16 unchanged sentences
For example, we are experiencing lead times significantly in excess of normal levels while also experiencing the effects of inflation through increases in fuel, material, and other commodity prices.
−Removed: These disruptions have manifested themselves most notably through project delays or scheduling impacts and reduced labor productivity and efficiency, particularly within our United States construction segments and our United States building services segment.
+Added: These disruptions have manifested themselves through project delays or scheduling impacts and reduced labor productivity and efficiency, particularly within our United States construction segments and our United States building services segment.
+Added: In addition, the market for trade labor remains tight in many of the regions in which we operate and the conflict in Ukraine has added another layer of uncertainty, especially with respect to energy costs.
In response to these challenges, we continue to strive to more effectively manage our business through enhanced labor planning and project scheduling, increased pricing to the extent contractually permitted, and by leveraging our relationships with our suppliers and customers.
−Removed: However, the impact of these disruptions continues to evolve and the conflict in Ukraine has added another layer of uncertainty, especially with respect to energy costs.
−Removed: In addition, the market for trade labor remains tight in many of the regions in which we operate.
−Removed: There can be no assurance that our actions will serve to mitigate such impacts in future periods.
−Removed: Further, while we believe our remaining performance obligations are firm, and our customers have not provided us with any indications that they no longer wish to proceed with planned projects, prolonged delays in the receipt of critical equipment could impact our ability to convert such remaining performance obligations to revenues in the near term, or result in our customers seeking to terminate existing or pending agreements.
+Added: While we believe the actions we have taken continue to be effective, as evidenced in part by the sequential improvement in our operating performance throughout each quarter of 2022, the impact of these disruptions continues to evolve and there can be no assurance that our actions will serve to mitigate such impacts in future periods.
+Added: Further, while we believe our remaining performance obligations are firm, and we have not experienced any material project cancellations to date, prolonged delays in the receipt of critical equipment could impact our ability to convert such remaining performance obligations to revenues in the near term, or result in our customers seeking to terminate existing or pending agreements.
+Added: Lastly, rising interest rates may cause a decline in our customers’ capital spending and, therefore, the demand for our services.
Any of these events could have a material adverse effect on our business, financial condition, and/or results of operations.
−Removed: The following table presents selected financial data for the three months ended June 30, 2022 and 2021 (in thousands, except percentages and per share data):
+Added: The following table presents selected financial data for the three months ended September 30, 2022 and 2021 (in thousands, except percentages and per share data):
For the three months ended
+Added: September 30,
Revenues $ 2,826,361 $ 2,521,672
7 unchanged sentences
Diluted earnings per common share $ 2.16 $ 1.85
−Removed: Revenues of $2.71 billion for the quarter ended June 30, 2022 represent an increase of 11.1% from revenues of $2.44 billion for the quarter ended June 30, 2021.
−Removed: Demand for our services continues to be strong and, as described in further detail below, we experienced revenue growth within all of our reportable segments except for our United Kingdom building services segment, the reduction in revenues of which was largely due to unfavorable exchange rate movements during 2022.
−Removed: During the second quarter of 2022, a company acquired in 2021 generated incremental revenues of approximately $33.7 million.
−Removed: Operating income for the quarter ended June 30, 2022 was $137.6 million, or 5.1% of revenues, compared to operating income of $133.4 million, or 5.5% of revenues, for the quarter ended June 30, 2021.
−Removed: The increase in operating income was a result of the aforementioned increase in revenues, while the decrease in operating margin was driven by a reduction in gross profit margin, predominantly within our United States construction segments, partially due to a change in project mix.
−Removed: In addition, as described in further detail below, gross profit margin for each of our construction segments was adversely impacted by supply chain disruptions and delays, which contributed to:
−Removed: (a) certain project losses recognized in the second quarter of 2022, which negatively impacted our consolidated operating margin by 40 basis points, and (b) reduced labor productivity when compared to the prior year.
−Removed: These declines in gross profit margin were partially offset by a reduction in the ratio of selling, general and administrative expenses to revenues as we were able to leverage our overhead cost structure during this period of revenue growth.
−Removed: Net income of $100.7 million, or $1.99 per diluted share, for the quarter ended June 30, 2022, compares favorably to net income of $97.4 million, or $1.78 per diluted share, for the quarter ended June 30, 2021.
−Removed: In addition to the increase in operating income referenced above, our diluted earnings per share for the second quarter of 2022 benefited from a reduced weighted average share count given the impact of common stock repurchases made by us throughout 2021 and 2022.
+Added: Revenues of $2.83 billion for the quarter ended September 30, 2022 set a new quarterly record for the Company and represent an increase of 12.1% from revenues of $2.52 billion for the quarter ended September 30, 2021.
+Added: Demand for our services continues to be strong and, as described in further detail below, we experienced revenue growth within all of our reportable segments except for our United Kingdom building services segment, the reduction in revenues of which was entirely due to unfavorable exchange rate movements during 2022, which more than offset revenue growth experienced on a local currency basis.
+Added: Companies acquired in 2022 and 2021, the results of operations of which are included within our United States electrical construction and facilities services segment, generated incremental revenues of approximately $32.8 million during the three months ended September 30, 2022.
+Added: Operating income for the quarter ended September 30, 2022 was $150.1 million, a $12.7 million increase compared to operating income of $137.4 million for the quarter ended September 30, 2021.
+Added: Contributing to this increase in operating income was improved operating results from each of our reportable segments, other than our United States electrical construction and facilities services segment.
+Added: Operating margin was 5.3% and 5.4% for the quarters ended September 30, 2022 and 2021, respectively.
+Added: The slight decrease in operating margin period over period was driven by a reduction in gross profit margin, predominantly within our United States electrical construction and facilities services segment, which was almost entirely offset by a reduction in the ratio of selling, general and administrative expenses to revenues as we continue to leverage our overhead cost structure during periods of revenue growth.
+Added: Refer to the operating income section below for further discussion regarding the operating performance of each of our reportable segments.
+Added: Net income of $105.8 million, or $2.16 per diluted share, for the quarter ended September 30, 2022, compares favorably to net income of $99.7 million, or $1.85 per diluted share, for the quarter ended September 30, 2021.
+Added: In addition to the increase in operating income referenced above, our diluted earnings per share for the third quarter of 2022 benefited from a reduced weighted average share count given the impact of common stock repurchases made by us throughout 2021 and 2022.
Impact of Acquisitions
1 unchanged sentence
The amounts discussed reflect the acquired companies’ operating results in the current reported period only for the time period these entities were not owned by EMCOR in the comparable prior reported period.
−Removed: During the first half of 2022, we acquired three companies, each for an immaterial amount.
−Removed: Two companies, the results of operations of which have been included within our United States mechanical construction and facilities services segment, provide fire protection services in the Northeastern and Southern regions of the United States, respectively.
−Removed: The third company, the results of operations of which have been included within our United States building services segment, specializes in building automation and controls in the Southwestern region of the United States.
−Removed: The results of operations of each such company were de minimis.
+Added: During the first nine months of 2022, we acquired four companies for total consideration of $93.2 million.
+Added: Such acquisitions include:
+Added: (a) a company that provides electrical construction services in the Greater Boston area, the results of operations of which have been included in our United States electrical construction and facilities services segment, and (b) three companies, that enhance our presence in geographies where we have existing operations, the results of operations of which were de minimis, consisting of:
+Added: (i) two companies that provide fire protection services in the Northeastern and Southern regions of the United States, respectively, and that have been included within our United States mechanical construction and facilities services segment, and (ii) a company that specializes in building automation and controls in the Southwestern region of the United States and that has been included within our United States building services segment.
We acquired eight companies during calendar year 2021 for total consideration of $131.2 million.
2 unchanged sentences
(i) a company that provides mechanical services within the Southern region of the United States and (ii) a company that provides fire protection services in the Midwestern region of the United States, (b) two companies that provide electrical construction services for a broad array of customers in the Midwestern region of the United States, the results of operations of which have been included in our United States electrical construction and facilities services segment, and (c) four companies included within our United States building services segment, consisting of:
−Removed: (i) a company that provides mobile mechanical services across North Texas and (ii) three companies, the results of operations of which were de minimis, that bolster our presence in geographies where we have existing operations and provide either mobile mechanical services or building automation and controls solutions.
+Added: (i) a company that provides mobile mechanical services across North Texas and (ii) three companies, the results of operations of which were de minimis, that enhance our presence in geographies where we have existing operations and provide either mobile mechanical services or building automation and controls solutions.
Results of Operations
The following tables present our operating segment revenues from unrelated entities and their respective percentages of total revenues (in thousands, except for percentages):
−Removed: For the three months ended June 30,
+Added: For the three months ended September 30,
Total 2021 % of
6 unchanged sentences
Total operations $ 2,826,361 100 % $ 2,521,672 100 %
−Removed: For the six months ended June 30,
+Added: For the nine months ended September 30,
Total 2021 % of
6 unchanged sentences
Total operations $ 8,126,298 100 % $ 7,263,387 100 %
−Removed: As described below in more detail, our revenues for the second quarter of 2022 increased to $2.71 billion compared to $2.44 billion for the second quarter of 2021, and our revenues for the six months ended June 30, 2022 increased to $5.30 billion compared to $4.74 billion for the six months ended June 30, 2021.
−Removed: We experienced increases in revenues from all of our reportable segments, except for our United Kingdom building services segment, the reduction in revenues of which was largely due to unfavorable exchange rate movements during 2022.
−Removed: Companies acquired in 2022 and 2021 generated incremental revenues of approximately $33.7 million and $83.2 million for the three and six months ended June 30, 2022, respectively.
−Removed: Revenues of our United States electrical construction and facilities services segment were $564.1 million and $1,086.1 million for the three and six months ended June 30, 2022, respectively, compared to revenues of $492.1 million and $951.5 million for the three and six months ended June 30, 2021, respectively.
−Removed: This segment’s results for the three and six months ended June 30, 2022 included $33.7 million and $68.6 million, respectively, of incremental revenues generated by companies acquired in 2021.
+Added: As described below in more detail, our revenues for the third quarter of 2022 increased to $2.83 billion compared to $2.52 billion for the third quarter of 2021, and our revenues for the nine months ended September 30, 2022 increased to $8.13 billion compared to $7.26 billion for the nine months ended September 30, 2021.
+Added: For both 2022 periods presented, we experienced increases in revenues from all of our reportable segments, except for our United Kingdom building services segment, the reduction in revenues of which was entirely due to unfavorable exchange rate movements during 2022, which more than offset revenue growth experienced on a local currency basis.
+Added: Companies acquired in 2022 and 2021 generated incremental revenues of approximately $32.8 million for the three months ended September 30, 2022, and incremental revenues of approximately $116.0 million for the nine months ended September 30, 2022.
+Added: Revenues of our United States electrical construction and facilities services segment were $633.4 million and $1,719.5 million for the three and nine months ended September 30, 2022, respectively, compared to revenues of $531.0 million and $1,482.5 million for the three and nine months ended September 30, 2021, respectively.
+Added: This segment’s results for the three and nine months ended September 30, 2022 included $32.8 million and $101.4 million, respectively, of incremental revenues from acquired companies.
Excluding the impact of acquisitions, revenues of this segment increased by $69.6 million and $135.6 million, respectively, primarily as a result of an increase in revenues from:
−Removed: (a) the commercial market sector, inclusive of both certain telecommunication and technology projects as well as traditional commercial construction projects, (b) the healthcare market sector due to large project activity, and (c) transmission and distribution projects, including those to support sustainable energy solutions such as solar and wind.
−Removed: These revenue increases were partially offset by a decrease in revenues from the institutional market sector during both the three and six months ended June 30, 2022, due to the completion or substantial completion of various projects which were performed in the prior year.
−Removed: Our United States mechanical construction and facilities services segment revenues for the three months ended June 30, 2022 were $1,066.3 billion, a $97.7 million increase compared to revenues of $968.7 million for the three months ended June 30, 2021.
−Removed: Revenues of this segment for the six months ended June 30, 2022 were $2,066.8 million, a $183.7 million increase compared to revenues of $1,883.2 million for the six months ended June 30, 2021.
−Removed: The increase in this segment’s revenues for both periods was attributable to revenue growth within the majority of the market sectors in which we operate, including:
−Removed: (a) the manufacturing market sector, driven by certain large food processing projects, (b) the water and wastewater market sector, given increased project activity within the Southern region of the United States, (c) the institutional market sector, due to
−Removed: increased project activity within the Midwestern and Northeastern regions of the United States, (d) the commercial market sector, as a result of increased demand for our mechanical construction and/or fire protection services by certain customers engaged in the design and manufacturing of semiconductors as well as customers within the biotech, life-sciences, and pharmaceutical industries, and (e) the healthcare market sector, due to increased mechanical system retrofits and installations as our healthcare customers seek to upgrade their existing facilities or build new facilities.
−Removed: In addition, revenues of this segment for the six months ended June 30, 2022 benefited from increased demand for our fire protection services within various warehousing and distribution facilities to support the build-out of our customers’ e-commerce supply chains.
−Removed: Revenues of our United States building services segment were $677.8 million and $1,305.6 million for the three and six months ended June 30, 2022, respectively, compared to revenues of $611.8 million and $1,179.9 million for the three and six months ended June 30, 2021, respectively.
−Removed: Excluding incremental acquisition revenues within this segment’s mobile mechanical services division of $14.6 million during the six months ended June 30, 2022, this segment’s revenue growth for both periods was primarily attributable to:
−Removed: (a) its commercial site-based services division, due to the award of facilities maintenance contracts with new customers, as well as scope or site expansion and increased project work with existing customers, and (b) its mobile mechanical services division, due to:
−Removed: (i) greater service repair and maintenance volumes, partially as a result of incremental repair opportunities driven by supply chain delays, which have created a need to extend the life of existing equipment in instances when replacement equipment is not readily available, and (ii) an increase in demand for HVAC system retrofits and building automation and controls services, partially as our customers continue to seek ways to improve the energy efficiency or indoor air quality of their facilities.
−Removed: Revenues of our United States industrial services segment for the three months ended June 30, 2022 were $284.5 million, a $49.4 million increase compared to revenues of $235.2 million for the three months ended June 30, 2021.
−Removed: Revenues of this segment for the six months ended June 30, 2022 were $595.3 million, a $124.7 million increase compared to revenues of $470.5 million for the six months ended June 30, 2021.
+Added: (a) the commercial market sector, predominantly within the telecommunications sub-market sector, inclusive of our data center projects, and the technology sub-market sector,
+Added: (b) the manufacturing market sector, driven by an increase in:
+Added: (i) transmission and distribution projects, including those to support sustainable energy solutions such as solar and wind, (ii) revenues from contracts with certain of our other energy sector customers, and (iii) food processing construction projects within the Midwestern region of the United States, and (c) the healthcare market sector due to large project activity.
+Added: Revenues of this segment for the nine months ended September 30, 2022 additionally benefited from an increase in traditional commercial construction projects.
+Added: For the three and nine months ended September 30, 2022, the aforementioned revenue increases were partially offset by a decrease in revenues from the transportation market sector, and for the nine months ended September 30, 2022, such revenue increase was also partially offset by a reduction in institutional market sector activity, in each case, due to the completion or substantial completion of various projects.
+Added: Our United States mechanical construction and facilities services segment revenues for the three months ended September 30, 2022 were $1,117.4 million, a $113.0 million increase compared to revenues of $1,004.4 million for the three months ended September 30, 2021.
+Added: Revenues of this segment for the nine months ended September 30, 2022 were $3,184.2 million, a $296.6 million increase compared to revenues of $2,887.6 million for the nine months ended September 30, 2021.
+Added: The increase in this segment’s revenues for both periods was primarily attributable to revenue growth within:
+Added: (a) the commercial market sector, as a result of increased demand for:
+Added: (i) our mechanical construction and/or fire protection services by certain customers engaged in the design and manufacturing of semiconductors as well as customers within the biotech, life-sciences, and pharmaceutical industries, and (ii) our fire protection services within various warehousing and distribution facilities to support the build-out of our customers’ e-commerce supply chains, (b) the institutional market sector, due to project activity throughout several of the regions in which we operate, and (c) the water and wastewater market sector, given greater project activity within the Southern region of the United States.
+Added: While commercial market sector revenues of this segment for the nine months ended September 30, 2022 reflected a slight decrease within the telecommunications sub-market sector, we experienced notable growth in telecommunications revenues during the three months ended September 30, 2022 due to an increase in construction activity on several data center projects.
+Added: The results of this segment for the nine months ended September 30, 2022 additionally included incremental revenues from the manufacturing market sector, driven by certain large food processing projects.
+Added: Revenues of our United States building services segment were $710.7 million and $2,016.3 million for the three and nine months ended September 30, 2022, respectively, compared to revenues of $624.6 million and $1,804.5 million for the three and nine months ended September 30, 2021, respectively.
+Added: Excluding incremental acquisition revenues within this segment’s mobile mechanical services division of $14.6 million during the nine months ended September 30, 2022, this segment’s revenue growth for both periods was primarily attributable to:
+Added: (a) its mobile mechanical services division, due to:
+Added: (i) increased project work, including incremental demand for HVAC system retrofits and building automation and controls services, partially as our customers continue to seek ways to improve the energy efficiency or indoor air quality of their facilities, and (ii) greater service repair and maintenance volumes, partially as a result of incremental repair opportunities driven by supply chain delays, which have created a need to extend the life of existing equipment in instances when replacement equipment is not readily available, and (b) its commercial site-based services division, due to the award of facilities maintenance contracts with new customers, as well as scope or site expansion and increased project work with existing customers.
+Added: In addition, for the three months ended September 30, 2022, revenues of this segment’s mobile mechanical services division were positively impacted by increased demand for HVAC repair and maintenance services during the peak cooling season, when compared to the prior year period.
+Added: Revenues of our United States industrial services segment for the three months ended September 30, 2022 were $247.2 million, compared to revenues of $232.2 million for the three months ended September 30, 2021.
+Added: Revenues of this segment for the nine months ended September 30, 2022 were $842.5 million, compared to revenues of $702.8 million for the nine months ended September 30, 2021.
While there remains significant disruption and uncertainty within the broader oil and gas industry, most notably within the upstream and midstream energy sectors, we began to experience a resumption in downstream energy demand within this segment during the second half of 2021.
−Removed: Such increased demand continued into the first half of 2022 and resulted in growth in revenues from:
−Removed: (a) this segment’s field services operations, due to:
−Removed: (i) a more normalized spring turnaround season when compared to the prior year, and (ii) an increase in maintenance and capital project activity, and (b) this segment’s shop services operations, as a result of greater new build heat exchanger sales and an increase in maintenance, repair, and hydro blast cleaning services.
−Removed: Our United Kingdom building services segment revenues were $114.5 million and $246.0 million for the three and six months ended June 30, 2022, respectively, compared to revenues of $129.9 million and $256.6 million for the three and six months ended June 30, 2021, respectively.
−Removed: The decrease in this segment’s revenues for both periods was predominantly a result of unfavorable exchange rate movements for the British pound versus the United States dollar, which negatively impacted this segment’s revenues by $12.5 million and $16.4 million for the three and six months ended June 30, 2022, respectively.
−Removed: Excluding the impact of foreign exchange rate movements, this segment’s revenues for the six months ended June 30, 2022 increased as a result of growth in project activities with existing customers, primarily within the commercial market sector, including certain telecommunication projects.
+Added: Such increased demand continued into the first nine months of 2022, resulting in revenue growth within this segment.
+Added: Specifically, more normalized turnaround project demand and an increase in maintenance and capital project activity, when compared to the prior year, has resulted in increased revenues from this segment’s field services operations during the three and nine months ended September 30, 2022.
+Added: In addition, although reduced slightly during the third quarter of 2022, revenues of this segment’s shop services operations have increased for the first nine months of 2022, as a result of greater new build heat exchanger sales and an increase in maintenance, repair, and hydro blast cleaning services.
+Added: Our United Kingdom building services segment revenues were $117.7 million and $363.7 million for the three and nine months ended September 30, 2022, respectively, compared to revenues of $129.5 million and $386.1 million for the three and nine months ended September 30, 2021, respectively.
+Added: The decrease in this segment’s revenues for both periods was entirely a result of unfavorable exchange rate movements for the British pound versus the United States dollar, which negatively impacted this segment’s revenues by $20.2 million and $36.6 million for the three and nine months ended September 30, 2022, respectively.
+Added: Excluding the impact of foreign exchange rate movements, this segment’s revenues for each 2022 period increased as a result of growth in project activities with existing customers, primarily within the commercial market sector, including certain telecommunication projects.
Cost of sales and gross profit
1 unchanged sentence
For the three months ended
−Removed: June 30, For the six months ended
+Added: September 30, For the nine months ended
+Added: September 30,
2022 2021 2022 2021
2 unchanged sentences
Gross profit margin 14.6 % 15.1 % 14.1 % 15.1 %
−Removed: Our gross profit for the three months ended June 30, 2022 was $383.0 million, or 14.1% of revenues, compared to gross profit of $376.3 million, or 15.4% of revenues, for the three months ended June 30, 2021.
−Removed: Gross profit for the six months ended June 30, 2022 was $735.6 million, or 13.9% of revenues, compared to gross profit of $717.4 million, or 15.1% of revenues, for the six months ended June 30, 2021.
−Removed: Companies acquired in 2022 and 2021 generated incremental gross profit of approximately $5.4 million and $11.7 million for the three and six months ended June 30, 2022, respectively.
+Added: Our gross profit for the three months ended September 30, 2022 was $413.2 million, or 14.6% of revenues, compared to gross profit of $381.3 million, or 15.1% of revenues, for the three months ended September 30, 2021.
+Added: Gross profit for the nine months ended September 30, 2022 was $1,148.8 million, or 14.1% of revenues, compared to gross profit of $1,098.7 million, or 15.1% of revenues, for the nine months ended September 30, 2021.
+Added: Companies acquired in 2022 and 2021 generated incremental gross profit of approximately $4.4 million and $16.0 million for the three and nine months ended September 30, 2022, respectively.
Excluding the impact of acquisitions, the increase in gross profit for both 2022 periods was a result of increased revenue volume, which despite the decrease in gross profit margin discussed below, resulted in an increase in consolidated gross profit.
−Removed: The decrease in gross profit margin for both 2022 periods was primarily attributable to a reduction in gross profit margin within each of our United States construction segments, as a result of:
−Removed: (a) a less favorable project mix, and (b) the impact of supply chain disruptions and delays, that contributed to:
−Removed: (i) certain discrete project losses during the three and six months ended June 30, 2022, which negatively impacted our consolidated gross profit margin during such periods by 50 basis points and 40 basis points, respectively, and (ii) reduced labor productivity in instances where projects were either delayed or work was performed out of sequence as we awaited the receipt of key materials and equipment.
+Added: The decrease in gross profit margin for both 2022 periods was primarily attributable to a reduction in gross profit margin within each of our United States construction segments, partially as a result of a less favorable project mix.
+Added: The decrease in gross profit margin for the three months ended September 30, 2022 was additionally attributable to the impact of certain discrete project losses within our United States electrical construction and facilities services segment, which negatively impacted our consolidated gross profit margin during such period by 40 basis points.
+Added: For the nine months ended September 30, 2022, discrete project losses within both our United States electrical construction and facilities services segment and our United States mechanical construction and facilities services segment negatively impacted our consolidated gross profit margin by 50 basis points.
Refer to the operating income section below for further discussion regarding the operating performance of each of our reportable segments.
2 unchanged sentences
For the three months ended
−Removed: June 30, For the six months ended
+Added: September 30, For the nine months ended
+Added: September 30,
2022 2021 2022 2021
1 unchanged sentence
SG&A margin 9.3 % 9.7 % 9.4 % 9.8 %
−Removed: Our selling, general and administrative expenses for the three months ended June 30, 2022 were $245.4 million compared to selling, general and administrative expenses of $242.9 million for the three months ended June 30, 2021.
−Removed: Selling, general and administrative expenses for the six months ended June 30, 2022 were $498.0 million compared to selling, general and administrative expenses of $467.0 million for the six months ended June 30, 2021.
−Removed: For the three and six months ended June 30, 2022, selling, general and administrative expenses included $3.1 million and $8.4 million, respectively, of incremental expenses directly related to companies acquired in 2022 and 2021, including amortization expense attributable to identifiable intangible assets of $1.1 million and $2.1 million, respectively.
−Removed: Excluding incremental expenses from businesses acquired, our selling, general and administrative expenses decreased by $0.7 million for the three months ended June 30, 2022 and increased by $22.6 million for the six months ended June 30, 2022.
−Removed: The organic increase in selling, general and administrative expenses for the year-to-date period was primarily attributable to an increase in:
−Removed: (a) salaries expense, as a result of an increase in headcount to support our organic revenue growth, (b) employee benefit costs, driven by greater medical claim activity, (c) travel and entertainment expenses, given a resumption in travel and business meals as COVID-19 related restrictions continue to ease, and (d) computer hardware and software costs, partially as a result of various information technology and cybersecurity initiatives currently in process.
−Removed: These increases were partially offset by a reduction in our provision for credit losses as our results for the prior year period included expense of approximately $4.1 million associated with a reserve taken for a specific customer bankruptcy within our United States industrial services segment.
−Removed: Selling, general and administrative expenses as a percentage of revenues were 9.1% and 10.0% for the three months ended June 30, 2022 and 2021, respectively, compared to 9.4% and 9.8% for the six months ended June 30, 2022 and 2021, respectively.
−Removed: The decrease in SG&A margin for both the three and six month periods was largely a result of an increase in revenues without a commensurate increase in overhead costs, as we were able to leverage our existing overhead cost structure.
+Added: Our selling, general and administrative expenses for the three months ended September 30, 2022 were $263.1 million compared to selling, general and administrative expenses of $243.9 million for the three months ended September 30, 2021.
+Added: Selling, general and administrative expenses for the nine months ended September 30, 2022 were $761.1 million compared to selling, general and administrative expenses of $710.9 million for the nine months ended September 30, 2021.
+Added: For the three and nine months ended September 30, 2022, selling, general and administrative expenses included $3.7 million and $12.1 million, respectively, of incremental expenses directly related to companies acquired in 2022 and 2021, including amortization expense attributable to identifiable intangible assets of $1.2 million and $3.3 million, respectively.
+Added: Excluding incremental expenses from businesses acquired, our selling, general and administrative expenses increased by $15.5 million and $38.1 million for the three and nine months ended September 30, 2022, respectively.
+Added: The organic increase in selling, general and administrative expenses for both periods was primarily attributable to an increase in:
+Added: (a) salaries and related employment expenses, largely as a result of an increase in headcount to support our organic revenue growth, (b) incentive compensation expense, predominantly within our United States mechanical construction and facilities services segment and our United States building services segment, due to higher projected annual operating results than those of the prior year, (c) travel and entertainment expenses, given a resumption in travel and business meals as COVID-19 related restrictions have eased, (d) rent and other occupancy costs, partially driven by the expansion or addition of certain fabrication facilities, which support our operations, and (e) computer hardware and software costs, as a result of various information technology and cybersecurity initiatives currently in process.
+Added: Selling, general and administrative expenses as a percentage of revenues were 9.3% and 9.7% for the three months ended September 30, 2022 and 2021, respectively, and 9.4% and 9.8% for the nine months ended September 30, 2022 and 2021, respectively.
+Added: The decrease in SG&A margin for both 2022 periods was largely a result of an increase in revenues without a commensurate increase in overhead costs, as we were able to leverage our existing overhead cost structure.
Operating income (loss)
The following tables present our operating income (loss) and operating margin (operating income (loss) as a percentage of segment revenues) (in thousands, except for percentages):
−Removed: For the three months ended June 30,
+Added: For the three months ended September 30,
Revenues 2021 % of
11 unchanged sentences
Income before income taxes $ 147,925 $ 137,043
−Removed: For the six months ended June 30,
+Added: For the nine months ended September 30,
Revenues 2021 % of
11 unchanged sentences
Income before income taxes $ 384,749 $ 386,556
−Removed: Operating income was $137.6 million, or 5.1% of revenues, for the three months ended June 30, 2022 compared to operating income of $133.4 million, or 5.5% of revenues, for the three months ended June 30, 2021.
−Removed: The increase in operating income for the three months ended June 30, 2022 was primarily a result of increased operating income within our United States industrial services segment and our United States building services segment, partially offset by a decline in operating income within our United States electrical construction and facilities services segment.
−Removed: Operating income was $237.6 million, or 4.5% of revenues, for the six months ended June 30, 2022 compared to operating income of $250.4 million, or 5.3% of revenues, for the six months ended June 30, 2021.
−Removed: The decrease in operating income for the six months ended June 30, 2022 was predominately a result of a decrease in operating income within our United States electrical construction and facilities services segment, which was only partially offset by improved operating performance within our United States industrial services segment.
−Removed: The reduction in operating margin for both 2022 periods was driven by a reduction in gross profit margin, predominantly within our United States construction segments, due to a change in project mix, as well as the impact of certain project losses, which negatively impacted our consolidated operating margin by 40 basis points during each of the three and six months ended June 30, 2022.
−Removed: These declines in gross profit margin were partially offset by a reduction in the ratio of selling, general and administrative expenses to revenues as we were able to leverage our overhead cost structure during this period of revenue growth.
−Removed: The operating performance of each of our reportable segments is described in further detail below.
−Removed: Operating income of our United States electrical construction and facilities services segment was $35.1 million, or 6.2% of revenues, for the three months ended June 30, 2022, compared to $43.0 million, or 8.7% of revenues, for the three months ended June 30, 2021.
−Removed: Operating income of this segment for the six months ended June 30, 2022 was $55.1 million, or 5.1% of revenues, compared to operating income of $83.3 million, or 8.8% of revenues, for the six months ended June 30, 2021.
−Removed: Companies acquired in 2021 contributed incremental operating income of $3.0 million and $4.2 million, inclusive of $0.4 million and $2.3 million of amortization expense associated with identifiable intangible assets, for the three and six months ended June 30, 2022, respectively.
−Removed: Excluding such acquisition contribution, operating income of this segment decreased by $10.9 million and $32.4 million during the three and six months ended June 30, 2022, respectively.
−Removed: A less favorable project mix within the commercial, institutional, and transportation market sectors, coupled with certain discrete project losses recognized during the first half of 2022, due, in part, to supply chain disruptions and delays, resulted in a decrease in gross profit and gross profit margin for both the three and six months ended June 30, 2022.
−Removed: Based on an evaluation of individual projects that had revisions to total estimated costs, which resulted in a reduction of profitability in excess of $1.0 million, the operating results of our United States electrical construction and facilities services segment were negatively impacted by approximately $7.7 million and $14.3 million during the three and six months ended June 30, 2022, respectively.
+Added: Operating income for the three months ended September 30, 2022 was $150.1 million, a $12.7 million increase compared to operating income of $137.4 million for the three months ended September 30, 2021.
+Added: Contributing to this increase in operating income was improved operating results from each of our reportable segments other than our United States electrical construction and facilities services segment.
+Added: Operating margin was 5.3% and 5.4% for the three months ended September 30, 2022 and 2021, respectively.
+Added: The slight decrease in operating margin period over period was driven by a reduction in gross profit margin, predominantly within our United States electrical construction and facilities services segment, which was almost entirely offset by a reduction in the ratio of selling, general and administrative expenses to revenues as we continue to leverage our overhead cost structure during periods of revenue growth.
+Added: Operating income for the nine months ended September 30, 2022 was $387.7 million, which was essentially consistent with operating income for the nine months ended September 30, 2021 of $387.8 million.
+Added: We experienced increased year-to-date operating results from each of our reportable segments other than our United States electrical construction and facilities services segment.
+Added: Operating margin for the nine months ended September 30, 2022 and 2021 was 4.8% and 5.3%, respectively.
+Added: The reduction in year-to-date operating margin was driven by a reduction in gross profit margin, predominantly within our United States construction segments, due to a change in project mix, as well as the impact of certain discrete project losses, described in further detail below.
+Added: These declines in gross profit margin were once again partially offset by a reduction in the ratio of selling, general and administrative expenses to revenues.
+Added: Operating income of our United States electrical construction and facilities services segment was $35.6 million, or 5.6% of revenues, for the three months ended September 30, 2022, compared to $44.3 million, or 8.3% of revenues, for the three months ended September 30, 2021.
+Added: Operating income of this segment for the nine months ended September 30, 2022 was $90.6 million, or 5.3% of revenues, compared to operating income of $127.5 million, or 8.6% of revenues, for the nine months ended September 30, 2021.
+Added: This segment’s results included incremental operating income from acquired companies of $1.4 million and $5.6 million, inclusive of $1.0 million and $3.3 million of amortization expense associated with identifiable intangible assets, for the three and nine months ended September 30, 2022, respectively.
+Added: Excluding the contribution from acquisitions, operating income of this segment decreased by $10.2 million and $42.5 million during the three and nine months ended September 30, 2022, respectively.
+Added: A less favorable project mix within the commercial, institutional, and transportation market sectors, coupled with certain discrete project losses recognized during the first nine months of 2022, due, in part, to supply chain disruptions and delays, resulted in a decrease in gross profit and gross profit margin for both the three and nine months ended September 30, 2022.
+Added: Based on an evaluation of individual projects that had revisions to total estimated costs, which resulted in a reduction of profitability in excess of $1.0 million, the operating results of our United States electrical construction and facilities services segment were negatively impacted by approximately $10.5 million and $26.5 million during the three and nine months ended September 30, 2022, respectively.
These reductions in estimated project profitability negatively affected the operating margin of this segment by 170 basis points and 150 basis points for the quarter and year-to-date 2022 periods, respectively.
−Removed: In addition, although improved from the first quarter of 2022, labor productivity and efficiency within this segment was adversely impacted during the first six months of 2022 as a result of increased lead times, which led to issues with respect to the sequencing of work on certain projects as we awaited delivery of key materials and equipment.
+Added: In addition to the impact of supply chain disruptions, a portion of these losses were attributable to project completion delays and time extensions, beyond our control, on certain projects which were bid a number of years ago, under different economic conditions.
We continue to evaluate our contractual rights and are pursuing recovery for such impacts to the extent permitted.
−Removed: The aforementioned reductions in gross profit margin were partially offset by a reduction in the ratio of selling, general, and administrative expense to revenues as this segment was able to successfully leverage its overhead cost structure during this period of revenue growth.
−Removed: Our United States mechanical construction and facilities services segment’s operating income for the three months ended June 30, 2022 was $76.9 million, or 7.2% of revenues, compared to operating income of $76.7 million, or 7.9% of revenues, for the three months ended June 30, 2021.
−Removed: Operating income of this segment for the six months ended June 30, 2022 was $135.6 million, or 6.6% of revenues, compared to operating income of $139.9 million, or 7.4% of revenues, for the six months ended June 30, 2021.
−Removed: Operating margin of this segment for both the three and six month 2022 periods was negatively impacted by a reduction in gross profit margin due to:
−Removed: (a) a greater number of projects within the manufacturing and water and wastewater market sectors for which we are acting as either the construction manager or general contractor and therefore carry lower than average gross profit margins, and (b) certain project write-downs, which were partially a result of supply chain disruptions and/or material price escalations, a portion of which we will seek recovery from our customers.
−Removed: These reductions in operating margin resulted in a moderate decrease in this segment’s operating income for the first six months of 2022, despite the aforementioned increase in segment revenues for such period.
−Removed: Based on an evaluation of individual projects that had revisions to total estimated costs, which resulted in a reduction of profitability in excess of $1.0 million, the operating results of our United States mechanical construction and facilities services segment were negatively impacted by approximately $4.1 million and $9.5 million during the three and six months ended June 30, 2022, respectively.
−Removed: These reductions in estimated project profitability negatively affected the operating margin of this segment by 40 basis points for both 2022 periods.
−Removed: Similar to our United States electrical construction and facilities services segment, reductions in gross profit margin for the three and six months ended June 30, 2022 were partially offset by reductions in the ratio of selling, general, and administrative expenses to revenues, given an increase in revenues without a commensurate increase in certain overhead costs.
−Removed: Operating income of our United States building services segment was $38.2 million, or 5.6% of revenues, for the three months ended June 30, 2022 compared to $32.5 million, or 5.3% of revenues, for the three months ended June 30, 2021.
−Removed: The increase in both operating income and operating margin for such three month period was largely due to greater gross profit and gross profit margin from this segment’s mobile mechanical services division resulting from improved profitability across the majority of its service lines, including projects, service repair and maintenance, and building automation and controls.
−Removed: These improvements were due to favorable project execution as well as certain price adjustments enacted, to the extent contractually permitted, in response to inflationary pressures, which partially offset the impact of increased material and commodity prices during the second quarter of 2022.
−Removed: Operating income of this segment for the six months ended June 30, 2022 was $62.1 million, or 4.8% of revenues, compared to operating income of $63.7 million, or 5.4% of revenues, for the six months ended June 30, 2021.
−Removed: The reduction in operating income and operating margin for such six month period was due to a decline in gross profit margin during the first quarter of 2022, which impacted this segment’s ability to convert revenue growth into incremental operating profit.
−Removed: While conditions have improved during the second quarter of 2022, gross profit margin of this segment for the first half of the year was negatively impacted by:
−Removed: (a) supply chain disruptions, including longer lead times for certain materials and equipment, which resulted in a greater amount of unabsorbed labor costs in instances where projects were delayed pending the receipt of materials, and (b) an escalation in fuel prices for its fleet of approximately 4,000 service vehicles.
−Removed: On a year-to-date basis, these negative first quarter impacts more than offset the increases in operating income and operating margin experienced during the second quarter of 2022.
−Removed: We continue to adjust our pricing models to address the inflationary, supply chain, and labor challenges we are experiencing.
−Removed: Our United States industrial services segment reported operating income of $6.5 million, or 2.3% of revenues, for the three months ended June 30, 2022, compared to an operating loss of $0.2 million, or (0.1)% of revenues, for the three months ended June 30, 2021.
−Removed: For the six months ended June 30, 2022, this segment reported operating income of $19.7 million, or 3.3% of revenues, compared to an operating loss of $2.7 million, or (0.6)% of revenues, for the six months ended June 30, 2021.
−Removed: With respect to operating income, the improved performance for both 2022 periods was due to increased gross profit, resulting from the growth in this segment’s revenues referenced above, as well as a reduction in selling, general and administrative expenses, as the prior year period included a $4.1 million provision for credit losses in connection with a reserve taken for a specific customer bankruptcy.
−Removed: Operating margin of this segment, for both the three and six months ended June 30, 2022, benefited from a reduction in the ratio of selling, general and administrative expenses to revenues when compared to the prior year period, given:
−Removed: (a) this segment was able to leverage its overhead cost structure during a period of revenue growth and (b) the effect, in the prior year, of the previously referenced customer bankruptcy, which negatively impacted this segment’s operating margin by 180 basis points for the three months ended June 30, 2021 and 90 basis points for the six months ended June 30, 2021.
−Removed: For the second quarter of 2022, this reduction in SG&A margin was partially offset by a quarterly reduction in gross profit margin, when compared to the second quarter of 2021, given a change in the composition of project work period-over-period, which in the prior year benefited from favorable progression on certain renewable energy projects.
−Removed: For the six months ended June 30, 2022, however, this segment’s operating margin additionally benefited from an increase in gross profit margin driven by improved pricing for our traditional field services and shop services work, coupled with greater absorption of certain indirect cost of sales given the increase in year-to-date revenues.
−Removed: Operating income of our United Kingdom building services segment was $6.4 million, or 5.6% of revenues, for the three months ended June 30, 2022 compared to $7.0 million, or 5.4% of revenues, for the three months ended June 30, 2021.
−Removed: Operating income for the six months ended June 30, 2022 was $17.0 million, or 6.9% of revenues, compared to $16.5 million, or 6.4% of revenues, for the six months ended June 30, 2021.
−Removed: This segment’s operating income for the three and six months ended June 30, 2022 was negatively impacted by $0.6 million and $1.0 million, respectively, related to the effect of unfavorable exchange rates for the British pound versus the United States dollar.
−Removed: Excluding the impact of foreign exchange rate movements, operating income of this segment for the three months ended June 30, 2022 was essentially unchanged when compared to operating income for the three months ended June 30, 2021, while operating income for the six months ended June 30, 2022 represented a $1.5 million increase when compared to operating income for the six months ended June 30, 2021.
−Removed: The increase in this segment’s operating margin for both 2022 periods was primarily a result of:
−Removed: (a) the favorable close-out of a project within the institutional market sector and (b) an increase in gross profit margin from projects within the commercial market sector, including the telecommunication projects referenced in the revenue commentary for this segment.
−Removed: Our corporate administration expenses for the three months ended June 30, 2022 were $25.4 million, compared to $25.8 million for the three months ended June 30, 2021.
−Removed: For the six months ended June 30, 2022, our corporate administrative expenses were $51.9 million, compared to $50.3 million for the six months ended June 30, 2021.
−Removed: The slight increase in corporate administration expenses for the first six months of 2022 was primarily due to an increase in employment costs, given an increase in headcount to support the revenue growth within our business as well as annual cost of living wage increases.
−Removed: Net interest expense for the three months ended June 30, 2022 and 2021 was $1.8 million and $1.3 million, respectively.
−Removed: Net interest expense for the six months ended June 30, 2022 and 2021 was $3.0 million and $2.7 million, respectively.
−Removed: The increase in net interest expense for both 2022 periods was primarily a result of an increase in interest rates.
−Removed: For the three and six months ended June 30, 2022, our income tax provision was $36.3 million and $62.8 million, respectively, compared to an income tax provision of $35.6 million and $67.2 million for the three and six months ended June 30, 2021, respectively.
−Removed: Our income tax rate for both the three and six months ended June 30, 2022 was 26.5%, compared to an income tax rate for the three and six months ended June 30, 2021 of 26.8% and 27.0%, respectively.
−Removed: The increase in our income tax provision for the three months ended June 30, 2022 was due to an increase in income before income taxes, while the decrease in our income tax provision for the six months ended June 30, 2022 was a result of a reduction in income before income taxes as well as a decrease in our income tax rate during the period.
−Removed: The decrease in our income tax rate for the three and six months ended June 30, 2022 was attributable to:
−Removed: (a) a reduction in certain permanent book-to-tax differences, (b) the favorable impact of certain discrete tax items during the first half of 2022, including an increase in the income tax benefit recognized upon the issuance of common stock under our share-based compensation programs, and (c) a reduction in our state income tax rate due to a change in the allocation of earnings among the jurisdictions in which our income is taxed.
+Added: The aforementioned reductions in gross profit margin were partially offset by a reduction in the ratio of selling, general, and administrative expense to revenues as:
+Added: (a) this segment was able to successfully leverage its overhead cost structure during this period of revenue growth and (b) the reduced profitability has resulted in a decrease in incentive compensation expense.
+Added: Our United States mechanical construction and facilities services segment’s operating income for the three months ended September 30, 2022 was $91.0 million, or 8.1% of revenues, compared to operating income of $80.8 million, or 8.0% of revenues, for the three months ended September 30, 2021.
+Added: Operating income of this segment for the nine months ended September 30, 2022 was $226.6 million, or 7.1% of revenues, compared to operating income of $220.7 million, or 7.6% of revenues, for the nine months ended September 30, 2021.
+Added: The increase in operating income for both the three and nine months ended September 30, 2022, as well as the increase in operating margin for the three months ended September 30, 2022, was primarily a result of increased gross profit contribution from the commercial market sector, including profit recognized on:
+Added: (a) several fire protection projects and (b) certain construction projects for customers engaged in the manufacturing of semiconductors.
+Added: Partially offsetting the growth in operating income for the first nine months of 2022, and the primary factor resulting in the decline in operating margin for such nine month period, were certain project write-downs, in the first half of 2022, which were partially a result of supply chain disruptions and/or material price escalations, a portion of which we are seeking recovery from our customers.
+Added: Based on an evaluation of individual projects that had revisions to total estimated costs, which resulted in a reduction of profitability in excess of $1.0 million, the operating results of our United States mechanical construction and facilities services segment were negatively impacted by approximately $8.4 million during the nine months ended September 30, 2022.
+Added: These reductions in estimated project profitability negatively affected the year-to-date operating margin of this segment by 30 basis points.
+Added: Similar to our United States electrical construction and facilities services segment, operating margin of this segment for the quarter and year-to-date 2022 periods has benefited from reductions in the ratio of selling, general, and administrative expenses to revenues, given an increase in revenues without a commensurate increase in certain overhead costs.
+Added: Operating income of our United States building services segment was $45.6 million, or 6.4% of revenues, for the three months ended September 30, 2022 compared to $32.9 million, or 5.3% of revenues, for the three months ended September 30, 2021.
+Added: Operating income of this segment for the nine months ended September 30, 2022 was $107.7 million, or 5.3% of revenues, compared to operating income of $96.5 million, or 5.3% of revenues, for the nine months ended September 30, 2021.
+Added: The increase in operating income for both 2022 periods, as well as the increase in operating margin for the year-to-date period, was largely due to greater gross profit contribution from this segment’s mobile mechanical services division resulting from improved profitability across the majority of its service lines, including projects, service repair and maintenance, and building automation and controls.
+Added: These improvements were due to favorable project execution as well as certain price adjustments enacted, to the extent contractually permitted, in response to inflationary pressures such as increased material prices.
+Added: Despite the increase in revenues from this segment’s commercial site-based services division, operating income of such division was relatively consistent with that of the prior year period given:
+Added: (a) an increase in more traditional facilities maintenance revenues, which carry lower gross profit margins, and (b) the continued effects of certain economic disruptions, including:
+Added: (i) inflation, which has negatively impacted the profitability of a portion of this division’s fixed price projects, and (ii) labor shortages, which resulted in a greater use of subcontractors, thereby reducing gross profit.
+Added: On a year-to-date basis, operating margin of this segment is consistent with that of the prior year as gross profit improvements in both the second and third quarters of 2022 offset the negative impacts experienced in the first quarter of 2022, such as supply chain disruptions and escalating fuel prices.
+Added: Our United States industrial services segment reported an operating loss of $1.4 million, or (0.6)% of revenues, for the three months ended September 30, 2022, a slight improvement compared to an operating loss of $3.0 million, or (1.3)% of revenues, for the three months ended September 30, 2021.
+Added: For the nine months ended September 30, 2022, this segment reported operating income of $18.3 million, or 2.2% of revenues, compared to an operating loss of $5.7 million, or (0.8)% of revenues, for the nine months ended September 30, 2021.
+Added: The improved performance for the nine months ended September 30, 2022 was primarily due to increased gross profit, resulting from the growth in this segment’s revenues referenced above.
+Added: Operating margin of this segment during the year-to-date 2022 period benefited from a reduction in the ratio of selling, general and administrative expenses to revenues, when compared to the prior year period, given:
+Added: (a) this segment was able to leverage its overhead cost structure during a period of revenue growth and (b) the effect, in the prior year, of a $4.1 million provision for credit losses taken in connection with a specific customer bankruptcy, which negatively impacted this segment’s operating margin by 60 basis points for the nine months ended September 30, 2021.
+Added: This segment’s operating margin for the first nine months of 2022 additionally benefited from an increase in gross profit margin driven by greater absorption of certain indirect cost of sales given the increase in year-to-date revenues.
+Added: Operating income of our United Kingdom building services segment was $8.4 million, or 7.1% of revenues, for the three months ended September 30, 2022 compared to $6.6 million, or 5.1% of revenues, for the three months ended September 30, 2021.
+Added: Operating income for the nine months ended September 30, 2022 was $25.4 million, or 7.0% of revenues, compared to $23.0 million, or 6.0% of revenues, for the nine months ended September 30, 2021.
+Added: This segment’s operating income for the three and nine months ended September 30, 2022 was negatively impacted by $1.4 million and $2.4 million, respectively, related to the effect of unfavorable exchange rates for the British pound versus the United States dollar.
+Added: Excluding the impact of foreign exchange rate movements, operating income of this segment represented a $3.2 million and $4.7 million increase for the three and nine months ended September 30, 2022, respectively, when compared to operating income for the three and nine months ended September 30, 2021.
+Added: The improvement in this segment’s operating income and operating margin for both 2022 periods was primarily a result of:
+Added: (a) an increase in gross profit, primarily as a result of a change in the mix of work, which included a greater amount of revenue generated from project activity as opposed to traditional facilities maintenance services, including an increased number of telecommunication projects as referenced in the revenue commentary for this segment, and (b) the favorable close-out of certain other contracts throughout the year-to-date period.
+Added: Our corporate administration expenses for the three months ended September 30, 2022 were $29.0 million, compared to $24.1 million for the three months ended September 30, 2021.
+Added: For the nine months ended September 30, 2022, our corporate administrative expenses were $80.9 million, compared to $74.4 million for the nine months ended September 30, 2021.
+Added: The increase in corporate administration expenses for both 2022 periods was primarily due to greater:
+Added: (a) incentive compensation expense, partially as a result of incremental expense taken during the third quarter of 2022, necessitated by revised estimates of our annual operating performance, and (b) employment costs, given an increase in headcount to support the revenue growth within our business as well as annual cost of living wage increases.
+Added: Net interest expense for the three months ended September 30, 2022 and 2021 was $3.2 million and $1.3 million, respectively.
+Added: Net interest expense for the nine months ended September 30, 2022 and 2021 was $6.2 million and $4.0 million, respectively.
+Added: The increase in net interest expense for both 2022 periods was a result of both an increase in interest rates and greater average outstanding borrowings.
+Added: For the three and nine months ended September 30, 2022, our income tax provision was $42.2 million and $104.9 million, respectively, compared to an income tax provision of $37.3 million and $104.5 million for the three and nine months ended September 30, 2021, respectively.
+Added: The increase in our income tax provision for both 2022 periods was due to an increase in our income tax rate.
+Added: The increase in our income tax provision for the three months ended September 30, 2022 was additionally a result of an increase in income before income taxes.
+Added: Our income tax rate for the three and nine months ended September 30, 2022 was 28.5% and 27.3%, respectively, compared to an income tax rate for the three and nine months ended September 30, 2021 of 27.2% and 27.1%, respectively.
+Added: The increase in our income tax rate for both 2022 periods was attributable to an increase in certain permanent book-to-tax differences and the unfavorable impact of certain discrete tax items during the third quarter of 2022.
+Added: On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law.
+Added: Such act implements various new tax provisions, some of which may have an impact on our financial position and/or liquidity in future periods.
+Added: For further discussion regarding the potential impact of these provisions, refer to Note 9 - Income Taxes of the notes to consolidated financial statements.
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 percentage of total remaining performance obligations (in thousands, except for percentages):
−Removed: 2022 % of Total December 31, 2021 % of Total June 30,
+Added: September 30,
+Added: 2022 % of Total December 31, 2021 % of Total September 30,
2021 % of Total
7 unchanged sentences
Total operations $ 7,101,461 100 % $ 5,599,297 100 % $ 5,378,746 100 %
−Removed: Our remaining performance obligations at June 30, 2022 were $6.46 billion compared to $5.60 billion at December 31, 2021 and $5.11 billion at June 30, 2021.
−Removed: The increase in remaining performance obligations at June 30, 2022, when compared to December 31, 2021, was attributable to an increase in remaining performance obligations within all of our reportable segments.
+Added: Our remaining performance obligations at September 30, 2022 were $7.10 billion compared to $5.60 billion at December 31, 2021 and $5.38 billion at September 30, 2021.
+Added: The increase in remaining performance obligations at September 30, 2022, when compared to December 31, 2021, was attributable to an increase in remaining performance obligations within all of our reportable segments.
Most notably, we experienced an increase in remaining performance obligations within:
−Removed: (a) our United States construction segments, driven by the award of various construction projects within the commercial market sector, inclusive of various telecommunications projects as well as certain projects for customers within the biotech, life-sciences, and pharmaceutical industries, and (b) our United States building services segment given increased project opportunities within its mobile mechanical services division.
+Added: (a) our United States construction segments, driven by the award of various construction projects within the commercial market sector, inclusive of:
+Added: (i) data center projects, (ii) semiconductor projects, and (iii) other projects for customers within the biotech, life-sciences, and pharmaceutical industries, and (b) our United States building services segment given increased project opportunities within its mobile mechanical services division and the award or renewal of several facilities maintenance contracts within its site-based services division.
+Added: Remaining performance obligations of our United Kingdom building services segment increased by $25.6 million since December 31, 2021, despite unfavorable exchange rates for the British pound versus the United States dollar, which negatively impacted this segment’s remaining performance obligations by $30.4 million.
While the continued growth in our remaining performance obligations is largely due to the strength in demand for our services, a portion of this increase can likely be attributed to external market factors such as material and labor inflation, which has increased the price of certain of our project work, as well as supply chain delays, which has impacted the timing of conversion of our remaining performance obligations to revenue, in certain instances.
10 unchanged sentences
While we strive to negotiate favorable billing terms, which allow us to invoice in advance of costs incurred on certain of our contracts, there can be no assurance that such terms will be agreed to by our customers.
−Removed: As of June 30, 2022, we had cash and cash equivalents, excluding restricted cash, of $262.4 million, which are maintained in depository accounts and highly liquid investments with original maturity dates of three months or less.
−Removed: Both our short-term and long-term liquidity requirements are expected to be met through our cash and cash equivalent balances, cash generated from our operations, and, if necessary, the borrowing capacity under our revolving credit facility.
−Removed: Our credit agreement provides for a $1.30 billion revolving credit facility, for which there is $1.23 billion of available capacity as of June 30, 2022.
+Added: As of September 30, 2022, we had cash and cash equivalents, excluding restricted cash, of $403.8 million, which are maintained in depository accounts and highly liquid investments with original maturity dates of three months or less.
+Added: Both our short-term and long-term liquidity requirements are expected to be met through our cash and cash equivalent balances, cash generated from our operations, and, as necessary, the borrowing capacity under our revolving credit facility.
+Added: Our credit agreement provides for a $1.30 billion revolving credit facility, for which there is $1.06 billion of available capacity as of September 30, 2022.
Refer to Note 7 - Debt of the notes to consolidated financial statements for further information regarding our credit agreement.
3 unchanged sentences
The following table presents a summary of our operating, investing, and financing cash flows (in thousands):
−Removed: For the six months ended
−Removed: Net cash used in operating activities $ (18,851) $ (6,972)
+Added: For the nine months ended
+Added: September 30,
+Added: Net cash provided by operating activities $ 238,354 $ 113,941
Net cash used in investing activities $ (122,898) $ (137,486)
Net cash used in financing activities $ (512,598) $ (213,127)
+Added: Effect of exchange rate changes on cash, cash equivalents, and restricted cash $ (20,540) $ (1,870)
Decrease in cash, cash equivalents, and restricted cash $ (417,682) $ (238,542)
−Removed: During the six months ended June 30, 2022, our cash balance, including cash equivalents and restricted cash, decreased by approximately $559.0 million from $822.6 million at December 31, 2021 to $263.5 million at June 30, 2022.
−Removed: Changes in our cash position from December 31, 2021 to June 30, 2022 are described in further detail below.
+Added: During the nine months ended September 30, 2022, our cash balance, including cash equivalents and restricted cash, decreased by approximately $417.7 million from $822.6 million at December 31, 2021 to $404.9 million at September 30, 2022.
+Added: Changes in our cash position from December 31, 2021 to September 30, 2022 are described in further detail below.
Operating Activities – Operating cash flows generally represent our net income as adjusted for certain non-cash items and changes in assets and liabilities.
−Removed: Net cash used in operating activities for the six months ended June 30, 2022 was approximately $18.9 million compared to approximately $7.0 million of net cash used in operating activities for the six months ended June 30, 2021.
−Removed: Historically, our working capital needs are greater in the first half of each year, resulting in a use of cash to fund our operations during such period, as evidenced by the fairly consistent use of cash during each of the six months ended June 30, 2022 and 2021.
−Removed: The modest increase in net cash used in operating activities for the first six months of 2022, compared to the first six months of 2021, was almost entirely due to the decrease in our net income period-over-period, as changes in working capital for both periods were nearly identical.
−Removed: As the year progresses, we anticipate the generation of positive operating cash flow.
+Added: Net cash provided by operating activities for the nine months ended September 30, 2022 was approximately $238.4 million compared to approximately $113.9 million of net cash provided by operating activities for the nine months ended September 30, 2021.
+Added: The increase in net cash provided by operating activities for the first nine months of 2022, compared to the first nine months of 2021, was primary a result of the collection of advanced billings on certain of our uncompleted construction projects, as evidenced in part by the growth in our contract liabilities.
Investing Activities – Investing cash flows consist primarily of payments for the acquisition of businesses, capital expenditures, and proceeds from the sale or disposal of property, plant, and equipment.
−Removed: Net cash used in investing activities for the six months ended June 30, 2022 decreased by approximately $17.6 million compared to the six months ended June 30, 2021 due to a decrease in payments for business acquisitions, partially offset by higher capital expenditures used to invest in organic growth.
+Added: Net cash used in investing activities for the nine months ended September 30, 2022 decreased by approximately $14.6 million compared to the nine months ended September 30, 2021 due to a decrease in payments for business acquisitions, partially offset by higher capital expenditures used to invest in organic growth.
Financing Activities – Financing cash flows consist primarily of the issuance and repayment of short-term and long-term debt, repurchases of common stock, payments of dividends to stockholders, and the issuance of common stock through certain equity plans.
−Removed: Net cash used in financing activities for the six months ended June 30, 2022 was $475.1 million compared to net cash used in financing activities for the six months ended June 30, 2021 of $157.1 million.
−Removed: The $318.0 million increase in cash used in financing activities was almost entirely due to an increase in funds used for the repurchase of our common stock.
−Removed: The timing of repurchases is at management’s discretion subject to securities laws and other legal requirements and depends upon several factors, including market and business conditions, current and anticipated future liquidity, share price, and share availability, among others.
+Added: Net cash used in financing activities for the nine months ended September 30, 2022 was $512.6 million compared to net cash used in financing activities for the nine months ended September 30, 2021 of $213.1 million.
+Added: The $299.5 million increase in cash used in financing activities was primarily due to a $473.3 million increase in funds used for the repurchase of our common stock, partially offset by $170.0 million in net borrowings made under our revolving credit facility during 2022.
+Added: The timing of common stock repurchases is at management’s discretion subject to securities laws and other legal requirements and depends upon several factors, including market and business conditions, current and anticipated future liquidity, share price, and share availability, among others.
For additional detail regarding our share repurchase program, refer to Note 10 - Common Stock of the notes to consolidated financial statements.
−Removed: We currently pay a regular quarterly dividend of $0.13 per share.
−Removed: For the six months ended June 30, 2022 and 2021, cash payments related to dividends were $13.6 million and $14.2 million, respectively.
−Removed: Subsequent to June 30, 2022, our Board of Directors announced its intention to increase the regular quarterly divided to $0.15 per share commencing with the dividend to be paid in October 2022.
+Added: We currently pay a regular quarterly dividend, which commencing with the dividend to be paid on October 31, 2022, will increase from $0.13 per share to $0.15 per share.
+Added: For the nine months ended September 30, 2022 and 2021, cash payments related to dividends were $20.0 million and $21.2 million, respectively.
Our credit agreement places limitations on the payment of dividends on our common stock.
However, we do not believe that the terms of such agreement currently materially limit our ability to pay such quarterly dividends for the foreseeable future.
+Added: Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash – We are exposed to fluctuations in foreign currency exchange rates, almost entirely with respect to the British pound.
+Added: Therefore, the $18.7 million variance between the nine months ended September 30, 2022 and 2021 was a direct result of unfavorable exchange rate movements for the British pound versus the United States dollar.
Material Cash Requirements from Contractual and Other Obligations
−Removed: As of June 30, 2022, our short-term and long-term material cash requirements for known contractual and other obligations were as follows:
−Removed: Outstanding Debt and Interest Payments – As of June 30, 2022, the amount outstanding under our term loan was $256.7 million.
−Removed: Based on our outstanding balance, we are required to make annual principal payments of $13.9 million on December 31 of each year until maturity.
−Removed: Any remaining unpaid principal is due on March 2, 2025, when the credit agreement governing our term loan expires.
−Removed: As of June 30, 2022, we had no direct borrowings outstanding under our revolving credit facility.
−Removed: In addition to annual principal payments, we are required to make quarterly interest payments on our outstanding indebtedness.
+Added: As of September 30, 2022, our short-term and long-term material cash requirements for known contractual and other obligations were as follows:
+Added: Outstanding Debt and Interest Payments – As of September 30, 2022, the amount outstanding under our term loan was $256.7 million, and we had $170.0 million in direct borrowings outstanding under our revolving credit facility.
+Added: We are required to make annual principal payments on our term loan of $13.9 million on December 31 of each year until maturity.
+Added: All remaining unpaid amounts are due on March 2, 2025, when the credit agreement governing our term loan and revolving credit facility expires.
+Added: Until such time, we are required to make periodic interest payments on our outstanding indebtedness.
Future interest payments will be determined based on prevailing interest rates during that time, which are anticipated to increase in the near term.
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Operating and Finance Leases – In the normal course of business, we lease real estate, vehicles, and equipment under various arrangements which are classified as either operating or finance leases.
−Removed: Future payments for such leases, excluding leases with initial terms of one year or less, were $326.7 million at June 30, 2022, with $72.8 million payable within the next 12 months.
−Removed: Open Purchase Obligations – As of June 30, 2022, we had $1.96 billion of open purchase obligations, of which payments totaling approximately $1.71 billion are expected to become due within the next 12 months.
+Added: Future payments for such leases, excluding leases with initial terms of one year or less, were $318.7 million at September 30, 2022, with $73.7 million payable within the next 12 months.
+Added: Open Purchase Obligations – As of September 30, 2022, we had $2.16 billion of open purchase obligations, of which payments totaling approximately $1.84 billion are expected to become due within the next 12 months.
These obligations represent open purchase orders to suppliers and subcontractors related to our construction and services contracts.
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Insurance Obligations – As described in further detail in Note 12 - Commitments and Contingencies of the notes to consolidated financial statements, we have loss payment deductibles and/or self-insured retentions for certain insurance matters.
−Removed: As of June 30, 2022, our insurance liabilities, net of estimated recoveries, were $192.9 million.
+Added: As of September 30, 2022, our insurance liabilities, net of estimated recoveries, were $193.3 million.
Of this net amount, approximately $36.7 million is estimated to be payable within the next 12 months.
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To the extent that the amount required to settle claims covered by insurance continues to increase, the cost of our insurance coverage, including premiums and deductibles, is likely to increase.
−Removed: Retirement Plan Obligations – As of June 30, 2022, expected future payments relating to our defined benefit post retirement plans were approximately $4.2 million per year.
+Added: Retirement Plan Obligations – As of September 30, 2022, expected future payments relating to our defined benefit post retirement plans were approximately $3.8 million per year.
We provide funding to our post retirement plans based on at least the minimum funding required by applicable regulations.
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The aggregate amount of these liabilities can change due to additional business acquisitions, settlement of outstanding liabilities, changes in the fair value of amounts owed based on performance during such post-acquisition periods, and accretion in present value.
−Removed: As of June 30, 2022, the present value of expected future payments relating to these contingent consideration arrangements was $13.3 million.
−Removed: Of this amount, $7.6 million is estimated as being payable within the next 12 months, with the remainder due substantially during the following 12 months.
+Added: As of September 30, 2022, the present value of expected future payments relating to these contingent consideration arrangements was $20.2 million.
+Added: Of this amount, $13.7 million is estimated as being payable within the next 12 months, with the remainder due pursuant to the terms of our contractual agreements some of which extend through 2025.
In addition, material cash requirements for other potential obligations, for which we cannot reasonably estimate future payments, include the following:
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We have agreed to indemnify the surety companies for amounts, if any, paid by them in respect of surety bonds issued on our behalf.
−Removed: As of June 30, 2022, based on the percentage-of-completion of our projects covered by surety bonds, our aggregate estimated exposure, assuming defaults on all our then existing contractual obligations, was approximately $1.6 billion, which represents approximately 25% of our total remaining performance obligations.
+Added: As of September 30, 2022, based on the percentage-of-completion of our projects covered by surety bonds, our aggregate estimated exposure, assuming defaults on all our then existing contractual obligations, was approximately $1.5 billion, which represents approximately 21% of our total remaining performance obligations.
Surety bonds expire at various times ranging from final completion of a project to a period extending beyond contract completion in certain circumstances.
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In addition, surety bonds or letters of credit may be issued as collateral for certain insurance obligations.
−Removed: As of June 30, 2022, we satisfied approximately $48.1 million and $71.2 million of the collateral requirements of our insurance programs by utilizing surety bonds and letters of credit, respectively.
+Added: As of September 30, 2022, we satisfied approximately $48.1 million and $71.2 million of the collateral requirements of our insurance programs by utilizing surety bonds and letters of credit, respectively.
All such letters of credit were issued under our revolving credit facility, therefore reducing the available capacity of such facility.
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As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.
−Removed: There have been no significant changes to our critical accounting policies or methods for the six months ended June 30, 2022.
+Added: There have been no significant changes to our critical accounting policies or methods for the nine months ended September 30, 2022.
We believe the following critical accounting policies govern the more significant judgments and estimates used in the preparation of our financial statements.
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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, or changes in the estimate of transaction prices, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made.
−Removed: Based on an evaluation of individual projects that had revisions to total estimated costs, which resulted in a reduction of profitability in excess of $1.0 million, our operating results were negatively impacted by approximately $11.8 million and $23.8 million, during the three and six months ended June 30, 2022, respectively.
−Removed: Of the amount recorded during the three months ended June 30, 2022, approximately $7.7 million was recorded within our United States electrical construction and facilities services segment and approximately $4.1 million was recorded within our United States mechanical construction and facilities services segment.
−Removed: Of the amount recorded during the six months ended June 30, 2022, approximately $14.3 million was recorded within our United States electrical construction and facilities services segment and approximately $9.5 million was recorded within our United States mechanical construction and facilities services segment.
−Removed: There were no changes in total estimated costs that had a significant impact on our operating results during the three and six months ended June 30, 2021.
−Removed: Due to the significant judgments utilized in the estimation process described above, if subsequent actual results and/or updated assumptions, estimates, or projections related to our underlying project positions were to change from those utilized at June 30, 2022, it could result in a material impact to our results of operations.
−Removed: For example, a 50 basis point increase or decrease in the estimated gross profit margin on our uncompleted construction projects, in the aggregate, as a result of a revision in estimated costs to complete a performance obligation or a revision in estimated transaction price, would have resulted in an increase or decrease to operating income in excess of $75 million for the six months ended June 30, 2022.
+Added: Based on an evaluation of individual projects that had revisions to total estimated costs, which resulted in a reduction of profitability in excess of $1.0 million, our operating results were negatively impacted by approximately $10.5 million and $34.9 million during the three and nine months ended September 30, 2022, respectively.
+Added: The entire amount recorded during the three months ended September 30, 2022, was reported within our United States electrical construction and facilities services segment.
+Added: However, of the amount recorded during the nine months ended September 30, 2022, approximately $26.5 million was reported within our United States electrical construction and facilities services segment and approximately $8.4 million was reported within our United States mechanical construction and facilities services segment.
+Added: There were no changes in total estimated costs that had a significant impact on our operating results during the three and nine months ended September 30, 2021.
+Added: Due to the significant judgments utilized in the estimation process described above, if subsequent actual results and/or updated assumptions, estimates, or projections related to our underlying project positions were to change from those utilized at September 30, 2022, it could result in a material impact to our results of operations.
+Added: For example, a 50 basis point increase or decrease in the estimated gross profit margin on our uncompleted construction projects, in the aggregate, as a result of a revision in estimated costs to complete a performance obligation or a revision in estimated transaction price, would have resulted in an increase or decrease to operating income in excess of $80 million for the nine months ended September 30, 2022.
See Note 3 - Revenue from Contracts with Customers of the notes to consolidated financial statements for further disclosure regarding revenue recognition.
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In addition to monitoring delinquent accounts, management reviews the credit quality of its receivables by, among other things, obtaining credit ratings of significant customers, assessing economic and market conditions, and evaluating material changes to a customer’s business, cash flows, and financial condition.
−Removed: At June 30, 2022 and December 31, 2021, our accounts receivable of $2,439.6 million and $2,204.5 million, respectively, were recorded net of allowances for credit losses of $23.9 million and $23.5 million, respectively.
−Removed: The increase in our allowance for credit losses was attributable to an increase in the provision for credit losses, largely offset by the write-off of specific amounts deemed unrecoverable.
−Removed: We have adjusted our allowance for credit losses during the first six months of 2022 to account for the impact of changing economic conditions, including rising interest rates.
+Added: At September 30, 2022 and December 31, 2021, our accounts receivable of $2,510.6 million and $2,204.5 million, respectively, were recorded net of allowances for credit losses of $25.3 million and $23.5 million, respectively.
+Added: The increase in our allowance for credit losses was attributable to an increase in the provision for credit losses, partially offset by the write-off of specific amounts deemed unrecoverable.
+Added: We have adjusted our allowance for credit losses during the nine months of 2022 to account for the impact of changing economic conditions, including rising interest rates.
Allowances for credit losses are based on the best facts available and are reassessed and adjusted on a regular basis as additional information is received.
−Removed: The provision for credit losses amounted to approximately $1.6 million and $5.5 million for the six months ended June 30, 2022 and 2021, respectively.
−Removed: The period-over-period decrease in the provision for credit losses was a result of an approximately $4.1 million reserve taken for a specific customer bankruptcy within our United States industrial services segment in the 2021 period.
+Added: The provision for credit losses amounted to approximately $3.2 million and $5.8 million for the nine months ended September 30, 2022 and 2021, respectively.
+Added: The period-over-period decrease in the provision for credit losses was a result the impact of an approximately $4.1 million reserve taken for a specific customer bankruptcy within our United States industrial services segment in the 2021 period, partially offset by incremental expense taken during the first nine months of 2022, which primarily resulted from the aforementioned change in economic conditions.
Should anticipated collections fail to materialize, or if future economic conditions compare unfavorably to our forecasts, we could experience an increase in our allowances for credit losses.
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However, such obligations are difficult to assess and estimate due to numerous factors, including severity of injury, determination of liability in proportion to other parties, timely reporting of occurrences, and effectiveness of safety and risk management programs.
−Removed: Therefore, if our actual experience differs from the assumptions and estimates used for recording the liabilities, adjustments may be required and will be recorded in the period that
−Removed: the experience becomes known.
−Removed: In addition, as discussed above, an increase in the cost to settle insurance claims could result in higher insurance costs and deductibles.
−Removed: Our estimated net insurance liabilities for workers’ compensation, automobile liability, general liability, and property claims increased by $14.3 million at June 30, 2022 compared to December 31, 2021, partially as a result of greater potential exposures and an increase in certain of our deductibles or self-insured retentions.
−Removed: If our estimated insurance liabilities for workers’ compensation, automobile liability, general liability, and property claims were to increase by 10%, it would have resulted in $19.3 million of additional expense for the six months ended June 30, 2022.
−Removed: As of June 30, 2022 and December 31, 2021, we had net deferred income tax liabilities of $52.0 million and $51.0 million, respectively, primarily resulting from differences between the carrying value and income tax bases of certain identifiable intangible assets, goodwill, and depreciable fixed assets.
−Removed: Included within these net deferred income tax liabilities are $215.0 million and $212.3 million of deferred income tax assets as of June 30, 2022 and December 31, 2021, respectively.
−Removed: The total valuation allowance on deferred income tax assets was approximately $2.5 million as of both June 30, 2022 and December 31, 2021.
+Added: Therefore, if our actual experience differs from the assumptions and estimates used for recording the liabilities, adjustments may be required and will be recorded in the period that the experience becomes known.
+Added: In addition, as discussed above, an increase in the cost to settle insurance claims could result in
+Added: higher insurance costs and deductibles.
+Added: Our estimated net insurance liabilities for workers’ compensation, automobile liability, general liability, and property claims increased by $14.7 million at September 30, 2022 compared to December 31, 2021, partially as a result of greater potential exposures and an increase in certain of our deductibles or self-insured retentions.
+Added: If our estimated insurance liabilities for workers’ compensation, automobile liability, general liability, and property claims were to increase by 10%, it would have resulted in $19.3 million of additional expense for the nine months ended September 30, 2022.
+Added: As of September 30, 2022 and December 31, 2021, we had net deferred income tax liabilities of $52.4 million and $51.0 million, respectively, primarily resulting from differences between the carrying value and income tax bases of certain identifiable intangible assets, goodwill, and depreciable fixed assets.
+Added: Included within these net deferred income tax liabilities are $213.8 million and $212.3 million of deferred income tax assets as of September 30, 2022 and December 31, 2021, respectively.
+Added: The total valuation allowance on deferred income tax assets was approximately $2.5 million as of both September 30, 2022 and December 31, 2021.
The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
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Goodwill, Identifiable Intangible Assets, and Other Long-Lived Assets
−Removed: As of June 30, 2022 and December 31, 2021, we had goodwill of $901.2 million and $890.3 million, respectively, arising out of the acquisition of businesses.
+Added: As of September 30, 2022 and December 31, 2021, we had goodwill of $916.8 million and $890.3 million, respectively, arising out of the acquisition of businesses.
Goodwill is not amortized but instead allocated to its respective reporting unit and evaluated for impairment annually, or more frequently if events or circumstances indicate that the carrying amount of goodwill may be impaired.
We have determined that our reporting units are consistent with the reportable segments identified in Note 14 - Segment Information of the notes to consolidated financial statements.
−Removed: As of June 30, 2022, approximately 17.8% of our goodwill related to our United States electrical construction and facilities services segment, approximately 35.0% related to our United States mechanical construction and facilities services segment, approximately 34.5% related to our United States building services segment, and approximately 12.7% related to our United States industrial services segment.
+Added: As of September 30, 2022, approximately 19.2% of our goodwill related to our United States electrical construction and facilities services segment, approximately 34.4% related to our United States mechanical construction and facilities services segment, approximately 34.0% related to our United States building services segment, and approximately 12.4% related to our United States industrial services segment.
Absent any earlier identified impairment indicators, we perform our annual goodwill impairment assessment on October 1 each fiscal year.
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In the case of our United States industrial services segment, however, a 10% decrease would cause the estimated fair value of this reporting unit to approximate its carrying value.
−Removed: No impairment of our goodwill was recognized during the three and six months ended June 30, 2022 and 2021.
+Added: No impairment of our goodwill was recognized during the three and nine months ended September 30, 2022 and 2021.
Identifiable Intangible Assets and Other Long-Lived Assets
−Removed: As of June 30, 2022 and December 31, 2021, net identifiable intangible assets (primarily consisting of our customer relationships, subsidiary trade names, developed technology/vendor network, and contract backlog) arising out of the acquisition of businesses were $577.3 million and $589.4 million, respectively.
+Added: As of September 30, 2022 and December 31, 2021, net identifiable intangible assets (primarily consisting of our customer relationships, subsidiary trade names, developed technology/vendor network, and contract backlog) arising out of the acquisition of businesses were $605.9 million and $589.4 million, respectively.
The determination of related estimated useful lives for identifiable intangible assets and whether those assets are impaired involves significant judgments based upon short- and long-term projections of future performance.
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If the assets are impaired, the assets are written down to their fair values, generally determined based on their discounted estimated future cash flows.
−Removed: No impairment of our identifiable intangible assets or other long-lived assets was recognized during the three and six months ended June 30, 2022 and 2021.
+Added: No impairment of our identifiable intangible assets or other long-lived assets was recognized during the three and nine months ended September 30, 2022 and 2021.
Other Considerations
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.