What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-12-15 compared with 2024-12-19 · 133 added, 128 removed, 401 unchanged (39% of the section changed)

41 unchanged sentences

The increase was the result of increased work in the Electrical, Mechanical, and General and Gas & Water Distribution business lines, partially offset by a decrease in Gas & Petroleum Transmission work.

Gas & Water Distribution revenues totaled $82.4 million for the fiscal year ended September 30, 2024, an $18.9 million increase from $63.5 million for the fiscal year ended September 30, 2023.

Gas & Water Distribution revenues totaled $149.6 million for the fiscal year ended September 30, 2025, a $67.1 million increase from $82.4 million for the fiscal year ended September 30, 2024.

The revenue increase was primarily related to the Company’s continued focus on increasing water project opportunities.

Gas & Petroleum Transmission revenues totaled $81.1 million for the fiscal year ended September 30, 2024, an $11.0 million decrease from $92.1 million for the fiscal year ended September 30, 2023.

The revenue decrease was primarily related to a significant natural gas project that was substantially completed during the fiscal year ended September 30, 2023 that was not fully replaced in the fiscal year ended September 30, 2024.

Electrical, Mechanical, & General services and construction revenues totaled $188.4 million for the fiscal year ended September 30, 2024, a $40.0 million increase from $148.4 million for the fiscal year ended September 30, 2023.

Gas & Petroleum Transmission revenues totaled $64.6 million for the fiscal year ended September 30, 2025, a $16.5 million decrease from $81.1 million for the fiscal year ended September 30, 2024.

The revenue decrease was primarily related to bid opportunities received later in the current fiscal year and a significant decrease in natural gas project awards as compared to the previous fiscal year.

Electrical, Mechanical, & General services and construction revenues totaled $196.8 million for the fiscal year ended September 30, 2025, an $8.4 million increase from $188.4 million for the fiscal year ended September 30, 2024.

The revenue increase was primarily related to increased mechanical and electrical maintenance services performed and an increase in new construction opportunities during the fiscal year ended September 30, 2025, as compared to the prior fiscal year.

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Gas & Petroleum Transmission cost of revenues totaled $60.1 million for the fiscal year ended September 30, 2025, a $9.3 million decrease from $69.5 million for the fiscal year ended September 30, 2024.

The cost of revenues decrease was primarily related to a significant natural gas project that was substantially completed during the fiscal year ended September 30, 2023 that was not fully replaced in the fiscal year ended September 30, 2024.

Electrical, Mechanical, & General services and construction cost of revenues totaled $167.6 million for the fiscal year ended September 30, 2024, a $29.8 million increase from $137.8 million for the fiscal year ended September 30, 2023.

The cost of revenues decrease was primarily related to bid opportunities received later in the current fiscal year and a significant decrease in natural gas project awards as compared to the previous fiscal year.

Electrical, Mechanical, & General services and construction cost of revenues totaled $176.3 million for the fiscal year ended September 30, 2025, an $8.7 million increase from $167.6 million for the fiscal year ended September 30, 2024.

The cost of revenues increase was primarily related to increased mechanical and electrical maintenance services performed and an increase in new construction opportunities during the fiscal year ended September 30, 2025, as compared to the prior fiscal year.

Unallocated shop expenses totaled $1.6 million for the fiscal year ended September 30, 2024, a $444,000 increase from $1.2 million for the fiscal year ended September 30, 2023.

Unallocated shop expenses totaled $4.6 million for the fiscal year ended September 30, 2025, a $3.0 million increase from $1.6 million for the fiscal year ended September 30, 2024.

The increase in unallocated shop expenses was primarily due to decreased internal equipment charges to projects for the fiscal year ended September 30, 2025, as compared to the prior fiscal year.

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Unallocated Shop Expense

Total gross profit increased by $13.1 million or 35.7% to $50.0 million for the fiscal year ended September 30, 2024, from $36.8 million for the fiscal year ended September 30, 2023.

Gas & Water Distribution gross profit totaled $19.2 million for the fiscal year ended September 30, 2024, a $4.5 million increase from $14.6 million for the fiscal year ended September 30, 2023.

The gross profit increase was primarily related to the Company’s continued focus on increasing water project opportunities.

Total gross profit decreased by $11.2 million or 22.4% to $38.8 million for the fiscal year ended September 30, 2025, from $50.0 million for the fiscal year ended September 30, 2024.

Gas & Water Distribution gross profit totaled $18.3 million for the fiscal year ended September 30, 2025, an $857,000 decrease from $19.2 million for the fiscal year ended September 30, 2024.

The gross profit decrease was primarily related to greater competition in the water industry, combined with an increase in public water projects which have a lesser profit margin, and integrating new employees due to growth in the water business line.

Gas & Petroleum Transmission gross profit totaled $4.5 million for the fiscal year ended September 30, 2025, a $7.1 million decrease from $11.6 million for the fiscal year ended September 30, 2024.

The gross profit decrease was primarily related to less transmission work performed in the fiscal year ended September 30, 2024 as compared to the prior fiscal year.

Electrical, Mechanical, & General services and construction gross profit totaled $20.8 million for the fiscal year ended September 30, 2024, a $10.1 million increase from $10.7 million for the fiscal year ended September 30, 2023.

The gross profit increase was primarily related to a large new construction electrical project that resulted in higher than expected profits and increased profits in general contractor opportunities during the fiscal year ended September 30, 2024, as compared to the prior fiscal year.

Gross loss attributed to unallocated shop operations totaled $1.6 million for the fiscal year ended September 30, 2024, a $444,000 increase from $1.2 million for the fiscal year ended September 30, 2023.

The gross profit decrease was primarily related to greater

competition affecting project pricing in the transmission business line and less transmission work performed in the fiscal year ended September 30, 2025 as compared to the prior fiscal year.

Electrical, Mechanical, & General services and construction gross profit totaled $20.5 million for the fiscal year ended September 30, 2025, a $242,000 decrease from $20.8 million for the fiscal year ended September 30, 2024.

The decrease in gross profit was primarily related to a large electrical project nearing completion at September 30, 2024 which was more profitable than expected while profit margins during the fiscal year ended September 30, 2025 were in line with expected profit margins over a larger volume of revenue.

Gross loss attributed to unallocated shop operations totaled $4.6 million for the fiscal year ended September 30, 2025, a $3.0 million increase from $1.6 million for the fiscal year ended September 30, 2024.

The gross loss increase was primarily due to decreased internal equipment charges to projects for the fiscal year ended September 30, 2025, as compared to the prior fiscal year.

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The increase was primarily related to increased business opportunities and management hirings needed to secure and manage projects.

Additionally, $1.9 million of the increase was related to Tribute, which was acquired on December 2, 2024, and included $608,000 related to the amortization of acquired intangible assets.

Income from operations .

Income from operations was $19.8 million for the fiscal year ended September 30, 2024, a $6.8 million increase from $13.0 million for the fiscal year ended September 30, 2023.

The increase was due to the items described above.

Income from operations was $4.2 million for the fiscal year ended September 30, 2025, a $15.6 million decrease from $30.1 million for the fiscal year ended September 30, 2024.

The decrease was due to the items described above.

Other nonoperating expense.

Other nonoperating expense decreased by $266,000 or (92.5%) to $22,000 for the fiscal year ended September 30, 2024, from $288,000 for the fiscal year ended September 30, 2023.

The decrease was primarily due to the receipt of a settlement from a former third-party administrator of the Company’s 401(k) retirement plan.

Other nonoperating expense increased by $203,000 or 942.8% to $225,000 for the fiscal year ended September 30, 2025, from $22,000 for the fiscal year ended September 30, 2024.

The increase was primarily due to the receipt of a settlement from a former third-party administrator of the Company’s 401(k) retirement plan in the fiscal year ended September 30, 2024, which offset expenses, that did not repeat in the fiscal year ended September 30, 2025.

Income from lawsuit judgement.

The Company received $15.6 million from a lawsuit judgement against a former customer for work performed in a prior period.

Please see Legal Proceedings on page 15 for more information.

In the fiscal year ended September 30, 2024, the Company received $15.6 million from a lawsuit judgement against a former customer for work performed in a prior period.

Gain on sale of equipment.

The net gain on the sale of equipment increased by $227,000 or 657.3% to $261,000 for the fiscal year ended September 30, 2024, from $34,000 for the fiscal year ended September 30, 2023.

This increase was primarily due to the Company sending more obsolete and underused equipment to auction during the fiscal year ended September 30, 2024.

The net gain on the sale of equipment decreased by $178,000 or (68.0%) to $84,000 for the fiscal year ended September 30, 2025, from $261,000 for the fiscal year ended September 30, 2024.

This decrease was primarily due to the Company sending more obsolete and underused equipment to auction during the fiscal year ended September 30, 2024 as compared to the fiscal year ended September 30, 2025.

Interest Expense.

Interest expense decreased by $218,000 or (9.1%) to $2.2 million for the fiscal year ended September 30, 2024, from $2.4 million for the fiscal year ended September 30, 2023.

This decrease was primarily due to lower line of credit borrowings during the fiscal year ended September 30, 2024.

Income before income taxes was $33.5 million for the fiscal year ended September 30, 2024, compared to $10.4 million for the fiscal year ended September 30, 2023.

The increase was due to the items mentioned above.

The income tax expense for the fiscal year ended September 30, 2024 was $8.4 million as compared to $3.0 million for the fiscal year ended September 30, 2023.

The increase was due to an increase in taxable income in the fiscal year ended September 30, 2024, as compared to the prior fiscal year.

Interest expense increased by $1.0 million or 46.6% to $3.2 million for the fiscal year ended September 30, 2025, from $2.2 million for the fiscal year ended September 30, 2024.

The increase was primarily due to the financing of the Tribute acquisition.

Income before income taxes was $865,000 for the fiscal year ended September 30, 2025, compared to $33.5 million for the fiscal year ended September 30, 2024.

The decrease was due to the items described above.

The income tax expense for the fiscal year ended September 30, 2025 was $485,000 as compared to $8.4 million for the fiscal year ended September 30, 2024.

The decrease in income tax expense was due to a decrease in taxable income in the fiscal year ended September 30, 2025, as compared to the prior fiscal year.

The effective income tax rate for the fiscal year ended September 30, 2025 was 56.1%, as compared to 25.1% for the prior fiscal year.

Effective income tax rates are estimates and may vary from period to period due to changes in the amount of taxable income or loss, non-taxable and non-deductible expenses.

Net income for the fiscal year ended September 30, 2024 was $25.1 million compared to $7.4 million for the fiscal year ended September 30, 2023.

The increase was due to the items mentioned above.

Net income for the fiscal year ended September 30, 2025 was $380,000 compared to $25.1 million for the fiscal year ended September 30, 2024.

The decrease was due to the items described above.

Segment Results

The following table sets forth segment revenues, segment income (loss) from operations and operating margins for the periods indicated, as well as the dollar and percentage change from the prior period:

Year Ended September 30,

Underground Infrastructure Construction

Industrial Construction

Building Construction

Consolidated revenues

Income (loss) from operations:

Underground Infrastructure Construction

Industrial Construction

Building Construction

Corporate and Non-Allocated Costs

Consolidated income from operations

Underground Infrastructure Construction

The $33.9 million increase in revenues for the year ended September 30, 2025 as compared to the prior fiscal year was primarily due to the Company’s focus on growing its natural gas and water distribution business lines.

(Loss) income from operations.

The $13.5 million decrease in income from operations for the year ended September 30, 2025 as compared to the prior fiscal year was primarily due to the decreased profitability in water projects, integrating a new acquisition, and decreased volume of work and profitability from gas transmission projects.

Industrial Construction

The $34.9 million increase in revenues for the year ended September 30, 2025 as compared to the prior fiscal year was primarily due to an increase in large construction projects awarded in the automotive and manufacturing industries.

Income from operations.

The $1.3 million increase in income from operations for the year ended September 30, 2025 as compared to the prior fiscal year was primarily due to the increased volume in work awarded and completed in fiscal year 2025.

Building Construction

The $9.6 million decrease in revenues for the year ended September 30, 2025 as compared to the prior fiscal year was primarily due to a concerted effort to focus on completing several large construction projects that were in backlog as of September 30, 2024.

Income from operations.

The $1.6 million decrease in income from operations for the year ended September 30, 2025 as compared to the prior fiscal year was primarily due to the decreased volume of work completed in fiscal year 2025.

Corporate and Non-Allocated Costs

The $1.8 million increase in Corporate and Non-Allocated Costs for the year ended September 30, 2025 as compared to the prior fiscal year end was primarily due to additional management needed to support the organic and inorganic growth of the Company.

The Company hired an additional controller to support an acquisition, a SOX (Sarbanes-Oxley) Compliance Officer, and a Risk Manager from a subsidiary.

Additionally, the Company’s growth has led to increased legal and acquisition costs, SOX and financial audit fees, information technology and cybersecurity costs, and investor relations costs.

The Company’s disaggregated revenue does vary slightly from the Company’s segment reporting due to combining the Industrial and Building Construction into Electrical, Mechanical and General, and one legal entity in the Underground Infrastructure Construction segment that performs services other than underground construction that are included in Electrical, Mechanical and General.

The volume of these services is not material to the Company’s segment reporting.

Comparison of Financial Condition at September 30, 2025 Compared to September 30, 2024.

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The increase was primarily due to the timing of receivables, retainages, and receipts at the fiscal year ended September 30, 2025 as compared to the prior fiscal year end.

Cash and cash equivalents totaled $12.9 million at September 30, 2024, a decrease of $3.5 million from the prior fiscal year-end balance of $16.4 million.

The decrease was primarily related to a net $7.9 million investment in property and equipment and a net $14.2 million used in financing activities, partially offset by a net $18.6 million provided by operating activities.

Net property, plant and equipment totaled $53.5 million at September 30, 2025, an increase of $15.3 million from the prior fiscal year-end balance of $38.1 million.

Property, plant and equipment acquisitions totaled $10.9 million for the fiscal year 2024 while depreciation expense was $8.5 million, and the net impact of disposals was $797,000.

Right-of-use assets acquired from operating leases totaled $2.5 million net of amortization expense at September 30, 2024, a decrease of $795,000 from the prior fiscal year-end balance of $3.3 million.

The decrease was primarily related to $1.3 million in right-of-use asset payments and, partially offset by $510,000 in right-of-use asset additions during the fiscal year ended September 30, 2024.

Goodwill and acquired intangible assets totaled $7.2 million at September 30, 2024, a $318,000 decrease from the prior fiscal year end balance of $7.5 million and was the result of intangible asset amortization expense of $438,000 for the fiscal year ended September 30, 2024, partially offset by $121,000 related to the acquisition of Heritage Painting.

Prepaid expenses and other totaled $4.1 million at September 30, 2024, an increase of $568,000 from the prior fiscal year-end balance of $3.5 million.

The increase was primarily due to the increase of various prepaid insurance accounts at the fiscal year ended September 30, 2024, as compared to the prior fiscal year end.

Property, plant and equipment acquisitions totaled $28.4 million for the fiscal year 2025 while depreciation expense was $12.0 million, and the net impact of disposals was $1.1 million.

Contract assets totaled $34.5 million at September 30, 2025, an increase of $9.9 million from the prior fiscal year-end balance of $24.6 million.

This increase was primarily due to the timing of project billings and related costs and estimated earnings in excess of billings at September 30, 2025, as compared to at September 30, 2024.

Liabilities totaled $99.6 million at September 30, 2024, decrease of $8.3 million from the prior fiscal year-end balance of $107.9 million.

Contract liabilities totaled $17.0 million at September 30, 2024, a decrease of $792,000 from the prior fiscal year-end balance of $17.7 million.

This decrease was due to increased billings in excess of costs and earnings when computing earned revenue on construction projects at September 30, 2024, as compared to at September 30, 2023.

The aggregate balance of current maturities of long-term debt and long-term debt totaled $23.6 million at September 30, 2024, a decrease of $1.4 million from the prior fiscal year-end balance of $25.0 million.

The decrease was primarily due to $8.0 million in long-term debt repayments, partially offset by $2.0 million in long-term debt additions and $4.5 million in line of credit borrowings due by June 28, 2026.

Net deferred income tax payable totaled $6.5 million at September 30, 2024, a decrease of $380,000 from the prior fiscal year-end balance of $6.9 million.

The decrease was primarily related to the addition of $533,000 in state net operating loss valuation allowances at the fiscal year ended September 30, 2024.

Goodwill and acquired intangible assets totaled $14.8 million at September 30, 2025, a $7.6 million increase from the prior fiscal year end balance of $7.2 million and was the result of an $8.5 million increase related to the acquisitions of Tribute and Rigney, partially offset by intangible asset amortization expense of $1.1 million for the fiscal year ended September 30, 2025.

Prepaid expenses and other totaled $5.0 million at September 30, 2025, an increase of $937,000 from the prior fiscal year-end balance of $4.1 million.

The increase was primarily due to federal and state incomes taxes receivable and the increase of various prepaid insurance accounts at the fiscal year ended September 30, 2025, as compared to the prior fiscal year end.

Cash and cash equivalents totaled $12.2 million at September 30, 2025, a decrease of $684,000 from the prior fiscal year-end balance of $12.9 million.

The decrease was primarily related to a net $29.4 million investment in Company acquisitions and investment in property and equipment, partially offset by a net $24.6 million provided by financing activities and a net $4.1 million provided by operating activities.

Right-of-use assets acquired from operating leases totaled $2.1 million net of amortization expense at September 30, 2025, a decrease of $477,000 from the prior fiscal year-end balance of $2.5 million.

The decrease was primarily related to $1.4 million in right-of-use asset payments and, partially offset by $866,000 in right-of-use asset additions during the fiscal year ended September 30, 2025.

Liabilities totaled $156.0 million at September 30, 2025, an increase of $56.4 million from the prior fiscal year-end balance of $99.6 million.

The aggregate balance of current maturities of long-term debt and long-term debt totaled $61.8 million at September 30, 2025, an increase of $38.2 million from the prior fiscal year-end balance of $23.6 million.

The increase was primarily due to a $20.3 million increase in line of credit borrowings, $16.0 million increase related to the Tribute acquisition and an $11.4 million increase related to equipment financing, partially offset by $9.3 million in long-term debt repayments.

Contract liabilities totaled $28.3 million at September 30, 2025, an increase of $11.4 million from the prior fiscal year-end balance of $17.0 million.

This increase was due to increased billings in excess of costs and earnings when computing earned revenue on construction projects at September 30, 2025, as compared to at September 30, 2024.

Accounts payable totaled $30.7 million as of September 30, 2025, an increase of $7.1 million from the prior fiscal year-end balance of $23.7 million.

The increase was due to more work in progress at the end of the fiscal year ended September 30, 2025, as compared to the prior fiscal year-end.

Accrued expenses and other current liabilities totaled $15.9 million at September 30, 2025, an increase of $2.1 million from the prior fiscal year-end balance of $13.9 million.

The decrease was primarily due to increased labor and burden expenses incurred towards the end of the fiscal year 2025, as compared to fiscal 2024.

Net deferred income tax payable totaled $6.8 million at September 30, 2025, an increase of $263,000 from the prior fiscal year-end balance of $6.5 million.

The decrease was primarily related to an increase in the net operating loss carry forward at the fiscal year ended September 30, 2025.

Current maturities of lines of credit and short-term borrowings totaled $10.4 million at September 30, 2025, an increase of $109,000 from the prior fiscal year-end balance of $10.3 million.

The increase was due to $109,000 in accrued interest on PPP loan debt.

Income taxes payable totaled $0 at September 30, 2025, a decrease of $2.2 million from the prior fiscal year-end balance of $2.2 million primarily due to a decrease in taxable income for the fiscal year ended September 30, 2025 and compared to the fiscal year ended September 30, 2024.

Current and long-term operating lease liabilities totaled $2.0 million at September 30, 2025, a decrease of $489,000 from the prior fiscal year end balance of $2.5 million.

The decrease was primarily related to $1.4 million in operating lease payments, partially offset by $866,000 in additions during the fiscal year ended September 30, 2025.

Accrued expenses and other current liabilities totaled $13.9 million at September 30, 2024, an increase of $752,000 from the prior fiscal year-end balance of $13.1 million.

The increase was primarily due to increased labor and burden expenses incurred towards the end of the fiscal year 2024, as compared to fiscal 2023.

Current maturities of lines of credit and short-term borrowings totaled $10.3 million at September 30, 2024, a decrease of $9.6 million from the prior fiscal year-end balance of $19.8 million.

This decrease was primarily due to $4.2 million in line of credit

repayments, the reclass of $4.5 million in line of credit borrowings to long-term debt, and the payment of $950,000 in short-term insurance premium financing, partially offset by $100,000 in accrued interest on PPP loan debt.

Income taxes payable totaled $2.2 million at September 30, 2024, as compared to a prior fiscal year-end balance of $0 due to having net operating loss carry forwards at September 30, 2023.

Shareholders’ equity totaled $58.7 million at September 30, 2024, an increase of $24.1 million from the prior fiscal year-end balance of $34.6 million.

This increase was primarily due to $25.1 million in net income, partially offset by $994,000 in special cash dividend payments.

Shareholders’ equity totaled $59.2 million at September 30, 2025, an increase of $542,000 from the prior fiscal year-end balance of $58.7 million.

The increase was primarily due to $380,000 in net income, a $2.9 million increase in equity related to common shares issued as consideration in acquisitions, an $81,000 increase in equity related to the vesting of common shares from restricted stock awards, partially offset by $2.0 million in cash dividend payments and $844,000 in stock repurchases by the Company.

Liquidity and Capital Resources

Operating Line of Credit

On August 8, 2024, the Company renewed its $30.0 million line of credit with a maturity date of June 28, 2026.

In July 2025, the Company renewed its $30.0 million line of credit with a maturity date of June 28, 2027.

The interest rate on the line of credit is the “ Wall Street Journal ” Prime Rate (the index) with a floor of 4.99%.

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Interest rate

The Company’s $4.5 million line of credit borrowing is recorded as a long-term debt as of September 30, 2024, as compared to an $8.7 million short-term borrowing at September 30, 2023.

The Company’s $24.8 million and $4.5 million line of credit borrowings are recorded as a long-term debt as of September 30, 2025 and 2024, respectively.

The modified financial covenants for the quarter ended June 30, 2023, and all subsequent quarters, are below:

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The Company’s lender has agreed to omit the effect of the PPP loan restatement from the Company’s covenant compliance calculations while a final decision on PPP loan forgiveness remains in question.

Thus, the Company was in compliance with all covenants at September 30, 2024.

Insurance Premiums Financed

The Company had previously financed insurance policy premiums on a short-term basis through a financing company prior to beginning to make quarterly installment payments for calendar year 2024.

These insurance policies include workers’ compensation, general liability, automobile, umbrella, and equipment policies.

At September 30, 2024 and September 30, 2023, the remaining balance of the insurance premiums was $0 and $950,000, respectively.

The Company was not in compliance with all covenants at September 30, 2025 and received a waiver from its lender.

The Company projects to meet all covenant requirements for the next twelve months.

Paycheck Protection Program Loans

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The requested information was subsequently provided to the SBA through the Lender.

As of September 30, 2025, there have been no further requests or communications from the SBA relating to the PPP Loans.

Borrowers must retain PPP documentation for at least six years after the date the loan is forgiven or paid in full, and the SBA and SBA Inspector General must be granted these files upon request.

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The note is currently held by Peoples Bank, Inc.

On November 13, 2015, the Company entered into a 10-year $1.1 million loan agreement with United Bank to purchase the fabrication shop and property Nitro had previously been leasing.

As of September 30, 2024, the Company had repaid this loan in full.

On December 31, 2020, West Virginia Pipeline Acquisition Company, later renamed West Virginia Pipeline, Inc., entered into a $3.0 million sellers’ note agreement with David and Daniel Bolton for the remaining purchase price of West Virginia Pipeline, Inc.

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As part of the $6.35 million acquisition price, the Company paid $3.5 million in cash in addition to the note.

The unsecured five-year term note requires annual payments of at least

$500,000 with a fixed interest rate of 3.25% on the $3.0 million sellers’ note, which equates to 5.35% on the carrying value of the note.

As of September 30, 2024, the Company had made annual installment payments of $2,000,000.

On January 4, 2021, the Company entered into a $3.0 million Non-Revolving Note agreement with United Bank.

This five-year agreement gave the Company access to a $3.0 million line of credit for the purchase of equipment.

As of September 30, 2024, the Company had repaid this loan in full.

The unsecured five-year term note requires annual payments of at least $500,000 with a fixed interest rate of 3.25% on the $3.0 million sellers’ note, which equates to 5.35% on the carrying value of the note.

As of September 30, 2025, the Company had made annual installment payments of $2.5 million.

On April 2, 2021, the Company entered into a $3.5 million Non-Revolving Note agreement with United Bank.

This five-year agreement repaid the outstanding $3.5 million line of credit that was used for the down payment on the West Virginia Pipeline acquisition.

This five-year agreement repaid the outstanding $3.5 million line of credit that was used for the down payment on the West Virginia Pipeline

This loan has monthly installment payments of $64,853 and has a fixed interest rate of 4.25%.

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On April 29, 2022, the Company entered into a $1.0 million promissory note agreement with Corns Enterprises, a related party, as partial consideration for the purchase of Tri-State Paving.

Corns continued his role as President of the Company’s Tri-State Paving Subsidiary.

Corns continued his role as President of the Company’s Tri-State Paving Subsidiary until his retirement in May 2025.

This four-year agreement requires $250,000 principal installment payments on or before the end of each twelve (12) full calendar month period beginning April 29, 2022.

Interest payments due shall be calculated on the principal balance remaining and shall be at the stated rate of 3.5% per year.

Interest payments due will be calculated on the principal balance remaining and shall be at the stated rate of 3.5% per year.

The Company has made $750,000 in principal payments on this note as of September 30, 2025.

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As of September 30, 2025, the Company had borrowed $9.3 million against this line of credit and made $3.4 million in principal payments.

On August 8, 2024, the Company renewed its $30.0 million line of credit with a maturity date of June 28, 2026.

The interest rate on the line of credit is the “ Wall Street Journal ” Prime Rate (the index) with a floor of 4.99%.

The outstanding balance on the operating line of credit at September 30, 2024 was $4.5 million with an interest rate of 8.0%.

On August 8, 2024, the Company entered into a $5.0 million Non-Revolving Note agreement with United Bank.

This five-year agreement gave the Company access to a $5.0 million equipment line of credit, specifically for the purchase of equipment, for a period of twelve months with a variable interest rate based on the “ Wall Street Journal ” Prime Rate (the index) and initially at 8.5%.

After twelve months, all borrowings against the equipment line of credit will be converted to a forty-eight month term note agreement with a

fixed interest rate equal to the “U.S.

After twelve months, all borrowings against the equipment line of credit were converted to a forty-eight month term note agreement with a fixed interest rate equal to the “U.S.

Treasury Rate” plus 2.75% per annum.

The loan is collateralized by the equipment purchased under this agreement.

As of September 30, 2024, the Company had not borrowed against this line of credit.

As of September 30, 2025, the Company had borrowed $5.0 million against this equipment line of credit and made repayments of $90,000 in principal payments.

On December 2, 2024, the Company entered into a $16.0 million loan agreement with United Bank to finance the acquisition of Tribute.

This six-year agreement has monthly payments of $272,000 including a fixed interest rate of 6.9%.

As of September 30, 2025, the Company had made $1.8 million in principal payments.

On September 30, 2025, the Company entered into a $500,000 sellers’ note agreement with Joe and Cathy Rigney for the remaining purchase price of Rigney Digital Systems Ltd.

For the purchase price allocation, the $500,000 note had a fair carrying value of $461,000.

As part of the $4.6 million acquisition price, the Company paid $3.0 million in cash in addition to the note and issued $1.0 million in common shares of the Company’s stock.

The unsecured five-year term note requires a $500,000 payment at the end of the term with monthly interest paid at a fixed interest rate of 5.0% on the $3.0 million sellers’ note, which equates to 7.05% on the carrying value of the note.

At September 30, 2025, future expected payments due on short-term and long-term debt are as follows:

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The lease, which was originally signed on March 25, 2021, is for a period of two years with five one-year renewals available immediately following the end of the base term.

The Company has only committed to one-year renewals and is evaluating whether to renew for additional periods.

The Company had two lease agreements for construction equipment with a combined amount of $160,000 that were paid in full as of September 30, 2024.

The leases had a term of twenty-two months with a stated interest rate of 0%, combined monthly installment payments of $6,645 and were cancellable at any time without penalty.

The Company exercised the right to purchase the equipment at the expiration of the leases by applying the two-month deposit paid.

The related assets and finance lease obligations associated with these lease agreements had been included in the consolidated balance sheets within property, plant and equipment and long-term debt.

As of September 30, 2025, the Company has only committed to one-year renewals and is evaluating whether to renew for additional periods.

The Company has two right-of-use operating leases acquired on April 29, 2022, as part of the Tri-State Paving, LLC transaction.

The first operating lease, for the Hurricane, West Virginia facility, had a net present value of $236,000 at inception, and a carrying value of $0 at September 30, 2025.

The 4.5% interest rate on the operating leases is based on the Company’s incremental borrowing rate at inception.

The 4.5% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception.

The Company signed a one-year renewal after the lease expired and as of September 30, 2025 is evaluating whether to renew for additional periods.

The second operating lease, for the Chattanooga, Tennessee facility, had a net present value of $144,000 at inception, and expired on August 31, 2024.

The lease was renewed for a two-year period with a net present value of $140,000 and had a carrying value of $50,000 at September 30, 2025.

The 8.5% interest rate on the operating leases is based on the Company’s incremental borrowing rate at inception.

The 8.5% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception.

The Company has a right-of-use operating lease with Enterprise acquired on August 11, 2022, as part of the Ryan Environmental acquisition.

This lease agreement was initially for thirty-one vehicles with a net present value of $1.2 million.

The Company subsequently netted forty-three additional leased vehicles.

The Company subsequently netted fifty-one additional leased vehicles.

The right-of-use operating lease had a carrying value of $1.9 million at September 30, 2025.

Each vehicle leased under the master lease program has its own implicit rate.

The Company had a right-of-use operating lease with RICA Developers, LLC acquired on August 12, 2022, as part of the Ryan Environmental acquisition.

This lease, for the Bridgeport, West Virginia facility, had a net present value of $140,000 at inception and no carrying value at September 30, 2023.

The 4.5% interest rate on the operating lease was based on the Company’s incremental borrowing rate at inception.

The Company has signed a one-year renewal agreement effective October 1, 2023 through September 30, 2024.

The lease had a net present value of $125,000 at inception and no carrying value at September 30, 2024.

The 8.5% interest rate on the operating lease was based on the Company’s incremental borrowing rate at inception.

As of September 30, 2024, the Company has only committed to a one-year renewal and is evaluating whether to renew for additional periods.

The Company has a right-of-use operating lease acquired on March 28, 2023.

1 unchanged sentence

The 7.5% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception.

The maturities of the Company’s operating lease liabilities are as follows:

The maturities of the Company’s operating lease liabilities at September 30, 2025 are as follows:

Less amounts representing interest

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TransCanada Corporation

NiSource and subsidiaries

* Less than 10.0% and included in “All other” if applicable

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at September 30, 2024

NiSource and subsidiaries

TransCanada Corporation

* Less than 10.0% and included in “All other” if applicable

2 unchanged sentences

However, due to the nature of the Company’s operations, the major customers and sources of revenues may change from year to year.

As previously disclosed, in February 2018, the Company filed a lawsuit against a customer in the United States District Court for the Western District of Pennsylvania (the “District Court”).

The lawsuit was related to a dispute over work performed on a pipeline construction project.

On November 21, 2022, the District Court issued a judgment in favor of the Company.

On April 17, 2024, the United States Court of Appeals for the Third Circuit (the “Appeals Court”) affirmed the decision of the District Court.

In May 2024, the Appeals Court denied petitions for a rehearing.

This upheld the award granted by the District Court in November 2022.

The Company received approximately $15.6 million payment related to the lawsuit.

The Company recognized the payment in its consolidated financial statements for the third fiscal quarter ended June 30, 2024.

On November 12, 2021, the Company received a withdrawal liability claim from a pension plan to which the Company made pension contributions for union construction employees performing covered work in a particular jurisdiction.

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The Company is in negotiations with the pension fund to resolve the matter and all future payments have been suspended as part of the negotiation.

The Company has expensed all $164,000 in payments made through September 30, 2022 and

does not expect any future liabilities related to this claim.

The Company has expensed all $164,000 in payments made through September 30, 2022 and does not expect any future liabilities related to this claim.

The Company did not make any payments during the twelve months ended September 30, 2025 or 2024.

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This four-year agreement requires $250,000 principal installment payments on or before the end of each twelve (12) full calendar month period beginning April 29, 2022.

Interest payments due shall be calculated on the principal balance remaining and shall be at the stated rate of 3.5% per year.

Interest payments due will be calculated on the principal balance remaining and will be at the stated rate of 3.5% per year.

The Company has made $750,000 in principal payments on this note as of September 30, 2025.

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This thirty-six-month lease is treated as a right to use asset and has payments of $7,000 per month.

The total net present value at inception was $236,000 with a carrying value of $46,000 at September 30, 2024.

The total net present value at inception was $236,000 with no carrying value at September 30, 2025.

The Company signed a one-year renewal after the lease expired and as of September 30, 2025 is evaluating whether to renew for additional periods.

In May 2025, David E.

Corns, member of Corns Enterprises and President of Tri-State Paving, retired.

SQP made an equity investment of $156,000 in 1030 Quarrier Development, LLC (“Development”) in August 2022.

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Customer relationships

Revolt Energy:

Employment agreement/non-compete

Heritage Painting

2 unchanged sentences

Customer relationships

Tribute Contracting & Consultants

Non-compete 1

Non-compete 2

Rigney Digital Systems

Total intangible assets

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The Company’s provision for income taxes is computed by applying a federal rate of 21.0% and a blended state rate of approximately 5% to 6.0% to taxable income or loss after consideration of non-taxable and non-deductible items.

The income tax expense for the fiscal year ended September 30, 2024 was $8.4 million as compared to $3.0 million for the fiscal year ended September 30, 2023.

The increase was due to an increase in taxable income for the fiscal year ended September 30, 2024, as compared to the fiscal year ended September 30, 2023.

The income tax expense for the fiscal year ended September 30, 2025 was $485,000 as compared to $8.4 million for the fiscal year ended September 30, 2024.

The decrease in income tax expense was due to an decrease in taxable income for the fiscal year ended September 30, 2025, as compared to the fiscal year ended September 30, 2024.

The effective income tax rate for the fiscal year ended September 30, 2025 was 56.1%, as compared to an effective income tax rate of 25.1% for the fiscal year ended September 30, 2024.

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New Accounting Pronouncements

On October 28, 2021, the Financial Accounting Standards Board (“FASB”) released Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

The amendments of this ASU require entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.

The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination.

The amendments are effective for public business entities for the fiscal years, including interim periods within those the fiscal years, beginning after December 15, 2022.

For all other entities they are effective for the fiscal years, including interim periods within those the fiscal years, beginning after December 15, 2023.

Entities should apply the amendments prospectively to business combinations that occur after the effective date.

Early adoption is permitted, including in any interim period, for public business entities for periods for which financial statements have not yet been issued, and for all other entities for periods for which financial statements have not yet been made available for issuance.

The Company is currently assessing the effect that ASU 2021-08 will have on its results of operations, financial position and cash flows;

however, the Company does not expect a significant impact.

In November 2024, the FASB issued an update that requires incremental disclosures about specific expense categories.

Entities are required to disclose in the notes to financial statements the amounts of purchases of inventory, employee compensation, depreciation, intangible asset amortization and selling expenses included in each relevant expense caption of the statements of operations.

The standard also requires disclosure of the amount, and a qualitative description of, other items remaining in relevant expense captions that are not separately disaggregated.

This update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption and both prospective and retrospective application are permitted.

The Company is currently assessing the effect of this update.

In December 2023, the FASB issued an update that expands disclosures for tax rate reconciliation tables, primarily by requiring disaggregation of income taxes paid by jurisdiction, as well as greater disaggregation within the rate reconciliation.

This update is effective for fiscal years beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025.

Early adoption and retrospective application are permitted.

The Company is currently assessing the effect of this update.

Subsequent Events

On October 31, 2024, the Company announced it had entered into an Asset Purchase Agreement with Tribute Contracting & Consultants, LLC (“Tribute”), an underground utility contractor that primarily specializes in water and wastewater system installations in Ohio, Kentucky, and West Virginia.

On December 2, 2024, the Company closed on the acquisition.

Under the terms of the agreement, Energy Services’ new subsidiary, Tribute Acquisition Company, purchased substantially all of the assets of Tribute for $22.0 million in cash, less any assumed debt and working capital adjustments, and $2.0 million of Energy Services’ common stock.

The $22.0 million in cash was funded through a $16.0 million loan with United Bank, West Virginia, with the remainder paid in cash by the Company.

On November 20, 2024, the Company’s Board of Directors approved a quarterly cash dividend of $0.03 per common share.

The dividend will be paid on January 2, 2025 to holders of record as of December 13, 2024.

While this is expected to be a quarterly cash dividend, factors such as income from operations, cash flows, and overall financial outlook may affect future dividend payments.

On October 15, 2025, the Company paid a quarterly dividend of $0.03 per share to holders of record as of October 6, 2025.

Management has evaluated all subsequent events for accounting and disclosure.

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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.

What changed 10-K

Item 7. Management’s Discussion and Analysis