What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-11-22 compared with 2023-12-07 · 188 added, 109 removed, 815 unchanged (27% of the section changed)

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated December 7, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 22, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue recognition for certain fixed-price construction contracts

Description of the Matter As described in Notes 2 and 4 to the consolidated financial statements, the Company principally recognizes revenue on construction contracts over time using costs incurred as a percentage of the estimated total costs at completion to determine the extent of progress of performance obligations.

Revenue recognition under this method is subject to judgment as the determination of progress towards completion requires management to prepare estimates of the total project costs to complete.

Auditing management’s estimate of the progress towards completion for certain projects which are structured under fixed-price arrangements, and which are larger in size and longer in duration, was complex and subjective, requiring considerable judgment to evaluate management’s determination of the forecasted costs to complete, specifically as it relates to labor.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s cost estimating process, including controls over management’s review of cost estimates for significant inputs such as labor.

Our audit procedures included, among others, evaluating the appropriate application of the Company’s revenue recognition method;

testing significant assumptions used to develop the estimated cost to complete;

Description of the Matter As described in Notes 2 and 4 to the consolidated financial statements, the Company principally recognizes revenue on construction contracts over time using costs incurred as a percentage of estimated total costs at completion to determine the extent of progress toward satisfying performance obligations.

The extent of progress is applied to the contract transaction price, which may include variable consideration associated with unapproved change orders, customer claims and incentives.

Revenue recognition under this method is subject to judgment as the determination of progress towards completion requires management to prepare estimates of the transaction price and total project costs to complete.

Auditing management’s estimates for certain projects structured under fixed-price arrangements, and which are larger in size and longer in duration, was complex and subjective, requiring considerable judgment to evaluate management’s determination of variable consideration, specifically as it related to the impact of reductions in scope and potential customer claims.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s estimating process, including controls over management’s review of significant inputs and judgments with respect to the measurement of variable consideration.

Our audit procedures included, among others, evaluating appropriate application of the Company’s revenue recognition method;

testing significant assumptions used to develop the estimated transaction price;

and testing the completeness and accuracy of the underlying data.

To assess the reasonableness of management’s estimated costs, we performed audit procedures that included, among others, agreeing the estimates to supporting documentation;

To assess the reasonableness of management’s estimated transaction price, we performed audit procedures that included, among others, agreeing the estimate to supporting documentation;

conducting interviews with project personnel;

attending select project review meetings;

and performing sensitivity analyses or retrospective review using historical actual costs and trends.

and performing retrospective review.

/s/ Ernst & Young LLP

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Houston, Texas

December 7, 2023

November 22, 2024

Report of Independent Registered Public Accounting Firm

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and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2023 and 2022, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended September 30, 2023, and the related notes and our report dated December 7, 2023 expressed an unqualified opinion thereon.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Greiner Industries, Inc., which is included in the 2024 consolidated financial statements of the Company and constituted 6% and 12% of total and net assets, respectively, as of September 30, 2024 and 1% of both revenues and net income for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Greiner Industries, Inc.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2024 and 2023, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended September 30, 2024, and the related notes and our report dated November 22, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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Houston, Texas

December 7, 2023

November 22, 2024

IES HOLDINGS, INC.

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Cash and cash equivalents $ 100,832 $ 75,770

Marketable securities

Accounts receivable:

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Noncontrolling interest 40,996 49,951

COMMITMENTS AND CONTINGENCIES (NOTE 18 )

STOCKHOLDERS’ EQUITY:

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Acquisition of treasury stock — — ( 556,798 ) ( 18,556 ) — — ( 18,556 )

Options exercised — — 9,000 218 ( 165 ) — 53

Non-cash compensation — — — — 3,775 — 3,775

Increase in noncontrolling interest — — — — — ( 4,699 ) ( 4,699 )

Cumulative effect adjustment from adoption of new accounting standard — — — — — ( 214 ) ( 214 )

Net income attributable to IES Holdings, Inc.

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Options exercised

— — 2,500 91 ( 72 ) — 19

Non-cash compensation — — — — 5,517 — 5,517

Change in IES Holdings, Inc.'s ownership interest in consolidated subsidiaries — — — — ( 2,356 ) — ( 2,356 )

Increase in noncontrolling interest — — — — — ( 17,140 ) ( 17,140 )

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Bad debt expense (benefit) 1,481 ( 120 ) 3,141

( 120 ) 3,141 1,216

Deferred financing cost amortization 287 268 199

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Non-cash compensation expense 5,532 4,372 3,775

Deferred income tax expense (benefit) 5,185 ( 31 ) 11,724

Deferred income tax expense (benefit) and other non-cash tax adjustments, net

( 1,126 ) 5,185 ( 31 )

Unrealized gain on trading securities ( 1,789 ) — —

Changes in operating assets and liabilities

Marketable securities

( 33,214 ) — —

Accounts receivable ( 93,507 ) 2,917 ( 87,160 )

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Cash paid in conjunction with equity investments ( 380 ) ( 165 ) ( 500 )

Cash paid in conjunction with business combinations or dispositions — — ( 92,463 )

Cash paid in conjunction with business combinations or dispositions, net of cash acquired

( 67,002 ) — —

Net cash provided by (used in) investing activities ( 108,847 ) 2,770 ( 29,536 )

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Purchase of noncontrolling interest ( 32,000 ) — —

Settlement of contingent consideration liability

( 4,074 ) — —

Distribution to noncontrolling interest ( 16,155 ) ( 11,491 ) ( 7,000 )

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Net cash provided by (used in) financing activities ( 100,495 ) ( 105,750 ) 15,017

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 50,922 1,743 ( 30,472 )

NET INCREASE IN CASH AND CASH EQUIVALENTS

25,062 50,922 1,743

CASH, CASH EQUIVALENTS, beginning of period 75,770 24,848 23,105

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Cash paid for income taxes, net $ 61,614 $ 12,056 $ 3,953

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Property and equipment acquired in exchange for liabilities $ — $ 4,712 $ —

$ 4,712 $ — $ —

Contingent consideration liability assumed in conjunction with business combinations $ 2,790 $ — $ —

The accompanying notes are an integral part of these Consolidated Financial Statements.

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We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Marketable Securities

Marketable securities consist of highly liquid equity securities and debt securities with original maturities over three months.

All of our marketable debt securities are classified as trading securities and mature after one year and before five years at September 30, 2024.

Our marketable securities with readily determinable fair values are carried at fair value, with gains and losses included in Other (income) expense, net on our Consolidated Statements of Comprehensive Income.

Inventories consist of raw materials, work in process, finished goods, and parts and supplies held for use in the ordinary course of business.

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Leasehold improvements are capitalized and depreciated over the lesser of the life of the lease or the estimated useful life of the asset.

Costs associated with software developed or obtained for internal use, including third party

development fees incurred during the application development stage and software licenses, are capitalized and amortized on a straight-line basis over the estimated useful life of the software.

Costs associated with software developed or obtained for internal use, including third party development fees incurred during the application development stage and software licenses, are capitalized and amortized on a straight-line basis over the estimated useful life of the software.

Expenditures for repairs and maintenance are charged to expense when incurred.

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Revisions can also result in claims we might make against the customer to recover additional costs that have not been resolved through change orders with the customer.

We do not recognize revenue or margin based on change orders or claims if it is probable such revenue will be reversed.

We recognize revenue from change orders or claims when recovery of such amounts is probable.

The amount of revenue associated with unapproved change orders and claims was immaterial for the years ended September 30, 2024, 2023 and 2022.

Provisions for total estimated losses on uncompleted contracts are made in the period in which such losses are determined.

Provisions for total estimated losses on uncompleted contracts are

made in the period in which such losses are determined.

The balances billed but not paid by customers pursuant to retainage provisions in project contracts are typically due upon completion of the contracts and acceptance by the customer.

Based on our experience, the retention balance at each balance sheet date will be collected within the subsequent fiscal year.

Certain divisions in the Residential and Infrastructure Solutions segments recognize revenue at the completion of the contract ("completed contract") under the right to invoice practical expedient because the duration of their contracts is short in nature.

Certain divisions in our operating segments recognize revenue at the completion of the contract ("completed contract") under the right to invoice practical expedient because the duration of their contracts is short in nature.

We recognize revenue on completed contracts when the project is complete and billable to the customer.

Accounts Receivable and Allowance for Credit Losses

As described below under “Accounting Standards Recently Adopted”, we adopted the new accounting standard for measuring credit losses effective October 1, 2020.

We record accounts receivable for all amounts billed and not collected and amounts for which we have an unconditional right to bill our customers.

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Fair Value of Financial Instruments

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and a loan agreement.

Our financial instruments consist of cash and cash equivalents, marketable securities, accounts receivable, accounts payable, and a loan agreement.

We believe that the carrying value of financial instruments approximates their fair value due to their short-term nature.

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Noncontrolling Interest

In connection with our acquisitions of Edmonson Electric, LLC (“Edmonson”) and Bayonet Plumbing, Heating & Air-Conditioning, LLC (“Bayonet”) in fiscal 2021, NEXT Electric, LLC (“NEXT”) in fiscal 2017, and STR Mechanical, LLC (“STR”) in fiscal 2016, we acquired an 80 percent interest in each of the entities, with the remaining 20 percent interest in each such entity being retained by

the respective third party sellers.

In connection with our acquisitions of Edmonson Electric, LLC (“Edmonson”) and Bayonet Plumbing, Heating & Air-Conditioning, LLC (“Bayonet”) in fiscal 2021, and NEXT Electric, LLC (“NEXT”) in fiscal 2017, we acquired an 80 percent interest in each of the entities, with the remaining 20 percent interest in each such entity being retained by the respective third party sellers.

The interests retained by those third party sellers are identified on our Consolidated Balance Sheets as noncontrolling interest, classified outside of permanent equity.

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Therefore, this noncontrolling interest is carried at the greater of the balance determined under Accounting Standards Codification (“ASC”) 810 and the redemption amounts assuming the noncontrolling interests were redeemable at the balance sheet date.

During the year ended September 30, 2021, we acquired the noncontrolling interest in STR for $ 1,188 .

We sold 100 % of our interests in STR in October 2022.

On June 28, 2024, we purchased the remaining 20 percent noncontrolling interest in Bayonet for $32,000.

As we retained our controlling interest in Bayonet, the change in ownership interest was accounted for as an equity transaction.

The difference between the balance of the noncontrolling interest at the date of redemption of the remaining interests and the consideration paid was recognized in Additional Paid-In Capital in the accompanying Consolidated Balance Sheets and was not reflected in earnings.

If all of the noncontrolling interests remaining outstanding at September 30, 2024 had been redeemable at that date, the redemption amount would have been $ 40,996 .

For the year ended September 30, 2023, we recorded a decrease to Retained Earnings of $ 15,701 to increase the carrying amount of noncontrolling interest in NEXT, Edmonson and Bayonet to their redemption amounts.

For the year ended September 30, 2022, we recorded a decrease to Retained Earnings of $ 4,699 to increase the carrying amount of noncontrolling interest in NEXT and Edmonson to their redemption amounts.

The activity in redeemable noncontrolling interest is summarized in the table below.

Year Ended September 30,

2024 2023 2022

Balance at beginning of period $ 49,951 $ 29,193 $ 24,594

Net income attributable to noncontrolling interests 13,385 11,499 5,424

Distributions to noncontrolling interests ( 16,155 ) ( 11,491 ) ( 7,000 )

Adjustments to record noncontrolling interests at redemption value 22,695 20,750 6,175

Adjustment to record noncontrolling interests at value of consideration paid to acquire ownership interest 3,120 — —

Purchase of ownership interest from noncontrolling interests ( 32,000 ) — —

Balance at end of period $ 40,996 $ 49,951 $ 29,193

We enter into various contractual arrangements for the right to use facilities, vehicles and equipment.

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Accounting Standards Recently Adopted

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update No.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”).

This standard amends the existing guidance under ASC 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations.

Under this standard, the acquirer of a business is expected to recognize and measure acquired contract assets and contract liabilities as if the acquirer entered into the original contract on the same date with the same terms in accordance with ASC 606 rather than at fair value on the date of acquisition.

This update is effective for fiscal years beginning after December 15, 2022 and for interim periods within that year.

We adopted this standard on October 1, 2023 using the prospective method.

ASU 2021-08 impacts how we account for business combinations completed after its adoption.

In December 2019, the FASB issued Accounting Standard Update No.

2019-12, “Income Taxes (Topic 740):

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We adopted this standard on October 1, 2021 with immaterial impact on our Consolidated Financial Statements.

In June 2016, FASB issued Accounting Standard Update No.

2016-13, Financial Instruments – Credit Losses (“ASU 2016-13”), which requires companies to consider historical experiences, current market conditions and reasonable and supportable forecasts in the measurement of expected credit losses, with further clarifications made in April 2019 and May 2019 with the issuances of Accounting Standard Updates No.

2019-04 and 2019-05.

This update is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years.

We adopted this standard on October 1, 2020, using a modified retrospective transition method through a cumulative-effect adjustment to beginning retained earnings in the period of adoption.

As a result, we recorded an increase in the Allowance for Credit Losses of $ 284 , an increase to Deferred Tax Assets of $ 70 , and a decrease to Retained Earnings of $ 214 .

Recent Accounting Pronouncements and Disclosure Rules Not Yet Adopted

In December 2023, the FASB issued Accounting Standard Update No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

This standard requires more detailed disclosure within the tax rate reconciliation table, as well as additional information about cash taxes paid.

This update is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

We are evaluating the impact this update will have on our annual disclosures;

however, it will not impact our financial condition, results of operations, or cash flows.

In November 2023, the FASB issued Accounting Standard Update No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

This standard requires disclosure of significant segment expenses, other segment items, and additional information about the chief operating decision maker (“CODM”).

This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted, and retrospective application is required.

We are evaluating the impact this update will have on our annual disclosures;

however, it will not impact our financial condition, results of operations, or cash flows.

In November 2024, the FASB issued Accounting Standard Update No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”).

This standard requires additional disclosures over certain expenses, including purchases of inventory, employee compensation, depreciation, intangible asset amortization, and other specific expense categories.

This standard also requires disclosure of the total amount of selling expenses and the Company's definition of selling expenses.

This update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

We are evaluating the impact this update will have on our annual disclosures;

however, it will not impact our financial condition, results of operations, or cash flows.

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.

While Tontine is subject to certain restrictions under federal securities laws on sales of its shares as an affiliate, the Company has filed a shelf registration statement to register all of the shares of IES common stock owned by Tontine at the time of registration.

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

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

While Tontine is subject to certain restrictions under federal securities laws on sales of its shares as an affiliate, the Company has filed a resale shelf registration statement to register for resale a majority of the shares of IES common stock owned by Tontine.

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

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

A change of control 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.

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Gendell was an employee of Tontine from 2004 until January 2018.

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

The Company is 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 to approximately $9 effective March 1, 2023.

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.

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We recognize revenue over time for the majority of the services we perform, other than the Residential Single-family and Infrastructure Solutions Industrial Services businesses, as (i) control continuously transfers to the customer as work progresses at a project location controlled by the customer and (ii) we have the right to bill the customer as costs are incurred.

Within our Infrastructure Solutions Custom Power Solutions business, we often perform work inside our own facilities, where control does not continuously transfer to the customer as work progresses.

Within our Infrastructure Solutions Custom Engineered Solutions business, we often perform work inside our own facilities, where control does not continuously transfer to the customer as work progresses.

In such cases, we evaluate whether the work performed creates an asset with alternative use to the Company and whether we have the right to bill the customer as costs are incurred.

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If we do not have such a right, we recognize revenue upon completion of the contract, when control of the work transfers to the customer.

For arrangements where we recognize revenue over time, we use the percentage of completion method of accounting under which revenue recognized is measured principally by the costs incurred and accrued to date for each contract as a percentage of the estimated total cost for each contract at completion.

For arrangements where we recognize revenue over time, we generally use the percentage of completion method of accounting under which revenue recognized is measured principally by the costs incurred and accrued to date for each contract as a percentage of the

estimated total cost for each contract at completion.

Contract costs include all direct material, labor and indirect costs related to contract performance.

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This measurement and comparison process requires updates to the estimate of total costs to complete the contract, and these updates may include subjective assessments and judgments.

Revenue for arrangements whose durations are short in nature is recognized when the project is complete and billable to the customer under the right to invoice practical expedient.

Variable Consideration

The transaction price for our contracts may include variable consideration, which includes changes to transaction price for approved and unapproved change orders, claims and incentives.

Change orders, claims and incentives are generally not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation.

We estimate variable consideration for a performance obligation at the 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 estimate variable consideration at the 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 include variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved.

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We disaggregate our revenue from contracts with customers by activity and contract type, as these categories reflect how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

During the year ended September 30, 2024, we began to disaggregate the revenue from our Residential operating segment's single-family electrical and single-family plumbing & HVAC businesses, which was aggregated under our Residential single-family business in prior periods, to provide more detail about the major product lines significant to our Residential business.

Our consolidated revenue for the years ended September 30, 2024, 2023 and 2022 was derived from the following activities.

Prior period amounts have been reclassified to conform with the current period presentation, where applicable.

See details in the following tables:

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Communications $ 776,474 $ 600,776 $ 559,777

Single-family 961,271 825,505 454,449

Single-family Electrical 732,334 717,386 660,602

Single-family Plumbing & HVAC 324,911 243,885 164,903

Multi-family and Other 331,595 318,233 305,909

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Industrial Services 53,291 46,091 65,686

Custom Power Solutions 171,262 101,427 102,553

Custom Engineered Solutions 297,805 171,262 101,427

Total Infrastructure Solutions 351,096 217,353 167,113

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Amounts by which cumulative contract revenue recognized on a contract as of a given date exceeds cumulative billings and unbilled receivables to the customer under the contract are reflected as a current asset in our Consolidated Balance Sheets under the caption “Costs and estimated earnings in excess of billings”.

Amounts by which cumulative billings to the customer under a contract as of a given date exceed cumulative contract revenue recognized are reflected as

a current liability in our Consolidated Balance Sheets under the caption “Billings in excess of costs and estimated earnings”.

Amounts by which cumulative billings to the customer under a contract as of a given date exceed cumulative contract revenue recognized are reflected as a current liability in our Consolidated Balance Sheets under the caption “Billings in excess of costs and estimated earnings”.

During the years ended September 30, 2024 and 2023, we recognized revenue of $ 98,564 and $ 82,520 related to our contract liabilities at October 1, 2023 and 2022, respectively.

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Furniture and fixtures 5 - 7 2,976 2,507

Construction in progress 6,578 1,367

Property and equipment, gross $ 207,583 $ 122,103

Less-Accumulated depreciation ( 73,386 ) ( 58,693 )

Construction in progress 1,367 539

Property and equipment, net $ 134,197 $ 63,410

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Current operating lease liabilities 21,981 19,496

Income taxes payable

22,778 10,414

Other accrued expenses 41,819 29,903

$ 363,582 $ 296,797

Other non-current assets are comprised of the following:

September 30,

Executive Savings Plan assets $ 783 $ 706

Securities and equity investments 675 2,447

Right of use asset - finance leases 12,344 10,246

Other 2,345 1,746

Total $ 16,147 $ 15,145

Debt consists of the following:

Year Ended September 30,

Revolving loan (long-term debt) $ — $ 82,659

Debt issuance costs

Total debt $ — $ 81,628

At September 30, 2023, we had no outstanding borrowings, $ 4,166 in outstanding letters of credit and $ 142,761 of availability under our revolving credit facility.

We had no outstanding borrowings as of September 30, 2024 or 2023.

At September 30, 2024, we had $ 4,756 in outstanding letters of credit and $ 143,381 of availability under our revolving credit facility.

Any amounts outstanding under our revolving credit facility are due and payable in September 2026, upon expiration of our revolving credit facility, and all amounts described as available are available without triggering our financial covenants under the Amended Credit Agreement (as defined below).

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Current operating lease liabilities were $ 21,981 and $ 19,496 , respectively, as of September 30, 2024 and 2023, and current finance lease liabilities were $ 4,563 and $ 4,301 , respectively, as of September 30, 2024 and 2023.

Current operating and finance lease liabilities were included in " Accounts payable and accrued expenses " in the Consolidated Balance Sheets as of September 30, 2023 and 2022.

Current operating and finance lease

liabilities were included in " Accounts payable and accrued expenses " in the Consolidated Balance Sheets as of September 30, 2024 and 2023.

Non-current finance lease liabilities and finance lease right-of-use assets were included in the " Other non-current liabilities " and " Other non-current assets ", respectively, in the Consolidated Balance Sheets.

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Various reserves 2,073 1,718

Equity losses in affiliate — 125

Intangible assets 390 —

Share-based compensation 1,364 1,298

Capital loss carryforward — 82

Lease asset 15,630 14,207

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Net deferred income tax assets $ 22,458 $ 20,383

In fiscal 2023 and 2022, the valuation allowance on our deferred tax assets decreased by $ 52 and increased by $ 283 , respectively, which is included in “Provision for income taxes” in our Consolidated Statements of Comprehensive Income.

In fiscal 2024 and 2023, the valuation allowance on our deferred tax assets increased by $ 138 and decreased by $ 52 , respectively, which is included in “Provision for income taxes” in our Consolidated Statements of Comprehensive Income.

As of September 30, 2024, we had available approximately $ 4,493 of federal net tax operating loss carry forward for federal income tax purposes.

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Communications, Residential, Infrastructure Solutions and Commercial & Industrial.

These segments are reflective of how the Company’s Chief Operating Decision Maker (“CODM”) reviews operating results for the purposes of allocating resources and assessing performance.

These segments are reflective of how the Company’s CODM reviews operating results for the purposes of allocating resources and assessing performance.

The Company’s CODM is its Chief Executive Officer.

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Contingent consideration — 36 678 — — 714

Loss (gain) on sale of assets 12 69 ( 1,029 ) ( 13,198 ) 7 ( 14,139 )

Gain on sale of assets ( 18 ) ( 1,354 ) ( 184 ) ( 114 ) ( 14 ) ( 1,684 )

Income (loss) from operations $ 86,896 $ 137,347 $ 67,465 $ 41,396 $ ( 32,228 ) $ 300,876

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In December 2022, our Board of Directors terminated our previous stock repurchase program and authorized a new $ 40,000 stock repurchase program.

Share purchases are made for cash in open market

transactions at prevailing market prices or in privately negotiated transactions or otherwise.

On July 31, 2024, the Board authorized a new $ 200,000 stock repurchase program after the $ 40,000 stock repurchase program was fully utilized.

Share purchases are made for cash

in open market transactions at prevailing market prices or in privately negotiated transactions or otherwise.

The timing and amount of purchases under the program are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

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During the year ended September 30, 2024, we issued 104,600 shares of treasury stock to employees and repurchased 40,308 shares of common stock from our employees to satisfy statutory tax withholding requirements upon the vesting of certain performance phantom stock units under the Equity Incentive Plan.

We also repurchased 224,013 shares of common stock on the open market pursuant to our stock repurchase program, and 266 shares were forfeited by former employees and returned to treasury stock.

During the year ended September 30, 2023, we issued 3,000 unrestricted shares to satisfy the exercise of outstanding options.

During the year ended September 30, 2022, we issued 157,167 shares of treasury stock to employees and repurchased 45,198 shares of common stock from our employees to satisfy statutory tax withholding requirements upon the vesting of certain performance phantom stock units under the Equity Incentive Plan.

We also repurchased 289,284 shares of common stock on the open market pursuant to our stock repurchase program.

During the year ended September 30, 2024, we issued 2,500 shares of treasury stock to satisfy the exercise of outstanding options, of which 56 shares were repurchased to pay the exercise price of options.

We had no outstanding unexercised stock options remaining as of September 30, 2024.

During the year ended September 30, 2023, we issued 105,755 shares of treasury stock to employees and repurchased 32,158 shares of common stock from our employees to satisfy statutory tax withholding requirements upon the vesting of certain performance phantom stock units under the Equity Incentive Plan.

We also repurchased 224,013 shares of common stock on the open market pursuant to our stock repurchase program, and 266 shares of restricted stock awards were forfeited by former employees and returned to treasury stock.

During the year ended September 30, 2023, we issued 3,000 unrestricted shares to satisfy the exercise of outstanding options.

Restricted Stock

We did not have any unvested restricted stock awards outstanding or related activity during the year ended September 30, 2024.

A summary of restricted stock awards for the years ended September 30, 2023 and 2022 is provided in the table below:

Year Ended September 30,

2023 2022 2021

Unvested at beginning of year 13,639 16,757

Granted — — —

Vested ( 13,373 ) ( 3,118 )

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Fair value was calculated as the number of shares vested times the market price of shares on the date of vesting.

At September 30, 2023, we did not have any remaining unvested restricted stock awards or related unamortized compensation cost.

All the restricted shares granted under the Equity Incentive Plan (vested or unvested) participate in dividends issued to common shareholders, if any.

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Depending on the terms of each grant, Employee PSUs may vest upon the achievement of certain specified performance objectives and continued performance of services, or may vest based on continued performance of services through the vesting date.

As of September 30, 2022, the Company had outstanding Employee PSUs, which, subject to the achievement of certain performance metrics, could have resulted in the issuance of 315,961 shares of common stock.

During the year ended September 30, 2023, 13,583 Employee PSUs were forfeited and 105,755 vested, and the Company granted additional Employee PSUs, which, subject to the achievement of certain performance metrics, could result in the issuance of 129,189 shares of common stock.

As of September 30, 2023, a maximum of 325,813 shares of common stock may be issued under outstanding Employee PSUs.

The vesting of these awards is subject to either the achievement of specified levels of cumulative net income before taxes (a performance condition) or specified stock price levels (a market condition) and continued performance of services, or based on continued performance of services through the vesting date alone.

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At September 30, 2024, it is deemed probable that the portion of the awards that vest based on performance conditions will vest.

A summary of Employee PSU activity for the year ended September 30, 2024, which are subject to the achievement of certain performance metrics, is provided in the table below:

Unvested at September 30, 2023

Granted 86,563

Vested ( 99,579 )

Forfeited ( 12,496 )

Unvested at September 30 , 2024

A summary of the compensation expense related to our stock awards recognized during the years ended September 30, 2024, 2023 and 2022 is provided in the table below:

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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.

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Fair value is considered the price to sell an asset, or transfer a liability, between market participants on the measurement date.

Fair value measurements assume that (1) the asset or liability is exchanged in an orderly manner, (2) the exchange is in the principal market for that asset or liability, and (3) the market participants are independent, knowledgeable, able and willing to transact an

Fair value accounting and reporting establishes a framework for measuring fair value by creating a hierarchy for observable independent market inputs and unobservable market assumptions and expands disclosures about fair value measurements.

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The use of different market assumptions and/or estimation methods could have a material effect on the estimated fair value.

At September 30, 2023, financial assets and liabilities measured at fair value on a recurring basis were limited to our Executive Savings Plan, under which certain employees are permitted to defer a portion of their base salary and/or bonus for a Plan Year (as defined in the plan), equity securities held for sale, and contingent consideration liabilities related to certain of our acquisitions.

Financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and 2022, are summarized in the following tables by the type of inputs applicable to the fair value measurements:

At September 30, 2024, financial assets and liabilities measured at fair value on a recurring basis were limited to investments in equity securities and debt securities classified as trading securities, our Executive Savings Plan, under which certain employees are permitted to defer a portion of their base salary and/or bonus for a Plan Year (as defined in the plan), and contingent consideration liabilities related to certain of our acquisitions.

Financial assets (liabilities) measured at fair value on a recurring basis as of September 30, 2024 and 2023, are summarized in the following tables by the type of inputs applicable to the fair value measurements:

September 30 , 2024

Total Fair Value Quoted Prices (Level 1) Significant Unobservable (Level 3)

Equity securities $ 31,639 $ 31,639 $ —

Debt securities classified as trading securities 3,364 3,364 —

Executive savings plan assets 986 986 —

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Contingent consideration liability ( 3,468 ) — ( 3,468 )

Total $ 31,669 $ 35,137 $ ( 3,468 )

September 30, 2023

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Executive savings plan assets $ 783 $ 783 $ —

Equity securities 1,937 $ 1,937 —

Executive savings plan liabilities ( 657 ) ( 657 ) —

Contingent consideration liability ( 4,465 ) — ( 4,465 )

In fiscal year 2021, we entered into a contingent consideration arrangement related to the acquisition of Bayonet.

At September 30, 2023, we estimated the fair value of this contingent consideration liability at $ 4,465 .

Total $ ( 4,339 ) $ 126 $ ( 4,465 )

Investments in equity securities and debt securities, all of which are classified as trading securities and mature after one year and before five years at September 30, 2024, were included in “Marketable securities” in our Consolidated Balance Sheets.

Gains and losses to measure our investments in equity and debt securities at fair value were included in Other (income) expense, net in our Consolidated Statements of Comprehensive Income.

Our unrealized net gains (losses), which are calculated as total net gains (losses) recognized during the period less net gains (losses) recognized on securities sold during the period, were as follows:

Year Ended September 30,

2024 2023 2022

Unrealized gain on equity securities $ 1,492 $ — $ —

Unrealized gain on debt securities 297 — —

Total unrealized gain on trading securities $ 1,789 $ — $ —

On April 1, 2024 , we entered into a contingent consideration arrangement valued at $ 2,790 in connection with the acquisition of Greiner Industries, Inc.

For more information, refer to Note 19, “Business Combinations and Divestitures.” The contingent consideration obligation related to Bayonet, which was acquired in fiscal year 2021, was settled in cash for $ 4,500 in December 2023.

Net adjustments to fair value of such liabilities were included in Contingent consideration in our Consolidated Statements of Comprehensive Income.

The table below presents the fair value of this obligation, which used significant unobservable inputs (Level 3).

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Fair value at September 30, 2023 $ ( 4,465 )

Acquisitions ( 2,790 )

Net adjustments to fair value ( 713 )

Settlements 4,500

Fair value at September 30, 2024 $ ( 3,468 )

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GOODWILL AND INTANGIBLE ASSETS

The following summarizes the carrying value of goodwill by segment at September 30, 2023, which was unchanged during the years ended September 30, 2023 and 2022:

The following summarizes changes in the carrying value of goodwill by segment during the year ended September 30, 2024.

The carrying value of goodwill was unchanged during the year ended September 30, 2023.

Communications Residential Infrastructure Solutions Commercial & Industrial Total

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2,816 51,370 38,209 — 92,395

Acquisitions (Note 19) — — 1,565 — 1,565

Balance at September 30, 2024

$ 2,816 $ 51,370 $ 39,774 $ — $ 93,960

Based on the results of our annual goodwill impairment assessment at September 30, 2024, we concluded the fair value of each of our reporting units exceeded its book value, and therefore we recorded no impairment charges for the year ended September 30, 2024.

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Customer relationships 1 - 15 92,796 ( 54,478 ) 38,318

Non-competition arrangements 5 40 ( 40 ) —

Backlog and construction contracts 1 - 2 750 ( 214 ) 536

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In the course of performing work as a subcontractor, from time to time we may be involved in projects which are the subject of contractual disputes between the general contractor and project owner, or between us and the general contractor.

In such cases, payment of amounts owed to us by the general contractor may be delayed as contractual disputes are resolved through mediation, arbitration, or litigation.

In such cases,

payment of amounts owed to us by the general contractor may be delayed as contractual disputes are resolved through mediation, arbitration, or litigation.

Such disputes may cause us to incur legal fees and other expenses to enforce our contractual rights, and we may not prevail in recovering all amounts to which we believe we are contractually entitled.

At September 30, 2022, we had an aggregate $ 10,451 of trade accounts receivable, against which we had recorded a reserve of $ 3,095 , where payment had been delayed as a result of contractual disputes between the general contractor and project owner on certain projects.

All of these disputes were settled during the year ended September 30, 2023, and none of these receivables or associated reserves remained outstanding at September 30, 2023.

Risk Management

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We are also subject to construction defect liabilities, primarily within our Residential segment.

Because these accruals are based on judgment and estimates, and involve variables that are inherently uncertain, such as the outcome of litigation and an assessment of insurance coverage, there can be no assurance that the ultimate liability will not be higher or lower than such estimates or that the timing of payments will not create liquidity issues for the Company.

Some of the underwriters of our casualty insurance program require us to post letters of credit as collateral.

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BUSINESS COMBINATIONS AND DIVESTITURES

Business combinations

On April 1, 2024 , the Company acquired 100 % of the equity interests of Greiner Industries, Inc.

("Greiner"), a Mount Joy, Pennsylvania-based structural steel fabrication and services company for an aggregate total purchase price of $ 70,334 .

Greiner is part of our Infrastructure Solutions segment and continues to operate under the Greiner name.

The acquisition of Greiner expands our geographic footprint, adds custom structural steel fabrication to our product offerings, and provides additional capacity for our existing custom engineered product offerings.

In addition to cash consideration, net of cash acquired, of $ 67,544 , the aggregate purchase price also includes contingent consideration of up to $ 5,000 upon achievement of certain future earnings targets, which was valued at $ 2,790 as of the date of the acquisition.

The fair value of the total consideration for this transaction remains subject to post-closing adjustments as of the date of this Annual Report on Form 10-K.

The Company accounted for the transaction under the acquisition method of accounting, which requires recording assets and liabilities at fair value (Level 3).

The total purchase price, and the allocation thereof to the assets acquired and liabilities assumed, is preliminary and subject to change pending the finalization of post-closing working capital adjustments.

The preliminary valuation of the assets acquired and liabilities assumed is as follows:

Trade receivables

Other current assets

Property and equipment 48,209

Intangible assets 2,900

Goodwill 1,565

Current liabilities ( 6,426 )

Net assets acquired $ 70,334

In connection with this acquisition, we acquired goodwill of $ 1,565 , all of which is tax deductible, attributable to an assembled workforce and other intangibles that do not qualify for separate recognition.

The intangible assets acquired primarily consisted of customer relationships, backlog and trade name with a total weighted-average amortization period of 3.5 years.

Greiner contributed $ 34,038 in revenue and $ 2,489 in operating income during the year ended September 30 , 2024 .

We completed no acquisitions in fiscal years 2023 and 2022.

We completed four acquisitions in fiscal year 2021 for total aggregate cash consideration of $ 92,463 .

In November 2020, we acquired both Wedlake Fabricating, Inc., a Tulsa, Oklahoma-based manufacturer of custom generator enclosures that are primarily used by data centers and large commercial and industrial facilities, and K.E.P.

Electric, Inc., a Batavia, Ohio-based electrical contractor specializing in the design and installation of electrical systems for single-family housing and multi-family developments.

In December 2020, we acquired an 80% interest in Bayonet Plumbing, Heating & Air-Conditioning, LLC, a Hudson, Florida-based provider of residential heating, ventilation and air conditioning ("HVAC") and plumbing installation and maintenance services.

In May 2021, we acquired an 80% ownership interest in Edmonson Electric, LLC, a Land O'Lakes, Florida-based provider of residential electric, low voltage, and HVAC installation services.

Total aggregate cash consideration for these acquisitions was $ 92,463 , of which $ 10,916 was paid into escrow pending discharge of the acquired companies' indebtedness under the Paycheck Protection Program (the "PPP") established by the Coronavirus Aid, Relief, and Economic Security Act and implemented by the U.S.

Small Business Administration.

Loans made under the PPP are eligible to be forgiven if certain criteria are met.

During the year ended September 30, 2021, all PPP loans were forgiven, and escrow payments were distributed to the respective sellers.

In addition to the cash consideration, the purchase price included contingent consideration with respect to the acquisition of Bayonet of up to $ 4,500 due in December 2023.

Amounts to be paid are contingent on earnings achieved over a three year period, and accrue interest on the $ 4,500 at a rate of 3%, paid quarterly.

This contingent liability was valued at $ 4,074 as of the date of the acquisition.

On October 7, 2022, we sold 100 % of the membership interests of STR Mechanical, LLC and its subsidiary Technical Services II, LLC (collectively, “STR”).

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The disposition of STR, which had operated as part of our Commercial & Industrial segment, will not have a material impact on our ongoing results of operations or financial position.

SUBSEQUENT EVENTS

On October 4, 2024 , we entered into a funding commitment to join a consortium led by Mason Capital Management LLC to acquire the CB&I storage solutions business, a designer and builder of storage facilities, tanks and terminals for energy and industrial markets, from McDermott International, Ltd.

Upon close of the transaction, which we expect to occur by the end of calendar year 2024, we expect to make a cash payment of approximately $ 45 million, subject to customary closing adjustments.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data