What changed in this filing

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Item 1A. Risk Factors

2025-09-10 compared with 2024-09-10 · 41 added, 35 removed, 242 unchanged (24% of the section changed)

15 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.

Additionally, we expect our customers to benefit from bills such as the Infrastructure Investment and Jobs Act and the Inflation Reduction Act.

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.

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• the ability of energy and industrial companies to generate, access and deploy capital;

• interest rates and inflation;

• interest rates, inflation, and tariffs;

• technological challenges and advances;

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Our ability to attract and retain qualified engineers, project managers, skilled craftsmen and other experienced professionals in accordance with our need is an important factor in our ability to maintain profitability and grow our business.

Competent and experienced engineers, project estimators, project managers, and craft workers are especially critical to the profitable performance of our contracts, particularly on our fixed-price contracts where superior design and execution of the project can result in profits greater than originally estimated or where inferior design and project execution can reduce or eliminate estimated profits or even result in a loss.

The market for these professionals is competitive, particularly during periods of economic growth when the supply is limited.

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If we do incur additional compensation and benefit costs, our customer contracts may not allow us to pass through these costs.

Our project managers are involved in most aspects of contracting and contract execution, including:

• supervising the bidding process, including providing estimates of significant cost components, such as material and equipment needs, and the size, productivity and composition of the workforce;

• negotiating contracts;

• supervising project performance, including performance by our employees, subcontractors and other third-party suppliers and vendors;

• estimating costs for completion of contracts that is used to estimate amounts that can be reported as revenue and earnings on the contract under the percentage-of-completion method of accounting;

• negotiating requests for change orders and the final terms of approved change orders;

• determining and documenting claims by us for increased costs incurred due to the failure of customers, subcontractors and other third-party suppliers of equipment and materials to perform on a timely basis and in accordance with contract terms.

The loss of one or more of our significant customers could adversely affect us.

One or more customers have in the past and may in the future contribute a material portion of our revenue in any one year.

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.

One customer accounted for $133.9 million or 17.4% of our consolidated revenue in fiscal 2025, which was primarily included in the Utilities and Power Infrastructure segment.

Another customer accounted for $80.8 million or 10.5% of our consolidated revenue in fiscal 2025, which was primarily included in the Storage and Terminal Solutions segment.

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.

The loss of business from any one of these customers could have a material adverse effect on our business or results of operations.

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Under cost-plus and time-and-material contracts, we perform our services in return for payment of our agreed upon reimbursable costs plus a profit.

The profit component is typically expressed in the contract either as a percentage of the reimbursable costs we actually incur or is factored into the rates we charge for labor or for the cost of equipment and materials, if any, we are required to provide.

The profit component is typically expressed in the contract either as a percentage of the

reimbursable costs we actually incur or is factored into the rates we charge for labor or for the cost of equipment and materials, if any, we are required to provide.

Our profit could be negatively impacted if our actual costs exceed the estimated costs utilized to establish the billing rates included in the contracts.

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However, we may be unable to pass through some or all of these increases in costs to our customers which may materially affect our results of operations.

Additionally, our clients' interest in approving new projects, budgets for capital expenditures and need for our services have in the past been, and may in the future be, adversely affected by, among other things, poor economic conditions, including inflation, slow growth or recession, changes to governments' fiscal or monetary policy and higher interest rates.

to governments' fiscal or monetary policy and higher interest rates.

These factors could materially and adversely affect the demand for our services.

Domestic and foreign trade tariffs could raise the price and reduce the availability of raw materials to us, which could negatively impact our operating results and financial condition.

Changes in global trade policy and the impact on tariffs may have a material adverse effect on business operations and financial performance.

presidential administration has announced tariffs on U.S.

imports generally, with higher rates for select U.S.

trade partners.

Certain foreign governments have also announced retaliatory tariffs.

The tariff policy environment has been and is expected to continue to be dynamic, and we cannot predict what additional actions may ultimately be taken by the United States or other governments with respect to tariffs or trade relations.

Domestic and foreign trade tariffs could raise the price and reduce the availability of raw materials such as steel plate and steel pipe, which are key materials used by us.

Supplies of these materials are available throughout the United States and globally from numerous sources.

We anticipate that adequate amounts of these materials will be available in the foreseeable future.

However, if trade tariffs should significantly impact the price and availability of these materials, we could experience lower gross margins, operational inefficiencies and project delays.

Increased costs of raw materials could cause us to experience lower gross margins, operational inefficiencies and project delays.

We include contract provisions that mitigate our exposure to fluctuations in material costs and to the impact of changes in laws and regulations.

We also utilize contracting strategies that allow us to spread the risk of cost increases to other involved parties.

However, we may be unable to pass through some or all of these increases in costs to other parties which may materially affect our results of operations.

To the extent we can, we also mitigate these risks primarily by procuring materials upon contract execution to ensure that our purchase price approximates the costs included in the project estimate.

Additionally, tariffs or other trade restrictions may lead to continuing uncertainty and volatility in U.S.

economic conditions and commodity markets, declining consumer confidence, significant inflation, and diminished expectations for the economy.

These factors could increase our costs and reduce our customers’ demand for our services, including decisions by our clients on project viability or timing, which could negatively impact our operating results and financial condition.

Unsatisfactory safety performance may subject us to penalties, affect customer relationships, result in higher operating costs, negatively impact employee morale and result in higher employee turnover.

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These plans are not administered by us and contributions are determined in accordance with provisions of negotiated labor contracts.

The Employee Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980, imposes certain liabilities upon employers who are contributors to a multiemployer plan in the event of the employer’s withdrawal from, or upon termination of, such plan.

The Employee Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980,

imposes certain liabilities upon employers who are contributors to a multiemployer plan in the event of the employer’s withdrawal from, or upon termination of, such plan.

If we terminate, withdraw, or partially withdraw from other multiemployer pension plans, we could be required to make significant cash contributions to fund that plan's unfunded vested benefit, which could materially and adversely affect our financial condition and results of operations;

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Financial Risks

Our borrowing capacity under our Credit Agreement is determined by the size of our borrowing base and if the size of our borrowing base combined with our unrestricted cash does not provide adequate liquidity, then we may need to raise additional capital in the future for working capital letters of credit, capital expenditures and/or acquisitions, and we may not be able to do so on favorable terms or at all, which would impair our ability to operate our business or achieve our strategic plan.

additional capital in the future for working capital, letters of credit, capital expenditures and/or acquisitions, and we may not be able to do so on favorable terms or at all, which would impair our ability to operate our business or achieve our strategic plan.

Management believes it has sufficient cash on hand and will generate sufficient cash from operations to fund the business.

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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.

As of June 30, 2024, our borrowing base was $60.9 million.

Our borrowing base has ranged from $60.9 million to $74.6 million during fiscal 2024.

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.

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 or letters of credit, we may require additional financing from other sources.

Our ability to obtain such additional financing in the future will depend in part upon prevailing capital market conditions, as well as conditions in our business and our operating results;

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We may be unable to compete for projects if we are not able to obtain surety bonds or letters of credit.

A portion of our business depends on our ability to provide surety bonds or letters of credit.

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.

These actions could be taken on short notice.

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.

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.

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.

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.

Customers may require us to provide forms of performance security, including letters of credit, or surety bonds.

We are often required to provide performance security to customers to indemnify the customer should we fail to perform our obligations under the contract.

Failure to provide the required performance security on terms required by a customer may result in an inability to bid, win or comply with the contract.

Historically, we have had adequate letters of credit capacity but such capacity beyond our Senior Credit Facility is generally at the provider’s sole discretion.

Due to events that affect the banking and insurance markets, letters of credit or surety bonds may be difficult to obtain or may only be available at significant cost.

In addition, future projects may require us to obtain letters of credit that extend beyond the term of our Senior Credit Facility.

Any inability to bid for or win new contracts due to the failure of obtaining adequate letters of credit, surety bonds or other customary forms of performance security could have a material adverse effect on our business prospects and future revenues.

Accounting Risks

8 unchanged sentences

No restatements are made to prior periods.

Further, many of our contracts contain various cost and performance incentives and penalties that impact the earnings we realize from our contracts, and adjustments related to these incentives and penalties are recorded on a percentage of completion basis in the period when estimable and probable.

Further, many of our contracts contain various cost and performance incentives and penalties that impact the earnings we realize from our contracts,

and adjustments related to these incentives and penalties are recorded on a percentage of completion basis in the period when estimable and probable.

As a result of the requirements of the percentage-of-completion method of accounting, the possibility exists that we could have estimated and reported a profit on a contract over several prior periods and later determine, as a result of additional information, that all or a portion of such previously estimated and reported profits were overstated.

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• valuation of assets acquired and liabilities assumed in connection with business combinations;

• accruals for estimated liabilities, including litigation and insurance reserves.

• accruals for estimated liabilities, including litigation reserves.

Our actual results could materially differ from these estimates.

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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, 2024, we had $1.7 million of amortizing intangible assets and $29.0 million of non-amortizing goodwill representing 0.4% and 6.4% of our total assets, respectively.

As of June 30, 2025, we had $29.0 million of non-amortizing goodwill representing 4.8% of our total assets.

Legal, Insurance, Regulatory and Compliance Risks

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Litigation, regardless of its outcome, is expensive, typically diverts the efforts of our management away from operations for varying periods of time, and can disrupt or otherwise adversely impact our relationships with current or potential customers, subcontractors and suppliers.

Payment and claim disputes with customers may also cause us to incur increased interest costs resulting from incurring indebtedness under our revolving line of credit or receiving less interest income resulting from fewer funds invested due to the failure to receive payment for disputed claims and accounts.

Payment and claim disputes with customers may also cause us to incur increased interest costs

resulting from incurring indebtedness under our revolving line of credit or receiving less interest income resulting from fewer funds invested due to the failure to receive payment for disputed claims and accounts.

Our projects expose us to potential professional liability, product liability, pollution liability, warranty and other claims, which could be expensive, damage our reputation and harm our business.

45 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors