What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-11 compared with 2026-02-09 · 402 added, 261 removed, 359 unchanged (65% of the section changed)

23 unchanged sentences

The Company has also added the ability to perform horizontal directional drilling, civil, and general contracting services.

The Company had consolidated operating revenues of $114.1 million for the three months ended December 31, 2025, of which 43.3% was attributable to electrical, mechanical, and general contract services, 21.1% to gas and petroleum transmission projects, and 35.6% to gas & water distributions services.

The Company had consolidated operating revenues of $100.6 million for the three months ended December 31, 2024, of which 53.2% was attributable to electrical, mechanical, and general contract services, 23.5% to gas and petroleum transmission projects, and 23.3% to gas & water distributions services.

The Company had consolidated operating revenues of $93.2 million for the three months ended March 31, 2026, of which 54.6% was attributable to electrical, mechanical, and general contract services, 11.8% to gas and petroleum transmission projects, and 33.6% to gas & water distributions services.

The Company had consolidated operating revenues of $76.7 million for the three months ended March 31, 2025, of which 60.3% was attributable to electrical, mechanical, and general contract services, 4.4% to gas and petroleum transmission projects, and 35.3% to gas & water distributions services.

The Company had consolidated operating revenues of $207.3 million for the six months ended March 31, 2026, of which 48.3% was attributable to electrical, mechanical, and general contract services, 17.0% to gas and petroleum transmission projects, and 34.7% to gas & water distributions services.

The Company had consolidated operating revenues of $177.3 million for the six months ended March 31, 2025, of which 54.8% was attributable to electrical, mechanical, and general contract services, 12.3% to gas and petroleum transmission projects, and 32.9% to gas & water distributions services.

Energy Services’ customers include many of the leading companies in the industries it serves, including:

67 unchanged sentences

As a result, our volume of business may be adversely affected by where our customers are in the cycle and thereby their financial condition as to their capital needs and access to capital to finance those needs.

Three months ended December 31, 2025 and 2024 Overview

The following is an overview of results from operations for the three months ended December 31, 2025 and 2024:

Three and six months ended March 31, 2026 and 2025 Overview

The following is an overview of results from operations for the three and six months ended March 31, 2026 and 2025:

Three Months Ended

Six Months Ended

Cost of revenue

Selling and administrative expenses

Income from operations

Other income (expense)

Interest income

Paycheck Protection Program (“PPP”) loan forgiveness

Proceeds from lawsuit judgement

Income (loss) from operations

Other (expense) income

Other nonoperating expense

1 unchanged sentence

Gain on sale of equipment

Income before income taxes

Income tax expense

Weighted average shares outstanding-basic

Weighted average shares-diluted

Earnings per share available to common shareholders

Earnings per share-diluted available to common shareholders

Results of Operations for the Three Months Ended December 31, 2025 Compared to the Three Months Ended December 31, 2024

A table comparing the Company’s revenues for the three months ended December 31, 2025 compared to the three months ended December 31, 2024 is below:

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

Results of Operations for the Three and Six Months Ended March 31, 2026 Compared to the Three and Six Months Ended March 31, 2025

The following table compares the Company’s revenues for the three and six months ended March 31, 2026 to the corresponding periods in 2025:

Three Months Ended

December 31, 2025

December 31, 2024

March 31, 2026

March 31, 2025

Gas & Water Distribution

1 unchanged sentence

Electrical, Mechanical, & General

Total revenues increased by $13.5 million to $114.1 million for the three months ended December 31, 2025, as compared to $100.6 million for the three months ended December 31, 2024.

The increase was a result of $9.3 million and $5.7 million in increased work in the Gas & Water Distribution and Gas & Petroleum Transmission categories, respectively, partially offset by a $1.5 million decrease in Electrical, Mechanical, & General work for the three months ended December 31, 2025 as compared to the same period in 2024.

Gas & Water Distribution revenues totaled $40.6 million for the three months ended December 31, 2025, a $9.3 million increase from $31.3 million for the three months ended December 31, 2024.

The revenue increase was primarily related to increased water distribution services performed during the three months ended December 31, 2025, as compared to the same period in 2024.

Gas & Petroleum Transmission revenues totaled $24.1 million for the three months ended December 31, 2025, a $5.7 million increase from $18.5 million for the three months ended December 31, 2024.

The revenue increase was primarily due to two new transmission projects awarded in the first quarter of fiscal year 2026.

Electrical, Mechanical, & General construction services revenues totaled $49.4 million for the three months ended December 31, 2025, a $1.5 million decrease from $50.9 million for the three months ended December 31, 2024.

The revenue decrease was primarily related to a decrease in electrical services performed during the three months ended December 31, 2025, as compared to the same period in 2024.

Six Months Ended

March 31, 2026

March 31, 2025

Gas & Water Distribution

Gas & Petroleum Transmission

Electrical, Mechanical, & General

Total revenues increased by $16.5 million to $93.2 million for the three months ended March 31, 2026, compared to $76.7 million for the three months ended March 31, 2025.

For the six months ended March 31, 2026, total revenues increased by $30.0 million to $207.3 million, compared to $177.3 million for the same period in 2025.

These increases were driven by higher revenues across all business lines during the three- and six-month periods ended March 31, 2026, compared to the corresponding periods in 2025.

Gas & Water Distribution revenues were $31.3 million for the three months ended March 31, 2026, an increase of $4.2 million from $27.1 million for the three months ended March 31, 2025.

For the six months ended March 31, 2026, revenues were $71.9 million, an increase of $13.5 million from $58.4 million for the same period in 2025.

These increases were primarily attributable to higher levels of water distribution services performed during the 2026 periods.

Gas & Petroleum Transmission revenues were $11.0 million for the three months ended March 31, 2026, an increase of $7.6 million from $3.4 million for the three months ended March 31, 2025.

For the six months ended March 31, 2026, revenues were $35.1 million, an increase of $13.3 million from $21.9 million for the same period in 2025.

These increases were primarily due to new transmission projects awarded in the first quarter of fiscal 2026, as well as the timing of project execution, with most transmission work in fiscal 2025 commencing in the third fiscal quarter.

Electrical, Mechanical, & General Construction Services revenues were $50.8 million for the three months ended March 31, 2026, an increase of $4.6 million from $46.2 million for the three months ended March 31, 2025.

For the six months ended March 31, 2026, revenues were $100.2 million, an increase of $3.1 million from $97.1 million for the same period in 2025.

These increases were primarily attributable to higher levels of electrical services performed during the 2026 periods.

Cost of Revenues.

A table comparing the Company’s costs of revenues for the three months ended December 31, 2025, compared to the three months ended December 31, 2024, is below:

The following table compares the Company’s cost of revenues for the three and six months ended March 31, 2026 to the corresponding periods in 2025:

Three Months Ended

December 31, 2025

December 31, 2024

March 31, 2026

March 31, 2025

Gas & Water Distribution

1 unchanged sentence

Electrical, Mechanical, & General

Unallocated Shop Expense

Total cost of revenues increased by $9.7 million to $100.1 million for the three months ended December 31, 2025, as compared to $90.4 million for the three months ended December 31, 2024.

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

Gas & Water Distribution cost of revenues totaled $34.1 million for the three months ended December 31, 2025, a $8.0 million increase from $26.1 million for the three months ended December 31, 2024.

The cost of revenues increase was primarily related to increased water distribution services performed during the three months ended December 31, 2025, as compared to the same period in 2024.

Gas & Petroleum Transmission cost of revenues totaled $20.3 million for the three months ended December 31, 2025, a $2.8 million increase from $17.5 million for the three months ended December 31, 2024.

The cost of revenues increase for the three months ended December 31, 2025 was primarily due to two new transmission projects awarded in the first quarter of fiscal year 2026.

Electrical, Mechanical, & General construction services cost revenues totaled $44.5 million for the three months ended December 31, 2025, a $1.5 million decrease from $46.1 million for the three months ended December 31, 2024.

The cost of revenues decrease was primarily related to a decrease in electrical services performed during the three months ended December 31, 2025, as compared to the same period in 2024.

Unallocated shop expenses totaled $1.2 million for the three months ended December 31, 2025, a $570,000 increase from $674,000 for the three months ended December 31, 2024.

The increase in unallocated shop expenses was primarily due to an increase in depreciation, insurance, and equipment repair costs without an offsetting increase to internal equipment charged to projects for the three months ended December 31, 2025, as compared to the same period in the prior year.

Unallocated Shop Expenses

Six Months Ended

March 31, 2026

March 31, 2025

Gas & Water Distribution

Gas & Petroleum Transmission

Electrical, Mechanical, & General

Unallocated Shop Expenses

Total cost of revenues increased by $6.3 million to $82.9 million for the three months ended March 31, 2026, compared to $76.6 million for the three months ended March 31, 2025.

For the six months ended March 31, 2026, total cost of revenues increased by $16.1 million to $183.1 million, compared to $167.0 million for the same period in 2025.

These increases were primarily attributable to higher levels of work across all business lines during the 2026 periods, partially offset by a $312,000 decrease in cost of revenues for Electrical, Mechanical, and General Construction Services for the six months ended March 31, 2026.

Gas & Water Distribution cost of revenues was $29.0 million for the three months ended March 31, 2026, an increase of $962,000 from $28.0 million for the prior-year period.

For the six months ended March 31, 2026, cost of revenues was $63.1 million, an increase of $8.9 million from $54.1 million for the same period in 2025.

These increases were primarily attributable to higher levels of water distribution activity.

Gas & Petroleum Transmission cost of revenues was $8.5 million for the three months ended March 31, 2026, an increase of $3.9 million from $4.6 million for the prior-year period.

For the six months ended March 31, 2026, cost of revenues was $28.8 million, an increase of $6.7 million from $22.1 million for the same period in 2025.

These increases were primarily due to new transmission projects awarded in the first quarter of fiscal 2026 and the timing of project execution, as most transmission work in fiscal 2025 commenced in the third fiscal quarter.

Electrical, Mechanical, & General Construction Services cost of revenues was $43.7 million for the three months ended March 31, 2026, an increase of $1.2 million from $42.4 million for the prior-year period.

For the six months ended March 31, 2026, cost of revenues was $88.2 million, a decrease of $312,000 from $88.5 million for the same period in 2025.

While activity levels increased, the

Company achieved improved margins during the 2026 periods, resulting in a modest decrease in cost of revenues for the current six-month period.

Unallocated shop expenses were $1.8 million for the three months ended March 31, 2026, an increase of $235,000 from $1.6 million for the prior-year period.

For the six months ended March 31, 2026, unallocated shop expenses were $3.0 million, an increase of $805,000 from $2.2 million for the same period in 2025.

The increase in the 2026 periods was primarily due to higher depreciation, insurance, and equipment repair costs, without a corresponding increase in internal equipment charges to projects during the 2026 periods.

Gross Profit (Loss) .

A table comparing the Company’s gross profit for the three months ended December 31, 2025, compared to the three months ended December 31, 2024, is below:

The following table compares the Company’s gross profit for the three and six months ended March 31, 2026 to the corresponding periods in 2025:

Three Months Ended

December 31, 2025

December 31, 2024

March 31, 2026

March 31, 2025

Gas & Water Distribution

2 unchanged sentences

Unallocated Shop Expense

Total gross profit increased by $3.7 million to $14.0 million for the three months ended December 31, 2025, as compared to $10.3 million for the three months ended December 31, 2024.

The increase was primarily due to increased profit in all business lines, partially offset by increased unallocated shop expense during the first quarter of fiscal year 2026, as compared to the same period in the prior year.

Gas & Water Distribution gross profit totaled $6.5 million for the three months ended December 31, 2025, a $1.4 million increase from $5.2 million for the three months ended December 31, 2024.

The gross profit increase was primarily related to increased water distribution services performed during the three months ended December 31, 2025, as compared to the same period in 2024.

Gas & Petroleum Transmission gross profit totaled $3.8 million for the three months ended December 31, 2025, a $2.9 million increase from $934,000 for the three months ended December 31, 2024.

The gross profit increase for the three months ended December 31, 2025 was primarily due to two new transmission projects awarded in the first quarter of fiscal year 2026.

Electrical, Mechanical, & General construction services gross profit totaled $4.9 million for the three months ended December 31, 2025, a $30,000 increase from $4.8 million for the three months ended December 31, 2024.

The gross profit increase was primarily related to increased profitability on work performed offsetting the $1.5 million decrease in revenue for the three months ended December 31, 2025 compared to the same period in 2024.

Gross loss attributable to unallocated shop expenses totaled ($1.2 million) for the three months ended December 31, 2025, a $570,000 increase from ($674,000) for the three months ended December 31, 2024.

The increase in gross loss related to unallocated shop expenses was primarily due to an increase in depreciation, insurance, and equipment repair costs without an offsetting increase to internal equipment charged to projects for the three months ended December 31, 2025, as compared to the same period in the prior year.

Six Months Ended

March 31, 2026

March 31, 2025

Gas & Water Distribution

Gas & Petroleum Transmission

Electrical, Mechanical, & General

Unallocated Shop Expense

Total gross profit increased by $10.1 million to $10.2 million for the three months ended March 31, 2026, compared to $78,000 for the three months ended March 31, 2025.

For the six months ended March 31, 2026, total gross profit increased by $13.9 million to $24.2 million, compared to $10.3 million for the same period in 2025.

These increases were primarily attributable to higher activity levels and improved profitability across all business lines, partially offset by higher unallocated shop expenses during the 2026 periods.

Gas & Water Distribution gross profit was $2.4 million for the three months ended March 31, 2026, an increase of $3.3 million from a gross loss of $911,000 for the prior-year period.

For the six months ended March 31, 2026, gross profit was $8.9 million, an increase of $4.6 million from $4.3 million for the same period in 2025.

These increases were primarily attributable to higher levels of water distribution activity and improved project profitability.

Gas & Petroleum Transmission gross profit was $2.5 million for the three months ended March 31, 2026, an increase of $3.7 million from a gross loss of $1.2 million for the prior-year period.

For the six months ended March 31, 2026, gross profit was $6.4 million, an increase of $6.6 million from a gross loss of $271,000 for the same period in 2025.

These increases were primarily due to transmission projects awarded in the first and second quarters of fiscal 2026, as well as improved profitability and project execution.

Electrical, Mechanical, & General Construction Services gross profit was $7.2 million for the three months ended March 31, 2026, an increase of $3.4 million from $3.8 million for the prior-year period.

For the six months ended March 31, 2026, gross profit was $12.0 million, an increase of $3.4 million from $8.6 million for the same period in 2025.

These increases were primarily attributable to improved margins on relatively consistent levels of work performed.

Gross loss attributable to unallocated shop expenses was $1.8 million for the three months ended March 31, 2026, an increase of $235,000 from $1.6 million for the prior-year period.

For the six months ended March 31, 2026, gross loss attributable to unallocated shop expenses was $3.0 million, an increase of $805,000 from $2.2 million for the same period in 2025.

Selling and administrative expenses .

Total selling and administrative expenses increased by $463,000 to $9.1 million for the three months ended December 31, 2025, as compared to $8.6 million for the same period in 2024.

The increase was primarily related to increased selling and administrative expenses for the three months ended December 31, 2025 related to a fiscal year 2025 acquisition that only operated for one month during the three months ended December 31, 2024.

Total selling and administrative expenses increased by $1.0 million to $9.2 million for the three months ended March 31, 2026, compared to $8.2 million for the same period in 2025.

For the six months ended March 31, 2026,

total selling and administrative expenses increased by $1.5 million to $18.3 million, compared to $16.8 million for the same period in 2025.

These increases were primarily attributable to higher labor and related burden costs associated with the Company’s growth.

Other non-operating expense .

Other non-operating expenses totaled $103,000 for the three months ended December 31, 2025, as compared to $48,000 in non-operating expense for the same period in 2024.

The increase was primarily due to intangible asset amortization related to an acquisition closed on September 30, 2025.

Other non-operating expenses were $94,000 for the three months ended March 31, 2026, compared to $21,000 for the same period in 2025.

For the six months ended March 31, 2026, other non-operating expenses were $197,000, compared to $69,000 for the same period in 2025.

The increases were primarily attributable to amortization of intangible assets associated with an acquisition completed on September 30, 2025.

Interest expense .

Interest expense totaled $990,000 for the three months ended December 31, 2025, an increase of $506,000 from $484,000 for the same period in 2024.

The increase was primarily due to increased interest expense related to line of credit borrowings during the three months ended December 31, 2025, as compared to same period in the prior fiscal year.

Interest expense was $622,000 for the three months ended March 31, 2026, a decrease of $254,000 from $876,000 for the same period in 2025.

This decrease was primarily attributable to lower interest expense on line of credit borrowings and the repayment of other long-term debt using proceeds from an equity raise completed in February 2026.

For the six months ended March 31, 2026, interest expense was $1.6 million, an increase of $252,000 from $1.4 million for the same period in 2025.

This increase was primarily attributable to higher average borrowings on the Company’s line of credit during the three months ended December 31, 2025, compared to the corresponding period in the prior fiscal year.

Gain on sale of equipment .

Gain on sale of equipment totaled $19,000 for the three months ended December 31, 2025, a decrease of $177,000 from $196,000 for the same period in the prior year.

The Company sold certain underutilized or non-working pieces of equipment during the three months ended December 31, 2024, with no comparable sale occurring during the three months ended December 31, 2025.

Income before income taxes was $3.8 million for the three months ended December 31, 2025, as compared to $1.3 million for the same period in the prior year.

The increase was primarily related to the items mentioned above.

Income tax expense for the three months ended December 31, 2025, was $1.1 million compared to $455,000 for the same period in the prior year.

The increase in income tax expense was due to an increase in taxable income during the three months ended December 31, 2025, as compared to the same period in the prior year.

Net income for the three months ended December 31, 2025, was $2.7 million, as compared to $854,000 for the same period in the prior year.

Gain on sale of equipment was $70,000 for the three months ended March 31, 2026, an increase of $87,000 from a loss of $17,000 for the same period in the prior year.

For the six months ended March 31, 2026, gain on sale of equipment was $89,000, a decrease of $90,000 from $179,000 for the same period in the prior year.

The Company periodically sells underutilized or non-operating equipment as part of its asset management practices.

As a result, gains and losses on such sales may vary from period to period.

Net income (loss) .

Income (loss) before income taxes was $412,000 for the three months ended March 31, 2026, compared to a loss of $9.0 million for the same period in the prior year.

For the six months ended March 31, 2026, income before income taxes was $4.3 million, compared to a loss of $7.7 million for the same period in the prior year.

These increases were primarily attributable to the factors discussed above.

Income tax expense was $197,000 for the three months ended March 31, 2026, compared to an income tax benefit of $2.2 million for the same period in the prior year.

For the six months ended March 31, 2026, income tax expense was $1.3 million, compared to an income tax benefit of $1.8 million for the same period in the prior year.

The increase in income tax expense was primarily due to higher pre-tax income during the 2026 periods.

Net income was $216,000 for the three months ended March 31, 2026, compared to a net loss of $6.8 million for the same period in the prior year.

For the six months ended March 31, 2026, net income was $2.9 million, compared to a net loss of $5.9 million for the same period in the prior year.

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:

Three Months Ended December 31,

Underground Infrastructure Construction

Industrial Construction

Building Construction

Consolidated revenues

Income (loss) from operations:

Underground Infrastructure Construction

Industrial Construction

Building Construction

Infrastructure

Three Months Ended March 31, 2026

Segment direct operating expenses (excluding depreciation)

Direct depreciation expense

Segment gross profit

Segment gross profit percentage

Selling, general, and administrative expenses

Indirect depreciation expense

Intangible asset amortization expenses

Segment indirect operating expenses

Segment income from operations

Segment operating margin percentage

Corporate and non-allocated costs

Consolidated income from operations

Corporate depreciation expense

Total consolidated income from operations

Infrastructure

Three Months Ended March 31, 2025

Segment direct operating expenses (excluding depreciation)

Direct depreciation expense

Segment gross (loss) profit

Segment gross profit percentage

Selling, general, and administrative expenses

Indirect depreciation expense

Intangible asset amortization expenses

Segment indirect operating expenses

Segment (loss) income from operations

Segment operating margin percentage

Corporate and non-allocated costs

Corporate depreciation expense

Total consolidated (loss) income from operations

Variance Between Three Months Ended March 31, 2026 and 2025

Infrastructure

Segment direct operating expenses (excluding depreciation)

Direct depreciation expense

Segment gross profit

Segment gross profit percentage

Selling, general, and administrative expenses

Indirect depreciation expense

Intangible asset amortization expenses

Segment indirect operating expenses

Segment income from operations

Segment operating margin percentage

Corporate and non-allocated costs

Corporate depreciation expense

Total consolidated income from operations

Infrastructure

Six Months Ended March 31, 2026

Segment direct operating expenses (excluding depreciation)

Direct depreciation expense

Segment gross profit

Segment gross profit percentage

Selling, general, and administrative expenses

Indirect depreciation expense

Intangible asset amortization expenses

Segment indirect operating expenses

Segment income from operations

Segment operating margin percentage

Corporate and non-allocated costs

Corporate depreciation expense

Total consolidated income from operations

Infrastructure

Six Months Ended March 31, 2025

Segment direct operating expenses (excluding depreciation)

Direct depreciation expense

Segment gross profit

Segment gross profit percentage

Selling, general, and administrative expenses

Indirect depreciation expense

Intangible asset amortization expenses

Segment indirect operating expenses

Segment (loss) income from operations

Segment operating margin percentage

Corporate and non-allocated costs

Corporate depreciation expense

Total consolidated (loss) income from operations

Variance Between Six Months Ended March 31, 2026 and 2025

Infrastructure

Segment direct operating expenses (excluding depreciation)

Direct depreciation expense

Segment gross profit

Segment gross profit percentage

Selling, general, and administrative expenses

Indirect depreciation expense

Intangible asset amortization expenses

Segment indirect operating expenses

Segment income from operations

Segment operating margin percentage

Corporate and non-allocated costs

Corporate depreciation expense

Total consolidated income from operations

Underground Infrastructure Construction

The $16.4 million increase in revenues for the three months ended December 31, 2025 as compared to the same period in 2024 was primarily due to the Company’s focus on growing its natural gas and water distribution business lines.

Additionally, two new natural gas transmission projects were started during the three months ended December 31, 2025.

The $13.7 million and $30.0 million increases in revenues for the three and six months ended March 31, 2026 as compared to the same periods in 2025 were primarily due to the Company’s focus on growing its natural gas and water distribution business lines.

Additionally, natural gas transmission projects started earlier in fiscal year 2026 as compared to fiscal year 2025.

Income from operations.

The $3.5 million increase in income from operations for the three months ended December 31, 2025 as compared to the same period in 2024 was primarily due to an increased volume of work and profitability from gas transmission projects.

The $8.1 million and $11.6 million increases in income from operations for the three and six months ended March 31, 2026 as compared to the same period in 2025 were primarily due to an increased volume of work and profitability from underground infrastructure projects.

Industrial Construction

The $1.7 million decrease in revenues for the three months ended December 31, 2025 as compared to the same period in 2024 was primarily due to a decrease in the amount of electrical work performed.

The $3.7 million and $2.1 million increases in revenues for the three and six months ended March 31, 2026 as compared to the same periods in 2025 were primarily due to an increase in the amount of electrical and mechanical work performed.

Income from operations.

The $339,000 decrease in income from operations for the three months ended December 31, 2025 as compared to the same period in 2024 was primarily due to a slight decrease in gross profit resulting from less work performed and an increase in indirect operating expenses.

The $2.1 million and $1.8 million increases in income from operations for the three and six months ended March 31, 2026 as compared to the same period in 2025 were primarily due to an increase in industrial work and an increase in profitability.

Building Construction

The $1.2 million decrease in revenues for the three months ended December 31, 2025 as compared to the same period in 2024 was primarily due to working to complete projects under contract while bidding on projects with projected start dates in the Company’s third quarter of fiscal year 2026.

The $933,000 and $2.2 million decreases in revenues for the three and six months ended March 31, 2026 as compared to the same period in 2025 were primarily due to winding down work on substantially complete projects while bidding on potential new projects with projected start dates in the Company’s third quarter of fiscal year 2026.

Income from operations.

The $83,000 decrease in income from operations for the three months ended December 31, 2025 as compared to the same period in 2024 was primarily due to the decreased volume of work completed in the Company’s first quarter of fiscal year 2026.

The $1.0 million and $1.1 million decreases in income from operations for the three and six months ended March 31, 2026 as compared to the same period in 2025 were primarily due to the decreased volume of work completed in the Company’s first quarter of fiscal year 2026.

Corporate and Non-Allocated Costs

The $236,000 decrease in Corporate and Non-Allocated Costs for the three months ended December 31, 2025 as compared to the same period in 2024 was primarily due to decreased indirect operating costs.

Corporate and Non-Allocated Costs increased by $113,000 for the three months ended March 31, 2026 and decreased by $123,000 for the six months ended March 31, 2026, respectively, as compared to the same periods in 2025.

The variances are attributed to various factors;

however, the Company has added additional safety and risk management personnel at the corporate level.

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 December 31, 2025, and September 30, 2025

The Company had total assets of $201.0 million at December 31, 2025, a decrease of $14.2 million from the prior fiscal year end balance of $215.2 million.

Contract assets totaled $23.3 million at December 31, 2025, a decrease of $11.1 million from the prior fiscal year end balance of $34.5 million.

The decrease was due to a difference in the timing of project billings at December 31, 2025, compared to September 30, 2025.

Accounts receivable, net of allowance for doubtful accounts, totaled $69.1 million at December 31, 2025, a decrease of $7.5 million from the prior fiscal year end balance of $76.6 million.

The decrease was primarily due to the timing of cash collections and project invoicing since September 30, 2025.

Prepaid expenses and other totaled $3.6 million at December 31, 2025, a decrease of $1.4 million from the prior fiscal year end balance of $5.0 million.

The decrease was primarily due to a decrease in prepaid insurance that was expensed during the three months ended December 31, 2025.

The Company had net property, plant and equipment of $52.9 million at December 31, 2025, a decrease of $592,000 from the prior fiscal year end balance of $53.5 million.

The decrease was due to $3.4 million in depreciation expense, and $91,000 in net equipment disposals, partially offset by 2.9 million in equipment acquisitions.

Intangible assets, net totaled $4.5 million at December 31, 2025, a decrease of $406,000 from the prior fiscal year end balance of $4.9 million.

The decrease was primarily due to the amortization of intangible assets during the three months ended December 31, 2025.

Right-of-use assets totaled $2.0 million at December 31, 2025, a decrease of $44,000 from the prior fiscal year end balance of $2.1 million.

The decrease was primarily due to the amortization of operating leases during the three months ended December 31, 2025, partially offset by the addition of one new right-of-use asset resulting from a new operating lease.

Cash and cash equivalents totaled $16.7 million at December 31, 2025, an increase of $4.4 million from the prior fiscal year end balance of $12.2 million.

The increase was primarily due to a net $18.8 million provided by operating activities, partially offset by a net $12.5 million used in financing activities, and by a $1.9 million net investment in equipment.

Retainage receivable totaled $18.3 million at December 31, 2025, an increase of $2.2 million from the prior fiscal year end balance of $16.0 million.

The increase was primarily due to the timing of retention billings and increased work in the three months ended December 31, 2025 as compared to the same period in the prior fiscal year.

Other receivables totaled $1.2 million at December 31, 2025, an increase of $138,000 from the prior fiscal year end balance of $1.1 million.

The increase was primarily due to an expected refund on insurance premiums paid.

Goodwill totaled $9.9 million at December 31, 2025, unchanged from the prior fiscal year end balance.

The Company had total liabilities of $140.4 million at December 31, 2025, a decrease of $15.6 million from the prior fiscal year end balance of $156.0 million.

The aggregate balance of current maturities of long-term debt and long-term debt totaled $51.5 million at December 31, 2025, a decrease of $10.3 million from the prior fiscal year-end balance of $61.8 million.

The decrease was primarily due to $3.4 million in principal payments on long-term debt and $7.8 million in repayments on the operating line of credit, partially offset by $840,000 in new equipment financing.

Accounts payable totaled $24.3 million at December 31, 2025, a decrease of $6.4 million from the prior fiscal year end balance of $30.7 million.

The decrease was due to the timing of accounts payable payments as compared to September 30, 2025.

Accrued expenses and other current liabilities totaled $13.2 million at December 31, 2025, a decrease of $2.7 million from the prior fiscal year end balance of $15.9 million.

The decrease was due to the timing of accrued expense payments, as compared to September 30, 2025.

Contract liabilities totaled $31.0 million at December 31, 2025, an increase of $2.7 million from the prior fiscal year end balance of $28.3 million.

The increase was due to a difference in the timing of project billings at December 31, 2025, as compared to September 30, 2025.

Current and long-term operating lease liabilities totaled $2.0 million at December 31, 2025, a decrease of $44,000 from the prior fiscal year end balance.

The decrease was primarily due to lease payments made during the three months ended December 31, 2025, partially offset by the addition of one new operating lease.

Income tax payable totaled $168,000 at December 31, 2025, an increase of $168,000 from the prior fiscal year end balance.

The increase was primarily related to the taxable income generated during the three months ended December 31, 2025.

Lines of credit and short-term borrowings totaled $10.4 million at December 31, 2025, an increase of $16,000 from the prior fiscal year end balance.

The increase was due to interest accrued on PPP Loans.

Refer to Note 3 “Accounting for PPP Loans” in the accompanying consolidated financial statements for additional details.

Deferred tax liabilities totaled $7.7 million at December 31, 2025, a $978,000 increase from the prior fiscal year end balance of $6.8 million.

The increase was primarily related to a $171,000 deferred tax liability increase related to bonus depreciation on equipment acquired, a $445,000 decrease in federal and state NOL carryforwards, and a $382,000 decrease to other deferred tax assets.

Shareholders’ equity was $60.6 million at December 31, 2025, an increase of $1.4 million from the prior fiscal year end balance of $59.2 million.

The increase was primarily due to net income of $2.7 million for the three months ended December 31, 2025, partially offset by $847,000 in repurchases of the Company’s common stock and a $499,000 declared quarterly dividend that was paid on January 2, 2026.

Comparison of Financial Condition at March 31, 2026 and September 30, 2025

The Company had total assets of $193.9 million at March 31, 2026, a decrease of $21.3 million from $215.2 million at September 30, 2025.

Accounts receivable, net of allowance for credit losses, totaled $60.1 million at March 31, 2026, a decrease of $16.0 million from $76.0 million at September 30, 2025.

The decrease was primarily due to the timing of cash collections and project billings since September 30, 2025.

Contract assets totaled $26.8 million at March 31, 2026, a decrease of $7.7 million from $34.5 million at September 30, 2025.

The decrease was due to the timing of project billing activity at March 31, 2026 compared to September 30, 2025.

Cash and cash equivalents totaled $10.1 million at March 31, 2026, a decrease of $2.1 million from $12.2 million at September 30, 2025.

The decrease was primarily due to $19.1 million used in financing activities and $5.4 million used for net investment in equipment, partially offset by $22.5 million of cash provided by operating activities.

Intangible assets, net totaled $4.2 million at March 31, 2026, a decrease of $690,000 from $4.9 million at September 30, 2025.

The decrease was primarily due to amortization of intangible assets during the period.

Retainage receivable totaled $18.6 million at March 31, 2026, an increase of $2.6 million from $16.0 million at September 30, 2025.

The increase was primarily due to the timing of retention billings and increased project activity during the period.

Prepaid expenses and other totaled $6.4 million at March 31, 2026, an increase of $1.4 million from $5.0 million at September 30, 2025.

The increase was primarily due to insurance premium payments, partially offset by insurance expense recognized during the six months ended March 31, 2026.

Net property, plant and equipment totaled $54.2 million at March 31, 2026, an increase of $708,000 from $53.5 million at September 30, 2025.

The increase reflected $7.6 million of equipment acquisitions, partially offset by $6.7 million of depreciation expense and $214,000 of net equipment disposals.

Right-of-use assets totaled $2.4 million at March 31, 2026, an increase of $339,000 from $2.1 million at September 30, 2025.

The increase was primarily due to $940,000 in additions from new operating lease agreements, partially offset by $600,000 of amortization of right-of-use assets during the period.

Other receivables totaled $1.2 million at March 31, 2026, an increase of $137,000 from $1.1 million at September 30, 2025.

The increase was primarily due to an expected insurance premium refund.

Goodwill totaled $9.9 million at March 31, 2026, unchanged from September 30, 2025.

The Company had total liabilities of $112.4 million at March 31, 2026, a decrease of $43.6 million from $156.0 million at September 30, 2025.

The aggregate balance of current maturities of long-term debt and long-term debt was $24.7 million at March 31, 2026, a decrease of $37.1 million from $61.8 million at September 30, 2025.

The decrease was primarily due to $14.3 million in principal repayments on long-term debt and $24.8 million in repayments on the operating line of credit, partially offset by $1.9 million in new equipment financing.

Accounts payable totaled $21.3 million at March 31, 2026, a decrease of $9.4 million from $30.7 million at September 30, 2025.

The decrease was primarily due to the timing of vendor payments.

Contract liabilities totaled $29.5 million at March 31, 2026, an increase of $1.2 million from $28.3 million at September 30, 2025.

The increase was due to the timing of project billing activity.

Accrued expenses and other current liabilities totaled $16.2 million at March 31, 2026, an increase of $234,000 from $15.9 million at September 30, 2025.

The increase was primarily due to the timing of accrued expense payments.

Deferred tax liabilities totaled $7.9 million at March 31, 2026, an increase of $1.2 million from $6.8 million at September 30, 2025.

This increase was primarily attributable to a $450,000 increase in deferred tax liabilities related to timing differences between book and tax depreciation, a $188,000 decrease in federal and state net operating loss carryforwards, and a $524,000 decrease in other deferred tax assets.

Current and long-term operating lease liabilities totaled $2.4 million at March 31, 2026, an increase of $342,000 from $2.0 million at September 30, 2025.

The increase was primarily due to $937,000 in new operating lease additions, partially offset by $686,000 in lease payments during the period.

Lines of credit and short-term borrowings totaled $10.5 million at March 31, 2026, an increase of $50,000 from September 30, 2025.

The increase was due to accrued interest on PPP loans.

Refer to Note 3, “Accounting for PPP Loans,” in the accompanying consolidated financial statements for additional information.

Shareholders’ equity was $81.5 million at March 31, 2026, an increase of $22.3 million from $59.2 million at September 30, 2025.

The increase was primarily due to $21.2 million in net proceeds from an equity raise and net income of $2.9 million for the six months ended March 31, 2026, partially offset by $848,000 in share repurchases and $1.1 million in declared dividends.

Liquidity and Capital Resources

On February 18, 2026, The Company entered into an underwriting agreement (the “Underwriting Agreement”) with Lake Street Capital Markets, LLC (the “Underwriter”).

Pursuant to the Underwriting Agreement, the Company agreed to issue and sell, and the Underwriter agreed to purchase, subject to the terms and conditions therein, 1,740,000 shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), in a registered public offering pursuant to an effective shelf registration statement on Form S-3 (File No.

333-280025) and related prospectus, including the prospectus supplement filed with the Securities and Exchange Commission (the “Offering”).

The Company also granted the Underwriter a 30-day option to purchase up to an additional 261,000 shares of Common Stock.

The Offering closed on February 20, 2026, with the Underwriter purchasing 1,740,000 shares of Common Stock at a public offering price of $11.50 per share.

Net proceeds to the Company were approximately $18.4 million, after deducting underwriting discounts and commissions and estimated offering expenses.

On February 24, 2026, the Underwriter exercised its overallotment option and purchased an additional 261,000 shares of Common Stock at the public offering price of $11.50 per share.

Net proceeds from the exercise of the option were approximately $2.8 million, after deducting underwriting discounts and commissions but before deducting other offering expenses payable by the Company.

The Company intends to use the net proceeds from the Offering for strategic growth initiatives, working capital needs, and general corporate purposes.

Operating Line of Credit

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The line of credit is limited to a borrowing base calculation as summarized below:

December 31, 2025

March 31, 2026

September 30, 2025

Eligible borrowing base

Borrowed on line of credit

Borrowings on line of credit

Line of credit balance available

Interest rate

The Company’s $17.0 million and $24.8 million line of credit borrowings are recorded as a long-term debt as of December 31, 2025 and September 30, 2025, respectively.

The Company did not have any line of credit borrowings at March 31, 2026.

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

The financial covenants required by the Company’s lender 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.

The Company was in compliance with all covenants at December 31, 2025 except for the debt service coverage for which the Company received a waiver from its lender.

The Company was in compliance with all covenants at March 31, 2026.

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

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

As of December 31, 2025, there have been no further requests or communications from the SBA relating to the PPP Loans.

As of March 31, 2026, 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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Long-Term Debt

On December 16, 2014, the Company’s Nitro subsidiary entered into a 20-year $1.2 million loan agreement with a bank to purchase the office building and property it had previously been leasing.

The interest rate on this loan agreement is 4.82% with monthly payments of $7,800.

The interest rate on this note is subject to change from time to time based on changes in the U.S.

Treasury yield,

adjusted to a constant maturity of three years as published by the Federal Reserve weekly.

As of December 31, 2025, the Company had made principal payments of $503,000.

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

The note is currently held by Peoples Bank, Inc.

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.

For the purchase price allocation, the $3.0 million note had a fair value of $2.85 million.

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 December 31, 2025, the Company had paid off the seller’s note.

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

The loan is collateralized by the Company’s equipment and receivables.

As of December 31, 2025, the Company had made principal payments of $3.3 million.

On April 29, 2022, the Company entered into a $7.5 million Non-Revolving Note agreement with United Bank.

This five-year agreement was used to finance the purchase of Tri-State Paving and has monthly payments of $129,910 with a fixed interest rate of 4.25%.

As of December 31, 2025, the Company had made principal payments of $4.9 million.

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 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 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 December 31, 2025.

On October 10, 2022, the Company entered into a $3.1 million promissory note agreement with United Bank.

This five-year agreement financed the previous cash value of equipment purchased in the Ryan Construction acquisition.

This loan has monthly installment payments of $60,000 and has a fixed interest rate of 6.0%.

The loan is collateralized by the Company’s equipment and receivables.

As of December 31, 2025, the Company had made principal payments of $1.8 million.

On June 1, 2023, the Company entered into a $9.3 million Non-Revolving Note agreement with United Bank.

This five-year agreement gave the Company access to a $9.3 million line of credit (“Equipment Line of Credit 2023”), specifically for the purchase of equipment, for a period of six months with a fixed interest rate of 7.25%.

After six months, all borrowings against the Equipment Line of Credit 2023 converted to a fifty-four-month term note agreement with a fixed interest rate of 7.25%.

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

As of December 31, 2025, the Company had borrowed $9.3 million against this line of credit and made $3.9 million in principal payments.

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 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 December 31, 2025, the Company had borrowed $5.0 million against this equipment line of credit and made repayments of $367,000 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 December 31, 2025, the Company had made $2.4 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.

On March 16, 2014, the Company’s Nitro subsidiary entered into a $1.2 million, 20-year loan agreement with a bank to purchase an office building and property previously held under lease.

The loan bears interest at 4.82% with monthly payments of $7,800.

The interest rate is subject to periodic adjustment based on changes in the U.S.

Treasury yield, adjusted to a constant maturity of three years, as published weekly by the Federal Reserve.

As of March 31, 2026, the Company had made principal payments of $517,000.

The loan is collateralized by the related building and is currently held by Peoples Bank, Inc.

On March 31, 2020, West Virginia Pipeline Acquisition Company (subsequently renamed West Virginia Pipeline, Inc.) entered into a $3.0 million seller’s note agreement with David and Daniel Bolton for the remaining purchase price of the business.

For purchase accounting purposes, the note had a fair value of $2.85 million.

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

The unsecured five-year note required annual principal payments of at least $500,000 and bore interest at a fixed rate of 3.25% on the $3.0 million stated principal balance (approximately 5.35% on the carrying value).

Final payment on this note was made in December 2025.

On April 2, 2021, the Company entered into a $3.5 million non-revolving term note with United Bank.

The proceeds were used to repay an outstanding line of credit utilized for the down payment on the West Virginia Pipeline acquisition.

The loan required monthly payments of $64,853 and bore interest at a fixed rate of 4.25%.

The loan was collateralized by the Company’s equipment and receivables.

Final payment on this note was made in February 2026.

On April 29, 2022, the Company entered into a $7.5 million non-revolving term note with United Bank to finance the acquisition of Tri-State Paving.

The loan required monthly payments of $129,910 and bore interest at a fixed rate of 4.25%.

Final payment on this note was made in February 2026.

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

Corns served as President of the Company’s Tri-State Paving subsidiary until his retirement in May 2025.

The note required annual principal payments of $250,000 beginning on the first anniversary of the agreement date, with interest on the outstanding balance at 3.5% per annum.

As of March 31, 2026, $750,000 of principal had been repaid.

Final payment on this note was made in April 2026.

On October 10, 2022, the Company entered into a $3.1 million term note with United Bank to finance equipment acquired in the Ryan Construction acquisition.

The loan required monthly payments of $60,000 and bore interest at a fixed rate of 6.0%.

The loan was collateralized by equipment and receivables.

Final payment on this note was made in February 2026.

On June 1, 2023, the Company entered into a $9.3 million non-revolving equipment line of credit with United Bank (“Equipment Line of Credit 2023”).

The facility provided borrowing availability for six months at a fixed interest rate of 7.25%, after which all borrowings converted into a 54-month term note at the same fixed rate.

The loan is collateralized by the related equipment purchases.

As of March 31, 2026, the Company had borrowed $9.3 million under the facility and had repaid $4.4 million of principal.

On August 8, 2024, the Company entered into a $5.0 million non-revolving equipment line of credit with United Bank.

The facility provided borrowing availability for twelve months at a variable rate based on the Wall Street Journal Prime Rate (initially 8.5%).

After twelve months, outstanding borrowings convert to a 48-month term loan bearing interest at a fixed rate equal to the U.S.

Treasury Rate plus 2.75%.

The loan is collateralized by the related equipment.

As of March 31, 2026, the Company had borrowed $5.0 million and repaid $649,000 of principal.

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

The six-year loan requires monthly payments of approximately $272,000 and bears interest at a fixed rate of 6.9%.

As of March 31, 2026, the Company had repaid $7.8 million of principal.

On September 30, 2025, the Company entered into a $500,000 seller’s note agreement with Joe and Cathy Rigney in connection with the acquisition of Rigney Digital Systems Ltd.

For purchase accounting purposes, the note had a fair value of $461,000.

As part of the $4.6 million total acquisition price, the Company paid $3.0 million in cash and issued $1.0 million in common stock.

The unsecured five-year note requires a $500,000 payment at maturity and bears interest at 5.0% on the stated principal amount (approximately 7.05% on the carrying value).

As of March 31, 2026, the carrying value of the note was $465,000.

Operating Leases

The Company leases office space for SQP for $1,500 per month.

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.

As of December 31, 2025, the Company has only committed to a one-year renewal 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 December 31, 2025.

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

The Company signed a an amendment to extend the lease for one year after the original lease expired.

As of December 31, 2025, the Company has only committed to a one-year renewal and 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 $30,000 at December 31, 2025.

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 fifty additional leased vehicles.

The right-of-use operating lease had a carrying value of $1.7 million at December 31, 2025.

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

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

This lease, for the Winchester, Kentucky facility, had a net present value of $290,000 at inception and a carrying value of $17,000 at December 31, 2025.

The 7.5% 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 acquired on December 1, 2025.

This lease, for the Columbus, Ohio facility, had a net present value of $255,000 at inception and a carrying value of $250,000 at December 31, 2025.

The 6.75% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception.

The Company leases office space for SQP at a rate of $1,500 per month.

The lease, originally executed on March 25, 2021, has a two-year base term with five one-year renewal options available following expiration of the base term.

As of March 31, 2026, the Company has committed to a one-year renewal period and is evaluating the exercise of additional renewal options.

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

The first lease, for the Hurricane, West Virginia facility, had a net present value of $236,000 at inception and a carrying value of $0 at March 31, 2026.

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

The Company executed an amendment to extend the lease for one additional year following the expiration of the original term.

As of March 31, 2026, the Company has committed to one renewal period and is evaluating additional renewals.

The second 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 term with a net present value of $140,000 and had a carrying value of $17,000 at March 31, 2026.

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

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

The master lease initially covered 31 vehicles with a net present value of $1.2 million.

The Company subsequently added 58 additional vehicles under the arrangement.

The lease had a carrying value of $1.8 million at March 31, 2026.

Each vehicle under the master lease arrangement carries its own implicit rate.

The Company has a right-of-use operating lease acquired on March 28, 2023 for the Winchester, Kentucky facility.

The lease had a net present value of $290,000 at inception and a carrying value of $0 at March 31, 2026.

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

The lease was renewed for a three-year term in April 2026.

The Company has a right-of-use operating lease acquired on December 1, 2025 for the Columbus, Ohio facility.

The lease had a net present value of $255,000 at inception and a carrying value of $236,000 at March 31, 2026.

The lease bears interest at 6.75%, based on the Company’s incremental borrowing rate at inception.

The Company has a right-of-use operating lease acquired on January 1, 2026 for the Oklahoma City, Oklahoma facility.

The lease had a net present value of $208,000 at inception and a carrying value of $186,000 at March 31, 2026.

The lease bears interest at 6.75%, based on the Company’s incremental borrowing rate at inception.

The Company also has a right-of-use operating lease acquired on January 1, 2026 for the Louisville, Kentucky facility.

The lease had a net present value of $128,000 at inception and a carrying value of $128,000 at March 31, 2026.

The lease bears interest at 6.75%, based on the Company’s incremental borrowing rate at inception.

Lease payments do not commence until April 1, 2026.

Off-Balance Sheet Arrangements

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Rental Agreements

The Company rents equipment for use on construction projects with rental agreements being week to week or month to month.

Rental expense can vary by reporting period due to equipment requirements on construction projects and the availability of Company owned equipment.

Rental expense, which is included in cost of goods sold on the consolidated statements of income, was $7.0 million and $5.0 million, respectively, for the three months ended December 31, 2025 and 2024.

The Company rents equipment for use on construction projects with rental agreements week to week or month to month.

Rental expense can vary by fiscal year due to equipment requirements on construction projects and the availability of Company owned equipment.

Rental expenses, which is included in cost of goods sold on the consolidated statements of income, were $4.8 million and $3.9 million for the three months ended March 31, 2026, and 2025, respectively, and $11.8 million and $9.0 million for the six months ended March 31, 2026 and 2025, respectively.

Letters of Credit

Certain customers or vendors may require letters of credit to secure payments that the vendors are making on our behalf or to secure payments to subcontractors and vendors on various customer projects.

At December 31, 2025, the Company did not have any letters of credit outstanding.

At March 31, 2026, the Company did not have any letters of credit outstanding.

Performance Bonds

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These performance bonds are obtained through insurance carriers and guarantee to the customer that we will perform under the terms of a contract and that we will pay subcontractors and vendors.

If the Company fails

to perform under a contract or to pay subcontractors and vendors, the customer may demand that the insurer make payments or provide services under the bond.

If the Company fails to perform under a contract or to pay subcontractors and vendors, the customer may demand that the insurer make payments or provide services under the bond.

The Company must reimburse the insurer for any expenses or outlays it is required to make.

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The Company does not anticipate any claims in the foreseeable future.

At December 31, 2025, the Company had $71.7 million in performance bonds outstanding.

At March 31, 2026, the Company had $130.6 million in performance bonds outstanding.

Concentration of Credit Risk

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Under certain circumstances such as foreclosure, the Company may take title to the underlying assets in lieu of cash in settlement of receivables.

Please see the tables below for customers that represent 10.0% or more of the Company’s revenue for the three months ended December 31, 2025 and 2024:

Please see the tables below for customers that represent 10.0% or more of the Company’s revenue for the three and six months ended March 31, 2026 and 2025:

Three Months Ended

NiSource and subsidiaries

Six Months Ended

Customers 10.0% or greater

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

Please see the tables below for customers that represent 10.0% or more of the Company’s accounts receivable, net of retention at December 31, 2025 and September 30, 2025:

Please see the tables below for customers that represent 10.0% or more of the Company’s accounts receivable, net of retention at March 31, 2026 and September 30, 2025:

Accounts receivable, net of retention

at December 31, 2025

at March 31, 2026

at September 30, 2025

TransCanada Corporation

NiSource and subsidiaries

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

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however, the Company disagrees with the withdrawal claim and believes it is covered by an exemption under federal law.

The demand called for thirty-four quarterly installment payments of $41,000 starting December 15, 2021.

The demand called for thirty-four quarterly installment payments of $41,000 starting March 15, 2021.

The Company complied with the demand according to federal pension law;

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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 three months ended December 31, 2025 or 2024.

Other than described above, at December 31, 2025, the Company was not involved in any legal proceedings other than in the ordinary course of business.

The Company did not make any payments during the three and six months ended March 31, 2026 or 2025.

Other than described above, at March 31, 2026, the Company was not involved in any legal proceedings other than in the ordinary course of business.

The Company is a party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business.

These actions typically seek, among other things, compensation for alleged personal injury, breach

of contract and/or property damages, punitive damages, civil penalties, or other losses, or injunctive or declaratory relief.

These actions typically seek, among other things, compensation for alleged personal injury, breach of contract and/or property damages, punitive damages, civil penalties, or other losses, or injunctive or declaratory relief.

With respect to all such lawsuits, claims, and proceedings, we record reserves when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

At December 31, 2025, the Company does not believe that any of these proceedings, separately or in aggregate, would be expected to have a material adverse effect on our financial position, results of operations or cash flows.

At March 31, 2026, the Company does not believe that any of these proceedings, separately or in aggregate, would be expected to have a material adverse effect on our financial position, results of operations or cash flows.

Related Party Transactions

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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 December 31, 2025.

The Company has made $750,000 in principal payments on this note as of March 31, 2026.

Final payment on this note was made in April 2026.

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

Development is a variable interest entity (“VIE”) that is 75% owned by 1030 Quarrier Ventures, LLC (“Ventures”) and 25% owned by SQP.

Development is a variable interest entity (“VIE”) that is 75% owned by 1030 Quarrier Ventures, LLC (“Ventures”) and 25% owned by

SQP is not the primary beneficiary of the VIE and therefore will not consolidate Development into its consolidated financial statements.

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CJ Hughes is not obliged to rent any equipment and does so only when CJ Hughes does not have equipment available of its own and would otherwise need to rent such equipment as the demand increases throughout the construction season.

For the three months ended December 31, 2025 and 2024, the rental amounts for these specific periods were $146,000, and $53,000, respectively.

Other than mentioned above, there were no new material related party transactions entered into during the three months ended December 31, 2025.

For the three months ended March 31, 2026 and 2025, the rental amounts for these specific periods were $72,000, and $123,000, respectively.

For the six months ended March 31, 2026 and 2025, the rental amounts for these specific periods were $218,000, and $176,000, respectively.

Other than mentioned above, there were no new material related party transactions entered into during the three and six months ended March 31, 2026.

Certain Energy Services subsidiaries routinely engage in transactions in the normal course of business with each other, including sharing employee benefit plan coverage, payment for insurance and other expenses on behalf of other affiliates, and other services incidental to business of each of the affiliates.

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Significant inflation or supply chain issues could cause customers to delay or cancel planned projects;

however, inflation did not have a significant effect on our results for the three months ended December 31, 2025 and 2024.

however, inflation did not have a significant effect on our results for the three and six months ended March 31, 2026 and 2025.

Critical Accounting Estimates

The discussion and analysis of the Company’s financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts

of assets and liabilities, disclosures of contingent assets and liabilities known to exist at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period.

The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities known to exist at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period.

We evaluate our estimates on an ongoing basis, based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.

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Generally, unearned project-related costs will be earned over the next twelve months.

The following table presents our costs and estimated earnings in excess of billings and billings in excess of costs and estimated earnings at December 31, 2025 and September 30, 2025:

December 31, 2025

The following table presents our costs and estimated earnings in excess of billings and billings in excess of costs and estimated earnings at March 31, 2026 and September 30, 2025:

March 31, 2026

September 30, 2025

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Less billings in excess of costs and estimated earnings on uncompleted contracts

Allowance for doubtful accounts

The Company provides an allowance for doubtful accounts when collection of an account is considered doubtful.

Inherent in the assessment of the allowance for doubtful accounts are certain judgments and estimates relating to, among others, our customers’ access to capital, our customers’ willingness or ability to pay, general economic conditions and the ongoing relationship with the customers.

Allowance for credit losses

The Company provides an allowance for credit losses when collection of an account is considered doubtful.

Inherent in the assessment of the allowance for credit losses are certain judgments and estimates relating to, among others, our customers’ access to capital, our customers’ willingness or ability to pay, general economic conditions and the ongoing relationship with the customers.

While most of our customers are large well capitalized companies, should they experience material changes in their revenues and cash flows or incur other difficulties and not be able to pay the amounts owed, this could cause reduced cash flows and losses in excess of our current reserves.

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Additionally, frequently changing reserves could be an indication of risky or unreliable customers.

At December 31, 2025, the management review deemed that the allowance for doubtful accounts was adequate.

Please see the allowance for doubtful accounts table below as of and for the three months ended December 31, 2025 and as of fiscal year ended September 30, 2025:

December 31, 2025

At March 31, 2026, the management review deemed that the allowance for credit losses was adequate.

Please see the allowance for credit losses table below as of and for the six months ended March 31, 2026 and as of fiscal year ended September 30, 2025:

March 31, 2026

September 30, 2025

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If a company fails this test or decides to bypass this step, it must proceed with a quantitative assessment of goodwill impairment.

The Company did not have a goodwill impairment at December 31, 2025.

The Company did not have a goodwill impairment at March 31, 2026.

Materially incorrect estimates could cause an impairment of goodwill or intangible assets and result in a loss in profitability for the Company.

A table of the Company’s intangible assets subject to amortization at December 31, 2025 and September 30, 2025 is below:

A table of the Company’s intangible assets subject to amortization at March 31, 2026 and September 30, 2025 is below:

Remaining Life

1 unchanged sentence

and Impairment

(in months) at

3 unchanged sentences

Net Book Value

at December 31,

at September 30,

Ended December 31,

at December 31,

Ended March 31,

at September 30,

Intangible assets:

Original Cost

Intangible assets:

West Virginia Pipeline:

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The definite-lived identifiable intangible assets recognized as part of the Company’s business combinations are initially recorded at their estimated fair value.

The Company’s depreciation expenses for the three months ended December 31, 2025 and 2024 were $3.4 million and $2.6 million, respectively.

In general, depreciation is included in “cost of revenues” on the Company’s consolidated statements of income.

The Company’s amortization expenses for the three months ended December 31, 2025 and 2024 were $405,942 and $130,863, respectively.

The Company’s depreciation expenses for the three months ended March 31, 2026 and 2025 were $3.4 million and $3.0 million, respectively.

The Company’s depreciation expenses for the six months ended March 31, 2026 and 2025 were $6.7 million and $5.6 million, respectively In general, depreciation is included in “cost of revenues” on the Company’s consolidated statements of income.

The Company’s amortization expenses for the three months ended March 31, 2026 and 2025 were $284,403 and $164,197, respectively.

The Company’s amortization expenses for the six months ended March 31, 2026 and 2025 were $690,345 and $295,060, respectively.

In general, amortization is included in “cost of revenues” on the Company’s consolidated statements of income.

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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 5.0% to 6.0% to taxable income or loss after consideration of non-taxable and non-deductible items.

The effective income tax rate for the three months ended December 31, 2025 was 29.5%, as compared to 34.8%, for the same period in 2024.

The effective income tax rate for the three months ended March 31, 2026 was 47.7%, as compared to 24.5%, for the same period in 2025.

The effective income tax rate for the six months ended March 31, 2026 was 31.3%, as compared to 22.8%, for the same period in 2025.

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

2 unchanged sentences

A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company had $5.2 million and $6.9 million of federal net operating loss carryforwards at December 31, 2025 and September 30, 2025, respectively.

The Company had $26.0 million and $41.9 million of state net operating loss carryforwards at December 31, 2025 and September 30, 2025, respectively.

The Company had $6.1 million and $6.9 million of federal net operating loss carryforwards at March 31, 2026 and September 30, 2025, respectively.

The Company had $35.1 million and $41.9 million of state net operating loss carryforwards at March 31, 2026 and September 30, 2025, respectively.

The state net operating loss carryforwards begin to expire in 2026.

10 unchanged sentences

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.

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

In March 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 March 15, 2024 and interim periods within fiscal years beginning after March 15, 2025.

Early adoption and retrospective application are permitted.

1 unchanged sentence

Subsequent Events

On January 15, 2026, the Company paid a quarterly dividend of $0.03 per common share to shareholders of record as of December 31, 2025.

On April 15, 2026, the Company paid a quarterly dividend of $0.03 per common share to shareholders of record as of March 31, 2026.

Management has evaluated all subsequent events for accounting and disclosure.

2 unchanged sentences

These statements are forward-looking, and actual results may differ materially.

The Company is receiving significant bid opportunities for water and wastewater projects, natural gas transmission and distribution projects and electrical, mechanical, and general construction projects.

The Company’s unaudited backlog at December 31, 2025, was $301.4 million, as compared to $260.2 million and $259.7 million at December 31, 2024, and September 30, 2025, respectively.

The $9.3 million and $5.7 million revenue increases, respectively, for Gas & Water Distribution and Gas & Petroleum Transmission projects for the three months ended December 31, 2025, as compared to the same period in 2024, aligns with the opportunities the Company is seeing for fiscal year 2026.

Backlog for these categories was projected to be $161.7 million at December 31, 2025.

Electrical, Mechanical, & General revenue decreased by $1.5 million for the three months ended December 31, 2025, as compared to the same period in 2024.

However, the Company projects a $139.7 million backlog in this category and continues to see bidding opportunities for large construction projects in fiscal year 2026.

While adding additional projects appears likely, no assurance can be given that the Company will be successful in bidding on projects that become available.

Moreover, even if the Company obtains contracts, there can be no guarantee that the projects will go forward.

The Company continues to receive significant bid opportunities for water and wastewater projects, natural gas transmission and distribution projects, and electrical, mechanical, and general construction projects.

The Company’s unaudited backlog at March 31, 2026, was $325.1 million, compared to $280.7 million at March 31, 2025, and $259.7 million at September 30, 2025.

The $13.5 million and $13.3 million increases in revenue for Gas & Water Distribution and Gas & Petroleum Transmission, respectively, for the six months ended March 31, 2026, compared to the same period in 2025, are consistent with the increased project opportunities the Company is experiencing in fiscal year 2026.

Backlog for these categories was $154.7 million at March 31, 2026.

Electrical, Mechanical, & General Construction Services revenue increased by $3.1 million for the six months ended March 31, 2026, compared to the same period in 2025.

The Company’s backlog in this category was $170.4 million at March 31, 2026, and the Company continues to experience bidding opportunities for larger construction projects in fiscal year 2026.

While the addition of further projects appears likely, no assurance can be given that the Company will be successful in securing projects for which it bids.

Moreover, even if contracts are awarded, there can be no assurance that the related projects will proceed as planned or at all.

Quantitative and Quantitative Disclosures About Market Risk

1 unchanged sentence

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-Q

Item 2. Management’s Discussion and Analysis