What changed in this filing

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Item 1. Business

2020-12-07 compared with 2019-12-06 · 126 added, 131 removed, 151 unchanged (63% of the section changed)

IES Holdings, Inc.

is a holding company that owns and manages operating subsidiaries in business activities across a variety of end-markets.

is a holding company that owns and manages operating subsidiaries that design and install integrated electrical and technology systems and provide infrastructure products and services to a variety of end markets.

Our operations are currently organized into four principal business segments, based upon the nature of our current services:

Commercial & Industrial – Provider of electrical and mechanical design, construction, and maintenance services to the commercial and industrial markets in various regional markets and nationwide in certain areas of expertise, such as the power infrastructure market.

Communications – Nationwide provider of technology infrastructure services, including the design, build, and maintenance of the communications infrastructure within data centers for colocation and managed hosting customers, for both large corporations and independent businesses.

Infrastructure Solutions – Provider of electro-mechanical solutions for industrial operations, including apparatus repair and custom-engineered products, such as generator enclosures, to be used in data centers and other industrial applications.

• Communications – Nationwide provider of technology services, including the design, build, and maintenance of the infrastructure within data centers for co-location and managed hosting customers, for both large corporations and independent businesses.

• Residential – Regional provider of electrical installation services for single-family housing and multi-family apartment complexes.

Our businesses are managed in a decentralized manner.

• Infrastructure Solutions – Provider of electro-mechanical solutions for industrial operations, including apparatus repair and custom-engineered products, such as generator enclosures used in data centers and other industrial applications.

• Commercial & Industrial – Provider of electrical and mechanical design, construction, and maintenance services to the commercial and industrial markets in various regional markets and nationwide in certain areas of expertise, such as the power infrastructure market and data centers.

While sharing common goals and values, each of the Company’s segments manages its own day-to-day operations.

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We seek to create shareholder value through improving operating margins and generating free cash flow by investing in our existing businesses and completing acquisitions.

We seek to acquire or invest in stand-alone platform companies based in North America or to acquire businesses that strategically complement our existing business segments.

We seek to acquire businesses that strategically complement our existing business segments or to acquire or invest in stand-alone platform companies based in North America.

In evaluating potential acquisition candidates, we seek to invest in businesses with, among other characteristics:

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• strong cash flow characteristics.

We believe that acquisitions provide an opportunity to expand into new end markets and diversify our revenue and profit streams, which we expect will allow us to maximize the value of our significant net operating loss tax carry forwards (“NOLs”).

We believe that acquisitions provide an opportunity to expand into new or related services, products, end markets or geographic areas and diversify our revenue and profit streams, which we expect will allow us to maximize the value of our significant net operating loss tax carry forwards (“NOLs”).

While we may use acquisitions to build our presence in the industries we serve, we will also consider potential acquisitions in other industries, which could result in changes in our operations from those historically conducted by us.

Controlling Shareholder

A majority of our outstanding common stock is owned by Tontine Associates, L.L.C.

and its affiliates (collectively, “Tontine”).

Based on a Form 4 filed on October 3, 2019 , Tontine owns approximately 58 percent of our outstanding common stock.

As a result, Tontine can control most of our affairs, including most actions requiring the approval of shareholders, such as the approval of any potential merger or sale of all or substantially all assets, segments, or the Company itself.

Most of Tontine’s shares are registered for resale on a

shelf registration statement filed by the Company with the United States Securities and Exchange Commission (the “SEC”).

Tontine’s sale of all or any portion of its shares could result in a change of control of the Company, which would trigger the change of control provisions in a number of our material agreements, including our credit facility, bonding agreements with our sureties and our executive severance plan.

For more information, see Note 3, “Controlling Shareholder” in the notes to our Consolidated Financial Statements.

Net Operating Loss Tax Carry Forward and Other Deferred Tax Assets

The Company and certain of its subsidiaries have an estimated federal net operating loss (“NOL”) of approximately $ 306.3 million at September 30, 2019 , including approximately $ 143.6 million resulting from net operating losses on which a deferred tax asset is not recorded.

In December 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted which, among other things, reduced the corporate income tax rate from 35% to 21%, effective January 1, 2018.

As a result of this change, the Company’s statutory rate for fiscal 2018 was a blended rate of 24.53% and decreased to 21% in 2019.

For the year ended September 30, 2018, our effective tax rate differed from the statutory tax rate as a result of a charge of $ 31.3 million to re-measure our deferred tax assets and liabilities to reflect the estimated impact of the new statutory tax rate.

Any future change in the federal statutory tax rate could also impact the economic benefit of the NOL and other deferred tax assets available to us and result in an additional charge or benefit to adjust the book value of the deferred tax asset recorded on our balance sheet.

A change in ownership, as defined by Internal Revenue Code Section 382, could reduce the availability of NOLs for federal and state income tax purposes.

Should Tontine sell or otherwise dispose of all or a portion of its position in IES, a change in ownership could occur.

In addition, a change in ownership could result from the purchase of common stock by an existing or a new 5% shareholder as defined by Internal Revenue Code Section 382.

Should a change in ownership occur, all NOLs incurred prior to the change in ownership would be subject to limitation imposed by Internal Revenue Code Section 382, which would substantially reduce the amount of NOL currently available to offset taxable income.

For more information see Note 3, “Controlling Shareholder” in the notes to our Consolidated Financial Statements.

The Company maintains a tax benefit protection plan (the “NOL Rights Plan”) which was designed to deter an acquisition of the Company’s stock in excess of a threshold amount that could trigger an ownership change within the meaning of Internal Revenue Code Section 382.

OPERATING SEGMENTS

The Company’s reportable segments consist of the consolidated business segments identified above, which offer different services and are managed separately.

The table below describes the percentage of our total revenues attributable to each of our four segments over each of the last three years:

The table below describes the percentage of our total revenues attributable to each of our four segments over each of the last three years (percentage columns may not add due to rounding):

Year Ended September 30,

2020 2019 2018

(Dollars in thousands, Percentage of revenues)

Commercial & Industrial

Communications $ 395,141 33.2 % $ 321,246 29.8 % $ 219,655 25.1 %

Residential 411,790 34.6 % 313,336 29.1 % 285,711 32.6 %

Infrastructure Solutions 128,379 10.8 % 136,790 12.7 % 97,163 11.1 %

Commercial & Industrial 255,546 21.5 % 305,624 28.4 % 274,299 31.3 %

Total Consolidated $ 1,190,856 100.0 % $ 1,076,996 100.0 % $ 876,828 100.0 %

For additional financial information by segment, see Note 11, “Operating Segments” in the notes to our Consolidated Financial Statements.

Commercial & Industrial

Business Description

Our Commercial & Industrial segment provides electrical and mechanical design, service, and construction services to commercial and industrial markets.

Our design services range from budget assistance to providing design-build and LEED (Leadership in Energy & Environmental Design) solutions to our end customers.

Our maintenance and emergency services include critical plant shutdown, troubleshooting, emergency testing, preventative maintenance, and constant presence.

Our construction services range from the initial

planning and procurement to installation and start-up and are offered to a variety of new and remodel construction projects, ranging from the construction of office buildings and industrial facilities to transmission and distribution projects.

We also provide mechanical services such as maintenance agreements, installation, or replacement of mechanical equipment for commercial and industrial facilities.

This segment provides services for a variety of project types, including office buildings, manufacturing facilities, data centers, chemical plants, refineries, wind farms, solar facilities, municipal infrastructure and health care facilities.

The Commercial & Industrial segment consists of 23 locations, which includes the segment headquarters in Houston, Texas.

Geographically, these locations cover Texas, Nebraska, Oregon, Wisconsin, and the Southeast and Mid-Atlantic regions.

Industry Overview

Given the diverse end-markets of our Commercial & Industrial customers, which include both commercial buildings, such as offices, healthcare facilities and schools, and industrial projects, such as power, chemical, refinery and heavy manufacturing facilities, we are subject to many trends within the construction industry.

In general, demand for our Commercial & Industrial services is driven by construction and renovation activity levels, economic growth, and availability of bank lending.

Due to economic, technological or other factors, there can be no assurance that construction and demand will increase.

Sales and Marketing

Our sales focus varies by location, but is primarily based upon regional and local relationships and a demonstrated expertise in certain areas, such as heavy industrial, design-build, agricultural, or transmission and distribution.

Our maintenance and certain renovation and upgrade work tends to be either recurring or experience lower sensitivity to economic cycles, or both.

A significant portion of our larger projects are awarded from long-term, repeat customers.

From time to time, we are contracted on projects with completion times extending beyond one year or over several years, which are generally more complex and difficult to estimate.

With a focus on quality service offerings, our long-term strategy is to continue to be one of the preferred providers of electrical and mechanical services in the markets where we have demonstrated expertise and/or are a local market leader.

Key elements of our long-term strategy include leveraging our expertise in certain niche markets, expanding our service and maintenance business, attracting and retaining highly qualified employees, and maintaining our focus on returns on risk adjusted capital through an emphasis on reducing costs and managing working capital.

The electrical and mechanical contracting services industry is generally highly competitive and includes a number of regional or small privately-held local firms.

Traditionally, competitors in certain parts of this market have faced few barriers to entry.

Our strategy is to pursue projects where our access to capital and expertise provide a competitive advantage.

Industry expertise, project size, location and past performance will determine our bidding strategy, the level of involvement from competitors and our level of success in winning awards.

Our primary advantages vary by location and market, but mostly are based upon local individual relationships with key customers or a demonstrated industry expertise.

Additionally, due to the size of many of our projects, our financial resources help us compete effectively against local competitors.

Seasonality and Quarterly Fluctuations

The effects of seasonality on our Commercial & Industrial business are not significant, as most of our work generally is performed inside structures protected from the weather.

However, we do perform some work outdoors, which can be affected by the weather.

Most of our service and maintenance business is also generally not affected by seasonality.

However, the construction industry has historically been highly cyclical.

Our volume of business may be adversely affected by declines in construction projects resulting from adverse regional or national economic conditions.

Quarterly results may also be materially affected by the timing of new construction projects.

Accordingly, operating results for any fiscal period are not necessarily indicative of results that may be achieved for any subsequent fiscal period.

Communications

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Originally established in 1984, our Communications segment is a leading provider of network infrastructure solutions for data centers and other mission critical environments.

Our services include the design, installation and maintenance of network infrastructure to leading and recognizable global technology, social networking and e-commerce brands, including many Fortune 100 and 500 corporations.

We serve a variety of industries and end-markets, including data centers for colocation and managed hosting customers;

Our services include the design, installation and maintenance of network infrastructure for leading and recognizable global technology, social networking and e-commerce brands, including many Fortune 100 and 500 corporations.

We serve a variety of industries and end-markets, including data centers for co-location and managed hosting customers;

corporate, educational, financial, hospitality and healthcare buildings;

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Our Communications segment is driven by demand increases for computing and storage resources as a result of technology advancements and obsolescence and changes in data consumption patterns.

The data center market remains strong, and the needs of several of our large customers are growing rapidly.

Growth in the data center market remains strong, and the need for structured cabling services for applications such as data centers and distribution centers is growing rapidly.

Additionally, we are continuing to expand our offerings in this market to broaden our customer base.

Demand has also been growing for our audio-visual and other building technology offerings.

Demand has also been strong for our audio-visual and other building technology offerings.

Nevertheless, due to economic, technological and other factors, there can be no assurance that demand will continue to increase.

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Key elements of our long-term strategy include continued investment in our employees’ technical expertise and expansion of our on-site maintenance and recurring revenue model, as well as opportunistic acquisitions of businesses that serve our markets, consistent with our stated corporate strategy.

Our competition consists of both large national or regional competitors and small, privately owned contractors who have limited access to capital.

Our competition consists of both large national or regional competitors and small, privately owned contractors who generally have limited access to capital.

We compete on quality of service and/or price and seek to emphasize our financial capabilities and long history of delivering high quality solutions to our customers.

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Accordingly, operating results for any fiscal period are not necessarily indicative of results that may be achieved for any subsequent fiscal period.

Infrastructure Solutions

Business Description

Our Infrastructure Solutions segment provides electro-mechanical solutions for industrial operations to domestic and international customers.

Our solutions include the maintenance and repair of alternating current (AC) and direct current (DC) electric motors and generators, as well as power generating and distribution equipment;

the manufacture of custom-engineered, metal enclosed bus duct solutions used in power distribution;

the manufacture of custom commercial and industrial generator enclosures;

the manufacture, re-manufacture, and repair of industrial lifting magnets;

and maintenance and repair of railroad main and auxiliary generators, main alternators, and traction motors.

This segment serves the steel, railroad, marine, petrochemical, pulp and paper, wind energy, mining, automotive, power generation, scrap yards, data center, and utility industries.

Our Infrastructure Solutions segment is comprised of nine locations and is headquartered in Ohio.

These segment locations geographically cover Alabama, Georgia, Illinois, Indiana, Ohio, and West Virginia.

Industry Overview

Given the diverse end-markets of Infrastructure Solutions’ customers, we are subject to many economic trends.

In general, demand for our services has been driven by growth in industries, such as data centers, in-house maintenance departments continuing to outsource maintenance and repair work, output levels and equipment utilization at heavy industrial facilities, railroad companies’ and mass transit authorities’ capital investments and repair needs, investment in the United States’ aging energy and industrial infrastructure, demand for critical power applications, that have high power demands and require dependable power supplies, and the overall health of the economy .

Sales and Marketing

Demand for Infrastructure Solutions’ services is largely driven by the degree to which industrial and mechanical services are outsourced by our customers, production rates at steel mills, investments in power generation, other heavy industrial facilities, data centers, and the need for electrical infrastructure improvements.

Our sales efforts are primarily driven by personnel based at our operating locations, as well as independent sales representatives.

Given that the majority of our apparatus repair customers are located

within a 200-mile radius of our facilities, we believe that this structure allows us to rapidly address and respond to the needs of our customers.

Our custom-engineered bus system and generator enclosure products and services are principally sold in partnership with an original equipment manufacturer (“OEM”) or to an engineering, procurement and construction firm on behalf of the end-user.

Our long term strategy is to be the preferred solutions provider of outsourced electro-mechanical services, repairs, and manufacturing to our select markets and a leader in custom-engineered metal enclosed bus systems.

Our competition is comprised mainly of small, specialized manufacturing and repair shops, a limited number of other multi-location providers of electric motor repair, engineering and maintenance services, and various OEMs.

Participants in this industry compete primarily on the basis of capabilities, service, quality, timeliness and price.

We believe that we have a competitive advantage due to our breadth of capabilities, focus on quality, technical support, customer service, and financial resources.

Seasonality and Quarterly Fluctuations

Infrastructure Solutions’ revenues from industrial services may be affected by the timing of scheduled outages at its industrial customers’ facilities and by weather conditions with respect to projects conducted outdoors, but the effects of seasonality on revenues in its industrial services business are not significant.

Infrastructure Solutions’ quarterly results may fluctuate, and the results of one fiscal quarter may not be representative of the results of any other quarter or of the full fiscal year.

Business Description

Originally established in 1973, our Residential segment is a leading provider of electrical installation services for single-family housing and multi-family apartment complexes and cable television installations for residential and light commercial applications.

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The Residential segment is made up of 29 total locations, which include the segment headquarters in Houston, Texas.

These locations geographically cover the Sun-Belt, Western and Mid-Atlantic regions of the United States.

These locations geographically cover the Sun-Belt, Western, Mid-Atlantic and Northeastern regions of the United States.

Industry Overview

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Demand for our Residential services is highly dependent on the number of single-family and multi-family home starts in the markets we serve.

Although we operate in multiple states throughout the Sun-Belt, Mid-Atlantic and Western regions of the United States, the majority of our single-family revenues are derived from services provided in Texas.

Although we operate in multiple states throughout the Sun-Belt, Mid-Atlantic, Northeastern and Western regions of the United States, the majority of our single-family revenues are derived from services provided in Texas.

The Texas market also remains an important part of our multi-family business;

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The key elements of our long-term strategy include a continued focus on maintaining a low and variable cost structure and cash generation, allowing us to effectively scale according to the housing cycle, and to opportunistically increase our market share.

Our competition primarily consists of small, privately owned contractors who have limited access to capital.

Our competition primarily consists of small, privately owned contractors who generally have limited access to capital.

We believe that we have a competitive advantage over these smaller competitors due to our key employees’ long-standing customer relationships, our financial capabilities, our strong employee training program, and our local market knowledge and competitive pricing.

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In addition, the construction industry has historically been highly cyclical.

Our volume of business may be adversely affected

by declines in multi-family occupancy rates as well as single-family housing starts within our operational footprint.

Our volume of business may be adversely affected by declines in multi-family occupancy rates as well as single-family housing starts within our operational footprint.

Quarterly results may also be materially affected by the timing of new construction projects.

Accordingly, operating results for any fiscal period are not necessarily indicative of results that may be achieved for any subsequent fiscal period.

Infrastructure Solutions

Business Description

Our Infrastructure Solutions segment provides electro-mechanical solutions for industrial operations to domestic and international customers.

Our solutions include the maintenance and repair of alternating current (AC) and direct current (DC) electric motors and

generators, as well as power generating and distribution equipment;

the manufacture of custom-engineered power distribution equipment, including metal enclosed bus duct solutions used in power distribution;

the manufacture of custom commercial and industrial generator enclosures;

the manufacture, re-manufacture, and repair of industrial lifting magnets;

and maintenance and repair of railroad main and auxiliary generators, main alternators, and traction motors.

This segment serves the steel, railroad, marine, petrochemical, pipeline, pulp and paper, wind energy, mining, automotive, power generation, scrap yards, data center, and utility industries.

Our Infrastructure Solutions segment is comprised of ten locations in Alabama, Georgia, Illinois, Indiana, Ohio, and West Virginia, and is headquartered in Massillon, Ohio.

Industry Overview

Given the diverse end-markets of Infrastructure Solutions’ customers, we are subject to many economic trends.

In general, demand for our services has been driven by growth in industries, such as data centers, in-house maintenance departments continuing to outsource maintenance and repair work, output levels and equipment utilization at heavy industrial facilities, railroad companies’ and mass transit authorities’ capital investments and repair needs, investment in the United States’ aging energy and industrial infrastructure, demand for critical power applications that have high power demands and require dependable power supplies, the need for electrical or pipeline infrastructure improvements and the overall health of the economy .

Sales and Marketing

Our sales efforts are primarily driven by personnel based at our operating locations, as well as independent sales representatives.

Given that the majority of our apparatus repair customers are located within a 200-mile radius of our facilities, we believe that this structure allows us to rapidly address and respond to the needs of our customers.

Our custom-engineered power distribution, bus system and generator enclosure products and services are principally sold in partnership with an original equipment manufacturer (“OEM”) or to an engineering, procurement and construction firm on behalf of the end-user.

Participants in this industry compete primarily on the basis of capabilities, service, quality, timeliness and price.

We believe that we have a competitive advantage due to our breadth of capabilities, focus on quality, technical support, customer service, and financial resources.

Seasonality and Quarterly Fluctuations

Infrastructure Solutions’ revenues from its custom-engineered bus systems and generator enclosures are affected by the timing of customers' capital spending projects.

Revenues from industrial services may be affected by the timing of scheduled outages at its industrial customers’ facilities and by weather conditions with respect to projects conducted outdoors, but the effects of seasonality on revenues in its industrial services business are not significant.

Infrastructure Solutions’ quarterly results may fluctuate, and the results of one fiscal quarter may not be representative of the results of any other quarter or of the full fiscal year.

Commercial & Industrial

Business Description

Our Commercial & Industrial segment provides electrical and mechanical design, service, and construction services to commercial and industrial markets.

Our design services range from budget assistance to providing design-build and LEED (Leadership in Energy & Environmental Design) solutions to our end customers.

Our maintenance and emergency services include critical plant shutdown, troubleshooting, emergency testing, preventative maintenance, and constant presence.

Our construction services range from the initial planning and procurement to installation and start-up and are offered to a variety of new and remodel construction projects, ranging from the construction of office buildings and industrial facilities to transmission and distribution projects.

We also provide mechanical services such as maintenance agreements, installation, or replacement of mechanical equipment for commercial and industrial facilities.

The Commercial & Industrial segment consists of 22 locations, which includes the segment headquarters in Houston, Texas.

Geographically, these locations cover Texas, Nebraska, Oregon, Wisconsin, and the Southeast and Mid-Atlantic regions.

Industry Overview

In general, demand for our Commercial & Industrial services is driven by construction and renovation activity levels, economic growth, and availability of bank or other financing.

Currently, the construction industry is being impacted by the ongoing COVID-19 pandemic, which has caused some customers to delay the awarding of new projects.

Due to economic, technological or other factors, there can be no assurance that construction and demand will increase.

Sales and Marketing

Our maintenance and certain renovation and upgrade work tends to be either recurring or experience lower sensitivity to economic cycles, or both.

A significant portion of our larger projects is awarded from long-term, repeat customers.

From time to time, we are contracted on projects with completion times extending beyond one year or over several years, which are generally more complex and difficult to estimate.

The electrical and mechanical contracting services industry is generally highly competitive and includes a number of regional or small privately-held local firms.

Traditionally, competitors in certain parts of this market have faced few barriers to entry.

Therefore, we seek to pursue projects where our access to capital and expertise provide a competitive advantage.

Industry expertise, project size, location and past performance will determine our bidding strategy, the level of involvement from competitors and our level of success in winning awards.

Our primary advantages vary by location and market, but mostly are based upon local individual relationships with key customers or a demonstrated industry expertise.

Additionally, due to the size of many of our projects, our financial resources help us compete effectively against local competitors.

Seasonality and Quarterly Fluctuations

The effects of seasonality on our Commercial & Industrial business are not significant, as most of our work generally is performed inside structures protected from the weather.

However, we do perform some work outdoors, which can be affected by the weather.

Most of our service and maintenance business is also generally not affected by seasonality.

However, the construction industry has historically been highly cyclical.

Our volume of business may be adversely affected by declines in construction projects resulting from adverse regional or national economic conditions.

Quarterly results may also be materially affected by the timing of new construction projects.

Accordingly, operating results for any fiscal period are not necessarily indicative of results that may be achieved for any subsequent fiscal period.

SOURCES OF SUPPLY

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We maintain automobile, general liability and construction defect insurance for third party health, bodily injury and property damage, as well as pollution coverage and workers’ compensation coverage, which we consider appropriate to insure against these risks.

Our third-party insurance is subject to deductibles for which we establish reserves.

third-party insurance is subject to deductibles for which we establish reserves.

In light of these risks, we are also committed to a strong safety and environmental compliance culture.

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Management at each of our segments is responsible for determining sales strategies and sales activities.

CONTROLLING SHAREHOLDER

A majority of our outstanding common stock is owned by Tontine Associates, L.L.C.

("Tontine Associates") and its affiliates (collectively, “Tontine”).

Based on an amended Schedule 13D filed by Tontine with the United States Securities and Exchange Commission (the “SEC”) on October 9, 2020, Tontine owns approximately 56 percent of our outstanding common stock.

Most of Tontine’s shares are registered for resale on a shelf registration statement filed by the Company with the SEC.

Tontine’s sale of all or any portion of its shares could result in a change of control of the Company, which would trigger the change of control provisions in a number of our material agreements, including our credit agreement, bonding agreements with our sureties and our executive severance plan.

For more information, see Note 3, “Controlling Shareholder” in the notes to our Consolidated Financial Statements.

NET OPERATING LOSS TAX CARRYFORWARDS

The Company and certain of its subsidiaries have an estimated federal net operating loss (“NOL”) of approximately $217.3 million at September 30, 2020, including approximately $128.0 million resulting from net operating losses on which a deferred tax asset is not recorded.

In December 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted which, among other things, reduced the corporate income tax rate from 35% to 21%, effective January 1, 2018.

As a result of this change, the Company’s statutory rate for fiscal 2018 was a blended rate of 24.53% and decreased to 21% in 2019.

For the year ended September 30, 2018, our effective tax rate differed from the statutory tax rate as a result of a charge of $31.3 million to re-measure our deferred tax assets and liabilities to reflect the estimated impact of the new statutory tax rate.

A change in ownership, as defined by Internal Revenue Code Section 382, could reduce the availability of NOLs for federal and state income tax purposes.

Should Tontine sell or otherwise dispose of all or a portion of its position in IES, a change in ownership could occur.

In addition, a change in ownership could result from the purchase of common stock by an existing or a new 5% shareholder as defined by Internal Revenue Code Section 382.

For more information see Note 3, “Controlling Shareholder” in the notes to our Consolidated Financial Statements.

The Company maintains a tax benefit protection plan (the “NOL Rights Plan”) which is designed to deter an acquisition of the Company’s stock in excess of a threshold amount that could trigger a change in ownership within the meaning of Internal Revenue Code Section 382.

REMAINING PERFORMANCE OBLIGATIONS AND BACKLOG

Remaining performance obligations represent the unrecognized revenue value of our contract commitments.

While backlog is not a defined term under GAAP, it is a common measurement used in our industry, and we believe it improves our ability to forecast future results and identify operating trends that may not otherwise be apparent.

While backlog is not a defined term under accounting principles generally accepted in the United States of America ("GAAP"), it is a common measurement used in our industry, and we believe it improves our ability to forecast future results and identify operating trends that may not otherwise be apparent.

Backlog is a measure of revenue that we expect to recognize from work that has yet to be performed on uncompleted contracts and from work that has been contracted but has not started, exclusive of short-term projects.

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Additionally, electrical installation services for single-family housing at our Residential segment are completed on a short-term basis and are therefore excluded from backlog.

The table below summarizes our backlog by segment:

The table below summarizes our remaining performance obligations and backlog by segment:

Year Ended September 30,

Remaining Performance Obligations

Agreements without an enforceable obligation (1)

Remaining Performance Obligations

Agreements without an enforceable obligation (1)

Remaining Performance Obligations Agreements without an enforceable obligation (1)

Backlog Remaining Performance Obligations Agreements without an enforceable obligation (1)

(Dollars in millions)

Commercial & Industrial

Communications $ 169 $ 33 $ 202 $ 131 $ 29 $ 160

Residential 170 51 221 132 34 166

Infrastructure Solutions 43 9 52 37 11 48

Commercial & Industrial 123 4 127 152 11 163

Total $ 505 $ 97 $ 602 $ 452 $ 85 $ 537

(1) Our backlog includes signed agreements and letters of intent that we do not have a legal right to enforce prior to beginning work.

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however, there can be no assurance that this backlog will be completed within expected time frames or at all.

The increase in our backlog year over year was driven by strong demand and increased market share within our Communications and Residential segments.

The increase in our backlog year over year was primarily driven by strong demand and increased market share within our Communications and Residential segments.

Our operations are subject to various federal, state and local laws and regulations, including:

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In some cases, a required permit or license held by a single individual may be sufficient to authorize specified activities for all our electricians or mechanical service technicians who work in the state or county that issued the permit or license.

While we seek permits or licenses, where available, that may be material to our operations in a particular geographic area to be held by multiple employees within that area, given the large number of permits and licenses required, we are unable to ensure that multiple employees hold such required permits and licenses.

We believe we have all licenses required to conduct our operations and are in compliance with applicable regulatory requirements.

While we seek permits or licenses, where available, that may be material to our operations in a particular geographic area to be held by multiple employees

within that area, given the large number of permits and licenses required, we are unable to ensure that multiple employees hold such required permits and licenses.

We believe that we have all licenses required to conduct our operations and are in material compliance with applicable regulatory requirements.

Failure to comply with applicable regulations could result in substantial fines or revocation of our operating licenses or an inability to perform government work.

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During fiscal year 2020, the Company maintained a revolving credit facility, as further described in Item 7.

“ Management’s Discussion and Analysis of Financial Condition and Results of Operations — The Revolving Credit Facility ” of this Annual Report on Form 10-K.

“ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources ” of this Annual Report on Form 10-K.

For a discussion of the Company’s capital resources, see Item 7.

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For the Company’s financial information by segment, see Note 11, “Operating Segments ” in the notes to our Consolidated Financial Statements.

At September 30, 2019 , we had 5,389 employees.

At September 30, 2020, we had 5,243 employees, of whom 5,214 were full-time employees.

We are party to two collective bargaining agreements within our Infrastructure Solutions segment.

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As of September 30, 2020, we have 79 domestic locations serving the United States.

In addition to our two executive and corporate offices, as of September 30, 2019 , we have 23 locations within our Commercial & Industrial business, 15 locations within our Communications business, nine locations within our Infrastructure Solutions business and 30 locations within our Residential business.

This diversity helps to reduce our exposure to unfavorable economic developments in any given region.

In addition to our two executive and corporate offices, as of September 30, 2020, we have 16 locations within our Communications business, 29 locations within our Residential business, ten locations within our Infrastructure Solutions business and 22 locations within our Commercial & Industrial business.

This geographic diversity helps to reduce our exposure to unfavorable economic developments in any given region.

EXECUTIVE OFFICERS OF THE REGISTRANT

Certain information with respect to each executive officer is as follows:

Matthews, 62, has served as Chief Executive Officer and a Director of the Company since March 2019.

Prior to joining the Company, he served as Managing Director of Morgan Stanley Capital Partners from 2007 where he worked with the private equity team in evaluating companies for direct investment and helping to oversee the management and strategies for those businesses.

Prior to joining Morgan Stanley, Mr.

Matthews led several private equity-backed manufacturing companies, including serving as President of Simmons Bedding Company, Chief Executive Officer of Sleep Innovations, Inc.

and Chief Executive Officer of Derby Cycle Corporation, and also led business units of several public companies.

He received a B.A., cum laude, from Princeton University and his Masters in Business with distinction from Harvard Business School.

Matthews currently serves on the board of directors of Pathway Partners Vet Holding LLC and Manna Pro Products, LLC.

He has previously served as Chairman of the board of directors of Hojeij Branded Foods, Creative Circle, LLC and Tops Markets, LLC, and as a member of the board of directors of Lagunitas Brewing Company, Molson Coors Brewing Company, Lenox Group Inc.

(previously Department 56), Learning Care Group, Inc., Van Wagner, Inc.

and Canyon Ranch.

Gendell, 61, has served as the Company's Chief Executive Officer since October 1, 2020;

he previously served as Interim Chief Executive Officer from July 31, 2020 to September 30, 2020.

Gendell has also served as the Chairman of the Board since November 2016.

Gendell is the founder and managing member of Tontine Associates, L.L.C., which together with its affiliates is the Company's majority shareholder.

Gendell formed Tontine in 1995 and manages all of the investment decisions at the firm.

Prior to forming Tontine, Mr.

Gendell held senior investment management positions at several other private investment firms, including Odyssey Partners, L.P., and began his career in investment banking over 35 years ago at Smith Barney, Harris Upham & Co., where he was involved in capital markets, corporate finance and M&A activity.

McLauchlin , 51, has served as Senior Vice President, Chief Financial Officer and Treasurer of the Company since May 2015.

8 unchanged sentences

We have adopted a Code of Ethics for Financial Executives that applies to our principal executive officer, principal financial officer and principal accounting officer.

The Code of Ethics may be found on our website at www.ies-co.com .

The Code of Ethics may be found on our website at www.ies-corporate.com/corporate-governance .

If we make any substantive amendments to the Code of Ethics or grant any waiver, including any implicit waiver, from a provision of the Code of Ethics to our principal executive officer, principal financial officer or principal accounting officer, we will disclose the nature of such amendment or waiver on that website or in a report on Form 8-K.

3 unchanged sentences

Our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to those reports are available free of charge through our website as soon as it is reasonably practicable after we file them with, or furnish them to, the SEC.

You may also contact our Investor Relations department and they will provide you with a copy of these

reports , or you may find them at www.ies-corporate.com/sec-filings .

You may also contact our Investor Relations department and they will provide you with a copy of these reports , or you may find them at www.ies-corporate.com/sec-filings .

The materials that we file with the SEC are also available free of charge through the SEC’s website at www.sec.gov .

4 unchanged sentences

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

What changed 10-K

Item 1. Business