What changed in this filing

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Item 1A. Risk Factors

2023-02-22 compared with 2022-02-23 · 51 added, 44 removed, 379 unchanged (20% of the section changed)

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The risks described below highlight some of the factors that have affected, and in the future could affect, our operations.

Although the risks are organized by heading, and each risk is

described separately, many of the risks are interrelated.

Although the risks are organized by heading, and each risk is described separately, many of the risks are interrelated.

Additional risks we do not yet know of, or that we currently think are immaterial, may also affect our operations.

You should not interpret the disclosure of any risk factor to imply that the risk has not

already materialized.

You should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.

If any of the events or circumstances described in the following risks actually occurs, our business, financial condition, results of operations and cash flows could be affected and our stock price could decline.

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• changes in the demand for our services;

• schedule delays, equipment and materials availability and increasing insurance, equipment, labor and material costs related to the continued market disruption from the COVID-19 pandemic and regulatory slowdowns;

• schedule delays, equipment and materials availability and increasing insurance, equipment, labor and material costs related to supply chain disruptions, inflationary pressures, recessionary conditions, tariffs, regulatory slowdowns and market disruptions;

• the timing and integration of acquisitions and the magnitude of the related acquisition and integration costs;

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• costs associated with our multi-employer pension plan obligations;

• the availability of equipment;

• the availability or increased cost of equipment;

• impairment of goodwill or intangible assets;

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Our industry is fragmented and we compete with other companies, ranging from small, independent firms servicing local markets to larger firms servicing regional, national and international markets.

Relatively few barriers prevent entry into the C&I market and the distribution market.

As a result, any organization that has adequate financial resources and access to technical expertise may become one of our competitors in those areas.

Any organization that has adequate financial resources and access to technical expertise may become one of our competitors.

Competition in the industry depends on many factors, including pricing of the construction services, the reputation for safety and the quality and reliability of the contractor.

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If we are unable to compete successfully in our markets, our operating results could be adversely affected.

Negative economic and market conditions may adversely impact our customers’ future spending and, as a result, our operations and growth.

The demand for infrastructure construction and maintenance services from our customers has been, and will likely continue to be, cyclical in nature and vulnerable to downturns in the industries we serve as well as the economy in general.

Negative economic and market conditions including tariffs on materials and recessionary conditions may in the future adversely impact our customers’ spending and, as a result, our operations and growth.

The demand for our services from our customers has been, and will likely continue to be, cyclical in nature and vulnerable to downturns in the industries we serve as well as the economy in general.

Stagnant or declining economic conditions could result in the delay, reduction or cancellation of certain projects and could cause our customers to outsource less work, which could adversely affect us in the future.

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Any delay or failure by suppliers or by third-party subcontractors in the completion of their portion of the project may result in delays in the overall progress of the project or may cause us to incur additional costs, or both.

We also may encounter project delays due to local opposition, which may include injunctive actions as well as public protests, to the siting of electric transmission lines, renewable energy projects, or other facilities.

We also may encounter project delays due to local opposition, which may include injunctive actions as well as public protests, to the siting of electric transmission lines, clean energy projects, or other facilities.

We may not be able to recover the costs we incur that are caused by delays.

Certain contracts have guarantee or bonus provisions regarding project completion by a scheduled acceptance date or achievement of certain acceptance and performance testing levels.

Certain contracts have guarantee provisions regarding project completion by a scheduled acceptance date or achievement of certain acceptance and performance testing levels.

Failure to meet any of our schedules or performance requirements could also result in additional costs or penalties, including liquidated damages, and such amounts could exceed expected project profit.

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If we are unable to hire personnel with the requisite skills, we may also be forced to incur significant training expenses.

In addition, the success of our business depends upon the continued efforts and abilities of our executive officers and senior management, including the management at our operating subsidiaries.

The relationships between our executive officers and senior management and our customers are important to obtaining and retaining business.

We are also dependent upon our project managers and field supervisors who are responsible for managing and recruiting personnel for our projects.

There can be no assurance that any individual will continue in his or her capacity for any particular period of time.

In addition, the success of our business depends upon the continued efforts and abilities of our employees.

The relationships between our employees and our customers are important to obtaining and retaining business.

We are also dependent on recruiting effective personnel for our projects.

There can be no assurance that any individual employee will continue in his or her capacity for any particular period of time.

Industry-wide competition for managerial talent is high.

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Business — Backlog” for a discussion on how we calculate backlog for our business.

Our insurance has limits and exclusions that may not fully indemnify us against certain claims or losses, including claims resulting from wildfires or other natural disasters and an increase in cost, or the unavailability or cancellation of third-party insurance coverages would increase our overall risk exposure and may reduce our profitability.

We maintain insurance coverages from third party insurers as part of our overall risk management strategy and most of our customer contracts require us to maintain specific insurance coverage limits.

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Any future damages caused by our services that are not covered by insurance or are in excess of policy limits could have a material adverse effect on our business, financial position, results of operations and cash flows.

Risks associated with operating in the Canadian market could restrict our ability to expand and harm our business and prospects.

Risks associated with operating in the Canadian market could impact our profitability.

There are numerous inherent risks in conducting our business in a different country including, but not limited to, potential instability in markets, political, economic or social conditions, and difficult or additional legal and regulatory requirements applicable to our operations.

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The final determination of our income tax liabilities involves the interpretation of local tax laws, tax treaties and related authorities in each jurisdiction, as well as the significant use of estimates and assumptions regarding the scope of future operations and results achieved and the timing and nature of income earned and expenditures incurred.

Changes in the operating environment, including changes in tax laws, could materially impact our income tax liabilities.

Changes in the operating environment, including changes in tax laws, could materially impact our income tax liabilities The Inflation Reduction Act was enacted on August 16, 2022, and includes a number of provisions that may impact the Company, including a corporate alternative minimum tax on certain large corporations, incentives to address climate change mitigation and other non-income tax provisions, including an excise tax on the repurchase of our stock.

We are assessing these impacts on our condensed consolidated financial statements.

The nature of our business exposes us to potential liability for warranty claims and faulty engineering, which may reduce our profitability.

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An uninsured or underinsured claim could have an adverse impact on our business, financial condition, results of operations and cash flows.

Health outbreaks such as the COVID-19 pandemic may have an adverse impact on our business, employees, liquidity, financial condition, results of operations and cash flows.

While the ongoing COVID-19 pandemic has disrupted global supply chains and created significant volatility and disruption of financial markets, we have continued to operate without substantial interruption, as most of our operations are considered essential.

However, future changes to our business, implementation of required, health and safety protocols and other potential impacts from the COVID-19 pandemic or other future health outbreaks could result in higher operating costs and could adversely impact our business, including certain operational, reporting, accounting or other processes.

Pandemic outbreaks of disease, such as the COVID-19 pandemic, have in the past had and may in the future have an adverse impact on our business, employees, liquidity, financial condition, results of operations and cash flows.

Future pandemic outbreaks of disease may further disrupt global supply chains and create significant additional volatility and disruption of financial markets, which may require us to make changes to our business and, implement new health and safety protocols.

Any such future health outbreaks could result in higher operating costs and could adversely impact our business, including certain operational, reporting, accounting or other processes.

In addition, an extended period of remote work arrangements could impair our ability to effectively manage our business, and introduce additional operational risks, including but not limited to cybersecurity risks and increased vulnerability to security breaches, cyber-attacks, computer viruses, ransomware, or other similar events and intrusions.

As our response to the COVID-19 pandemic continues to evolve, we are unable to predict the ultimate impact at this time and the pandemic could adversely affect, our business, financial condition, results of operations and cash flows.

We are unable to predict the ultimate impact of any pandemic outbreak of disease, which could adversely affect our business, financial condition, results of operations and cash flows.

Such effects may be material and the potential impacts include, but are not limited to:

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• volatility in the global financial markets, which could have a negative impact on our ability to access capital and additional sources of financing in the future.

As the situation surrounding COVID-19 continues to remains fluid, and given its inherent uncertainty, the pandemic may have an adverse impact on our business.

Should health outbreaks or the ongoing COVID-19 pandemic conditions worsen or persist for a prolonged period, any of the above factors and others that are currently unknown, may have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, we cannot predict the future impact that the COVID-19 pandemic will have on our customers and suppliers, and any adverse impacts on these parties may have a material adverse impact on our business.

Should a future health outbreak persist for a prolonged period, any of the above factors and others that are unknown, may have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, we cannot predict the ultimate impact of any pandemic outbreak of disease will have on our customers and suppliers, and any adverse impacts on these parties may have a material adverse impact on our business.

Third Party Partner Risks

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Regulatory and Environmental Risks

Legislative or regulatory actions relating to electricity transmission and renewable energy may impact demand for our services.

Current and potential legislative or regulatory actions may impact demand for our services, requiring utilities to meet reliability standards, and encourage installation of new electric transmission and renewable energy generation facilities.

Legislative or regulatory actions relating to electricity transmission and clean energy may impact demand for our services.

Current and future legislative or regulatory actions may impact demand for our services, require utilities to meet reliability standards, and encourage installation of new electric transmission and clean energy generation facilities.

However, it is unclear whether these initiatives will create sufficient incentives for projects or result in increased demand for our services.

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These regulatory factors have resulted in decreased demand for our services in the past, and they may do so in the future, potentially impacting our operations and our ability to grow at historical levels, or at all.

In addition, while many states have mandates in place that require specified percentages of electricity to be generated from renewable sources, states could reduce those mandates or make them optional, which could reduce, delay or eliminate renewable energy development in the affected states.

Additionally, renewable energy is generally more expensive to produce and may require additional power generation sources as backup.

The locations of renewable energy projects are often remote and may not be viable unless new or expanded transmission infrastructure to transport the electricity to demand centers is economically feasible.

Furthermore, funding for renewable energy initiatives may not be available.

These factors could result in fewer renewable energy projects and a delay in the construction of these projects and the related infrastructure, which could negatively impact our business.

In addition, while many states have mandates in place that require specified percentages of electricity to be generated from clean energy sources, states could reduce those mandates or make them optional, which could reduce, delay or eliminate clean energy development in the affected states.

Additionally, clean energy is generally more expensive to produce and may require additional power generation sources as backup.

The locations of clean energy projects are often remote and may not be viable unless new or expanded transmission infrastructure to transport the electricity to demand centers is economically feasible.

Furthermore, funding for clean energy initiatives may not be available.

These factors could result in fewer clean energy projects and a delay in the construction of these projects and the related infrastructure, which could negatively impact our business.

We may incur liabilities and suffer negative financial or reputational impacts relating to occupational health and safety matters, including those related to environmental hazards such as wildfires and other natural disasters.

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Working capital needs are also influenced by the seasonality of our business.

We generally experience a need for additional working capital during the spring when we increase outdoor construction in weather-affected regions of the country, and we convert working capital assets to cash during the winter months.

Opportunities associated with government contracts could lead to increased governmental regulation applicable to us.

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Such extreme weather conditions may limit the availability of resources, increasing the costs of our projects, or may cause projects to be delayed or cancelled.

Certain risks associated with climate change could include but are not limited to:

• changes in insurance coverage, availability of coverage, availability of adequate insurance limits, higher insurance premiums, and larger self-insured retentions/deductibles,

• changes in market demand based on climate change as well as legal and regulatory requirements and trends,

• operational disruptions and accompanying project inefficiencies and delays that may not be recoverable from clients due to severe weather events,

• damage from severe weather events to construction work in progress,

• damage to our assets from severe weather events,

• reputational risk due to perceptions of the company’s sustainability efforts, and

• increased reporting and compliance costs due to new regulatory requirements, customer, shareholder, and stakeholder requests targeting climate change.

Additionally, legislative and regulatory responses related to climate change and new interpretations of existing laws through climate change litigation may also negatively impact our operations.

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Compliance with any new laws or regulations regarding the reduction of greenhouse gases could result in significant changes to our operations and a significant increase in our cost of conducting business.

From time to time, we establish strategies and expectations related to climate change and other environmental matters.

Our ability to achieve any such strategies or expectations is subject to numerous factors and conditions, many of which are outside of our control.

Examples of such factors include, but are not limited to, evolving legal, regulatory, and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon markets.

Failures or delays (whether actual or perceived) in achieving our strategies or expectations related to climate change and other environmental matters could adversely affect our business, operations, and reputation, and increase risk of litigation.

Accounting Risks

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In some cases, these estimates are particularly difficult to determine, and we must exercise significant judgment.

The most significant estimates we use are related to costs to complete contracts, pending change orders and claims, shared savings, insurance reserves, income tax reserves, estimates surrounding stock-based compensation, the recoverability of goodwill and intangibles, and accounts receivable reserves.

The most significant estimates we use are related to costs to complete contracts, pending change orders and claims, shared savings, insurance reserves, income tax reserves, estimates surrounding stock-based compensation, acquisition-related contingent earn-out consideration liabilities, the recoverability of goodwill and intangibles, and accounts receivable reserves.

Our business, financial condition, results of operations and cash flows could be adversely affected by impairments to goodwill, other intangible assets, receivables, long-lived assets or investments.

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• project modifications that create unanticipated costs;

• changes in the costs of equipment, materials, labor or subcontractors;

• changes in the costs or availability of equipment, materials, labor or subcontractors;

• the failure of our suppliers or subcontractors to perform;

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• quality issues requiring rework.

An increase in the prices or availability of certain materials and commodities used in our business could adversely affect our business.

For certain contracts, we are exposed to market risk of increases in certain commodity prices of materials, such as copper and steel, which are used as components of supplies or materials utilized in all of our operations.

We are also exposed to the availability of these materials which have been impacted by the supply-chain disruption from the COVID-19 pandemic and regulatory slowdowns.

In addition, our customers’ capital budgets may be impacted by the prices of certain materials, and reduced customer spending could lead to fewer project awards and more competition.

These prices could be materially impacted by general market conditions and other factors, including U.S.

An increase in the cost or availability for items such as materials, parts, commodities, equipment and tooling may also be impacted by trade regulations, tariffs, global relations, taxes, transportation costs and inflation which could adversely affect our business.

For certain contracts, we are exposed to market risks that may cause increases in the cost, or the availability of, parts, commodities, equipment and tooling, utilized in our operations.

We have experienced, and may continue to experience, delays and cost volatility of these items due to recent supply chain disruptions, inflationary pressures, tariffs, regulatory slowdowns and the continued market disruption from the COVID-19 pandemic.

In addition, our customers’ capital budgets may be impacted by cost increases and reduced customer spending could lead to fewer project awards and more competition.

These costs could be materially impacted by general market conditions and other factors, including U.S.

trade relationships with other countries or the imposition of tariffs.

We are also exposed to increases in energy prices, particularly as they relate to fuel prices for our fleet vehicles.

While we believe we can increase our prices to adjust for some price increases in commodities, there can be no assurance that price increases of commodities, if they were to occur, would be recoverable.

Additionally, some of our fixed price contracts do not allow us to adjust our prices and, as a result, increases in material or fuel costs could reduce our profitability with respect to such projects.

While we believe we can increase our prices to adjust for cost increases, there can be no assurance that future cost increases would be recoverable.

Additionally, some of our fixed price contracts do not allow us to adjust our prices and, as a result, increases in the cost of parts, commodities, equipment and tooling or fuel costs could reduce our profitability with respect to such projects and could have a material adverse effect on our business, financial condition, results of operations and cash flows

Capital and Credit Risks

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The failure of these systems to operate effectively or problems with transitioning to upgraded or replacement systems could cause delays and reduce the efficiency of our operations, which could have a material adverse effect on our business, financial position, results of operations and cash flows, and significant costs could be incurred to remediate any problem.

In addition, the risk of cyber-based attacks is heightened with many of our employees working and accessing our technology infrastructure remotely as a result of the COVID-19 pandemic.

Increased IT security threats and more sophisticated computer crimes, including advanced persistent threats, computer viruses, ransomware, other types of malicious code, hacking, phishing and social engineering schemes designed to provide access to our networks or data, pose a potential risk to the security of our IT systems, networks and services, as well as the confidentiality, availability and integrity of our data.

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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 1A. Risk Factors