| [removed: 301] [added: 301] Merritt [removed: Seven Norwalk, Connecticut] [added: Seven] | [added: Norwalk,] | [removed: 06851-1092] [added: Connecticut] | [added: | 06851-1092 |]

| (Address of principal executive offices) | | [added: | |] (Zip Code) |

| [removed: Title] [added: Title] of each [removed: class] [added: class] | | [removed: Name] [added: Trading Symbol | | Name] of each exchange on which [removed: registered] [added: registered] |

| [removed: Common Stock] [added: Common Stock] | | [removed: New] [added: EME | | New] York Stock [removed: Exchange] [added: Exchange] |

Yes [removed: x] [added: ☒] No [removed: ¨][added: ☐]

Yes [removed: ¨] [added: ☐] No [removed: x][added: ☒]

Yes [removed: x] [added: ☒] No [removed: ¨][added: ☐]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: 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 [removed: and post] such files).

Yes [removed: x] [added: ☒] No [removed: ¨][added: ☐]

| Large [removed: accelerated filer] [added: Accelerated Filer] | [removed: x] [added: ☒] | Accelerated [removed: filer] [added: Filer] | [removed: ¨] [added: ☐] | Non-accelerated [removed: filer | ¨] [added: Filer] | [removed: (Do not check if a smaller reporting company)] [added: ☐] | Smaller [removed: reporting company] [added: Reporting Company] | [removed: ¨] [added: ☐] | Emerging [removed: growth company] [added: Growth Company] | [removed: ¨] [added: ☐] |

Yes [removed: ¨] [added: ☐] No [removed: x][added: ☒]

The aggregate market value of the common stock held by non-affiliates of the registrant was approximately [removed: $3,270,000,000] [added: $3,785,000,000] as of the last business day of the registrant’s most recently completed second fiscal quarter, based upon the closing sale price on the New York Stock Exchange reported for such date.

Number of shares of the registrant’s common stock outstanding as of the close of business on February [removed: 15, 2019: 55,997,627] [added: 21, 2020: 56,259,161] shares.

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the definitive proxy statement for the [removed: 2019] [added: 2020] Annual Meeting of Stockholders, which document will be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year to which this Form 10-K relates, are incorporated by reference into Items 10 through 14 of Part III of this Form 10-K.

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

| | | [removed: PAGE] [added: PAGE] |

[removed: | [PART I](#s800F3A59947B5FE58A7E04F9D5D100D8) | | |][added: PART I]

| Item 1. | [removed: [Business](#s6F43E1132D9A5D1191153AAAFA6B2DDF)] [added: [Business](#sFD35AD39781A433213963854A268A3EE)] | [removed: [1](#s6F43E1132D9A5D1191153AAAFA6B2DDF)] [added: [1](#sFD35AD39781A433213963854A268A3EE)] |

| | [Remaining Unsatisfied Performance [removed: Obligations](#s41BF4DC474D75E90820D18FAE117214B)] [added: Obligations](#s2B2C950FB157F3CFA2F03854A34163AF)] | [removed: [5](#s41BF4DC474D75E90820D18FAE117214B)] [added: [5](#s2B2C950FB157F3CFA2F03854A34163AF)] |

| | [Available [removed: Information](#s235D0FB918E35507A4D048FAC19DF815)] [added: Information](#sAA9E92D46AD41FECF1E83854A362FB4D)] | [removed: [6](#s235D0FB918E35507A4D048FAC19DF815)] [added: [6](#sAA9E92D46AD41FECF1E83854A362FB4D)] |

| Item 1A. | [Risk [removed: Factors](#sD09A81D0B6135AAF9E1FE053FADFF27C)] [added: Factors](#s434315A6B356EFAFDDE33854A3937EB6)] | [removed: [6](#sD09A81D0B6135AAF9E1FE053FADFF27C)] [added: [7](#s434315A6B356EFAFDDE33854A3937EB6)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#sCE501D8134E550B5A5E4E26B0BEA0DA9)] [added: Comments](#sAC4DCA3316C6335BABA73854A3B5773F)] | [removed: [13](#sCE501D8134E550B5A5E4E26B0BEA0DA9)] [added: [14](#sAC4DCA3316C6335BABA73854A3B5773F)] |

| Item 2. | [removed: [Properties](#s4D2F0ECECC055C81AB4237137E5CEC25)] [added: [Properties](#sEB9A6F0DF6B0CC9958293854A3E89829)] | [removed: [14](#s4D2F0ECECC055C81AB4237137E5CEC25)] [added: [15](#sEB9A6F0DF6B0CC9958293854A3E89829)] |

| Item 3. | [Legal [removed: Proceedings](#s0CFDD90B19F5538695E2EE44C284664E)] [added: Proceedings](#s6924499A83F502F642883854A4071CE7)] | [removed: [16](#s0CFDD90B19F5538695E2EE44C284664E)] [added: [17](#s6924499A83F502F642883854A4071CE7)] |

| Item 4. | [Mine Safety [removed: Disclosures](#s144AE0BC368359958E42759805DE6B2B)] [added: Disclosures](#s7A5FAB8265F99A96B0A63854A43BC988)] | [removed: [16](#s144AE0BC368359958E42759805DE6B2B)] [added: [17](#s7A5FAB8265F99A96B0A63854A43BC988)] |

| | [Executive Officers of the [removed: Registrant](#sA3A3A9F7B8DD502E98069D071906BB46)] [added: Registrant](#s69B799B5A413B61AC83B3854A45CA5B3)] | [removed: [17](#sA3A3A9F7B8DD502E98069D071906BB46)] [added: [18](#s69B799B5A413B61AC83B3854A45CA5B3)] |

| Item 5. | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s3043BBB007F157F198DCF90E7E8F1F5F)] [added: Securities](#s4D2C90D544E457C7357F3854A4AFEF47)] | [removed: [18](#s3043BBB007F157F198DCF90E7E8F1F5F)] [added: [19](#s4D2C90D544E457C7357F3854A4AFEF47)] |

| Item 6. | [Selected Financial [removed: Data](#s00B09F3F31C354029C70A3CCBD38403F)] [added: Data](#s3296EB9B189AE07F8A2638548E832F43)] | [removed: [20](#s00B09F3F31C354029C70A3CCBD38403F)] [added: [21](#s3296EB9B189AE07F8A2638548E832F43)] |

| Item 7. | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s1BC58BD0D53954E199A3ADBCE0D11C38)] [added: Operations](#sE1920E134F7D9E4D08EA3854A5035355)] | [removed: [21](#s1BC58BD0D53954E199A3ADBCE0D11C38)] [added: [22](#sE1920E134F7D9E4D08EA3854A5035355)] |

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

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[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

| | [General](#s1E529881DC4A3306DD323854A2993506) | [1](#s1E529881DC4A3306DD323854A2993506) |

| | [Operations](#s49E559CF579B6DFC348A3854A2BBDDD6) | [2](#s49E559CF579B6DFC348A3854A2BBDDD6) |

| | [Competition](#sD89CB3D61E39C596CDDF3854A2EEB69D) | [5](#sD89CB3D61E39C596CDDF3854A2EEB69D) |

| | [Employees](#sD023AC69379C6E7953DC3854A30E4313) | [5](#sD023AC69379C6E7953DC3854A30E4313) |

| [PART II](#sCFF79A40546D083E183C3854A48E5F8F) | | |

| [PART IV](#s469CD5512B2CA56EA4F33854AE51BF3E) | | |

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

10-K 1 eme-20181231x10k.htm FORM 10-K

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| | [General](#sC3970EFD28BD536F90371D893605B029) | [1](#sC3970EFD28BD536F90371D893605B029) |

| | [Operations](#sB381A4A8693F5035BA18CE9C4D24F1C2) | [2](#sB381A4A8693F5035BA18CE9C4D24F1C2) |

| | [Competition](#s9A907521CF9850F6876AECD7FA146C4B) | [5](#s9A907521CF9850F6876AECD7FA146C4B) |

| | [Employees](#s2D80F9682D2854548C8765067E604355) | [5](#s2D80F9682D2854548C8765067E604355) |

| [PART II](#s44F008DF14F15B2BAAE61F260F168B58) | | |

| [PART IV](#sABE61999B9F25AB28280ABB964D01C5D) | | |

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

| | [removed: Approximate] [added: Approximate] Square [removed: Feet] [added: Feet] | | | [removed: Lease] [added: Lease] Expiration Date, Unless [removed: Owned] [added: Owned] |

| 4462 Corporate Center Drive Los Alamitos, California (a) | 57,863 | | | [removed: 12/31/2019] [added: 12/31/2026] |

| 7614 and 7720 Opportunity Drive Fort Wayne, Indiana (b) | [removed: 144,695] [added: 156,993] | | | [removed: 7/31/2026] [added: 7/31/2031] |

| 2655 Garfield Avenue Highland, Indiana (a) | [removed: 57,765] [added: 58,065] | | | [removed: 6/30/2019] [added: 6/30/2034] |

| 111-01 and 111-21 14th Avenue College Point, New York (a) | 73,013 | | | [removed: 2/28/2024] [added: 2/29/2024] |

| | [removed: Approximate] [added: Approximate] Square [removed: Feet] [added: Feet] | | | [removed: Lease] [added: Lease] Expiration Date, Unless [removed: Owned] [added: Owned] |

See Note [removed: 16] [added: 17] - [removed: Commitments and Contingencies] [added: Leases] of the notes to consolidated financial statements included in Item 8.

We utilize substantially all of our leased or owned facilities and believe there will be no difficulty either in negotiating the renewal of [removed: our real property] [added: such] leases as they expire or in finding alternative space, if necessary.

| 2227 Plunkett Road Conyers, Georgia (b) | 100,400 | | | 10/31/2029 |

| 3976 Southern Avenue Cincinnati, Ohio (b) | 60,575 | | | 10/31/2025 |

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

[removed: EXECUTIVE] [added: EXECUTIVE] OFFICERS OF THE [removed: REGISTRANT][added: REGISTRANT]

[removed: Anthony] [added: Anthony] J.

[removed: Guzzi,] [added: Guzzi,] Age [removed: 54;] [added: 55;] President since October 2004, Chief Executive Officer since January 2011 and Chairman of the Board since June 2018.

[removed: Mark] [added: Mark] A.

[removed: Pompa,] [added: Pompa,] Age [removed: 54;] [added: 55;] Executive Vice President and Chief Financial Officer of the Company since April [removed: 2006.][added: 2006 and Treasurer since October 2019.]

From June 2003 to April 2006, Mr. Pompa was Senior Vice President-Chief Accounting Officer of the Company, and from June 2003 to January 2007, Mr. Pompa [removed: was] also [added: served as] Treasurer of the Company.

Kevin [removed: Matz,] [added: Matz,] Age [removed: 60;] [added: 61;] Executive Vice President-Shared Services of the Company since December 2007 and Senior Vice President-Shared Services from June 2003 to December 2007.

[removed: Maxine] [added: Maxine] L.

[removed: Mauricio,] [added: Mauricio,] Age [removed: 47;] [added: 48;] Senior Vice President, General Counsel and Secretary of the Company since January 2016.

[removed: PART II][added: PART II]

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

R.

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

R.

[added: *Market Information.*] Our common stock trades on the New York Stock Exchange under the symbol “EME”.

| [removed: 2018] [added: 2018] | [removed: High] [added: High] | | | | [removed: Low] [added: Low] | | |

| [removed: 2017] [added: 2019] | [removed: High] [added: High] | | | | [removed: Low] [added: Low] | | |

[added: *Holders.*] As of February [removed: 15, 2019,] [added: 21, 2020,] there were approximately [removed: 288] [added: 400] stockholders of record and, as of that date, we estimate there were [removed: approximately 41,791] [added: 58,382] beneficial owners holding our common stock in nominee or “street” name.

[added: *Dividends.*] We have paid quarterly dividends since October 25, 2011.

[added: *Securities Authorized for Issuance Under Equity Compensation Plans.*] The following table summarizes, as of December 31, [removed: 2018,] [added: 2019,] certain information regarding equity compensation plans that were approved by stockholders and equity compensation plans that were not approved by stockholders.

| | | [removed: Equity] [added: Equity] Compensation Plan [removed: Information] [added: Information] | | | | | | | | | |

| [removed: Plan Category] [added: Plan Category] | | [removed: Number] [added: Number] of Securities to be Issued upon Exercise of Outstanding Options, Warrants and [removed: Rights] [added: Rights] | | | [removed: Weighted] [added: Weighted] Average Exercise Price of Outstanding Options, Warrants and [removed: Rights] [added: Rights] | | | | [removed: Number] [added: Number] of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column [removed: A)] [added: A)] | | |

| (1) | Included within this amount are [removed: 549,357] [added: 489,888] restricted stock units awarded to our non-employee directors and employees. The weighted average exercise price would have been $24.48 had the weighted average exercise price calculation excluded such restricted stock units. |

[removed: Purchase] [added: Purchase] of Equity Securities by the Issuer and Affiliated [removed: Purchasers][added: Purchasers]

The following table summarizes repurchases of our common stock made by us during the quarter ended December 31, [removed: 2018:][added: 2019:]

| [removed: Period] [added: Period] | [removed: Total] [added: Total] Number [removed: of Shares Purchased(1)(2)] [added: of Shares Purchased (1)(2)] | | [removed: Average Price Paid] [added: Average Price Paid] Per [removed: Share] [added: Share] | [removed: Total] [added: | Total] Number [removed: of Shares] [added: of Shares] Purchased as [removed: Part of] [added: Part of] Publicly [removed: Announced Plans] [added: Announced Plans] or [removed: Programs] [added: Programs] | | [removed: Maximum Number (or] [added: Maximum Number (or] Approximate Dollar [removed: Value) of] [added: Value) of] Shares That May Yet [removed: be Purchased Under the] [added: be Purchased Under the] Plan or [removed: Programs] [added: Programs] |

| December 1, [removed: 2018] [added: 2019] to December 31, [removed: 2018] [added: 2019] | [removed: 1,096,213] [added: —] | | [removed: $63.50] [added: —] | [removed: 1,096,213] | [added: —] | [added: |] $158,506,898 |

| (1) | On September 26, 2011, our Board of Directors [added: (the “Board”)] authorized us to repurchase up to $100.0 million of our outstanding common stock. [removed: On December 5, 2013, October 23, 2014, October 28, 2015, October 25, 2017 and October 23, 2018, our] [added: Subsequently, the] Board [added: has from time to time increased the amount] of [removed: Directors] [added: our common stock that we may repurchase. Since the inception of the repurchase program, the Board has] authorized us to repurchase up to [removed: an additional $100.0 million, $250.0 million, $200.0 million, $100.0 million and $200.0] [added: $950.0] million of our outstanding common [removed: stock, respectively.] [added: stock.] As of December 31, [removed: 2018,] [added: 2019,] there remained authorization for us to repurchase approximately $158.5 million of our shares. No shares have been repurchased by us since the [removed: programs have been] [added: program was] announced other than pursuant to [removed: these publicly announced programs.] [added: such program.] The repurchase [removed: programs have] [added: program has] no [removed: expiration date and do] [added: expiration, does] 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 credit agreement, placing limitations on such repurchases. |

| (2) | Excludes [removed: 1,416] [added: 28,839] shares surrendered to the Company by participants in our share-based compensation plans to satisfy minimum tax withholdings for common stock issued under such plans. |

| First Quarter | $ | 74.60 | | | $ | 58.05 | |

| Second Quarter | $ | 88.27 | | | $ | 73.46 | |

| Third Quarter | $ | 89.55 | | | $ | 79.59 | |

| Fourth Quarter | $ | 93.54 | | | $ | 81.65 | |

| | | A | | | B | | | | C | | |

| Equity Compensation Plans Approved by Security Holders | | 509,888 | | (1) | $ | 0.96 | | (1) | 1,160,086 | | (2) |

| Total | | 509,888 | | | $ | 0.96 | | | 1,160,086 | | |

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

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| October 1, 2019 to October 31, 2019 | — | | — | | — | | $158,506,898 |

| November 1, 2019 to November 30, 2019 | — | | — | | — | | $158,506,898 |

| Total | — | | — | | — | | |

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

Market Information.

| First Quarter | $ | 72.88 | | | $ | 59.76 | |

| Second Quarter | $ | 69.14 | | | $ | 60.30 | |

| Third Quarter | $ | 70.26 | | | $ | 62.15 | |

| Fourth Quarter | $ | 84.11 | | | $ | 68.77 | |

Holders.

Dividends.

Securities Authorized for Issuance Under Equity Compensation Plans.

| | | A | | | B | | | | C | | |

| Equity Compensation Plans Approved by Security Holders | | 589,357 | | (1) | $ | 1.66 | | (1) | 1,327,307 | | (2) |

| Total | | 589,357 | | | $ | 1.66 | | | 1,327,307 | | |

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| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| | | | | | | |

| October 1, 2018 to October 31, 2018 | 425,947 | | $72.48 | 425,947 | | $248,237,181 |

| November 1, 2018 to November 30, 2018 | 279,856 | | $71.90 | 279,856 | | $228,115,562 |

| Total | 1,802,016 | | $66.93 | 1,802,016 | | |

[removed: Income] [added: Income] Statement [removed: Data][added: Data]

| | [removed: Years] [added: Years] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Revenues | $ | [removed: 8,130,631] [added: 9,174,611] | | | $ | [removed: 7,686,999] [added: 8,130,631] | | | $ | [removed: 7,551,524] [added: 7,686,999] | | | $ | [removed: 6,718,726] [added: 7,551,524] | | | $ | [removed: 6,424,965] [added: 6,718,726] | |

| Gross profit | $ | [removed: 1,205,453] [added: 1,355,868] | | | $ | [removed: 1,147,012] [added: 1,205,453] | | | $ | [removed: 1,037,862] [added: 1,147,012] | | | $ | [removed: 944,479] [added: 1,037,862] | | | $ | [removed: 907,246] [added: 944,479] | |

| Impairment loss on goodwill and identifiable intangible assets | $ | [removed: 907] [added: —] | | | $ | [removed: 57,819] [added: 907] | | | $ | [removed: 2,428] [added: 57,819] | | | $ | [removed: —] [added: 2,428] | | | $ | [removed: 1,471] [added: —] | |

| Operating income | $ | [removed: 403,083] [added: 460,892] | | | $ | [removed: 328,902] [added: 403,083] | | | $ | [removed: 306,929] [added: 328,902] | | | $ | [removed: 285,336] [added: 306,929] | | | $ | [removed: 289,342] [added: 285,336] | |

| Net income attributable to EMCOR Group, Inc. | $ | [removed: 283,531] [added: 325,140] | | | $ | [removed: 227,196] [added: 283,531] | | | $ | [removed: 181,935] [added: 227,196] | | | $ | [removed: 172,286] [added: 181,935] | | | $ | [removed: 168,664] [added: 172,286] | |

| From continuing operations | $ | [removed: 4.92] [added: 5.78] | | | $ | [removed: 3.85] [added: 4.92] | | | $ | [removed: 3.05] [added: 3.85] | | | $ | [removed: 2.74] [added: 3.05] | | | $ | [removed: 2.61] [added: 2.74] | |

| From discontinued operations | [removed: (0.04] [added: —] | | [removed: )] | | [removed: (0.01] [added: (0.04] | | ) | | [removed: (0.05] [added: (0.01] | | ) | | [removed: (0.00] [added: (0.05] | | ) | | [removed: (0.07] [added: (0.00] | | ) |

| | $ | [removed: 4.88] [added: 5.78] | | | $ | [removed: 3.84] [added: 4.88] | | | $ | [removed: 3.00] [added: 3.84] | | | $ | [removed: 2.74] [added: 3.00] | | | $ | [removed: 2.54] [added: 2.74] | |

| From continuing operations | $ | [removed: 4.89] [added: 5.75] | | | $ | [removed: 3.83] [added: 4.89] | | | $ | [removed: 3.02] [added: 3.83] | | | $ | [removed: 2.72] [added: 3.02] | | | $ | [removed: 2.59] [added: 2.72] | |

| From discontinued operations | [removed: (0.04] [added: —] | | [removed: )] | | [removed: (0.01] [added: (0.04] | | ) | | [removed: (0.05] [added: (0.01] | | ) | | [removed: (0.00] [added: (0.05] | | ) | | [removed: (0.07] [added: (0.00] | | ) |

| | $ | [removed: 4.85] [added: 5.75] | | | $ | [removed: 3.82] [added: 4.85] | | | $ | [removed: 2.97] [added: 3.82] | | | $ | [removed: 2.72] [added: 2.97] | | | $ | [removed: 2.52] [added: 2.72] | |

| [removed: Balance] [added: Balance] Sheet [removed: Data] [added: Data] (In thousands) | | | | | | | | | | | | | | | | | | | |

| | [removed: As] [added: As] of December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Equity (1) | $ | [removed: 1,741,441] [added: 2,057,780] | | | $ | [removed: 1,674,117] [added: 1,741,441] | | | $ | [removed: 1,537,942] [added: 1,674,117] | | | $ | [removed: 1,480,056] [added: 1,537,942] | | | $ | [removed: 1,429,387] [added: 1,480,056] | |

| Total assets | $ | [removed: 4,088,807] [added: 4,830,358] | | | $ | [removed: 3,965,904] [added: 4,088,807] | | | $ | [removed: 3,852,438] [added: 3,965,904] | | | $ | [removed: 3,506,706] [added: 3,852,438] | | | $ | [removed: 3,354,558] [added: 3,506,706] | |

| Goodwill | $ | [removed: 990,887] [added: 1,063,911] | | | $ | [removed: 964,893] [added: 990,887] | | | $ | [removed: 979,628] [added: 964,893] | | | $ | [removed: 843,170] [added: 979,628] | | | $ | [removed: 834,102] [added: 843,170] | |

| Borrowings under revolving credit facility | $ | [removed: 25,000] [added: 50,000] | | | $ | 25,000 | | | $ | [removed: 125,000] [added: 25,000] | | | $ | [removed: —] [added: 125,000] | | | $ | — | |

| Term loan, including current maturities | $ | [removed: 269,620] [added: 254,431] | | | $ | [removed: 284,810] [added: 269,620] | | | $ | [removed: 300,000] [added: 284,810] | | | $ | [removed: 315,000] [added: 300,000] | | | $ | [removed: 332,500] [added: 315,000] | |

| Other long-term debt, including current maturities | $ | [removed: 9] [added: —] | | | $ | [removed: 20] [added: 9] | | | $ | [removed: 31] [added: 20] | | | $ | [removed: 44] [added: 31] | | | $ | [removed: 57] [added: 44] | |

| [removed: Capital] [added: Finance] lease [removed: obligations,] [added: liabilities,] including current maturities | $ | [removed: 4,213] [added: 9,679] | | | $ | [removed: 4,571] [added: 4,213] | | | $ | [removed: 3,732] [added: 4,571] | | | $ | [removed: 3,869] [added: 3,732] | | | $ | [removed: 2,883] [added: 3,869] | |

| (1) | [removed: During 2018, we repurchased approximately 3.1 million shares of our common stock for approximately $216.2 million.] Since the inception of [removed: the] [added: our common stock] repurchase [removed: programs] [added: program] in 2011 through December 31, [removed: 2018,] [added: 2019,] we have repurchased approximately 15.9 million shares of our common stock for approximately $791.5 million. We have paid quarterly dividends since October 25, 2011. We currently pay a regular quarterly dividend of $0.08 per share, and we expect that quarterly dividends will be paid in the foreseeable future. These transactions result in a reduction of our equity. |

[Table of Contents](#s39C4528AA09E9ED237F03854A19F8960)

| Gain on sale of building | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 11,749 | |

[removed: EMCOR] [added: EMCOR] Group, Inc. and [removed: Subsidiaries][added: Subsidiaries]

[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

[removed: (In] [added: *(In] thousands, except share and per share [removed: data)][added: data)*]

| | [removed: December 31, 2018] [added: 2018] | | | | [removed: December 31, 2017] [added: 2017] | | |

| [removed: ASSETS] [added: ASSETS] | | | | | | | |

| [removed: Current assets:] [added: Current assets:] | | | | | | | |

| Cash and cash equivalents | $ | [removed: 363,907] [added: 358,818] | | | $ | [removed: 467,430] [added: 363,907] | |

| Accounts receivable, less allowance for doubtful accounts of [removed: $15,361] [added: $14,466] and [removed: $17,230,] [added: $15,361,] respectively | [removed: 1,773,620] [added: 2,030,813] | | | | [removed: 1,607,922] [added: 1,773,620] | | |

| Contract assets | [removed: 158,243] [added: 177,830] | | | | [removed: 122,621] [added: 158,243] | | |

| Inventories | [removed: 42,321] [added: 40,446] | | | | [removed: 42,724] [added: 42,321] | | |

| Prepaid expenses and other | [removed: 48,116] [added: 51,976] | | | | [removed: 43,812] [added: 48,116] | | |

| [removed: Total] [added: Total] current [removed: assets] [added: assets] | [removed: 2,386,207] [added: 2,659,883] | | | | [removed: 2,284,509] [added: 2,386,207] | | |

| Property, plant and equipment, net | [removed: 134,351] [added: 156,187] | | | | [removed: 127,156] [added: 134,351] | | |

| Goodwill | [removed: 990,887] [added: 1,063,911] | | | | [removed: 964,893] [added: 990,887] | | |

| Identifiable intangible assets, net | [removed: 488,286] [added: 611,444] | | | | [removed: 495,036] [added: 488,286] | | |

| [removed: Total assets] [added: Total assets] | $ | [removed: 4,088,807] [added: 4,830,358] | | | $ | [removed: 3,965,904] [added: 4,088,807] | |

| [removed: LIABILITIES] [added: LIABILITIES] AND [removed: EQUITY] [added: EQUITY] | | | | | | | |

| [removed: Current liabilities:] [added: Current liabilities:] | | | | | | | |

| Current maturities of long-term debt and [removed: capital] [added: finance] lease [removed: obligations] [added: liabilities] | $ | [removed: 16,013] [added: 18,092] | | | $ | [removed: 15,364] [added: 16,013] | |

| Accounts payable | [removed: 652,091] [added: 665,402] | | | | [removed: 567,840] [added: 652,091] | | |

| Contract liabilities | [removed: 552,290] [added: 623,642] | | | | [removed: 524,156] [added: 552,290] | | |

| Accrued payroll and benefits | [removed: 343,069] [added: 382,573] | | | | [removed: 322,865] [added: 343,069] | | |

| Other accrued expenses and liabilities | [removed: 170,935] [added: 195,757] | | | | [removed: 220,727] [added: 170,935] | | |

| [removed: Total] [added: Total] current [removed: liabilities] [added: liabilities] | [removed: 1,734,398] [added: 1,938,610] | | | | [removed: 1,650,952] [added: 1,734,398] | | |

| Borrowings under revolving credit facility | [removed: 25,000] [added: 50,000] | | | | 25,000 | | |

| Long-term debt and [removed: capital] [added: finance] lease [removed: obligations] [added: liabilities] | [removed: 254,764] [added: 244,139] | | | | [removed: 269,786] [added: 254,764] | | |

| Other long-term obligations | [removed: 333,204] [added: 334,879] | | | | [removed: 346,049] [added: 333,204] | | |

| [removed: Total liabilities] [added: Total liabilities] | [removed: 2,347,366] [added: 2,772,578] | | | | [removed: 2,291,787] [added: 2,347,366] | | |

| [removed: Equity:] [added: Equity:] | | | | | | | |

| [removed: EMCOR] [added: EMCOR] Group, Inc. stockholders’ [removed: equity:] [added: equity:] | | | | | | | |

| Common stock, $0.01 par value, 200,000,000 shares authorized, [removed: 60,123,184] [added: 60,359,252] and [removed: 59,870,980] [added: 60,123,184] shares issued, respectively | [removed: 601] [added: 604] | | | | [removed: 599] [added: 601] | | |

| Capital surplus | [removed: 21,103] [added: 32,274] | | | | [removed: 8,005] [added: 21,103] | | |

| Accumulated other comprehensive loss | [removed: (87,662] [added: (89,288] | | ) | | [removed: (94,200] [added: (87,662] | | ) |

| Retained earnings | [removed: 2,060,440] [added: 2,367,481] | | | | [removed: 1,796,556] [added: 2,060,440] | | |

| Treasury stock, at cost 4,139,421 [removed: and 1,072,552 shares, respectively] [added: shares] | (253,937 | | ) | | [removed: (37,693] [added: (253,937] | | ) |

| [removed: Total] [added: Total] EMCOR Group, Inc. stockholders’ [removed: equity] [added: equity] | [removed: 1,740,545] [added: 2,057,134] | | | | [removed: 1,673,267] [added: 1,740,545] | | |

| Noncontrolling interests | [removed: 896] [added: 646] | | | | [removed: 850] [added: 896] | | |

| [removed: Total equity] [added: Total equity] | [removed: 1,741,441] [added: 2,057,780] | | | | [removed: 1,674,117] [added: 1,741,441] | | |

| [removed: Total] [added: Total] liabilities and [removed: equity] [added: equity] | $ | [removed: 4,088,807] [added: 4,830,358] | | | $ | [removed: 3,965,904] [added: 4,088,807] | |

[removed: EMCOR] [added: EMCOR] Group, Inc. and [removed: Subsidiaries][added: Subsidiaries]

| Operating lease right-of-use assets | 245,471 | | | | — | | |

| Operating lease liabilities, current | 53,144 | | | | — | | |

| Operating lease liabilities, long-term | 204,950 | | | | — | | |

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| Common stock dividends | (17,950 | | ) | | — | | | | 149 | | | | — | | | | (18,099 | | ) | | — | | | | — | | |

| Balance, December 31, 2019 | $ | 2,057,780 | | | $ | 604 | | | $ | 32,274 | | | $ | (89,288 | ) | | $ | 2,367,481 | | | $ | (253,937 | ) | | $ | 646 | |

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Additional required disclosures have been included within Note 17 - Leases of the notes to consolidated financial statements.

On January 1, 2019, we adopted the accounting pronouncement issued by the FASB related to the reporting of certain items in accumulated other comprehensive income (loss) (“AOCI”).

This guidance provides entities the option to reclassify to retained earnings certain tax effects stranded in AOCI as a result of tax reform.

As part of our adoption of this accounting pronouncement, we elected not to reclassify the stranded tax effects related to the retirement plans of our United States subsidiaries as such amounts are immaterial.

Tax effects remaining in AOCI will be released upon liquidation of each individual retirement plan.

In June 2016, an accounting pronouncement was issued by the FASB which changes the way in which entities estimate and present credit losses for most financial assets, including accounts receivable.

In preparation for adoption, we have substantially completed a process to identify and group financial assets with similar characteristics into collective pools.

We have additionally begun implementing processes and internal controls to identify information, including macroeconomic forecasts and key credit indicators, relevant to estimating expected credit losses.

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In December 2019, an accounting pronouncement was issued by the FASB which simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to intraperiod tax allocations and the methodology for calculating income taxes in an interim period.

The guidance also simplifies aspects of the accounting for franchise taxes as well as enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The pronouncement is effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted.

Certain aspects of this standard must be applied retrospectively while other aspects are to be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption.

The Company intends to adopt this accounting pronouncement on January 1, 2021, and we are currently evaluating the potential impact on our financial position and/or results of operations.

Such methods include: (a) the expected value method, whereby the

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There were no significant amounts of revenue recognized during the year ended December 31, 2019 related to performance obligations satisfied in prior periods.

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When the current estimate

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During 2019, there were no changes in total estimated costs that had a significant impact on our operating results.

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| Commercial market sector | $ | 1,185,129 | | | 36 | % | | $ | 1,057,542 | | | 35 | % |

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| Investments, notes and other long-term receivables | 2,899 | | | | 2,309 | | |

| Other assets | 86,177 | | | | 92,001 | | |

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| Borrowings from long-term debt | — | | | | — | | | | 400,000 | | |

| Proceeds from exercise of stock options | — | | | | — | | | | 741 | | |

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| Balance, December 31, 2015 | $ | 1,480,056 | | | $ | 617 | | | $ | 130,369 | | | $ | (76,953 | ) | | $ | 1,432,980 | | | $ | (10,302 | ) | | $ | 3,345 | |

| Common stock dividends | (19,454 | | ) | | — | | | | 183 | | | | — | | | | (19,637 | | ) | | — | | | | — | | |

| Distributions to noncontrolling interests | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | |

| Repurchase of common stock (3) | (216,244 | | ) | | — | | | | — | | | | — | | | | — | | | | (216,244 | | ) | | — | | |

| Distributions to noncontrolling interests | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | |

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| (2) | Includes a $1.0 million 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. |

Revenues from the performance of services for maintenance, repair and retrofit work were recognized consistent with the performance of the services, generally on a pro-rata basis over the life of the contractual arrangement.

Translation adjustments have been recorded as “Accumulated other comprehensive loss”, a separate component of “Equity”.

We adopted this pronouncement on a modified retrospective 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 the adoption of this standard, certain changes have been made to the Consolidated Balance 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, 2017, amounts representing deferred revenues on services contracts, which were previously included in “Other accrued expenses and liabilities” within the Consolidated Balance Sheets, have been reclassified as “Contract liabilities.”

On January 1, 2018, we adopted the accounting pronouncement issued by the FASB to clarify how entities should present restricted cash and restricted cash equivalents in the statement of cash flows.

This guidance requires entities to show changes in the total of cash, cash equivalents and restricted cash in the statement of cash flows.

During 2018, we adopted the accounting pronouncement issued by the FASB that modifies the presentation of net periodic pension and post retirement benefit costs within the statement of operations.

This guidance requires the components of the net periodic pension and post retirement benefit costs, other than service costs, to be recognized below operating income.

Guzzi, and our Executive Vice [removed: President and] [added: President,] Chief Financial [removed: Officer,] [added: Officer and Treasurer,] Mark A.

[removed: Management’s] [added: Management’s] Report on Internal Control over Financial [removed: Reporting][added: Reporting]

Our internal control over financial reporting includes policies and procedures that: (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of assets, (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and Board of [removed: Directors] [added: Directors,] and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

As of December 31, [removed: 2018,] [added: 2019,] our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework established in [removed: Internal Control\-Integrated] [added: *Internal Control*\-*Integrated] Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management has determined that EMCOR’s internal control over financial reporting is effective as of December 31, [removed: 2018.][added: 2019.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2018] [added: 2019] has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report appearing in [added: Item 8 of] this Annual Report on Form 10-K, which such report expressed an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, [removed: 2018.][added: 2019.]