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(1)	Net of tax of $0.1 million for each of the three months ended March 31, 2020 and 2019.

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(1)	Includes $1.1 million and $2.3 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of December 31, 2019 and 2018, respectively.

(2)	Includes $1.0 million and $2.2 million of restricted cash classified as “Prepaid expenses and other” in the Consolidated Balance Sheets as of March 31, 2020 and 2019, respectively.

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(1)	Represents cumulative foreign currency translation adjustments and post retirement liability adjustments.

(2)	Represents adjustment to retained earnings upon the adoption of Accounting Standards Codification Topic 326.

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The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Consequently, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. References to the “Company,” “EMCOR,” “we,” “us,” “our” and similar words refer to EMCOR Group, Inc. and its consolidated subsidiaries unless the context indicates otherwise. Readers of this report should refer to the consolidated financial statements and the notes thereto included in our latest Annual Report on Form 10-K filed with the Securities and Exchange Commission.

In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of those of a normal recurring nature) necessary to present fairly our financial position and the results of our operations.

The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020.

On January 1, 2020, we adopted the accounting pronouncement issued by the Financial Accounting Standards Board (“FASB”), which changes the way in which entities estimate and present credit losses for most financial assets, including accounts receivable and contract assets. This pronouncement replaces the previous incurred loss model with an expected credit loss model that requires consideration of a broader range of information when estimating expected credit losses over the lifetime of an asset. This guidance requires entities to estimate expected credit losses by considering forecasts of future economic conditions in addition to information about past events and current conditions. The cumulative effect of applying the new guidance was recorded as a reduction to retained earnings in the amount of $2.3 million, net of tax.

In accordance with the guidance described above, we maintain an allowance for credit losses, which represents the portion of our financial assets (accounts receivable and contract assets) that we do not expect to collect over the contractual life of such assets. Credit losses are recorded when we believe a customer, or group of customers, may not be able to meet their financial obligations due to deterioration in financial condition or credit rating. A considerable amount of judgment is required in determining expected credit losses. Relevant factors include our prior collection history with our customers, the related aging of past due balances, projections of credit losses based on historical trends in credit quality indicators or past events, and forecasts of future economic conditions. At March 31, 2020 and December 31, 2019, our allowance for credit losses was $20.0 million and $14.5 million, respectively. Our allowance for credit losses increased based on our evaluation of forecasts of future economic conditions and the expected impact on customer collections. Allowances for credit losses are based on the best facts available and are re-evaluated and adjusted on a regular basis as additional information is received. Negative macroeconomic trends, including the impact of COVID-19, could result in an increase in our credit losses if we experience delays in the payment of outstanding receivables or if future economic conditions differ from our forecasts.

The change in the allowance for credit losses for the three months ended March 31, 2020 was as follows (in thousands):

Balance at December 31, 2019	$	14,466
Cumulative-effect adjustment	3,150
Provision for credit losses	2,614
Amounts written off against the allowance	(237		)
Balance at March 31, 2020	$	19,993

In December 2019, an accounting pronouncement was issued by the FASB that simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to intraperiod tax allocations and the methodology for calculating income taxes in an interim period. The guidance also simplifies aspects of the accounting for franchise taxes as well as enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The pronouncement is effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted. Certain aspects of this standard must be applied retrospectively while other aspects are to be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company intends to adopt this accounting pronouncement on January 1, 2021, and we are currently evaluating the potential impact on our financial position and/or results of operations.

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The Company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by applying the following five step model:

(1) Identify the contract with a customer

A contract with a customer exists when: (a) the parties have approved the contract and are committed to perform their respective obligations, (b) the rights of the parties can be identified, (c) payment terms can be identified, (d) the arrangement has commercial substance, and (e) collectibility of consideration is probable. Judgment is required when determining if the contractual criteria are met, specifically in the earlier stages of a project when a formally executed contract may not yet exist. In these situations, the Company evaluates all relevant facts and circumstances, including the existence of other forms of documentation or historical experience with our customers that may indicate a contractual agreement is in place and revenue should be recognized. In determining if the collectibility of consideration is probable, the Company considers the customer’s ability and intention to pay such consideration through an evaluation of several factors, including an assessment of the creditworthiness of the customer and our prior collection history with such customer.

(2) Identify the performance obligations in the contract

At contract inception, the Company assesses the goods or services promised in a contract and identifies, as a separate performance obligation, each distinct promise to transfer goods or services to the customer. The identified performance obligations represent the “unit of account” for purposes of determining revenue recognition. In order to properly identify separate performance obligations, the Company applies judgment in determining whether each good or service provided is: (a) capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and (b) distinct within the context of the contract, whereby the transfer of the good or service to the customer is separately identifiable from other promises in the contract.

In addition, when assessing performance obligations within a contract, the Company considers the warranty provisions included within such contract.To the extent the warranty terms provide the customer with an additional service, other than assurance that the promised good or service complies with agreed upon specifications, such warranty is accounted for as a separate performance obligation. In determining whether a warranty provides an additional service, the Company considers each warranty provision in comparison to warranty terms which are standard in the industry.

Our contracts are often modified through change orders to account for changes in the scope and price of the goods or services we are providing. Although the Company evaluates each change order to determine whether such modification creates a separate performance obligation, the majority of our change orders are for goods or services that are not distinct within the context of our original contract, and therefore, are not treated as separate performance obligations.

(3) Determine the transaction price

The transaction price represents the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to our customers. The consideration promised within a contract may include fixed amounts, variable amounts, or both. To the extent the performance obligation includes variable consideration, including contract bonuses and penalties that can either increase or decrease the transaction price, the Company estimates the amount of variable consideration to be included in the transaction price utilizing one of two prescribed methods, depending on which method better predicts the amount of consideration to which the entity will be entitled. Such methods include: (a) the expected value method, whereby the amount of variable consideration to be recognized represents the sum of probability weighted amounts in a range of possible consideration amounts, and (b) the most likely amount method, whereby the amount of variable consideration to be recognized represents the single most likely amount in a range of possible consideration amounts. When applying these methods, the Company considers all information that is reasonably available, including historical, current, and estimates of future performance. The expected value method is typically utilized in situations where a contract contains a large number of possible outcomes while the most likely amount method is typically utilized in situations where a contract has only two possible outcomes.

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NOTE 3 Revenue from Contracts with Customers - (Continued)

Variable consideration is included in the transaction price only to the extent it is probable, in the Company’s judgment, that a significant future reversal in the amount of cumulative revenue recognized under the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved. This threshold is referred to as the variable consideration constraint. In assessing whether to apply the variable consideration constraint, the Company considers if factors exist that could increase the likelihood or the magnitude of a potential reversal of revenue, including, but not limited to, whether: (a) the amount of consideration is highly susceptible to factors outside of the Company’s influence, such as the actions of third parties, (b) the uncertainty surrounding the amount of consideration is not expected to be resolved for a long period of time, (c) the Company’s experience with similar types of contracts is limited or that experience has limited predictive value, (d) the Company has a practice of either offering a broad range of price concessions or changing the payment terms and conditions of similar contracts in similar circumstances, and (e) the contract has a large number and broad range of possible consideration amounts.

Pending change orders represent one of the most common forms of variable consideration included within contract value and typically represent contract modifications for which a change in scope has been authorized or acknowledged by our customer, but the final adjustment to contract price is yet to be negotiated. In estimating the transaction price for pending change orders, the Company considers all relevant facts, including documented correspondence with the customer regarding acknowledgment of and/or agreement with the modification, as well as historical experience with the customer or similar contractual circumstances. Based upon this assessment, the Company estimates the transaction price, including whether the variable consideration constraint should be applied.

Contract claims are another form of variable consideration which is common within our industry. Claim amounts represent revenue that has been recognized for contract modifications that are not submitted or are in dispute as to both scope and price. In estimating the transaction price for claims, the Company considers all relevant facts available. However, given the uncertainty surrounding claims, including the potential long-term nature of dispute resolution and the broad range of possible consideration amounts, there is an increased likelihood that any additional contract revenue associated with contract claims is constrained. The resolution of claims involves negotiations and, in certain cases, litigation. In the event litigation costs are incurred by us in connection with claims, such litigation costs are expensed as incurred, although we may seek to recover these costs.

For some transactions, the receipt of consideration does not match the timing of the transfer of goods or services to the customer. For such contracts, the Company evaluates whether this timing difference represents a financing arrangement within the contract. Although rare, if a contract is determined to contain a significant financing component, the Company adjusts the promised amount of consideration for the effects of the time value of money when determining the transaction price of such contract. Although our customers may retain a portion of the contract price until completion of the project and final contract settlement, these retainage amounts are not considered a significant financing component as the intent of the withheld amounts is to provide the customer with assurance that we will complete our obligations under the contract rather than to provide financing to the customer. In addition, although we may be entitled to advanced payments from our customers on certain contracts, these advanced payments generally do not represent a significant financing component as the payments are used to meet working capital demands that can be higher in the early stages of a contract, as well as to protect us from our customer failing to meet its obligations under the contract.

Changes in the estimates of transaction prices are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. Such changes in estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in prior periods. Such changes in estimates may also result in the reversal of previously recognized revenue if the ultimate outcome differs from the Company’s previous estimate. For the three months ended March 31, 2020 and 2019, there were no significant amounts of revenue recognized during the period related to performance obligations satisfied in prior periods. In addition, for the three months ended March 31, 2020 and 2019, there were no significant reversals of revenue recognized associated with the revision of transaction prices.

(4) Allocate the transaction price to performance obligations in the contract

For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on a relative standalone selling price. The Company determines the standalone selling price based on the price at which the performance obligation would have been sold separately in similar circumstances to similar customers. If the standalone selling price is not observable, the Company estimates the standalone selling price taking into account all available information such as market conditions and internal pricing guidelines. In certain circumstances, the standalone selling price is determined using an expected profit margin on anticipated costs related to the performance obligation.

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NOTE 3 Revenue from Contracts with Customers - (Continued)

(5) Recognize revenue as performance obligations are satisfied

The Company recognizes revenue at the time the related performance obligation is satisfied by transferring a promised good or service to its customers. A good or service is considered to be transferred when the customer obtains control. The Company can transfer control of a good or service and satisfy its performance obligations either over time or at a point in time. The Company transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognizes revenue over time if one of the following three criteria are met: (a) the customer simultaneously receives and consumes the benefits provided by the Company’s performance as we perform, (b) the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (c) the Company’s performance does not create an asset with an alternative use to us, and we have an enforceable right to payment for performance completed to date.

For our performance obligations satisfied over time, we recognize revenue by measuring the progress toward complete satisfaction of that performance obligation. The selection of the method to measure progress towards completion can be either an input method or an output method and requires judgment based on the nature of the goods or services to be provided.

For our construction contracts, revenue is generally recognized over time as our performance creates or enhances an asset that the customer controls as it is created or enhanced. Our fixed price construction projects generally use a cost-to-cost input method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. For our unit price construction contracts, progress towards complete satisfaction is measured through an output method, such as the amount of units produced or delivered, when our performance does not produce significant amounts of work in process or finished goods prior to complete satisfaction of such performance obligations.

For our services contracts, revenue is also generally recognized over time as the customer simultaneously receives and consumes the benefits of our performance as we perform the service. For our fixed price service contracts with specified service periods, revenue is generally recognized on a straight-line basis over such service period when our inputs are expended evenly, and the customer receives and consumes the benefits of our performance throughout the contract term.

The timing of revenue recognition for the manufacturing of new build heat exchangers within our United States industrial services segment depends on the payment terms of the contract, as our performance does not create an asset with an alternative use to us. For those contracts for which we have a right to payment for performance completed to date at all times throughout our performance, inclusive of a cancellation, we recognize revenue over time. For these performance obligations, we use a cost-to-cost input method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. However, for those contracts for which we do not have a right, at all times, to payment for performance completed to date, we recognize revenue at the point in time when control is transferred to the customer. For bill-and-hold arrangements, revenue is recognized when the customer obtains control of the heat exchanger, which may be prior to shipping, if certain recognition criteria are met.

For certain of our revenue streams, such as call-out repair and service work, outage services, refinery turnarounds, and specialty welding services that are performed under time and materials contracts, our progress towards complete satisfaction of such performance obligations is measured using an output method as the customer receives and consumes the benefits of our performance completed to date.

Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. When the current estimate of total costs for a performance obligation indicate a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident. For the three months ended March 31, 2020 and 2019, there were no changes in total estimated costs that had a significant impact on our operating results. In addition, there were no significant losses recognized during the three months ended March 31, 2020 and 2019.

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NOTE 3 Revenue from Contracts with Customers - (Continued)

Disaggregation of Revenues

Our revenues are principally derived from contracts to provide construction services relating to electrical and mechanical systems, as well as to provide a number of building services and industrial services to our customers. Our contracts are with many different customers in numerous industries. Refer to Note 14 - Segment Information of the notes to consolidated financial statements for additional information on how we disaggregate our revenues by reportable segment, as well as a more complete description of our business.

The following tables provide further disaggregation of our revenues by categories we use to evaluate our financial performance within each of our reportable segments for the three months ended March 31, 2020 and 2019 (in thousands):

	For the three months ended March 31,
	2020				% of Total			2019				% of Total
United States electrical construction and facilities services:
Commercial market sector	$	242,841			46	%		$	269,441			51	%
Institutional market sector	41,518				8	%		22,345				4	%
Hospitality market sector	5,082				1	%		6,841				1	%
Manufacturing market sector	120,372				23	%		98,803				19	%
Healthcare market sector	20,646				4	%		17,615				3	%
Transportation market sector	44,180				8	%		58,139				11	%
Water and wastewater market sector	2,329				1	%		6,015				1	%
Short duration projects (1)	32,721				6	%		40,409				8	%
Service work	16,296				3	%		9,262				2	%
	525,985							528,870
Less intersegment revenues	(756		)					(800		)
Total segment revenues	$	525,229						$	528,070

	For the three months ended March 31,
	2020				% of Total			2019				% of Total
United States mechanical construction and facilities services:
Commercial market sector	$	304,690			36	%		$	281,862			37	%
Institutional market sector	76,997				9	%		61,283				8	%
Hospitality market sector	7,714				1	%		13,648				2	%
Manufacturing market sector	115,582				14	%		98,763				13	%
Healthcare market sector	88,059				10	%		61,374				8	%
Transportation market sector	14,346				2	%		5,734				1	%
Water and wastewater market sector	40,513				5	%		43,211				6	%
Short duration projects (1)	97,202				12	%		99,936				13	%
Service work	90,893				11	%		89,466				12	%
	835,996							755,277
Less intersegment revenues	(1,884		)					(2,868		)
Total segment revenues	$	834,112						$	752,409

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(1)	Represents those projects which generally are completed within three months or less.

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NOTE 3 Revenue from Contracts with Customers - (Continued)

	For the three months ended March 31,
	2020				% of Total			2019				% of Total
United States building services:
Commercial site-based services	$	143,438			28	%		$	155,978			30	%
Government site-based services	42,917				8	%		48,791				10	%
Mechanical services	303,391				59	%		274,166				54	%
Energy services	28,337				5	%		33,144				6	%
Total segment revenues	$	518,083						$	512,079

	For the three months ended March 31,
	2020				% of Total			2019				% of Total
United States industrial services:
Field services	$	269,756			87	%		$	216,770			84	%
Shop services	40,275				13	%		41,875				16	%
Total segment revenues	$	310,031						$	258,645
Total United States operations	$	2,187,455						$	2,051,203

	For the three months ended March 31,
	2020				% of Total			2019				% of Total
United Kingdom building services:
Service work	$	55,106			49	%		$	54,634			51	%
Projects & extras	57,271				51	%		52,891				49	%
Total segment revenues	$	112,377						$	107,525
Total worldwide operations	$	2,299,832						$	2,158,728

 Contract Assets and Contract Liabilities

Accounts receivable are recognized in the period when our right to consideration is unconditional. Accounts receivable are recognized net of an allowance for credit losses. A considerable amount of judgment is required in assessing the likelihood of realization of receivables.

The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets include unbilled amounts from our long-term construction projects when revenues recognized under the cost-to-cost measure of progress exceed the amounts invoiced to our customers, as the amounts cannot be billed under the terms of our contracts. Such amounts are recoverable from our customers based upon various measures of performance, including achievement of certain milestones, completion of specified units, or completion of a contract. In addition, many of our time and materials arrangements, as well as our contracts to perform turnaround services within the United States industrial services segment, are billed in arrears pursuant to contract terms that are standard within the industry, resulting in contract assets and/or unbilled receivables being recorded, as revenue is recognized in advance of billings. Also included in contract assets are amounts we seek or will seek to collect from customers or others for errors or changes in contract specifications or design, contract change orders or modifications in dispute or unapproved as to scope and/or price, or other customer-related causes of unanticipated additional contract costs (claims and unapproved change orders). Our contract assets do not include capitalized costs to obtain and fulfill a contract. Contract assets are generally classified as current within the Consolidated Balance Sheets.

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NOTE 3 Revenue from Contracts with Customers - (Continued)

Contract liabilities from our long-term construction contracts arise when amounts invoiced to our customers exceed revenues recognized under the cost-to-cost measure of progress. Contract liabilities additionally include advanced payments from our customers on certain contracts. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation and are recorded as either current or long-term, depending upon when we expect to recognize such revenue. The long-term portion of contract liabilities is included in “Other long-term obligations” in the Consolidated Balance Sheets.

Net contract liabilities consisted of the following (in thousands):

	March 31, 2020				December 31, 2019
Contract assets, current	$	195,265			$	177,830
Contract assets, non-current	—				—
Contract liabilities, current	(590,873		)		(623,642		)
Contract liabilities, non-current	(2,051		)		(2,142		)
Net contract liabilities	$	(397,659	)		$	(447,954	)

The $50.3 million decrease in net contract liabilities for the three months ended March 31, 2020 was primarily attributable to a decrease in net contract liabilities on our uncompleted long-term construction contracts, partially as a result of the completion or substantial completion of certain large projects which were previously billed in advance pursuant to contract terms. The acquisition completed in the first quarter of 2020 did not have a significant impact on our contract assets and contract liabilities. There was no significant impairment of contract assets recognized during either period presented.

Transaction Price Allocated to Remaining Unsatisfied Performance Obligations     

The following table presents the transaction price allocated to remaining unsatisfied performance obligations (“remaining performance obligations”) for each of our reportable segments and their respective percentages of total remaining performance obligations (in thousands, except for percentages):

	March 31, 2020				% of Total
Remaining performance obligations:
United States electrical construction and facilities services	$	1,032,611			23	%
United States mechanical construction and facilities services	2,601,659				59	%
United States building services	545,803				12	%
United States industrial services	109,192				3	%
Total United States operations	4,289,265				97	%
United Kingdom building services	134,634				3	%
Total worldwide operations	$	4,423,899			100	%

Our remaining performance obligations at March 31, 2020 were $4.42 billion. Remaining performance obligations increase with awards of new contracts and decrease as we perform work and recognize revenue on existing contracts. We include a project within our remaining performance obligations at such time the project is awarded and agreement on contract terms has been reached. Our remaining performance obligations include amounts related to contracts for which a fixed price contract value is not assigned when a reasonable estimate of the total transaction price can be made.

Remaining performance obligations include unrecognized revenues to be realized from uncompleted construction contracts. Although many of our construction contracts are subject to cancellation at the election of our customers, in accordance with industry practice, we do not limit the amount of unrecognized revenue included within remaining performance obligations for these contracts due to the inherent substantial economic penalty that would be incurred by our customers upon cancellation.

Remaining performance obligations also include unrecognized revenues expected to be realized over the remaining term of service contracts. However, to the extent a service contract includes a cancellation clause which allows for the termination of such contract by either party without a substantive penalty, the remaining contract term, and therefore, the amount of unrecognized revenues included within remaining performance obligations, is limited to the notice period required for the termination.

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NOTE 3 Revenue from Contracts with Customers - (Continued)

Our remaining performance obligations are comprised of: (a) original contract amounts, (b) change orders for which we have received written confirmations from our customers, (c) pending change orders for which we expect to receive confirmations in the ordinary course of business, (d) claim amounts that we have made against customers for which we have determined we have a legal basis under existing contractual arrangements and as to which the variable consideration constraint does not apply, and (e) other forms of variable consideration to the extent that such variable consideration has been included within the transaction price of our contracts. Such claim and other variable consideration amounts were immaterial for all periods presented.

Refer to the table below for additional information regarding our remaining performance obligations, including an estimate of when we expect to recognize such remaining performance obligations as revenue (in thousands):

	Within one year				Greater than one year
Remaining performance obligations:
United States electrical construction and facilities services	$	842,643			$	189,968
United States mechanical construction and facilities services	1,996,744				604,915
United States building services	525,161				20,642
United States industrial services	109,192				—
Total United States operations	3,473,740				815,525
United Kingdom building services	99,059				35,575
Total worldwide operations	$	3,572,799			$	851,100

We believe our reported remaining performance obligations are firm and contract cancellations have not historically had a material adverse effect on us. However, the extent to which the COVID-19 pandemic may impact our remaining performance obligations is highly uncertain and will be affected by a number of factors that are difficult to predict. These include the duration and extent of the outbreak; the duration and extent of imposed or recommended containment and mitigation measures; the impact of the pandemic on economic activity, including on construction projects and our customers’ demand for our goods and services; any further closures of our customers’ offices and facilities; and any additional project delays or shutdowns.

Acquisitions are accounted for utilizing the acquisition method of accounting and the prices paid for them are allocated to their respective assets and liabilities based on the estimated fair value of such assets and liabilities at the dates of their respective acquisition by us.

In January 2020, we acquired a company for an immaterial amount. This company provides building automation and controls solutions within the Northeastern region of the United States, and its results of operations have been included within our United States building services segment.

On November 1, 2019, we completed the acquisition of Batchelor & Kimball, Inc. (“BKI”), a leading full service provider of mechanical construction and maintenance services. This acquisition strengthens our position and broadens our capabilities in the Southern and Southeastern regions of the United States, and its results of operations have been included within our United States mechanical construction and facilities services segment. Under the terms of the transaction, we acquired 100% of BKI’s outstanding capital stock for total consideration of approximately $220.0 million. In connection with the acquisition of BKI, we acquired working capital of $29.8 million and other net assets of $4.9 million and have preliminarily ascribed $43.6 million to goodwill and $141.7 million to identifiable intangible assets. Goodwill is calculated as the excess of the consideration transferred over the fair value of the net assets acquired and represents the future economic benefits expected from this strategic acquisition. The weighted average amortization period for the identifiable intangible assets, which consist of a trade name, customer relationships, and contract backlog, is approximately 10.5 years.

In addition to BKI, during 2019, we completed six other acquisitions for total consideration of $85.3 million. Such companies include: (a) a company which provides electrical contracting services in central Iowa, the results of operations of which have been included within our United States electrical construction and facilities services segment, (b) a company which provides mechanical contracting services in south-central and eastern Texas, the results of operations of which have been included within our United States mechanical construction and facilities services segment, and (c) four companies within our United States building services segment which bolster our presence in geographies where we have existing operations and provide either mobile mechanical services or building automation and controls solutions. In connection with these acquisitions, we acquired working capital of

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$25.3 million and other net assets of $1.3 million and have preliminarily ascribed $29.1 million to goodwill and $29.6 million to identifiable intangible assets.

We expect that all of the goodwill acquired in connection with these acquisitions will be deductible for tax purposes. The purchase price allocations for the business acquired in 2020, BKI, and one of the other businesses acquired in 2019 are preliminary and subject to change during their respective measurement periods. As we finalize such purchase price allocations, adjustments may be recorded relating to finalization of intangible asset valuations, tax matters, or other items. Although not expected to be significant, such adjustments may result in changes in the valuation of assets and liabilities acquired. The purchase price allocations for the remaining businesses acquired in 2019 have been finalized with an insignificant impact.

Calculation of Basic and Diluted Earnings per Common Share

The following tables summarize our calculation of Basic and Diluted Earnings per Common Share (“EPS”) for the three months ended March 31, 2020 and 2019 (in thousands, except share and per share data):

	For the three months ended March 31,
	2020				2019
Numerator:
Net income available to common stockholders	$	75,665			$	72,410
Denominator:
Weighted average shares outstanding used to compute basic earnings per common share	56,007,122				56,168,356
Effect of dilutive securities—Share-based awards	203,606				255,866
Shares used to compute diluted earnings per common share	56,210,728				56,424,222
Basic earnings per common share	$	1.35			$	1.29
Diluted earnings per common share	$	1.35			$	1.28

The number of outstanding share-based awards that were excluded from the computation of diluted EPS for the three months ended March 31, 2020 and 2019 because they would be anti-dilutive were 95,084 and 2,150, respectively.

Inventories in the accompanying Consolidated Balance Sheets consisted of the following amounts (in thousands):

	March 31, 2020				December 31, 2019
Raw materials and construction materials	$	25,749			$	31,365
Work in process	9,638				9,081
Inventories	$	35,387			$	40,446

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Debt in the accompanying Consolidated Balance Sheets consisted of the following amounts (in thousands):

	March 31, 2020				December 31, 2019
Revolving credit facility	$	200,000			$	50,000
Term loan	300,000				254,431
Unamortized debt issuance costs	(4,720		)		(1,879		)
Finance lease obligations	9,261				9,679
Total debt	504,541				312,231
Less: current maturities	10,360				18,092
Total long-term debt	$	494,181			$	294,139

Credit Agreement        

We use a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy, which gives the highest priority to quoted prices in active markets, is comprised of the following three levels:

Level 1 – Unadjusted quoted market prices in active markets for identical assets and liabilities.

Level 2 – Observable inputs, other than Level 1 inputs. Level 2 inputs would typically include quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.

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Level 3 – Prices or valuations that require inputs that are both significant to the measurement and unobservable.

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2020 and December 31, 2019 (in thousands):  

	Assets at Fair Value as of March 31, 2020
Asset Category	Level 1				Level 2				Level 3				Total
Cash and cash equivalents (1)	$	347,092			$	—			$	—			$	347,092
Restricted cash (2)	1,035				—				—				1,035
Deferred compensation plan assets (3)	29,626				—				—				29,626
Total	$	377,753			$	—			$	—			$	377,753

	Assets at Fair Value as of December 31, 2019
Asset Category	Level 1				Level 2				Level 3				Total
Cash and cash equivalents (1)	$	358,818			$	—			$	—			$	358,818
Restricted cash (2)	1,102				—				—				1,102
Deferred compensation plan assets (3)	30,295				—				—				30,295
Total	$	390,215			$	—			$	—			$	390,215

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(1)	Cash and cash equivalents consist of deposit accounts and money market funds with original maturity dates of three months or less, which are Level 1 assets. At March 31, 2020 and December 31, 2019, we had $120.0 million and $164.0 million, respectively, in money market funds.

(2)	Restricted cash is classified as “Prepaid expenses and other” in the Consolidated Balance Sheets. Restricted cash primarily represents cash held in account for use on customer contracts.

(3)	Deferred compensation plan assets are classified as “Other assets” in the Consolidated Balance Sheets.

For the three months ended March 31, 2020 and 2019, our income tax provision was $28.6 million and $27.5 million, respectively, based on an effective income tax rate, before discrete items, of 27.6% and 28.0%, respectively. The actual income tax rate for the three months ended March 31, 2020 and 2019, inclusive of discrete items, was 27.4% and 27.5%, respectively. The actual income tax rates differed from the statutory tax rate due to state and local income taxes and other permanent book to tax differences. The increase in the 2020 income tax provision was primarily due to increased income before income taxes.

As of March 31, 2020 and December 31, 2019, we had no unrecognized income tax benefits.

We file a consolidated federal income tax return including all of our U.S. subsidiaries with the Internal Revenue Service. We additionally file income tax returns with various state, local, and foreign tax agencies. The Company is currently under examination by various taxing authorities for the years 2014 through 2018.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act provides for various tax relief and tax incentive measures, which are not expected to have a material impact on our results of operations or liquidity.

As of March 31, 2020 and December 31, 2019, there were 54,837,771 and 56,219,831 shares of our common stock outstanding, respectively.

During the three months ended March 31, 2020 and 2019, we issued 101,695 and 100,947 shares of common stock, respectively. These shares were issued primarily upon: (a) the satisfaction of required conditions under certain of our share-based

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compensation plans, (b) the purchase of common stock pursuant to our employee stock purchase plan, and (c) the exercise of stock options. We have paid quarterly dividends since October 25, 2011. We currently pay a regular quarterly dividend of $0.08 per share.

In September 2011, our Board of Directors (the “Board”) authorized a share repurchase program allowing us to begin repurchasing shares of our outstanding common stock. Subsequently, the Board has from time to time increased the amount of our common stock that we may repurchase under such program. Since the inception of the repurchase program, the Board has authorized us to repurchase up to $1.15 billion of our outstanding common stock. During the first quarter of 2020, we repurchased approximately 1.5 million shares of our common stock for approximately $99.0 million. Since the inception of the repurchase program through March 31, 2020, we have repurchased approximately 17.4 million shares of our common stock for approximately $890.5 million. As of March 31, 2020, there remained authorization for us to repurchase approximately $259.5 million of our shares. The repurchase program has no expiration date, does not obligate the Company to acquire any particular amount of common stock, and may be suspended, recommenced, or discontinued at any time or from time to time without prior notice. We may repurchase our shares from time to time to the extent permitted by securities laws and other legal requirements, including provisions in our 2020 Credit Agreement, placing limitations on such repurchases. The repurchase program has been and will be funded from our operations.

Our United Kingdom subsidiary has a defined benefit pension plan covering all eligible employees (the “UK Plan”); however, no individual joining the company after October 31, 2001 may participate in the UK Plan. On May 31, 2010, we curtailed the future accrual of benefits for active employees under such plan. We also sponsor three domestic retirement plans in which participation by new individuals is frozen.

Components of Net Periodic Pension Cost

The components of net periodic pension cost (income) of the UK Plan for the three months ended March 31, 2020 and 2019 were as follows (in thousands): 

	For the three months ended March 31,
	2020				2019
Interest cost	$	1,596			$	2,039
Expected return on plan assets	(2,997		)		(3,116		)
Amortization of unrecognized loss	595				600
Net periodic pension cost (income)	$	(806	)		$	(477	)

The net periodic pension cost associated with the domestic plans was approximately $0.1 million for each of the three months ended March 31, 2020 and 2019.

Employer Contributions

For the three months ended March 31, 2020, our United Kingdom subsidiary contributed approximately $1.0 million to the UK Plan and anticipates contributing an additional $3.5 million during the remainder of 2020. No contributions were made to the domestic plans for the three months ended March 31, 2020.

Government Contracts

As a government contractor, we are subject to U.S. government audits and investigations relating to our operations, fines, penalties and compensatory and treble damages, and possible suspension or debarment from doing business with the government. Based on currently available information, we believe the outcome of ongoing government disputes and investigations will not have a material impact on our financial position, results of operations or liquidity.

Computer System Attack

On February 15, 2020, we became aware on an infiltration and encryption of portions of our information technology network. This attack temporarily disrupted our use of the impacted systems. As part of our investigation into this incident, we have engaged outside security experts. Although our investigation is still ongoing, the procedures performed to date have not identified any

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exfiltration of customer or employee data or any inappropriate access to our accounting or finance systems. The Company maintains insurance coverage for these types of incidents; such policies, however, may not completely provide coverage for, or completely offset the costs of, this infiltration.

Legal Proceedings     

We are involved in several legal proceedings in which damages and claims have been asserted against us. We believe that we have a number of valid defenses to such proceedings and claims and intend to vigorously defend ourselves. We do not believe that any such matters will have a material adverse effect on our financial position, results of operations, or liquidity. We record a loss contingency if the potential loss from a proceeding or claim is considered probable and the amount can be reasonably estimated or a range of loss can be determined. We provide disclosure when it is reasonably possible that a loss will be incurred in excess of any recorded provision. Significant judgment is required in these determinations. As additional information becomes available, we reassess prior determinations and may change our estimates. Additional claims may be asserted against us in the future. Litigation is subject to many uncertainties, and the outcome of litigation is not predictable with assurance. It is possible that a litigation matter for which liabilities have not been recorded could be decided unfavorably to us, and that any such unfavorable decision could have a material adverse effect on our financial position, results of operations or liquidity.

Restructuring expenses        

Restructuring expenses, relating to employee severance obligations, were $0.1 million and $0.3 million for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, the balance of restructuring obligations yet to be paid was $1.1 million. Such remaining amounts will be paid pursuant to our contractual obligations throughout 2020 and 2021. Based on current plans in place, no material expenses in connection with restructuring are expected to be incurred during the remainder of 2020.

The changes in restructuring activity by reportable segment during the three months ended March 31, 2020 and 2019 were as follows (in thousands):    

		United States electrical construction and facilities services segment				United States building services segment				Corporate administration				Total
Balance at December 31, 2018		$	30			$	176			$	1,424			$	1,630
Charges		—				275				—				275
Payments		(30		)		(381		)		(30		)		(441		)
Balance at March 31, 2019		$	—			$	70			$	1,394			$	1,464
Balance at December 31, 2019		$	445			$	412			$	701			$	1,558
Charges		—				69				—				69
Payments		(89		)		(481		)		—				(570		)
Balance at March 31, 2020		$	356			$	—			$	701			$	1,057

The following presents additional cash flow information for the three months ended March 31, 2020 and 2019 (in thousands):  

	For the three months ended March 31,
	2020				2019
Cash paid for:
Interest	$	3,030			$	3,218
Income taxes	$	4,265			$	3,787
Right-of-use assets obtained in exchange for new operating lease liabilities	$	7,652			$	23,956
Right-of-use assets obtained in exchange for new finance lease liabilities	$	882			$	2,973

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We have the following reportable segments: (a) United States electrical construction and facilities services (involving systems for electrical power transmission and distribution; premises electrical and lighting systems; process instrumentation in the refining, chemical processing, food processing, and mining industries; 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; controls and filtration; water and wastewater treatment; central plant heating and cooling; cranes and rigging; millwrighting; and steel fabrication, erection and welding); (c) United States building services; (d) United States industrial services; and (e) United Kingdom building services. The “United States building services” and “United Kingdom building services” segments principally consist of those operations which provide a portfolio of services needed to support the operation and maintenance of customers’ facilities, including commercial and government site-based operations and maintenance; facility maintenance and services, including reception, security, and catering services; outage services to utilities and industrial plants; military base operations support services; mobile mechanical maintenance and services, including maintenance and service of mechanical, electrical, plumbing, and building automation systems; floor care and janitorial services; landscaping, lot sweeping, and snow removal; facilities management; vendor management; call center services; installation and support for building systems; program development, management and maintenance for energy systems; technical consulting and diagnostic services; infrastructure and building projects for federal, state and local governmental agencies and bodies; and small modification and retrofit projects, which services are not generally related to customers’ construction programs. The “United States industrial services” segment principally consists of those operations which provide industrial maintenance and services for refineries, petrochemical plants, and other customers within the oil and gas industry. Services of this segment include refinery turnaround planning and engineering; specialty welding; overhaul and maintenance of critical process units; specialty technical services; on-site repairs, maintenance and service of heat exchangers, towers, vessels, and piping; design, manufacturing, repair, and hydro blast cleaning of shell and tube heat exchangers and related equipment; and other support services for customers within the upstream and midstream sectors.

The following tables present information about industry segments and geographic areas for the three months ended March 31, 2020 and 2019 (in thousands): 

	For the three months ended March 31,
	2020				2019
Revenues from unrelated entities:
United States electrical construction and facilities services	$	525,229			$	528,070
United States mechanical construction and facilities services	834,112				752,409
United States building services	518,083				512,079
United States industrial services	310,031				258,645
Total United States operations	2,187,455				2,051,203
United Kingdom building services	112,377				107,525
Total worldwide operations	$	2,299,832			$	2,158,728
Total revenues:
United States electrical construction and facilities services	$	526,245			$	528,982
United States mechanical construction and facilities services	838,804				759,764
United States building services	532,477				530,596
United States industrial services	316,230				259,275
Less intersegment revenues	(26,301		)		(27,414		)
Total United States operations	2,187,455				2,051,203
United Kingdom building services	112,377				107,525
Total worldwide operations	$	2,299,832			$	2,158,728

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NOTE 14 Segment Information - (Continued)

	For the three months ended March 31,
	2020				2019
Operating income (loss):
United States electrical construction and facilities services	$	43,903			$	42,951
United States mechanical construction and facilities services	45,171				40,985
United States building services	20,838				27,483
United States industrial services	12,257				9,636
Total United States operations	122,169				121,055
United Kingdom building services	5,764				4,141
Corporate administration	(21,869		)		(22,611		)
Restructuring expenses	(69		)		(275		)
Total worldwide operations	105,995				102,310
Other corporate items:
Net periodic pension (cost) income	742				406
Interest expense, net	(2,488		)		(2,823		)
Income before income taxes	$	104,249			$	99,893

	March 31, 2020				December 31, 2019
Total assets:
United States electrical construction and facilities services	$	783,887			$	834,802
United States mechanical construction and facilities services	1,506,313				1,536,325
United States building services	1,022,266				996,664
United States industrial services	902,791				829,793
Total United States operations	4,215,257				4,197,584
United Kingdom building services	190,143				181,147
Corporate administration	430,147				451,627
Total worldwide operations	$	4,835,547			$	4,830,358

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(1)

On March 2, 2020, we entered into a $1.3 billion revolving credit facility (the “2020 Revolving Credit Facility”) and a $300.0 million term loan (the “2020 Term Loan”) (collectively referred to as the “2020 Credit Agreement”). As of March 31, 2020, the amount outstanding under the 2020 Term Loan was $300.0 million, and there were borrowings outstanding of $200.0 million under the 2020 Revolving Credit Facility.

(2)	Represents open purchase orders for material and subcontracting costs related to construction and services contracts. These purchase orders are not reflected in EMCOR’s Consolidated Balance Sheets and should not impact future cash flows as amounts should be recovered through customer billings.

(3)

Primarily represents insurance related liabilities, and liabilities for deferred income taxes, incentive compensation and deferred compensation, classified as other long-term liabilities in the Consolidated Balance Sheets. Cash payments for insurance and deferred compensation related liabilities may be payable beyond three years, however, it is not practical to estimate these payments; therefore, these liabilities are reflected in the 1-3 years payment period. We provide funding to our post retirement plans based on at least the minimum funding required by applicable regulations. In determining the minimum required funding, we utilize current actuarial assumptions and exchange rates to forecast amounts that may be payable for up to five years in the future. In our judgment, minimum funding estimates beyond a five year time horizon cannot be reliably estimated and, therefore, have not been included in the table.

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(1)

In September 2011, our Board of Directors (the “Board”) authorized a share repurchase program allowing us to begin repurchasing shares of our outstanding common stock. Subsequently, the Board has from time to time increased the amount of our common stock that we may repurchase under such program. Since the inception of the repurchase program, the Board has authorized us to repurchase up to $1.15 billion of our outstanding common stock. As of March 31, 2020, there remained authorization for us to repurchase approximately $259.5 million of our shares. No shares have been repurchased by us since the program was announced other than pursuant to such program. The repurchase program has no expiration date, does not obligate the Company to acquire any particular amount of common stock, and may be suspended, recommenced or discontinued at any time or from time to time without prior notice. We may repurchase our shares from time to time to the extent permitted by securities laws and other legal requirements, including provisions in our credit agreement, placing limitations on such repurchases.

(2)	Excludes 31,748 shares surrendered to the Company by participants in our share-based compensation plans to satisfy minimum tax withholdings for common stock issued under such plans.

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