EMCOR Q3 2026: revenue up 28.8% to $5.54B as data center work nearly doubled; backlog hits $18.6B

EMCOR, one of the largest US electrical and mechanical contractors, had the biggest quarter in its history. Revenue rose 28.8% to $5.54 billion and diluted earnings per share (EPS) rose 37.6% to $9.04. Data center construction did most of the work: revenue from what EMCOR calls the "network and communications" market sector nearly doubled across its two construction segments, to $2.03 billion from $1.05 billion, and accounted for about four-fifths of the company's $1.24 billion revenue increase. Management raised its full-year guidance for the second quarter in a row, and the Board added $500 million to the share buyback authorization.

Key metrics

Gross margin is the share of revenue left after the direct costs of doing the work (labor, materials, subcontractors). Operating margin is what is left after overhead too, before interest and tax. The network & communications row adds the two construction segments' figures from the revenue breakdown in Note 3 of the 10-Q.

The headline growth rate understates the US business. EMCOR sold its UK operations on December 1, 2025, so last year's quarter includes $136.2 million of UK revenue that is gone. Counting only US operations, revenue grew 33.0% ($5.54 billion vs. $4.17 billion). Acquisitions added $313.3 million of revenue; the company's earnings release puts organic growth (excluding both acquisitions and the UK sale) at 25.5%.

First nine months: revenue $15.32 billion (+22.9%; organic +20.8%), operating income $1.50 billion (9.8% margin vs. 9.1%), net income $1.11 billion and diluted EPS $24.93 (+34.5%), or $25.48 on the company's adjusted basis.

Segment performance

Segment margins are before corporate costs ($46.8 million vs. $42.0 million) and before the $34.0 million impairment, which EMCOR reports as a separate line.

Electrical construction was again the profit standout. Operating income rose 70.1% to $247.0 million and margin gained 2.0 points. The 10-Q credits "excellent project execution, and a more favorable mix of work", plus an easy comparison: last year's quarter carried projects with "reduced labor productivity or availability while investing in the development of a workforce in new geographies". Data center revenue in this segment rose 68% to $1.05 billion, 56% of the segment. Institutional work (mostly public sector) rose 78% to $150.5 million. Transportation fell 23% as an airport project neared completion and EMCOR deliberately cut back on roadway lighting and traffic signal work. Five electrical contractors bought this year added $140.1 million of revenue but only $7.6 million of operating income, after $9.8 million of amortization (the write-off over time of the intangible assets that come with an acquisition).

Mechanical construction grew fastest in dollars, up $767.4 million, and its data center revenue more than doubled (+128% to $985.2 million), helped by what the 10-Q calls "expanded scope associated with increased cooling requirements". But its margin fell for a second straight quarter, to 12.1% from 12.9%. Management again blames mix rather than execution: more work as construction manager or prime contractor, which carries "lower than average gross profit margins due to a higher proportion of materials, equipment, and subcontractor costs", and more guaranteed-maximum-price and cost-plus contracts "particularly in newer geographies or on projects where design or scope is still evolving". High-tech manufacturing revenue (chip, EV and battery plants) slipped 6% to $211.5 million as projects finished.

Building services grew slowly but widened its margin on more repair and maintenance contracts, building-automation work and lower overhead after 2025's restructuring. Industrial services was flat on revenue, and its margin slipped to 1.8%.

Backlog

Since December, backlog is up $5.32 billion, of which acquisitions brought $500.3 million; the rest is new contract awards. The 10-Q names the largest increases as network and communications ("several data center construction contracts"), healthcare, and water and wastewater in the Southeast. Electrical backlog alone is up 61% from a year ago.

What the headline numbers hide

• The impairment makes GAAP profit look smaller than the business. EMCOR wrote down $34.0 million ($24.7 million after tax, about $0.56 a share) of trade name and customer-relationship value at one building services business after it "revised our long-term financial projections" for that business. It is non-cash and does not reflect this quarter's segment results, which improved. Excluding it, operating income rose 42.9% to $579.8 million and pretax income rose 43.2%. That gap between GAAP and adjusted EPS is the only adjustment the company makes this quarter. It is still a signal worth noting: an acquired business is worth less than EMCOR paid for it.
• Cash conversion is strong. Operating cash flow for the first nine months was $1.09 billion, 98% of net income (93% a year earlier), and $990 million after capital spending. Receivables rose 30% since December to $5.53 billion, in line with revenue growth and acquisitions; customers are also paying ahead: net contract liabilities (billings in advance of work done) rose $464.3 million excluding acquisitions.
• Buybacks helped only a little. Diluted shares fell 1.6% to 44.2 million, so a lower share count explains under 2 points of the 37.6% EPS growth. EMCOR spent $188.0 million on repurchases in the quarter (none in Q3 2025) and $17.7 million on dividends, which rose to $0.40 a share from $0.25.
• No help from tax or interest. The tax rate was 27.2% vs. 27.5%, and net interest income was just $3.8 million. Operating income did the work.
• Acquisitions contributed little profit so far. They added $313.3 million of revenue but only $21.0 million of operating income after $14.4 million of amortization, so organic work drove nearly all the margin gain.

On balance the quarter is understated: GAAP EPS rose 37.6%, but excluding the $34.0 million non-cash impairment it rose 46.1%, with buybacks, tax and one-offs contributing little else.

Did last time's read hold up?

Our Q2 2026 report said the raised guidance implied second-half EPS of $16.11–$17.36 and listed three risks: data center concentration, margins on the newer guaranteed-maximum-price and cost-plus contracts, and working capital absorbing cash. Q3 alone delivered $9.60 of adjusted EPS and guidance went up again. The concentration grew (data centers rose from about 34% of revenue in Q2 to 37%). The mechanical margin pressure persisted, with that segment's margin down to 12.1% from 12.5% in Q2. Working capital did not absorb cash: cash flow kept pace with profit. The electrical acquisitions we flagged showed up: $140.1 million of revenue, but only $7.6 million of operating income after amortization.

Takeaway: EMCOR's growth is now mostly a data center story: that market added about $978 million of the $1.24 billion revenue increase, and backlog rose another $1.43 billion in the quarter. The $34 million write-down is a reminder that not every acquired business is keeping up, but it is small against $580 million of underlying operating income.

Outlook

Management raised full-year 2026 guidance in the earnings release (8-K Exhibit 99.1), its second increase in three months:

After nine months of $15.32 billion revenue and $25.48 adjusted EPS, the range implies fourth-quarter revenue of about $5.28–$5.68 billion and adjusted EPS of $9.02–$10.02, roughly in line with Q3. With $14.36 billion of backlog due within a year, the revenue range looks reachable; the low end would mean a sequential decline from Q3. The things to watch in Q4 are whether the mechanical segment's margin stabilizes as its data center mix rises, whether the nine acquisitions made this year ($809.9 million) start earning more after amortization, and how buybacks are paced now that the authorization has an extra $500 million on top of the $225.4 million left at September 30.