What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-12 compared with 2024-05-08 · 223 added, 207 removed, 412 unchanged (51% of the section changed)

81 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, 2024 and 2023 Overview

The following is an overview of results from operations for the three and six months ended March 31,2024 and 2023:

Three and nine months ended June 30, 2024 and 2023 Overview

The following is an overview of results from operations for the three and nine months ended June 30, 2024 and 2023:

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of revenues

Selling and administrative expenses

(Loss) income from operations

Income from operations

Other income (expense)

1 unchanged sentence

Other nonoperating expense

Income from lawsuit judgement

Interest expense

Gain on sale of equipment

(Loss) income before income taxes

Income tax (benefit) expense

Net (loss) income

Income before income taxes

Income tax expense

Weighted average shares outstanding-basic

Weighted average shares-diluted

(Loss) earnings per share-basic

(Loss) earnings per share-diluted

Results of Operations for the Three and Six Months Ended March 31, 2024 Compared to the Three and Six Months Ended March 31, 2023

A table comparing the Company’s revenues for the three and six months ended March 31, 2024 compared to the three and six months ended March 31, 2023 is below:

Earnings per share-basic

Earnings per share-diluted

Results of Operations for the Three and Nine Months Ended June 30, 2024 Compared to the Three and Nine Months Ended June 30, 2023

A table comparing the Company’s revenues for the three and nine months ended June 30, 2024 compared to the three and nine months ended June 30, 2023 is below:

Three Months Ended

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

Gas & Water Distribution

1 unchanged sentence

Electrical, Mechanical, and General

Six Months Ended

March 31, 2024

March 31, 2023

Nine Months Ended

June 30, 2024

June 30, 2023

Gas & Water Distribution

1 unchanged sentence

Electrical, Mechanical, and General

Total revenues increased by $17.5 million to $71.1 million for the three months ended March 31, 2024, as compared to $53.7 million for the three months ended March 31, 2023.

Total revenues increased by $47.6 million to $161.3 million for the six months ended March 31, 2024, as compared to $113.7 million for the six months ended March 31, 2023.

The increases were a result of increased work in all categories of business.

Gas & Water Distribution revenues totaled $14.3 million for the three months ended March 31, 2024, an $842,000 increase from $13.4 million for the three months ended March 31, 2023.

Gas & Water Distribution revenues totaled $31.4 million for the six months ended March 31, 2024, a $5.4 million increase from $25.9 million for the six months ended March 31, 2023.

The revenue increases were primarily related to increased paving and gas and water distribution services performed during the three and six months ended March 31, 2024, as compared to the same periods in 2023.

Gas & Petroleum Transmission revenues totaled $9.8 million for the three months ended March 31, 2024, a $4.5 million increase from $5.3 million for the three months ended March 31, 2023.

Gas & Petroleum Transmission revenues totaled $38.3 million for the six months ended March 31, 2024, a $16.1 million increase from $22.2 million for the six months ended March 31, 2023.

The revenue increases were primarily related to gas transmission work that was awarded during the fiscal year ended September 30, 2023 and continued into fiscal year 2024.

Electrical, Mechanical, & General construction services revenues totaled $47.1 million for the three months ended March 31, 2024, a $12.2 million increase from $34.9 million for the three months ended March 31, 2023.

Electrical, Mechanical, & General construction services revenues totaled $91.6 million for the six months ended March 31, 2024, a $26.0 million increase from $65.6 million for the six months ended March 31, 2023.

The revenue increases were primarily related to an increase in general contracting and electrical services performed during the three and six months ended March 31, 2024, as compared to the same period in the prior year.

Total revenues increased by $394,000 to $85.9 million for the three months ended June 30, 2024, as compared to $85.5 million for the three months ended June 30, 2023.

Total revenues increased by $48.0 million to $247.2 million for the nine months ended June 30, 2024, as compared to $199.2 million for the nine months ended June 30, 2023.

The increases were a result of increased work in all categories of business except for an $11.3 million decrease in Gas & Petroleum Transmission work for the three months ended June 30, 2024 as compared to the same period in 2023.

Gas & Water Distribution revenues totaled $22.5 million for the three months ended June 30, 2024, a $4.6 million increase from $17.9 million for the three months ended June 30, 2023.

Gas & Water Distribution revenues totaled $53.9 million for the nine months ended June 30, 2024, a $10.1 million increase from $43.8 million for the nine months ended June 30, 2023.

The revenue increases were primarily related to increased paving and gas and water distribution services performed during the three and nine months ended June 30, 2024, as compared to the same periods in 2023.

Gas & Petroleum Transmission revenues totaled $17.1 million for the three months ended June 30, 2024, an $11.4 million decrease from $28.5 million for the three months ended June 30, 2023.

Gas & Petroleum Transmission revenues totaled $55.5 million for the nine months ended June 30, 2024, a $4.8 million increase from $50.7 million for the nine months ended June 30, 2023.

The revenue decrease for the three months ended June 30, 2024, as compared to the same period in 2023, was primarily due to transmission work starting later in 2024 as compared to 2023 and the Company having a large transmission project that started in the third fiscal year quarter of 2023 that was not replaced in the third quarter of fiscal year 2024.

The revenue increase for the nine months ended June 30, 2024, as compared to the same period in 2023, was primarily due to projects that started later in fiscal year 2023 and continued into fiscal year 2024.

Electrical, Mechanical, & General construction services revenues totaled $46.2 million for the three months ended June 30, 2024, a $7.1 million increase from $39.1 million for the three months ended June 30, 2023.

Electrical, Mechanical, & General construction services revenues totaled $137.9 million for the nine months ended June 30, 2024, a $33.2 million increase from $104.7 million for the nine months ended June 30, 2023.

The revenue increases were primarily related to an increase in general contracting and electrical services performed during the three and nine months ended June 30, 2024, as compared to the same period in the prior year.

Cost of Revenues.

A table comparing the Company’s costs of revenues for the three and six months ended March 31, 2024, compared to the three and six months ended March 31, 2023, is below:

A table comparing the Company’s costs of revenues for the three and nine months ended June 30, 2024, compared to the three and nine months ended June 30, 2023, is below:

Three Months Ended

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

Gas & Water Distribution

2 unchanged sentences

Unallocated Shop Expense

Six Months Ended

March 31, 2024

March 31, 2023

Nine Months Ended

June 30, 2024

June 30, 2023

Gas & Water Distribution

2 unchanged sentences

Unallocated Shop Expense

Total cost of revenues increased by $15.1 million to $64.9 million for the three months ended March 31, 2024, as compared to $49.8 million for the three months ended March 31, 2023.

Total cost of revenues increased by $40.4 million to $144.2 million for the six months ended March 31, 2024, as compared to $103.8 million for the six months ended March 31, 2023.

The cost of revenues increases were a result of increased work in all categories of business, partially offset by less unallocated shop expenses for the three and six months ended March 31, 2024 as compared to the same period in 2023.

Gas & Water Distribution cost of revenues totaled $11.9 million for the three months ended March 31, 2024, a $1.3 million increase from $10.6 million for the three months ended March 31, 2023.

Gas & Water Distribution cost of revenues totaled $25.0 million for the six months ended March 31, 2024, a $3.7 million increase from $21.3 million for the six months ended March 31, 2023.

The cost of revenues increases were primarily related to increased paving and gas and water distribution services performed during the six months ended March 31, 2024, as compared to the same periods in 2023.

Gas & Petroleum Transmission cost of revenues totaled $9.5 million for the three months ended March 31, 2024, a $3.8 million increase from $5.8 million for the three months ended March 31, 2023.

Gas & Petroleum Transmission cost of revenues totaled $34.7 million for the six months ended March 31, 2024, a $14.9 million increase from $19.8 million for the six months ended March 31, 2023.

The cost of revenues increases were primarily related to gas transmission work that was awarded during the fiscal year ended September 30, 2023 and continued into fiscal year 2024.

Electrical, Mechanical, & General construction services cost of revenues totaled $42.4 million for the three months ended March 31, 2024, a $9.9 million increase from $32.5 million for the three months ended March 31, 2023.

Electrical, Mechanical, & General construction services cost of revenues totaled $83.4 million for the six months ended March 31, 2024, a $21.9 million increase from $61.5 million for the six months ended March 31, 2023.

The cost of revenues increases were primarily related to an increase in general contracting and electrical services performed during the three and six months ended March 31, 2024, as compared to the same period in the prior year.

Unallocated shop expenses totaled $1.1 million for the three months ended March 31, 2024, a $173,000 increase from $935,000 for the three months ended March 31, 2023.

Unallocated shop expenses totaled $1.1 million for the six months ended March 31, 2024, a $118,000 decrease from $1.2 million for the six months ended March 31, 2023.

The changes in unallocated shop expenses were due to changes in the amount of internal equipment charged to projects for the three and six months ended March 31, 2024, as compared to the same period in the prior year.

Total cost of revenues decreased by $4.0 million to $70.6 million for the three months ended June 30, 2024, as compared to $74.7 million for the three months ended June 30, 2023.

Total cost of revenues increased by $36.3 million to $214.8 million for the nine months ended June 30, 2024, as compared to $178.5 million for the nine months ended June 30, 2023.

The cost of revenues decreases for the three months ended June 30, 2024, as compared to the same period in 2023, as a result of Gas & Petroleum Transmission work starting later in 2024 as compared to 2023 and the Company having a large transmission project that started in the third fiscal year quarter of 2023 that was not replaced in the third quarter of fiscal year 2024.

The cost of revenue increase for the nine months ended June 30, 2024, as compared to the nine months ended June 30, 2023, as a result of increased work in all categories of business.

Gas & Water Distribution cost of revenues totaled $16.1 million for the three months ended June 30, 2024, a $2.9 million increase from $13.3 million for the three months ended June 30, 2023.

Gas & Water Distribution cost of revenues totaled $41.1 million for the nine months ended June 30, 2024, a $6.6 million increase from $34.5 million for the nine months ended June 30, 2023.

The cost of revenues increase was primarily related to increased paving and gas and water distribution services performed during the nine months ended June 30, 2024, as compared to the same periods in 2023.

Gas & Petroleum Transmission cost of revenues totaled $12.5 million for the three months ended June 30, 2024, a $12.0 million decrease from $24.5 million for the three months ended June 30, 2023.

Gas & Petroleum Transmission cost of revenues totaled $47.2 million for the nine months ended June 30, 2024, a $2.9 million increase from $44.4 million for the nine months ended June 30, 2023.

The cost of revenues decreases for the three months ended June 30, 2024, as compared to the same period in 2023, were primarily due to Gas & Petroleum Transmission work starting later in 2024 as compared to 2023 and the Company having a large transmission project that started in the third fiscal year quarter of 2023 that was not replaced in the third quarter of fiscal year 2024.

The cost of revenues increased for the nine months ended June 30, 2024, as compared to the same period in 2023, primarily due to projects that started later in fiscal year 2023 and continued into fiscal year 2024.

Electrical, Mechanical, & General construction services cost revenues totaled $40.2 million for the three months ended June 30, 2024, a $3.6 million increase from $36.6 million for the three months ended June 30, 2023.

Electrical, Mechanical, & General construction services cost of revenues totaled $123.7 million for the nine months ended June 30, 2024, a $25.5 million increase from $98.1 million for the nine months ended June 30, 2023.

The cost of revenues increase was primarily related to an increase in general contracting and electrical services performed during the three and nine months ended June 30, 2024, as compared to the same period in the prior year.

Unallocated shop expenses totaled $1.7 million for the three months ended June 30, 2024, a $1.5 increase from $249,000 for the three months ended June 30, 2023.

Unallocated shop expenses totaled $2.8 million for the nine months ended June 30, 2024, a $1.3 million increase from $1.5 million for the nine months ended June 30, 2023.

The changes in unallocated shop expenses were primarily due to changes in the amount of internal equipment charged to projects for the three and nine months ended June 30, 2024, as compared to the same period in the prior year.

Gross Profit (Loss) .

A table comparing the Company’s gross profit (loss) for the three and six months ended March 31, 2024, compared to the three and six months ended March 31, 2023, is below:

A table comparing the Company’s gross profit (loss) for the three and nine months ended June 30, 2024, compared to the three and nine months ended June 30, 2023, is below:

Three Months Ended

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

Gas & Water Distribution

2 unchanged sentences

Unallocated Shop Expense

Six Months Ended

March 31, 2024

March 31, 2023

Nine Months Ended

June 30, 2024

June 30, 2023

Gas & Water Distribution

2 unchanged sentences

Unallocated Shop Expense

Total gross profit increased by $2.4 million to $6.2 million for the three months ended March 31, 2024, as compared to $3.9 million for the three months ended March 31, 2023.

Total gross profit increased by $7.2 million to $17.1 million for the six months ended March 31, 2024, as compared to $9.9 million for the six months ended March 31, 2023.

Gas & Water Distribution gross profit totaled $2.4 million for the three months ended March 31, 2024, a $438,000 decrease from $2.8 million for the three months ended March 31, 2023.

The gross profit decrease was primarily due to inclement weather conditions and training and certification expenses incurred during the three months ended March 31, 2024.

Gas & Water Distribution gross profit totaled $6.4 million for the six months ended March 31, 2024, a $1.7 million increase from $4.7 million for the six months ended March 31, 2023.

The gross profit increase was primarily related to increased paving and gas and water distribution services performed during the six months ended March 31, 2024, as compared to the same period in 2023.

Gas & Petroleum Transmission gross profit totaled $231,000 for the three months ended March 31, 2024, a $651,000 increase from ($420,000) for the three months ended March 31, 2023.

Gas & Petroleum Transmission gross profit totaled $3.6 million for the six months ended March 31, 2024, a $1.2 million increase from $2.4 million for the six months ended March 31, 2023.

The gross profit increases were primarily related to gas transmission work that was awarded during the fiscal year ended September 30, 2023 and continued into fiscal year 2024.

Electrical, Mechanical, & General construction services gross profit totaled $4.7 million for the three months ended March 31, 2024, a $2.3 million increase from $2.4 million for the three months ended March 31, 2023.

Electrical, Mechanical, & General construction services gross profit totaled $8.2 million for the six months ended March 31, 2024, a $4.1 million increase from $4.1 million for the six months ended March 31, 2023.

The gross profit increases were primarily related to an increase in general contracting and electrical services performed during the three and six months ended March 31, 2024, as compared to the same periods in the prior year.

Gross loss attributable to unallocated shop expenses totaled $1.1 million for the three months ended March 31, 2024, a $173,000 increase from $935,000 for the three months ended March 31, 2023.

Gross loss attributable to unallocated shop expenses totaled $1.1 million for the six months ended March 31, 2024, a $118,000 decrease from $1.2 million for the six months ended March 31, 2023.

Total gross profit increased by $4.4 million to $15.3 million for the three months ended June 30, 2024, as compared to $10.9 million for the three months ended June 30, 2023.

Total gross profit increased by $11.6 million to $32.4 million for the nine months ended June 30, 2024, as compared to $20.8 million for the nine months ended June 30, 2023.

Gas & Water Distribution gross profit totaled $6.4 million for the three months ended June 30, 2024, a $1.7 million increase from $4.6 million for the three months ended June 30, 2023.

Gas & Water Distribution gross profit totaled $12.8 million for the nine months ended June 30, 2024, a $3.5 million increase from $9.3 million for the nine months ended June 30, 2023.

The gross profit increase was primarily related to increased paving and gas and water distribution services performed during the three and nine months ended June 30, 2024, as compared to the same period in 2023.

Gas & Petroleum Transmission gross profit totaled $4.6 million for the three months ended June 30, 2024, a $618,000 increase from $4.0 million for the three months ended June 30, 2023.

Gas & Petroleum Transmission gross profit totaled $8.2 million for the nine months ended June 30, 2024, a $1.9 million increase from $6.4 million for the nine months ended June 30, 2023.

The gross profit increase for the three months ended June 30, 2024, as compared to the same period in 2023, was primarily related to the unexpected receipt of project changes orders for work performed earlier in fiscal year 2023.

The gross profit increase for the nine months ended June 30, 2024, as compared to the same period in 2023, was primarily related to projects that started later in fiscal year 2023 and continued into fiscal year 2024.

Electrical, Mechanical, & General construction services gross profit totaled $6.0 million for the three months ended June 30, 2024, a $3.5 million increase from $2.5 million for the three months ended June 30, 2023.

Electrical, Mechanical, & General construction services gross profit totaled $14.2 million for the nine months ended June 30, 2024, a $7.6 million increase from $6.6 million for the nine months ended June 30, 2023.

The gross profit increases were primarily related to an increase in general contracting and electrical services performed during the three and nine months ended June 30, 2024, as compared to the same periods in the prior year.

In addition, the Company completed several milestones on a significant project nearing completion during the third quarter of fiscal year 2024 with a higher than expected profits.

Gross loss attributable to unallocated shop expenses totaled ($1.7) million for the three months ended June 30, 2024, a $1.5 increase from ($249,000) for the three months ended June 30, 2023.

Gross loss attributable to unallocated shop expenses totaled ($2.8) million for the nine months ended June 30, 2024, a $1.3 million increase from ($1.5) million for the nine months ended June 30, 2023.

The changes in unallocated shop expenses were due to changes in the amount of internal equipment charged to projects for the three and nine months ended June 30, 2024, as compared to the same periods in the prior year.

Selling and administrative expenses .

Total selling and administrative expenses increased by $1.4 million to $7.3 million for the three months ended March 31, 2024, as compared to $5.9 million for the same period in the prior year.

Total selling and administrative expenses increased by $3.3 million to $14.5 million for the six months ended March 31, 2024, as compared to $11.2 million for the same period in the prior year.

Total selling and administrative expenses increased by $1.5 million to $6.8 million for the three months ended June 30, 2024, as compared to $5.3 million for the same period in the prior year.

Total selling and administrative expenses increased by $4.8 million to $21.3 million for the nine months ended June 30, 2024, as compared to $16.5 million for the same

period in the prior year.

The increase was primarily related to additional personnel hired to secure and manage work for expected growth.

Other nonoperating income (expense) .

Other nonoperating expenses totaled $81,000 for the three months ended March 31, 2024, as compared to $11,000 for the same period in the prior year.

The change was primarily related to an increase in charitable contributions.

Other nonoperating expenses totaled $6,000 for the six months ended March 31, 2024, as compared to $91,000 for the same period in the prior year.

The change was primarily related to an immaterial legal settlement that recouped costs expended in a prior period.

Other nonoperating expense .

Other nonoperating expenses totaled $27,000 for the three months ended June 30, 2024, as compared to $72,000 for the same period in the prior year.

Other nonoperating expenses totaled $34,000 for the nine months ended June 30, 2024, as compared to $164,000 for the same period in the prior year.

The change for the nine months ended June 30, 2024, as compared to the same period in 2023, was primarily related to an immaterial legal settlement that recouped costs expended in a prior period.

Income from Lawsuit Judgement .

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

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

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

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

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

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

The Company received an approximately $15.6 million payment related to the lawsuit in May 2024.

Interest expense .

Interest expense totaled $623,000 for the three months ended March 31, 2024, an increase of $48,000 from $575,000 for the same period in the prior year.

Interest expense totaled $1.2 million for the six months ended March 31, 2024, an increase of $150,000 from $1.1 million for the same period in the prior year.

The increase in interest expense was primarily due to interest paid for equipment financing added in late fiscal year 2023 and an increase in interest rates.

Interest expense totaled $547,000 for the three months ended June 30, 2024, a decrease of $93,000 from $640,000 for the same period in the prior year.

The decrease was primarily due to the Company paying off its operating line of credit in late May 2024.

Interest expense totaled $1.8 million for the nine months ended June 30, 2024, an increase of $58,000 from $1.7 million for the same period in the prior year.

The increase in interest expense was primarily due to interest paid for equipment financing added in late fiscal year 2023 and an increase in interest rates, partially offset by the Company paying off its operating line of credit in late May 2024.

Gain on sale of equipment .

Gain on sale of equipment totaled $305,000 for the three months ended March 31, 2024, an increase of $257,000 from $48,000 for the same period in the prior year.

Gain on sale of equipment totaled $292,000 for the six months ended March 31, 2024, an increase of $275,000 from $17,000 for the same period in the prior year.

The Company sold certain underutilized or non-working pieces of equipment during the three and six months ended March 31, 2024, with no comparable sale occurring during the three and six months ended March 31, 2023.

Net income (loss) .

Loss before income taxes was $1.5 million for the three months ended March 31, 2024, as compared to $2.5 million for the same period in the prior year.

Income before income taxes was $1.6 million for the six months ended March 31, 2024, as compared to a loss before income taxes of $2.5 million for the same period in the prior year.

Gain on sale of equipment totaled $600 for the three months ended June 30, 2024, a decrease of $29,400 from $30,000 for the same period in the prior year.

Gain on sale of equipment totaled $292,000 for the nine months ended June 30, 2024, an increase of $245,000 from $47,000 for the same period in the prior year.

The Company sold certain underutilized or non-working pieces of equipment during the nine months ended June 30, 2024, with no comparable sale occurring during the nine months ended June 30, 2023.

Income before income taxes was $23.6 million for the three months ended June 30, 2024, as compared to $4.9 million for the same period in the prior year.

Income before income taxes was $25.2 million for the nine months ended June 30, 2024, as compared to income before income taxes of $2.4 million for the same period in the prior year.

The increases were primarily related to the items mentioned above.

Income tax benefit for the three months ended March 31, 2024, was $373,000 compared to $650,000 for the same period in the prior year.

The decrease in income tax benefit was due to the increase in taxable income for the three months ended March 31, 2024, as compared to the prior period.

Income tax expense for the six months ended March 31, 2024, was $685,000 compared to an income tax benefit of $730,000 for the same period in the prior year.

The increase in income tax expense was due to the increase in taxable income for the six months ended March 31, 2024, as compared to the prior year period.

Net loss for the three months ended March 31, 2024, was $1.1 million, as compared to $1.9 million for the same period in the prior year.

Net income for the six months ended March 31, 2024 was $933,000, as compared to a net loss of $1.7 million for the same period in 2023.

Comparison of Financial Condition at March 31, 2024, and September 30, 2023

The Company had total assets of $136.1 million at March 31, 2024, a decrease of $6.4 million from the prior fiscal year end balance of $142.5 million.

Accounts receivable, net of allowance for doubtful accounts, totaled $46.4 million at March 31, 2024, a decrease of $4.8 million from the prior fiscal year end balance of $51.2 million.

The decrease was primarily due to the timing of cash collections and project invoicing since September 30, 2023.

Cash and cash equivalents totaled $12.1 million at March 31, 2024, a decrease of $4.3 million from the prior fiscal year end balance of $16.4 million.

The decrease was primarily due to a net $2.6 million investment in equipment, and a net $1.9 million used in financing activities, partially offset by a net $183,000 provided from operating activities.

Contract assets totaled $14.6 million at March 31, 2024, a decrease of $1.3 million from the prior fiscal year end balance of $16.0 million.

The decrease was due to a difference in the timing of project billings at March 31, 2024, compared to September 30, 2023.

Right-of-use assets totaled $2.8 million at March 31, 2024, a decrease of $560,000 from the prior fiscal year end balance of $3.3 million.

The decrease was primarily due to the amortization of operating leases during the six months ended March 31, 2024, partially offset by a net increase in leased vehicles.

Intangible assets, net totaled $3.2 million at March 31, 2024, a decrease of $216,000 from the prior fiscal year end balance of $3.4 million.

The decrease was due to the amortization of intangible assets during the six months ended March 31, 2024.

Retainage receivable totaled $10.1 million at March 31, 2024, an increase of $2.5 million from the prior fiscal year end balance of $7.6 million.

Income tax expense for the three months ended June 30, 2024, was $6.0million compared to $1.5 million for the same period in the prior year.

Income tax expense for the nine months ended June 30, 2024, was $6.7 million compared to income tax expense of $768,000 for the same period in the prior year.

The increases in income tax expenses were due to an increase in taxable income primarily related to $15.6 million recognized as income from the receipt of a lawsuit judgement during the three and nine months ended June 30, 2024.

Net income for the three months ended June 30, 2024, was $17.5 million, as compared to $3.4 million for the same period in the prior year.

Net income for the nine months ended June 30, 2024 was $18.4 million, as compared to a net loss of $1.7 million for the same period in 2023.

Comparison of Financial Condition at June 30, 2024, and September 30, 2023

The Company had total assets of $148.8 million at June 30, 2024, an increase of $6.3 million from the prior fiscal year end balance of $142.5 million.

Contract assets totaled $21.0 million at June 30, 2024, an increase of $5.1 million from the prior fiscal year end balance of $16.0 million.

The increase was due to a difference in the timing of project billings at June 30, 2024, compared to September 30, 2023.

Retainage receivable totaled $10.3 million at June 30, 2024, an increase of $2.7 million from the prior fiscal year end balance of $7.6 million.

The increase was primarily due to more current year projects that require retainages to be withheld.

Prepaid expenses and other totaled $5.1 million at March 31, 2024, an increase of $1.6 million from the prior fiscal year end balance of $3.5 million.

The increase was primarily due to an increase in prepaid insurance that will be expense throughout fiscal year 2024.

The Company had net property, plant and equipment of $37.0 million at March 31, 2024, an increase of $448,000 from the prior fiscal year end balance of $36.5 million.

The Company had net property, plant and equipment of $37.9 million at June 30, 2024, an increase of $1.4 million from the prior fiscal year end balance of $36.5 million.

The increase was due to $8.4 million in asset additions, partially offset by $6.3 million in depreciation and net equipment disposals of $703,000.

Goodwill totaled $4.1 million at March 31, 2024 and September 30, 2023.

The Company had total liabilities of $101.6 million at March 31, 2024, a decrease of $6.4 million from the prior fiscal year end balance of $107.9 million.

Accounts payable totaled $18.7 million at March 31, 2024, a decrease of approximately $3.3 million from the prior fiscal year end balance of $22.0 million.

Prepaid expenses and other totaled $4.2 million at June 30, 2024, an increase of $726,000 from the prior fiscal year end balance of $3.5 million.

The increase was primarily due to an increase in prepaid insurance that will be expensed in the next twelve months.

Other receivables totaled $1.1 million at June 30, 2024, an increase of $605,000 from the prior fiscal year end balance of $517,000.

The increase was primarily due to an advance made to the variable interest entity referenced in Related Party Transactions.

Cash and cash equivalents totaled $14.5 million at June 30, 2024, a decrease of $1.9 million from the prior fiscal year end balance of $16.4 million.

The decrease was primarily due to a net $5.7 million investment in equipment, and a net $15.7 million used in financing activities, partially offset by a net $19.5 million provided from operating activities.

Accounts receivable, net of allowance for doubtful accounts, totaled $50.1 million at June 30, 2024, a decrease of $1.1 million from the prior fiscal year end balance of $51.2 million.

The decrease was primarily due to the timing of cash collections and project invoicing since September 30, 2023.

Right-of-use assets totaled $2.5 million at June 30, 2024, a decrease of $829,000 from the prior fiscal year end balance of $3.3 million.

The decrease was primarily due to the amortization of operating leases during the nine months ended June 30, 2024, partially offset by a net increase in leased vehicles.

Intangible assets, net totaled $3.1 million at June 30, 2024, a decrease of $324,000 from the prior fiscal year end balance of $3.4 million.

The decrease was due to the amortization of intangible assets during the nine months ended June 30, 2024.

Goodwill totaled $4.1 million at June 30, 2024 and September 30, 2023.

The Company had total liabilities of $96.8 million at June 30, 2024, a decrease of $11.1 million from the prior fiscal year end balance of $107.9 million.

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

The decrease was primarily due to repayment of the operating line of credit and financed insurance premiums.

The remaining balance relates to PPP loans.

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

Long-term debt totaled $21.7 million at June 30, 2024, a decrease of $3.3 million from the prior fiscal year end balance of $25.0 million.

The decrease in long-term debt was primarily due to $5.0 million in payments on long-term debt, partially offset by $1.7 million in new equipment financing.

Accounts payable totaled $19.4 million at June 30, 2024, a decrease of approximately $2.6 million from the prior fiscal year end balance of $22.0 million.

The decrease was due to the timing of accounts payable payments as compared to September 30, 2023.

Accrued expenses and other current liabilities totaled $10.9 million at March 31, 2024, a decrease of $2.2 million from the prior fiscal year end balance of $13.1 million.

Accrued expenses and other current liabilities totaled $12.0 million at June 30, 2024, a decrease of $1.1 million from the prior fiscal year end balance of $13.1 million.

The decrease was due to the timing of accrued expense payments, as compared to September 30, 2023.

Long-term debt totaled $23.2 million at March 31, 2024, a decrease of $1.8 million from the prior fiscal year end balance of $25.0 million.

The decrease in long-term debt was primarily due to $3.5 million in payments on long-term debt, partially offset by $1.8 million in new equipment financing.

Contract liabilities totaled $16.3 million at March 31, 2024, a decrease of $1.4 million from the prior fiscal year end balance of $17.7 million.

The decrease was due to a difference in the timing of project billings at March 31, 2024, as compared to September 30, 2023.

Current and long-term operating lease liabilities totaled $2.8 million at March 31, 2024, a decrease of $569,000 from the prior fiscal year end balance of $3.4 million.

The decrease was due to payments made during the six months ended March 31, 2024.

Lines of credit and short-term borrowings totaled $22.5 million at March 31, 2024, an increase of $2.6 million from the prior fiscal year end balance of $19.8 million.

The increase was primarily due to additional line of credit borrowings.

Deferred tax liabilities totaled $7.2 million at March 31, 2024, an increase of $331,000 from the prior fiscal year end balance of $6.9 million.

The increase was primarily related to the reduction of the net operating loss carry forward during the six months ended March 31, 2024.

Shareholders’ equity was $34.6 million at March 31, 2024, a decrease of $25,000 from the prior fiscal year end balance of $34.6 million.

The increase was primarily due to net income of $933,000 for the six months ended March 31, 2024, mostly offset by an annual cash dividend payment of $994,000 on January 2, 2024.

Current and long-term operating lease liabilities totaled $2.5 million at June 30, 2024, a decrease of $864,000 from the prior fiscal year end balance of $3.6 million.

The decrease was due to payments made during the nine months ended June 30, 2024.

Income tax payable totaled $5.7 million at June 30, 2024, an increase of $5.7 million from the prior fiscal year end.

The increase was primarily related to the taxable income generated during the nine months ended June 30, 2024.

Deferred tax liabilities totaled $7.3 million at June 30, 2024, an increase of $412,000 from the prior fiscal year end balance of $6.9 million.

The increase was primarily related to a $910,000 reduction of a tax asset related to a net operating loss carry forward during the nine months ended June 30, 2024, partially offset by a $460,000 decrease in deferred taxes related to property and equipment.

Contract liabilities totaled $17.9 million at June 30, 2024, an increase of $202,000 from the prior fiscal year end balance of $17.7 million.

The increase was due to a difference in the timing of project billings at June 30, 2024, as compared to September 30, 2023.

Shareholders’ equity was $52.0 million at June 30, 2024, an increase of $17.4 million from the prior fiscal year end balance of $34.6 million.

The increase was primarily due to net income of $18.4 million for the nine months ended June 30, 2024, partially offset by an annual cash dividend payment of $994,000 on January 2, 2024 .

Liquidity and Capital Resources

Operating Line of Credit

On July 13, 2022, the Company received a one-year extension on its $15.0 million operating line of credit effective June 28, 2022.

On January 19, 2023, the Company received an amendment to its $15.0 million operating line of credit which increased the line of credit to $30.0 million with a maturity date of June 28, 2023.

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

On January 19, 2023, the Company received an amendment to the agreement which increased the line of credit to $30.0 million with a maturity date of June 28, 2023.

On June 1, 2023, the agreement was renewed through June 28, 2024.

The Company is working with its lender and expects the operating line of credit to be extended in the Company’s fourth quarter of fiscal year 2024.

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

March 31, 2024

June 30, 2024

September 30, 2023

13 unchanged sentences

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

Thus, the Company was in compliance with all covenants at March 31, 2024.

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

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

3 unchanged sentences

The Company made a down payment in January 2023 and financed the remaining premium amount over eleven monthly payments.

At March 31, 2024 and September 30, 2023, the remaining balance of the insurance premiums was $0 and $950,000, respectively.

For the calendar year beginning January 1, 2024, the Company’s insurance company is accepting quarterly payments on certain insurance policies and the Company has prepaid the balance of the remaining policies as of March 31, 2024.

The Company has no insurance premiums financed as of March 31, 2024.

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

The Company has no insurance premiums financed as of June 30, 2024.

Paycheck Protection Program Loans

17 unchanged sentences

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 in whole or in part for loan forgiveness and demand repayment of the loans.

The SBA could revisit its forgiveness decision and determine that the Company does not qualify in 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.

5 unchanged sentences

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

As of March 31, 2024, the Company had made principal payments of $413,000.

As of June 30, 2024, the Company had made principal payments of $425,000.

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

2 unchanged sentences

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

The variable interest rate on the loan agreement is 9.5% at March 31, 2024.

As of March 31, 2024, the Company had made principal payments of $868,000.

The variable interest rate on the loan agreement is 9.5% at June 30, 2024.

As of June 30, 2024, the Company had made principal payments of $900,000.

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

3 unchanged sentences

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 March 31, 2024, the Company had made annual installment payments of $2.1 million.

As of June 30, 2024, the Company had made annual installment payments of $2.1 million.

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

2 unchanged sentences

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

As of March 31, 2024, the Company borrowed $3.0 million against this line of credit with monthly payments of $68,150 that started in February 2022.

The interest rate at March 31, 2023 was 9.5%.

The Company has made principal payments of $1.5 million on this note as of March 31, 2024.

As of June 30, 2024, the Company borrowed $3.0 million against this line of credit with monthly payments of $68,150 that started in February 2022.

The interest rate at June 30, 2023 was 9.5%.

The Company has made principal payments of $1.6 million on this note as of June 30, 2024.

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

2 unchanged sentences

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

As of March 31, 2024, the Company had made principal payments of $2.0 million.

As of June 30, 2024, the Company had made principal payments of $2.2 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%.

The Company has made principal payments of $2.5 million on this note as of March 31, 2024.

The Company has made principal payments of $2.8 million on this note as of June 30, 2024.

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

2 unchanged sentences

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

As of March 31, 2024, the Company had made principal payments of $783,000.

As of June 30, 2024, the Company had made principal payments of $928,000.

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.

2 unchanged sentences

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

The Company has made principal payments of $750,000 on this note as of March 31, 2024.

The Company has made principal payments of $750,000 on this note as of June 30, 2024.

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

2 unchanged sentences

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

As of March 31, 2024, the Company had borrowed $9.3 million against this line of credit and made $588,000 in principal payments.

As of June 30, 2024, the Company had borrowed $9.3 million against this line of credit and made $1.0 million in principal payments.

Operating Leases

2 unchanged sentences

The Company has only committed to a one-year renewal and is evaluating the intent to renew for additional periods.

The Company had two lease agreements for construction equipment with a combined amount of $160,000 that were paid in full as of March 31, 2024.

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

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

2 unchanged sentences

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 $86,000 at March 31, 2024.

The second operating lease, for the Chattanooga, Tennessee facility, had a net present value of $144,000 at inception, and a carrying value of $24,000 at March 31, 2024.

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 $69,000 at June 30, 2024.

The second operating lease, for the Chattanooga, Tennessee facility, had a net present value of $144,000 at inception, and a carrying value of $6,000 at June 30, 2024.

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

2 unchanged sentences

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

The Company had seventy-one vehicles on lease at March 31, 2024.

The right-of-use operating lease has a carrying value of $2.4 million at March 31, 2024.

The Company had seventy-one vehicles on lease at June 30, 2024.

The right-of-use operating lease has a carrying value of $2.2 million at June 30, 2024.

Each vehicle leased under the master lease program has its own implicit rate ranging from 12.8% to 15.6%.

The Company has a right-of-use operating lease with RICA Developers, LLC acquired on August 12, 2022 and renewed for one year effective October 1, 2023.

This lease, for the Bridgeport, West Virginia facility, had a net present value of $125,000 at inception and a carrying value of $64,000 at March 31, 2024.

This lease, for the Bridgeport, West Virginia facility, had a net present value of $125,000 at inception and a carrying value of $21,000 at June 30, 2024.

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

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 $209,000 at March 31, 2024.

This lease, for the Winchester, Kentucky facility, had a net present value of $290,000 at inception and a carrying value of $169,000 at June 30, 2024.

The 7.75% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception.

5 unchanged sentences

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 $3.3 million and $1.5 million, respectively, for the three months ended March 31, 2024 and 2023.

Rental expenses were $8.7 million and $4.2 million, respectively, for the six months ended March 31, 2024 and 2023.

Rental expense, which is included in cost of goods sold on the consolidated statements of income, was $3.3 million and $2.5 million, respectively, for the three months ended June 30, 2024 and 2023.

Rental expenses were $12.0 million and $6.8 million, respectively, for the nine months ended June 30, 2024 and 2023.

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, 2024, the Company did not have any letters of credit outstanding.

At June 30, 2024, the Company did not have any letters of credit outstanding.

Performance Bonds

6 unchanged sentences

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

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, 2024, the Company had $94.9 million in performance bonds outstanding.

At June 30, 2024, the Company had $94.5 million in 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.

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 or accounts receivable, net of retention for the three and six months ended March 31, 2024 and 2023:

Please see the tables below for customers that represent 10.0% or more of the Company’s revenue or accounts receivable, net of retention for the three and nine months ended June 30, 2024 and 2023:

Three Months Ended

Six Months Ended

Nine Months Ended

TransCanada Corporation

NiSource and subsidiaries

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

Accounts receivable, net of retention

at March 31, 2024

at March 31, 2023

Yates Construction

at June 30, 2024

at September 30, 2023

Walbridge Aldinger

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

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

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

On November 21, 2022, a Judgment Order was issued, and the Company was awarded $13.1 million, of which $5.8 million was the jury award, $1.6 million was for attorney’s fees, and $5.7 million was for penalties and interest.

The amounts awarded by the Judgment Order have not been recognized in the Company’s consolidated financial statements as of March 31, 2024.

The Company’s attorney’s

fees have been expensed as incurred.

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

On May 1, 2024, the Defendant filed a Petition for Rehearing or Rehearing En Banc with the Appeals Court.

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

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

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

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

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

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

The Company received an approximately $15.6 million payment related to the lawsuit in May 2024.

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

6 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, 2024.

Other than described above, at March 31, 2024, 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, 2024.

Other than described above, at June 30, 2024, 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, 2024, 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, 2024, 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

1 unchanged sentence

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

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

The Company has made $750,000 in principal payments on this note as of March 31, 2024.

Interest payments due shall 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 June 30, 2024.

Subsequent to the April 29, 2022 acquisition of Tri-State Paving, the Company entered into an operating lease for facilities in Hurricane, West Virginia with Corns Enterprises.

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

The total net present value at inception was $236,000 with a carrying value of $86,000 at March 31, 2024.

The total net present value at inception was $236,000 with a carrying value of $69,000 at June 30, 2024.

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

9 unchanged sentences

SQP and Ventures have jointly provided an unconditional guarantee for the $5.0 million of obligations associated with the Project.

Other than mentioned above, there were no new material related party transactions entered into during the three and six months ended March 31, 2024.

Other than mentioned above, there were no new material related party transactions entered into during the three and nine months ended June 30, 2024.

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.

4 unchanged sentences

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, 2024 and 2023.

however, inflation did not have a significant effect on our results for the three and nine months ended June 30, 2024 and 2023.

Critical Accounting Estimates

29 unchanged sentences

Settlement with the customer of outstanding affirmative claims is dependent on the claims resolution process and could extend beyond one year.

on our historical experience, we generally consider the collection risk related to billable amounts to be low.

Based on our historical experience, we generally consider the collection risk related to billable amounts to be low.

When events or conditions indicate that it is probable that the amounts outstanding become unbillable, the transaction price and associated contract asset is reduced.

3 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, 2024 and September 30, 2023:

March 31, 2024

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, 2024 and September 30, 2023:

June 30, 2024

September 30, 2023

10 unchanged sentences

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

At March 31, 2024, the management review deemed that the allowance for doubtful accounts was adequate.

Please see the allowance for doubtful accounts table below:

March 31, 2024

At June 30, 2024, 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 nine months ended June 30, 2024 and as of and for the twelve months ended September 30, 2023:

June 30, 2024

September 30, 2023

5 unchanged sentences

The Company follows the guidance of Accounting Standards Codification (“ASC”) 350-20-35-3 “Intangibles-Goodwill and Other (Topic 350)” which requires a company to record an impairment charge based on the excess of a reporting unit’s carrying amount of goodwill over its fair value.

Under the current guidance, companies can first choose to assess any impairment based on qualitative

factors (Step 0).

Under the current guidance, companies can first choose to assess any impairment based on qualitative factors (Step 0).

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, 2024.

The Company did not have a goodwill impairment at June 30, 2024.

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

11 unchanged sentences

at September 30,

Ended March 31,

Ended June 30,

at September 30,

21 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, 2024 and 2023 were $2.1 million and $1.8 million, respectively.

The Company’s depreciation expenses for the six months ended March 31, 2024 and 2023 were $4.2 million and $3.6 million, respectively.

The Company’s depreciation expenses for the three months ended June 30, 2024 and 2023 were $2.2 million and $1.7 million, respectively.

The Company’s depreciation expenses for the nine months ended June 30, 2024 and 2023 were $6.3 million and $5.4 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, 2024 and 2023 were $108,142 and $132,621, respectively.

The Company’s amortization expenses for the six months ended March 31, 2024 and 2023 were $216,284 and $265,401, respectively.

The Company’s amortization expenses for the three months ended June 30, 2024 and 2023 were $108,142 and $135,820, respectively.

The Company’s amortization expenses for the nine months ended June 30, 2024 and 2023 were $324,426 and $401,221, 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 state rate of 6.0% to taxable income or loss after consideration of non-taxable and non-deductible items.

The income tax benefit for the three months ended March 31, 2024 was $373,000 as compared to $650,000 for the three months ended March 31, 2023.

The income tax expense for the six months ended March 31, 2024 was $685,000 as compared to an income tax benefit of $730,000 for the six months ended March 31, 2023.

The changes were due to an increase in taxable income for the three and six months ended March 31, 2024, as compared to the same period in 2023.

The effective income tax rate for the three and six months ended March 31, 2024, was (25.2%) and 42.3%, respectively, as compared to (25.8%) and (29.6%), respectively, for the same periods in 2023.

The income tax expense for the three months ended June 30, 2024 was $6.0 million as compared to $1.5 million for the three months ended June 30, 2023.

The income tax expense for the nine months ended June 30, 2024 was $6.7 million as compared to 768,000 for the nine months ended June 30, 2023.

The changes were due to an increase in taxable income for the three and nine months ended June 30, 2024, as compared to the same period in 2023.

The effective income tax rate for the three and nine months ended June 30, 2024, was 25.6% and 30.5%, respectively, as compared to 26.7% and 31.4%, respectively, for the same periods in 2023.

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.

9 unchanged sentences

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

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

For all other entities they are effective for the fiscal years,

including interim periods within those the fiscal years, beginning after December 15, 2023.

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

3 unchanged sentences

Subsequent Events

On April 17, 2024, the United States Court of Appeals for the Third Circuit (the “Court”) affirmed the decision of the United States District Court for the Western District of Pennsylvania in a lawsuit filed by the Company against a former customer (“Defendant”) related to a dispute over work performed on a pipeline contract.

On May 1, 2024, the Defendant filed a Petition for Rehearing or Rehearing En Banc with the Court.

Please see Litigation on page 31 for further details.

On July 11, 2024, the Company’s Nitro subsidiary completed the acquisition of substantially all the physical assets of Heritage Painting, LLC, a West Virginia corporation located in Poca, West Virginia for $300,000 cash.

Management has evaluated all subsequent events for accounting and disclosure.

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The Company is seeing a significant increase in bid opportunities for natural gas transmission and distribution projects along with electrical, mechanical, and general construction projects.

The Company’s backlog at March 31, 2024, was $222.8 million, as compared to $224.6 million and $229.8 million at March 31, 2023, and September 30, 2023, respectively.

The Company’s unaudited backlog at June 30, 2024, was $250.9 million, as compared to $185.9 million and $229.8 million at June 30, 2023, and September 30, 2023, respectively.

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

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis