We are one of the largest electrical and mechanical construction and facilities services firms in the United States, Canada, and the United Kingdom and in the world. We provide services to a broad range of commercial, industrial, utility and institutional customers through approximately 75 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

The following table presents selected  financial data for the three months ended
September  30, 2009 and 2008 (in  thousands,  except  percentages  and per share
data):

                                                     For the three months ended
                                                            September 30,
                                                     ---------------------------
                                                        2009             2008
                                                     ----------       ----------
Revenues                                             $1,371,985       $1,720,349
  Revenues (decrease) increase from prior year            (20.2)%           14.6%
Operating income                                     $   67,260       $   78,638
  Operating income as a percentage of revenues              4.9%             4.6%
Net income attributable to EMCOR Group, Inc.         $   39,986       $   48,635
Diluted earnings per common share                    $     0.59       $     0.72

The results of our operations for the third quarter of 2009 reflect decreases in revenues, gross profit, operating income, net income and diluted earnings per common share compared to the year ago quarter; however, gross profit margin (gross profit as a percentage of revenues) and operating margin (operating income as a percentage of revenues) increased compared to the year ago quarter. The decrease in revenues for the 2009 third quarter, when compared to the prior year's third quarter, was primarily attributable to: (a) a decline in work performed on domestic commercial and hospitality construction projects, generally as a result of the economic slowdown, (b) a decline in revenues arising from the mobile mechanical services group of our United States facilities services segment and (c) the unfavorable exchange rate effects of the weakening British pound and Canadian dollar against the United States dollar. During the third quarter of 2009, companies we acquired in 2009 and 2008, that are within our United States facilities services segment, contributed $24.3 million to revenues and $0.6 million to operating income (net of $1.1 million of amortization expense attributable to identifiable intangible assets included in cost of sales and selling, general and administrative expenses). The decrease in operating income was a result of lower operating income from our United States electrical construction and facilities services and United States facilities services segments. These decreases were partially offset by improvement in operating income primarily as a result of: (a) reduced selling, general and administrative expenses and (b) the turnaround in the performance of one of our operations within our United States mechanical construction and facilities services segment, which operation had experienced large operating losses in the third quarter of 2008. The operating income of our Canada construction and facilities services segment also improved for the 2009 third quarter compared to the year ago quarter.

The improvement in operating margin for the 2009 third quarter, when compared to the prior year's third quarter, was in large part due to the increase in the gross profit margin in our domestic construction segments, as well as improved operating performance by our international operations. The increase in the gross profit margin for the 2009 third quarter, when compared to the prior year's third quarter, was primarily the result of (a) improved margins within our United States electrical construction and facilities services segment as a result of the resolution of uncertainties on projects nearing or at completion, and improved productivity, (b) the turnaround in the performance of one of our operations, which had experienced large operating losses in 2008, within our United States mechanical construction and facilities services segment and (c) the improved performance of our international operations. These increases were partially offset by lower gross profit margin in our United States facilities services segment as a result of lower margins, primarily in its industrial services operations.

Cash provided by operating activities increased by $72.5 million for the first nine months of 2009, compared to the first nine months of 2008, primarily due to changes in our working capital. Cash used for investing activities decreased by $33.4 million for the first nine months of 2009, compared to the first nine months of 2008, primarily due to a $32.3 million decrease in payments for acquisitions of businesses, identifiable intangible assets and payments pursuant to related earn-out agreements. Cash used in financing activities decreased by $24.5 million during the first nine months of 2009, compared to the prior year's first nine months, primarily due to repayment of a portion of our long-term indebtedness in the first nine months of 2008. Interest expense for the first nine months of 2009 was $5.6 million, a $3.5 million decrease compared to the first nine months of 2008. The decrease in interest expense was related to the reduction in our long-term indebtedness and lower interest rates as compared to 2008. Interest income for the first nine months of 2009 was $3.4 million, a $4.1 million decrease compared to the first nine months of 2008. The decrease in interest income was primarily related to lower interest rates earned on our invested cash balances.

We completed one acquisition during the first nine months of 2009 for an immaterial amount. The acquired company, which provides mobile mechanical services, has been included in our United States facilities services segment and expands our service capabilities in a geographical area in which we had been already operating. The acquisition is not material to our results of operations for the periods presented.

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; outage services to utilities and industrial plants; 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; retrofit projects to comply with clean air laws; 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 construction and facilities services 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.

Results of Operations

Revenues

The following  tables  present our  operating  segment  revenues from  unrelated
entities and their  respective  percentages  of total  revenues  (in  thousands,
except for percentages):

                                                                       For the three months ended September 30,
                                                                     --------------------------------------------
                                                                                    % of                    % of
                                                                        2009        Total        2008       Total
                                                                     ----------     -----     ----------    -----
Revenues:
   United States electrical construction and facilities services     $  309,820      23%      $  446,742     26%
   United States mechanical construction and facilities services        491,686      36%         625,599     36%
   United States facilities services                                    352,365      26%         365,153     21%
                                                                     ----------               ----------
   Total United States operations                                     1,153,871      84%       1,437,494     84%
   Canada construction and facilities services                           80,986       6%         114,861      7%
   United Kingdom construction and facilities services                  137,128      10%         167,994     10%
   Other international construction and facilities services                  --      --               --     --
                                                                     ----------               ----------
   Total worldwide operations                                        $1,371,985     100%      $1,720,349    100%
                                                                     ==========               ==========

                                                                        For the nine months ended September 30,
                                                                     --------------------------------------------
                                                                                    % of                    % of
                                                                        2009        Total        2008       Total
                                                                     ----------     -----     ----------    -----
Revenues:
   United States electrical construction and facilities services     $  956,362      23%      $1,277,935     25%
   United States mechanical construction and facilities services      1,546,294      37%       1,854,498     36%
   United States facilities services                                  1,081,808      26%       1,121,815     22%
                                                                     ----------               ----------
   Total United States operations                                     3,584,464      86%       4,254,248     83%
   Canada construction and facilities services                          231,203       6%         317,061      6%
   United Kingdom construction and facilities services                  373,624       9%         533,415     10%
   Other international construction and facilities services                  --      --               --     --
                                                                     ----------               ----------
   Total worldwide operations                                        $4,189,291     100%      $5,104,724    100%
                                                                     ==========               ==========

As described below in more detail, our revenues for the three months ended September 30, 2009 decreased to $1.4 billion compared to $1.7 billion of revenues for the three months ended September 30, 2008, and our revenues for the nine months ended September 30, 2009 decreased to $4.2 billion compared to $5.1 billion for the nine months ended September 30, 2008. The decrease in revenues for the three and nine month periods ended September 30, 2009, compared to the same periods in 2008, extended across all of our business segments and was primarily attributable to: (a) lower levels of work in our United States electrical construction and facilities services and mechanical construction and facilities services segments, most notably on commercial and hospitality projects, and generally as a result of the economic slowdown, (b) lower revenues from our Canadian operations as a result of fewer contracts in the automotive, energy and industrial markets and (c) the unfavorable exchange rate effects of the weakening British pound and Canadian dollar against the United States dollar. This decrease was partially offset by revenues for the three and nine months ended September 30, 2009 of $24.3 million and $89.0 million, respectively, attributable to companies acquired in 2009 and 2008, which are reported within our United States facilities services and United States mechanical construction and facilities services segments.

Our backlog at September 30, 2009 was $3.39 billion compared to $4.42 billion of backlog at September 30, 2008. Our backlog was $4.00 billion at December 31, 2008. Backlog decreases as we perform work on existing contracts and increases with awards of new contracts. The decrease in our United States electrical construction and facilities services and our United States mechanical construction and facilities services segments' backlog at September 30, 2009, compared to such backlog at September 30, 2008, was primarily due to a decrease in awards within the commercial, hospitality and industrial construction markets, partially offset by an increase in awards in the institutional construction market. 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 the next 12 months of revenues.

Revenues of our United States electrical construction and facilities services segment for the three months ended September 30, 2009 decreased by $136.9 million compared to revenues for the three months ended September 30, 2008. Revenues of this segment for the nine months ended September 30, 2009 decreased by $321.6 million compared to revenues for the nine months ended September 30, 2008. The decrease in revenues for both periods was primarily attributable to lower levels of work on commercial, industrial and hospitality projects, most notably in the New York, greater Chicago (including northern Indiana), Las Vegas, and Washington D.C. markets, as a result of the recession and tight credit markets. These decreases in revenues for both periods were partially offset by an increase in revenues from healthcare related projects.

Revenues of our United States mechanical construction and facilities services segment for the three months ended September 30, 2009 decreased by $133.9 million compared to revenues for the three months ended September 30, 2008. Revenues of this segment for the nine months ended September 30, 2009 decreased by $308.2 million compared to revenues for the nine months ended September 30, 2008. The decrease in revenues for both periods was primarily attributable to a decrease in work on hospitality projects, most notably in the Las Vegas market, and commercial projects. The decreases in revenues for both periods were partially offset by an increase in revenues from work performed on industrial and healthcare projects. Additionally, the decrease in revenues for the nine months ended September 30, 2009 was partially offset by revenues of $2.2 million from a company acquired during the first quarter of 2008.

Our United States facilities services revenues decreased by $12.8 million for the three months ended September 30, 2009 compared to revenues for the three months ended September 30, 2008, and by $40.0 million for the nine months ended September 30, 2009 compared to revenues for the nine months ended September 30, 2008. The decreases in revenues for the three and nine months ended September 30, 2009 were primarily attributable to lower revenues from our mobile mechanical services group as a result of lower revenues from small discretionary projects, controls work and repair service due to the economic downturn and the cooler than normal summer in some of our major markets. The decrease in revenues for the nine months ended September 30, 2009 was also attributable to lower revenues from our industrial services operations, (i) which benefited in 2008 from a significant turnaround/expansion contract at a refinery and (ii) which experienced adverse industry conditions that led to lower demand for our shop and field refinery and petrochemical services. These decreases in revenues for the three and nine month periods ended September 30, 2009 were partially offset by: (a) revenues of $24.3 million and $86.8 million, respectively, from companies acquired in 2009 and 2008, which perform maintenance services for utility and industrial plants and perform mobile mechanical services and (b) increases in revenues from our site-based government facilities services operations.

Revenues of our Canada construction and facilities services segment decreased by $33.9 million for the three months ended September 30, 2009 compared to revenues for the three months ended September 30, 2008. Revenues of this segment decreased by $85.9 million for the nine months ended September 30, 2009 compared to revenues for the nine months ended September 30, 2008. The decrease in revenues for both periods was primarily attributable to fewer contracts for automotive, energy and industrial projects. In addition, $4.4 million and $33.8 million of the decrease in revenues for the three and nine months ended September 30, 2009, respectively, was a result of the weakening of the Canadian dollar against the United States dollar. The decreases in revenues were partially offset by more work on commercial and healthcare related projects.

Our United Kingdom construction and facilities services revenues decreased by $30.9 million for the three months ended September 30, 2009 compared to revenues for the three months ended September 30, 2008. Approximately $21.1 million of this decrease in revenues was a result of the weakening of the British pound against the United States dollar. Revenues of this segment decreased by $159.8 million for the nine months ended September 30, 2009 compared to revenues for the nine months ended September 30, 2008. Approximately $97.6 million of this decrease in revenues was a result of the weakening of the British pound against the United States dollar. In addition, the decrease in revenues for both periods was partially attributable to a decrease in revenues relating to rail contracts as a result of the planned strategy to exit this market and lower revenues from the United Kingdom's facilities services business.

Other international construction and facilities services activities consist of operations currently operating only in the Middle East. All of the current projects in this market are being performed through a joint venture. The results of the joint venture were accounted for under the equity method.

Cost of sales and Gross profit

The following tables present our cost of sales, gross profit (revenues less cost of sales) and gross profit margin (in thousands, except for percentages):

                                                For the three months ended       For the nine months ended
                                                        September 30,                  September 30,
                                               -----------------------------   -----------------------------
                                                  2009               2008         2009               2008
                                               ----------         ----------   ----------         ----------
Cost of sales                                  $1,166,740         $1,496,003   $3,576,003         $4,465,242
Gross profit                                   $  205,245         $  224,346   $  613,288         $  639,482
Gross profit, as a percentage of revenues            15.0%              13.0%        14.6%              12.5%

Our gross profit decreased by $19.1 million for the three months ended September 30, 2009 compared to the three months ended September 30, 2008. Gross profit decreased by $26.2 million for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008. The decrease in gross profit for both periods was primarily attributable to lower gross profit from (a) our industrial services and mobile mechanical operations within our United States facilities services segment due to lower levels of work and (b) our international operations due to the unfavorable exchange rate effects of the weakening British pound and Canadian dollar against the United States dollar. In addition, the decrease in gross profit for the third quarter of 2009, compared to the third quarter of 2008, was primarily attributable to lower volume of work in our United States electrical construction and facilities services and mechanical construction and facilities services segments, most notably on commercial projects. The overall decrease in gross profit for the nine months ended September 30, 2009 was partially offset by increases in the gross profit contributed by our United States electrical construction and facilities services and mechanical construction and facilities services segments and by companies acquired in 2009 and 2008. In addition, the overall decrease in gross profit for the three months ended September 30, 2009 was partially offset by increases in the gross profit contributed by our United States mechanical construction and facilities services segment. For the three and nine months ended September 30, 2009, companies acquired in 2009 and 2008 contributed $2.2 million and $8.4 million to gross profit, net of amortization expense of $0.7 million and $2.5 million, respectively.

Our gross profit margin was 15.0% and 13.0% for the three months ended September 30, 2009 and 2008, respectively. Our gross profit margin was 14.6% and 12.5% for the nine months ended September 30, 2009 and 2008, respectively. The increase in the gross profit margin for the three months ended September 30, 2009 was primarily the result of (a) improved margins within our United States electrical construction and facilities services segment as a result of the resolution of uncertainties on projects at or nearing completion, and improved productivity,
(b) the turnaround in the performance of one of our operations, which had experienced large operating losses in 2008 within our United States mechanical construction and facilities services segment and (c) the improved performance of our international operations. In addition, the increase in the gross profit margin for the nine months ended September 30, 2009 was partially attributable to a charge to expense in 2008 of $7.9 million in connection with an adverse ruling in a construction lawsuit (the "UOSA Action") within our United States mechanical construction and facilities services segment. (The UOSA Action was concluded in the third quarter of 2009, and as a consequence, the Company is liable to the other party to the litigation for approximately $0.7 million.) These increases in both periods were partially offset by lower gross profit margin in our United States facilities services segment as a result of lower margins in our industrial services operations.

Selling, general and administrative expenses

The following tables present our selling, general and administrative expenses and selling, general and administrative expenses as a percentage of revenues (in thousands, except for percentages):

                                                For the three months ended       For the nine months ended
                                                        September 30,                   September 30,
                                               -----------------------------   -----------------------------
                                                  2009               2008         2009               2008
                                               ----------         ----------   ----------         ----------
Selling, general and administrative expenses   $  137,895         $  145,708   $  402,664         $  437,774
Selling, general and administrative expenses,
  as a percentage of revenues                        10.1%               8.5%         9.6%               8.6%

Our selling, general and administrative expenses for the three months ended September 30, 2009 decreased by $7.8 million to $137.9 million compared to $145.7 million for the three months ended September 30, 2008, and decreased by $35.1 million to $402.7 million for the nine months ended September 30, 2009 compared to $437.8 million for the comparable 2008 period. Selling, general and administrative expenses as a percentage of revenues were 10.1% and 9.6% for the three and nine months ended September 30, 2009, compared to 8.5% and 8.6% for the three and nine months ended September 30, 2008, respectively. The decrease in selling, general and administrative expenses for the three and nine months ended September 30, 2009, compared to the three and nine months ended September 30, 2008, was primarily due to: (a) lower incentive compensation accruals as a result of reduced forecasted earnings and lower staff levels in 2009 compared to 2008, (b) lower employee costs, such as salaries and employee benefits, as a result of downsizing of staff at numerous locations, (c) lower discretionary spending and (d) a $1.9 million and $10.1 million decrease as a result of changes in the rates of exchange of British pounds and Canadian dollars for United States dollars due to the weakening of the British pound and Canadian dollar, respectively. These decreases in selling, general and administrative expenses were partially offset by (a) $1.6 million and $6.4 million of expenses for the three and nine months ended September 30, 2009, respectively, directly related to companies acquired in 2009 and 2008, including amortization expense of $0.4 million and $1.4 million, respectively, and (b) a $2.9 million increase in our provision for doubtful accounts for the nine months ended September 30, . . .