What changed in this filing

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Item 1A. Risk Factors

2021-12-03 compared with 2020-12-07 · 95 added, 75 removed, 184 unchanged (48% of the section changed)

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Risks Relating to the Operations of our Business

The Coronavirus Disease 2019 ("COVID-19") pandemic has adversely impacted and could have a materially adverse impact on our business, including our financial condition, cash flows and results of operations.

The COVID-19 pandemic and related governmental responses have caused, and are likely to continue to cause, significant volatility in financial markets, and have raised the prospect of an extended global recession.

Public health problems resulting from COVID-19 and precautionary measures instituted by governments and businesses to mitigate its spread, including travel restrictions, curfews and "stay at home" orders, have contributed to a prolonged slowdown in the global economy, have disrupted global supply chains, have adversely impacted the businesses of the Company’s customers and suppliers, and have disrupted the Company’s operations.

There is no assurance that the outbreak will not have a material adverse impact on the future results of the Company.

Potential risks associated with the COVID-19 pandemic include:

• Government travel restrictions, curfews, “stay at home” orders, and other safety concerns related to COVID-19 have caused some of our customers to close job sites temporarily or delay the start dates of new projects and the awarding of new projects.

Because much of our revenue is generated by our employees working at customer sites, our revenue will be reduced if a significant number of our customer sites close, or if customers reduce or eliminate the presence of third-party contractors and service providers, such as our employees.

Further, a general economic downturn could reduce the demand for our services.

Any cancellations, delays or losses of projects may significantly reduce our revenues and harm our operating performance.

• The COVID-19 pandemic could disrupt our operations due to absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who elect not to come to work due to the illness affecting others on our job sites or in our facilities, or due to quarantines.

The COVID-19 pandemic could also impact members of our Board, resulting in absenteeism from the meetings of the directors or committees of the directors, and make it difficult to convene the quorums of the full Board or its committees needed to conduct meetings for the management of our affairs.

• Certain of our customers may experience financial difficulties, including bankruptcy or insolvency, as a result of a decline in the economy relating to COVID-19.

If our customers suffer significant financial difficulty, they may be unable to pay amounts due to us in a timely manner or at all, which could have a material adverse effect on our ability to collect on

receivables and our results of operations.

It is possible that customers may contest their contractual obligations to us under bankruptcy laws or otherwise.

Further, we may have to negotiate significant discounts and/or extended financing terms with such customers in such a situation.

If we are unable to collect upon our accounts receivable as they come due in an efficient and timely manner, our business, results of operations and financial condition may be materially adversely affected.

The Coronavirus Disease 2019 ("COVID-19") pandemic has adversely impacted, and could have a future materially adverse impact on, our business, including our financial condition, cash flows and results of operations.

The COVID-19 pandemic and its ongoing impact on markets, the supply chain, and availability of labor continue to influence trends affecting our business.

We continue to experience increased prices, longer delivery times, or limited availability for certain materials necessary for our projects, notably copper, aluminum, steel, electrical components, fuel, and certain plastics.

The COVID-19 pandemic and related responses are continuing to evolve and, therefore, continue to present potential new risks to our business, particularly in light of new variants of the virus.

To date, the COVID-19 pandemic has had a number of adverse impacts on our results of operations.

Factors that may affect our results of operations in the future include, but are not limited to, the potential impacts of illness on our workforce, management, or Board of Directors;

the shut-down of job sites;

a reduced demand for our services;

increases in operating costs due to disruptions, the cost of complying with vaccine or testing mandates, personal protective equipment requirements and other increased employment-related costs;

potential supply chain disruptions;

increased material prices;

and limitations on the ability of our customers to pay us on a timely basis.

We may also be more vulnerable to security breaches, cyber-attacks, computer viruses, ransomware, or other similar events, particularly with respect to employees working remotely.

We are continuing to monitor conditions affecting our business and will take actions as may be necessary to protect the health and safety of our employees and to serve our customers.

The ultimate impact and the extent to which the COVID-19 pandemic will continue to affect our business, results of operations and financial condition are difficult to predict and depend on numerous evolving factors outside our control including:

emergence of new variants of the virus;

government, social, business and other actions that have been and will be taken in response to the pandemic;

any additional waves of COVID-19 infections;

the efficacy of vaccines on new variants of the virus;

the effect of government or customer vaccine or testing requirements on employee retention and recruitment;

and the effect of the pandemic on short- and long-term general economic conditions.

The highly competitive nature of our industries could affect our profitability by reducing our revenues or profit margins.

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In the future, we could also face competition from new competitors entering these markets because certain segments, such as our electrical contracting services, have a relatively low barrier for entry while other segments, such as our services for mission critical infrastructure, have attractive growth and profitability characteristics.

Some of our competitors offer a greater range of services, including mechanical construction, facilities management, plumbing and heating, ventilation and air conditioning services.

Some of our competitors in certain markets offer a greater range of services, including mechanical construction, facilities management, plumbing and heating, ventilation and air conditioning services.

Competition in our markets depends on a number of factors, including price.

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The markets in which Infrastructure Solutions does business are highly competitive, and we do not expect the level of competition that we face to decrease in the future.

An increase in competitive pressures in these markets or our failure to compete effectively (including efficiently managing future capital expenditures and refurbishment, repair and upgrade costs) may result in pricing reductions, reduced gross margins, and loss of market share.

An increase in competitive pressures in these markets or our failure to compete effectively (including

efficiently managing future capital expenditures and refurbishment, repair and upgrade costs) may result in pricing reductions, reduced gross margins, and loss of market share.

Some of our competitors have longer operating histories, greater name recognition, more customers, and significantly greater financial, marketing, technical, and other competitive resources than we have.

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Depending upon the size of a particular project, variations from estimated contract costs can have a significant impact on our operating results.

If the costs associated with labor and commodities, such as copper, aluminum, steel, fuel and certain plastics, increase due to low supply or other forces, losses may be incurred.

If the costs associated with labor and commodities, such as copper, aluminum, steel, electrical components, fuel, and certain plastics, increase due to low supply or other forces, losses may be incurred.

Some of our materials have been and may continue to be subject to sudden and significant price increases.

Depending on competitive pressures and customer resistance, we may not be able to pass on these cost increases to our customers, which would reduce our gross profit margins and, in turn, make it more difficult for us to maintain our profitability.

We have a work force of over 5,000 employees, and our labor costs may fluctuate based on supply as well as other labor related risks, including risks related to collective bargaining agreements, benefits arrangements, wage and hour claims and other compensation arrangements.

We have a work force of over 6,700 employees, and our labor costs may fluctuate based on availability of and demand for workers as well as other labor related risks, including risks related to collective bargaining agreements, benefits arrangements, wage and hour claims and other compensation arrangements.

A failure to secure new contracts may adversely affect our cash flows and financial results.

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We could experience a decrease in profitability if we are unable to replace canceled, completed or expired contracts with new work.

Our inability to carry out plans and strategies as expected, including our inability to identify and complete acquisitions that meet our investment criteria in furtherance of our corporate strategy or the subsequent underperformance of those acquisitions, may adversely impact our future growth and profitability.

Our corporate strategy involves creating shareholder value through acquiring businesses that we believe will strategically complement our existing business segments or acquiring or investing in stand-alone platform companies based in North America.

Our inability to carry out plans and strategies as expected, including our inability to identify and complete acquisitions and investments that meet our investment criteria in furtherance of our corporate strategy or the subsequent underperformance of those acquisitions and investments, may adversely impact our future growth and profitability.

Our corporate strategy includes creating shareholder value through acquiring businesses that we believe will strategically complement our existing business segments or acquiring or investing in stand-alone platform companies based in North America.

While we believe that acquisitions will provide an opportunity to expand into new or related services, products, end-markets or geographic areas and diversify our revenue and profit streams, potential acquisitions could result in changes in our operations from those historically conducted by us and introduce the requirement for new controls.

Alternatively, our failure to diversify from existing markets may limit our future growth.

In addition, our investments may not perform as expected or may not generate a positive return on investment due to factors we could not predict prior to the acquisition or due to incorrect investment assumptions.

In addition, we have made, and may continue to make, strategic investments in debt or equity securities of publicly traded and privately held companies, including early-stage companies and more established companies.

We are subject to risks associated with these investments, including the inability to dispose of these investments due to lack of an active market for or contractual limitations on our ability to sell a particular investment, and the partial or complete loss of invested capital, and significant changes in the fair value of our investment portfolio could adversely impact our financial results.

Further, valuations of non-marketable debt and equity investments are inherently complex due to the lack of readily available market data.

In addition, our acquisitions and investments may not perform as expected or may not generate a positive return on investment due to factors we could not predict prior to the acquisition or due to incorrect investment assumptions.

We may be unsuccessful at integrating other companies that we may acquire, or new types of work, products or processes into our segments.

We are actively seeking to engage in acquisitions of operations, assets and investments, or to develop new types of work or processes, and we may seek to engage in dispositions of certain operations, assets or investments from time to time.

If we are unable to successfully integrate newly acquired assets or operations or if we make untimely or unfavorable investments or dispositions, it could negatively impact the market value of our common stock.

If we are unable to successfully integrate newly acquired assets or operations or if we make untimely or unfavorable investments or dispositions, it could negatively impact our financial condition, results of operations and the market value of our common stock.

Additionally, any future acquisition, investment or disposition may result in significant changes in the composition of our assets and liabilities, and as a result, our financial condition, results of operations and the market value of our common stock following any such acquisition, investment or disposition may be affected by factors different from those currently affecting our financial condition, results of operations and market value of our common stock.

The difficulties of integrating a business, assets or operations potentially will include, among other things:

The difficulties of integrating a business, assets or operations may include, among other things:

• geographically separated organizations and possible differences in corporate cultures and management philosophies;

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In the event of a project cancellation, we may be reimbursed for certain costs, but typically have no contractual right to the total revenues reflected in our backlog.

We may fail to adequately recover on contract change orders or claims brought by us against customers.

From time to time, we may pursue claims against our customers to recover costs incurred on a project in excess of the original contract amount.

Such additional costs may be incurred in connection with project delays caused by our customers or third parties, including other trades, or changes in project scope or specifications.

While we generally negotiate with the customer for additional compensation, we may be unable to obtain, through negotiation, arbitration, litigation or otherwise, adequate compensation for the additional work performed or expenses incurred.

The process of pursuing a claim may be lengthy, result in significant legal fees, and negatively impact our relationships with customers.

Furthermore, we may be required to invest significant working capital to fund cost overruns while the resolution of a claim is pending, and our additional costs may not be recovered until the claim is resolved, if at all.

Unfavorable resolution of these matters can result in a reduction of revenues and profit recognized in prior periods or the recognition of a loss, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may incur significant charges or be adversely impacted by the closure or sale of facilities or assets.

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Those bonds guarantee the customer that we will perform under the terms of a contract and that we will pay subcontractors and vendors.

We obtain surety bonds from two primary surety providers;

however, there is no commitment from these providers to guarantee our ability to issue bonds for projects as

they are required.

We obtain surety bonds from two

primary surety providers;

however, there is no commitment from these providers to guarantee our ability to issue bonds for projects as they are required.

Our ability to access this bonding capacity is at the sole discretion of our surety providers.

Accordingly, if we were to experience an interruption or reduction in our availability of bonding capacity, we may be unable to compete for, or work on, certain projects .

Due to seasonality and differing regional economic conditions, our results may fluctuate from period to period.

We are subject to risks associated with seasonality, adverse weather conditions, and climate change.

Our business is subject to seasonal variations in operations and demand that affect the construction business, particularly in the Residential and Commercial & Industrial segments.

Untimely weather delay from rain, heat, ice, cold or snow may not only delay our work but may negatively impact our schedules and profitability by delaying the work of other trades on a construction site.

Adverse weather conditions, including rain, heat, ice, cold or snow may not only delay our work and contribute to project inefficiency, but may negatively impact our schedules and profitability by delaying the work of other trades on a construction site.

Extreme weather conditions (such as storms, droughts, extreme heat or cold, wildfires and floods) may limit the availability of resources, increase our costs, or may cause projects to be cancelled.

To the extent climate change results in an increase in extreme weather events and adverse weather conditions, the likelihood of a negative impact on our results of operations may increase.

Due to differing regional economic conditions, our results may fluctuate from period to period.

Our quarterly results may also be affected by regional economic conditions that affect the construction market.

In particular, a prolonged period of weak demand in the oil and gas industry or increased regulatory restrictions on the industry could dampen the housing market in certain regions, resulting in reduced demand for the services provided by our Residential segment.

Infrastructure Solutions’ revenues from industrial services may be affected by the timing of scheduled outages at its industrial customers’ facilities, by weather conditions with respect to projects conducted outdoors, by data center construction, and by changes in spending in public infrastructure, power and steel markets.

Infrastructure Solutions’ revenues from industrial services may be affected by the timing of scheduled outages or capital projects at its industrial customers’ facilities, by demand for design, construction and site support of data centers, and by changes in spending in public infrastructure, power and steel markets.

Industrial and rail customers may also be affected by volatility in oil prices.

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We may experience difficulties in managing our billings and collections.

Our billings under fixed price contracts in our contracting business are generally based upon achieving certain milestones and will be accepted by the customer once we demonstrate those milestones have been met.

Our billings under fixed price contracts in our contracting business are generally based upon achieving certain milestones and will only be accepted by the customer once we demonstrate those milestones have been met.

If we are unable to demonstrate compliance with billing requests, or if we fail to issue a project billing, our likelihood of collection could be delayed or impaired, which, if experienced across several large projects, could have a material adverse effect on our results of operations.

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We also collect and retain information about our customers, stockholders, vendors, and employees, with the expectation by such third parties being that we will adequately protect such information.

Although our information technology systems, networks and infrastructure are protected through physical and software safeguards, our information technology environment is still vulnerable to natural disasters, power losses, telecommunication failures, deliberate intrusions, inadvertent user misuse or error, computer viruses, malicious code, ransomware attacks, acts of terrorism and other cyber security risks, which could cause a loss of critical data, or release of sensitive information.

If critical information systems fail or are otherwise unavailable, or if sensitive information is released, our business operations could be adversely affected.

Although our information technology systems, networks and infrastructure are protected through our policies, procedures and physical and software safeguards, our information technology environment is still vulnerable to natural disasters, power losses, telecommunication failures, deliberate intrusions, inadvertent user misuse or error, computer viruses, malicious code, ransomware attacks, acts of terrorism and other cyber security risks, which could cause a loss of critical data, or release of sensitive information.

If critical information systems fail or are otherwise unavailable, or if sensitive information is released, we could experience reputational harm, loss of customers and revenue, loss of proprietary data, regulatory actions and scrutiny, statutory penalties, and litigation.

We have from time to time experienced cybersecurity incidents, such as ransomware attacks or unauthorized parties gaining access to our information technology systems, and privacy incidents, such as potential exposure of data.

While to date such incidents have not had a material impact on our business, there can be no assurance that future incidents would not have an adverse effect on our business or reputation.

Additionally, the process of integrating the information systems of the businesses we acquire is complex and exposes us to additional risk as we might not adequately identify weaknesses in the acquired business’s information systems or information handling, privacy and security policies and protocols, which could expose us to unexpected liabilities or make our own systems and data more vulnerable to attack.

We may be required to conduct environmental remediation activities, which could be expensive and inhibit the growth of our business and our ability to maintain profitability, particularly in our Infrastructure Solutions business.

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These environmental laws generally impose liability on current and former owners and operators, transporters and generators of hazardous materials for remediation of contaminated properties.

We believe that our business is operating in compliance in all material respects with applicable environmental laws, many of which provide for substantial penalties for violations.

There can be no assurance that future changes in such laws, interpretations of existing regulations or the discovery of currently unknown problems or conditions will not require substantial additional expenditures.

In addition, if we do not comply with these laws and regulations, we could be subject to material administrative, civil or criminal penalties, or other liabilities.

We may also be required to incur substantial costs to comply with current or future environmental and safety laws and regulations.

Any such additional expenditures or costs that we may incur could hurt our operating results.

We could be held liable for such contamination created not only from our own activities but also from the historical activities of companies we have acquired, or the activities of others on properties that we own or lease.

There can be no assurance that the discovery of currently unknown problems or conditions will not require substantial additional expenditures.

In addition, if we do not comply with these laws and regulations, we could be subject to material administrative, civil or criminal penalties, or other substantial liabilities.

Compliance with future changes in environmental laws and regulations, including those relating to climate change, could require significant expenditures.

Increasing concerns about climate change and other environmental issues may result in additional environmental regulations and restrictions, and we cannot predict the nature, scope or effect of legislation or regulatory requirements that could be imposed, or how

existing or future laws or regulations will be administered or interpreted.

Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies, could increase the costs of projects for us or our customers, potentially resulting in reduced profitability or a reduced demand for our services, or require us to incur substantial costs of compliance.

The loss of a group or several key personnel, either at the corporate or operating level, or general labor constraints could adversely affect our business.

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As a service organization, relationships with significant customers can be dependent on certain employees within our organization, and our ability to meet our contractual obligations to our customers and support our growth strategy may be limited by our ability to retain and train necessary personnel.

We cannot guarantee that any member of management at the corporate or subsidiary level will continue in their capacity for any particular period of time, and there is significant competition in our industry for managerial personnel.

We cannot guarantee that any member of management at the corporate or operating segment level will continue in their capacity for any particular period of time, and there is significant competition in our industry for managerial personnel.

We have a severance plan in place that covers certain of our senior leaders;

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Additionally, we generally do not maintain key man life insurance for members of our management.

We also may be constrained in hiring and retaining qualified employees due to general labor shortages in our industries.

Our business is labor intensive, and many of our operations experience a high rate of employee turnover.

We also may be constrained in hiring and retaining sufficient qualified employees to support our growth strategy due to general labor shortages in our industries, including potential employee attrition in connection with government or customer COVID-19 vaccine or testing mandates.

In addition, a lack of skilled labor or increased turnover rates within our employee base could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees.

Continued labor constraints may limit our ability to grow and may limit our profitability due to the impact of rising wages.

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

As of September 30, 2020 , we have approximately $217.3 million of federal NOLs that are available to use to offset taxable income, including approximately $128.0 million resulting from net operating losses on which a deferred tax asset is not recorded.

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.

The Company maintains an 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.

The NOL Rights Plan is designed to dilute the ownership of such an acquirer through the offering of rights to the Company’s other stockholders that will become exercisable upon the acquirer’s purchase of the Company’s stock in excess of the threshold amount.

We can make no assurances the NOL Rights Plan will be effective in deterring a change in ownership or protecting or realizing NOLs.

As of September 30, 2021 , we have approximately $120.2 million of federal NOLs that are available to use to offset future taxable income, including approximately $103.7 million resulting from net operating losses on which a deferred tax asset is not recorded.

We have adopted tax positions that a taxing authority may view differently.

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Taxing authorities may not always agree with the positions we have taken.

We have established reserves for tax positions that we have determined to be less likely than not to be sustained by taxing authorities.

We have established reserves for tax positions that we have determined to be less than likely to be sustained by taxing authorities.

However, there can be no assurance that our results of operations will not be adversely affected in the event that disagreement over our tax positions does arise.

We have recognized deferred tax assets based upon our estimates of future taxable income, and we may recognize tax expense if there is a reduction in the statutory tax rate or if future taxable income is lower than our estimates.

As of September 30, 2020, we have a net deferred tax asset of $33.8 million on our Consolidated Balance Sheets, of which $22.6 million is attributable to NOLs.

As of September 30, 2021, we have a net deferred tax asset of $19.0 million on our Consolidated Balance Sheets, which includes $6.4 million attributable to NOLs.

To realize the full benefit of this deferred tax asset attributable to NOLs, we must generate sufficient taxable income within the applicable carry forward period to offset against NOLs.

Under GAAP, we are required to assess whether we believe the benefit of the deferred tax asset is more likely than not to be realized based on our expectation of generating sufficient future taxable income, and we are required to record a valuation allowance, or offset, against our deferred tax asset based on the portion of the deferred tax asset that we believe is not more likely than not to be realized.

Any future change in the federal statutory tax rate could impact the economic benefit of the NOLs and other deferred tax assets available to us and result in a charge or benefit to adjust the book value of the deferred tax asset recorded on our Consolidated Balance Sheets.

If we are unable to generate sufficient taxable income in the future to utilize our NOLs, then we could be required to record valuation allowances, resulting in an increase in income tax expense and a reduction of our consolidated net income.

Failure to generate sufficient taxable income in the future could also result in the expiration of certain NOLs.

In addition, we recorded a charge of $31.3 million during fiscal 2018 to reflect the impact of the reduced statutory federal corporate tax rate as a result of the U.S.

Tax Cuts and Jobs Act, which became effective on January 1, 2018, on the value of our net deferred tax asset on our Consolidated Balance Sheet.

Any further decrease in the federal statutory tax rate or other changes in federal tax statutes could also cause a reduction in the economic benefit of the NOL currently available to us and a corresponding reduction in the amount of our recorded deferred tax assets.

Failure to generate sufficient taxable income in the future could also result in the inability to utilize certain NOLs before they expire.

To fund our working capital requirements, complete acquisitions and service any debt we may incur, we may require a significant amount of cash.

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We may need to refinance our credit facility on or before maturity.

provide assurance that we will be able to refinance our credit facility on commercially reasonable terms or at all.

We cannot provide assurance that we will be able to refinance our credit facility on commercially reasonable terms or at all.

Our inability to access capital on commercially reasonable terms could have a material adverse effect on our business.

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Many of our customers depend on the availability of credit to help finance their capital and maintenance projects.

At times, tightened availability of credit and changes in interest rates that affect the cost of construction financing and mortgages has negatively impacted the ability of existing and prospective customers to obtain sufficient financing and fund projects we might otherwise perform.

At times, tightened availability of credit and changes in interest rates that affect the cost of construction financing and mortgages have negatively impacted the ability of existing and prospective customers to obtain sufficient financing and fund projects we might otherwise perform.

As a result, our customers may defer such projects for an unknown, and perhaps lengthy, period.

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GAAP accounting requires that goodwill attributable to each of our reporting units be tested at least annually, or when changes in circumstance indicate the carrying value of our reporting units may not be recoverable.

At September 30, 2020, we had recorded $54 million of goodwill on our Consolidated Balance Sheets, net of a $7.0 million impairment recognized within our Commercial & Industrial segment during the year ended September 30, 2020.

Factors that could lead to impairment of current goodwill in the future include significant adverse changes in the business climate, declines in the financial condition of our business, and actual or projected operating results affecting the Company as a whole or affecting any particular reporting unit.

At September 30, 2021, we had recorded $92 million of goodwill on our Consolidated Balance Sheets.

Factors that could lead to impairment of current goodwill in the future include significant adverse changes in the business climate, declines in the financial condition of our business, and actual or projected future operating results affecting the Company as a whole or affecting any particular reporting unit.

On an ongoing basis, we expect to perform impairment tests at least annually as of September 30.

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We cannot assure that we will not have future impairment adjustments to our recorded goodwill.

The phase-out, replacement or unavailability of LIBOR could affect interest rates under our revolving credit facility, as well as our ability to obtain future debt financing on favorable terms.

We are subject to interest rate risk on floating interest rate borrowings under our revolving credit facility.

Borrowings under our revolving credit facility use LIBOR as a benchmark for establishing the interest rate.

In July 2017, the Financial Conduct Authority (the regulatory authority over LIBOR) stated that it would phase out LIBOR as a benchmark after 2021 to allow for an orderly transition to an alternative reference rate.

Our revolving credit facility provides for a mechanism to amend the facility to reflect the establishment of an alternative rate of interest upon the occurrence of certain events related to the phase-out of LIBOR.

However, we have not yet pursued any technical amendment or other contractual alternative to address this matter and are currently evaluating the impact of the potential replacement of the LIBOR interest rate.

In the United States, the Alternative Reference Rates Committee has proposed the Secured Overnight Financing Rate (“SOFR”) as an alternative to LIBOR for use in contracts that are currently indexed to U.S.

dollar LIBOR and has proposed a market transition plan to SOFR.

It is not presently known whether SOFR or any other alternative reference rates that have been proposed will attain market acceptance as replacements of LIBOR.

In addition, the overall financial markets may be disrupted as a result of the phase-out or replacement of LIBOR.

Uncertainty as to the nature of such phase out and selection of an alternative reference rate, together with disruption in the financial markets, could have a material adverse effect on our financial condition, results of operations and cash flows, and may adversely affect our ability to obtain future debt financing on favorable terms.

Risks Relating to Our Common Stock

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A majority of our outstanding common stock is owned by Tontine, and Jeffrey Gendell, founder and managing member of Tontine, serves as our Chief Executive Officer and as Chairman of our Board of Directors.

Based on an amended Schedule 13D filed by Tontine with the SEC on October 9, 2020, Tontine owns approximately 56 percent of the Company’s outstanding common stock.

Based on a Form 4 filed by Tontine with the SEC on November 18, 2021, Tontine owned approximately 56 percent of the Company’s outstanding common stock as of December 1, 2021.

As a result, Tontine can control most of our affairs, including the election of our directors, who in turn appoint executive management and can control most actions requiring the approval of shareholders, including the adoption of amendments to our corporate charter and approval of any potential merger or sale of all or substantially all of the Company's assets or business segments or the Company itself.

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Pursuant to a resale shelf registration statement filed by the Company, Tontine has the ability to resell any or all of its registered shares from time to time in one or more offerings as long as the registration statement remains effective and the Company remains eligible to use it, as described further in the registration statement and in any prospectus supplement filed in connection with an offering pursuant to the shelf registration statement.

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, as well as the exercisability of the purchase rights under our NOL Rights Plan.

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, and could trigger limitations on the availability of our NOLs under Internal Revenue Code Section 382.

Our common stock has less liquidity than many other stocks listed on the Nasdaq Global Market.

Historically, the trading volume of our common stock has been relatively low when compared to other companies listed on the NASDAQ Global Market or other stock exchanges.

Historically, the trading volume of our common stock has been relatively low when compared to other companies listed on the N asdaq Global Market or other stock exchanges.

While we have experienced increased liquidity in our stock during recent years compared with historical levels, we cannot say with certainty that a more active and liquid trading market for our common stock will continue to develop.

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Although we currently do not have any intention of issuing additional common stock (other than pursuant to our equity compensation plans) or preferred stock, we may do so in the future in order to meet our capital needs.

Subject to applicable NASDAQ Listing Rules, our Board of Directors generally has the authority, without action by or vote of the stockholders, to issue all or part of any authorized but unissued shares of common stock or preferred stock for any corporate purpose.

Subject to applicable N asdaq Listing Rules, our Board of Directors generally has the authority, without action by or vote of the stockholders, to issue all or part of any authorized but unissued shares of common stock or preferred stock for any corporate purpose.

We may seek additional equity capital in the future as we develop our business and expand our operations.

Any issuance of additional shares of common stock, preferred stock, or

convertible securities will dilute the percentage ownership interest of our stockholders and may dilute the book value per share of our common stock.

Any issuance of additional shares of common stock, preferred stock, or convertible securities will dilute the percentage ownership interest of our stockholders and may dilute the book value per share of our common stock.

Substantial sales of our common stock could adversely affect our stock price.

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We cannot predict whether future sales of our common stock, or the availability of our common stock for sale, will adversely affect the market price for our common stock or our ability to raise capital by offering equity securities.

Increasing scrutiny and changing expectations from investors and customers with respect to our environmental, social and governance practices may impose additional costs on us or expose us to reputational or other risks.

Investors have increased their emphasis on the environmental, social and governance ("ESG") practices of companies across all industries, including the environmental impact of operations and human capital management.

Certain stockholders use third-party benchmarks or scores to measure a company’s ESG practices and decide whether to invest in its common stock or engage with the company to require changes to its practices.

In addition, our customers may evaluate our ESG practices or require that we adopt certain ESG policies as a condition of awarding contracts.

A failure to comply with investor or customer expectations and standards, which are evolving and vary considerably, or the perception that we have not responded appropriately to the growing concern for ESG issues, could result in reputational harm to our business and could have an adverse effect on us.

In addition, organizations that provide ratings information to investors on ESG matters may assign unfavorable ratings to IES or our industries, which may lead to negative investor sentiment and the diversion of investment capital to other companies or industries, which could have a negative impact on our stock price and our costs of capital.

Our bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders, which could increase the costs for our shareholders to bring claims, discourage our shareholders from bringing claims, or limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our current or former directors, officers, employees or shareholders in such capacity.

In April 2021, we amended our bylaws to provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for claims, including derivative claims that are based upon a violation of a duty by a current or former director, officer, employee or shareholder in such capacity or as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery.

The exclusive forum provision may increase the costs for a shareholder to bring a claim or limit a shareholder’s ability to bring a claim in a judicial forum that the shareholder finds favorable for disputes with us or our directors, officers, employees or shareholders in such capacity, which may discourage such lawsuits against us and such persons.

Alternatively, if a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, the claims as to which they are intended to apply, then we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial position or results of operations.

While the exclusive forum provision applies to state and federal law claims, our shareholders will not be deemed to have waived our compliance with, and the exclusive forum provision will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under, the federal securities laws, including the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

General Risks

5 unchanged sentences

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be satisfied.

Internal controls over financial reporting and disclosure controls and procedures are designed to give reasonable assurance that they are effective and achieve their objectives.

Internal controls over financial reporting and disclosure controls and procedures are designed to

give reasonable assurance that they are effective and achieve their objectives.

We cannot provide absolute assurance that all possible future control issues have been detected.

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 1A. Risk Factors