5 unchanged sentences
Generally, it is difficult to predict whether and when we will be awarded a new contract due to lengthy and complex bidding and selection processes, changes in existing or forecasted market conditions, customers' access to financing, governmental regulations, permitting and environmental matters.
−Removed: Because our revenue are derived from contract awards, our results of operations and cash flows can fluctuate materially from period to period.
+Added: Because our revenue is derived from contract awards, our results of operations and cash flows can fluctuate materially from period to period.
The uncertainty associated with the timing of contract awards may reduce our short-term profitability as we balance our current capacity with expectations of future contract awards.
6 unchanged sentences
The availability of engineering and construction projects is dependent upon economic conditions and the outlook for renewable energy, hydrogen, natural gas, oil, petrochemical, industrial, and power industries, and specifically, the level of capital expenditures on energy infrastructure.
+Added: Additionally, we expect our customers to benefit from bills such as the Infrastructure Investment and Jobs Act and the Inflation Reduction Act.
+Added: While spending and stimulus bills are expected to provide funding in many of the markets in which we operate, we may not be able to obtain the expected benefits from these bills or similar bills in the future.
Our failure to obtain projects, the delay of project awards, the cancellation of projects or delays in the execution of contracts has resulted and may continue to result in under-utilization of our resources, which could adversely impact our revenue, margins, operating results and cash flow.
13 unchanged sentences
The extent to which we utilize our workforce affects our profitability.
−Removed: If we under utilize our workforce, our project gross margins and overall profitability suffer in the short-term.
+Added: If we under utilize our workforce, our gross margins and overall profitability suffer in the short-term.
If we over utilize our workforce, we may negatively impact safety, employee satisfaction and project execution.
21 unchanged sentences
One or more customers have in the past and may in the future contribute a material portion of our revenue in any one year.
−Removed: Because these significant customers generally contract with us for specific projects or for specific periods of time, we may lose these customers from year to year as the projects or maintenance contracts are completed.
+Added: Because these significant customers generally contract with us for specific projects or for specific periods of time, we may lose
+Added: these customers from year to year as the projects or maintenance contracts are completed.
The loss of business from any one of these customers could have a material adverse effect on our business or results of operations.
28 unchanged sentences
These difficult conditions may also cause us to incur additional, unanticipated costs that we might not be able to pass on to our customers.
−Removed: We are susceptible to severe weather conditions as a result of climate change or otherwise, which may harm our business and financial results.
+Added: We are susceptible to severe weather conditions, including those caused by climate change or otherwise, which may harm our business and financial results.
Our business may be adversely affected by severe weather in areas where we have significant operations.
11 unchanged sentences
Following the onset of the pandemic and with the ongoing conflict between Ukraine and Russia in Europe, there has been a high degree of volatility in commodity and energy markets that affect our client's businesses.
−Removed: In addition, inflation in the United States has reached multi-decade highs and has been increasing since the beginning of the fiscal year.
+Added: In addition, inflation in the United States has reached multi-decade highs.
In some cases we have had to bid more competitively than before to win work, which has compressed margins somewhat given the higher inflation.
18 unchanged sentences
Under the terms of our contracts, at times we commit resources to customer projects prior to receiving payments from customers in amounts sufficient to cover expenditures on these projects as they are incurred.
−Removed: Many of our fixed-price or cost-plus contracts require us to satisfy specified progress milestones or performance standards in order to receive a payment.
+Added: Many of our fixed-price or cost-
+Added: plus contracts require us to satisfy specified progress milestones or performance standards in order to receive a payment.
Under these types of arrangements, we may incur significant costs for labor, equipment and supplies prior to receipt of payment.
28 unchanged sentences
We strengthened our identity and access management capabilities by requiring multi-factor authentication, increased the threat detection efficiencies within our security information and event management capacity, and completed projects designed to reduce our organization's external attack surface.
−Removed: In addition, in the area of security awareness
−Removed: and training, we have updated our foundational curriculum, established mandatory recurring training requirements, and commenced periodic phishing campaign assessments.
+Added: In addition, in the area of security awareness and training, we have updated our foundational curriculum, established mandatory recurring training requirements, and commenced periodic phishing campaign assessments.
We rely on internally and externally developed software applications and systems to support critical functions including project management, estimating, scheduling, human resources, accounting, and financial reporting.
8 unchanged sentences
The borrowing base includes restricted cash plus a percentage of the value of certain accounts receivable, inventory and equipment, reduced for certain reserves.
+Added: Accounts receivable eligible to be included in the borrowing base are generally limited to receivables associated with cost reimbursable work.
+Added: While receivables associated with fixed price work do not increase the borrowing base, such work often has upfront billings, which help support the liquidity needs of the business.
+Added: As of June 30, 2023, our borrowing base was $67.0 million.
+Added: Our borrowing base has ranged from $67.0 million to $83.2 million during fiscal 2023.
To the extent that cash on hand, cash flow from operations, and borrowing availability under the Credit Agreement are insufficient to make future investments, or provide needed working capital, we may require additional financing from other sources.
8 unchanged sentences
We can provide no assurance that a default could be remedied, or that our creditors would grant a waiver or further amend the terms of the Credit Agreement.
+Added: We may be unable to compete for projects if we are not able to obtain surety bonds or letters of credit.
+Added: A portion of our business depends on our ability to provide surety bonds or letters of credit.
+Added: Current or future market conditions, including losses incurred in the construction industry or as a result of large corporate bankruptcies, as well as changes in our sureties’ assessment of our operating and financial risk, could cause our surety providers and lenders to decline to issue or renew, or substantially reduce the amount of, bid or performance bonds for our work and could increase our costs associated with collateral.
+Added: These actions could be taken on short notice.
+Added: If our surety providers or lenders were to limit or eliminate our access to bonding or letters of credit, our alternatives would include seeking capacity from other sureties and lenders or finding more business that does not require bonds or that allows for other forms of collateral for project performance, such as cash.
+Added: We may be unable to secure these alternatives in a timely manner, on acceptable terms, or at all, which could affect our ability to bid for or work on certain future projects requiring financial assurances.
+Added: Under standard terms in the surety market, sureties issue or continue bonds on a project-by-project basis and can decline to issue bonds at any time or require the posting of additional collateral as a condition to issuing or renewing bonds.
+Added: If we were to experience an interruption or reduction in the availability of bonding capacity as a result of these or other reasons, we may be unable to compete for or work on certain projects that require bonding.
Accounting Risks
2 unchanged sentences
Under percentage-of-completion accounting, contract revenue and earnings are recognized ratably over the contract term based on the proportion of actual costs incurred to total estimated costs.
−Removed: In addition, some contracts contain penalty provisions for failure to achieve certain milestones, schedules or performance standards.
We review our estimates of contract revenue, costs and profitability on a monthly basis.
20 unchanged sentences
We perform annual goodwill impairment reviews in the fourth quarter of every fiscal year.
−Removed: In addition, we perform an impairment review whenever events or changes in circumstances indicate the carrying value of goodwill or an intangible or fixed asset may not be recoverable.
+Added: In addition, we perform an impairment review whenever events or changes in circumstances indicate the fair value of a goodwill reporting unit may be less than its carrying value or the carrying value of an intangible or fixed asset may not recoverable.
As of June 30, 2023, we had $3.1 million of amortizing intangible assets and $29.1 million of non-amortizing goodwill representing 0.8% and 7.3% of our total assets, respectively.
36 unchanged sentences
It is impossible to predict the effect on us of any future changes to these laws and regulations.
−Removed: We can provide no absolute assurance that our operations will continue to comply with future laws and regulations
−Removed: or that the costs to comply with these laws and regulations and/or a failure to comply with these laws will not significantly adversely affect our business, financial condition and results of operations.
−Removed: Climate change legislation or regulations restricting emissions of “greenhouse gases” could result in reduced demand for our services and products.
+Added: We can provide no absolute assurance that our operations will continue to comply with future laws and regulations or that the costs to comply with these laws and regulations and/or a failure to comply with these laws will not significantly adversely affect our business, financial condition and results of operations.
+Added: Climate change legislation or regulations restricting emissions of “greenhouse gases” could result in reduced demand for certain services and products we provide.
There has been an increased focus in the last several years on climate change in response to findings that emissions of carbon dioxide, methane and other greenhouse gases present an endangerment to public health and the environment.
As a result, there have been a variety of regulatory developments, proposals or requirements and legislative initiatives as well as pressure from institutional investors to restrict the emission of greenhouse gases.
−Removed: The growing imperative on customers for whom we provide services to limit greenhouse gas emissions could affect demand for our products and services.
+Added: The growing imperative on customers for whom we provide services to limit greenhouse gas emissions could affect demand for certain services and products we provide.
Further, scientists have concluded that increasing greenhouse gas concentrations in the atmosphere may produce physical effects, such as increased severity and frequency of storms, droughts, floods and other climate events.
−Removed: Such climate events have the potential to adversely affect our operations or those of our customers, which in turn could have a negative effect on us.
+Added: Such climate events have the potential to adversely affect certain operations or those of certain customers, which in turn could have a negative effect on us.
+Added: We believe this risk is partly mitigated by new project opportunities resulting from our customers' investment in cleaner energy sources.
We could be adversely affected by violations of the U.S.
9 unchanged sentences
Economic, political and other risks associated with international operations could adversely affect our business.
−Removed: A portion of our operations are conducted outside the United States, and accordingly, our business is subject to risks associated with doing business internationally, including changes in foreign currency exchange rates, instability in political or economic conditions, difficulty in repatriating cash proceeds, differing employee relations, differing regulatory environments, trade protection measures, and difficulty in administering and enforcing corporate policies which may be different than the normal business practices of local cultures.
−Removed: General Risk Factors
−Removed: Acquisitions may result in significant transaction expenses, and unidentified liabilities and risks associated with entering new markets.
−Removed: We may also be unable to profitably integrate and operate these businesses.
−Removed: Any future acquisitions may result in significant transaction expenses, unexpected liabilities and other risks in addition to the integration and consolidation risks.
−Removed: If we make any future acquisitions, we will likely assume liabilities of the acquired business or have exposure to contingent liabilities that may not be adequately covered by insurance or indemnification, if any, from the former owners of the acquired business.
−Removed: These potential liabilities could have a material adverse effect on our business.
−Removed: We may also not be able to successfully complete our ongoing integration of the operations, personnel and technology from our acquisitions.
−Removed: Because of their size and complexity, if we fail to complete our integration efforts successfully, we may experience interruptions in our business activities, a decrease in the quality of our services, a deterioration in our employee and customer relationships, and harm to our reputation, all of which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: Our integration activities have required significant attention from management, which potentially decreases the time that management may devote to serve existing customers, attract new customers and develop new services and strategies.
−Removed: We may also experience difficulties in combining corporate cultures, maintaining employee morale and retaining key employees.
−Removed: The integration efforts may also impose substantial demands on our operations or other projects.
−Removed: We will have to actively strive to demonstrate to our existing customers that these integrations have not resulted in adverse changes
−Removed: in our standards or business focus.
−Removed: Our acquisitions have involved a significant capital commitment, and the return that we achieve on any capital invested may be less than the return achieved on our other projects or investments.
−Removed: There will be challenges in consolidating and rationalizing information technology platforms and administrative infrastructures.
−Removed: In addition, any delays or increased costs of integrating acquired companies could adversely affect our operations, financial results and liquidity.
−Removed: We may not realize the growth opportunities, operating margins and synergies that are anticipated from acquisitions.
−Removed: The benefits we expect to achieve as a result of an acquisition will depend, in part, on our ability to realize the anticipated growth opportunities, operating margins and synergies.
−Removed: Our success in realizing these growth opportunities, operating margins and synergies, and the timing of this realization, depends on the successful integration of the acquired business and operations with our existing business and operations.
−Removed: Even if we are able to integrate existing and acquired businesses successfully, this integration may not result in the realization of the full benefits of the growth opportunities, operating margins and synergies we currently expect within the anticipated time frame or at all.
−Removed: Accordingly, the benefits from an acquisition may be offset by costs incurred or delays in integrating the companies, which could cause our revenue assumptions and operating margin to be inaccurate.
−Removed: We face substantial competition in each of our business segments, which may have a material adverse effect on our business.
−Removed: We face competition in all areas of our business from regional, national and international competitors.
−Removed: Our competitors range from small, family-owned businesses to well-established, well-financed entities, both privately and publicly held, including many large engineering and construction companies and specialty contractors.
−Removed: We compete primarily on the basis of price, customer satisfaction, safety performance and programs, quality of our products and services, and schedule.
−Removed: As a result, an increase in the level of competition in one or more markets may result in lower operating margins than we have recently experienced.
−Removed: Our common stock, which is listed on the NASDAQ Global Select Market, has experienced significant price and volume fluctuations.
−Removed: These fluctuations could continue in the future, and our stockholders may not be able to resell their shares of common stock at or above the purchase price paid.
−Removed: The market price of our common stock may change significantly in response to various factors and events beyond our control, including the following:
−Removed: • the risk factors described in this Item 1A;
−Removed: • general conditions in our customers’ industries;
−Removed: • general conditions in the security markets;
−Removed: • the significant concentration of ownership of our common stock in the hands of a small number of institutional investors;
−Removed: • a shortfall in operating revenue or net income from that expected by securities analysts and investors;
−Removed: • changes in securities analysts’ estimates of our financial performance or the financial performance of our competitors or companies in our industry.
−Removed: Some companies that have volatile market prices for their securities have been subject to security class action suits filed against them.
−Removed: If a suit were to be filed against us, regardless of the outcome, it could result in substantial costs and a diversion of our management’s attention and resources.
−Removed: This could have a material adverse effect on our business, results of operations and financial condition.
−Removed: Future sales of our common stock may depress our stock price.
−Removed: Sales of a substantial number of shares of our common stock in the public market or otherwise, either by us, a member of management or a major stockholder, or the perception that these sales could occur, could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.
−Removed: We may issue additional equity securities, which could lead to dilution of our issued and outstanding stock.
−Removed: The issuance of additional common stock, restricted stock units or securities convertible into our common stock could result in dilution of the ownership interest held by existing stockholders.
−Removed: We are authorized to issue, without stockholder approval 5,000,000 shares of preferred stock, par value $0.01 per share, in one or more series, which may give other stockholders dividend, conversion, voting, and liquidation rights, among other rights, which may be superior to the rights of holders of our common stock.
−Removed: In addition, we are authorized to issue, without stockholder approval, a significant number of additional shares of our common stock and securities convertible into either common stock or preferred stock.
−Removed: Shareholder activists could cause a disruption to our business.
−Removed: An activist investor may indicate disagreement with our strategic direction or capital allocation policies and may seek representation on our Board of Directors.
−Removed: Our business, operating results or financial condition could be adversely affected and may result in, among other things:
−Removed: • increased operating costs, including increased legal expenses, insurance, administrative expenses and associated costs incurred in connection with director election contests;
−Removed: • uncertainties as to our future direction, which could result in the loss of potential business opportunities and could make it more difficult to attract, retain, or motivate qualified personnel, and strain relationships with investors and customers;
−Removed: • reduction or delay in our ability to effectively execute our current business strategy and to implement new strategies.
+Added: A small portion of our operations are conducted outside the United States, and accordingly, our business is subject to risks associated with doing business internationally, including changes in foreign currency exchange rates, instability in political or economic conditions, difficulty in repatriating cash proceeds, differing employee relations, differing regulatory environments,
+Added: trade protection measures, and difficulty in administering and enforcing corporate policies which may be different than the normal business practices of local cultures.
Unresolved Staff Comments
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.