EMCOR集团 (EME) 2026年第三季度业绩电话会：RPO创历史新高并上调业绩指引

EMCOR Group（纽约证券交易所代码：EME）公布2026年第三季度营收创历史新高、现金流强劲，且履约义务余额（RPO）进一步扩大。受数据中心需求以及医疗保健、水利基础设施、机构和工业市场增长的支撑，管理层上调了全年业绩指引。

核心要点

• 营收创下单季历史新高，达到55.4亿美元，同比增长28.8%，有机增长25.5%。
• 调整后营业利润增长43%至5.798亿美元，调整后营业利润率扩大110个基点至10.5%。
• 调整后摊薄每股收益增长46.1%至9.60美元。GAAP摊薄每股收益为9.04美元，其中包括3400万美元的非现金减值损失。
• 履约义务余额（RPO）创下纪录，达185.7亿美元，同比增长47%，较2025年底增长40%，环比增长8.3%。
• 数据中心RPO同比增长逾一倍至87.4亿美元，环比增长13%。
• 管理层上调了2026年业绩指引，预计营收达206亿美元至210亿美元，调整后摊薄每股收益为34.50美元至35.50美元。

核心财务数据

业务与经营业绩

施工业务板块

电气施工业务营收增长 44.3% 至 18.5亿美元。网络与通信业务中，数据中心相关营收增长 68%，而机构、医疗保健及制造与工业业务营收分别增长 78%、31%与 28%。收购带来了1.401亿美元的增量收入。

电气施工业务的营业利润增长略超70%，达到2.47亿美元。营业利润率扩大200个基点至13.3%，这主要归因于项目执行和业务组合改善带来的更高毛利率，同时销售及管理费用杠杆效应也带来了额外收益。

机械施工业务收入增长43.1%，达到25.5亿美元。网络与通信业务收入增长近130%，反映出数据中心需求以及冷却需求的扩大。机构业务收入增长56%，医疗保健业务增长29%，水与污水处理业务增长32%，商业业务增长23%，制造与工业业务增长17%。收购Danforth带来了1.732亿美元的收入。

机械施工业务营业利润增长34.4%，达到3.082亿美元，而营业利润率则下降80个基点至12.1%。管理层将这一下滑归因于施工管理、总承包、最高保证价格（GMP）和成本加成项目的占比提高，此类项目虽然能创造可观的利润金额，但财报显示的利润率百分比相对较低。

建筑施工业务合计收入达44亿美元。合计营业利润增长近50%，营业利润率提升40个基点至12.6%。

建筑与工业服务

建筑服务收入增长4.7%，创下季度历史新高，达到8.524亿美元。营业利润增长11.5% 至 6620万美元，且营业利润率提升50个基点，达到创纪录的 7.8%。增长主要来自机械服务、维修与保养、楼宇自动化、控制系统、改造项目以及现场营运业务。

工业服务部门的营收基本持平，为 2.875亿美元，但今年迄今的营收增长了 10.4%。管理层提到了炼油厂大修活动、石化项目、LNG日常维护以及一个大型太阳能项目的进展。季度营业利润降至 510万美元，低于上年同期的 630万美元，原因是销售、一般及行政费用（SG&A）的增加抵消了毛利率的改善。

未履约结转订单（RPO）构成

管理层表示，数据中心约占今年迄今营收的三分之一，分布在众多客户、行业和地理区域。数据中心 RPO 增长的约 75% 仍位于 EMCOR 的核心市场内或距其 30 至 40 英里的范围内。

管理层业绩指引

基于今年迄今的表现以及创纪录的 RPO 可见度，EMCOR 上调了 2026 全年业绩预期：

• 营收： 206亿美元至210亿美元
• 调整后摊薄每股收益（EPS）： 34.50美元至35.50美元
• 调整后营业利润率： 管理层预计全年业绩将至少与前九个月实现的 10% 水平保持一致。
• 经营活动现金流： 管理层预计全年区间约为 15亿美元至17亿美元。

该预期假设核心市场的需求和执行力持续良好。管理层表示，收购带来的未完成订单摊销将在一定程度上削弱收购对近期营业利润和每股收益的贡献。

预计摊销金额为 3530万美元用于2026年第四季度，2027年约为1.28亿美元，上述数据基于电话会议时已宣布并完成的收购。Schmidt与Connolly的已收购在手订单摊销期约为16至17个月。

风险与关注领域

• 管理层指出，地缘政治冲突、供应链中断以及政策与监管变化是持续存在的宏观经济不确定因素。
• 由于大型总承包、保证最高价格（GMP）和成本加成项目的占比增加，机械施工业务的利润率面临结构性压力。管理层预计未来约12个月内利润率将维持在当前区间附近。
• 数据中心建设面临政治和监管层面的讨论，包括拟议的暂停建设指令。管理层表示，对于未来两到三年内预计开展的项目，尚未观察到项目进度变更或储备项目延期的情况。
• 数据中心需求在施工业务组合中的重要性日益上升，尽管管理层强调了在客户、地理区域和工种方面的多元化发展。
• 燃料价格上涨会影响成本。EMCOR每年消耗约2000万加仑汽油和柴油，这意味着若成本未获转嫁，每上涨1美元可能带来潜在的2000万美元的年度影响。管理层估计，50%至75%的增加成本通常能够得以收回。

分析师问答环节亮点

数据中心前景： 管理层表示需求并未出现减退，并指出EMCOR仍专注于大型超大规模数据中心客户及为其提供服务的公司，而非投机性开发项目。公司持有的潜在数据中心项目量超过了目前的承接能力，这为其精选项目和客户提供了支撑。

云计算与人工智能项目： 管理层估计目前的数据中心业务组合约为65%至70%为云计算，30%为人工智能，未来该比例可能趋向各占50%。由于冷却需求更高，人工智能需求对机械施工业务产生了尤为显著的影响。

利润率可持续性： 管理层建议在4到8个季度的周期内评估利润率，而不是将单一季度视为永久基准。管理层预计电气施工业务的营业利润率范围约为12%至13%（近期表现偏向12.5%至13%），机械施工业务为12%至12.5%。

营运资金与现金流： 管理层表示，合同负债随着未履约订单总额（RPO）的增加而增长。如果营收增长放缓，未开票应收账款和应收账款有望转化为现金，这与EMCOR历史上的现金生成模式一致。

预制加工能力： EMCOR计划在未来两个季度内新增数个纯预制加工设施。这些设施将为EMCOR旗下的多家公司以及选定的外部客户提供支持。管理层预计资本支出将保持在营业收入的1%或以下。

资本配置： 截至9月30日，EMCOR已投资近8亿美元用于收购，并通过回购和股息向股东回报了5.1亿美元。董事会额外批准了5亿美元用于普通股回购。

业绩电话会议完整文字实录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good morning. My name is Dave, and I will be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group Third Quarter 2026 Earnings Conference Call. [Operator Instructions]

I will now turn the call over to Lucas Sullivan, Director, Financial Planning and Analysis. Mr. Sullivan, you may begin.

Lucas Sullivan

Thanks, Dave. Good morning, everyone, and welcome to EMCOR's Third Quarter 2026 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 emcorgroup.com.

With me today are Tony Guzzi, our Chairman, President and Chief Executive Officer; Jason Nalbandian, Senior Vice President and EMCOR'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 third quarter 2026 and discuss our RPOs. Jason will then review the third quarter numbers and 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 contains certain forward-looking statements and may contain certain non-GAAP financial information.

Slide 2 of our presentation describes in detail these forward-looking statements and the non-GAAP financial information disclosures. I encourage everyone to review both 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 issued this morning and in our Form 10-Q filed with the Securities and Exchange Commission.

And with that, let me turn the call over to Tony.

Anthony Guzzi

Yes. Thanks, Lucas, and good morning, and thank you for joining us. I'm going to begin here on Slide 4. EMCOR delivered another quarter of exceptional growth, margin performance, operating cash flow and capital allocation. Revenue increased 28.8%, or 25.5% organically. This growth, coupled with strong field execution, and improved SG&A leverage resulted in meaningful expansion of our operating margin. Operating cash flow in the quarter was $797 million, and remaining performance obligations reached a record $18.57 billion, up 47% year-over-year, 40% from year-end 2025 and 8.3% sequentially despite the strong revenue growth we had in the quarter.

Most of the RPO growth was organic reinforcing the depth of demand across multiple end markets. On an adjusted basis, our third quarter operating margin was 10.5%. The reflecting the strength of our execution and operating model. And we earned $9.60 in adjusted diluted earnings per share, a 46% increase versus the year ago period. Our construction segments continue to deliver outstanding performance. Both our Electrical and Mechanical segments grew revenues by more than 40%. With approximately 75% of such growth being generated organically.

Our Electrical Construction segment delivered a 13.3% operating margin. And Mechanical Construction delivered a 12.1% operating margin resulting in combined margin expansion, up 40 basis points. Demand remains broad-based with particular strength in the network and communications, which is data centers for the most part, health care, manufacturing and industrial, water and wastewater and institutional sectors.

We continue to outgrow the broader nonresidential construction markets. Building Services also posted a strong quarter. Revenue grew nearly 5%, operating income increased 11.5% and operating margin expanded 50 basis points driven by a favorable revenue mix and improved SG&A leverage.

Industrial Services performed as expected and relatively in line with the third quarter of 2025. Importantly, we saw expanding opportunities in LNG maintenance and petrochemical work, which supports our continued broadening of the markets that we will serve with this segment. As I previously mentioned, and this will be on Slide 5 now. As I previously mentioned, our RPO position strengthened considerably during the quarter, reaching a record $18.57 billion. This growth reflects strong demand across the majority of our market sectors led by network and communications or data centers as well as continued strength in health care, water and wastewater, institutional, manufacturing and industrial and I'm going to take a deeper look at each of these sectors.

Data center RPOs totaled a record $8.74 billion, more than double the year ago level and an increase of 13% sequentially. This growth demonstrates our broad capabilities in this sector, which includes electrical, mechanical and fire life safety construction and service. Healthcare RPOs totaled $1.71 billion, an increase of 31% year-over-year, reflecting the strength of this long-standing core market for EMCOR. Water and wastewater RPOs totaled $1.42 billion, an increase of 38% year-over-year as we continue to capitalize on opportunities throughout Florida.

Institutional RPOs totaled $1.72 billion, an increase of 25% year-over-year driven by strong demand for many of our education customers, especially at the higher level education.

And finally, Manufacturing and Industrial ARPUs totaled $1.18 billion, an increase of 10% year-over-year and nearly 27% sequentially as we are benefiting from a broad range of investments across this sector. The size, quality and diversity of our RPOs remains very strong.

Before I turn the call over to Jason, I want to underscore what these results demonstrate. Our field leaders continue to exhibit discipline and precision as they execute some of the industry's largest and most technically complex projects for our highly sophisticated and very demanding customers. At execution it is translating into strong margins, cash generation, record RPOs and growth well above the underlying market.

With that, I'll turn it over to Jason.

Jason Nalbandian

Thank you, Tony, and good morning, everyone. Starting on Slide 6, I will cover the results for each of our segments as well as some of the key financial data for the third quarter of 2026 as compared to the third quarter of 2025. Revenues of $5.54 billion established a new quarterly record for EMCOR increasing 28.8% or 25.5% on an organic basis. Revenues of Electrical Construction were $1.85 billion, increasing 44.3%. While the largest increase was driven by greater demand for data center construction projects within the network and communications market sector, where revenues increased by 68%. This segment also saw notable growth within institutional, which was up 78%; health care, which was up 31% and manufacturing and industrial, which increased by 28%.

Additionally, contributing to the growth of our Electrical segment was $140.1 million of incremental revenues resulting from the acquisitions we previously announced, including Connelly and Schmidt, which closed in early August. Mechanical Construction revenues were $2.55 billion, an increase of 43.1%. Greater demand for data center construction projects, including expanded scope associated with increased cooling requirements, led to significant growth within the network and communications market sector, where revenues increased by nearly 130%.

Beyond data centers, mechanical construction benefited from greater opportunities within several other sectors including institutional, which was up 56%; commercial, which increased by 23%, really driven by warehousing, distribution and logistics projects, Manufacturing and industrial, which includes food processing and was up 17%; Healthcare, which grew by 29% and Water and Wastewater, which increased by 32%.

Driven by the Danforth acquisition in Q4 of last year, this segment generated $173.2 million of incremental revenues within the quarter. On a combined basis, our construction segments had revenues of $4.4 billion, establishing new quarterly revenue records for both segments. We often discussed the diversity of demand that we have across our business and with double-digit revenue increases across a number of sectors, I think the performance of our construction segments this quarter really highlights that fact.

If we move to Building Services, revenues of $852.4 million increased by 4.7% and like our construction segments represents a quarterly record. We continue to see strength within Mechanical Services, which experienced growth across each of its service lines including service, repair and maintenance, building automation and controls and retrofit projects.

In addition, given greater project volume, the award of new facilities maintenance contracts and scope or site expansion with existing customers, this segment site-based business grew revenues by 6.5% continuing the trend we saw last quarter. Industrial Services revenues were $287.5 million, generally in line with the prior year. However, on a year-to-date basis, revenues of this segment are up 10.4% as a result of greater refinery turnaround activity, higher petrochemical project volume, new opportunities for LNG plant maintenance, and progress made on a large solar projects.

Let's turn to Slide 7 for operating income. On a GAAP basis, we generated operating income of $545.8 million, or 9.8% of revenues. Our third quarter results included a $34 million noncash intangible asset impairment charge associated with the prior acquisition within our Building Services segment. This business, which accounts for less than 1% of the segment's revenues, provides energy efficiency contracting outside of traditional mechanical services and our site-based offerings and has been affected by disruption in the performance contracting market. When excluding this impairment, our operating income was $579.8 million, and our operating margin was 10.5%. This represents a 43% increase in operating income and reflects 110 basis points of operating margin expansion.

Looking at each of our segments. Operating income of electrical construction increased by just over 70% to $247 million due to the revenue growth I previously mentioned, coupled with 200 basis points of operating margin expansion. While the segment did benefit from a 50 basis point reduction in SG&A margin, the overwhelming majority of the increase in operating margin was a result of greater gross profit margin, given an improved execution and a more favorable project mix.

Mechanical Construction had operating income of $308.2 million, which represents a 34.4% increase. Similar to the first half of the year and as we anticipated, the 80 basis point reduction in operating margin of this segment resulted from a change in mix that included a greater percentage of revenues from projects where we are acting as either the construction manager or prime contractor and which inherently carry a lower-than-average gross profit margin due to reduced markups on materials, equipment and subcontractor costs as well as an increase in the number of GMP and cost-plus contracts. Despite the year-over-year decrease, operating margin of 12.1% and continues to reflect strong execution by our operating companies across a vast number of projects, and we remain pleased with this performance.

Together, our construction segments grew operating income by nearly 50% establishing new quarterly operating income records for each segment and earning a combined operating margin of 12.6%, an increase of 40 basis points. Operating income of Building Services was $66.2 million, an increase of 11.5%, and operating margin was a quarterly record of 7.8%, a 50 basis point improvement over Q3 2025. A more favorable mix, coupled with better project execution, resulted in a 30 basis point improvement in gross margin and due in part to the restructuring we completed within our site-based business last year, SG&A margin decreased by 20 basis points.

Operating income for Industrial Services was $5.1 million, compared to $6.3 million a year ago. A 120 basis point improvement in gross profit margin was more than offset by an increase in SG&A of the segment. If we move to Slide 8, I'll cover a few additional items regarding the quarter. As you can see on this page, the increase in our operating margin reflects both outstanding execution by our field teams, as well as meaningful operating leverage resulting from the growth we've experienced.

Specifically, gross profit of $1.11 billion increased 32.7% while gross profit margin expanded by 60 basis points to 20%. And SG&A was $528.4 million, or 9.5% of revenues compared to $429.6 million, or 10% of revenues in last year's quarter.

Moving down our P&L. Diluted earnings per share was $9.04 but when you adjust for the intangible asset impairment charge, diluted earnings per share was $9.60, which represents an increase of 46.1% compared to the $6.57 earned in last year's third quarter.

If we briefly turn to Slide 9, you can see our performance year-to-date. Revenues have grown by 22.9% or 20.8% organically. Our gross profit margin has increased by 30 basis points, and we successfully leveraged our cost structure, reducing SG&A margin by 40 basis points.

In a few slides, Tony will provide our updated guidance for 2026. Underlying that guidance is strong fourth quarter performance and the expectation that our full year adjusted operating margin will at least be equivalent to the unprecedented 10% that we have earned through the first 9 months of the year.

I'm going to close on Slide 10, which is our balance sheet. With $775 million of cash on hand and $1.03 billion of working capital, we continue to have significant financial flexibility. This allows us to invest in organic growth execute on strategic M&A opportunities and return capital to our shareholders. Although not shown on the slide, we generated $796.7 million of operating cash flow in the quarter. And on a year-to-date basis, operating cash flow is now $1.1 billion.

We remain committed to our philosophy of balanced and disciplined capital allocation, which is demonstrated by our year-to-date activity as well as this morning's announcement that our Board of Directors has authorized an additional $500 million for the repurchase of our common stock. Through September 30, we have invested nearly $800 million in acquisitions and returned $510 million to our shareholders through both share repurchases and dividends. These actions reflect our confidence in the long-term prospects of our business.

And with that, I'll turn the call back over to Tony

Anthony Guzzi

Thanks, Jason. I'm going to finish on Slide 11 and 12 and going to the capital allocation point before I jump in. You can see all that on Slide 12. Given our year-to-date performance and the visibility of our record RPOs, we are again raising our full year 2026 guidance. We now expect earned revenue of between $20.6 billion and $21 billion and adjusted diluted earnings per share of between $34.50 and $35.50. This increase reflects the same demand across multiple sectors. Our continued success in winning and executing large-scale projects and our confidence in our operating teams.

Although our acquisitions enhance long-term earnings, near-term earnings per share and operating income contribution is moderated by acquisition-related backlog amortization. Our integrations remain on track, and we are pleased with the strategic fit, build capabilities and the teams we have added.

Our outlook assumes continued strong execution and demand across our core end markets. We will remain disciplined on pricing, contract terms, project selection and resource allocation. Now our performance rests on 4 durable operating fundamentals that support growth, margins and cash generation, and they really do serve as our long-term foundation for our compounding success.

First, we invest in training and innovation, workforce development, prefabrication, virtual design and construction or we refer to it as VDC, and enhanced project delivery methods to increase productivity, expand capacity which ultimately strengthens our execution. We are supporting these capabilities with investments in our recruitment, development, software enhancements, leadership rating and new and expanded facilities.

Second, we exercised disciplined contract and risk management. Our teams always balance customer service with rigorous project selection and execution, particularly on large and complex opportunities.

Third, we believe our field leadership is a structural competitive advantage. The expertise of our Forman, general Forman and super attendance, project managers and operating leaders drive safe, reliable execution and that supports repeat business with our customers.

And finally, our balanced capital allocation strategy has supported long-term value creation. We are investing in organic growth, pursuing strategic acquisitions and returning cash to shareholders while preserving the financial flexibility to act on attractive opportunities. During the quarter, we did close on our acquisition of Smith Electric headquartered in Austin, Texas, and Connely Electric serving the Chicago land area. We are very excited that they are part of our team. We do recognize the macro environment remains uncertain, including geopolitical conflict supply chain disruptions and policy and regulatory changes. Our approach is consistent, serve our customers well, protect our contractual rights, manage overall risk and execute through changing and challenging conditions. And we have done that very well over a very long period of time.

And I'm going to close, like I always do, by thanking my EMCOR teammates. Their commitment to our culture of mission first people always is the foundation of that success. With that, I will take questions and turn the call over to Dave to queue you.

Operator

[Operator Instructions] Our first question comes from Adam Thalhimer with Thompson Davis.

分析师问答

Adam Thalhimer

Great quarter. I wanted to start on the RPOs for Network & Communications. You said $8.74 billion based upon what you're seeing, the trends you're seeing, what are the expectations for growth there?

Lucas Sullivan

I mean we're going to keep growing. And you'll always remind you, and I know, Adam, you know this, and this is no particular comment. Growth can come in lumpy, but we see great opportunities across the country in all the markets we serve in the data center market. We're seeing it electrically, mechanically and through fire life safety. We've seen no abatement of that demand despite all the noise out in the market right now, preelection. And we continue to work for the right people. The people that have long-term prospects, the big hyperscalers and those that are serving the bigger hyperscaler is who we work for. We're not very much into the Neo cloud market and sort of the speculative building in data centers. So good market, will continue to be good. We are working off a larger number. So I think eventually, you run in the large law of large numbers. But I said that last year, too, and we doubled our growth.

Anthony Guzzi

Yes. And I think the acquisitions we made give us additional opportunities in additional geographies where maybe they weren't as exposed at the time of acquisition, and that gives us the play into the future. .

Adam Thalhimer

Okay. And just as we think about the margin performance in the quarter and how we should think about that going forward as a comp? Were there any headwinds from gasoline prices or diesel prices or other inflation in Q2?

Anthony Guzzi

At one time that -- with the size we were 5, 8 years ago, it would have mattered a lot more. I think the headwind from that is de minimis because we also are very good at going out and adjusting our bill rates, mainly in mechanical service, which is where the majority of the gasoline is used. So was it a headwind I would say marginally adjacent.

Jason Nalbandian

Yes. I think on an annual basis, round numbers, we use 20 million gallons of gasoline and diesel. So the way I think about it is every dollar increase is a $20 million impact to us. If we don't pass those costs along. But to Tony's point, we're doing a good job passing along. So I would say at least 50% of the increase is getting passed on to cost.

Anthony Guzzi

Yes. I mean the ones that don't are them being captured really and project pricing through the project managers and the form it back into the jobs or in some general condition on a job. So pretty good, like Jason said, 50% to 75% getting on. You never get it all back. But the flip side, you don't reduce your prices immediately. So it catches on the other side when prices come down for a little bit. .

Adam Thalhimer

And's then, Jason, just any quick thoughts on cash from ops in Q4. You've still got a lot of -- you still have a lot of accounts receivable that could flip in Q4?

Jason Nalbandian

I think for us, nothing's changed in terms of the way we view long-term cash generation, right? So somewhere between net income to 80% to 85% of operating income on a full year basis. So for this year, that puts you somewhere around $1.5 billion to $1.7 billion of operating cash flow for the full year.

Operator

The next question comes from Brent Thielman with Oppenheimer. .

Brent Thielman

Tony, this massive growth in data center, RPO, is it fair to say it's all happening still within your kind of your core markets? Is any of this kind of a product if you moving, maybe what we call it a little further from the home markets into traditional areas?

Anthony Guzzi

I think 75% of it is still in our core markets. But we are expanding. We are expanding in Texas, even free Smith acquisition mechanically. We've expanded in Texas. We are serving mechanically some of the more rural markets in Texas that's part of this. But in general, it's our core markets growing and building out and/or within 30 to 40 miles of our core markets.

Brent Thielman

Okay. And then look, as this gets towards data centers get toward it looks like 50% of your combined construction segment revenue here pretty quickly. I guess I want to get your view whether there's a balance in terms of mix of markets and customers you want to maintain? Or is it simply move the teams to go after the best returning opportunities for the business right now?

Anthony Guzzi

I think it's both, Brent, the reality, right? We have built in diversity of demand because not all our end markets, not our geographic markets have data center capability. We still have a fairly significant business in California. And really the data center business in California is de minimis. We have a fairly significant business across all New York State, New England, the data center business across New York State, none there right now because of the more but the data center business in New England, New York State and even New Jersey is de minimis. So we have built in diversity. But even within markets where we have strong data center demand, we are very cognizant that we still need to serve, especially our core health care customers and some of our institutional customers and our manufacturing customers. So we are very cognizant of having the ability to spread across all. And quite fortunately, we've been able to do very creative things with our workforce to make that happen to include things like the word on those sites, 4 or 5 days a week and if they want to pick up over time, they can come over on a scope of work and work on the data center side on the weekend to pick up extra hours.

But it's -- there is no magic number to any of this. I think it starts with -- we have long-term customers. We have built in diversity. We have long-term customers and markets that have data center demand. We're going to continue to serve but then on balance, we're going to make the right mix management opportunity because we are contractors over the next 1- to 3-year period about how we'll serve the market and how we'll maximize return for our shareholders.

Jason Nalbandian

And if you're asking about the data center, in particular, if we have a concentration risk there, I would say we're not tied to 1 or 2 customers. It's fairly diverse. And if you look year-to-date data centers are about 1/3 of our revenues, and that 1/3 of our revenues is split amongst numerous customs.

Anthony Guzzi

Yes. But even there, Brent, in the data center market, Jason makes a good point. One, we have diversity, not only of trade and geographies and end customers, but the other thing that we have also is we have more people who want to work with us. I do want to say people are just like we could do what we want. We have more data center construction that want to work with us, then we can serve. So we do have the ability to be selective about who will work for, what kind of work we'll do. It's always important when you think about data centers.

Still, the majority of our mix still tilt stores, cloud storage, data centers and cloud computing data centers. And I think it's going to be that way for at least the next year, 1.5 years.

Brent Thielman

Okay. Excellent. Maybe just last one. Tony, a lot of your peers talk about developing physical capacity in MEP, whether you call it prefab or whether you call it modular. You've been doing a lot of that for a long time. Maybe you could just talk about what your plans are within your business on that side? Are you doing expansions? Are you building that out? Maybe just to clarify what it is you do there as well?

Anthony Guzzi

Yes, 100% were expanding. The way we think about it is what demand do we have to support that, typically, we're building for ourselves. We are -- we do have the opportunity with a couple of the hyperscalers to build modules. And the difference between us and one of our peers, we're not building buildings and then putting them on tractor trailers and moving them out. We're building piping modules, piping racks, hack units, things like that. We typically have done it for ourselves. We have done it for them to have other people install. I think that's going to become more of what we do. There won't ever be a significant amount of our revenue but we will service that market. I think pragmatically, once we are doing that on a job, they will then ask us to expand and do the installation. So that will actually grow geographic areas, too. .

But no -- we're expanding some of our traditional locations. But we'll add over the next 2 quarters, a couple of fab shops that will be fab-only serving multiple EMCOR companies and of the external market. And then the other thing to always think about with us, one of the reasons people sell their companies to us is a lot of times they have good fab capability. Others don't have great fab capability. And as a result of that, we help them with best practice learning and build the right fab shop for them to grow in the future.

Operator

The next question comes from Justin Hauke with Baird.

Justin Hauke

Great. So yes, I wanted to -- I feel like this has been a question on kind of across the space. But on the cash flow, the net contract liabilities balance went up a pretty decent amount, I guess, on some of the advanced billings on some of these earlier stage projects. But I guess, Jason, maybe you could just talk about the sustainability of that given that you've had such rapid growth, and that's obviously a very favorable working capital dynamic. But to the extent that growth, I don't know, moderates or maybe just doesn't grow at the same pace, how that would potentially reverse itself?

Jason Nalbandian

Sure. Sure. So I mean, you're right. Some of the growth that we saw this quarter in contract liabilities is just both hand-in-hand with the growth we've seen in backlog or RPO. And that's typical. The flip side, though, is we still do have a significant investment in working capital in the form of unbilled and accounts receivable. And so if growth were to slow, you are going to see that start to liquidate and you're going to see that turn into cash flow. And to some extent, that's part of what drove this quarter's cash flow in industrial, right? We had fairly strong growth last quarter in Industrial. We were up nearly 30%. This quarter, revenues were relatively flat. You saw the flip of that favorably impacting cash flow. So in a period where growth slows for us, we've historically spent off a lot of cash, and I think that would happen again.

Anthony Guzzi

And it's always import to know billings in advance doesn't mean we're getting all cash in advance.

Jason Nalbandian

Some of that is offset by the increase in ARR. Some of it is just advanced billings that haven't been collected yet. Some of it is deposits. So it's a combination of both.

Justin Hauke

All right. No, that makes sense. And then I guess maybe my second one here would just -- obviously, margins were really good this quarter and the outlook is higher. On the mechanical side, you talked about the mix impacts. You think you guys have been talking about that for a while. But just curious if you could quantify how much maybe that's weighing on the margins. And also, to what extent does that continue? When do we get to a point I mean, I guess it can change all the time. But assuming the mix stays at the same level, when does that kind of anniversary .

Anthony Guzzi

I think the level we're running at today is where we're going to be running for probably the next 12 months or so, right? So there's been there's been a year-over-year decline in mechanical margin because of the mix shift. I think as we enter '27, that decline goes away. I think the margins are around this level. Again, if you look at a rolling 12- to 24-month average for mechanical, that puts you in the 12% to 12.5% margin range. I think that's where we're going to be for some time.

Jason Nalbandian

Yes, because I think the more AI data centers become part of the mechanical mix. The designs on those are so much more dynamic. And also that's sort of the contracting method of choice from one of the big customers we work with. And that's not going to change. We're not going to seek to change it because it is so dynamic. These are still really good gross margin job. They're really good jobs. And they contribute pretty significant margin dollars, which is really. You've heard me say this before, the margins we're operating in now. We're much more in the quest for margin dollars than margin percentages.

Operator

The next question comes from Brian Brophy with Stifel.

Brian Brophy

Great quarter. Just following up your answer to Brent's question, it sounds like you're leaning more into fab only capacity here relative to what you've talked about in the past. So I guess I'm just curious as to what changed. Is this a reflection of the demand environment, something else? And how you're thinking about managing risk given the incremental fixed costs.

Anthony Guzzi

The incremental -- so for us, think about fixed cost, we lease the facilities. We have the capital in it. And these are long-term, I would say, geographically advantaged locations we're going to. So if there is a fixed cost turnabout, we will get out of less productive facilities long term and go to these.

Secondarily, nothing's really changed in how we think about it. It's just -- we have 1 or 2 customers who like what we've done on the work that we do and see the fabrication that we do. And in places where we don't have installation capability that like us to support them on how they are going to build out longer term.

Like I said, we're not going to be looking to build buildings and put them on trailers with a bunch of other people's equipment and ship them to the job site, that's not what we do. What we do is take the capability we have whether it be on some of the substation packages we do or even things like that and also some of the work we do on piping packages and then serve the market more broadly, which allows us to absorb the fixed cost in the facilities we have. So not a shift on what we do, responding to our customers and being supportive of them.

Jason Nalbandian

And I think even if we made some larger investments in that space, CapEx for us is still going to be 1% or less of revenue, still in terms of investment, not significantly...

Anthony Guzzi

That is really tied to the revenue growth.

Brian Brophy

Understood. That's really helpful. And then you touched on some of the SG&A leverage you're seeing curious how much runway is left there? And part of the reason I'm curious is that it's been less of a margin driver for you guys in the past despite some of the really healthy top line growth we've seen over the past, call 5 years. I guess I'm just curious if something has structurally changed there and how you're managing costs on that line.

Anthony Guzzi

Not really. We are getting some efficiencies, right? With favorable mix, large projects and because we're shifting more to large project mix, we do absorb more SG&A doing that. Also, nothing structural. -- it'd be probably small into this. But the positive of GMP contracts is you can absorb more through general conditions of your SG&A overhead into those contracts, then you may get right on a fixed price contract. Nothing very much structurally. I just think it's the mix of large project work, coupled with us because as large projects, you don't have to hire 5 project managers, you can have 2 virtually you're doing the smaller work, you still need more people to do that. .

Jason Nalbandian

And then the other factor is just field incentive compensation is variable. A lot of that runs through SG&A. And so in the last few years where we've had a pretty sizable expansion of gross profit margins, you're going to have greater field incentive comp, which will drive SG&A margins up as well. This year where that incremental gross profit margin hasn't been as large going to see the benefit in SG&A because the field compensation doesn't increase to the same extent.

Operator

The next question comes from Ari Jaroslawicz with UBS. .

Avinatan Jaroslawicz

Just on the high-tech manufacturing vertical, still seeing that not really accelerating yet but it does look like it's nearing an inflection point. Just wondering how you're thinking about growth within that specific market sector.

Anthony Guzzi

We remain pretty excited about growth in that market sector. The first phase usually comes in a lump and then thereafter it gets awarded in smaller packages. But clearly, there's a couple of sites that we're pretty excited about, we are participating in. One of those companies is expanding to another geography that wants to be part of it. And we'll balance that specific market sector against other market opportunities in that market, specifically data centers at times and whether there's a big data center build, we'll balance between the 2 of them over a 2-year period. We have the capability. We're good at it. But it's not always the best use of our resources in a given 1- or 2-year period.

Jason Nalbandian

And I also think you can see it starting to flip in our favor now. If you look combined construction year-to-date, that sector is down $162 million, but in the quarter, the decrease was only $6 million. So I think this is the first quarter in a while where we actually saw the semiconductor revenues increase. It's just being offset by a bit of a decline in some of the EV work that we do. So for the second quarter, relatively flat, if you will, in high tech, we're starting to see semis come back.

Anthony Guzzi

The bottom line, it's another job in other sector, and we balance it against everything else.

Avinatan Jaroslawicz

Okay. That makes sense. And I guess touching your continuing on that thread and similar to what you mentioned before. I know not every operating unit that you guys have is working on data centers. So just if we were to see a broader reacceleration in non-res spending. How should we think about how that could impact your business? How much of the business has kind of more room to grow with better end markets?

Anthony Guzzi

I mean we've grown -- if you go look at RPOs and you look at the growth in those RPOs outside of data centers, it's pretty stunning, right? Health care RPO is up 31% year-over-year, water and wastewater up 38% year-over-year. institutional RPO is up 25% year-over-year. Manufacturing industrial RPO is up 10% year-over-year. Really, the only -- and I think commercial is down 1%, 2%.

We've had pretty good success with RPOs. And that is the precursor for growth in subsequent periods. I will serve those markets, especially in the nondata center markets. But a lot of times, when you look at -- especially at the health care, specifically and manufacturing and industrial, we're balanced in that in a lot of cases in some markets against data centers. And so I don't want to -- and we haven't really seen a deceleration for the most part in those markets that we serve. So what would benefit from it, I think if you're going to see nonres grow more broadly, based on what we've seen in our business, that will likely come in traditional commercial that will be more so in warehousing and then just more commercial outer market with building restacks, energy efficiency and things like that.

Operator

And the next question comes from Tim Mulrooney with William Blair.

Timothy Mulrooney

I know you highlighted some regions where you're doing a lot of work that has nothing to do with data centers. But I'm curious, with all the political rhetoric around data center moratoriums and other regulations around data center construction. I'm curious if you've seen any change in project schedules or pushouts to the pipelines in the regions where you are very large and dense in data center work.

Anthony Guzzi

No. But I think -- so no, because I think most of that's going to get built in the next 2 or 3 years aren't subject to that rhetoric. That rhetoric, they're permitting things and trying to develop things for 18 to 24 or 36 months out. But also, I think a lot of that rhetoric wasn't grounded in fact. And as facts become more aware and people -- the people wanting to build in permanent things become more engaged in the local communities and start talking about the benefits. I think rhetoric will die down, and there'll be -- I think there'll be a lot of rhetoric to die down magically between November 3 and November 30 post-election. I think it's just...

Timothy Mulrooney

Got it. Okay. That's very clear for walking me through that. And then on the data center, sticking with that, you said -- I thought I heard you say in the prepared remarks, I want to make sure I heard that right, that the majority of work you're doing today is still on cloud-based data centers presumably contrasted with the large liquid cooled AI data centers. I just want to make sure I heard you correctly. And if so as you -- I did, okay. So as you look into the backlog what do you think that mix will look like a year or 2 from now? I still don't have a good sense for that.

Anthony Guzzi

It's hard for us to do because as they get bigger, I think the distinction starts to go away a little bit. We definitely know when we're building an AI training model data center. We know that. I mean we know what's going on there. We know what is connected to. When you get to the mixed-use ones, we're less clear. I think 2 things will be true. Even the cloud storage is getting bigger and more resource intensive and it's pretty clear when it's an AI training module one. The question is the sort of the ones that cope between both of them. But I think, look, because they're so much larger and the contracts are bigger, I would say today, we're probably 65% to 70% cloud and 30% AI, that will probably get to more 50-50 in the future. And where you really see that as mechanical. That's where we know the difference and see the difference.

Jason Nalbandian

Yes. The AI is definitely driving a bigger piece of the growth right now in the technical, hence, the 130% year-over-year increase in data center revenues or mechanical, but still on balance. More of our revenues are coming from the cloud. .

Anthony Guzzi

Yes. And that's even shifted more in electrical, I agree that comes from cloud.

One follow-up on as right -- you've noted the political discussion and all this stuff has been around AI data center is very targeted, right? And I'm not sure people really understand all the things we just talked about.

Timothy Mulrooney

Yes. That's why I was asking, Tony, because I see the proposed moratoriums by some of these candidates are like for the large data centers, not the cloud-based one. So I was curious about that as well, but it sounds like broadly you expect a lot of those to die down after November 4.

Anthony Guzzi

Well, especially one of them, they can do all the moratoriums they want, but they're 1 over 100 what they. .

Operator

And the next question comes from Manish Somaiya with Cantor.

Manish Somaiya

Hello, Tony, Jason and Lucas. Congrats on a strong quarter. I wanted to ask on the margins that are embedded in new awards, obviously, we see mechanical. And I think, Jason, you kind of went through the math that, that should improve with the current contract structure shifting. But more specifically, I wanted to know about the electrical if that 13% is sustainable and how we should sort of think about that going forward?

Anthony Guzzi

So to be very clear, we didn't say that we thought mechanical margins would very much from where they are today in the future because comps get easier. The comps get easier in a margins stay somewhere in this band. But the reality is the best way to start to see our margins is what we've always said look back 4 to 8 quarters and you get a pretty good view of what's happening in the market.

Jason Nalbandian

And so for electrical, that's somewhere between 12% and 13%, maybe skewing up to 12.5% to 13%. And for mechanical, that's $12 million to $12.5 million.

Anthony Guzzi

Any contractor that tells you with conviction that they know that this is a baseline for their margins going forward and they only improve from there must be running 1 project. It must be a 1 project or 2 project contractor. Because with 12,000 projects, we couldn't possibly do that. So over a long period of time, we've been very clear with all of our analytical community and our buy side.

Margins move in bands. We are in a very good band structurally. We continue to execute very well. We don't -- we are very much now focused on margin dollars. Could we expand from yes, we could get more SG&A leverage a little bit. Could we have a couple of quarters where we have close offs that are more favorable, sure, we could. We can also have quarters where we're starting up more difficult work, and they seem a little more depressed because we have a release contingency. So I think any responsible contractor talks about margins and bands and talks about growth the same way. And I think that's why we have so much credibility over a very long period of time when we address this subject.

Manish Somaiya

That's helpful. And then, Tony, obviously, you gave really good color on the end markets and the diversity of growth coming from those markets. As we think about backlog and RPOs, I mean it sounds to me like it may not be the best indicator of all the work that you have ahead of you because obviously, orders tend to be lumpy, et cetera. So what are some of the other measures we should look at in understanding the true potential of import or any other company for that matter?

Anthony Guzzi

Yes. I think you always have to be careful, right? -- we've always been very rigorous in how we talk about forward-looking, right? We've always done RPOs. When it all converted about 7, 8 years ago, it was a very easy walk over to us from backlog RPOs. We don't make up backlog and say it's only contracted work. It's only the noncanceled portion of service agreements. It's only approved change orders. We don't say, well, we know we've done with this customer, this oil and gas customer. We know that we've done this work forever and the turnaround is projected at that. We also know it's all T&M work and that scope can change. We don't say, Hey, we're on 1 site, they promise us buildings 2 and 3. It has the same scope. So therefore, we're going to give you an RPO number, which is accounting based.

But here's what our real backlog of future opportunity looks like. I think backlog is a pretty good indicator of future awards. But it doesn't capture. And I think you correctly pointed out is what's the potential for us to grow on some of these sites? And I'm always just in been careful, right? We have very little work that's canceled. We actually have very little work that were promised that gets delayed. But I think we sort of had this construct for a while of how we communicate, and it's worked very well for us. because it's all in the known. And I think we'll keep it that way. I think when you think about future demand, the way I think about it is if these end markets continue to grow like they have, we expect to grow in excess of those end markets.

We are the largest specialty subcontractor doing data center work. Could it approach 50% of our construction revenue, sure, it could, for a period of time. That's not by design, that's not owning people up. That's literally mix managing over probably 17 or 20 different discrete and geographic markets. And looking for the best opportunities while continuing to serve our core customers that we've had for a long time.

So I think if you believe in the data center growth and you look at nonres, I think a great construct is what we've said before to the market. If nonres grows x, we're going to grow probably most times 600 basis points above that as a company overall and our construction business could be somewhere between 700 and 900 basis points above that. And that's, I think, the best contract to think about it because that captures everything.

And that's pretty healthy growth. And I think probably the last couple of years, we would even skew a little higher above the non-res growth that we're giving you a 5-year look at the world, not just you look at the world.

Manish Somaiya

Okay. Super helpful, Tony. And then just lastly, obviously, you've had a number of acquisitions this year which will entail some purchase accounting, backlog amortization, et cetera, in '27. But I guess what I wanted to gather was, how should we think about EBITDA accretion becoming EPS accretion when it comes to these acquisitions. I mean what's the time frame? And I guess, what are the indicators, et cetera, that we should think about?

Anthony Guzzi

I guess the best thing to think about for the newly acquired businesses, particularly Schmidt and Connolly, is that the backlog that we acquired, that amortization period is roughly 16 to 17 months. So that's with us really through the end of '27. And so I think probably what's helpful for everyone on the call, just to give you a sense of what we expect for amortization, both in Q4 and then into '27. So you can obviously see what our amortization is year-to-date in our 10-Q. But if you look at Q4, our expectation is $35.3 million of amortization, it's about $20.1 million in electrical, $7.7 million in mechanical, $4.4 million in building and $3 million in industrial. And then in 2027, our estimate is about $128 million. It's about $76 million in Electrical, $25 million in mechanical $17 million in building and $10 million in industrial. And I think if you look at those numbers relative to the year-to-date plus the estimate I just gave you for fourth quarter, you'll be able to see what the impact in '27 is from the incremental amortization. That's just from acquisitions that we .

Jason Nalbandian

That's the one that we've announced and we have today, yes.

Anthony Guzzi

And I think Manish, you're right to think about EBITDA also. I mean, I think my perfect role, that would be a GAAP number. because there's no crop usually in that, but EBITDA and then we do GAAP earnings, we figure you're smart enough to figure out the benefit. Of course, everything always comes out in cash. And I think across the sector for a very long period of time, we've been the leading cash generator as a percentage of net income or over percentage of net income. And I think that's where the rubber really hits the road, right? .

Operator

The next question comes from Sangita Jain with KeyBanc Capital Markets. .

Sangita Jain

I just have one. And I know this was related to earlier on semi-fab. It looks like a lot of activity is upcoming in the in the quarters ahead. And I just want to see how you guys see allocating resources to that end market versus you did in the first cycle of the build-out because you're in a very different place now with all the data center-led demand.

Anthony Guzzi

We will participate. Where we will have -- we have real capability is broadly, we have real capability with Firelife safety. We will participate broadly with fire life safety. Electrical, really across it a little less so maybe a little bit in 1 of the states of Arizona, but outside and maybe Oregon a little bit. But outside of that, [indiscernible] . mechanically, Arizona, potentially upstate New York and potentially with one of the customers moving into Texas, we'll participate there. These are all right, your win or you don't. And we're positioned to continue winning well on a couple of these sites. And then we're putting together good estimates and good potential to maybe participate in the others or get us carve out of scope of the work we want to do. We'll sure know this time next year, we'll know how successful or whether we diverted resources in other places based on pricing. .

Operator

And the next question comes from Adam Bubes with Goldman Sachs.

Adam Bubes

I know we're only at Q3 here, but with backlog up [ 7% ]year-over-year. Can you just talk about visibility you have on growth in 2027, how you're thinking about range of outcomes? And what's your current assessment of your ability to grow head count over the next 12 months to meet the demand that's in your backlog? .

Anthony Guzzi

So I'll start there. we wouldn't have taken the job if we didn't think we could put the resources from fill supervision through craft labor on those jobs. We put a manpower plan together with our -- whenever we even estimate work to figure out how it will slide in with what we have available and what we're going to be able to recruit.

As far as '27, I mean, look, I think you go back to the long-term trends that Jason talked about, and I talked about today about our ability to outgrow nonres. I think that's the best we'll give you we've been pretty rigorous about not providing forward-looking guidance on the year ahead. You guys are pretty smart to figure it out.

Adam Bubes

And then I wanted to talk about your Virginia exposure. I think it's your top market. We we've seen some slowdown in announcements in that market in Loudon County recently enacted a pause in data centers. How are you thinking about the trajectory of incremental awards in Virginia? And just more broadly, how you think through your regional mix evolving over the next year or 2?

Anthony Guzzi

Look, we're bullish on Virginia, Loudon county, 1 county, and I fully expect by the middle of next year. We'll be continuing to see new awards in Loudon County. I think the reality of Loudon County was it's booked for the next 2 or 3 years anyway. And so I think it was probably a pause to say, "Okay, where else are we going to build in the county. They probably were waiting for some power to be provided anyway. Virginia will remain a great market for us. Texas will remain a great market for us. Ohio will remain a great market for us. Iowa remain a great market for us. I'm just -- Georgia will remain a great market for us. Oklahoma. I'm only providing a few. We're in many, many more markets than that.

But I'm just hitting some of the hot buttons where people have talked about this openly. Pennsylvania will be involved also. I think some of it actually made a lot of sense in the way I've talked about it to the team. And I think collectively, if you put our top 100 data center people in a room, they would agree. Some of it actually will elongate the cycle. And that will be a good thing. And some of it was -- I think some of the thought behind some of the executive orders have made a lot of sense. I think there was a fair amount of phantom demand in Texas. And it wasn't fandom demand with us because of who we serve. But there are other things that people want that gets involved with, it would be like that's not going to be real anytime soon or you really don't have a plan there. You're just trying to sort of put a stake in the ground. So I think some of it has been thoughtful. And of course, the whole thing has been full of misinformation. I venture to say this. I think if you put -- so the tax benefits that's happening as a result of these data centers and put 100 school superintendents in a market with the local people. I think when they understood what's available to them and how it can really allow them to build the schools, pay the teachers the comps and the firefighters and build out world-class facilities like they've done in Loudon County and like they've done in Louisiana, like they've done in other markets we serve.

I think you'll find that these things will get built. They won't get built everywhere. But I think we'll build the capacity in being EMCOR. We're well positioned anywhere that matters that they're going to build them.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Tony Guzzi for any closing remarks.

Anthony Guzzi

Thank you all very much. Thanks for your interest. Thanks for the preparation. I guess we won't talk again until we see some of you when we're about talking to your buy-side people. In general, I don't see you, have a great holiday season, and hope we'll stay healthy, and we'll talk to you again in February collectively. Thanks, Bob. .

Operator

The conference has concluded. Thank you for attending today's presentation. You may now disconnect.