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

Anthony Guzzi: And our risk appetite has less to do with can we do the job. But can we check all those 4 boxes? And capital allocation is a big deal for us. So a lot of the things we did in ’18, ’19, ’17 acquisition-wise and even into ’20 investment-wise, with shops and organic investment and all those things allowed us to be in a position to serve these customers. If we don’t build fire fab shops in the right places with really a great team both at Shambaugh & Son, we’re not prepared to take care of these customers because you’re not going to find enough labor to do that. So you have to be doing the prefabrication, like Mark said, but you also have to be able to get to work off the job because you want to make it safer and more repetitive and more — the quality goes way up.

The second point is, when you think about the investment, it goes beyond even just physical infrastructure, we’ve put a lot of investment into our knowledge infrastructure. We put some resources around BIM to make it more predictable, reliable and it’s not only a data infrastructure, but it’s a people infrastructure to be able to share best practices. We also do a really good job of sharing best practices across the company through a series of peer groups where folks get together and share building techniques, right? And all those things are really important to allow us to serve our customer better.

Brent Thielman: Really helpful. Just one more on the outlook for 2023. It sounds like you made some green shoots in Industrial Services business in terms of better opportunities in front of them. Can you just remind me where that business needs to be in order to kind of get back to that 4% kind of margin target that you’ve talked about?

Anthony Guzzi: I don’t know exactly. But I think if you could do more solo work, it was just different than what it was there last time, that would certainly help because it’s work we do very well and go back to the means and method. We figured out some of the means and methods around the electrical work. I think that the more call-out work we do, the better. But look, the reality is we have customers operating at extraordinarily high levels of utilization, and they almost have to now to supply the refined product that the economy needs to run. So we are working different with those customers today and we’ll adapt, and we’re one of the go-to people to do it. The mix plays a big role in that. The more we can get a shop work at the right pricing, the more we can get a cleaning work at the right pricing and the more work we can do in our Electrical business will help lift those margins overall.

Operator: Our next question comes from Adam Thalhimer with Thompson, Davis.

Adam Thalhimer: Congrats on the strong fourth quarter and the outlook. BIM and prefab, can you talk a little bit about how much further you can push those? And should we look at that as a revenue opportunity for you guys, a margin opportunity or both?