What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-11-22 compared with 2023-12-07 · 216 added, 147 removed, 312 unchanged (54% of the section changed)

14 unchanged sentences

However, there can be no assurance that we will not experience a decrease in demand for our services due to economic, technological or other factors beyond our control, including interest rate increases, increases in the price of copper, aluminum, steel, fuel, electrical components, certain plastics, and other commodity prices and other economic factors, which may reduce the demand for housing in the regions where our Residential division operates, and may impact levels of construction.

For a further discussion of the industries in which we operate, please see Item 1.

For further discussion of the industries in which we operate, please see Item 1.

“ Business - Operating Segments ” of this Annual Report on Form 10-K.

1 unchanged sentence

While there are differences among the Company’s segments, on an overall basis, increased demand for the Company’s services and the Company’s previous investment in growth initiatives and other business-specific factors discussed below resulted in aggregate year-over-year revenue growth in fiscal 2024 as compared to fiscal 2023.

Our business segments each have their own unique set of factors influencing demand for our services.

While we are entering the year with strong backlog levels in each of our business segments, we are also closely monitoring weakness in the residential construction market and, more generally, heightened uncertainty regarding the future direction of the overall economy.

Heading into fiscal 2024, we are cautious about the impact of a decline in the affordability of housing on demand in our single-family housing business, where we typically do not enter into long-term contracts.

In our multi-family housing business, limited availability and increased cost of project financing may have an impact on our backlog as the year progresses.

However, we have benefited from improved pricing in a strong non-residential construction market.

We remain focused on monitoring costs, improving margins, and capitalizing on opportunities to expand our service lines and gain market share, as many of our markets continue to experience highly competitive margins.

Further, we believe our strong balance sheet and flexible operating model position us to navigate challenges we may encounter in a more uncertain economy.

Entering fiscal 2025, we see strong demand across many of our key end markets.

However, our business segments each have their own unique set of factors influencing demand for our services.

Heading into fiscal 2025, we are cautious about near-term demand for single-family housing as elevated mortgage rates and the impacts of inflation on materials and labor costs have resulted in a decline in housing affordability.

In addition, consumer expectations about future interest rate reductions may cause some home buyers to delay purchases in anticipation of lower mortgage costs.

In the multi-family business, higher borrowing costs for project owners during fiscal 2024 have resulted in a reduction in backlog at September 30, 2024 compared with September 30, 2023.

This will result in lower multi-family revenues in fiscal 2025 as compared with the prior year.

However, backlog across our business segments as a whole remains at record levels, reflecting strong demand in key end markets.

Demand with respect to data centers, a key end market served by our Communications, Infrastructure Solutions, and Commercial & Industrial segments, remains particularly strong.

However, availability of labor and capacity could constrain the rate at which we are able to grow this business.

To continue to grow our business, including through acquisitions and the funding of working capital, we may require a significant amount of cash.

Our ability to generate cash depends on many externally influenced factors, including demand for our services, the availability of projects at margins acceptable to us, the ultimate collectability of our receivables, our ability to borrow on our credit facility, and our ability to raise funds in the capital markets, among many other factors.

Our ability to generate or otherwise access cash depends on many externally influenced factors, including demand for our services, the availability of projects at margins acceptable to us, the ultimate collectability of our receivables, our ability to borrow on our credit facility, and our ability to raise funds in the capital markets, among many other factors.

We anticipate that the combination of cash on hand, cash flows from operations and available capacity under our credit facility will provide sufficient cash to enable us to meet our working capital needs, debt service requirements and capital expenditures for property and equipment through the next 12 months.

We expect our capital expenditures will range from $45 million to $55 million for the year ending on September 30, 2025.

The COVID-19 pandemic and its impact on markets, the supply chain and the labor force continue to be areas of focus for our business as we work to protect our workforce and serve our customers.

While the pandemic had less of an impact on our business in fiscal 2023 compared with fiscal 2022, this or any future pandemic or other public health emergency could impact our workforce,

customers and suppliers.

While the COVID-19 pandemic's impact on markets, the supply chain and the labor force had significantly less of an impact on our business in fiscal 2024 compared with prior fiscal years, COVID-19 and any future pandemic or other public health emergency could impact our workforce, customers and suppliers in the future.

An inability to procure materials in a timely manner, to complete work on schedule, and to reflect higher materials or labor costs in our pricing to customers has had, and could have in the future, a significant impact on our operating results.

14 unchanged sentences

Operating income 300,876 10.4 % 159,776 6.7 % 56,008 2.6 %

Interest and other expense, net 1,228 0.1 % 3,007 0.1 % 676 — %

Operating income before income taxes 158,548 6.7 % 53,001 2.4 % 84,907 5.5 %

Interest and other (income) expense, net (3,790) (0.1) % 1,228 0.1 % 3,007 0.1 %

Income from operations before income taxes

304,666 10.6 % 158,548 6.7 % 53,001 2.4 %

Provision for income taxes 72,165 2.5 % 38,761 1.6 % 12,815 0.6 %

5 unchanged sentences

2024 Compared to 2023

Consolidated revenues for the year ended September 30, 2023, were $210.4 million higher than for the year ended September 30, 2022, an increase of 9.7%, with increases at our Communications, Residential and Infrastructure Solutions operating segments, partially offset by a decrease at our Commercial & Industrial segment.

Consolidated revenues for the year ended September 30, 2024, were $507.1 million higher than for the year ended September 30, 2023, an increase of 21.3%, with increases at all of our operating segments.

See further discussion below of changes in revenues for our individual segments.

5 unchanged sentences

We allocate certain corporate selling, general and administrative costs across our segments as we believe this more accurately reflects the costs associated with operating each segment.

During the year ended September 30, 2023, our selling, general and administrative expenses were $298.6 million, an increase of $35.9 million, or 13.7% over the year ended September 30, 2022, driven by increased personnel costs, primarily at our Residential operating segment in connection with its growth, including higher incentive compensation at the division level as a result of higher earnings.

Additionally, our Residential segment recorded severance charges of $3.6 million in connection with a reorganization of its management structure.

During the year ended September 30, 2024, our selling, general and administrative expenses were $396.7 million, an increase of $98.1 million, or 32.8% over the year ended September 30, 2023, driven by increased personnel costs, primarily at our Residential operating segment, and higher incentive compensation across our business as a result of higher earnings.

Selling, general and administrative expenses as a percentage of revenue increased to 13.8% for the year ended September 30, 2024 from 12.6% for the year ended September 30, 2023.

Our results for the year ended September 30, 2023 include a pretax gain of $13.0 million from the sale of STR Mechanical, LLC (“STR”), which previously operated as part of our Commercial & Industrial segment, on October 7, 2022, and a pretax gain of $1.0 million from the sale of excess land at our Infrastructure Solutions segment.

Our results for the year ended September 30, 2023 included a pretax gain of $13.0 million from the sale of STR Mechanical, LLC (“STR”), which previously operated as part of our Commercial & Industrial segment, on October 7, 2022.

2023 Compared to 2022

Consolidated revenues for the year ended September 30, 2022, were $630.3 million higher than for the year ended September 30, 2021, an increase of 41.0%, with increases at all four of our operating segments, driven by strong demand and the contribution of businesses acquired in fiscal 2021.

Our overall gross profit percentage decreased to 14.7% during the year ended September 30, 2022, as compared to 18.7% during the year ended September 30, 2021.

Gross profit as a percentage of revenue decreased at all four of our operating segments.

partially offset by a decrease at our Commercial & Industrial segment.

See further discussion below of changes in revenues for our

individual segments.

Our overall gross profit percentage increased to 18.7% during the year ended September 30, 2023, as compared to 14.7% during the year ended September 30, 2022.

Gross profit as a percentage of revenue increased at all four of our operating segments.

See further discussion below of changes in gross margin for our individual segments.

During the year ended September 30, 2022, our selling, general and administrative expenses were $262.7 million, an increase of $60.5 million, or 29.9% over the year ended September 30, 2021, driven by increased personnel costs, primarily at our Residential operating segment, in connection with its growth, and the impact of businesses acquired during fiscal 2021, including amortization of intangible assets.

Selling, general and administrative expenses as a percentage of revenue decreased to 12.1% for the year ended September 30, 2022 from 13.2% for the year ended September 30, 2021, as we benefited from the increased scale of our operations.

During the year ended September 30, 2023, our selling, general and administrative expenses were $298.6 million, an increase of $35.9 million, or 13.7% over the year ended September 30, 2022, driven by increased personnel costs, primarily at our Residential operating segment, in connection with its growth, including higher incentive compensation at the division level as a result of higher earnings.

Additionally, our Residential segment recorded severance charges of $3.6 million in connection with a reorganization of its

management structure.

Selling, general and administrative expenses as a percentage of revenue increased to 12.6% for the year ended September 30, 2023 from 12.1% for the year ended September 30, 2022.

Communications

6 unchanged sentences

Selling, general and administrative expenses 65,752 8.5 % 54,344 9.0 %

Loss on sale of assets 12 — % 12 — %

(Gain) loss on sale of assets ( 18 ) — % 12 — %

Operating Income 86,896 11.2 % 51,456 8.6 %

Our Communications segment’s revenues increased by $175.7 million, or 29.2%, during the year ended September 30, 2024, compared to the year ended September 30, 2023.

This increase primarily resulted from increased demand from our high-tech manufacturing and data center customers.

This increase primarily resulted from increased demand from our data center, high-tech manufacturing and e-commerce distribution center customers.

Gross Profit.

1 unchanged sentence

Gross profit as a percentage of revenue increased from 17.6% for the year ended September 30, 2023 to 19.7% for the year ended September 30, 2024.

The increase in gross profit and gross profit as a percentage of revenue partially reflects the impact of $19.9 million of project losses incurred in the year ended September 30, 2022 resulting from execution issues relating to an expansion into a new, adjacent service area.

Although these projects continued to negatively impact our results throughout fiscal 2022, we have since completed all such projects, and are no longer working in this service area.

Gross profit also increased as a result of an increase in revenues in the year ended September 30, 2023 compared to the year ended September 30, 2022 as discussed above.

The increase in gross profit and gross profit as a percentage of revenue primarily reflects increased volume, successful project execution, favorable contract pricing and the impact of a more disciplined bidding process.

Selling, General and Administrative Expenses.

Our Communications segment’s selling, general and administrative expenses increased $11.4 million, or 21.0% during the year ended September 30, 2024, as compared to the year ended September 30, 2023.

The increase is a result of higher personnel costs including higher incentive compensation as a result of higher earnings, investment in an organizational structure that will enhance the scalability of our business, and higher wages in a competitive labor market.

Selling, general and administrative expenses as a percentage of revenue in the Communications segment were 8.5% during the year ended September 30, 2024, compared to 9.0% for the year ended September 30, 2023.

6 unchanged sentences

Selling, general and administrative expenses 54,344 9.0 % 46,717 8.3 %

(Gain)/Loss on sale of assets 12 — % (4) — %

Loss on sale of assets 12 — % 12 — %

Operating Income 51,456 8.6 % 22,089 3.9 %

Our Communications segment’s revenues increased by $113.8 million, or 25.5%, during the year ended September 30, 2022, compared to the year ended September 30, 2021.

This increase primarily resulted from increased demand from our data center customers.

Our Communications segment’s revenues increased by $41.0 million, or 7.3%, during the year ended September 30, 2023

compared to the year ended September 30, 2022.

This increase primarily resulted from increased demand from our high-tech

manufacturing and data center customers.

Gross Profit.

Our Communications segment’s gross profit during the year ended September 30, 2022, decreased $16.0 million, or 18.8%, as compared to the year ended September 30, 2021.

Gross profit as a percentage of revenue decreased from 19.0% for the year ended September 30, 2021 to 12.3% for the year ended September 30, 2022.

During fiscal 2022, we expanded our offerings to our data center customers into a new, adjacent service area;

however, we had execution issues and recorded a combined loss of $19.9 million on a series of these projects for the year ended September 30, 2022.

As a result of this loss, we are no longer pursuing work in this service area.

As of September 30, 2022, our work on such projects was substantially complete.

Our operating margins for the year ended September 30, 2022 were also negatively impacted by a shift in our mix of customers, as well as a more competitive bidding environment in the distribution center and warehouse market, which has experienced slowing activity following a period of significant pandemic-related growth.

Supply chain challenges and workforce disruptions related to COVID-19 also continued to affect project efficiency.

Finally, we continued to invest in hiring and training personnel, particularly in estimating and project management, to grow the business.

Our Communications segment’s gross profit during the year ended September 30, 2023, increased $37.0 million, or

53.8%, as compared to the year ended September 30, 2022.

Gross profit as a percentage of revenue increased from 12.3% for the year

ended September 30, 2022 to 17.6% for the year ended September 30, 2023.

The increase in gross profit and gross profit as a

percentage of revenue partially reflects the impact of $19.9 million of project losses incurred in the year ended September 30, 2022

resulting from execution issues relating to an expansion into a new, adjacent service area.

Although these projects continued to

negatively impact our results throughout fiscal 2022, we have since completed all such projects, and are no longer working in this

service area.

Gross profit also increased as a result of an increase in revenues in the year ended September 30, 2023 compared to the

year ended September 30, 2022 as discussed above.

Selling, General and Administrative Expenses.

Our Communications segment’s selling, general and administrative expenses increased $5.3 million, or 12.9% during the year ended September 30, 2022, as compared to the year ended September 30, 2021.

The increase is a result of higher personnel costs in connection with the growth of our business, as well as higher wages in an increasingly competitive labor market.

We also experienced a more typical level of selling expense for the year ended September 30, 2022 as compared to the year ended September 30, 2021, when travel and other activities were curtailed due to the pandemic.

Selling, general and administrative expenses as a percentage of revenue in the Communications segment were 8.3% during the year ended September 30, 2022, compared to 9.3% for the year ended September 30, 2021, as we benefited from the scale of our operations.

Our Communications segment’s selling, general and administrative expenses increased

$7.6 million, or 16.3% during the year ended September 30, 2023, as compared to the year ended September 30, 2022.

The increase is

a result of higher personnel costs including higher incentive compensation as a result of higher earnings, investment in an

organizational structure that will enhance the scalability of our business, and higher wages in a competitive labor market.

general and administrative expenses as a percentage of revenue in the Communications segment were 9.0% during the year ended

September 30, 2023, compared to 8.3% for the year ended September 30, 2022.

2024 Compared to 2023

6 unchanged sentences

Contingent consideration 36 — % 277 — %

Loss on sale of assets 69 — % 20 — %

(Gain) loss on sale of assets ( 1,354 ) (0.1) % 69 — %

Operating Income 137,347 9.9 % 82,897 6.5 %

Our Residential segment’s revenues increased by $109.3 million, or 8.5%, during the year ended September 30, 2024, as compared to the year ended September 30, 2023.

The increase was driven by the impact of price increases in connection with higher materials costs and continued strong demand, particularly in the Florida single-family market.

Revenue in our single-family business

increased by $135.8 million for the year ended September 30, 2023, compared to the year ended September 30, 2022, while multi-family and other revenue increased by $12.3 million.

The increase was primarily driven by an $81.0 million increase in revenues from our plumbing and HVAC business as we expanded our offerings during the year ended September 30, 2024.

Our single-family electrical business continued to have strong demand as revenues increased by $14.9 million, while multi-family and other revenue increased by $13.4 million resulting from continued strong demand and successful execution of existing backlog, partially offset by a reduction in activity in certain areas as we became more selective in our bidding process.

Gross Profit.

During the year ended September 30, 2023, our Residential segment gross profit increased by $49.7 million, or 24.5%, as compared to the year ended September 30, 2022.

The increase in gross profit was driven primarily by increased activity, as well as the impact of price increases and an easing of supply chain challenges that impacted prior year efficiency.

Gross margin as a percentage of revenue increased to 19.8% during the year ended September 30, 2023 from 18.0% for the year ended September 30, 2022, as prior year gross margins were negatively impacted by higher labor and material costs, but improved incrementally throughout fiscal year 2022 as pricing actions were implemented.

During the year ended September 30, 2024, our Residential segment gross profit increased by $111.4 million, or 44.0%, as compared to the year ended September 30, 2023, and gross margin as a percentage of revenue increased to 26.2% during the year ended September 30, 2024 from 19.8% for the year ended September 30, 2023.

The increase in profitability was driven primarily by improved project execution in our multi-family business, as well as the benefit of improved procurement and other processes implemented as part of the reorganization of the segment in fiscal 2023.

Selling, General and Administrative Expenses.

Our Residential segment's selling, general and administrative expenses increased by $58.6 million, or 34.5%, during the year ended September 30, 2024, compared to the year ended September 30, 2023.

The increase was driven primarily by higher personnel costs in connection with business growth, including incentive profit sharing for division management.

Selling, general and administrative expenses for the year ended September 30, 2023 also included the $3.6 million of severance charges discussed above, as we reorganized the segment's management structure.

We also incurred other discrete expenses in the year ended September 30, 2023 in connection with implementing this reorganization as we began combining multiple administrative facilities into a single location and consolidating several underperforming branches.

Selling, general and administrative expenses as a percentage of revenues in the Residential segment increased to 13.3% during the year ended September 30, 2023, from 12.7% during the year ended September 30, 2022.

Selling, general and administrative expenses as a percentage of revenue in the Residential segment increased to 16.4% during the year ended September 30, 2024, from 13.3% during the year ended September 30, 2023.

The increase was driven primarily by higher personnel costs in connection with a reorganization of the segment's management structure in fiscal 2023 and increased incentive profit sharing for division management resulting from higher earnings.

2023 Compared to 2022

8 unchanged sentences

Operating Income 82,897 6.5 % 58,856 5.2 %

Our Residential segment’s revenues increased by $444.1 million, or 64.6%, during the year ended September 30, 2022, as compared to the year ended September 30, 2021, reflecting a full year of revenue contribution from businesses acquired in fiscal 2021, strong demand for single-family and multi-family housing and the impact of price increases in connection with a higher cost of materials.

Businesses acquired in fiscal 2021 contributed $233.1 million of the total increase for the year ended September 30, 2022 compared to the year ended September 30, 2021.

Inclusive of these acquired businesses, revenue in our single-family business increased by $371.1 million for the year ended September 30, 2022, compared to the year ended September 30, 2021, while multi-family and other revenue increased by $73.0 million.

Our Residential segment’s revenues increased by $148.1 million, or 13.1%, during the year ended September 30, 2023, as

compared to the year ended September 30, 2022.

The increase was driven by the impact of price increases in connection with higher

materials costs and continued strong demand, particularly in the Florida single-family electrical, plumbing and HVAC market.

Revenue in our single-family electrical business increased by $56.8 million for the year ended September 30, 2023, compared to the year ended September 30, 2022, and revenue in our single-family plumbing & HVAC business increased by $79.0 million, while multifamily and other revenue increased by $12.3 million.

Gross Profit.

During the year ended September 30, 2022, our Residential segment gross profit increased by $69.5 million, or 51.9%, as compared to the year ended September 30, 2021.

The increase in gross profit was driven primarily by contributions from the businesses acquired in fiscal 2021 and higher volumes, partly offset by increased commodity prices.

Gross margin as a percentage of revenue decreased to 18.0% during the year ended September 30, 2022 from 19.5% for the year ended September 30, 2021, primarily as a result of increased commodity prices and a reduction in project efficiency related to supply-chain challenges and the COVID-19 pandemic.

During the year ended September 30, 2023, our Residential segment gross profit increased by $49.7 million, or 24.5%,

as compared to the year ended September 30, 2022.

The increase in gross profit was driven primarily by increased activity, as well as

the impact of price increases and an easing of supply chain challenges that impacted prior year efficiency.

Gross margin as a

percentage of revenue increased to 19.8% during the year ended September 30, 2023 from 18.0% for the year ended September 30,

2022, as prior year gross margins were negatively impacted by higher labor and material costs, but improved incrementally throughout

fiscal year 2022 as pricing actions were implemented.

Selling, General and Administrative Expenses.

Our Residential segment's selling, general and administrative expenses increased by $51.3 million, or 55.3%, during the year ended September 30, 2022, compared to the year ended September 30, 2021.

Selling, general and administrative expenses incurred at the businesses acquired during fiscal 2021, including amortization of intangible assets, contributed $21.3 million of the increase.

The remaining increase was driven by higher personnel costs in connection with business growth, including incentive profit sharing for division management.

Selling, general and administrative expenses as a percentage of revenues in the Residential segment decreased to 12.7% during the year ended September 30, 2022, from 13.5% during the year ended September 30, 2021, as we benefited from the increased scale of our operations.

Our Residential segment's selling, general and administrative expenses increased by

$25.6 million, or 17.8%, during the year ended September 30, 2023, compared to the year ended September 30, 2022.

was driven primarily by higher personnel costs in connection with business growth, including incentive profit sharing for division

Selling, general and administrative expenses for the year ended September 30, 2023 also included the $3.6 million of

severance charges discussed above, as we reorganized the segment's management structure.

We also incurred other discrete expenses

in the year ended September 30, 2023 in connection with implementing this reorganization as we began combining multiple

administrative facilities into a single location and consolidating several underperforming branches.

Selling, general and administrative

expenses as a percentage of revenues in the Residential segment increased to 13.3% during the year ended September 30, 2023, from

12.7% during the year ended September 30, 2022.

Infrastructure Solutions

6 unchanged sentences

Selling, general and administrative expenses 37,394 10.7 % 26,260 12.1 %

Contingent consideration 678 0.2 % — — %

Gain on sale of assets (184) (0.1) % (1,029) (0.5) %

1 unchanged sentence

Revenues in our Infrastructure Solutions segment increased by $133.7 million, or 61.5% during the year ended September 30, 2024 compared to the year ended September 30, 2023.

The increase in revenue was driven primarily by increased demand at our generator enclosure business.

The increase in revenues was driven primarily by continued strong demand in our custom engineered solutions manufacturing businesses.

We also acquired Greiner Industries, Inc.

(“Greiner”) on April 1, 2024, which contributed $34.0 million in revenue in the year ended September 30, 2024.

Gross Profit .

Our Infrastructure Solutions segment’s gross profit for the year ended September 30, 2023, increased by $25.8 million, or 89.9%, as compared to the year ended September 30, 2022.

Gross profit for the year ended September 30, 2022 was negatively impacted by supply chain disruptions, COVID-19 related labor inefficiencies, and operating inefficiencies in connection with the relocation of our Tulsa, Oklahoma operation to a new, larger facility in order to accommodate increased demand for our generator enclosure products.

Additionally, gross profit for the year ended September 30, 2023 was positively impacted by an increase in revenues from our generator enclosure business as discussed above, as well as improved operating margins in our custom power solutions business.

Our Infrastructure Solutions segment’s gross profit for the year ended September 30, 2024 increased by $50.9 million, or 93.5%, as compared to the year ended September 30, 2023, primarily resulting from higher volumes, improved pricing and operating efficiencies at our custom engineered solutions manufacturing facilities as well as the impact of investments to increase capacity we have made over the last several years.

Gross profit as a percent of revenue increased to 30.0% for the year ended September 30, 2024 compared to 25.1% for the year ended September 30, 2023.

Selling, General and Administrative Expenses.

Our Infrastructure Solutions segment’s selling, general and administrative expenses during the year ended September 30, 2023, increased $1.1 million, or 4.5%, compared to the year ended September 30, 2022.

Our Infrastructure Solutions segment’s selling, general and administrative expenses during the year ended September 30, 2024, increased $11.1 million, or 42.4%, compared to the year ended September 30, 2023, primarily as a result of increased employee compensation cost to support growth in the business, in part due to the acquisition of Greiner in April 2024, and increased incentive profit sharing resulting from higher earnings.

Selling, general and administrative expenses as a percentage of revenue decreased from 12.1% for the year ended September 30, 2023, to 10.7% for the year ended September 30, 2024 as we benefited from the scale of our operations.

11 unchanged sentences

Operating Income 29,217 13.4 % 3,586 2.1 %

Revenues in our Infrastructure Solutions segment increased by $20.1 million, or 13.7% during the year ended September 30, 2022 compared to the year ended September 30, 2021.

The increase in revenue was driven primarily by increased demand at our generator enclosure business as well as the acquisition of Wedlake Fabricating, Inc.

("Wedlake") during the first quarter of fiscal 2021, which contributed $16.9 million of the increase.

Revenues in our Infrastructure Solutions segment increased by $50.2 million, or 30.1% during the year ended September 30,

2023 compared to the year ended September 30, 2022.

The increase in revenue was driven primarily by increased demand at our

generator enclosure business.

Gross Profit .

Our Infrastructure Solutions segment’s gross profit for the year ended September 30, 2022, decreased by $12.3 million, as compared to the year ended September 30, 2021, reflecting the impact of supply chain disruptions on our generator enclosure

business, COVID-19 related labor inefficiencies, and operating inefficiencies in connection with the relocation of the Wedlake business to a new, larger facility that expands capacity while allowing for improved workflow and process efficiency.

The transition to and setup of the new facility were completed during the third quarter of fiscal 2022.

Gross profit as a percent of revenue decreased to 17.2% for the year ended September 30, 2022 compared to 27.8% for the year ended September 30, 2021.

Additionally, during the year ended September 30, 2021, we benefited from workers' compensation refunds received from the State of Ohio.

Our Infrastructure Solutions segment’s gross profit for the year ended September 30, 2023, increased by $25.8 million,

or 89.9%, as compared to the year ended September 30, 2022.

Gross profit for the year ended September 30, 2022 was negatively

impacted by supply chain disruptions, COVID-19 related labor inefficiencies, and operating inefficiencies in connection with the

relocation of our Tulsa, Oklahoma operation to a new, larger facility in order to accommodate increased demand for our generator

enclosure products.

Additionally, gross profit for the year ended September 30, 2023 was positively impacted by an increase in

revenues from our generator enclosure business as discussed above, as well as improved operating margins in our custom engineered

solutions business.

Gross profit as a percent of revenue increased to 25.1% for the year ended September 30, 2023 compared to 17.2%

for the year ended September 30, 2022.

Selling, General and Administrative Expenses.

Our Infrastructure Solutions segment’s selling, general and administrative expenses during the year ended September 30, 2022, increased $1.2 million compared to the year ended September 30, 2021, primarily as a result of expenses incurred at the Wedlake business acquired during the first fiscal quarter of 2021.

Selling, general and administrative expenses as a percentage of revenue decreased from 16.3% for the year ended September 30, 2021, to 15.0% for the year ended September 30, 2022.

Our Infrastructure Solutions segment’s selling, general and administrative expenses

during the year ended September 30, 2023, increased $1.1 million, or 4.5%, compared to the year ended September 30, 2022.

general and administrative expenses as a percentage of revenue decreased from 15.0% for the year ended September 30, 2022, to

12.1% for the year ended September 30, 2023 as we benefited from the scale of our operations.

Gain on Sale of Assets.

Our results for the year ended September 30, 2023 included a $1.0 million gain from the sale of a portion of

the property on which one of our operating facilities is located.

The sale of this excess land will have no impact on the operations of

the facility.

Commercial & Industrial

9 unchanged sentences

41,396 11.3 % 19,272 6.9 %

Revenues in our Commercial & Industrial segment decreased $28.9 million, or 9.4%, during the year ended September 30, 2023, compared to the year ended September 30, 2022.

The decrease is primarily due to the sale of our STR business in October 2022, which contributed revenue of $18.3 million for the year ended September 30, 2022.

The decrease in revenues was also the result of a planned reduction in activity at an underperforming branch where we incurred substantial losses in fiscal 2022.

Revenues in our Commercial & Industrial segment increased $88.4 million, or 31.6%, during the year ended September 30, 2024, compared to the year ended September 30, 2023.

The increase primarily relates to a large data center project.

Gross Profit .

Our Commercial & Industrial segment’s gross profit during the year ended September 30, 2023 increased by $13.1 million, or 72.1%, as compared to the year ended September 30, 2022.

Gross profit for the year ended September 30, 2022 included project losses of $16.7 million due to execution issues on two projects at one underperforming branch.

The benefit of improved project execution in 2023 was partially offset by the sale of STR in October 2022, which contributed gross profit of $4.9 million for the year ended September 30, 2022.

Gross profit as a percentage of revenue increased from 5.9% for the year ended September 30, 2022, to 11.2% for the year ended September 30, 2023.

Our Commercial & Industrial segment’s gross profit during the year ended September 30, 2024 increased by $42.9 million, or 137.1%, as compared to the year ended September 30, 2023, and gross profit as a percentage of revenue increased from 11.2% for the year ended September 30, 2023 to 20.2% for the year ended September 30, 2024.

Segment results in the year ended September 30, 2024 benefited from favorable project execution and additions to the original scope of work at favorable margins on the large data center project, improved project execution across the business, improving bid margins in certain markets, and a more selective bidding strategy implemented in the prior year.

Selling, General and Administrative Expenses.

Our Commercial & Industrial segment’s selling, general and administrative expenses during the year ended September 30, 2023 decreased $5.3 million, or 17.4%, compared to the year ended September 30, 2022.

The decrease was driven primarily by the sale of STR in October 2022, which recorded branch-level selling, general and administrative expense of $4.2 million for the year ended September 30, 2022.

Additionally, selling, general and administrative expenses for the year ended September 30, 2022 included $2.3 million of reserves in connection with legal matters related to certain contractual disputes.

Selling, general and administrative expenses as a percentage of revenue decreased from 9.9% for the year ended September 30, 2022 to 9.0% for the year ended September 30, 2023.

Our Commercial & Industrial segment’s selling, general and administrative expenses during the year ended September 30, 2024 increased $7.7 million, or 30.5%, compared to the year ended September 30, 2023.

The increase was driven primarily by increased employee compensation cost, including higher incentive compensation as a result of higher earnings.

Selling, general and administrative expenses as a percentage of revenue was 9.0% and 8.9% in the years ended September 30, 2023 and 2024, respectively.

Gain on Sale of Assets .

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Operating Income (Loss) 19,272 6.9 % ( 12,312 ) (4.0) %

Revenues in our Commercial & Industrial segment increased $52.3 million, or 20.4%, during the year ended September 30, 2022, compared to the year ended September 30, 2021.

During the year ended September 30, 2022, we benefited from the start-up of projects that were delayed in fiscal 2021.

While activity in this segment was curtailed earlier in the COVID-19 pandemic, many customers have returned to more typical levels of activity.

However, this market remains highly competitive.

Revenues in our Commercial & Industrial segment decreased $28.9 million, or 9.4%, during the year ended September 30,

2023, compared to the year ended September 30, 2022.

The decrease is primarily due to the sale of our STR business in October 2022,

which contributed revenue of $18.3 million for the year ended September 30, 2022.

The decrease in revenues was also the result of a

planned reduction in activity at an underperforming branch where we incurred substantial losses in fiscal 2022.

Gross Profit .

Our Commercial & Industrial segment’s gross profit during the year ended September 30, 2022 decreased by $10.3 million, or 36.2%, as compared to the year ended September 30, 2021.

During the year ended September 30, 2022, one of our Commercial & Industrial branches experienced execution issues on a large contract, resulting in significant project rework.

As a result, we incurred additional expense related to this project including the accrual of estimated costs to complete the project, including demolition, purchase of replacement materials, and performance of the rework.

Additionally, a second job at that same branch was affected by costs associated with a delay in receiving materials from a supplier.

These two projects collectively impacted gross profit for the year ended September 30, 2022 by $16.7 million.

As a result, gross profit as a percentage of revenue decreased from 11.1% for the year ended September 30, 2021, to 5.9% for the year ended September 30, 2022.

Our Commercial & Industrial segment’s gross profit during the year ended September 30, 2023 increased by $13.1

million, or 72.1%, as compared to the year ended September 30, 2022.

Gross profit for the year ended September 30, 2022 included

project losses of $16.7 million due to execution issues on two projects at one underperforming branch.

The benefit of improved project

execution in 2023 was partially offset by the sale of STR in October 2022, which contributed gross profit of $4.9 million for the year

ended September 30, 2022.

Gross profit as a percentage of revenue increased from 5.9% for the year ended September 30, 2022, to

11.2% for the year ended September 30, 2023.

Selling, General and Administrative Expenses.

Our Commercial & Industrial segment’s selling, general and administrative expenses during the year ended September 30, 2022 increased $2.4 million, or 8.5%, compared to the year ended September 30, 2021.

The increase was driven primarily by higher pay rates in an increasingly competitive labor market, as well as $2.3 million of reserves in connection with legal matters related to certain contractual disputes.

Selling, general and administrative expenses as a percentage of revenue decreased from 11.0% for the year ended September 30, 2021 to 9.9% for the year ended September 30, 2022.

Our Commercial & Industrial segment’s selling, general and administrative expenses

during the year ended September 30, 2023 decreased $5.3 million, or 17.4%, compared to the year ended September 30, 2022.

decrease was driven primarily by the sale of STR in October 2022, which recorded branch-level selling, general and administrative

expense of $4.2 million for the year ended September 30, 2022.

Additionally, selling, general and administrative expenses for the year

ended September 30, 2022 included $2.3 million of reserves in connection with legal matters related to certain contractual disputes.

Selling, general and administrative expenses as a percentage of revenue decreased from 9.9% for the year ended September 30, 2022

to 9.0% for the year ended September 30, 2023.

Gain on Sale of Assets.

As discussed above, our results for the year ended September 30, 2023 include a pretax gain on sale of $13.0

million from the sale of STR in October 2022.

INTEREST AND OTHER EXPENSE, NET

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Total interest expense 1,338 3,022 2,970

Interest income (4,042) (564) (10)

Other (income) expense, net (1,086) (1,230) 47

Total interest and other expense, net 1,228 3,007 676

During the year ended September 30, 2023, we incurred interest expense of $3.0 million primarily comprised of interest expense on an average outstanding balance of $26.9 million under our revolving credit facility and on our finance lease agreements, in addition to fees on an average letter of credit balance of $4.7 million under our revolving credit facility and an average unused line of credit balance of $117.8 million.

Interest expense in the year ended September 30, 2023 remained relatively consistent compared to the year ended September 30, 2022 as a decrease in interest expense incurred on our revolving credit facility resulting from a lower average outstanding balance was offset by an increase in interest expense related to a higher volume of active finance leases.

Other income of $1.8 million in the year ended September 30, 2023 was primarily the result of gains on investments in equity securities of $1.0 million.

Total other (income) expense, net (5,128) (1,794) 37

Total interest and other (income) expense, net (3,790) 1,228 3,007

During the year ended September 30, 2024, we incurred interest expense of $1.3 million primarily comprised of interest expense on our finance lease agreements and fees on an average letter of credit balance of $5.5 million under our revolving credit facility and an average unused line of credit balance of $144.5 million.

The reduction in interest expense in the year ended September 30, 2024 compared to the year ended September 30, 2023 was a result of a decrease in average outstanding borrowings under our revolving credit facility, which had no outstanding balance during the year ended September 30, 2024.

Total other income, net of $5.1 million in the year ended September 30, 2024 was primarily the result of interest income of $4.0 million and unrealized gains on investments in trading securities of $1.8 million.

During the year ended September 30, 2023, we incurred interest expense of $3.0 million primarily comprised of interest expense on an

average outstanding balance of $26.9 million under our revolving credit facility and on our finance lease agreements, in addition to

fees on an average letter of credit balance of $4.7 million under our revolving credit facility and an average unused line of credit

balance of $117.8 million.

Interest expense in the year ended September 30, 2023 remained relatively consistent compared to the year

ended September 30, 2022 as a decrease in interest expense incurred on our revolving credit facility resulting from a lower average

outstanding balance was offset by an increase in interest expense related to a higher volume of active finance leases.

Total other income, net of $1.8 million in the year ended September 30, 2023 was primarily the result of gains on investments in equity securities of $1.0 million.

During the year ended September 30, 2022, we incurred interest expense of $3.0 million primarily comprised of interest expense on an average outstanding balance of $82.3 million under our revolving credit facility, in addition to fees on an average letter of credit balance of $4.5 million under our revolving credit facility and an average unused line of credit balance of $49.2 million.

During the year ended September 30, 2021, we incurred interest expense of $1.0 million primarily comprised of interest expense from our revolving credit facility and fees on an average letter of credit balance of $5.7 million under our revolving credit facility and an average unused line of credit balance of $77.4 million.

PROVISION FOR INCOME TAXES

For the year ended September 30, 2023, we recorded income tax expense of $38.8 million, which reflects a higher pretax income than in the year ended September 30, 2022.

For the year ended September 30, 2022, we recorded income tax expense of $12.8 million, which reflects a $0.8 million benefit related to the recognition of previously unrecognized tax benefits.

For the year ended September 30, 2021, we recorded income tax expense of $16.2 million, which reflects a $5.1 million benefit related to the recognition of previously unrecognized tax benefits.

For the year ended September 30, 2024, we recorded income tax expense of $72.2 million, which reflects a higher pretax income than in the year ended September 30, 2023, partially offset by $5.5 million of non-cash tax benefits from the recognition of previously unrecognized tax benefits in fiscal 2024.

For the year ended September 30, 2023, we recorded income tax expense of $38.8 million, which reflects a higher pretax income than

in the year ended September 30, 2022.

For the year ended September 30, 2022, we recorded income tax expense of $12.8 million, which reflects a $0.8 million benefit related

to the recognition of previously unrecognized tax benefits.

WORKING CAPITAL

During the year ended September 30, 2023, working capital exclusive of cash decreased by $2.8 million from September 30, 2022, reflecting a $4.1 million decrease in current assets excluding cash and a $1.3 million decrease in current liabilities during the period.

During the year ended September 30, 2023, our current assets exclusive of cash decreased to $595.5 million, as compared to $599.6 million as of September 30, 2022.

A decrease in activity at our Commercial & Industrial business, which generally has longer customer payment terms than our other operating segments, as well as the collection of aged receivables related to prior year contractual disputes, drove a $6.9 million decrease in trade accounts receivable.

Days sales outstanding decreased to 51 at September 30, 2023 from 58 at September 30, 2022.

During the year ended September 30, 2024, working capital exclusive of cash increased by $53.4 million from September 30, 2023, reflecting a $175.4 million increase in current assets excluding cash partially offset by a $122.0 million increase in current liabilities during the period.

During the year ended September 30, 2024, our current assets exclusive of cash increased to $770.9 million, as compared to $595.5 million as of September 30, 2023.

An increase in activity and the timing of billings at our Communications and Infrastructure Solutions businesses, along with trade receivables acquired as part of the Greiner acquisition, drove a $106.0 million increase in trade accounts receivable and a $12.9 million increase in retainage.

While the rate of collections may vary, our typically secured position, resulting from our ability in general to secure liens against our customers’ overdue receivables, offers some protection that collection will occur eventually to the extent that our security retains value.

Additionally, prepaid expenses and other current assets decreased by $4.9 million as a result of the recognition of certain prepaid expenses as of September 30, 2022 and the timing of payments of project costs.

These decreases were partially offset by an $11.9 million increase in retainage as a result of increased activity in our Residential multi-family business.

During the year ended September 30, 2023, our total current liabilities decreased by $1.3 million to $400.6 million, compared to $401.9 million as of September 30, 2022, driven by a decrease in business activity at our Commercial & Industrial business, the timing of payments by our Residential and Communications segments, and remittance of all remaining payroll taxes deferred under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act").

These decreases were largely offset by an increase in billings in excess of costs and estimated earnings driven by increased activity in our Residential multi-family business.

Additionally, marketable securities increased by $35.0 million as a portion of our excess cash during the year ended September 30, 2024 was invested in trading securities, and costs and estimated earnings in excess of contract billings increased by $11.5 million primarily from contract assets acquired as part of the Greiner acquisition.

During the year ended September 30, 2024, our total current liabilities increased by $122.0 million to $522.6 million, compared to $400.6 million as of September 30, 2023, driven by a $55.2 million increase in contract billings in excess of costs and estimated earnings, which varies based on the timing of contract billings on projects on which revenue is recognized using the percentage of completion method, and a $66.8 million increase in accounts payable and accrued expenses primarily as a result of increased activity and the timing of payments across all of our operating segments, and an increase in income tax payable based on the timing of tax payments.

Many customers, particularly in connection with new construction, require us to post performance and payment bonds issued by a surety.

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We believe that our relationships with our sureties will allow us to provide surety bonds as they are required.

However, current market conditions, as well as changes in our sureties' assessment of our operating and financial risk, could cause our sureties to decline to issue bonds for our work.

However, current market conditions, as well as changes in our sureties' assessment of our operating and financial risk, could cause our sureties to decline to

issue bonds for our work.

If our sureties decline to issue bonds for our work, our alternatives will include posting other forms of collateral for project performance, such as letters of credit or cash, seeking bonding capacity from other sureties, or engaging in more projects that do not require surety bonds.

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Our Fixed Charge Coverage Ratio is calculated as follows (with capitalized terms as defined in the Amended Credit Agreement):

(i) our trailing twelve month EBITDA, less Non-Financed Capital Expenditures (other than capital expenditures financed by means of an advance under the credit facility), cash taxes and all Restricted Junior Payments consisting of certain Pass-Through Tax Liabilities, divided by (ii) the sum of our cash interest (other than interest paid-in-kind, amortization of financing fees, and other non-cash interest expense) and principal debt payments (other than repayment of principal on advances under the credit facility and including cash payments with respect to capital leases), any management, consulting, monitoring, and advisory fees paid to an affiliate, and all Restricted Junior Payments (other than Pass-Through Tax Liabilities) and other cash distributions;

expense) and principal debt payments (other than repayment of principal on advances under the credit facility and including cash payments with respect to capital leases), any management, consulting, monitoring, and advisory fees paid to an affiliate, and all Restricted Junior Payments (other than Pass-Through Tax Liabilities) and other cash distributions;

provided, that if we make an acquisition consented to by our lenders, the components of the Fixed Charge Coverage Ratio will be calculated for such fiscal period after giving pro forma effect to the acquisition assuming that such transaction has occurred on the first day of such period (including pro forma adjustments arising out of events which are directly attributable to such acquisition, are factually supportable, and are expected to have a continuing impact, in each case to be reasonably agreed to by our lenders).

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Operating activities provided net cash of $234.4 million during the year ended September 30, 2024, as compared to $153.9 million of net cash provided in the year ended September 30, 2023.

The increase in operating cash flow resulted primarily from increased earnings and a reduction in cash used in working capital during the year ended September 30, 2023 compared to the year ended September 30, 2022

Operating activities provided net cash of $16.3 million during the year ended September 30, 2022, as compared to $37.9 million of net cash provided in the year ended September 30, 2021.

The decrease in operating cash flow resulted from lower earnings and an increase in working capital, particularly due to increased trade accounts receivable and inventory during the year ended September 30, 2022 in support of the growth of the business.

We also remitted $7.0 million of payroll taxes previously deferred under the CARES Act.

The increase in operating cash flow resulted primarily from increased earnings partially offset by an increase in cash used in working capital during the year ended September 30, 2024 compared to the year ended September 30, 2023

Operating activities provided net cash of $153.9 million during the year ended September 30, 2023, as compared to $16.3 million of

net cash provided in the year ended September 30, 2022.

The increase in operating cash flow resulted primarily from increased

earnings and a reduction in cash used in working capital during the year ended September 30, 2023 compared to the year ended

September 30, 2022

Investing Activities

Net cash provided by investing activities was $2.8 million for the year ended September 30, 2023, compared to $29.5 million of net cash used in investing activities in the year ended September 30, 2022.

During the year ended September 30, 2023, the sale of assets, including the sale of STR, provided cash of $20.6 million, which was partially offset by $17.7 million used for capital expenditures.

Investing activities for the year ended September 30, 2022 include $29.3 million of capital expenditures primarily related to the acquisition of a new operating facility for our Wedlake business, as well as an additional facility to support the growth of our Residential business in Florida.

Net cash used in investing activities was $29.5 million for the year ended September 30, 2022, compared to $99.6 million of net cash used in investing activities in the year ended September 30, 2021.

We used $29.3 million for capital expenditures in the year ended September 30, 2022, primarily related to the acquisition of a new operating facility for our Wedlake business, as well as an additional facility to support the growth of our Residential business in Florida.

Investing activities for the year ended September 30, 2021 include $7.4 million of capital expenditures and $92.5 million for the acquisition of businesses.

Net cash used in investing activities was $108.8 million for the year ended September 30, 2024, compared to $2.8 million of net cash provided by investing activities in the year ended September 30, 2023.

During the year ended September 30, 2024, we completed the acquisition of Greiner for $67.0 million.

We also had capital expenditures of $45.2 million as we acquired new facilities to increase the manufacturing capacity of our Infrastructure Solutions segment's operations, purchased new assets instead of entering into new lease agreements at our Residential and Communications segments, and made other capital expenditures to support the growth of our business.

During the year ended September 30, 2023, the sale of assets, including the sale of STR, provided cash of $20.6 million, which was partially offset by capital expenditures of $17.7 million.

Net cash provided by investing activities was $2.8 million for the year ended September 30, 2023, compared to $29.5 million of net

cash used in investing activities in the year ended September 30, 2022.

During the year ended September 30, 2023, the sale of assets,

including the sale of STR, provided cash of $20.6 million, which was partially offset by $17.7 million used for capital expenditures.

Investing activities for the year ended September 30, 2022 include $29.3 million of capital expenditures primarily related to the

acquisition of a new operating facility for our Wedlake business, as well as an additional facility to support the growth of our

Residential business in Florida.

Financing Activities

Net cash used in financing activities was $100.5 million in the year ended September 30, 2024.

Net cash used in financing activities for the year ended September 30, 2023 included net repayments on our credit facility of $82.7 million, distributions to noncontrolling interests of $11.5 million under operating agreements in connection with certain acquisitions, and $8.3 million used for the repurchase

of our common stock, including repurchases to satisfy statutory withholding requirements upon the vesting of employee stock compensation.

Net cash provided by financing activities was $15.0 million in the year ended September 30, 2022.

Net cash provided by financing activities for the year ended September 30, 2022 included net borrowing on our credit facility of $42.3 million, partly offset by $18.6 million used for the repurchase of our common stock, including repurchases to satisfy statutory withholding requirements upon the vesting of employee stock compensation.

Additionally, we distributed $7.0 million to noncontrolling interests under operating agreements in connection with certain acquisitions.

Net cash used in financing activities for the year ended September 30, 2024 included $44.0 million used for the repurchase of our common stock, including repurchases to satisfy statutory withholding requirements upon the vesting of employee stock compensation, $32.0 million paid to acquire the 20 percent noncontrolling interest in Bayonet Plumbing, Heating & Air-Conditioning, LLC, and distributions to noncontrolling interests of $16.2 million under operating agreements in connection with certain acquisitions.

Net cash used in financing activities was $105.8 million in the year ended September 30, 2023.

Net cash used in financing activities

for the year ended September 30, 2023 included net repayments on our credit facility of $82.7 million, distributions to noncontrolling

interests of $11.5 million under operating agreements in connection with certain acquisitions, and $8.3 million used for the repurchase

of our common stock, including repurchases to satisfy statutory withholding requirements upon the vesting of employee stock

compensation.

Net cash provided by financing activities was $15.0 million in the year ended September 30, 2022.

For the year ended September 30, 2021, we borrowed a net $40.0 million on our revolving credit facility.

In addition, we used $7.0 million to repurchase our shares under our stock repurchase program, as well as to satisfy statutory withholding requirements upon the vesting of employee stock compensation.

Net cash provided by financing

activities for the year ended September 30, 2022 included net borrowing on our credit facility of $42.3 million, partly offset by $18.6

million used for the repurchase of our common stock, including repurchases to satisfy statutory withholding requirements upon the

vesting of employee stock compensation.

Additionally, we distributed $7.0 million to noncontrolling interests under operating

agreements in connection with certain acquisitions.

CONTROLLING SHAREHOLDER

Tontine Associates, L.L.C.

("Tontine Associates"), together with its affiliates (collectively, "Tontine") is the Company's controlling stockholder, owning approximately 58 percent of the Company’s outstanding common stock based on Amendment No.

27 to the Schedule 13D filed by Tontine with the SEC on September 8, 2023 and the Company's shares outstanding as of November 30, 2023.

("Tontine Associates"), together with its affiliates (collectively, "Tontine") is the Company's controlling stockholder, owning approximately 55 percent of the Company’s outstanding common stock based on a Form 4 filed by Tontine with the SEC on September 16, 2024 and the Company's shares outstanding as of November 18, 2024.

Accordingly, Tontine has the ability to exercise significant control over our affairs, including the election of directors and most actions requiring the approval of shareholders.

We are a party to a sublease agreement with Tontine Associates for corporate office space in Greenwich, Connecticut.

In December 2022, the Company entered into an amendment of the sublease agreement, which was set to terminate on February 28, 2023, to extend the term of the agreement through August 31, 2024 and to increase the monthly payments from approximately $8 thousand to approximately $9 thousand effective March 1, 2023.

The lease has terms at market rates, and payments by the Company are at a rate consistent with that paid by Tontine Associates to its landlord.

The Company is a party to a sublease agreement with Tontine Associates, for corporate office space in Greenwich, Connecticut.

On August 1, 2024, the Company entered into an amendment of the sublease agreement to extend the term of the agreement through September 30, 2025, effective September 1, 2024.

Payments by the Company are at a rate consistent with that paid by Tontine Associates to its landlord.

On December 6, 2018, the Company entered into a Board Observer Letter Agreement (the "Observer Agreement") with Tontine Associates in order to assist Tontine in managing its investment in the Company.

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Revenues from construction contracts are recognized on the percentage-of-completion method.

Revenues recognized on a percentage-of-completion basis, all of which are fixed price or cost plus arrangements, comprised approximately 52% of our total revenue for the year ended September 30, 2023.

Revenues recognized on a percentage-of-completion basis, all of which are fixed price or cost plus arrangements, comprised approximately 55% of our total revenue for the

year ended September 30, 2024.

The percentage-of-completion method for construction contracts is measured principally by the percentage of costs incurred and accrued to date for each contract to the estimated total costs for each contract at completion.

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Also included in this asset, from time to time, are claims and unapproved change orders, which include amounts that we are in the process of collecting from our customers or agencies for changes in contract specifications or design, contract change orders in dispute or unapproved as to scope and price, or other related causes of unanticipated additional contract costs.

Claims and unapproved change orders are recorded at estimated realizable value when collection is probable and can be reasonably estimated.

Variable consideration, including claims and unapproved change orders, is estimated at probability weighted value we expect to receive (or the most probable amount we expect to incur in the case of liquidated damages, if any), utilizing estimation methods that best predict the amount of consideration to which we will be entitled (or will be incurred in the case of liquidated damages, if any).

We do not recognize profits on construction costs incurred in connection with claims.

27 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 7. Management’s Discussion and Analysis