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Article by DailyStocks_admin    (01-26-09 05:22 AM)

The Daily Magic Formula Stock for 01/24/2009 is EMCOR Group Inc. According to the Magic Formula Investing Web Site, the ebit yield is 27% and the EBIT ROIC is >100%.

Dailystocks.com only deals with facts, not biased journalism. What is a better way than to go to the SEC Filings? It's not exciting reading, but it makes you money. We cut and paste the important information from SEC filings for you to get started on your research on a specific company.


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BUSINESS OVERVIEW

GENERAL

We are one of the largest electrical and mechanical construction and facilities services firms in the United States, Canada, the United Kingdom and in the world. In 2007, we had revenues of approximately $5.9 billion. We provide services to a broad range of commercial, industrial, utility and institutional customers through approximately 70 principal operating subsidiaries and joint venture entities. Our offices are located throughout the United States, in Canada and in the United Kingdom. In the Middle East, we carry on business through a joint venture. Our executive offices are located at 301 Merritt Seven, Norwalk, Connecticut 06851-1060, and our telephone number at those offices is
(203) 849-7800.

We specialize principally in providing construction services relating to electrical and mechanical systems in facilities of all types and in providing comprehensive services for the operation, maintenance and management of substantially all aspects of such facilities, commonly referred to as "facilities services."

We design, integrate, install, start-up, operate and maintain various electrical and mechanical systems, including:

o Electric power transmission and distribution systems;

o Premises electrical and lighting systems;

o Low-voltage systems, such as fire alarm, security and process control systems;

o Voice and data communications systems;

o Roadway and transit lighting and fiber optic lines;

o Heating, ventilation, air conditioning, refrigeration and clean-room process ventilation systems;

o Fire protection systems;

o Plumbing, process and high-purity piping systems;

o Water and wastewater treatment systems; and

o Central plant heating and cooling systems.

Our facilities services businesses, which support the operation of a customer's facilities, include:

o Industrial maintenance and services;

o Commercial and government site-based operations and maintenance;

o Military base operations support services;

o Mobile maintenance and services;

o Facilities management;

o Installation and support for building systems;

o Technical consulting and diagnostic services;

o Small modification and retrofit projects; and

o Program development, management and maintenance for energy systems.

These facilities services are provided to a wide range of commercial, industrial, utility and institutional facilities, including those to which we also provide construction services and others to which construction services are provided by others. Our varied facilities services are frequently combined to provide integrated service packages which include operations and maintenance, mobile services and facility improvement programs.

We provide construction services and facilities services directly to corporations, municipalities and other governmental entities, owners/developers and tenants of buildings. We also provide these services indirectly by acting as a subcontractor to general contractors, systems suppliers and other subcontractors. Worldwide, we have approximately 29,000 employees.

Our revenues are derived from many different customers in numerous industries which have operations in several different geographical areas. Of our 2007 revenues, approximately 81% were generated in the United States and approximately 19% were generated internationally. In 2007, approximately 50% of revenues were derived from new construction projects, 23% were derived from renovation and retrofit of customer's existing facilities and 27% were derived from facilities services operations.

The broad scope of our operations is more particularly described below. For information regarding the revenues, operating income and total assets of each of our segments with respect to each of the last three fiscal years, and our revenues and assets attributable to the United States, Canada, the United Kingdom and all other foreign countries, see Note N - Segment Information of the notes to consolidated financial statements included in this report.

OPERATIONS

The electrical and mechanical construction services industry has a high growth rate due principally to the ever increasing content and complexity of electrical and mechanical systems in all types of projects. This increasing content and complexity is, in part, a result of the expanded use of computers and more technologically advanced voice and data communications, lighting and environmental control systems in all types of facilities. For these reasons, buildings need extensive electrical distribution systems. In addition, advanced voice and data communication systems require more sophisticated power supplies and extensive low-voltage and fiber-optic communications cabling. Moreover, the need for substantial environmental controls within a building, due to the heightened need for climate control to maintain extensive computer systems at optimal temperatures, and the demand for energy savings and environmental control in individual spaces have created expanded opportunities for our electrical and mechanical services businesses. The demand for these services is typically driven by non-residential construction and renovation activity. Total spending in the United States for non-residential construction exceeded $630.0 billion in 2007, an increase of 15.6% from such spending in 2006, according to the United States Census Bureau. This increase in spending has been driven by, among other things, lower office and commercial vacancy rates, higher manufacturing utilization rates and institutional and governmental infrastructure spending.

Electrical and mechanical construction services primarily involve the design, integration, installation and start-up of: (a) electric power transmission and distribution systems, including power cables, conduits, distribution panels, transformers, generators, uninterruptible power supply systems and related switch gear and controls; (b) premises electrical and lighting systems, including fixtures and controls; (c) low-voltage systems, such as fire alarm, security and process control systems; (d) voice and data communications systems, including fiber-optic and low-voltage copper cabling;
(e) roadway and transit lighting and fiber-optic lines; (f) heating, ventilation, air conditioning, refrigeration and clean-room process ventilation systems; (g) fire protection systems; (h) plumbing, process and high-purity piping systems; (i) water and wastewater treatment systems; and (j) central plant heating and cooling systems.

Electrical and mechanical construction services generally fall into one of two categories: (a) large installation projects with contracts often in the multi-million dollar range that involve construction of industrial and commercial buildings and institutional and public works facilities or the fit-out of large blocks of space within commercial buildings and (b) smaller installation projects typically involving fit-out, renovation and retrofit work.

Our United States electrical and mechanical construction services operations accounted for about 60% of our 2007 revenues, of which revenues approximately 68% were related to new construction and approximately 32% were related to renovation and retrofit projects. Our United Kingdom and Canada electrical and mechanical construction services operations accounted for approximately 13% of our 2007 revenues, of which revenues approximately 73% were related to new construction and approximately 27% were related to renovation and retrofit projects. We provide electrical and mechanical construction services for both large and small installation and renovation projects. Our largest projects include those: (a) for institutional use (such as water and wastewater treatment facilities, hospitals, correctional facilities and research laboratories); (b) for industrial use (such as pharmaceutical plants, steel, pulp and paper mills, chemical, food, automotive and semiconductor manufacturing facilities and oil refineries); (c) for transportation projects (such as highways, airports and transit systems); (d) for commercial use (such as office buildings, data centers, hotels, casinos, convention centers, sports stadiums, shopping malls and resorts); and (e) for power generation and energy management projects. Our largest projects, which typically range in size from $10.0 million up to and occasionally exceeding $50.0 million and are frequently multi-year projects, represented about 35% of our construction services revenues in 2007.

Our projects of less than $10.0 million accounted for approximately 65% of our 2007 electrical and mechanical construction services revenues. These projects are typically completed in less than one year. They usually involve electrical and mechanical construction services when an end-user or owner undertakes construction or modification of a facility to accommodate a specific use. These projects frequently require electrical and mechanical systems to meet special needs such as critical systems power supply, fire protection systems, special environmental controls and high-purity air systems, sophisticated electrical and mechanical systems for data centers, trading floors in financial services businesses, new production lines in manufacturing plants and office arrangements in existing office buildings. They are not usually dependent upon the new construction market. Demand for these projects and types of services is often prompted by the expiration of leases, changes in technology or changes in the customer's plant or office layout in the normal course of a customer's business.

We have expanded our United States fire protection systems business through acquisitions in 2007 and 2006. In 2007, our fire protection systems business revenues were over $200.0 million, and these revenues are included in our United States mechanical construction and facilities services segment.

We have a broad customer base with many long-standing relationships. We perform services pursuant to contracts with owners, such as corporations, municipalities and other governmental entities, general contractors, systems suppliers, construction managers, developers, other subcontractors and tenants of commercial properties. Institutional and public works projects are frequently long-term complex projects that require significant technical and management skills and the financial strength to obtain bid and performance bonds, which are often a condition to bidding for and winning these projects.

We also install and maintain lighting for streets, highways, bridges and tunnels, traffic signals, computerized traffic control systems, and signal and communication systems for mass transit systems in several metropolitan areas. In addition, in the United States, we manufacture and install sheet metal air handling systems for both our own mechanical construction operations and for unrelated mechanical contractors. We also maintain welding and pipe fabrication shops in support of some of our mechanical operations.

Our United States facilities services segment, as well as our other segments, provide facilities services to a wide range of commercial, industrial and institutional facilities, including both those for which we have provided construction services and those for which construction services were provided by others. Facilities services are frequently bundled to provide integrated service packages and are provided on a mobile basis or by our employees based at customer sites.

These facilities services, which generated approximately 27% of our 2007 revenues, are provided to owners, operators, tenants and managers of all types of facilities both on a contract basis for a specified period of time and on an individual task order basis. Of our 2007 facilities services revenues, approximately 80% were generated in the United States and approximately 20% were generated internationally.

In 1997, we established a subsidiary to expand our facilities services operations in the United States. This division has built on our traditional electrical and mechanical services operations, facilities services activities at our electrical and mechanical contracting subsidiaries, and our client relationships, as well as acquisitions, to expand the scope of services being offered and to develop packages of services for customers on a regional, national and global basis.

Our United States facilities services division now offers a broad range of facilities services, including maintenance and service of electrical and mechanical systems, which we have historically provided to customers following completion of construction projects, and industrial maintenance and services, commercial and government site-based operations and maintenance, military base operations support services, mobile maintenance and services, facilities management, installation and support for building systems, technical consulting and diagnostic services, small modification and retrofit projects and program development, management and maintenance of energy systems.

We have experienced an expansion in the demand for our facilities services which we believe is driven by customers' decisions to focus on their own core competencies, customers' programs to reduce costs, the increasing technical complexity of their facilities and their mechanical, electrical, voice and data and other systems, and the need for increased reliability, especially in electrical and mechanical systems. These trends have led to outsourcing and privatization programs whereby customers in both the private and public sectors seek to contract out those activities that support, but are not directly associated with, the customer's core business. Our clients requiring facilities services include the federal government, utilities, refineries, and major corporations engaged in information technology, telecommunications, pharmaceuticals, petrochemicals, financial services, publishing and manufacturing.

In Washington D.C., we are the second largest facilities services provider to the federal government behind the General Services Administration and currently provide facilities services to such preeminent buildings as the Ronald Reagan Building, the second largest federal government facility after the Pentagon. We also provide facilities services to a number of military bases, including base operations support services to the Navy Capital Region, which, among other facilities, includes the Bethesda Naval Hospital, the Naval Research Laboratory and the Washington Navy Yard. We are also involved in joint ventures providing facilities services to the Navy, including one providing facilities services to the Naval Submarine Base in Bangor, Washington and the Naval Hospital in Bremerton, Washington. The agreements pursuant to which this division provides services to the federal government are subject to renegotiation of terms and prices, termination by the government prior to the expiration of the term and non-renewal.

In September 2007, we expanded our facilities services business in the industrial sector by acquiring FR X Ohmstede Acquisition Co. ("Ohmstede"). Headquartered in Beaumont, Texas, Ohmstede is the leading North American provider of aftermarket maintenance and repair services, replacement parts and fabrication services for highly engineered shell and tube heat exchangers for refineries and the petrochemical industry. Through Ohmstede, we provide in-shop repairs and customized design and manufacturing for heat exchangers as well as related equipment at five facilities on the U.S. Gulf Coast and at a facility in the Los Angeles, California area and provide cleaning services for heat exchangers at one of our Texas facilities. In addition, we provide aftermarket maintenance of shell and tube heat exchangers in the field. These services are tailored to meet customer needs for scheduled turnarounds or specialty callout service. We also have embedded multi-year contracts with refineries pursuant to which our crews and equipment are located at customers' plants, allowing our employees to perform specialty services for heat exchangers and related equipment on a daily basis.

We currently provide facilities services in a majority of states and as part of our operations are responsible for: (a) the oversight of all or most of a business' facilities operations, including operation and maintenance; (b) the oversight of logistical processes; (c) tenant services and management; (d) servicing, upgrade and retrofit of HVAC, electrical, plumbing and industrial piping and sheet metal systems in existing facilities; (e) diagnostic and solution engineering for building systems and their components; and (f) as a result of our Ohmstede acquisition, on-site field services for refineries.

Our United Kingdom subsidiary also has a division that focuses on facilities services. This division currently provides a full range of facilities services to public and private sector customers under multi-year agreements.

Our EMCOR Energy Services business designs, constructs and operates energy-related projects and facilities on a turn-key basis. Currently, we operate several central heating and cooling plants/power and cogeneration facilities and provide maintenance services for high-voltage and boiler systems under multi-year contracts. In addition, we provide consulting and national program energy management services under multi-year agreements and energy efficiency system retrofits. Our energy services business' recent projects include: (a) engineering, procurement and construction of two renewable energy facilities to process landfill gas into pipeline quality natural gas; (b) construction of several multi-megawatt cogeneration projects for Johnson & Johnson, the University of New Hampshire and Pluma Sierra Rural Electric Cooperative; and (c) provision of evaluation, engineering, project development, and construction management services for the San Francisco Public Utilities Commission, Pacific Gas & Electric Company and Southern California Edison for self generation and alternative generation projects and a wide range of conservation and efficiency projects. In addition, we have recently been selected to design, build and operate three multi-megawatt renewable energy projects in Connecticut - two for hospitals and one for a municipality. Over the past five years, we have also completed a number of energy-related projects ranging from basic life safety standby systems to complete utility grade peaking power plants and cogeneration/central utility plants supplying thermal and power requirements completely separated from utilities' electrical grids. This business is reported within our United States facilities services segment.

We believe that our electrical and mechanical construction services, facilities services and energy services activities are complementary, permitting us to offer customers a comprehensive package of services. The ability to offer construction services, facilities services and energy services enhances our competitive position with customers. Furthermore, our facilities services operations tend to be less cyclical than our construction operations because facilities services are more responsive to the needs of an industry's operational requirements rather than its construction requirements.

COMPETITION

We believe that the electrical and mechanical construction services business is highly fragmented and our competition includes thousands of small companies across the United States and around the world. We also compete with national, regional and local companies, many of which are small, owner-operated entities that operate in a limited geographic area. However, there are a few public companies focused on providing electrical and mechanical construction services, such as Integrated Electrical Services, Inc. and Comfort Systems USA, Inc. A majority of our revenues are derived from projects requiring competitive bids; however, an invitation to bid is often conditioned upon prior experience, technical capability and financial strength. Because we have total assets, annual revenues, net worth, access to bank credit and surety bonding and expertise significantly greater than most of our competitors, we believe we have a significant competitive advantage over our competitors in providing electrical and mechanical construction services. Competitive factors in the electrical and mechanical construction services business include: (a) the availability of qualified and/or licensed personnel; (b) reputation for integrity and quality;
(c) safety record; (d) cost structure; (e) relationships with customers; (f) geographic diversity; (g) the ability to control project costs; (h) experience in specialized markets; (i) the ability to obtain surety bonding; (j) adequate working capital; and (k) access to bank credit. However, there are relatively few significant barriers to entry to several types of our construction services business.

While the facilities services business is also highly fragmented with most competitors operating in a specific geographic region, a number of large corporations such as Johnson Controls, Inc., Fluor Corp., UNICCO Service Company, Washington Group International, CB Richard Ellis Group, Inc., Jones Lang LaSalle, ABM Facility Services and Linc Facility Services, LLC are engaged in this field, as are large original equipment manufacturers such as Carrier Corp. and Trane Air Conditioning. With respect to our Ohmstede industrial services operations, Ohmstede is the leading North American provider of aftermarket maintenance and repair services, replacement parts and fabrication services for highly engineered shell and tube heat exchangers. The key competitive factors in the facilities services business include price, service, quality, technical expertise, geographic scope and the availability of qualified personnel and managers. Due to our size, both financial and geographic, and our technical capability and management experience, we believe we are in a strong competitive position in the facilities services business.

EMPLOYEES

We presently employ approximately 29,000 people, approximately 73% of whom are represented by various unions pursuant to more than 400 collective bargaining agreements between our individual subsidiaries and local unions. We believe that our employee relations are generally good. Only one of these collective bargaining agreements is national or regional in scope.

BACKLOG

We had backlog as of December 31, 2007 of approximately $4.49 billion, compared with backlog of approximately $3.50 billion as of December 31, 2006. Backlog is not a term recognized under United States generally accepted accounting principles; however, it is a common measurement used in our industry. Backlog includes unrecognized revenues to be realized from uncompleted construction contracts plus unrecognized revenues expected to be realized over the remaining term of the facilities services contracts. However, if the remaining term of a facilities services contract exceeds 12 months, the unrecognized revenues attributable to such contract included in backlog are limited to only 12 months of revenues.

AVAILABLE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. These filings are available to the public over the internet at the SEC's web site at http://www.sec.gov. You may also read and copy any document we file at the SEC's public reference room located at 100 F Street, N.E., Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.

Our Internet address is www.emcorgroup.com. We make available free of charge on or through www.emcorgroup.com our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Our Board of Directors has an audit committee, a compensation and personnel committee and a nominating and corporate governance committee. Each of these committees has a formal charter. We also have Corporate Governance Guidelines, which include guidelines regarding related party transactions, a Code of Ethics for our Chief Executive Officer and Senior Financial Officers, and a Code of Ethics and Business Conduct for Directors, Officers and Employees. Copies of these charters, guidelines and codes, and any waivers or amendments to such codes which are applicable to our executive officers, senior financial officers or directors, can be obtained free of charge from our web site, www.emcorgroup.com.

In addition, you may request a copy of the foregoing filings (excluding exhibits), charters, guidelines and codes and any waivers or amendments to such codes which are applicable to our executive officers, senior financial officers or directors, at no cost by writing to us at EMCOR Group, Inc., 301 Merritt Seven, Norwalk, CT 06851-1060, Attention: Corporate Secretary, or by telephoning us at (203) 849-7800.

ITEM 1A. RISK FACTORS

Our business is subject to a variety of risks, including the risks described below as well as adverse business and market conditions and risks associated with foreign operations. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not known to us or not described below which we have not determined to be material may also impair our business operations. You should carefully consider the risks described below, together with all other information in this report, including information contained in the "Business," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures about Market Risk" sections. If any of the following risks actually occur, our business, financial condition and results of operations could be adversely affected, and we may not be able to achieve our goals. Such events may cause actual results to differ materially from expected and historical results, and the trading price of our common stock could decline.

AN ECONOMIC DOWNTURN MAY LEAD TO LESS DEMAND FOR OUR CONSTRUCTION SERVICES. The demand for construction services from our customers has been, and will likely continue to be, cyclical in nature and vulnerable to downturn in the industries we service, as well as the economies we operate in. If the general level of economic activity slows, it is possible that our ultimate customers may delay or cancel new projects. For example, economic downturns in the past have led to increased bankruptcies and pricing pressures. These factors contribute to the delay and cancellation of projects, especially with respect to more profitable private sector work, and impact our operations and ability to continue to grow at historical levels. A number of other factors, including financing conditions for the industries we serve, could further adversely affect our ultimate customers and their ability or willingness to fund capital expenditures in the future or pay for past services. In addition, consolidation, competition or capital constraints in the industries of our ultimate customers may result in reduced spending by such customers. If there is a significant economic downturn, reducing in particular the availability of more profitable private sector work, our results of operations are likely to be adversely affected.

AN INCREASE IN THE PRICE OF CERTAIN MATERIALS USED IN OUR BUSINESSES COULD ADVERSELY AFFECT OUR BUSINESSES. We are exposed to market risk of fluctuations in certain commodity prices of materials, such as copper and steel, which are used as components of supplies or materials utilized in both our construction and facilities services operations. We are also exposed to increases in energy prices, particularly as they relate to gasoline prices for our fleet of over 7,500 vehicles. Most of our construction contracts do not allow us to adjust our prices and, as a result, increases in material or fuel costs could reduce our profitability.

OUR INDUSTRY IS HIGHLY COMPETITIVE. Our industry is served by numerous small, owner-operated private companies, a few public companies and several large regional companies. In addition, relatively few barriers prevent entry into most of our businesses. As a result, any organization that has adequate financial resources and access to technical expertise may become one of our competitors. Competition in our industry depends on numerous factors, including price. Certain of our competitors have lower overhead cost structures and, therefore, are able to provide their services at lower rates than we are currently able to provide. In addition, some of our competitors have greater resources than we do. We cannot be certain that our competitors will not develop the expertise, experience and resources necessary to provide services that are superior in both price and quality to our services. Similarly, we cannot be certain that we will be able to maintain or enhance our competitive position within the industry or maintain a customer base at current levels. We may also face competition from the in-house service organizations of existing or prospective customers, particularly with respect to facilities services. Many of our customers employ personnel who perform some of the same types of facilities services that we do. We cannot be certain that our existing or prospective customers will continue to outsource facilities services in the future.

OUR BUSINESS MAY ALSO BE AFFECTED BY ADVERSE WEATHER CONDITIONS. Adverse weather conditions, particularly during the winter season, could affect our ability to perform efficient work outdoors in certain regions of the United States, the United Kingdom and Canada. As a result, we could experience reduced revenues in the first and fourth quarters of each year. In addition, cooler than normal temperatures during the summer months could reduce the need for our services, and we may experience reduced revenues and profitability during the period such weather conditions persist.

OUR BUSINESS MAY BE AFFECTED BY THE WORK ENVIRONMENT. We perform our work under a variety of conditions, including but not limited to, difficult terrain, difficult site conditions and busy urban centers where delivery of materials and availability of labor may be impacted, clean-room environments where strict procedures must be followed, and sites which may have been exposed to environmental hazards. Performing work under these conditions can negatively affect efficiency, and, therefore, our profitability.


MANY OF OUR CONTRACTS, ESPECIALLY OUR FACILITIES SERVICES CONTRACTS, MAY BE CANCELED ON SHORT NOTICE, AND WE MAY BE UNSUCCESSFUL IN REPLACING SUCH CONTRACTS IF THEY ARE CANCELED OR AS THEY ARE COMPLETED OR EXPIRE. We could experience a decrease in revenues, net income and liquidity if any of the following occur:

o customers cancel a significant number of contracts;

o we fail to win a significant number of our existing contracts upon re-bid;

o we complete a significant number of non-recurring projects and cannot replace them with similar projects; or

o we fail to reduce operating and overhead expenses consistent with any decrease in our revenues.

We may be unsuccessful at generating internal growth. Our ability to generate internal growth will be affected by, among other factors, our ability to:

o expand the range of services offered to customers to address their evolving needs;

o attract new customers; and

o increase the number of projects performed for existing customers.

In addition, our customers may reduce the number or size of projects available to us due to their inability to obtain capital or pay for services provided. Many of the factors affecting our ability to generate internal growth are beyond our control, and we cannot be certain that our strategies will be successful or that we will be able to generate cash flow sufficient to fund our operations and to support internal growth. If we are not successful, we may not be able to achieve internal growth, expand operations or grow our business.

THE DEPARTURE OF KEY PERSONNEL COULD DISRUPT OUR BUSINESS. We depend on the continued efforts of our senior management. The loss of key personnel, or the inability to hire and retain qualified executives, could negatively impact our ability to manage our business. However, we have executive development and management succession plans in place in order to minimize any such negative impact.

CEO BACKGROUND

Name and Position





Threshold





Target





Maximum







Frank T. MacInnis






Chairman and Chief Executive Officer





$


76,000





$


950,000





$


1,900,000



Anthony J. Guzzi



President and Chief Operating Officer





$


45,760





$


572,000





$


1,300,000







Sheldon I. Cammaker







Executive Vice President and General Counsel





$


30,400





$


380,000





$


950,000





Mark A. Pompa




Executive Vice President and Chief Financial Officer





$


28,800





$


360,000



$


900,000





R. Kevin Matz




Executive Vice President – Shared Services





$


26,240





$


328,000





$


820,000




Total





$


207,200





$


2,590,000





$


5,870,000



MANAGEMENT DISCUSSION FROM LATEST 10K

We are one of the largest electrical and mechanical construction and facilities services firms in the United States, Canada, the United Kingdom and in the world. We provide services to a broad range of commercial, industrial, utility and institutional customers through approximately 70 principal operating subsidiaries and joint venture entities. Our offices are located throughout the United States, in Canada and in the United Kingdom. In the Middle East, we carry on business through a joint venture.

The results of operations for the year ended December 31, 2007 ("2007") reflect continuing improvement compared to our historical results. In 2007, we achieved record highs in revenues, operating income, operating margin (operating income as a percentage of revenues), net income and diluted earnings per share.

Revenues and operating income increased in 2007 compared to the year ended December 31, 2006 ("2006") primarily due to: (a) increased awards and improved performance of United States construction work in the hospitality, high-tech, healthcare, commercial, institutional, industrial and water/wastewater treatment markets as these markets have continued to grow, (b) the addition of revenues and operating income from companies acquired in 2007 and 2006 and (c) increased demand for maintenance/retrofit work of the type provided by our mobile services in our United States facilities services segment, in part due to increased demand for more efficient energy systems. Negatively impacting the 2007 results of operations was the performance of our United Kingdom construction and facilities services segment. This segment's operating loss of $12.9 million primarily reflected the negative results of its rail division.

While our selling, general and administrative expenses increased primarily due to: (a) companies acquired during 2007 and (b) an increase in incentive-based compensation as a result of improved profits in 2007 compared to 2006, selling, general and administrative expenses as a percentage of revenues declined to 8.5% for 2007 from 9.0% for 2006. This decrease as a percentage of revenues primarily related to our ability to increase revenues without having to substantially increase overhead costs. The increase in selling, general and administrative expenses for 2007 when compared to 2006 was partially offset by a reduction in certain staff and facilities, particularly those associated with our United States facilities services segment (as a result of restructuring activities during 2006), and a reduction in deferred compensation expense of $6.4 million compared to 2006 deferred compensation expense due to a decrease in our liability corresponding with a reduction in the market price of our common stock during 2007. For 2007, selling, general and administrative expenses included amortization expense of $9.2 million attributable to identifiable intangible assets associated with acquisitions compared to $4.3 million of amortization expense for 2006.

Our cash and cash equivalents were $251.6 million at December 31, 2007 compared to $273.7 million at December 31, 2006. The decrease in cash and cash equivalents during 2007 was primarily due to cash flows used for investing activities of $526.4 million primarily related to the acquisition of five businesses in 2007. Offsetting the cash used for investing activities was cash provided by operating activities of $259.0 million in 2007 and cash provided by financing activities of $243.7 million. Our reported interest income for 2007 was $13.2 million, a $7.0 million improvement over 2006 interest income of $6.2 million, which was mostly offset by $6.9 million of additional interest expense related to financing activities as noted below. On September 19, 2007, we financed the acquisition of FR X Ohmstede Acquisition Co. ("Ohmstede") with $300.0 million from newly incurred term loan debt and $155.4 million from our own funds. We repaid $75.0 million of the term loan debt on December 31, 2007 (prior to the first scheduled principal payment of $0.75 million due March 31, 2008) and, because of the prepayment, we recorded as interest expense additional amortization expense related to capitalized debt issuance costs of $0.9 million. We funded our other 2007 acquisitions with cash on hand.

The 2007 acquisitions increased the geographical markets and industries in which we offer our services and are a part of our strategic objective to further diversify our overall business to provide a balance to our typically cyclical construction services business. Ohmstede's, business, which is largely comprised of providing maintenance services, has been included in our United States facilities services segment and expands our industrial services to refineries and the petrochemical industry. Ohmstede's business primarily provides aftermarket maintenance and repair services, replacement parts and fabrication services for highly engineered shell and tube heat exchangers.

On August 6, 2007, we sold our majority ownership interest in a joint venture with CB Richard Ellis, Inc. ("CBRE") to CBRE for $8.0 million. This sale followed our purchase, for approximately $0.5 million, of certain of the joint venture's assets. Included in the results of discontinued operations for 2007 was a gain of $1.2 million (net of income tax benefit of $1.8 million) resulting from the sale of our joint venture interest. As of December 31, 2007, $5.5 million of purchase price had been received, and the balance is reflected as a current note receivable on our Consolidated Balance Sheet.

OPERATING SEGMENTS

We have the following reportable segments which provide services associated with the design, integration, installation, start-up, operation and maintenance of various systems: (a) United States electrical construction and facilities services (involving systems for electrical power transmission and distribution; premises electrical and lighting systems; low-voltage systems, such as fire alarm, security and process control; voice and data communication; roadway and transit lighting; and fiber optic lines); (b) United States mechanical construction and facilities services (involving systems for heating, ventilation, air conditioning, refrigeration and clean-room process ventilation; fire protection; plumbing, process and high-purity piping; water and wastewater treatment; and central plant heating and cooling); (c) United States facilities services; (d) Canada construction and facilities services; (e) United Kingdom construction and facilities services; and (f) Other international construction and facilities services. The segment "United States facilities services" principally consists of those operations which provide a portfolio of services needed to support the operation and maintenance of customers' facilities (industrial maintenance and services; commercial and government site-based operations and maintenance; military base operations support services; mobile maintenance and services; facilities management; installation and support for building systems; technical consulting and diagnostic services; small modification and retrofit projects; and program development, management and maintenance for energy systems), which services are not generally related to customers' construction programs, as well as industrial services operations, which primarily provide aftermarket maintenance and repair services, replacement parts and fabrication services for highly engineered shell and tube heat exchangers for refineries and the petrochemical industry. The Canada, United Kingdom and Other international segments perform electrical construction, mechanical construction and facilities services. Our "Other international construction and facilities services" segment, currently operating only in the Middle East, represents our operations outside of the United States, Canada and the United Kingdom.

DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

Our reportable segments reflect, for all years presented, discontinued operations accounting due to the sale of our CBRE joint venture interest and the sales of subsidiaries in each of 2006 and 2005, in addition to certain reclassifications of prior years amounts among the segments due to changes in our internal reporting structure.

REVENUES

As described in more detail below, revenues for 2007 were $5.9 billion compared to $4.9 billion for 2006 and $4.6 billion for 2005. Revenues increased in 2007 compared to 2006 primarily due to: (a) increased awards and performance of United States construction work in the hospitality, high-tech, healthcare, commercial, institutional, industrial and water/wastewater treatment markets as these markets have continued to grow, (b) the addition of revenues from companies acquired in 2007 and 2006 and (c) increased demand for mainte-nance/retrofit work of the type provided by our mobile services in our United States facilities services segment, in part due to increased demand for more efficient energy systems. The increased revenues for 2006 compared to the year ended December 31, 2005 ("2005") was primarily attributable to a strong commercial construction business cycle and to increased work for the hospitality, high-tech, food and pharmaceutical markets.

As of December 31, 2007, our backlog was $4.49 billion, and as of December 31, 2006, our backlog was $3.50 billion. This increase in backlog was primarily at the United States reporting segments and was due to increased demand for hospitality, healthcare, transportation and industrial construction projects, companies acquired during 2007 and increased awards due to our active pursuit of opportunities in these and other markets. Backlog is not a term recognized under United States generally accepted accounting principles; however, it is a common measurement used in our industry. Backlog includes unrecognized revenues to be realized from uncompleted construction contracts plus unrecognized revenues expected to be realized over the remaining term of facilities services contracts. However, if the remaining term of a facilities services contract exceeds 12 months, the unrecognized revenues attributable to such contract included in backlog are limited to only 12 months of revenues.

Revenues of our United States electrical construction and facilities services segment for 2007 increased $153.6 million compared to 2006. The revenues increase was generally due to increased high-tech, hospitality and commercial projects as a result of the strong high-tech, hospitality and commercial construction markets. Revenues for 2006 increased $55.6 million compared to 2005. This increase was primarily attributable to increased commercial work as a result of a stronger commercial construction market and greater availability of government project work.

Revenues of our United States mechanical construction and facilities services segment for 2007 increased $522.2 million compared to 2006. The revenues increase was primarily attributable to increased availability of hospitality, healthcare, commercial, water/waste-water treatment and high-tech construction projects due to growth in these markets and increased maintenance/retrofit spending in part as a consequence of the impact of higher energy costs, and the addition of $14.5 million and $132.5 million of revenues from companies acquired during 2007 and 2006. Revenues for 2006 increased $149.3 million compared to 2005. This increase was primarily attributable to increased commercial work as a result of an overall stronger commercial construction market and greater availability of work in the hospitality, high-tech, food and pharmaceutical markets.

United States facilities services revenues, which include those operations that principally provide maintenance and consulting services, increased $218.0 million in 2007 compared to 2006. Companies acquired during 2007 contributed $151.2 million to this increase in revenues. The increase in revenues was also primarily attributable to the increased demand for both site-based government facilities services and small projects and for maintenance/retrofit work of the type provided by our mobile services group in this segment, in part due to increased demand for more efficient energy systems. Revenues in this segment increased by $148.5 million in 2006 compared to 2005. This increase was primarily related to an increased number of site-based services contracts, the addition of a mobile services company acquired during 2005, that accounted for $64.3 million of this increase in revenues in 2006, and greater demand in 2006 for mobile services work. The increase in site-based contracts obtained in 2006 was related to an increase in the outsourcing of facilities services work, augmented by our increased efforts to pursue opportunities for facilities services work in the government and commercial sectors. The increase in demand for mobile services was primarily due to the strong commercial construction business cycle, which resulted in an increase in our small project work, and increased demand for maintenance caused by energy cost awareness.

Revenues of the Canada construction and facilities services segment increased $82.9 million in 2007 compared to 2006. The increase in revenues for 2007 compared to 2006 was primarily related to various large projects obtained in the industrial and power generation markets and $27.9 million of additional revenues related to changes in the rate of exchange of Canadian dollars for United States dollars due to strengthening of the Canadian dollar. Revenues decreased by $43.0 million for 2006 compared to 2005. This decrease in revenues primarily reflected a reduction in awards to us of oil and gas industry work and a more selective bidding process on our part, offset by $18.2 million of additional revenues related to changes in the rate of exchange of Canadian dollars for United States dollars due to strengthening of the Canadian dollar.

United Kingdom construction and facilities services revenues increased $48.7 million in 2007 compared to 2006, principally due to a $57.6 million increase relating to the rate of exchange for British pounds to United States dollars as a result of the strengthening of the British pound, additional facilities services and construction work, partially offset by less rail project work performed as certain of our rail projects were at or near completion as of December 31, 2007 and a decision not to pursue significant new projects in the rail sector. Revenues decreased $1.6 million for 2006 compared to 2005, principally due to a refocus of our facilities services strategy. However, 2006 revenues from our commercial and transportation infrastructure construction businesses increased over 2005 revenues due to an improvement in the commercial construction market and significant transportation projects awarded to us. The overall decrease in revenues in 2006 compared to 2005 would have been greater except for $9.5 million of additional revenues related to the strengthening of the British pound.

Other international construction and facilities services activities consist of operations currently operating only in the Middle East. During each of 2007, 2006 and 2005, all of the projects in these markets were performed by joint ventures that were accounted for under the equity method of accounting.
The increase in gross profit (revenues less cost of sales) for 2007 when compared to 2006 was primarily due to: (a) increased awards leading to higher revenues and improved performance of United States construction work in the hospitality, high-tech, healthcare, commercial, institutional, industrial and water/wastewater treatment markets as these markets continued to grow and increased maintenance/retrofit spending in part as a consequence of the impact of higher energy costs, (b) the addition of gross profit from companies acquired in 2007 and 2006 which contributed gross profit of $59.3 million and (c) increased demand for the type of work provided by our mobile services in our United States facilities services segment. Negatively impacting gross profit was the performance of our United Kingdom construction and facilities services segment. This segment's loss primarily reflected the negative results of its rail division. Also, negatively impacting gross profit was a $5.5 million impairment charge related to an other-than-temporary decline in fair value of our investment in a joint venture in our United States facilities services segment. The increase in gross profit margin (gross profit as a percentage of revenues) for 2007 compared to 2006 primarily reflected the continuing trend in our construction project mix toward higher margin work that is typically associated with the types of projects referred to in the first sentence of this paragraph and reduced losses from one company in our United States electrical construction and facilities services segment. Gross profit margin was negatively impacted in 2007 compared to 2006 due to losses on the United Kingdom rail projects and $7.8 million of amortization expense recorded in cost of sales associated with the contract backlog of companies acquired in 2007.

Gross profit increased by $67.3 million for 2006 compared to 2005. Gross profit margin was 11.3% for 2006 compared to 10.6% for 2005. This increase in gross profit margin was primarily due to: (a) generally improved performance on United States mechanical construction and facilities services contracts for commercial, hospitality, high-tech, food and pharmaceutical sector work; (b) the increased availability of generally higher margin work in the United States; (c) increases in the number of site-based contracts in the United States facilities services segment; (d) increased demand for mobile services in the United States;
(e) the addition of a mobile services company acquired in November 2005; (f) improvements in Canada construction and facilities services profitability; and
(g) the absence of an $11.7 million non-cash expense recorded in 2005 in connection with a civil action between one of our subsidiaries and the Upper Occoquan Sewage Authority (the "UOSA Action"). These 2006 improvements were partially offset by the following items in the United States electrical construction and facilities services segment: (a) unusually large losses on certain 2006 contracts, (b) reduced profits from transportation infrastructure and financial services projects compared to 2005; and (c) the absence of $4.5 million from a favorable insurance settlement recorded in 2005.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

We are one of the largest mechanical and electrical construction and facilities services firms in the United States, Canada, the United Kingdom and in the world. We provide services to a broad range of commercial, industrial, utility and institutional customers through approximately 70 principal operating subsidiaries and joint venture entities. Our offices are located in the United States, Canada and the United Kingdom. In the Middle East, we carry on business through a joint venture.

Overview

On July 9, 2007, we effected a 2-for-1 stock split in the form of a stock distribution of one common share for each common share owned on the record date of June 20, 2007. The earnings per share data give effect to the stock split, applied retroactively, to all periods presented.

The results of our operations for the third quarter of 2008 set new Company records for a third quarter in terms of revenues, gross profit, gross margin (gross profit as a percentage of revenues), operating income, operating margin (operating income as a percentage of revenues), net income and diluted earnings per common share. These increases were generally attributable to (a) companies acquired during the last 12 months, (b) improved results of our United Kingdom construction and facilities services segment, (c) increased revenues from, and improved performance by, our United States electrical construction and facilities services segment and (d) increased revenues from, and improved performance by, our United States facilities services operations (excluding companies acquired during the last 12 months). The results of our United Kingdom construction and facilities services segment improved in the 2008 third quarter compared to the year ago quarter primarily due to the completion of rail projects in the United Kingdom in 2007 in connection with which we had incurred losses in 2007. During the third quarter of 2008, companies we acquired during the last 12 months contributed $99.3 million to revenues and $4.7 million to operating income (including $4.5 million of amortization expense attributable to identifiable intangible assets recorded to cost of sales and selling, general and administrative expenses). Companies acquired during the last 12 months, which primarily perform industrial facilities services and mobile mechanical services and are reported within the United States facilities services segment, contributed $61.6 million and $3.5 million to the increases in revenues and operating income, respectively. The balance of the increases in revenues and operating income attributable to companies acquired during the last 12 months are reported within the United States mechanical construction and facilities services segment.

Operating Segments

We have the following reportable segments which provide services associated with the design, integration, installation, start-up, operation and maintenance of various systems: (a) United States electrical construction and facilities services (involving systems for electrical power transmission and distribution; premises electrical and lighting systems; low-voltage systems, such as fire alarm, security and process control; voice and data communication; roadway and transit lighting; and fiber optic lines); (b) United States mechanical construction and facilities services (involving systems for heating, ventilation, air conditioning, refrigeration and clean-room process ventilation; fire protection; plumbing, process and high-purity piping; water and wastewater treatment and central plan heating and cooling); (c) United States facilities services; (d) Canada construction and facilities services; (e) United Kingdom construction and facilities services; and (f) Other international construction and facilities services. The segment "United States facilities services" principally consists of those operations which provide a portfolio of services needed to support the operation and maintenance of customers' facilities (industrial maintenance and services; commercial and government site-based operations and maintenance; military base operations support services; mobile maintenance and services; facilities management; installation and support for building systems; technical consulting and diagnostic services; small modification and retrofit projects; and program development, management and maintenance for energy systems), which services are not generally related to customers' construction programs, as well as industrial services operations, which primarily provide aftermarket maintenance and repair services, replacement parts and fabrication services for highly engineered shell and tube heat exchangers for the refinery and petrochemical industries. The Canada, United Kingdom and Other international segments perform electrical construction, mechanical construction and facilities services. Our "Other international construction and facilities services" segment, currently operating only in the Middle East, represents our operations outside of the United States, Canada and the United Kingdom.

As described below in more detail, our revenues for the three months ended September 30, 2008 increased to $1.7 billion compared to $1.5 billion for the three months ended September 30, 2007, and our revenues for the nine months ended September 30, 2008 increased to $5.1 billion compared to $4.2 billion for the nine months ended September 30, 2007. The increase in 2008 revenues compared to 2007 revenues was generally attributable to companies acquired during the last 12 months, increased construction work in the United States for the hospitality and healthcare markets, and increased work by our United States facilities services operations, primarily by those companies performing mobile mechanical services. The revenues of our Canada and United Kingdom construction and facilities services segments also increased for the nine months ended September 30, 2008 compared to the same period in 2007.

Our backlog at September 30, 2008 was $4.42 billion compared to $4.48 billion of backlog at September 30, 2007. Our backlog was $4.49 billion at December 31, 2007. Backlog declines as we perform work on existing contracts and increases with awards of new contracts. The decreases in backlog were primarily due to the cancellation of certain contracts and a decrease in commercial and hospitality contracts, partially offset by increased awards of industrial, transportation, healthcare and water/wastewater construction projects. Backlog is not a term recognized under United States generally accepted accounting principles; however, it is a common measurement used in our industry. Backlog includes unrecognized revenues to be realized from uncompleted construction contracts plus unrecognized revenues expected to be realized over the remaining term of facilities services contracts. However, if the remaining term of a facilities services contract exceeds 12 months, the unrecognized revenues attributable to such contract included in backlog are limited to only 12 months of revenues.

Revenues of our United States electrical construction and facilities services segment for the three months ended September 30, 2008 increased $96.3 million compared to the three months ended September 30, 2007. The increase in this segment's revenues for the three months ended September 30, 2008 was primarily due to an increase in commercial and industrial contract revenues. Revenues of this segment for the nine months ended September 30, 2008 increased $270.1 million compared to the nine months ended September 30, 2007. The increase in this segment's revenues for the nine months ended September 30, 2008 was primarily attributable to an increase in hospitality, commercial and industrial contract revenues.

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of EMCOR Group, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Frank T. MacInnis, Chairman of the Board of Directors and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 23, 2008 /s/FRANK T. MACINNIS
------------------------- ----------
Frank T. MacInnis
Chairman of the Board of
Directors and
Chief Executive Officer


Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of EMCOR Group, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mark A. Pompa, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


CONF CALL

Gordon McCoun

Thank you and good morning everyone. I’d like to welcome you the EMCOR Group conference call. We’re here to discuss the company’s 2008 third quarter results which were reported this morning. I’d now like to turn the call over to Kevin Matz, Executive Vice President, Shared Services, who will introduce management. Kevin, please go ahead.

R. Kevin Matz

Thank you, Gordon, and good morning, everyone. Welcome to EMCOR Group’s earnings conference call for the third quarter of 2008. For those of you who are accessing the call via the Internet in our website, welcome, and we hope you have arrived at the beginning of the slide presentation that will accompany our remarks today.

Currently, everyone accessing the slides should be on slide 1 which is the EMCOR title slide. Please advance to slide 2.

Slide 2 depicts the executives who are with me to discuss the quarter and nine months results. They are Frank MacInnis, Chairman and Chief Executive Officer; Tony Guzzi, President and Chief Operating Officer; Mark Pompa, our Executive Vice President and Chief Financial Officer; Mava Heffler, Vice President of Marketing and Communications; and our Executive Vice President and General Counsel, Sheldon Cammaker.

For call participants who are not accessing the conference call via the Internet, this presentation including the slides will be archived in the Investor Relations section of our website under presentations. You can find us at emcorgroup.com

Before we begin, I want to remind you that this discussion may contain certain forward-looking statements. Any such statements are based upon information available to EMCOR management’s perception as of this date and EMCOR assumes no obligation to update any such forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from the forward-looking statements. Accordingly, these statements are no guarantee of future performance.

Such risks and uncertainties include, but are not limited to, adverse change of economic conditions, changes in the political environment, changes in the specific markets for EMCOR services, adverse business conditions, increased competition, mix of business, and risks associated with foreign operations. Certain number of risks and factors associated with EMCOR’s business are also discussed in the company’s 2007 Form 10-K and 10-Q for the third quarter ended September 30, 2008, and in other reports filed from time to time with the Securities and Exchange Commission.

With that said, please let me turn the call over to Frank. Frank?

Frank T. MacInnis

Thank you, Kevin. You always manage to have it end happily. Good morning, everyone, and welcome to our 55th regular quarterly conference call for investors, analysts and other friends of EMCOR Group.

Today’s call is being conducted as usual by telephone and by simultaneous webcast. And I’ll be referring from time to time to a slide number to identify the relevant slide for webcast participants. Right now, we’re still on slide 2.

The focus of today’s call will be on the 2008 third quarter and year-to-date earnings press release and Form 10-Q that we issued and filed earlier this morning. We’ll conduct this call in our customary way. First, a brief discussion of those operating results including highlights of segment performance, cash flow from operations and overall quality of earnings. After commenting on our quarter-end balance sheet and liquidity, I’ll discuss the recent evolution and current status of our contract backlog portfolio with special emphasis on industry sectors that may experience changes in demand patterns.

Then I will turn the call over to Tony Guzzi, our President and COO for his comments on some notable recent contract awards from around our broad and diverse group of operating companies, followed by a new analysis of our fastest growing business segment, US facility services. During our respective presentations, Tony and I will do our best to evaluate EMCOR’s excellent current performance and future prospects in light of the challenging macroeconomic circumstances in which most large companies are operating today.

I’ll talk about trends that will define our performance through the fourth quarter and into early 2009. And I’ll provide modified revenue and earnings guidance for the 2008 full-year period.

At that point, there will be an opportunity for our listeners to make comments or to ask us questions. And you can see from slide 2 that a number of our senior officers are on hand to provide helpful answers. So let’s begin. Please move to slide 3.

In mid-1995, EMCOR began a record of consistent profitable operations that continues unbroken today, 53 consecutive profitable quarters later. Recent events have shown how difficult it is even for well-capitalized, well-managed companies to achieve such a record of consistent performance. It’s worth noting that EMCOR’s 13 and a half year of profit record includes several significant market cycles, an indication that our business model works in a variety of macroeconomic circumstances.

Slide 3 represents the best third quarter in our history by a substantial margin in all relevant measures in financial performance, revenues, gross profits, operating income and operating margin and earnings. General and administrative cost rose primarily as a result of newly acquired businesses and incentive compensation accruals linked to the company’s excellent performance.

Slide 4 reflects a similar pattern of performance improvement for the year-to-date period. During which revenues increased 23%, operating income rose 77% to more than $201 million, and diluted earnings per share from continued operations of $1.82 was 64% higher than in the year ago period. It’s worth noting that EMCOR’s operating income percentage rose year-over-year from 2.7% to 4% for the nine-month period, an important confirmation of market demand and quality of services.

Slide 5 illustrates some of the performance highlights from our excellent third quarter. Revenue growth pointed to a strong demand across our broad range of services in geographic markets and all five of our business segments were profitable. Our US facility services segment reported dramatic growth notably from recent investments in refinery maintenance services as we continue to balance our specialty construction revenues with less cyclical facilities maintenance work.

A record 4.6% operating margin for the quarter led to a 43% increase in operating income to a record $78.6 million, including positive contributions from both our Canadian and UK businesses. Our British business continues to reflect the success of our reorganization efforts and we’re very excited about our Comstock Canada Company and its growing strength in conventional and nuclear power generation.

We continue our quarterly operational highlights on slide 6. Diluted earnings per share from continuing operations rose to $0.72 from $0.55 a year ago, a 31% improvement; and our quality of earnings was extremely high. Cash flow from operations year-to-date was just under $200 million, a testament to our disciplined approach to cash management and contract administration. Our record profits and cash flow resulted in balance sheet cash at quarter end of $341 million. And our stockholders’ equity surpassed the $1 billion mark for the first time. We’re proud of EMCOR’s performance during this record quarter and grateful for the efforts of the many talented EMCOR employees who made it possible.

Slide 7, our balance sheet, illustrates our conservative approach to cash, liquidity, and leverage, a characteristic of our company for many years and a major factor in our long-term profitability. Balance sheet cash exceeds total debt by more than $140 million. Working capital rose to 476 million and our ratio of total debt to total capitalization declined to 16.5%, a modest level of leverage that we believe is well within our safety zone.

Our $200 million debt is comprised almost entirely of a term loan from a consortium of banks. The original $300 million proceeds from which were used to pay a proportion of the acquisition cost of our Ohmstede refinery maintenance company. The term loan agreement requires principal payments quarterly in the amount of $750,000 plus interest with a final payment of all remaining principals and interest in October 2010. We have made voluntary pre-payments of almost $100 million, in addition to the mandatory quarterly principal payments to reduce the balance of the term loan to $198.5 million on September 30. We are in compliance with all contractual covenants related to the term loan and expect to remain so.

We also have a revolving credit facility in the amount of $375 million, also from a consortium of banks whose agent has recently reaffirmed their credit commitment. We have no borrowings outstanding under the credit facility but have utilized $48 million of letters of credit in connection with normal business operations resulting in an available balance under the credit facility of $327 million. We believe that EMCOR has adequate access to and sources of operating and investment capital for the foreseeable future. Please go to slide 8.

Here we show the continued evolution of our contract backlog portfolio, representing the value of unperformed work on hand from construction and facility services contracts. We calculate the values shown on this slide, very conservatively. In particular, we report the value of multi-year facility service contracts at no more than one year of base revenue.

In addition, our backlog schedule omits a significant number of small, fast booming projects that in total amount to about 30% of our revenues, a percentage that – amount to about 30% of our revenues, a percentage that continues to increase in conjunction with the growth of the number of our U.S. construction and facility services businesses.

Contract backlog as of September 30, 2008 was $4.42 billion compared to $4.48 billion at the end of the 2007 third quarter and $4.67 billion at the end of the 2008 second quarter. A slight year-over-year decline in contract backlog and a roughly $250 million sequential decline were both primarily attributable to the suspension of two large Las Vegas hotel and casino projects with a total value of about $170 million. Together with a modest decline in commercial project awards largely offset by increased construction awards in healthcare, water wastewater, transportation, and industrial contracts. Awards rose both sequentially and year-over-year in our healthcare, transportation, and water wastewater segments illustrating the success of our diversity business model and the stability it creates.

Here to discuss some notable recent contract awards to some of our diverse family and EMCOR subsidiaries is Tony Guzzi, our President and Chief Operating Officer. Please go to slide 9. Tony?

Anthony J. Guzzi

Thanks Frank. Diverse project demand continues across our markets and on slide 9, I’d like to walk through some representative projects that show our diversity that were obtained in the third quarter.

For anyone that has traveled on the congested highways of Long Island, we are hoping to alleviate some of the traffic volume. Our Welsbach Electric Long Island Company is performing the electric work for the modernization of the intelligent transportation system and the lighting upgrade for 13 miles on the Wantagh Parkway. Welsbach's scope includes new variable message signs, all new parkway lighting, fiber optic cabling, CCTV cameras, and the central system software and integration. Across the river in New York City, our Forest Electric Company is installing the electrical systems for (inaudible 00:15:32) 290,000 square foot reserve (ph 00:15:35).

Our work includes installation of the electrical panels, feeders, complete lighting, fire alarm, and telephone and data cabling. I should also mention that this is a green project. And that we continue to see more and more green projects in the marketplace. For example, at the University of Wisconsin School of Medicine, they’re building a 135,000 square foot faculty administration building on the Madison campus. Our Kilgust Mechanical Company will be installing the HVAC air handling units and air-cooled chillers for this Green Lead certified building and we’re seeing more and more of that across our portfolio.

In Ghent, Kentucky, our DeBra-Kuempel Company is providing and installing the industrial mechanical systems for North American Stainless Steel Company's new steel pickling line. The DeBra team is performing the second phase of this project and is now fabricating and installing all the process piping and supporting process utilities such as steam, condensate, compressed air instrument, and industrial water. This fast track project requires a great deal subsystems assembly and we’re going to do that in our shop at DeBra-Kuempel.

Prefab has been a major, major improvement in EMCOR’s operation and helps drive a lot of the margin expansion you see in our mechanical business over the last three years and its productivity we can keep. In Las Vegas, our Dane Electric Company has been awarded in three phases for the Hard Rock Hotel remodeling expansion.

Phase I is a new 84-parking garage, phase II is the casino remodel and expansion, and the third phase is the South tower addition which will add 376 rooms. Dane’s scope of work includes the installation of complete electrical distribution, lighting, power, telephone and data, and fire safety systems for this new project.

And we continue to see strong demand across the country for healthcare facility of all types and sizes. For example, in Atchison, Kansas, our central mechanical company will be installing the HVAC sheet metal and plumbing systems for replacement critical access hospital for the city of Atchison. This 90,000 square foot state of the art facility will house 25 patient rooms, 3 surgeries suites, 3 intensive care trauma suites, and approximately 30,000 square feet reserved for private clinical use.

And in Harvard, in Cambridge Massachusetts, one of our mechanical services company, EMCOR Services Northeast has been awarded the replacement of two indoor 30-year-old main air handlers in Robinson Hall. Again, showing that EMCOR does the majority of its work in existing facilities. This original facility was built in 1900. The units arrived in September and after the start of the school year necessitating a flexible two-phase plan to allow the building to continue to be used by the History Department and its classrooms and remained cool and have good ventilation throughout the project.

The EMCOR Services Northeast is part of our mechanical mobile services group which is part of our facility services segment. I thought I'd spend a little bit of time talking about EMCOR facility services, how it operates, and how it's improved over the last five years and if you go to slide 10 you can see that.

EMCOR facility services operate as four key business units or platforms. We have site-based services both in the government and commercial spaces. We have our mechanical mobile services business and we have our industrial services business which (inaudible 00:19:24) was a major addition to it. And it’s important that not only within EMCOR facility services, we perform both industrial services and mechanical and mobile, and electrical services in our electrical and mechanical businesses in EMCOR construction services.

We’ve been building these businesses for a long time but has restructured the look in the last six years the other chart of revenue, operating income, and operating income percentage. And what you see is in 2002 full year which is the first part, we were doing $186 million dollars of revenue for the full year, $2.9 million of operating income, and an operating income percentage of 1.6% would not be material to EMCOR’s results today. Through acquisitions, organic growth, and focused selling, we’ve been able to grow the business just through three quarters to $1.1 billion making $83.3 million with a 7.4% operating margin. This is behind a lot of the margin transformation that Frank talked about in his earlier comments. It will serve as the necessary balancing base to continue to propel EMCOR in the future and serve as a major investment opportunity as we go forward. Back to you Frank.

Frank T. MacInnis

Thank you, Tony. We believe that the growth and profitability of our U.S. facility service segment has had a transformational effect on our revenue balance, on margin characteristics, and our non-cyclical earnings base. These will be important factors in EMCOR’s continued success amid macroeconomic challenges. For EMCOR's outlook for the remainder of 2008 and into 2009, please go to slide 11.

In assessing EMCOR’s prospects for the remainder of 2008 and into next year, there is more than the usual number of moving part to keep in mind due to uncertainties in the credit markets. Some principles, however, seem very clear. As discussed a few minutes ago, EMCOR is well-capitalized with substantial cash, no net debt, and well-established credit relationships. We foresee no internally generated constraints on our capital employment and deployment for operational or investment purposes.


Slide 11 illustrates the balance resulting from our backlog and end market diversity and the flexibility that which EMCOR companies can move from areas of declining demands to those where demand is grown.

Please go to slide 12. Accordingly, we look for a continuation of relatively strong revenue and earnings growth for the remainder of 2008 and into the first half of 2009. Specifically, with respect to full year 2008, we reiterate our previous revenue guidance of $6.8 billion to $7 billion and raise our guidance for diluted earnings per share from continuing operations from our previous range of $2.32 to $2.47 for our new estimate of 248 to 258 representing year-over-year earnings growth of between 33% and 39%.

With respect to 2009, our budgetary process which is a detailed bottom-up process starting at each subsidiary and flowing up to corporate has just begun and will not be complete until December. However, based on our view of general operating conditions and an assumption in economic stimulus and macroeconomic restructuring efforts will be successful in stabilizing the credit markets by mid-2009. It seems likely to me that we will maintain our revenue and margin momentum through at least the first half of the year and with no material degradation of revenues for the year as a whole subject to the foregoing assumptions. We think that we will maintain margins at our close to currently reported levels and I reiterate that we remain very interested in new investments and acquisitions that will continue to the transformation of our revenue diversity, margin performance, and earning space that has occurred over the last few years. We believe that there will be some very attractive bargains available for well capitalized strategic purchase areas in our sector in the next few months.

That's it for now. As always, thank you for your interest in and support of EMCOR Group. I also know that the number of EMCOR employees listen into this call. Special thanks to all of you for an excellent quarter and for EMCOR's long record of financial and operational success. Let's keep it up.

Now, it's time for questions or comments, and Christine is here to tell you how to queue.

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