What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-10 compared with 2026-05-11 · 247 added, 382 removed, 379 unchanged (62% 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 $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.

The Company had consolidated operating revenues of $130.0 million for the three months ended June 30, 2026, of which 46.6% was attributable to electrical, mechanical, and general contract services, 16.3% to gas and petroleum transmission projects, and 37.1% to gas & water distributions services.

The Company had consolidated operating revenues of $103.6 million for the three months ended June 30, 2025, of which 48.0% was attributable to electrical, mechanical, and general contract services, 14.8% to gas and petroleum transmission projects, and 37.2% to gas & water distributions services.

The Company had consolidated operating revenues of $337.3 million for the nine months ended June 30, 2026, of which 47.7% was attributable to electrical, mechanical, and general contract services, 16.7% to gas and petroleum transmission projects, and 35.6% to gas & water distributions services.

The Company had consolidated operating revenues of $280.9 million for the nine months ended June 30, 2025, of which 52.3% was attributable to electrical, mechanical, and general contract services, 13.2% to gas and petroleum transmission projects, and 34.5% 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 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 and nine months ended June 30, 2026 and 2025 Overview

The following is an overview of results from operations for the three and nine months ended June 30, 2026 and 2025:

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of revenue

1 unchanged sentence

Income (loss) from operations

Other (expense) income

Other nonoperating expense

3 unchanged sentences

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:

Net (loss) income

Weighted average shares outstanding-basic

Weighted average shares-diluted

Earnings (loss) per share available to common shareholders

Earnings (loss) per share-diluted available to common shareholders

Results of Operations for the Three and Nine months ended June 30, 2026 Compared to the Three and Nine months ended June 30, 2025

The following table compares the Company’s revenues for the three and nine months ended June 30, 2026 to the corresponding periods in 2025:

Three Months Ended

March 31, 2026

March 31, 2025

June 30, 2026

June 30, 2025

Gas & Water Distribution

1 unchanged sentence

Electrical, Mechanical, & General

Six Months Ended

March 31, 2026

March 31, 2025

Nine Months Ended

June 30, 2026

June 30, 2025

Gas & Water Distribution

1 unchanged sentence

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.

Total revenues increased by $26.4 million to $130.0 million for the three months ended June 30, 2026, compared to $103.6 million for the three months ended June 30, 2025.

For the nine months ended June 30, 2026, total revenues increased by $56.4 million to $337.3 million, compared to $280.9 million for the same period in 2025.

These increases primarily reflected higher activity levels across each of the Company’s principal business lines during the three- and nine-month periods ended June 30, 2026.

Gas & Water Distribution revenues were $48.3 million for the three months ended June 30, 2026, an increase of $9.7 million from $38.6 million for the three months ended June 30, 2025.

For the nine months ended June 30, 2026, revenues were $120.2 million, an increase of $23.2 million from $97.0 million for the same period in 2025.

These increases were primarily due to increased water distribution construction activity during the 2026 periods.

Gas & Petroleum Transmission revenues were $21.2 million for the three months ended June 30, 2026, an increase of $5.9 million from $15.3 million for the three months ended June 30, 2025.

For the nine months ended June 30, 2026, revenues were $56.4 million, an increase of $19.2 million from $37.2 million for the same period in 2025.

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

Electrical, Mechanical, & General Construction Services revenues were $60.5 million for the three months ended June 30, 2026, an increase of $10.8 million from $49.7 million for the three months ended June 30, 2025.

For the nine months ended June 30, 2026, revenues were $160.7 million, an increase of $13.9 million from $146.8 million for the same period in 2025.

These increases were primarily due to increased electrical construction activity during the 2026 periods.

Cost of Revenues.

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:

The following table compares the Company’s cost of revenues for the three and nine months ended June 30, 2026 to the corresponding periods in 2025:

Three Months Ended

March 31, 2026

March 31, 2025

June 30, 2026

June 30, 2025

Gas & Water Distribution

2 unchanged sentences

Unallocated Shop Expenses

Six Months Ended

March 31, 2026

March 31, 2025

Nine Months Ended

June 30, 2026

June 30, 2025

Gas & Water Distribution

2 unchanged sentences

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.

Total cost of revenues increased by $24.1 million to $115.7 million for the three months ended June 30, 2026, compared to $91.6 million for the three months ended June 30, 2025.

For the nine months ended June 30, 2026, total cost of revenues increased by $40.1 million to $298.7 million, compared to $258.6 million for the same period in 2025.

These increases primarily reflected higher activity levels across each of the Company’s principal business lines during the three- and nine-month periods ended June 30, 2026.

Gas & Water Distribution cost of revenues was $40.2 million for the three months ended June 30, 2026, an increase of $8.3 million from $31.9 million for the prior-year period.

For the nine months ended June 30, 2026, cost of revenues was $103.3 million, an increase of $17.2 million from $86.0 million for the same period in 2025.

These increases were primarily due to increased water distribution construction activity during the 2026 periods.

Gas & Petroleum Transmission cost of revenues was $21.2 million for the three months ended June 30, 2026, an increase of $7.0 million from $14.2 million for the prior-year period.

For the nine months ended June 30, 2026, cost of revenues was $50.0 million, an increase of $13.7 million from $36.3 million for the same period in 2025.

These increases were primarily due to higher construction activity on projects awarded during the first quarter of fiscal 2026, together with more favorable project timing, as most transmission work in fiscal 2025 commenced during the third fiscal quarter.

Electrical, Mechanical, & General Construction Services cost of revenues was $53.4 million for the three months ended June 30, 2026, an increase of $8.9 million from $44.4 million for the prior-year period.

For the nine months ended June 30, 2026, cost of revenues was $141.5 million, an increase of $8.6 million from $132.9 million for the same period in 2025.

These increases were primarily due to increased electrical construction activity during the 2026 periods.

Unallocated shop expenses were $879,000 for the three months ended June 30, 2026, a decrease of $215,000 from $1.1 million for the prior-year period.

For the nine months ended June 30, 2026, unallocated shop expenses were $3.9 million, an increase of $590,000 from $3.3 million for the same period in 2025.

The decrease for the three months ended June 30, 2026 as compared to the same period in 2025 was primarily due to increased internal equipment charges to projects.

The increase for the nine months ended June 30, 2026 as compared to the same period in 2025 was primarily due to higher depreciation, insurance, and equipment repair costs, without a corresponding increase in internal equipment charges to projects.

Gross Profit (Loss) .

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:

The following table compares the Company’s gross profit for the three and nine months ended June 30, 2026 to the corresponding periods in 2025:

Three Months Ended

March 31, 2026

March 31, 2025

June 30, 2026

June 30, 2025

Gas & Water Distribution

2 unchanged sentences

Unallocated Shop Expense

Six Months Ended

March 31, 2026

March 31, 2025

Nine Months Ended

June 30, 2026

June 30, 2025

Gas & Water Distribution

2 unchanged sentences

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.

Total gross profit increased by $2.3 million to $14.3 million for the three months ended June 30, 2026, compared to $12.0 million for the three months ended June 30, 2025.

For the nine months ended June 30, 2026, total gross profit increased by $16.2 million to $38.5 million, compared to $22.3 million for the same period in 2025.

These increases in gross profit were primarily driven by higher activity levels and generally improved project execution across the Company’s principal business lines during the three- and nine-month periods ended June 30, 2026.

The increase in gross profit for the three-month period was partially offset by lower margins on a large project within the Gas & Petroleum Transmission business line.

Gas & Water Distribution gross profit was $8.1 million for the three months ended June 30, 2026, an increase of $1.4 million from $6.7 million for the prior-year period.

The increase in gross profit for the three-month period primarily reflected higher water distribution construction activity but was partially offset by a slight decline in project profitability.

For the nine months ended June 30, 2026, gross profit was $17.0 million, an increase of $6.0 million from $10.9 million for the same period in 2025.

The increase in gross profit for the nine-month period primarily reflected higher water distribution construction activity and improved project profitability.

Gas & Petroleum Transmission gross profit was a gross loss of $17,000 for the three months ended June 30, 2026, compared to gross profit of $1.1 million for the prior-year period.

The decline in gross profit for the three-month period primarily reflected lower margins on one large transmission project, partially offset by increased construction activity on transmission projects awarded during the first and second quarters of fiscal 2026.

For the nine months ended June 30, 2026, gross profit was $6.3 million, an increase of $5.5 million from $852,000 for the same period in 2025.

The increase in gross profit for the nine-month period primarily reflected higher construction activity on transmission projects awarded during the first and second quarters of fiscal 2026, together with improved project execution and profitability.

Electrical, Mechanical, & General Construction Services gross profit was $7.1 million for the three months ended June 30, 2026, an increase of $1.9 million from $5.3 million for the prior-year period.

The increase in gross profit for the three-month period primarily reflected improved project margins and favorable project execution despite relatively consistent levels of construction activity.

For the nine months ended June 30, 2026, gross profit was $19.2 million, an increase of $5.3 million from $13.9 million for the same

period in 2025.

The increase in gross profit for the nine-month period primarily reflected improved project margins, favorable project execution, and a more profitable mix of work performed during fiscal 2026.

Unallocated shop gross loss was $879,000 for the three months ended June 30, 2026, compared to $1.1 million for the prior-year period.

The improvement in gross loss for the three-month period was primarily due to increased internal equipment charges allocated to projects, which more than offset higher depreciation, insurance, and equipment repair costs.

For the nine months ended June 30, 2026, unallocated shop gross loss was $3.9 million, compared to $3.3 million for the same period in 2025.

The increase in gross loss for the nine-month period primarily reflected higher depreciation, insurance, and equipment repair costs, which were only partially offset by internal equipment charges allocated to projects.

Selling and administrative expenses .

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.

Total selling and administrative expenses increased by $875,000 to $9.7 million for the three months ended June 30, 2026, compared to $8.8 million for the same period in 2025.

For the nine months ended June 30, 2026, total selling and administrative expenses increased by $2.3 million to $27.9 million, compared to $25.6 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.

Selling and administrative expenses increased at a slower rate than revenues during both periods, reflecting improved operating leverage as the Company expanded its operations.

Other non-operating expense .

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.

Other non-operating expenses were $118,000 for the three months ended June 30, 2026, compared to $39,000 for the same period in 2025.

For the nine months ended June 30, 2026, other non-operating expenses were $315,000, compared to $107,000 for the same period in 2025.

The increases primarily reflected amortization of intangible assets associated with the acquisition completed on September 30, 2025.

Interest expense .

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 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.

Interest expense was $487,000 for the three months ended June 30, 2026, a decrease of $294,000 from $781,000 for the same period in 2025.

For the nine months ended June 30, 2026, interest expense was $2.1 million, a decrease of $42,000 from $2.1 million for the same period in 2025.

These decreases primarily reflected lower average borrowings under the Company’s line of credit and the repayment of other long-term debt using proceeds from the February 2026 equity offering.

Gain (loss) on sale of equipment .

Gain on sale of equipment was $5,000 for the three months ended June 30, 2026, compared to a loss of $129,000 for the same period in the prior year.

For the nine months ended June 30, 2026, gain on sale of equipment was $94,000, an increase of $43,000 from $51,000 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.

Accordingly, gains and losses on such sales may fluctuate from period to period based on the timing of equipment dispositions and the carrying value of the assets sold.

Income (loss) before income taxes .

Income before income taxes was $4.0 million for the three months ended June 30, 2026, compared to $2.2 million for the same period in the prior year.

For the nine months ended June 30, 2026, income before income taxes was $8.3 million, compared to a loss before income taxes of $5.5 million for the same period in the prior year.

These improvements primarily reflected higher revenues, improved project profitability, and lower interest expense during the 2026 periods.

Income tax expense (benefit) .

Income tax expense was $745,000 for the three months ended June 30, 2026, compared to $138,000 for the same period in the prior year.

For the nine months ended June 30, 2026, income tax expense was $2.1 million, compared to an income tax benefit of $1.6 million for the same period in the prior year.

The increase in income tax expense primarily reflected higher pre-tax income during the 2026 periods.

Income tax expense (benefit) represents management’s estimate based on the Company’s projected annual effective income tax rate and may vary from period to period due to changes in pre-tax income, permanent differences, discrete tax items, and other factors affecting the annual effective tax rate.

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.

Net income was $3.3 million for the three months ended June 30, 2026, compared to $2.1 million for the same period in the prior year.

For the nine months ended June 30, 2026, net income was $6.2 million, compared to a net loss of $3.9 million for the same period in the prior year.

The improvements in net income primarily reflected higher revenues, improved gross profit, and lower interest expense during the 2026 periods.

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 June 30, 2026

Infrastructure

Three Months Ended March 31, 2026

Segment direct operating expenses (excluding depreciation)

11 unchanged sentences

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

Variance Between Three Months Ended June 30, 2026 and 2025

Infrastructure

12 unchanged sentences

Total consolidated income from operations

Nine Months Ended June 30, 2026

Infrastructure

Six Months Ended March 31, 2026

Segment direct operating expenses (excluding depreciation)

11 unchanged sentences

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

Variance Between Nine Months Ended June 30, 2026 and 2025

Infrastructure

13 unchanged sentences

Underground Infrastructure Construction

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.

Revenues increased by $16.1 million and $46.1 million for the three and nine months ended June 30, 2026, respectively, compared to the same periods in 2025.

The increases primarily reflected higher construction activity within the Company’s natural gas and water distribution business lines, together with the earlier commencement of natural gas transmission projects during fiscal 2026.

Income from operations.

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.

Income from operations increased by $304,000 and $11.9 million for the three and nine months ended June 30, 2026, respectively, compared to the same periods in 2025.

The increases primarily reflected higher construction activity, together with improved project execution across the Company’s underground infrastructure operations.

Industrial Construction

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.

Revenues increased by $9.6 million and $11.7 million for the three and nine months ended June 30, 2026, respectively, compared to the same periods in 2025.

The increases primarily reflected higher levels of electrical and mechanical construction activity.

Income from operations.

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.

Income from operations increased by $2.2 million and $4.0 million for the three and nine months ended June 30, 2026, respectively, compared to the same periods in 2025.

The increases primarily reflected improved project execution, higher project margins, and a more profitable mix of electrical and mechanical construction work.

Building Construction

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.

Revenues increased by $716,000 for the three months ended June 30, 2026, compared to the same period in 2025, and decreased by $1.5 million for the nine months ended June 30, 2026, compared to the same period in 2025.

The quarterly increase primarily reflected the timing of construction activity on active projects, while the year-to-date decrease primarily reflected the completion of several significant projects during fiscal 2025 and lower construction activity as newly awarded projects transitioned into active construction during fiscal 2026.

Income from operations.

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.

Income from operations decreased by $684,000 and $1.8 million for the three and nine months ended June 30, 2026, respectively, compared to the same periods in 2025.

The decreases primarily reflected lower project profitability and reduced absorption of fixed operating costs as newly awarded projects transitioned into active construction during fiscal 2026.

Corporate and Non-Allocated 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 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.

Corporate and non-allocated costs increased by $320,000 and $205,000 for the three and nine months ended June 30, 2026, respectively, compared to the same periods in 2025.

The increases primarily reflected additional personnel costs associated with the expansion of the Company’s corporate safety and risk management functions, partially offset by normal fluctuations in other corporate overhead costs.

The Company’s disaggregated revenue presentation differs slightly from its reportable segment presentation because the Industrial Construction and Building Construction reportable segments are combined within the Electrical, Mechanical and General revenue category.

In addition, one legal entity within the Underground Infrastructure Construction reportable segment performs certain services that are classified within the Electrical, Mechanical and General revenue category.

These differences are not material to the Company’s reportable segment results.

Comparison of Financial Condition at June 30, 2026 and September 30, 2025

Total assets increased to $219.5 million at June 30, 2026 from $215.2 million at September 30, 2025.

The increase primarily reflected higher contract assets, retainage receivable, cash and cash equivalents, and prepaid expenses, partially offset by lower accounts receivable and the amortization of intangible assets.

Working capital remained strong at June 30, 2026.

Accounts receivable, net of the allowance for doubtful accounts, decreased $11.4 million to $64.6 million, primarily reflecting the timing of customer collections and project billings.

Contract assets increased $9.4 million to $43.9 million, primarily reflecting the timing of revenue recognized in excess of billings on construction contracts as projects progressed during the period.

Retainage receivable increased $2.9 million to $18.9 million, consistent with the Company’s level of construction activity and the timing of retainage billings.

The Company continued to invest in its operating platform during the period.

Capital expenditures totaled approximately $7.6 million, primarily for construction equipment, while net property and equipment remained relatively consistent as depreciation substantially offset these investments.

The Company further strengthened its balance sheet through significant debt reduction.

Current and long-term debt, excluding lines of credit and short-term borrowings, decreased $26.9 million to $34.9 million at June 30, 2026, primarily reflecting principal repayments during the period.

Total liabilities decreased $20.5 million to $135.4 million, while shareholders’ equity increased $24.8 million to $84.1 million, primarily reflecting the February 2026 equity offering and net income generated during the period.

Overall, the Company believes its balance sheet remains well positioned to support ongoing operations, capital investment, and future growth opportunities.

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

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%.

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

March 31, 2026

September 30, 2025

Eligible borrowing base

Borrowings on line of credit

Line of credit balance available

Interest rate

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:

● Minimum tangible net worth of $28.0 million,

● Minimum traditional debt service coverage of 1.50x on a rolling twelve- month basis,

● Minimum current ratio of 1.20x,

● Maximum debt to tangible net worth ratio (“TNW”) of 2.75x,

● Each ratio and covenant shall be determined, tested, and measured as of each calendar quarter beginning June 30, 2023,

● The Company shall maintain a ratio of Maximum Senior Funded Debt (“SFD”) to Earnings before Interest, Taxes, Depreciation and Amortization (“EBDITA”) equal to or less than 3.5:1.

SFD shall mean any funded debt or lease of the Company, other than subordinated debt.

The covenant shall be tested quarterly, at the end of each fiscal quarter, with EBITDA based on the preceding four quarters.

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 March 31, 2026.

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

The Company’s primary sources of liquidity include cash generated from operations, borrowings available under its revolving credit facility, equipment financing arrangements and access to the capital markets.

Primary uses of liquidity include funding working capital, capital expenditures, strategic acquisitions, debt service, dividend payments and share repurchases.

Management believes that cash generated from operations, together with existing cash balances and available borrowings under its revolving credit facility, will be sufficient to fund the Company’s anticipated operating, investing and financing requirements for at least the next twelve months.

Working capital requirements are significantly influenced by the timing of project billings, customer collections, subcontractor and supplier payments, and contract retainage balances.

Net cash provided by operating activities for the nine months ended June 30, 2026 was $19.5 million, reflecting earnings from operations, partially offset by changes in working capital associated with the timing of customer billings, collections and payments to suppliers and subcontractors.

The $7.1 million net cash used in investing activities primarily reflected purchases of construction equipment and fleet assets.

Net cash used in financing activities of $10.0 million primarily reflected repayments of borrowings under the Company’s revolving credit facility and other debt obligations, dividend payments and share repurchases, partially offset by the net proceeds from the February 2026 equity offering.

Revolving Credit Facility

Effective June 28, 2026, the Company renewed its $30.0 million revolving credit facility with a maturity date of June 28, 2028.

At June 30, 2026, borrowings outstanding under the facility totaled $12.3 million, compared to $24.8 million at September 30, 2025.

Based on the borrowing base calculation, approximately $9.7 million remained available under the facility at June 30, 2026.

The revolving credit facility contains customary financial covenants, including a minimum Fixed Charge Coverage Ratio and a maximum Senior Funded Debt to EBITDA ratio, with which the Company was in compliance as of June 30, 2026.

Management expects to remain in compliance with these covenants over the next twelve months.

The available borrowing capacity under the revolving credit facility provides the Company with an important source of liquidity and financial flexibility.

Equity Offering

On February 20, 2026, the Company completed an underwritten public offering of 1,740,000 shares of common stock at a public offering price of $11.50 per share, generating net proceeds of approximately $18.4 million after underwriting discounts, commissions and offering expenses.

On February 24, 2026, the underwriter exercised its over-allotment option to purchase an additional 261,000 shares, providing approximately $2.8 million of additional net proceeds before certain offering expenses.

The Company used or expects to use the net proceeds to fund strategic growth initiatives, working capital requirements and general corporate purposes.

Debt and Capital Resources

During the nine months ended June 30, 2026, the Company continued to reduce outstanding indebtedness through scheduled principal repayments while investing in equipment to support future growth.

Management believes its capital structure provides sufficient financial flexibility to fund ongoing operations, capital expenditures, strategic growth opportunities and working capital requirements.

Capital expenditures during the period primarily consisted of investments in construction equipment and fleet assets.

Management expects future capital expenditures to remain focused on equipment replacement, fleet modernization and selective investments that improve operational efficiency.

Additional information regarding the Company’s debt arrangements and lease obligations is included in the accompanying Notes 13 and 16, respectively, to the consolidated financial statements.

Paycheck Protection Program Loans

Due to the economic uncertainties created by COVID-19 and limited operating funds available, the Company applied for loans under the PPP.

On April 15, 2020, the Company and its subsidiaries, C.J.

Hughes, Contractors Rental and Nitro, entered into separate PPP notes effective April 7, 2020, with its Lender in an aggregate principal amount of $13.1 million pursuant to the PPP Loans.

In a special meeting held on April 27, 2020, the Board of Directors of the Company unanimously voted to return $3.3 million of the PPP Loans after discussing the financing needs of the Company and subsidiaries.

That left the Company and subsidiaries with $9.8 million in PPP Loans to fund operations.

During fiscal year 2021, the Company received notice that the SBA had granted forgiveness of the $9.8 million of PPP Loans and the SBA repaid the Lender in full.

The forgiveness was recorded as other income for the fiscal year ended September 30, 2021.

During April 2023, management received notification from the SBA that one of the Company’s forgiveness applications related to the PPP Loans was under review.

As part of the review, the SBA requested additional payroll information.

Additionally, the SBA requested information regarding the ability of the Company’s affiliates to meet SBA size standards and/or PPP corporate maximum limits.

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

The Company recognizes that there is a possibility that the SBA could reverse its previous determination on the forgiveness of the PPP Loans.

As a result of this uncertainty, the Company restated the previously audited financial statements of the Company for the fiscal years 2022 and 2021.

The Company has recorded a short-term borrowing due to the SBA inquiry for the full $9.8 million, plus accrued interest.

During July 2023, management received notification from the SBA that two additional forgiveness applications related to the PPP Loans were under review.

As part of the review, the SBA requested information regarding the ability of the Company’s affiliates to meet SBA size standards and/or PPP corporate maximum limits.

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

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.

The SBA could revisit its forgiveness decision and determine that the Company does not qualify as a whole or in part for loan forgiveness and demand repayment of the loans.

In addition, it is unknown what type of penalties could be assessed against the Company if the SBA disagrees with the Company’s certification.

Any penalties in addition to the potential repayment of the PPP Loans could negatively impact the Company’s business, financial condition and results of operations and prospects.

Long-Term Debt

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 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.

As previously disclosed, the U.S.

Small Business Administration (“SBA”) continues to review the Company’s previously forgiven Paycheck Protection Program (“PPP”) loans.

Pending final resolution of the matter, the Company has recorded a liability for the full amount of the PPP loans together with accrued interest.

Although the timing and outcome of the SBA’s review remain uncertain, management continues to cooperate fully with the SBA and believes it has responded to all requests for information.

Any determination requiring repayment of the PPP loans or the assessment of penalties could adversely affect the Company’s financial condition, results of operations and cash flows.

Additional information is included in Note 3 to the accompanying consolidated financial statements.

Capital Allocation

The Company’s capital allocation strategy is designed to maintain financial flexibility while investing in long-term growth and enhancing shareholder value.

Management’s priorities include funding organic growth opportunities, investing in equipment and technology, pursuing strategic acquisitions, reducing leverage when appropriate, and returning capital to shareholders through dividends and opportunistic share repurchases.

Management regularly evaluates these priorities in light of market conditions, liquidity requirements and opportunities to enhance long-term shareholder value.

Off-Balance Sheet Arrangements

Due to the nature of our industry, we often enter into certain off-balance sheet arrangements in the ordinary course of business that result in risks not directly reflected in our balance sheets.

Though for the most part not material in nature, some of these are:

Rental Agreements

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.

The Company enters into certain off-balance sheet arrangements in the ordinary course of business that are customary within the construction industry.

Management does not believe these arrangements are reasonably likely to have a material effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources.

These arrangements include the following:

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

Certain customers or vendors may require the Company to provide letters of credit to secure contractual obligations or payments to subcontractors and vendors on various projects.

At June 30, 2026, the Company had no letters of credit outstanding.

Performance Bonds

Some customers, particularly new ones or governmental agencies require the Company to post bid bonds, performance bonds and payment bonds (collectively, performance bonds).

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.

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

Currently, the Company has an agreement with a surety company to provide bonding which will suit the Company’s immediate needs.

The ability to obtain bonding for future contracts is an important factor in the contracting industry with respect to the type and value of contracts that can be bid.

Depending upon the size and conditions of a particular contract, the Company may be required to post letters of credit or other collateral in favor of the insurer.

Posting these letters or other collateral will reduce our borrowing capabilities.

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

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

Certain customers, particularly governmental agencies and new customers, require the Company to obtain bid, performance and payment bonds in connection with construction contracts.

These bonds are issued by surety companies and guarantee the Company’s performance under its contracts and payment of subcontractors and suppliers.

If the Company fails to perform or satisfy its payment obligations, the surety may be required to make payments under the bond, and the Company would be obligated to reimburse the surety for any amounts paid.

The Company maintains a bonding program with a national surety provider that management believes is sufficient to support its current operations.

Depending on the size and terms of future contracts, the Company may be required to provide letters of credit or other collateral to support its bonding capacity, which could reduce available borrowing capacity.

Management does not anticipate any material claims against its surety program.

At June 30, 2026, the Company had approximately $107.9 million of performance bonds outstanding.

Concentration of Credit Risk

In the ordinary course of business, the Company grants credit under normal payment terms, generally without collateral, to our customers, which include natural gas and oil companies, general contractors, and various commercial and industrial customers located within the United States.

Consequently, the Company is subject to potential credit risk related to business and economic factors that would affect these companies.

However, the Company generally has certain statutory lien rights with respect to services provided.

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 and six months ended March 31, 2026 and 2025:

In the ordinary course of business, the Company extends credit to customers under customary payment terms, generally without requiring collateral.

The Company’s customers primarily consist of natural gas and oil companies, utilities, general contractors, and commercial and industrial customers located throughout the United States.

As a result, the Company is exposed to credit risk associated with the financial condition of these customers and general economic conditions affecting the industries in which they operate.

The Company manages its credit risk through ongoing evaluation of customer creditworthiness, active monitoring of outstanding receivable balances, and collection efforts.

In addition, the Company generally has statutory lien rights related to services performed.

Under certain circumstances, such as foreclosure proceedings, the Company may obtain title to underlying assets in satisfaction of outstanding receivable balances.

Please see the tables below for customers that represent 10.0% or more of the Company’s revenue for the three and nine months ended June 30, 2026 and 2025:

Three Months Ended

Six Months Ended

Customers 10.0% or greater

Nine Months Ended

NiSource and subsidiaries

American Water

* 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 March 31, 2026 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 June 30, 2026 and September 30, 2025:

Accounts receivable, net of retention

at March 31, 2026

at June 30, 2026

at September 30, 2025

9 unchanged sentences

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 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 did not make any payments during the three and nine months ended June 30, 2026 or 2025.

Other than described above, at June 30, 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.

1 unchanged sentence

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 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.

At June 30, 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

3 unchanged sentences

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 March 31, 2026.

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

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

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

11 unchanged sentences

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 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.

For the three months ended June 30, 2026 and 2025, the rental amounts for these specific periods were $111,000, and $74,000, respectively.

For the nine months ended June 30, 2026 and 2025, the rental amounts for these specific periods were $329,000, and $250,000, respectively.

Other than mentioned above, there were no new material related party transactions entered into during the three and nine months ended June 30, 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 and six months ended March 31, 2026 and 2025.

however, inflation did not have a significant effect on our results for the three and nine months ended June 30, 2026 and 2025.

Critical Accounting Estimates

7 unchanged sentences

For Cost Plus and Time and Material (“T&M”) contracts, revenue is ordinarily recognized over time as control is transferred to the customers by measuring the progress toward satisfaction of the performance obligation(s) using an output method.

The Company also does certain T&M service work that is generally completed in a short duration and is recognized at a point in time.

The accuracy of our revenue and profit recognition in a given period depends on the accuracy of our estimates of the cost to complete each project.

25 unchanged sentences

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 March 31, 2026 and September 30, 2025:

March 31, 2026

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

June 30, 2026

September 30, 2025

10 unchanged sentences

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

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

At June 30, 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 nine months ended June 30, 2026 and as of fiscal year ended September 30, 2025:

June 30, 2026

September 30, 2025

7 unchanged sentences

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 March 31, 2026.

The Company did not have a goodwill impairment at June 30, 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 March 31, 2026 and September 30, 2025 is below:

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

Remaining Life

9 unchanged sentences

at September 30,

Ended March 31,

Ended June 30,

at September 30,

25 unchanged sentences

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 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.

The Company’s depreciation expenses for the three months ended June 30, 2026 and 2025 were $3.4 million and $3.1 million, respectively.

The Company’s depreciation expenses for the nine months ended June 30, 2026 and 2025 were $10.1 million and $8.7 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 June 30, 2026 and 2025 were $329,736 and $164,199, respectively.

The Company’s amortization expenses for the nine months ended June 30, 2026 and 2025 were $1,020,081 and $459,259, respectively.

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

4 unchanged sentences

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 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.

The effective income tax rate for the three months ended June 30, 2026 was 18.5%, as compared to 6.2%, for the same period in 2025.

The effective income tax rate for the nine months ended June 30, 2026 was 25.1%, as compared to 29.5%, 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 $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 Company had $688,000 and $6.9 million of federal net operating loss carryforwards at June 30, 2026 and September 30, 2025, respectively.

The Company had $31.9 million and $41.9 million of state net operating loss carryforwards at June 30, 2026 and September 30, 2025, respectively.

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

14 unchanged sentences

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.

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

On July 15, 2026, the Company paid a quarterly dividend of $0.04 per common share to shareholders of record as of June 30, 2026.

Management has evaluated all subsequent events for accounting and disclosure.

There have been no other material events during the period, other than noted above, that would either impact the results reflected in the report or the Company’s results going forward.

The following statements are based on current expectations.

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

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

The following discussion contains forward-looking statements.

Actual results may differ materially from those discussed below due to a number of risks and uncertainties.

The Company continues to experience a favorable bidding environment across its core markets, including water and wastewater infrastructure, natural gas transmission and distribution, and electrical, mechanical and general construction services.

Management believes these markets continue to benefit from sustained public and private infrastructure investment, utility modernization initiatives, and increased industrial and commercial construction activity.

The Company also continues to see opportunities in data center development and other infrastructure-related projects within its geographic footprint.

At June 30, 2026, the Company’s unaudited backlog totaled $286.6 million, compared to $280.7 million at June 30, 2025, and $259.7 million at September 30, 2025.

Management believes its backlog reflects continued demand across its diversified end markets and provides meaningful visibility into near-term revenue outlook.

The Company’s backlog remains well diversified across its service offerings and customer base, reducing dependence on any single project or market.

Backlog within the Company’s Gas & Water Distribution and Gas & Petroleum Transmission segments totaled $148.0 million at June 30, 2026.

The Company continues to receive a healthy level of bidding opportunities in these markets and expects demand to remain supported by ongoing investment in utility infrastructure and energy transmission projects.

Backlog within the Company’s Electrical, Mechanical & General Construction Services segment totaled $138.6 million at June 30, 2026.

Management continues to pursue opportunities on larger commercial, industrial and infrastructure projects and believes market conditions remain favorable.

Included in backlog at June 30, 2026 is approximately $70.0 million of recurring maintenance and blanket contract work expected to be performed over the next twelve months.

Of the remaining $216.6 million of project-specific backlog, management expects approximately $200.0 million to be recognized as revenue over the next twelve months, subject to normal project execution and scheduling.

While management is encouraged by current bidding activity and backlog levels, the timing and conversion of backlog into revenue remain subject to customer funding, permitting, project scheduling, weather conditions, labor availability, supply chain factors and other risks beyond the Company’s control.

Accordingly, there can be no assurance that anticipated projects will be awarded, proceed as scheduled, or ultimately be completed on expected timelines.

Quantitative and Qualitative Disclosures About Market Risk

Not required for a smaller reporting company.

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