EMCOR Group, Inc. (NYSE:EME) Q4 2022 Earnings Call Transcript

We’re also not afraid to walk away as new information becomes available in due diligence. And coupled with that, there are sometimes things we see in due diligence say go fix this, and we’ll talk to you in a year. And when they talk to me in a year, they’re a better company. They want to sell to us, and we get to a good place. So ours is an iterative, interactive process where we try to build trust on both sides. We’re not trying to make the lowest deal possible for us. We’re trying to make the best deal for us over a long-term period. And I’d say over the last 5 years, that give us a good B+, A- because I don’t think anybody is an A on acquisitions.

Operator: Our next question comes from Brent Thielman with D.A. Davidson.

Brent Thielman: Congrats on a great year. Tony, Mark, I appreciate the breakout of RPOs by commercial submarkets. It’s really interesting stuff and see the telecom and high-tech sectors more than doubling year-on-year. Again, pretty interesting. That’s obviously where you and others are talking about a lot of the growth in the commercial market, I guess, still to come. And Tony, I guess I’ve thought about data centers and semiconductor fabs is a little more regionally specific. My question is these areas of your business around the country that are really benefiting from these submarkets, do you have the manpower, the capacity to keep sort of supporting this pace of gains in these verticals? I mean what are the limitations here in your business?

Anthony Guzzi: Well, that’s actually the question we ask ourselves every time we think about one of these jobs. Can we do it on a sustained basis? Because if you think about — and I agree, it’s a geographic region within the U.S., you have to think about it. So you start with what does the core labor look like in that market? And in every case, there’s not enough labor in that local market. And then you go to, okay, what is it going to take to attract labor and how much risk am I going to take to attract that labor. So in an established market like Arizona, we have a pretty good idea of what it takes to bring labor in. We have a pretty good idea what that wage rate looks like and that shift structure. So it’s not only wage rate, it’s also what do the shift structure going to look like?

Am I going to work 5, 10s, am I going to work 6, 10s with 3 days off? There’s all kinds of different things you think about. And then what is that local union loan go back to the comment on the different acts that are supporting this, what is that local union allow as far as classifications to be able to do the work? So in a more established market, where we’ve been doing like Arizona, we have a pretty good idea of what it’s going to take. When you go to a new market or an asset market where we are in the market to some extent, but we may travel in and we’re going to prefab a lot to traveling. We think about what peak manpower is going to be. We think about what resources we’re going to have to put on the ground. But you also think about what your contracting mechanism needs to be at the start of the job.