EME - Earnings call Q4 2025

Good morning. My name is Jamie and I will be your conference operator today. At this time I would like to welcome everyone to the Mcore Group or the quarter and four year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers prepared remarks there will be a question and answer session. If you would like to ask a question during this time simply press star and the number one on your telephone keypad. If you would like to withdraw your questions you may press star and two. At this time I would like to turn the floor over to Lucas Sullivan, director, financial planning and analysis. Mr. Sullivan, you may begin. Thanks Jamie. Good morning everyone and welcome to Mcore's fourth quarter and full year 2025 earnings conference call. For those of you joining us by webcast we are at the beginning of our slide presentation that will accompany our remarks today. This presentation will be archived in the investor relations section of our website at mcoregroup.com. With me today our Tony Guzzi, our chairman, president and chief executive officer Jason Nell Bandian, senior vice president and Mcore's chief financial officer and Maxine Mauricio, executive vice president, chief administrative officer and general counsel. For today's call Tony will provide comments on our fourth quarter, full year and discuss our RPOs. Jason will then review the fourth quarter and full year numbers then turn it back to Tony to discuss our guidance before we open it up for Q&A. Before we begin a quick reminder that this presentation and discussion contain certain forward-looking statements and may contain certain non-gap financial information. Slide two of our presentation describes in detail these forward-looking statements and the non-gap financial information disclosures. I encourage everyone to review both the disclosures in conjunction with our discussion and accompanying slides. And finally as a reminder all financial information discussed during this morning's call is included in our consolidated financial statements within both our earnings press release issue this morning and in our form 10K filed with the security of the exchange commission. And with that let me turn the call over to Tony. Tony? Yeah thanks Lucas. Good morning and welcome to our fourth quarter 2025 earnings call. I'm going to speak briefly to the fourth quarter in my opening comments but we'll focus my introductory marks on what drove our continued success in 2025. So I'm going to start on pages 4 through 5 of our earnings presentation. We had an excellent close to the year with our fourth quarter results. In the fourth quarter we generated revenues of 4.5 billion which represents 19.7 percent growth. We earned adjusted earnings per share of $7.19 per deluded share at 13.8 percent increase from 2024 and delivered adjusted operating income of $440 million at 13.1 percent increase from 2024. We did this while achieving strong adjusted operating margins of 9.7 percent. Our adjusted results for the fourth quarter exclude the gain on the sell of our UK business and the transaction costs related to such sell. For the full year our adjusted results include the items as well as the transaction costs incurred in the first quarter due to the acquisition of the Miller Electric Company. By any measure 2025 was a tremendous year for us. We had revenues of nearly $17 billion and record adjusted full year operating margin of 9.4 percent and at the high end of our guidance range. We also had record adjusted deluded earnings per share at $25.87 per share and increase of 20 percent from 2024. With our operating cash flow of 1.3 billion we continued our exceptional record of cash conversion. Our success once again demonstrates our ability to execute with discipline across our business as we drive innovation and efficiency to achieve exceptional outcomes for our customers. We have delivered sustained strong results despite the fact that we are working on the most technical needs sophisticated fast paced and demanding projects in our history. We had a great year and we enjoyed the living for our customers and our shareholders. Notably we are in full year mechanical and electrical construction operating margins of 12.8 and 12.1 percent respectively. Demonstrating excellent execution across a diverse range of projects by size and market and geography. We did this while growing revenues of the segments by 10.1 percent and 51.8 percent respectively. We achieved a 6 percent operating margin in our building services segment driven by the underlying strength of our mechanical services business which achieved high single digit operating margins and 6 percent growth. Virtually all that growth was organic. Demand for this business remained strong with a primary focus on aftermarket market projects and retrofits. HVAC service and repair, building automation and controls upgrades and services and indoor air quality and energy efficiency projects. We made well-position with our industrial services segment to serve a rebounding oil and gas industry. We divested our UK business to focus on our US operations. We found Mcore UK a great strategic home. We achieved a very strong result in the sale for our shareholders. We acquired Miller Electric which is the largest acquisition in Mcore history. The integration is on track. Our leadership and values are aligned and Miller will serve as a great platform for growth in the Southeast and Texas. In addition to Miller we acquired nine other companies across our mechanical construction and building services segments. Collectively these platform enhancing acquisitions will help us to better serve our customers. We repurchased almost 600 million in shares and increased our quarterly dividend to 40 cents per share. This return of cash to shareholders coupled with our organic investment and acquisitions affirms our successful balance capital allocation strategy. We maintained our sterling balance sheet that allows for continued organic and acquisition growth. We maintained our industry leading safety record in this demanding and complex environment with a TRI or under one for the second year in a row. We earned inclusion into the S&P 500 and we were recognized by Fortune as the number one most admired company in the engineering construction industry. And we built our RPOs at 13.25 billion from 10.1 billion despite our record revenues. That's quite a year, right? Congratulations to our team and thank you for a great 2025. I'm now going to go to page six. These are RPOs which I will now highlight, which I will now highlight 0.2 percent year-over-year and 17.6 percent organically. On a sequential basis RPOs have increased 5.1 since September or 3.6 percent organically driven by demand in our data center business. RPOs within the network and communications told us a record 4.46 billion at the end of December and increase of 1.65 billion or an early nearly 60 percent year-over-year. We see no change in the momentum of the CAPEX plans from our customers in this sector and we have good visibility for the next two to three years as we work to support their build-up. Institutional RPOs have increased by just under 440 million or 40 percent to 1.55 billion. Largely as we continue to see demand for our services within the education sector including from a number of colleges and universities. Manufacturing and industrial RPOs have increased by 201 million or 23 percent to 1.1 billion. As I mentioned last quarter in addition to project awards driven by customers on-suring and reshoring initiatives growth in the sector has also benefited from certain food processing projects within our mechanical construction segment as well as a renewable energy project in our industrial services segment. Led by our mechanical construction segment water and wastewater RPOs have increased by 408.5 million or nearly nearly 60 percent to 1.1 billion as we continue to win projects throughout Florida and due to select project opportunities RPOs within the hospitality and entertainment have more than doubled year-over-year. I'm now going to turn to page 7 because I think it's important to look at some of the longer-term trends and which really driving our growth over a sustained period of time and also to highlight our diversity of demand. So now go to page 7 let's take a minute. I want you to focus your eyes on the middle of this page and in this middle of this page you'll see where we were on the left hand bar at 123019 right right before COVID we were about 4.036 billion in RPOs and I want you to focus your eyes on that royal blue bar or dark blue bar and that's our networking communications business and I want you to look over at 1231-25 those networking communications RPOs are about 4.4 billion today which is greater than our total RPOs at the end of 1231-19 but then look at the total number of 13.254 billion and realize that we have grown everything else by over 8.5 billion dollars and now I want you to come over to the left side of the page and I want you to look at some of these long-term growth trends. I'm going to spend a little bit of time and we've already done that with the near-term commentary. High-tech manufacturing on a compound annual growth rate and that's an in and out of a major project but from where we started in 1231-19 which had some semiconductor work in it and farm work in it to where we are today has grown by compound annual growth rate, a 48% and we remain very bullish on this market. With a demand for semiconductor chips, the reshuring of Fora, Farma, the growth in GLP 100 drugs and what's going to happen there and just in general what has been reshured in high tech and what's going to continue to grow. Forty-eight percent compound annual growth right above that is networking communications. We thought we had a great data business center business in 2019. We went from having a very strong data business to a terrific data center business. Now I'm not going to say we're the only ones that can do data center work at scale, but we're the only ones that can operate in about 17 markets, electrically and we're doing about seven markets now mechanically and we're one of the only ones that can cover the whole country on fire, life, safety projects and the data center business. Look at healthcare. Twenty-three percent. That is a stable market for M.Core. It's been one of our long-term markets and it's as complex to build a high-rise hospital as it is a data center and that's why our electricians and our pipe fitters can move between those sectors so easily between high tech manufacturing, networking communication and really industrial work. They can move between those and we do that. Institutional is up 20 percent. That was actually a surprise to us when we went back and looked at the compound annual growth right institutional cross-set sector. Water and wastewater is a great market for us mainly in Florida. Twenty-four percent compound annual driven by consent degrees from the EPA driven by just growth in Florida and driven by updating technology in these large wastewater plants. Transportation is to talk about mixed management. We have decided to de-emperse the transportation market, especially the electrical roadway market. It takes a while to get out, but that will continue to drop unless a big airport or a project like that comes in and that would be then balancing against these other markets. I love the bottom. Commercial is a GDP grower. It's pretty good considering the engine outs that happen over this period. But look at the short duration projects. To me, that's a sign of what's going on across all the markets, especially in the built space and that contains some commercial work, that contains some institutional work, that contains some manufacturing work and these are projects that are going to last less than five months. And typically have a ticket size of somewhere between 50 and $500,000. And then put on top of that, the big service base we have in M4 across our fire like safety projects across our mechanical service business and across even our day-to-electric work. So what allows you to have that kind of compound annual growth across that sustained period of time? And these are no particular order. First of all, you've got to be where your customers are. You have to be able to meet them where they are, you have to have national reach, you have to have the geographic footprint. But that's not enough. You can have a geographic footprint that can't execute. You have to have opportunistically travel. You don't just travel to travel. We're not going to be the contractor that uses a labor broker and places labor around the country. For the most part, when we travel, we're traveling in our construction business with very strong union, uh, uh, journeyman and commercial wiremen and others that can move around the country and check into the union and we draw from that. And we're an employer of choice. And that is driven by the strong field leadership we have at the local level. We've got the technical expertise. We have great prefabrication capability, VDC capability that we use to work across these sectors. And really VDC we use today in our data center business and VDC we use today in our high tech manufacturing was really honed in the healthcare sector over 20 years ago. We have a great reputation and safety record. It's really a hallmark of who we are and why we continue to attract the best trade labor. Our customers want us to do the work for them. One of the benefits of scale to us is we can train. We can share our means and methods and we can share our best practices across our country. And that allows us to have very strong acquisition pipelines over sustained period of time and allows us to make the right, smart, growth, organic investments. I think this page is something that really is a hallmark of our company. And I think this page is really what we have built together with that. Our capital allocation strategy which is on page 14 coupled with what is on page 7 is what we get paid for to do to build a company that has great diversity of demand, can take advantage of the end markets in many cases and then build a sustainable compounding record of success. That's the end of the talk. Thank you Tony. Thank you. Good morning everyone. Before we dive into our results for the fourth quarter, I thought it made sense to step back and take a look at how we performed for the full year which is summarized on slide eight. In 2025, we earned revenues of $16.99 billion, operating income of $1.71 billion, and operating margin of 10.1% and diluted earnings per share of $28.19. And excluding the transaction costs and current connection with both the acquisition of Miller Electric and the sale of MQRUK, as well as the game on sale of MQRUK, we are non-gap operating income of $1.59 billion, operating margin of 9.4% and diluted earnings per share of $25 and 87 cents, all of which were records for MQR. We performed extremely well in 2025, benefiting from some of the best execution in our history and a favorable mix of work, both of which allowed us to deliver a full year operating margin at the high end of the guidance we previously provided and in excess of our expectations when we began the year. If we turn to slide nine, I'll now review the operating performance for each of our segments during the quarter, starting with revenues. 4.5 billion represents a quarterly record for MQR with revenues increasing 19.7% or 9.5% organically. Revenues of US electrical construction were a quarterly record of 1.36 billion, increasing 45.8% due to a combination of strong organic growth and the acquisition of Miller. Similar to recent coders, the most significant growth in this segment was generated from our data center projects within the networking communications market sector where revenues increased nearly 50% year-rear. While this represents the greatest increase during the quarter, almost all other sectors experienced growth. Healthcare, institutional and hospitality and entertainment represent the next three largest increases in addition to greater small project volumes. I think the best way to summarize the segments performance in the quarter is that half of its growth came from data centers and half of its growth came from strength in the underlying or more traditional business. Once again, this highlights our diversity of demand. Moving to US mechanical construction, revenues of 1.94 billion increased 17% establishing a new quarterly record for this segment. Similar to electrical due to greater demand for data center construction projects, this segment saw the largest increase from the networking communications market sector where quarterly revenues grew nearly 80% year-over-year. Starting with my earlier comment regarding broad-based demand, mechanical construction experienced quarterly revenue increases in eight out of the 11 sectors that we track with the only meaningful decrease coming from high-tech manufacturing. Notably, manufacturing and industrial including food processing was up just over 50%. Institutional was up 55% and commercial increased 17% as we are starting to see resumption in warehousing demand. As we've discussed throughout the year, although we are still executing off a higher base, the decrease in high-tech manufacturing is a result of the completion of certain semiconductor projects. On a combined basis, our construction segments generated revenues of 3.3 billion and increase of 27.4%. Starting next at U.S. building services, revenues of 772.5 million reflect a 2.2% increase all of which was organic. This marks the third quarter of revenue growth since the loss of the site-based contracts that we've previously referenced and this performance was driven by our mechanical services division which increased revenues by nearly 5% due to strength across each of their service lines including projects and retrofits, repair service, service maintenance and building automation and controls. Turning to our industrial services segment, revenues of 341.1 million have increased 9.1%. In the quarter, we experienced a more robust turnaround schedule including the execution of certain projects that were delayed from Q3 to Q4 which led to increased revenues from both our field and shop services operations. In addition, this segment benefited from progress made on a large solar project which is currently in process. And lastly, for the two months prior to the sale on December 1, U.K. building services generated fourth quarter revenues of 95.3 million dollars. Let's turn to slide 10 for operating income. For the fourth quarter, we generated operating income of 573.8 million or 12.7% of revenues. When adjusting for the transaction expenses and the gain on sale of MQRUK, we are a non-gap operating income of 439.6 million dollars. million, a quarterly record for M4. This performance resulted in an exceptional 9.7% non-gap operating margin, the highest we achieved in any quarter this year. Looking at each of our segments, electrical construction had operating income of 173.1 million, a 17% increase. As a result of its revenue growth, the segment experienced greater growth profit across the majority of the market sectors in which we operate, resulting in an increase in operating income to a record level. While down from the record 15.8% earned in last year's fourth quarter, this segment's operating margin of 12.7% remained well above its historical average and was in line with our expectations, particularly when compared against a rolling 12 to 24 month average, which would imply a range of 12 to 12.6% for the segment. When adjusting for the impact of incremental intangible asset amortization, growth profit margin of the segment remained relatively consistent year-to-year, reflecting the overall strength of our execution and project portfolio. Contributing to the unfavorable comparison in operating margin was an unusually low SGNA margin in last year's fourth quarter due to the timing of recognition of certain expenses in the prior year. Operating income for US mechanical construction increased by 13.6% to a quarterly record of 250.5 million. While slightly below that of the prior year's quarter, operating margin of 12.9% was equivalent to the third quarter of this year as we continue to execute well. From an end-market standpoint, we saw greater growth profit across many of the sectors in which we operate with the largest increases generally tracking in line with the revenue fluctuations I previously mentioned. Together, our construction segments grew operating income by nearly 15% and earned a combined operating margin of 12.8%. US building services generated operating income of 41.3 million, a modest increase over the prior year, an operating margin was a consistent 5.4%. Moving to industrial services, the segments revenue growth coupled with 30 basis points of operating margin expansion due to better absorption resulted in a 21.1% increase in operating income. And lastly, UK building services delivered break even performance during the quarter as 3.7 million of underlying operating income was entirely offset by transaction-related costs which were expense within the UK. Let's move to slide 11 and I'll cover a few quarterly highlights that were not included on the previous pages. Growth profit of 891.2 million has increased by 17.7% and our lowest profit margin for the quarter was an outstanding 19.7%. SGNA was 462.3 million or 10.2% of revenues. Included in SGNA for the quarter were 10.7 million of transaction expenses related to the sale of MQRUK which impacted SGNA margin by 20 basis points. Accounting for half of the remaining increase in SGNA was 35.2 million of incremental expenses from acquired companies and 6.2 million of additional amortization expense. Excluding these items, SGNA grew by 41.8 million almost entirely due to employment costs given both greater headcount to support our organic growth as well as increased incentive compensation expense in certain of our segments given the higher annual operating results. And finally on this page, diluted earnings per share were $9.68 or $7.19 on an adjusted basis which represents an increase of 13.8% year over year. If we quickly turn to slide 12, with 1.1 billion of cash on hand, our balance sheet positions as well to continue to deliver on our philosophy of balanced capital allocation which includes organic investment, strategic acquisitions and returning cash to shareholders. Our commitment to this model is further demonstrated by the recent increase in our dividend of 60% and the incremental $500 million of authorization under our share repurchase program. During the quarter, we repurchased approximately $155 million worth of our shares bringing our year-to-date repurchases to roughly $580 million. And we executed against our M&A pipeline utilizing over a billion dollars on acquisitions during the year including an additional 122 million in Q4. And finally on this page, we had operating cash flow of 524.4 million during the quarter or 1.3 billion for the full year representing conversion and excess of 80% of operating income which would adjust for the gain on sale of M3UK. With that, I'll turn the call back over to Tony. Thanks Jason. And I'm going to close on pages 13 and 14. As discussed, we're well positioned to continue to deliver excellent results in 2026. We expect to earn revenues of 17.75 billion to 18.5 billion and achieve diluted earnings per share from $27.25 to $29.25 with a full year operating margin of between 9 and 9.4%. We set guidance and I have stated this many times over the years. We have always thought about it the following way. From the low end to the midpoint, we have a high degree of confidence that we will deliver that outcome absent a major economic event. From the midpoint to the high end of our range, we need to execute very well from a margin standpoint and we need to book 40 to 45% of new work to allow us to hit the mid to high point of our revenue range. We easily said, the better our margins, the higher revenue, the more we move to the higher end of our range. As we look at the composition of our RPOs, we've been in the year with a strong mix of work with estimated gross margins in line with those experienced over the last few years. We have a strong foundation across diverse geographies and sectors. At this time, we see no slowing of demand from most of our end markets and continue to see exceptional prospects in our data center markets. As we move into 2026, we need to keep leveraging our training, VDC, fabrication and project planning and delivery capabilities. We must not only continue to incrementally improve but also innovate in our internal processes and delivery. We must also continue to protect ourselves through careful contract negotiation, execution and compliance. We deliver for our customers and we continue to do so, but we also strive to protect our rights as we deliver these complex projects. We will always face some macroeconomic challenge of some kind and some headwinds, but our team has excelled in overcoming these challenges over a very long period of time. I do believe that we are an employer of choice because of our excellence in field leadership. From our frontline foreman, superintendent, project managers and executives to our subsidiary and segment leadership. We will continue to execute a balanced capital allocation strategy focused on organic investment, organic acquisitions and returning cash to shareholders who share repurchases and dividends which we show on page 14. Our balanced capital allocation strategy has provided the foundation for our compounding record of success over the last 10 to 15 years. As I close, I want to thank my teammates. I appreciate all you do for MQA every day and for our customers and appreciate the safe and productive way you execute our work. Is that Jamie? I'll turn the call over to you for questions. At this time, if you would like to ask a question, please press star and one using a touch to your telephone to withdraw your questions you may press star and two. If you are using a speaker phone, do ask that you please pick up your hands set prior to a press and keys to ensure the best sound quality. Once again, that is star and then one to join the question queue. Our first question today comes from Brett Thiehlman from DA Davidson. Please go ahead with your question. Thanks, good morning. Good morning, Brett. Hey, Tony or Jason, if you could comment just on some of the initiatives that compressed margins a bit last quarter or three queue, I think you moved into some new territories. It caused a little pressure there. Like what being green impact me that had in the fourth quarter, if any, are you sort of beyond that at this stage here in 2026? You always have to be careful to say we're beyond that because we're starting projects all the time and we execute really well and we write projects up. We write them down, but on balance, I think the headwinds we experienced in that particular market are behind us now. And we had a little bit of that spill over into the fourth quarter. Some of it also is just mixed with work. We didn't finish as much fixed price work in our electrical segment as we did the pre- or before and we started some work that was more target price or GMP and hopefully will convert some of that to fixed price, but we don't know that. But they're underlying margins in the business which you can see from our gross margins is pretty strong. Yeah, and I would echo with Tony said the only thing I would add to that right is I tried to say this in my prepared remarks. If you look at the gross profit margin for electrical and you adjust for the amortization impact. It performed relatively consistently. in year over year. So any impacts that we did have from those projects start-ups was all statified by just execution within the segment. Yeah, and Brett, you could see it in our numbers, right? Are we a little disappointed? We coughed up 50 or 60 basis points this year in electrical operationally. Sure, we are. Some of the headwind was from amortization. That's not a cash expense. But, you know, when you look over a 12 to 24-month period, that's a pretty good snapshot of our margins. We expect to operate somewhere mid to low 12s to 14 or so percent, electrically, and mid to low 12s to high 13 and a half percent or so mechanically. And it's going to bounce around there. But if we can operate this business between 12 and 5 and 13 5 on a sustained basis across our construction segments, I think we'd be pretty pleased with that. Yep. Okay. Tony, maybe just to follow up, I mean, an interesting chart there on flood 7. So on the network communications data center side, you talked about good visibility here for the next two to three years. I think it'd be hard to dispute that. Maybe one of the questions that oftentimes comes up is just like your regional exposure. Do you see yourself having to move into different regions to get more of this work or maybe just talk about what's happening where you're already at, where you have where you're positioned today that you have to continue to start. Yeah, man. I have to go to the first thing. So far it gets electrically. But the way I look at it is we have a strong, we have a solid position in the Midwest. We'd like to make that a little bit stronger in some of the markets. We think we can do that either through acquisition investment or organic growth. Arizona, we continue to build that out. We've just built a better position mechanically in Arizona that we look to take advantage of it. And electrically, we moved into that market two years ago and we're starting to hit full ramp right now. Texas, we're pretty strong mechanically. We'll take some of our first significant jobs in Texas. And there's a mixed management decision, right? We had that capability there doing semiconductor work. We'll continue to do some of that. But quite frankly, we think some of the rural data center work is better for us to do. And it allows us to sort of get more productivity in our pre-fab shops also by doing that. And we invested ahead of that. The semiconductor work we did there in a lot of ways with the beach head to participate more broadly in the market. And especially in the data center market mechanically. Electrically, we have a very good position in the Dallas-Fore Worth area. We'll look to expand on to that. Atlanta, we have a very strong position mechanically. And we have a secondary position electrically. And we'll look to continue to strengthen that. The Carolinas were pretty strong both mechanically and electrically, more so mechanically, but still pretty strong electrically. Nor the Virginia, quite frankly, were terrific both mechanically and electrically. And then as you get to Oregon, we're very strong electrically. So we will continue and Iowa very strong electrically. We will continue to run that capability. You can tell we're more markets electrically than mechanically. Some of that is we found it advantageous to be able to take our electricians that were very skilled in our management teams and doing, you know, something to still know work at one time. And they've proven to be very good data center builders also. And we've been able to take that skill from our some of our companies and move it to others. And it takes about 18 months to ramp them up to get to full production where, you know, they can hit the kind of margins our traditional data center company that mechanically. I don't know real reason. Some of that we haven't expanded much just the footprint of where we are and what it takes mechanically to build the capability because of the pre-fab and all the other things a little more extensive. And at Fire Life Safety, we can cover the entire market and we do. Got it. Appreciate that Tony. It just last one. I mean, you balance. You sort of have a more chest here. How do you think about like total excess liquidity here assuming you want to keep some level of cash on the balance sheet? Also understand your revolvers untapped. Just thoughts there seems like you. Yeah. I'll hit a macro level on that. And then Jason will get into some specifics about like cash we'd probably like to have on hand. I think I think in general, we're never going to have a highly leveraged balance sheet on a sustained basis. Because think of who we're working for. One of our competitive differentiators, especially on this large project work is we're not a leveraged company. And think about the the hyperscalers. They're not looking to do business with leverage companies. And it's also when you look to the bonding line, it's a nice ability to be able to have a surety bond without question when you need it. And we've had that luxury. But we also would be willing to lever up for the right acquisitions or series of acquisitions to go to one to one and a half times, maybe two times, and leverage back down to one times. What I wouldn't do is borrow a bunch of money to buy back stock. We like to do the buybacks through excess liquidity. And if we're going to borrow money, it's because we're building and we're buying into an asset that's going to return cash to us over an extended period of time. That's sort of macro level Jason maybe gets the specifics. I would say if you go to that slide 14 that Tony referenced earlier and you look at what we've done this year last year and even over the last 10 years, I think that's what our playbook looks like going forward. It continues to be a balanced approach towards a capital allocation. We think we have a strong M&A pipeline as we move into next year. We'll continue to return capital to shareholders and you saw that in the repurchases this year and you saw that in the increase in dividend. In terms of minimal cash balance for our balance sheet, it's probably somewhere in the neighborhood of 300 to 400 million dollars. So obviously our balance sheet positions us to continue to deploy cash strategically as we move into 2026. I think if you ask any of our management team down through the segment level, we would love to replicate 2025 here in 26 and 27. However, you've heard me say many times. Dills happen when they happen. And what we are going to do is maintain discipline. We're not going to, I think people on the line know me well enough to know this management team well enough that we don't buy into hype and we don't buy into frenzy. We have to believe there's a long sustained business case for why we would do something and we have to believe that we can add value. And our acquisition record is pretty darn good. I always say it never give anybody an A, but that'd give us a strong B+ over an extended period of time and we're going to continue to do that. We're not private equity guys. We're not averaging multiples down. We're looking to buy and build for the long term and build sustainable positions. And how we got from some of these places to serve 17 electrical data center markets is we bought companies that were in the business and were able to strengthen it through peer learning, transferring people for periods of time to help it and really doing a great job of taking our best practices and means and methods and sharing it across the company, especially as it comes to virtual design, construct, VDC, BIM and prefabrication. Okay, thanks guys. I'll pass it on. Our next question comes from Adam Paulheimer from Poms and Davis. Hey, good morning guys. Congrats on the strong quarter and the year. Tony, I wanted to ask you first about RPOs, the 33% in network and communications, you know, obviously some others in your space are even higher than that. And I'm just curious if that was a conscious decision on your part to stay more diversified or if that reflects something else like geographic mix. It's funny. I'll go to the second thing you said is geographic and sector mix. We're not passing up great data center opportunities because we're doing the other work. However, we're not going to go away from our existing customers. We have very strong companies in markets that have limited to no data center exposure. We have one of the best electrical contractors in the country in San Diego that generates great returns serves our customers well, does it through a mix of farm and high tech manufacturing work, some defense work and healthcare work. There's not a data center opportunity there for them to do, but they are in returns that are as good or better than our segment averages. And we have a chunk of our business that exists just like that in places like California, some of the Intermountain States, some of the Midwestern towns. And as you go to the like something that's specific is water and wastewater. We're not walking away from opportunities in Florida to data centers, although the first ones are going to get built and we will participate in that. But the teams that do that water and wastewater work are very specialized. Could they do solar plant work and things like that, sure, but they're very specialized on that customer base and in that product offering. So, yeah, some of it's intentional. It's been intentional at them beyond the last four or five years. It's been intentional over a very long period of time to build diversity of demand. But that being said, that'll give you a great example. We had a very good industrial electrical contractor in the Midwest that are in middling returns for years. They've been very technically capable. When the opportunity to present it itself in Northwest Indiana to do data setter work, we were able to take some of our skill base on the supervision side and our estimating side, train the people there to do the work. work, estimate the work, and now they're one of the best data center builders we have. And so we have the ability to do that when the opportunity, and we create the opportunity presents itself and our customers need us to do that. So let's say yes, part of it has been intentional as a long-term strategy, but are we shooting to say we're only going to do 33% data center work in our RPOs? Could be 40 for a part of period of time? Could be 45? Could go down to 30? It's just the overall demand and the mix of work and margin we have out there. The only other thing I would add too is just remember that for us, but we show as RPOs, are the funded phases of a contract. So we're working on a data center campus where there's multiple buildings and we have even a verbal for the phase two. We're only showing that first phase in our RPOs. So others may be doing it differently, which could skew percentages, but for us this is funded, contracted, worked that we have in hand, and 82% of this will burn over the next 12 months. Yeah. Got it. Okay. But you're saying if the outlook for data center is strong, don't be surprised if it goes to 40, 45%. Yeah. It could. If you look at our electrical segment where we've been able to give the 17 markets, it's 40 to 50% on the system. I think it'll stay there for a while. It may even go up a little bit. Because we have found that that skill is the most, we have the most ability to take that electrical skill and translate that into other markets from other work that they have done. Okay. Last one for me. I was curious on semiconductors when the next wave of awards might be in that space. We'll see. Some of it now. They just get an award in the smaller chunks. We're very ingrained in one of the customers, two of the customers in Arizona. We're also there in Arizona and the mountain states, fire like safety. I don't know if it, you know, because you're already on site, I'm not sure you'll see the magnitude of the awards that we saw initially because they can leave it up to us in pieces. And I think that's an important delineation with us. We have a pretty good idea of the work we're going to be doing there, which is some of that 40 to 45%. We have to book in here. But Jason made a really important point, right? I think we do go back to Gap, right? So our RPOs are funded contracts, signed purchase orders, a non-cancellable portion of a service agreement. I mean, that is different than some of our peers do things. I mean, we know that we may be at a data center site for two or three years. We're pretty sure the buildings we're going to get. But A, the work isn't contracted to us yet. And so therefore, we'll plan for it. But we certainly, and in some semiconductor site, we know that maybe two years ago, we might have got $150 million award. And it's going to look like that $150 million award again. But they're letting it out to us, $30, $50 million at a time, because they know that that's how their funding is going to work. And that's how they did the actual contract for that piece of the work. So we've been that way forever. It's a little different when you have these huge projects. And we just have chosen to stay very consistent and not guess what the future holds and keep it to that kind of dimension. And that's to say the same thing about our operating margin performance. The only thing to get at it back here are hard things, like transaction cost, like the cell of the UK, or a significant impairment. We have restructuring going on in the business all the time where we're restructuring subsidiaries. We don't do that. We don't try to add back amortization. We figure our investors are smart enough to do that themselves. It's a not cash expense. We figure once we go down that rabbit hole, we've become adjusted on adjusted on adjusted. And we just chose to take pure into the gap numbers, both for our POs and operating income and revenue recognition. Jason, I think it's just easier. The numbers are very clean. We appreciate that. I'll turn it over. Thanks, Scott. I appreciate it sometimes, because you're salivating over other people that have five percent of your money. I can't speak for everybody else. I appreciate it. But go ahead. Thanks, Adam. Our next question comes from Brian Brophy from Steeple. Yeah. Thanks. Good morning, everybody. Appreciate you taking the question. So your data center work's been growing a bit faster on the mechanical side than on the electrical side for a few quarters now. Can you talk about what are the drivers behind that? And do you expect that to sustain itself in the next year or this year? Thanks. It could. It could, because we first with the basis, right? And comparison to the segment. So we've opened up a couple of new markets on the data center side. And also, I think one of the growth areas in that is it's a little different scope. We're benefiting more from the AI data center, even though we're building the AI data centers electrically. But the scope doesn't increase as much going from a 100 megawatt cloud storage data center to a 200 megawatt AI data center on the electrical side. But on the mechanical side, it can be a 1.5 to 2 times multiplier on the mechanical systems that will go in. And what's interesting about that, that in either cases that usually include the major end equipment? Yeah. I think Tony's point on the basis is very important as well, right? Mechanicals up more on a percentage basis, but on a dollar's basis, electrical grew a billion dollars this year. Mechanical grew 850 million. So electrical is still growing more in terms of dollars. It's just off a larger basis and do a smaller percentage. I think one way to look at it too. Electrically, we've about two years ago established ourselves as more of a national player in data centers. Mechanically, I would still say we're still a super regional player in data centers. So you may see that growth because of the base and how we're continuing to penetrate new markets mechanically. And it takes a little longer to penetrate mechanically. We're starting to see some of the investments return to us now from what we made two or three years ago mechanically. Thank you. That's helpful. And then related, I think you mentioned 17 electrical markets on the data center side. You're up to now seven mechanical in the grown nicely over time. Where can that go over time? I actually don't know. I think we'll stop counting soon because they're now becoming, you start counting the state of Ohio versus the four submarkets in Ohio and things like that. You take the state of Indiana versus the two or three submarkets. I think the way I think about it is we're now starting to build scale in some critical infrastructure places. So if you think about how this has happened and why it's happened is because it's been this quest for power. Right. That's how we, that's how our great industrial electrical got into the data center business in Indiana because they went and chased the stranded power from the steel mills and auto plants that had been there before. And so you know, you think about that over time. There's still stranded power out there and that should keep, that's why we say two to three year, pretty good outlook because our customers are telling us that and they may even be a little bit beyond that. They feel pretty good. They're a little longer that the word contractors, we always discount that back a little bit. And but I will say this, the markets are now dependent on where they can get power in place. My gut is there'll be a couple more markets added and then in the markets they're in, they're going to start to build even more density just like they did in northern Virginia right outside of Columbus, Ohio, what they've done in Chicago, what they've done in Arizona. They built in Atlanta. They're built in density in those markets and they do that for a reason. They do that for a reason because they think there's a good view on power in the long term. And also the connections there are really, really good. And the latency becomes important in some of those major metro areas for the knowledge workers long time. Now do I understand how the latency works everything? Not really, but that's how it all works. You know, we can put it all together. So it'll go up and it's not going to grow like it did because they're now they're starting to build critical mass in those markets. So I appreciate the color. That's it all. Our next question comes from Justin Hawke from Beard. Yeah, great. I guess first one, I mean, you've talked about the fire, life safety projects being strong for a while. I think you made some comments here about, you know, kind of the uniqueness of what you're doing on the data center specifically. Can you just elaborate a little bit more on your capabilities there and, you know, how you're different in that market? Yeah, are we different? Yeah, because I think we have some of the best fire. We have critical mass on design. And we have a very strong position with the road local in the UA for sprinkler fitters. So if you take the business first and you think, take a step back and those that have been with us for I'll be patient for a second as I answered this question. It's one of the few trades what we do that the actual implementation of that part of the specification is a design bill product. The way the specification is written is it says provide a fire like safety system in accordance with the code at both the national standard and then their state and local standards. And our guys are experts at that. And what they do then is we design it and then the fire like safety has a fairly significant prefabrication component. we have some pretty at scale fabrication shops to support our far like safety business and then it's for the union other than 16 close local that's a road local that will travel and so our people can travel across the country and it also tends to get connected to think of another word like Legos or Tinker Tinker if it connected system and we prefab most of it in the shops and then finally it has a nice aftermarket component and we have a nice aftermarket business and that is one of the places where if we build it we have a pretty good shot at getting the long-term service agreement post a building so it's a national business in scope it's a designed build business in scope on that specific trade we have a great workforce and we're at scale in that business and it probably as good as anybody else at this I'm never say we're the only ones but why are the few that can operate on a national basis I appreciate more of the history of us on that so thank you for that I guess my second one is I guess for Jason here and it's just more of a model question but the band fourth acquisition obviously much smaller than the Miller was but you know I know it's gonna have an intangible component with it as well now that it's closed you know I think I think Miller that was like 40 million for the year that was kind of a drag what what's kind of the similar magnitude for Danfield just so we can kind of think about what's running to it so I'll hit a couple things on amazement first so if we look just at Danforth in 2025 round numbers it's about 2.7 million dollars of amazement in 2026 it's gonna be around 14.2 million so you got about 11.5 of incremental amazement from Dan fourth in in 26 just a refresher on Miller we said in year one so 2025 it'd be about 40.5 million of amazement in 2026 it's gonna be about 33 so you should see about seven and a half drop off so if you just look across Mcore while we may have a little bit of amazement benefit and electrical it's gonna be offset in mechanical so if you really net the two it's near neutral great that's helpful appreciate it thank you thank you and our next question comes from Avi Jaros Jaroslawitz from UBS please go ahead with your question hey good morning guys morning Avi so you've noticed you've noted in the past how much more your revenue has grown than your head count is that something that you expect is gonna be able to continue this year or are some of those productivity gains maybe slowing down and requiring yeah just some more head count to us for revenue I think we'll keep the trend going yeah I think over time we've said it's it revenues growing two to three times faster than head count we saw that again for for the full year of 25 or revenue outpaced head count by 2x and I think that model holds for the future yeah we'll continue to get the productivity gains and we'll continue to do the means and methods sharing across the country allow you a more productivity gains okay that is helpful and then just as we think about the the margin guidance for this year and appreciate that you give that color on the entange glamourization but just without the UK business and with large projects continuing to grow and productivity continuing to grow would have expected maybe you know starting point of around flat for the year for for operating margins so maybe if you just help us think through that yeah the higher the range it is flat and so that it becomes a revenue if we do come in flat so you know on the size business we have with 12,000 projects we're giving you a 40 basis point range it's pretty tight and could we come in at the hop high that range sure but if we don't hit the midpoint of the guidance right you know and that allow us you know it's a revenue margin thing it's and it's really contract mix is probably the biggest thing in there we we think we'll maybe pick up a little better on a project write down year over year and so all that comes together that's how we get to the range it's pretty tight range and you know I think the bottom is pretty safe could there be upside on the top a lot of things would go right sure but we gave you the night for could we think we have a probability of hitting the night for the way the way I've used the range is that the high and we're essentially saying we could replicate the record margins that we achieved in 2024 that midpoint of that range is somewhere around our rolling 12 to 24 month average more or less is equivalent to that midpoint and at the low end we're saying this is what margins could look like if we have a different mix so we talked about the water and wastewater work that we have ahead of us it's great work we're not turning down data center work to do it the different margin profile we're acting as a prime contractor there's more subcontract component is more material and equipment component so lower margins so what we're saying is as we do some of that work from potentially revenue skews upward it could have an impact on margins but we still thinking in a fairly high band and a band that is at record levels for M-core over the last two years okay understood appreciate the color thank you thank you our next question comes from Tim Mulroney from William Blair please get in with your question yeah thanks for squeezing me in as I'm looking at the time here I'm just gonna ask one question and I really just want to build on that last question you guys because maybe maybe though Tony from like a more a higher level a more conceptual standpoint so bear with me because as I step back and I think about the situation that we're in like this this really is a renaissance for blue power trade labor American unionized labor in this country so as I look at your guide for 26 I wonder you know what is the fair value what is a fair burden for the critical services that you provide is it 12 to 13% margin in the construction business like why why can't that go higher thank you I think it's a mixed question and I think this whole thing is about risk and return for us to Tim you know clearly where we make our most margin is where we take the most risk on a contracting basis which is where we take risk risk and you know the more our mix use to that especially on these large projects and we do well the more money we can make however there's certain operating conditions on the ground that doesn't allow us to do that and a classic example would have been the job that happened last year we went in a new market we felt pretty sure of ourselves on the fixed price we we evaluate that now today we probably should have went into that market on that project with that design and with the schedule they gave us we probably should have pushed harder for a GMP contract which would have maybe not taken some of the upside away from us if we actually executed the way we thought we could but would have protected us on the downside I think the other thing that that you I think you're right but remember part of that Renaissance actually goes back to labor too I think they've been very good with us on labor increases but the packages you put together on a job here puts pressure on the budgets of our end customers and that's how you get into some of these target price GMP type projects because they're saying okay we're not exactly how you're going to put this labor force together in this remote market in this section of Iowa or this section of Texas so there's some underlying things going on here but generally I agree with you I don't think our customers pay us enough for what we do and we're going to continue to ask us to pay more I don't disagree with you that skill labor in the country I don't disagree with you understood very clear thank you Tony our next question comes from Adam this from Goldman Sachs please go with your question hi good morning one more of the outlook and sorry if I missed this but can you help us break out the revenue growth outlook between organic and acquisition another few moving pieces with by vestitures and the acquisitions you did last year I guess my first comment there right is you have to remember the UK basically gives us a 3% headwind on the revenue growth so if you look at our guidance and let's say at the low end it's 4.5% and at the high end it's 9% it's really equivalent to 7.5% and 12% when you when you consider the one month of incremental contribution we have from Miller and the the 10 months from Danforth you put that together it really offsets the UK impact the loss of revenues from the UK so if you look at it and you say what the guidance how much of that is organic how much that is acquisition I would say really all of it is organic because the lost revenue from the UK is just offset by the acquisitions understood helpful and then can you update us on the M&A pipeline today I know it's hard to predict timing of M&A but can you talk about how active your M&A pipeline is maybe compared to this time last year and any way to characterize the pipeline of opportunities in terms of size of businesses region or technical exposure sure first of all we we we have as good or better pipeline sitting here today, then we did at the end of 2020 because we knew we were already going to do Miller, right? We were in negotiation. So if you look at the pipeline beyond Miller, our pipeline today is broader and more diverse than it was at the end of '24. And the universe of them is where we like to buy, right? Mechanical and electrical segments, building service, focus on mechanical service and building control companies. That's where we're going to buy for the most part. And there's some spattering around Millwright work and maybe some of the handling work we do in our mechanical business to supplement what else we do there. But that's what we'll do. I know we're a landing site. Here's who we're landing site for someone that's selling their life's work or their family's life work. That's proven very good for us. They're typically a might be a broker, but it's not a broker itself. Very much like Miller, very much like Quibi, very much like Bachelor in Kimball, very much here as a good climbing out. These are sort of landmark businesses that we're going to hopefully get to a deal. Another place is ESOP. That was Danforth. Worked great place for ESOPs long term. And part of Miller was in ESOP. Why? Because we have an operational culture that's focused on the trades. And that's really how that ESOPs started at one time when that family moved that business into an ESOP. What we don't do particularly well in is auctions against private equity. We're not the, I don't have enough on my team with the vest that can go in and rip a company apart and tell me what it's worth. So we're not as good there and we're not playing the average multiple game down. We're actually buying companies for the long term. And our deal size could be everything from 2 million where we buy some HVAC technicians and it augments us more branch we have all the way up to Miller at 865 million. Would do anything along those lines. Could we do a couple 500 million dollar acquisitions this year, three to 500? Sure. We could. And we could do four or five hundred, I mean, a hundred million dollar acquisitions. Just don't know sitting here today, but I feel as good about our pipeline today at this point in the year as I have at any time in the last three or four years. Great. Thanks so much. You bet. And with that, everyone, we will be ending today's question and answer session. I would like to turn the floor back over to Tony for any closing remarks. Thanks, Jamie. And thanks to all the analysts. I thought this was a great question and answer session today. I think you got to the heart of what we wrestle with every day. I want to thank my colleagues from Mcore and my teammates for what was a great 25. Reality is most of us already forgot about 25. We're here in the third week of February. We've all been focused on 26 really since, you know, probably the fourth quarter or 25. We have a great outlook. We're in all the right sectors. We're playing with the right team. And we have a terrific capital allocation strategy. Thanks for your interest at Mcore. And thank you all my teammates. And with that, everyone will be concluding today's conference call end presentation. We do thank you for joining. You may now disconnect your line.