What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-11-21 compared with 2024-11-22 · 129 added, 238 removed, 290 unchanged (56% of the section changed)

11 unchanged sentences

Our performance is affected by a number of trends that drive the demand for our services.

In particular, the markets in which we operate are exposed to many regional and national trends such as the demand for single and multi-family housing, the need for mission critical facilities as a result of technology-driven advancements, capital spending on data centers, distribution centers, and high-tech manufacturing facilities, demand for back-up power, output levels and equipment utilization at heavy industrial facilities, demand for our rail and infrastructure services and custom engineered products, and changes in commercial, institutional, public infrastructure and electric utility spending.

Over the long term, we believe that there are numerous factors that could positively drive demand and affect growth within the industries in which we operate, including (i) population growth, which will increase the need for commercial and residential facilities, (ii) aging public infrastructure, which must be replaced or repaired, (iii) an increasing demand for data storage, and (iv) increased emphasis on environmental and energy efficiency, which may lead to increased public and private spending.

In particular, the markets in which we operate are exposed to many regional and national trends such as the need for mission critical facilities as a result of technology-driven advancements, capital spending on data centers, distribution centers, and high-tech manufacturing facilities, the demand for single and multi-family housing, demand for back-up power, output levels and equipment utilization at heavy industrial facilities, demand for our rail and infrastructure services and custom engineered products, and changes in commercial, institutional, public infrastructure and electric utility spending.

Over the long term, we believe that there are numerous factors that could positively drive demand and affect growth within the industries in which we operate, including (i) an increasing demand for data storage, (ii) population growth, which will increase the need for commercial and residential facilities, (iii) aging public infrastructure, which must be replaced or repaired, and (iv) increased emphasis on environmental and energy efficiency, which may lead to increased public and private spending.

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.

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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 2025 as compared to fiscal 2024.

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.

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

Heading into fiscal 2026, 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.

In our Residential business, we expect the challenges that affected demand for our services in the single-family market throughout fiscal 2025 will continue to affect us going into fiscal 2026, as housing affordability continues to be negatively impacted by elevated mortgage rates and the impact of inflation on materials and labor costs.

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, prolonged elevated borrowing costs for project owners have resulted in a reduction in backlog at September 30, 2025 compared with September 30, 2024.

This is expected to result in lower multi-family revenues in fiscal 2026 as compared with the prior year.

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

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We expect our capital expenditures will range from $110 million to $130 million for the year ending on September 30, 2026.

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.

RESULTS OF OPERATIONS

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Interest and other (income) expense, net (10,356) (0.3) % (3,790) (0.1) % 1,228 0.1 %

Income from operations before income taxes

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

Income from operations before income taxes and equity method investment income 393,885 11.7 % 304,666 10.6 % 158,548 6.7 %

Provision for income taxes 96,805 2.9 % 72,165 2.5 % 38,761 1.6 %

Equity method investment income (14,762) (0.4) % — 0.0 % — 0.0 %

Net income 311,842 9.2 % 232,501 8.1 % 119,787 5.0 %

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2025 Compared to 2024

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.

Consolidated revenues for the year ended September 30, 2025, were $487.1 million higher than for the year ended September 30, 2024, an increase of 16.9%, with increases in our Communications, Infrastructure Solutions and Commercial & Industrial operating segments, partly offset by a decrease in our Residential segment.

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

Our overall gross profit percentage increased to 25.5% during the year September 30, 2025, as compared to 24.2% during the year ended September 30, 2024.

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

Gross profit as a percentage of revenue increased at our Communications, Infrastructure Solutions and Commercial & Industrial operating segments and decreased at our Residential segment.

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

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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, 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 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.

During the year ended September 30, 2025, our selling, general and administrative expenses were $475.0 million, an increase of $78.3 million, or 19.7%, over the year ended September 30, 2024, driven by increased personnel costs and higher incentive compensation across our business as a result of higher earnings, as well as continued investment in the scalability of the business.

Selling, general and administrative expenses as a percentage of revenue were 14.1% for the year ended September 30, 2025 compared to 13.8% for the year ended September 30, 2024.

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.

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.

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

Our overall gross profit percentage increased to 24.2% during the year September 30, 2024, as compared to 18.7% during the year ended September 30, 2023.

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, 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.

Communications

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Selling, general and administrative expenses 98,187 8.6 % 65,752 8.5 %

Gain on sale of assets (89) — % (18) — %

Operating Income 166,505 14.6 % 86,896 11.2 %

Our Communications segment’s revenues increased by $364.2 million, or 46.9%, during the year ended September 30, 2025, compared to the year ended September 30, 2024.

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

Gross Profit.

Our Communications segment’s gross profit during the year ended September 30, 2025, increased $112.0 million, or 73.4%, as compared to the year ended September 30, 2024.

Gross profit as a percentage of revenue increased from 19.7% for the year ended September 30, 2024 to 23.2% for the year ended September 30, 2025.

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 $32.4 million, or 49.3%, during the year ended September 30, 2025, as compared to the year ended September 30, 2024.

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

Selling, general and administrative expenses as a percentage of revenue in the Communications segment were 8.6% during the year ended September 30, 2025, compared to 8.5% for the year ended September 30, 2024.

2024 Compared to 2023

Year Ended September 30,

(Dollars in thousands, Percentage of revenues)

Revenues $ 776,474 100.0 % $ 600,776 100.0 %

Cost of services 623,844 80.3 % 494,964 82.4 %

Gross Profit 152,630 19.7 % 105,812 17.6 %

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

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

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Selling, general and administrative expenses 232,789 17.8 % 228,371 16.4 %

Loss on sale of assets 12 — % 12 — %

Contingent consideration — — % 36 — %

Gain on sale of assets (132) — % (1,354) (0.1) %

Operating Income 103,792 8.0 % 137,347 9.9 %

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.

Our Residential segment’s revenues decreased by $84.5 million, or 6.1%, during the year ended September 30, 2025, as compared to the year ended September 30, 2024.

Revenue in our single-family electrical business decreased by $66.7 million, resulting from a decrease in new housing starts in most of our key markets.

Consumer demand in the single-family housing market was impacted by concerns over housing affordability and general economic conditions, leading to a decline in construction volumes and pressure on pricing for the year ended September 30, 2025.

Multi-family and other revenue decreased by $18.6 million, as the pace of new multi-family projects has been affected by prolonged elevated interest rates.

Revenue in our plumbing and HVAC business decreased by $0.9 million, as the impact of a decrease in housing starts was largely offset by expansion of these trades into new markets.

Gross Profit.

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.

During the year ended September 30, 2025, our Residential segment gross profit decreased by $28.0 million, or 7.7%, as compared to the year ended September 30, 2024, and gross margin as a percentage of revenue decreased to 25.8% during the year

ended September 30, 2025 from 26.2% for the year ended September 30, 2024.

The decrease in profitability was driven primarily by a decline in construction volumes as discussed above and pricing pressures as single-family home builders reduced their pricing in response to weaker demand, and in turn requested price concessions from their suppliers.

Selling, General and Administrative Expenses.

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.

Our Residential segment's selling, general and administrative expenses increased by $4.4 million, or 1.9%, during the year ended September 30, 2025, compared to the year ended September 30, 2024.

The increase was driven primarily increased investment in technology and other resources to support future growth of the business, partly offset by reduced incentive profit sharing for division management resulting from lower earnings.

Selling, general and administrative expenses as a percentage of revenue in the Residential segment increased to 17.8% during the year ended September 30, 2025, from 16.4% during the year ended September 30, 2024 as a decline in overall revenues as discussed above resulted in less absorption of fixed costs.

2024 Compared to 2023

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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.

Infrastructure Solutions

2025 Compared to 2024

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Contingent consideration 1,145 0.2 % 678 0.2 %

Loss on sale of assets 69 — % 20 — %

(Gain) loss on sale of assets 97 — % (184) (0.1) %

Operating Income 118,467 23.8 % 67,465 19.2 %

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.

Revenues in our Infrastructure Solutions segment increased by $147.6 million, or 42.0% during the year ended September 30, 2025 compared to the year ended September 30, 2024.

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

Acquisitions completed during the fiscal year contributed revenues of $15.1 million in the year ended September 30, 2025.

In addition, the year ended September 30, 2025 included a full year of revenue contribution from Greiner Industries, Inc.

(“Greiner”), which was acquired on April 1, 2024, compared to six months of revenue contribution in the year ended September 30, 2024.

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.

Our Infrastructure Solutions segment’s gross profit for the year ended September 30, 2025 increased by $66.2 million, or 62.8%, as compared to the year ended September 30, 2024, 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 34.4% for the year ended September 30, 2025 compared to 30.0% for the year ended September 30, 2024.

Selling, General and Administrative Expenses.

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

Our Infrastructure Solutions segment’s selling, general and administrative expenses during the year ended September 30, 2025, increased $14.4 million, or 38.6%, compared to the year ended September 30, 2024, primarily as a result of increased employee compensation cost to support growth in the business, in part due to acquisitions completed during fiscal 2025, and increased incentive profit sharing resulting from higher earnings.

In addition, the year ended September 30, 2025 included a full year of expenses related to Greiner compared to six months of expenses in the year ended September 30, 2024.

Selling, general and administrative expenses as a percentage of revenue decreased from 10.7% for the year ended September 30, 2024, to 10.4% for the year ended September 30, 2025 as we benefited from the scale of our operations.

2024 Compared to 2023

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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.

We also acquired 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, 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.

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.

5 unchanged sentences

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

Commercial & Industrial

2025 Compared to 2024

1 unchanged sentence

(Dollars in thousands, Percentage of revenues)

Revenues $ 217,353 100.0 % $ 167,113 100.0 %

$ 427,735 100.0 % $ 367,948 100.0 %

Cost of services 340,812 79.7 % 293,741 79.8 %

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Operating Income 47,259 11.0 % 41,396 11.3 %

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.

Revenues in our Commercial & Industrial segment increased $59.8 million, or 16.2%, during the year ended September 30, 2025, compared to the year ended September 30, 2024.

The increase was primarily driven by increased activity in the education and healthcare end markets, continued strong demand and successful execution in the data center end market, and the expansion of one of our operations in the Midwest market.

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 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.

Our Commercial & Industrial segment’s gross profit during the year ended September 30, 2025 increased by $12.7 million, or 17.1%, as compared to the year ended September 30, 2024.

Gross profit as a percentage of revenue was 20.3% for the year ended September 30, 2025 compared to 20.2% for the year ended September 30, 2024.

Segment results in the year ended September 30, 2025 and 2024 benefited from favorable project execution and additions to the original scope of work at favorable margins on large data center projects.

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.

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

Our Commercial & Industrial segment’s selling, general and administrative expenses during the year ended September 30, 2025 increased $6.8 million, or 20.6%, compared to the year ended September 30, 2024.

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

As a percentage of r evenue, s elling, general and administrative expenses increased from 8.9% during the year September 30, 2024 to 9.3% during the year ended September 30, 2025.

2024 Compared to 2023

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(Dollars in thousands, Percentage of revenues)

$ 367,948 100.0 % $ 279,594 100.0 %

Revenues $ 367,948 100.0 % $ 279,594 100.0 %

Cost of services 293,741 79.8 % 248,295 88.8 %

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Gain on sale of assets (114) — % (13,198) (4.7) %

Operating Income (Loss)

41,396 11.3 % 19,272 6.9 %

Operating Income 41,396 11.3 % 19,272 6.9 %

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.

9 unchanged sentences

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.

2023 Compared to 2022

Year Ended September 30,

(Dollars in thousands, Percentage of revenues)

Revenues $ 279,594 100.0 % $ 308,504 100.0 %

Cost of services 248,295 88.8 % 290,314 94.1 %

Gross Profit 31,299 11.2 % 18,190 5.9 %

Selling, general and administrative expenses 25,225 9.0 % 30,557 9.9 %

Gain on sale of assets ( 13,198 ) (4.7) % ( 55 ) — %

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

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, 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, 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

6 unchanged sentences

Interest income (2,925) (4,042) (564)

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

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

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

Other income, net (9,245) (1,086) (1,230)

Total other income, net (12,170) (5,128) (1,794)

Total interest expense and other income, net $ (10,356) $ (3,790) $ 1,228

During the year ended September 30, 2025, we incurred interest expense of $1.8 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 $248.7 million.

The increase in interest expense in the year ended September 30, 2025 compared to the year ended September 30, 2024 was primarily the result of a higher average unused line of credit balance compared to the prior year resulting from an increased maximum revolver amount under the amended credit agreement entered into on January 21, 2025 and increased amortization of capitalized debt issuance costs related to the new amended credit agreement.

Total other income, net of $12.2 million in the year ended September 30, 2025 was primarily the result of interest income of $2.9 million and unrealized gains on investments in trading securities of $7.5 million.

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.

4 unchanged sentences

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.

PROVISION FOR INCOME TAXES

For the year ended September 30, 2025, we recorded income tax expense of $96.8 million, which reflects a higher pretax income than in the year ended September 30, 2024, partially offset by $11.1 million of non-cash tax benefits from the recognition of previously unrecognized tax benefits in fiscal 2025.

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, 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.

WORKING CAPITAL

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During the year ended September 30, 2025, our current assets exclusive of cash increased to $958.3 million, as compared to $770.9 million as of September 30, 2024.

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, 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.

The increase was primarily driven by a $92.5 million increase in accounts receivable including retainage due to higher overall volume of sales and the timing of customer billings and project execution at the end of the year.

Marketable securities also increased by $69.6 million as a portion of our excess cash was invested in trading securities.

In addition, costs and estimated earnings in excess of billings increased by $9.1 million, driven by the timing of contract billings, and inventory increased by $9.8 million primarily due to acquisitions completed during the year ended September 30, 2025.

During the year ended September 30, 2025, our total current liabilities increased by $110.9 million to $633.4 million, compared to $522.6 million as of September 30, 2024, driven by a $93.1 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 a $17.8 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.

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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The Revolving Credit Facility

On April 28, 2022, we entered into a Third Amended and Restated Credit and Security Agreement (the "Amended Credit Agreement"), which increased our maximum borrowing amount from $125 million to $150 million.

The Amended Credit Agreement also removed the aggregate cap on our investments in certain securities and the cap on our ability to make stock repurchases, in each case subject to the satisfaction of certain liquidity requirements.

All other customary affirmative, negative and financial covenants and events of default were unchanged by the amendment.

Borrowings under the Amended Credit Agreement may not exceed a "Borrowing Base,” as defined in the Amended Credit Agreement, determined monthly based on available collateral, primarily certain accounts receivables, inventories, and equipment.

Amounts outstanding bear interest at a per annum rate equal to the Daily Three Month Secured Overnight Financing Rate ("SOFR"), plus an interest rate margin, which is determined quarterly, based on the following thresholds:

Level Thresholds

Interest Rate Margin

I If Liquidity is less than 35% of the Maximum Revolver Amount (each as defined in the Amended Credit Agreement) at any time during the period 2.00 percentage points

II If Liquidity is greater than or equal to 35% of the Maximum Revolver Amount at all times during the period and less than 50% of the Maximum Revolver Amount at any time during the period 1.75 percentage points

III If Liquidity is greater than or equal to 50% of the Maximum Revolver Amount at all times during the period 1.50 percentage points

In addition, we are charged monthly in arrears for (1) an unused commitment fee of 0.25% per annum, (2) a collateral monitoring fee of $5 thousand per quarter, (3) a letter of credit fee based on the then-applicable interest rate margin (4) appraisal fees, costs and expenses and (5) certain other fees and charges as specified in the Amended Credit Agreement.

As of September 30, 2024, we were in compliance with the financial covenants under the Amended Credit Agreement, requiring that we maintain:

• a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement), measured quarterly on a trailing

four-quarter basis at the end of each quarter, of at least 1.1 to 1.0;

• minimum Liquidity of at least 10% of the Maximum Revolver Amount, or $15.0 million;

with, for purposes of this covenant, at least 50% of our Liquidity comprised of Excess Availability (as defined in the Amended Credit Agreement).

At September 30, 2024, our Liquidity was $244.2 million, our Excess Availability was $143.4 million (or greater than 50% of minimum Liquidity), and our Fixed Charge Coverage Ratio was 3.4:1.0.

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;

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).

As defined in the Amended Credit Agreement, EBITDA is calculated as consolidated net income (or loss), less extraordinary gains, interest income, non-operating income and income tax benefits and decreases in any change in LIFO reserves, plus stock compensation expense, non-cash extraordinary losses (including, but not limited to, a non-cash impairment charge or write-down), Interest Expense, income taxes, depreciation and amortization, and increases in any change in LIFO reserves for such period, determined on a consolidated basis in accordance with GAAP.

If in the future our Liquidity falls below $15.0 million (or Excess Availability falls below 50% of our minimum Liquidity), our Fixed Charge Coverage Ratio is less than 1.1:1.0, or if we otherwise fail to perform or otherwise comply with certain of our covenants or other agreements under the Amended Credit Agreement, it would result in an event of default under the Amended Credit Agreement, which could result in some or all of our then-outstanding indebtedness becoming immediately due and payable.

On January 21, 2025, we entered into the Fourth Amended and Restated Credit Agreement (the “Amended Credit Agreement”).

Pursuant to the Amended Credit Agreement, our maximum revolver amount increased from $150 million to $300 million, and the maturity date was extended from September 30, 2026 to January 21, 2030.

In addition, the limitation on borrowings based on available collateral under the previous credit agreement was eliminated under the Amended Credit Agreement.

Under the Amended Credit Agreement, the Company is subject to certain financial covenants including a maximum Consolidated Total Leverage Ratio (as defined in the Amended Credit Agreement) of 3.00 to 1.00 and a minimum Consolidated Interest Coverage Ratio (as defined in the Amended Credit Agreement) of 3.00 to 1.00.

As of September 30, 2025, the Company was in compliance with the financial covenants under the Amended Credit Agreement.

Amounts outstanding bear interest at a rate equal to either (1) the Base Rate (which is the greater of the Federal Funds Rate (as defined in the Amended Credit Agreement) and the Prime Rate (as defined in the Amended Credit Agreement)), (2) the Daily Simple SOFR (as defined in the Amended Credit Agreement) or (3) Term SOFR (as defined in the Amended Credit Agreement), plus, in each case, an interest rate margin, which is determined quarterly based on our Consolidated Total Leverage Ratio, in accordance with the following thresholds:

Pricing Level Consolidated Total Leverage Ratio Interest Margin applicable to Daily Simple SOFR/Term SOFR Interest Margin applicable to Base Rate

Greater than or equal to 2.50 to 1.00

2.25 percentage points 1.25 percentage points

Greater than or equal to 1.75 to 1.00, but less than 2.50 to 1.00 2.00 percentage points 1.00 percentage points

Greater than or equal to 1.00 to 1.00, but less than 1.75 to 1.00

1.75 percentage points 0.75 percentage points

IV Less than 1.00 to 1.00 1.50 percentage points 0.50 percentage points

In addition, we are charged monthly in arrears for an unused commitment fee of 0.25% to 0.35% per annum on any unused portion of the revolving credit facility based on the Company's Consolidated Total Leverage Ratio.

The Amended Credit Agreement restricts certain types of transactions when the Company’s Consolidated Total Leverage Ratio, after giving pro forma effect thereto, exceeds 2.75 to 1.00.

The Amended Credit Agreement continues to contain other customary affirmative and negative covenants as well as events of default.

Under the Amended Credit Agreement, if in the future our Consolidated Total Leverage Ratio is greater than 3.00:1.00, or our Consolidated Interest Coverage Ratio is less than 3.00:1.00, or if we otherwise fail to perform or otherwise comply with certain of our covenants or other agreements under the Amended Credit Agreement, it would result in an event of default under the Amended Credit Agreement, which could result in some or all of our then-outstanding indebtedness becoming immediately due and payable.

At September 30, 2025, we had $5.5 million in outstanding letters of credit and no outstanding borrowings under our revolving credit facility.

From time to time, the Company invests in non-controlling positions in the debt or equity securities of other businesses.

Our Board of Directors has approved an investment policy that, after taking into consideration the liquidity required to support and invest in the Company's operations, permits the Company to invest in marketable securities, including equities and fixed income securities that can be easily bought and sold on a public market, and non-marketable securities, including equity and fixed income investments in private companies as well as private investments in public companies, subject to size limits and required approvals for certain investments.

be easily bought and sold on a public market, and non-marketable securities, including equity and fixed income investments in private companies as well as private investments in public companies, subject to size limits and required approvals for certain investments.

Operating Activities

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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, 2025 compared to the year ended September 30, 2024.

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

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.

Investing Activities

Net cash used in investing activities was $163.7 million for the year ended September 30, 2025, compared to $108.8 million of net cash used in investing activities in the year ended September 30, 2024.

During the year ended September 30, 2025, we had capital expenditures of $67.3 million as we continued to invest in equipment to increase the manufacturing capacity of our Infrastructure Solutions segment's operations, warehouse capacity and equipment for our Communications segment primarily in support of our data center customers, and other capital expenditures to support the growth of our business.

We also paid $52.4 million in conjunction with business combinations.

Additionally, we paid $44.9 million to acquire a membership interest in Jett Texas Company LLC (“Jett”), an investment company, as part of the financing of Jett's investment in the CB&I storage solutions business.

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.

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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 $96.1 million in the year ended September 30, 2025.

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 for the year ended September 30, 2025 included $41.6 million used for the repurchase of our common stock, including repurchases to satisfy statutory withholding requirements upon the vesting of employee stock compensation, $40.0 million paid to acquire the 20 percent noncontrolling interest in Edmonson Electric, LLC, and distributions to noncontrolling interests of $8.6 million.

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

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.

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.

interests of $11.5 million, 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.

CONTROLLING SHAREHOLDER

Tontine Associates, L.L.C.

("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.

("Tontine Associates"), together with its affiliates (collectively, "Tontine") is the Company's controlling stockholder, owning approximately 54 percent of the Company’s outstanding common stock based on a Form 4 and a Schedule 13D/A filed by Tontine with the SEC on September 17, 2025 and the Company's shares outstanding as of November 17, 2025.

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.

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.

On August 1, 2025, the Company entered into an amendment of the sublease agreement to extend the term of the agreement through September 30, 2026.

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

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Subject to the terms and conditions set forth in the Observer Agreement, so long as Tontine has the right to appoint a Board Observer, the Board Observer will have the right to attend and participate in meetings of the Board and the committees thereof, subject to confidentiality requirements, and to receive reimbursement for reasonable out-of-pocket expenses incurred in his or her capacity as a Board Observer and such rights to coverage under the Company’s directors’ and officers’ liability insurance policy as are available to directors.

Gendell was appointed Chief Executive Officer of the Company effective October 1, 2020, having served as the Company's Interim Chief Executive Officer since July 31, 2020.

Gendell also serves as Chairman of the Board of Directors, a position he has held since November 2016.

Gendell was appointed Executive Chairman of the Company effective July 1, 2025 after serving as Chief Executive Officer of the Company from October 1, 2020 to June 30, 2025, and as the Company's Interim Chief Executive Officer from July 31, 2020 to September 30, 2020.

Gendell has also served as a director and as Chairman of the Board of Directors since November 2016.

He is the managing member and founder of Tontine, and the brother of David B.

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Our significant off-balance sheet transactions include letter of credit obligations, firm commitments for materials and surety guarantees.

Some of our customers and vendors may require us to post letters of credit as a means of guaranteeing performance under our contracts and ensuring payment by us to subcontractors and vendors.

If our customer has reasonable cause to effect payment under a letter of credit, we would be required to reimburse our creditor for the letter of credit.

Some of the underwriters of our casualty insurance program require us to post letters of credit as collateral, as is common in the insurance industry.

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These commitments are typically for terms of less than one year and require us to buy minimum quantities of materials at specified intervals at a fixed price over the term.

As of September 30, 2024, we did not have any such firm commitments to purchase materials outstanding.

As of September 30, 2025, we had firm commitments of $13.4 million outstanding under agreements to purchase materials over the next 12 months in the ordinary course of business.

Many of our customers require us to post performance and payment bonds issued by a surety.

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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 55% of our total revenue for the

year ended September 30, 2024.

Revenues recognized on a percentage-of-completion basis, all of which are fixed price or cost plus arrangements, comprised approximately 64% of our total revenue for the year ended September 30, 2025.

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.

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.

Variable consideration, including claims and unapproved change orders, is estimated at either the expected probability weighted value or the most likely amount in a range of possible consideration amounts, 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).

Claims made by us involve negotiation and, in certain cases, litigation.

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To finalize purchase accounting for significant intangible assets and liabilities, we utilize the services of independent valuation specialists to assist in the determination of the fair value.

Valuation Allowance for Deferred Tax Assets.

We regularly evaluate valuation allowances established for deferred tax assets for which future realization is uncertain.

We perform this evaluation quarterly.

The estimation of required valuation allowances includes estimates of future taxable income.

In assessing the realizability of deferred tax assets at September 30, 2024, we concluded, based upon the assessment of positive and negative evidence, that it is more likely than not that the Company will generate sufficient taxable income to realize its $22.5 million of deferred tax assets.

We considered the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

An inability to generate sufficient taxable income in future periods to realize our deferred tax assets may lead to a future need for a valuation allowance and a corresponding reduction in GAAP net income.

In addition, any reduction in the federal statutory tax rate in the future could also cause a reduction in the economic benefit of the deferred tax assets available to us and a corresponding charge to reduce the book value of the deferred tax asset recorded on our Consolidated Balance Sheets.

Income Taxes.

GAAP specifies the methodology by which a company must identify, recognize, measure and disclose in its financial statements the effects of any uncertain tax return reporting positions that it has taken or expects to take.

GAAP requires financial statement reporting of the expected future tax consequences of uncertain tax return reporting positions on the presumption that all relevant tax authorities possess full knowledge of those tax reporting positions, as well as all of the pertinent facts and circumstances, but it prohibits discounting of any of the related tax effects for the time value of money.

The evaluation of a tax position is a two-step process.

The first step is the recognition process to determine if it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authority, based on the technical merits of the position.

The second step is a measurement process whereby a tax position that meets the more likely than not recognition threshold is calculated to determine the amount of benefit/expense to recognize in the financial statements.

The tax position is measured at the largest amount of benefit/expense that is more likely than not of being realized upon ultimate settlement.

The tax years ended September 30, 2021 and forward are subject to federal audit as are prior tax years, to the extent of unutilized net operating losses generated in those years.

We anticipate that approximately $10.8 million in liabilities for unrecognized tax benefits, including accrued interest, may be reversed in the next twelve months.

This reversal is predominantly due to the expiration of the statutes of limitation for unrecognized tax benefits.

New Accounting Pronouncements.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis