What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-22 compared with 2022-02-23 · 220 added, 143 removed, 1015 unchanged (26% of the section changed)

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Management’s Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Fir m (1)

Report of Independent Registered Public Accounting Firm (1)

Consolidated Balance Sheets as of December 31, 2022 and 2021

Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2022 , 2021 and 2020

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021 , 2020 and 2019

Consolidated Statements of S hareholders ’ Equity for the years ended December 31, 2022 , 2021 and 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2022 , 2021 and 2020

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

Management’s assessment of and conclusion on the Company’s internal control over financial reporting as of December 31, 2022 excluded the internal control over financial reporting of Powerline Plus Ltd.

and its affiliate PLP Redimix Ltd.

(collectively, the “Powerline Plus Companies"), which were acquired on January 4, 2022.

The Powerline Plus Companies represented a total of approximately 3.2% and 1.1% of total out of scope assets and net assets, respectively as of December 31, 2022, and 2.6% and 6.7% of contract revenues and out of scope income before income taxes, respectively, for the year then ended.

Such exclusion is in accordance with Securities and Exchange Commission guidance that the assessment of a recently acquired business may be omitted in management’s report on internal controls over financial reporting, provided the acquisition took place during the fiscal year being assessed.

Crowe LLP, the independent registered public accounting firm that audited and reported on the 2022 Financial Statements included in this Annual Report on Form 10-K, has audited the effectiveness of MYR Group’s internal control over financial reporting as of December 31, 2022 and has issued an attestation report on MYR Group’s internal control over financial reporting which appears herein.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of MYR Group Inc.

Henderson, CO

To the Shareholders and the Board of Directors of MYR Group Inc.

Opinions on the Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of MYR Group Inc.

(the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

(the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework:

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Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

As permitted, the Company has excluded the operations of Powerline Plus Ltd.

and its affiliate PLP Redimix Ltd.

acquired during 2022, which is described in Note 2 of the consolidated financial statements, from the scope of management’s report on internal control over financial reporting.

As such, it has also been excluded from the scope of our audit of internal control over financial reporting.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

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

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

Evaluation of variable consideration and estimated costs to complete on select long-term fixed price construction contracts

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

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

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

Evaluation of estimated costs to complete and variable consideration for fixed price construction contracts

As described in Note 1 of the Company’s consolidated financial statements, Organization, Business, and Significant Accounting Policies, and Note 12, Revenue Recognition, the Company recognizes revenue on fixed price construction projects over time using the cost-to-cost method.

The amount of contract revenues and gross profit recognized on fixed price construction contracts is dependent on the contract price, the actual contract costs incurred, and the forecasted contract revenues and contract costs for construction projects.

The recognition of revenue on fixed price construction contracts involves significant estimates based on specific project conditions and performance and due to uncertainty about estimates of costs to complete, and uncertainty in the outcome of discussions with customers on the valuation of change orders and claims.

The Company measures progress towards completion using the cost-to-cost method, which measures the progress as the ratio of actual contract costs incurred to date to the total estimated cost.

The recognition of revenue on fixed price construction contracts involves significant estimates due to the unique complexities of each construction project, uncertainty about estimates of costs to complete, and uncertainty in the outcome of discussions with customers on the valuation of change orders and claims.

The Company measures progress towards completion using the cost-to-cost method, which measures the progress as the ratio of actual contract costs incurred to date to the estimated costs at completion.

The Company recognizes revenue related to change orders only when it is probable that the change order will result in an addition to contract value and can be reliably estimated.

The Company evaluates change orders and claims based on historical experience with the customer, similar contracts, and on an individual basis, which involves significant judgment.

The Company recognizes estimated amounts of variable consideration in transaction price to the extent that it is probable there will not be a significant reversal of revenue.

Changes in estimates of variable consideration and costs to complete on in-process construction projects could have a significant impact on the amount of contract revenue recognized.

We identified auditing management’s estimates of variable consideration for change orders and claims and estimated costs to complete associated with the revenue recognition on select long-term fixed price construction contracts to be a critical audit matter.

The critical audit matter relates to select long-term fixed price construction contracts, based on magnitude of estimated costs to complete and the stage of completion of the contract.

The Company recognizes these estimated amounts of variable consideration in transaction price to the extent that it is probable there will not be a significant reversal of revenue.

We identified auditing management’s estimates of variable consideration for change orders and claims and estimated costs to complete on select fixed price construction contracts to be a critical audit matter.

The critical audit matter relates to select fixed price construction contracts, based on the magnitude of estimated costs to complete and the stage of completion of the contract.

These estimates require management to make assumptions about future events and, as a result, a high degree of auditor judgment is involved in auditing these estimates.

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Our audit procedures to address the critical audit matter included the following:

– Tested the operating effectiveness of controls over the reasonableness of estimates of costs to complete contracts and estimates of variable consideration recognized on contracts;

– Evaluated management’s process for estimating the costs to complete for select long-term fixed price construction contracts and evaluated the reasonableness of the significant assumptions used in the estimates;

– Tested the design, implementation, and operating effectiveness of controls that are designed to address the reasonableness of estimates of costs to complete contracts and estimates of variable consideration recognized on contracts;

– Evaluated the reasonableness of management’s estimates of cost to complete for a sample of fixed price construction contracts through testing the key components of the estimated costs to complete, including materials, labor, and subcontractor costs;

– Agreed a sample of contract costs incurred to supporting documentation;

– Performed corroborative interviews of management and project personnel regarding facts and circumstances relevant to the accounting for such contracts;

– Evaluated variable consideration recognized related to construction projects by comparing management’s estimates to subsequent actual data, evaluating the contracts and other documents that support estimates made by management, and obtaining legal correspondence from internal and external counsel;

– Performed procedures to retrospectively assess management’s historical ability to accurately estimate variable consideration and cost to complete of construction contracts.

– Performed inquiries of management and project personnel regarding facts and circumstances relevant to the accounting for such contracts;

– Recalculated revenue recognition based on the percentage of completion of projects;

– Evaluated variable consideration recognized related to construction projects by comparing estimates made by management to subsequent actual data, evaluating the contracts and other documents that support estimates made by management, and obtaining legal opinions from internal and external counsel;

– Performed retrospective review procedures to assess management’s historical ability to accurately estimate the transaction price and cost to complete of construction contracts.

Valuation of contingent earn-out consideration and customer relationships acquired associated with the acquisition of Powerline Plus Companies

As described in Note 2 to the financial statements, the Company completed the acquisition of Powerline Plus Ltd.

and its affiliate PLP Redimix Ltd.

(collectively, the “Powerline Plus Companies") in 2022 for total consideration of approximately $111.5 million, net of cash acquired.

Total consideration included approximately $0.9 million of contingent earn-out consideration measured at fair value as of the acquisition date.

Assets acquired included approximately $39.8 million of customer relationships (intangible assets) that were valued at fair value as of the acquisition date.

Auditing the valuation of contingent earn-out consideration and customer relationships acquired involved a high degree of subjectivity.

Significant auditor judgment was involved in evaluating the valuation methodology (used in estimating the contingent earn-out consideration and the significant assumptions used in the valuations of both the contingent earn-out consideration and customer relationships intangible asset.

The estimates included certain assumptions that involved a high degree of subjectivity and auditor judgment.

As a result, extensive audit procedures were involved in auditing the estimates and significant assumptions.

Our audit procedures related to testing the valuation of contingent earn-out consideration and customer relationships acquired included the following:

– Tested controls over the accounting for the acquisition, including controls over the recognition and measurement of customer relationships and contingent earn-out consideration;

– Read the purchase agreement and compared the terms of the purchase agreement to management’s application of purchase accounting for this acquisition;

– Evaluated the methods used in developing the fair value estimates and tested the recognition of the contingent earn-out consideration and customer relationships at fair value;

– Assessed whether all intangible assets were properly identified;

– Evaluated the reasonableness of the significant assumptions used in valuing the contingent earn-out considerations and customer relationships, including estimated revenue and revenue growth rates, attrition rate, income tax rate, projected profit margins, and discount rates.

Specifically, we considered the past performance of the Powerline Plus Companies and considered whether significant assumptions used were consistent with evidence obtained in other areas of the audit;

– Assessed the terms of the contingent earn-out consideration, which included projected revenue and operating profit projection criteria;

– Evaluated management’s classification of earn-out payments to continuing employees as either contingent consideration in the business combination or employee compensation.

/ s/ Crowe LLP

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Total assets $ 1,398,858 $ 1,121,092

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

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Operating lease obligations, net of current maturities 20,845 13,230

Finance lease obligations, net of current maturities 2,313 —

Other liabilities 15,999 11,261

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Commitments and contingencies

Stockholders’ equity

Shareholders’ equity

Preferred stock – $ 0.01 par value per share;

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Additional paid-in capital 161,427 163,754

Accumulated other comprehensive income 173 23

Accumulated other comprehensive income (loss) ( 6,300 ) 173

Retained earnings 404,908 355,007

Total stockholders’ equity attributable to MYR Group Inc.

519,102 429,288

Noncontrolling interest — 4

Total stockholders’ equity 519,102 429,292

Total liabilities and stockholders’ equity $ 1,121,092 $ 995,859

Total shareholders’ equity 560,200 519,102

Total liabilities and shareholders’ equity $ 1,398,858 $ 1,121,092

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

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Interest expense ( 3,563 ) ( 1,799 ) ( 4,563 )

Other expense, net ( 525 ) ( 606 ) ( 515 )

Other income (expense), net 2,673 ( 525 ) ( 606 )

Income before provision for income taxes 114,204 116,306 81,385

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MYR GROUP INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Preferred Stock Common Stock Additional

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Net income — — — — — 58,759 58,759 — 58,759

Adjustment to adopt ASC 326 — — — — — ( 268 ) ( 268 ) — ( 268 )

Stock issued under compensation plans, net — 108 1 748 — — 749 — 749

Stock-based compensation expense — — — 5,688 — — 5,688 — 5,688

Shares repurchased — ( 23 ) — ( 571 ) — ( 207 ) ( 778 ) — ( 778 )

Other comprehensive loss — — — — ( 253 ) — ( 253 ) — ( 253 )

Shares repurchased related to tax withholding for stock-based compensation — ( 25 ) — ( 422 ) — ( 230 ) ( 652 ) — ( 652 )

Other comprehensive income — — — — 469 — 469 — 469

Stock issued – other — 2 — 72 — — 72 — 72

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Net income — — — — — 85,010 85,010 ( 4 ) 85,006

Adjustment to adopt ASC 326 — — — — — ( 268 ) ( 268 ) — ( 268 )

Stock issued under compensation plans, net — 187 2 496 — — 498 — 498

Stock-based compensation expense — — — 7,496 — — 7,496 — 7,496

Shares repurchased — ( 25 ) — ( 422 ) ( 230 ) ( 652 ) — ( 652 )

Shares repurchased related to tax withholding for stock-based compensation — ( 51 ) ( 1 ) ( 2,868 ) — ( 483 ) ( 3,352 ) — ( 3,352 )

Other comprehensive income — — — — 150 — 150 — 150

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Stock-based compensation expense — — — 7,922 — — 7,922 — 7,922

Shares repurchased — ( 51 ) ( 1 ) ( 2,868 ) — ( 483 ) ( 3,352 ) — ( 3,352 )

Other comprehensive income — — — — 150 — 150 — 150

Stock issued – other — 1 — 12 — — 12 — 12

Shares repurchased related to tax withholding for stock-based compensation — ( 69 ) — ( 6,124 ) — ( 667 ) ( 6,791 ) — ( 6,791 )

Settlement of stock repurchase program — ( 442 ) ( 5 ) ( 4,163 ) — ( 32,813 ) ( 36,981 ) — ( 36,981 )

Other comprehensive loss — — — — ( 6,473 ) — ( 6,473 ) — ( 6,473 )

Balance at December 31, 2022 $ — 16,564 $ 165 $ 161,427 $ ( 6,300 ) $ 404,908 $ 560,200 $ — $ 560,200

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Proceeds from exercise of stock options 40 498 749

Debt refinancing costs — — ( 1,122 )

Repurchase of common stock ( 36,981 ) — —

Payments related to tax withholding for stock-based compensation ( 6,791 ) ( 3,352 ) ( 652 )

Other financing activities — 12 13,249

Net cash flows provided by (used in) financing activities ( 28,095 ) ( 124,296 ) 73,356

Net cash flows used in financing activities ( 9,272 ) ( 28,095 ) ( 124,296 )

Effect of exchange rate changes on cash ( 3,538 ) ( 410 ) 326

Net increase in cash and cash equivalents 59,424 10,271 4,890

Net increase (decrease) in cash and cash equivalents ( 31,052 ) 59,424 10,271

Cash and cash equivalents:

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T&D customers include investor-owned utilities, cooperatives, private developers, government-funded utilities, independent power producers, independent transmission companies, industrial facility owners and other contractors.

T&D provides a broad range of services, which include design, engineering, procurement, construction, upgrade, maintenance and repair services, with a particular focus on construction, maintenance and repair.

T&D provides a broad range of services on electric transmission, distribution networks, substation facilities and clean energy projects include design, engineering, procurement, construction, upgrade, maintenance and repair services.

C&I customers include general contractors, commercial and industrial facility owners, government agencies and developers.

C&I provides a broad range of services, which include design, installation, maintenance and repair of commercial and industrial wiring, the installation of traffic networks and the installation of bridge, roadway and tunnel lighting.

C&I provides a broad range of services, which include design, installation, maintenance and repair of commercial and industrial wiring.

Typical C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, commercial and industrial facilities, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities, intelligent transportation systems, roadway lighting and signalization.

Significant Accounting Policies

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Total revenues do not include sales tax as the Company considers itself a pass-through conduit for collecting and remitting sales taxes.

Sales tax and value added tax collected from customers is included in other current liabilities on the Company’s consolidated balance sheets.

Sales tax collected from customers is included in other current liabilities on the Company’s consolidated balance sheets.

Joint Ventures and Noncontrolling Interests

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The Company includes only its percentage ownership of each joint venture in its backlog.

See Note 18–Noncontrolling Interests to the Financial Statements for further information related to joint ventures in which the Company has a majority controlling interest.

Foreign Currency

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Cumulative translation adjustments are included as a separate component of accumulated other comprehensive income in shareholders’ equity.

Foreign currency transaction gains and losses, arising primarily from changes in exchange rates on short-term monetary assets and liabilities, and ineffective long-term monetary assets and liabilities are recorded in the “other income, net” line on the Company’s consolidated statements of operations.

Foreign currency losses, recorded in other income, net, for the year ended December 31, 2021, were $ 0.1 million.

Effective foreign currency transaction gains and losses, arising primarily from long-term assets and liabilities are recorded in the foreign currency translation adjustment line on the Company’s consolidated statements of comprehensive income.

Foreign currency transaction gains and losses, arising primarily from changes in exchange rates on short-term monetary assets and liabilities, and intercompany loans that are not deemed long-term investment accounts are recorded in the “other income (expense), net” line on the Company’s consolidated statements of operations.

Foreign currency losses, recorded in other income (expense), net, for the year ended December 31, 2022, were no t significant.

Foreign currency translation gains and losses, arising from intercompany loans that are deemed long-term investment accounts are recorded in the foreign currency translation adjustment line on the Company’s consolidated statements of comprehensive income.

Use of Estimates

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Actual results could differ from those estimates.

The most significant estimates are related to estimates of costs to complete on 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 allowance for doubtful accounts.

The most significant estimates are related to estimates of costs to complete on 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 allowance for doubtful accounts.

The Company estimates a cost accrual every period that represents costs incurred but not invoiced for services performed or goods delivered during the period, and estimates revenue from the contract cost portion of these accruals based on current gross margin rates to be consistent with its cost method of revenue recognition.

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The cost-to-cost method of accounting requires the Company to make estimates about the expected revenue and gross profit on each of its contracts in process.

During the year ended December 31, 2021, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.4 %, which resulted in increases in operating income of $ 9.2 million, net income of $ 6.6 million and diluted earnings per common share attributable to MYR Group Inc.

The estimates are reviewed and revised quarterly, as needed.

During the year ended December 31, 2022, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.4 %, which resulted in decreases in operating income of $ 9.8 million, net income of $ 6.9 million and diluted earnings per common share attributable to MYR Group Inc.

The estimates are reviewed and revised quarterly, as needed.

During the year ended December 31, 2020, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.8 %, which resulted in decreases in operating income of $ 18.0 million, net income attributable to MYR Group Inc.

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Interest and penalties related to uncertain income tax positions are included in income tax expense on the Company’s consolidated statements of operations.

Interest and penalties actually incurred are charged to interest expense and the “other income, net” line, respectively.

Interest and penalties actually incurred are charged to the interest expense and the “other income (expense), net” line, respectively.

Stock-Based Compensation

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These leases allow the Company to conserve cash by paying a monthly lease rental fee for the use of facilities, vehicles and equipment rather than purchasing them.

The Company’s leases have remaining terms ranging from one to six years , some of which may include options to extend the leases for up to five years , and some of which may include options to terminate the leases within one year .

The Company’s leases have remaining terms ranging from one to seven years , some of which may include options to extend the leases for up to five years , and some of which may include options to terminate the leases within one year .

Currently, all the Company’s leases contain fixed payment terms.

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Typically, the Company has purchase options on the equipment underlying its long-term leases and many of its short-term rental arrangements.

The Company may exercise some of these purchase options when the need for equipment is on-going and the purchase option price is attractive.

The Company may exercise some of these purchase options when the need for equipment is ongoing and the purchase option price is attractive.

Nonperformance-related default covenants, cross-default provisions, subjective default provisions and material adverse change clauses contained in material lease agreements, if any, are also evaluated to determine whether those clauses affect lease classification in accordance with ASC Topic 842-10-25.

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The financing component associated with finance lease obligations is included in interest expense.

Generally, for the Company’s finance leases an implicit rate to calculate present value is provided in the lease agreement, however if a rate in not provided the Company determines this rate by estimating the Company’s incremental borrowing rate, utilizing the borrowing rates associated with the Company’s various debt instruments.

Generally, for the Company’s finance leases an implicit rate to calculate present value is provided in the lease agreement.

However, if a rate in not provided the Company determines this rate by estimating the Company’s incremental borrowing rate, utilizing the borrowing rates associated with the Company’s various debt instruments.

Operating Right-of-Use Leases.

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The operating lease right-of-use asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Our lease terms may include options to extend or terminate the lease, which are considered in the present value calculations when it is reasonably certain we will exercise those options.

The Company carries insurance policies, which are subject to certain deductibles, for workers’ compensation, general liability, automobile liability and other coverages.

The deductible for each line of coverage is up to $ 1.0 million, except for wildfire coverage which has a deductible of $ 2.0 million.

The Company also maintains excess umbrella coverage providing higher layers of insurance coverage for losses that exhaust the limits of underlying coverage.

A layer of this umbrella coverage requires the Company to pay a portion of any loss within a certain loss range and our potential exposure for such losses is up to approximately $ 3.8 million.

Certain health benefit plans are subject to a stop-loss limit of up to $ 0.2 million, for qualified individuals.

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Although the majority of these agreements prohibit strikes and work stoppages, the Company cannot be certain that strikes or work stoppages will not occur in the future.

Canadian Emergency Wage Subsidy (CEWS)

In 2020 and 2021, certain C&I segment Canadian operations of the Company qualified for and applied for a wage subsidy under the Canada Emergency Wage Subsidy (“CEWS”) program.

Payroll subsidies received under CEWS totaled $ 2.3 million and were initially recorded in the "other current liabilities" line on the Company’s consolidated balance sheets.

Once the qualification criteria was met in 2022, these funds were recorded to the “ other income (expense) , net” line on the Company’s consolidated statements of operations.

The Company does not have any outstanding applications for further government assistance.

Recent Accounting Pronouncements

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Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application among reporting entities.

The Company adopted this ASU in January 2021 and there was no effect on the consolidated financial statements or disclosures.

Recently Issued Accounting Pronouncements

In October 2021, the FASB issued ASU No.

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However, adoption in an interim period other than the first fiscal quarter requires an entity to apply the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the new guidance is adopted.

The Company is currently evaluating the adoption date and impact, if any, this update will have on its financial position and results of operations.

CSI Electrical Contractors, Inc.

On July 15, 2019, the Company completed the acquisition of substantially all the assets of CSI Electrical Contractors, Inc.

(“CSI”), an electrical contracting firm based in California.

CSI provides services to a broad array of end markets under the Company’s C&I segment.

The total consideration, after net asset adjustments of approximately $ 1.0 million, was $ 80.7 million which was funded through borrowings under the Company’s credit facility.

The Company finalized the purchase price accounting relating to the acquisition of CSI during the year ended December 31, 2019.

The purchase agreement also includes contingent consideration provisions for margin guarantee adjustments based upon contract performance subsequent to the acquisition.

The Company adopted this ASU in January 2022 and there was no material effect on the consolidated financial statements or disclosures.

Powerline Plus Ltd

On January 4, 2022, the Company acquired all issued and outstanding shares of capital stock of Powerline Plus Ltd.

and its affiliate PLP Redimix Ltd.

(collectively, the “Powerline Plus Companies"), a full-service electrical distribution construction company based in Toronto, Ontario.

Cash consideration paid, funded through a combination of cash on hand and borrowings under the Facility (as defined below), including $ 0.1 million of net asset and other adjustments, was $ 110.7 million, net of cash acquired.

The addition of the Powerline Plus Companies expanded our distribution operations in Ontario, Canada.

Additionally, the acquisition includes contingent earn-out consideration that may be payable if the Powerline Plus Companies achieve certain performance targets over a three-year post-acquisition period.

As of the acquisition date, the fair value of the contingent earn-out consideration was $ 0.9 million.

The future payout of the contingent earn-out consideration, if any, is unlimited and could be significantly higher than the acquisition date fair value.

If the minimum thresholds of the performance targets are achieved the contingent earn-out consideration payment will be approximately $ 16.6 million.

Changes in contingent earn-out consideration, subsequent to the acquisition, of approximately $ 0.7 million were recorded in other income, for the year ended December 31, 2022.

The results of the Powerline Plus Companies are included in the Company’s consolidated financial statements beginning on the transaction date.

During the year ended December 31, 2022, the Company recognized approximately $ 0.5 million, of acquisition-related costs associated with this acquisition.

The purchase agreement also includes contingent consideration provisions for down-side margin guarantee adjustments based upon certain contract performance subsequent to the acquisition.

The contracts were valued at fair value at the acquisition date, causing no margin guarantee estimate or adjustments for fair value.

Changes in contract estimates, such as modified costs to complete or change order recognition, will result in changes to these margin guarantee estimates.

Changes in contingent consideration, subsequent to the acquisition, related to the margin guarantee adjustments on contracts of approximately $ 0.5 million, $ 0.6 million and $ 2.0 million were recorded in other expense for the year ended December 31, 2021, 2020 and 2019, respectively.

Future margin guarantee adjustments, if any, are expected to be recognized in 2022.

The Company could also be required to make compensation payments contingent on the successful achievement of certain performance targets and continued employment of certain key executives of CSI.

Payment of amounts earned, if any, as defined in the purchase agreement, will be made in 2024 and are included in other liabilities on the Company’s consolidated balance sheets.

These payments are recognized as compensation expense on the Company’s consolidated statements of operations when deemed probable.

For the year ended December 31, 2021, 2020 and 2019 the Company recognized $ 5.4 million, $ 4.0 million and $ 0.4 million, respectively, of compensation expense associated with these contingent payments.

Unfavorable changes in contract estimates, such as modified costs to complete or change order recognition, will result in changes to these margin guarantee estimates.

No changes in margin guarantee adjustments on contracts, subsequent to the acquisition, have been recorded for the year ended December 31, 2022.

Future margin guarantee adjustments, if any, will be recognized in other income in 2023.

The following table summarizes the allocation of the opening balance sheet as of the date of the Powerline Plus Companies acquisition:

(in thousands) January 4, 2022 acquisition date (initial estimates) Measurement

Adjustments Final Acquisition Allocation

Cash paid $ 114,429 $ — $ 114,429

Contingent consideration - fair value at acquisition date 10,608 ( 9,743 ) 865

Net asset and other adjustments 563 ( 479 ) 84

Total consideration, net of estimated net asset adjustments 125,600 ( 10,222 ) 115,378

Acquired cash ( 3,853 ) — ( 3,853 )

Total consideration less cash acquired, net of net asset and other adjustments $ 121,747 $ ( 10,222 ) $ 111,525

Cash and cash equivalents $ 3,853 $ — $ 3,853

Accounts receivable 12,131 ( 52 ) 12,079

Contract assets 12,443 148 12,591

Refundable income taxes 394 482 876

Prepaid expenses and other current assets 1,233 ( 121 ) 1,112

Property and equipment 10,366 1,577 11,943

Operating lease right-of-use assets 6,631 ( 511 ) 6,120

Intangible assets — 50,246 50,246

Accounts payable ( 8,095 ) ( 466 ) ( 8,561 )

Contract liabilities ( 1,597 ) ( 95 ) ( 1,692 )

Current portion of operating lease obligations ( 1,224 ) — ( 1,224 )

Current portion of finance lease obligations ( 1,492 ) — ( 1,492 )

Deferred income tax liabilities ( 1,358 ) ( 13,991 ) ( 15,349 )

Operating lease obligations, net of current maturities ( 4,897 ) — ( 4,897 )

Finance lease obligations, net of current maturities ( 3,243 ) — ( 3,243 )

Net identifiable assets and liabilities 25,145 37,217 62,362

Unallocated intangible assets 56,650 ( 56,650 ) —

Total acquired assets and liabilities 81,795 ( 19,433 ) 62,362

Goodwill $ 43,805 $ 9,211 $ 53,016

The following table summarizes the estimated fair values of identifiable intangible assets and the related weighted average amortization periods as of the acquisition date of the Powerline Plus Companies.

Estimated Fair Value at Acquisition Date Weighted Average Amortization Period at Acquisition Date

(in thousands) (in years)

Amortizable Intangible Assets

Customer relationships $ 39,757 15.0

Backlog 4,007 1.0

Below market lease 511 5.0

Total amortizable intangible assets $ 44,275 14.9

Indefinite-lived Intangible Assets

Trade names 5,971 Indefinite

Total intangible assets $ 50,246

The acquisition date fair values of intangible assets were determined using the income approach, which discounts the projected future cash flows using a discount rate that appropriately reflects the risks associated with the projected cash flows.

Under the income approach, the acquisition date fair value of the customer relationships and backlog were estimated using a multi-period excess earnings valuation method and the acquisition date fair value of the trade names was estimated using a relief from royalty valuation method.

The fair value of the acquired operating lease obligation and operating right of use asset was estimated by applying the income approach.

The fair value of the operating lease obligation was determined by comparing the difference between the annual lease contract rent over the remaining contractual term to a market rate cash flow stream, discounted to the present value.

The Company calculated the fair value of the operating right of use asset based on the fair values of the operating lease obligation adjusted for a below market lease positions.

The contractual value of the acquired accounts receivable is equal to the fair market value.

The Company has developed estimates of fair value of the assets acquired and liabilities assumed for the purposes of allocating the purchase price.

During the year ended December 31, 2022, the Company recorded certain measurement period adjustments related to various working capital, property and equipment, intangible asset and deferred tax accounts determined during our purchase price allocation procedures.

The goodwill to be recognized, which represents the excess of the purchase price over the net amount of the fair values assigned to assets acquired and liabilities assumed, is primarily attributable to the value of an assembled workforce and other non-identifiable assets.

No synergies were anticipated in the acquisition as the Powerline Plus Companies will function as an individual business within the Company’s operating structure.

Per applicable Canadian Revenue Authority regulations, $ 42.4 million of the goodwill and intangibles for tax purposes related to the acquisition of the Powerline Plus Companies will be tax deductible.

Contract Assets and Liabilities

2 unchanged sentences

The Company’s consolidated balance sheets present contract assets, which contain unbilled revenue and contract retainages associated with contract work that has been completed and billed but not paid by customers, pursuant to retainage provisions, that are generally due once the job is completed and approved.

The allowance for doubtful accounts associated with contract assets was $ 0.4 million as of December 31, 2021 and 2020.

The allowance for doubtful accounts associated with contract assets was $ 0.5 million as of December 31, 2022 and $ 0.4 million as of December 31, 2021.

Contract assets consisted of the following at December 31:

13 unchanged sentences

Contract liabilities ( 227,055 ) ( 167,931 ) ( 59,124 )

Net contract assets (liabilities) $ 57,144 $ 27,407 $ 29,737

Net contract assets $ 73,560 $ 57,144 $ 16,416

The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing of the Company’s billings in relation to its performance of work.

14 unchanged sentences

These leases allow the Company to conserve cash by paying a monthly lease rental fee for the use of facilities, vehicles and equipment rather than purchasing them.

Currently, all the Company’s leases contain fixed payment terms.

3 unchanged sentences

Typically, the Company has purchase options on the equipment underlying its long-term leases and many of its short-term rental arrangements.

The Company may exercise some of these purchase options when the need for equipment is on-going and the purchase option price is attractive.

The Company may exercise some of these purchase options when the need for equipment is ongoing and the purchase option price is attractive.

Leases are accounted for as operating or finance leases, depending on the terms of the lease.

15 unchanged sentences

Operating lease obligations, net of current maturities 20,845 13,230

Finance lease obligations

Finance lease obligations, net of current maturities 2,313 —

Total non-current obligations

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Right-of-use asset obtained in exchange for new operating lease obligations $ 21,663 $ 7,459

Right-of-use asset obtained in exchange for new finance lease obligations $ 517 $ —

Information on operating and financing lease right of use assets and corresponding lease obligations acquired with the Powerline Plus Companies is provided in Note 2–Acquisitions to the Financial Statements.

The future undiscounted minimum lease payments, as reconciled to the discounted minimum lease obligation indicated on the Company’s consolidated balance sheets, under current portion of operating lease obligations and operating lease obligations, net of current maturities, as of December 31, 2022 were as follows:

(in thousands) Operating Lease

(in thousands) Finance

Obligations Operating Lease

Obligations Total

2023 $ 1,212 $ 12,810 $ 14,022

2024 2,041 9,217 11,258

2025 316 6,786 7,102

2026 — 5,233 5,233

2027 — 1,578 1,578

Thereafter — 2,905 2,905

5 unchanged sentences

The financing component for operating lease obligations represents the effect of discounting the lease payments to their present value.

As of December 31, 2021, the Company had no outstanding finance lease obligations.

Certain subsidiaries of the Company have operating leases for facilities from third party companies that are owned, in whole or part, by employees of the subsidiaries.

12 unchanged sentences

In addition, based on borrowing rates currently available to the Company for borrowings with similar terms, the carrying values of the Company’s long term debt with fixed interest rates also approximated fair value.

As of December 31, 2022, the fair values of the Company’s contingent earn-out consideration liability associated with the acquisition of the Powerline Plus Companies was based on Level 3 inputs.

The contingent earn-out consideration recorded represents the estimated fair values of future amounts potentially payable to the former owners of the acquired Powerline Plus Companies and was initially determined using a Monte Carlo simulation valuation methodology based on probability-weighted performance projections and other inputs, including a discount rate and an expected volatility factor.

The fair value of this contingent earn-out consideration liability will be evaluated on an ongoing basis by management.

Accordingly, the level of inputs used for these fair value measurements is the lowest level (Level 3).

Significant changes in any of these assumptions could result in a significantly higher or lower potential liability.

Accounts Receivable

44 unchanged sentences

C&I 25,830 — 25,830 25,830 — 25,830

Foreign currency translation ( 3,223 ) — ( 3,223 ) 11 — 11

Total goodwill $ 115,847 $ — $ 115,847 $ 66,065 $ — $ 66,065

3 unchanged sentences

Trade names 695 357 338 695 311 384

Below market lease 511 102 409 — — —

Foreign currency translation ( 2,689 ) ( 410 ) ( 2,279 ) 1 — 1

Indefinite-lived Intangible Assets

Trade names 34,412 — 34,412 28,441 — 28,441

Foreign currency translation ( 367 ) — ( 367 ) 26 — 26

Total intangible assets $ 112,996 $ 25,439 $ 87,557 $ 65,833 $ 16,779 $ 49,054

Customer relationships and backlog are being amortized on a straight-line method over an estimated useful life ranging up to 12.5 years and the remaining life of the contract, respectively, and have been determined to have no residual value.

Amortizable trade names are being amortized on a straight-line basis over an estimated useful life of approximately 15 years.

The increase in goodwill as of December 31, 2022 compared to December 31, 2021 was primarily due to the allocation of $ 53.0 million of goodwill related to the acquisition of the Powerline Plus Companies identified during the purchase accounting.

The increase in intangible assets also related to the acquisition of the Powerline Plus Companies and are being amortized on a straight-line basis over periods ranging up to 15 years.

Additional financial information related to this acquisition is provided in Note 2–Acquisitions to the Financial Statements.

Customer relationships, amortizable trade names and backlog are being amortized on a straight-line method over an estimated useful life ranging up to 15 years and the remaining life of the contract, respectively, and have been determined to have no residual value.

Certain trade names have indefinite lives and, therefore, are not being amortized.

Intangible asset amortization expense was $ 9.0 million, $ 2.3 million and $ 3.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Immaterial foreign currency translation adjustments related to goodwill and intangible assets are netted with the amounts indicated above.

As of December 31, 2022, estimated future intangible asset amortization expense for the each of the next five years and thereafter was as follows:

11 unchanged sentences

$ 79,918 $ 94,857

The table below reflects the Company’s total debt, including borrowings under its credit agreement and master loan agreement for equipment notes:

The table below reflects the Company’s total debt, including borrowings under its credit agreement and equipment notes:

(dollars in thousands) Inception

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Equipment Note 10 8/26/2022 4.32 % Semi-annual 5 24,119 —

Equipment Note 8 12/27/2019 2.75 % Semi-annual 5 4,503 5,513

Equipment Note 9 12/24/2019 3.01 % Semi-annual 7 — 4,031

Other equipment note 4/11/2022 4.55 % Monthly 5 55 —

Total debt 40,553 4,503

14 unchanged sentences

or (2) Adjusted LIBO Rate (as defined in the Credit Agreement) plus an applicable margin ranging from 1.00 % to 1.75 %.

Once LIBOR is no longer available, the Company will amend the Credit Agreement to transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”) or will elect the Alternate Base Rate.

The applicable margin is determined based on the Company’s consolidated leverage ratio (the “Leverage Ratio”) which is defined in the Credit Agreement as Consolidated Total Indebtedness (as defined in the Credit Agreement) divided by Consolidated EBITDA (as defined in the Credit Agreement).

2 unchanged sentences

The Credit Agreement restricts certain types of payments when the Company’s consolidated Leverage Ratio exceeds 2.50 or the Company’s consolidated Liquidity (as defined in the Credit Agreement) is less than $ 50 million.

The weighted average interest rate on borrowings outstanding on the Facility for the year ended December 31, 2022, was 3.06 % per annum.

Under the Credit Agreement, the Company is subject to certain financial covenants and is limited to a maximum consolidated Leverage Ratio of 3.0 and a minimum interest coverage ratio of 3.0 , which is defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) divided by interest expense (as defined in the Credit Agreement).

1 unchanged sentence

The Company was in compliance with all of its financial covenants under the Credit Agreement as of December 31, 2022.

As of December 31, 2021, the Company had no debt outstanding under the Facility and letters of credit outstanding under the Facility of approximately $ 12.3 million, which are almost entirely related to the Company's payment obligation under its insurance programs.

As of December 31, 2020, the Company had no debt outstanding under the Facility and letters of credit outstanding under the Facility of approximately $ 10.4 million, including $ 9.8 million related to the Company’s payment obligation under its insurance programs and approximately $ 0.6 million related to contract performance obligations.

As of December 31, 2022, the Company had $ 12.9 million debt outstanding under the Facility and letters of credit outstanding under the Facility of approximately $ 12.8 million, which were almost entirely related to the Company's payment obligation under its insurance programs.

As of December 31, 2021, the Company had no debt outstanding under the Facility and letters of credit outstanding under the Facility of approximately $ 12.3 million, which were almost entirely related to the Company's payment obligation under its insurance programs.

The Company had remaining deferred debt issuance costs totaling $ 0.5 million as of December 31, 2022, related to the line of credit.

1 unchanged sentence

Equipment Notes

The Company has entered into Master Equipment Loan and Security Agreements (the “Master Loan Agreements”) with multiple banks.

The Master Loan Agreements may be used for the financing of equipment between the Company and the lending banks pursuant to one or more equipment notes “Equipment Note”.

The Company has entered into Master Equipment Loan and Security Agreements (the “Master Loan Agreements”) with multiple finance companies.

The Master Loan Agreements may be used for the financing of equipment between the Company and the lenders pursuant to one or more equipment notes (“Equipment Note”).

Each Equipment Note executed under the Master Loan Agreements constitutes a separate, distinct and independent financing of equipment and a contractual obligation of the Company, which may contain prepayment clauses.

As of December 31, 2021, the Company had one Equipment Note outstanding under the Master Loan Agreement that is collateralized by equipment and vehicles owned by the Company.

As of December 31, 2022, the Company had two Equipment Notes outstanding under the Master Loan Agreements that are collateralized by equipment and vehicles owned by the Company.

As of December 31, 2022, the Company had one other equipment note outstanding that is collateralized by a vehicle owned by the Company.

The following table sets forth our remaining principal payments for the Company’s outstanding Equipment Note as of December 31, 2022:

28 unchanged sentences

Unit price 475,276 27.2 78,714 6.2 553,990 18.4

T&E 372,016 28.6 159,399 13.3 531,415 21.3

435,228 25.0 132,608 10.5 567,836 18.9

$ 1,745,792 100.0 % $ 1,262,750 100.0 % $ 3,008,542 100.0 %

T&D C&I Total

2 unchanged sentences

Unit price 369,710 28.4 73,826 6.2 443,536 17.7

T&E 308,133 26.7 111,659 10.2 419,792 18.7

372,016 28.6 159,399 13.3 531,415 21.3

$ 1,301,587 100.0 % $ 1,196,702 100.0 % $ 2,498,289 100.0 %

T&D C&I Total

2 unchanged sentences

Unit price 338,611 29.3 77,331 7.1 415,942 18.5

T&E 341,916 30.2 182,061 19.5 523,977 25.3

308,133 26.7 111,659 10.2 419,792 18.7

$ 1,154,378 100.0 % $ 1,093,014 100.0 % $ 2,247,392 100.0 %

(1) The Company T&E contract type includes time-and-equipment, time-and-materials and cost-plus contracts.

The components of the Company’s revenue by market type were as follows for the year ended December 31:

49 unchanged sentences

Section 162(m) limitation 2.4 1.1 0.5

Non-controlling interest — — 0.9

Other income, net ( 0.1 ) ( 0.1 ) ( 0.5 )

18 unchanged sentences

intangible assets — tax over book amortization ( 11,086 ) —

Intangible assets — tax over book amortization ( 3,331 ) ( 2,913 )

Right-of-use operating lease assets ( 6,688 ) ( 5,398 )

4 unchanged sentences

Net deferred income taxes $ ( 45,775 ) $ ( 24,620 )

The Company determined that it is more-likely-than-not that it will not realize the deferred tax assets on certain Canadian subsidiaries and recorded a valuation allowance against the entire related deferred tax assets for those entities.

The Company determined that it is more-likely-than-not that it will not realize certain deferred tax assets related to net operating loss carryforwards on certain Canadian subsidiaries and therefore recorded a valuation allowance against the deferred tax assets for those entities.

As of December 31, 2022, the Company had no undistributed earnings of our Canadian subsidiaries.

23 unchanged sentences

Purchase Commitments

As of December 31, 2021, the Company had approximately $ 9.2 million in outstanding purchase orders for certain construction equipment, with cash payments scheduled to occur over the next eight months .

As of December 31, 2022, the Company had approximately $ 14.1 million in outstanding purchase orders for certain construction equipment, with cash payments scheduled to occur over the next four months .

Insurance and Claims Accruals

1 unchanged sentence

The deductible per occurrence for each line of coverage is up to $ 1.0 million, except for wildfire coverage which has a deductible of $ 2.0 million.

The Company also maintains excess umbrella coverage providing higher layers of insurance coverage for losses that exhaust the limits of underlying coverage.

A layer of this umbrella coverage requires the Company to pay a portion of any loss within a certain loss range and our potential exposure for such losses is up to approximately $ 3.8 million.

The Company’s health benefit plans are subject to stop-loss limits of up to $ 0.2 million for qualified individuals.

37 unchanged sentences

Upon the initial adoption of the LTIP in 2017, awards were no longer granted under the 2007 LTIP.

The LTIP was approved by our stockholders and provides for grants of (a) incentive stock options qualified as such under U.S.

The LTIP was approved by our shareholders and provides for grants of (a) incentive stock options qualified as such under U.S.

federal income tax laws, (b) stock options that do not qualify as incentive stock options, (c) stock appreciation rights, (d) restricted stock awards, (e) restricted stock units, (f) performance awards, (g) phantom stock, (h) stock bonuses, (i) dividend equivalents, or (j) any combination of such awards.

31 unchanged sentences

869 $ 24.68 0.2 years

$ 24.68 – $ 24.68

2,355 $ 24.68 1.2 years

2,709 $ 23.74 1.1 years

Time-Vested Stock Awards

37 unchanged sentences

Shares Per Share Weighted- Average

Outstanding at January 1, 2019

Outstanding unvested at January 1, 2020

138,245 $ 37.02

Granted at target 79,788 $ 34.10

Forfeited for performance below target ( 36,581 ) $ 48.94

Earned for performance above target 14,962 $ 69.45

Vested ( 78,260 ) $ 48.86

Forfeited ( 4,396 ) $ 36.28

Outstanding at December 31, 2019 138,245 $ 37.02

Outstanding unvested at December 31, 2020 150,339 $ 36.54

Granted at target 42,091 $ 80.11

2 unchanged sentences

Forfeited ( 644 ) $ 39.25

Outstanding at December 31, 2020 150,339 $ 36.54

Outstanding unvested at December 31, 2021 121,327 $ 50.06

Granted at target 31,603 $ 118.82

2 unchanged sentences

Forfeited ( 738 ) $ 45.71

Outstanding at December 31, 2021 121,327 $ 50.06

Outstanding unvested at December 31, 2022 73,508 $ 96.75

Stock-based Compensation Expense

32 unchanged sentences

Southern California IBEW-NECA Pension Trust Fund 95-6392774 001 Yellow 6/30/2021 Yellow 6/30/2020 $ 40,810 $ 39,529 $ 32,791 Yes No

National Electrical Benefit Fund 53-0181657 001 Green 12/31/2020 Green 12/31/2019 11,627 10,850 11,050 No No

Eighth District Electrical Pension

Fund 84-6100393 001 Green 3/31/2022 Green 3/31/2021 15,097 12,007 10,998 No No

National Electrical Benefit Fund 53-0181657 001 Green 12/31/2021 Green 12/31/2020 13,804 11,627 10,850 No No

IBEW Local 332 Pension Plan Part A 94-2688032 004 Green 12/31/2021 Green 12/31/2020 5,723 6,409 3,418 No No

IBEW Local 769 Management Pension Plan A 86-6049763 001 Green 6/30/2021 Green 6/30/2020 5,061 3,446 3,866 No No

IBEW Local No.

640 and Arizona NECA Defined Benefit Pension

Plan 86-0323980 001 Green 12/31/2020 Green 12/31/2019 1,751 1,195 2,397 No No

IBEW Local Union 1249 Pension Fund 15-6035161 001 Green 12/31/2021 Green 12/31/2020 3,791 3,684 2,126 No No

Indiana/Kentucky/Ohio Regional Council of Carpenters Pension

Fund 51-6123713 001 Green 6/30/2020 Green 6/30/2019 1,243 2,109 1,742 No No

Alaska Electrical Pension Plan 92-6005171 001 Green 12/31/2020 Green 12/31/2019 2,039 1,548 1,408 No No

Defined Contribution Plans:

2 unchanged sentences

San Mateo Country Electrical Construction Industry Retirement Plan 51-6052127 001 n/a n/a 2,953 5,976 3,202 n/a n/a

Puget Sound Electrical Workers 401(K) Savings Plan 91-6180326 001 n/a n/a 1,021 2,132 1,833 n/a n/a

All other plans:

4 unchanged sentences

The PPA data presented in the table above represents data available to us for the two most recent plan years.

One of the Company’s subsidiaries was listed in the Eighth District Electrical Pension Fund’s Form 5500 as providing more than five percent of the total contributions to that plan for the plan years ended March 31, 2021, 2020 and 2019, in the IBEW local 769 Management Pension Plan A’s Form 5500 as providing more than five percent of the total contributions to that plan for the plan years ended June 30, 2020 and 2019 and in the IBEW Local No.

640 and Arizona NECA Defined Benefit Pension Plan’s Form 5500 as providing more than five percent of the total contributions to that plan for the plan years ended December 31, 2020 and 2019.

Another of the company’s subsidiaries was listed in the Southern California IBEW-NECA Pension Trust Fund Plan’s Form 5500 as providing more than 5 percent of the total contributions to that plan for the plan year ended June 30, 2020.

One of the Company’s subsidiaries was listed in the Eighth District Electrical Pension Fund’s Form 5500 as providing more than five percent of the total contributions to that plan for the plan years ended March 31, 2022, 2021 and 2020 and in the IBEW local 769 Management Pension Plan A’s Form 5500 as providing more than five percent of the total contributions to that plan for the plan years ended June 30, 2021, 2020 and 2019.

Segment Information

6 unchanged sentences

The T&D segment provides a broad range of services on electric transmission and distribution networks and substation facilities which include design, engineering, procurement, construction, upgrade, maintenance and repair services with a particular focus on construction, maintenance and repair.

T&D services include the construction and maintenance of high voltage transmission lines, substations, lower voltage underground and overhead distribution systems, renewable power facilities and limited gas construction services.

The T&D segment also provides emergency restoration services in response to hurricane, ice or other storm-related damage.

T&D services include the construction and maintenance of high voltage transmission lines, substations and lower voltage underground and overhead distribution systems and clean energy projects.

The T&D segment also provides emergency restoration services in response to hurricane, wildfire, ice or other damage.

Commercial and Industrial:

The C&I segment provides services including the design, installation, maintenance and repair of commercial and industrial wiring, installation of traffic networks and the installation of bridge, roadway and tunnel lighting.

Typical C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, convention centers, renewable energy projects, manufacturing plants, processing facilities, water treatment facilities, mining facilities and transportation control and management systems.

The C&I segment provides services such as the design, installation, maintenance and repair of commercial and industrial wiring, the installation of intelligent transportation systems, roadway lighting and signalization.

Typical C&I contracts cover electrical contracting services for airports, hospitals, data centers, hotels, stadiums, commercial and industrial facilities, clean energy projects, manufacturing plants, processing facilities, water/waste-water treatment facilities, mining facilities and transportation control and management systems.

The C&I segment generally provides electric construction and maintenance services as a subcontractor to general contractors in the C&I industry, but also contracts directly with facility owners.

26 unchanged sentences

As of December 31, 2022 and 2021, there were $ 146.1 million and $ 23.1 million, respectively, of identifiable assets attributable to Canadian operations.

Noncontrolling Interests

On July 2, 2018, through the acquisition of certain assets of the Huen Companies, the Company became the majority controlling interest in a joint venture.

As a result, the Company has consolidated the carrying value of the joint ventures’ assets and liabilities and results of operations on the Company’s consolidated financial statements.

The Company records the equity owned by the other joint venture partners as noncontrolling interests on the Company’s consolidated balance sheets, consolidated statements of stockholders’ equity, and their portions, if material, of net income (loss) and other comprehensive income (loss) is shown as net income (loss) or other comprehensive income (loss) attributable to noncontrolling interests on the Company’s consolidated statements of operations and other comprehensive income (loss).

Additionally the joint venture associated with the Company’s noncontrolling interests is a partnership, and consequently, the tax effect of only the Company’s share of the joint venture income (loss) is recognized by the Company.

The acquired joint venture made no distributions to its partners, and the Company made no capital contributions to the joint venture during the year ended December 31, 2021.

Additionally, the joint venture was dissolved during the year ended December 31, 2021, and the underlying project was substantially completed in 2019.

The initial balance of the Company’s noncontrolling interest consists of the fair value of noncontrolling interest acquired on July 2, 2018 with the Huen Companies.

Net loss recognized during the year ended December 31, 2021 was not significant.

Earnings Per Share

26 unchanged sentences

Share Repurchase Program

On November 2, 2022, the Company announced that its Board of Directors had authorized a new $ 75.0 million share repurchase program (the "Repurchase Program") which became effective on November 8, 2022.

The Repurchase Program will expire on May 8, 2023, or when the authorized funds are exhausted, whichever is earlier.

The Company’s prior $ 75.0 million repurchase program that commenced on May 5, 2022 expired on November 7, 2022.

During 2022 the Company repurchased 442,167 shares of its common stock under its repurchase programs at a weighted-average price of $ 83.64 per share.

All of the shares repurchased were retired.

The shares repurchased resulted in no change to authorized shares and an increase to unissued shares.

As of December 31, 2022, the Company had $ 75.0 million of remaining availability to repurchase shares of the Company’s common stock under the Repurchase Program.

During 2022 and 2021, the Company repurchased 68,675 and 51,113 shares of stock, respectively, for approximately $ 6.8 million and $ 3.4 million, respectively, from its employees to satisfy tax obligations on shares vested under the Long-Term Incentive Plans.

All of the shares repurchased were retired and returned to authorized but unissued stock.

Subsequent Event

On January 4, 2022, the Company acquired all issued and outstanding shares of capital stock of Powerline Plus Ltd.

and its affiliate PLP Redimix Ltd.

(collectively, the “Powerline Plus Companies"), a full-service electrical distribution construction company based in Toronto, Ontario.

Consideration paid was approximately $ 114.4 million, subject to working capital and net asset adjustments, and was funded through a combination of cash on hand and borrowings under the Facility.

There could be additional contingent consideration paid based on the achievement of certain performance targets.

The results of Powerline Plus Companies will be included in the Company’s consolidated financial statements beginning on the transaction date.

Approximately $ 0.2 million of acquisition-related costs associated with this acquisition were expensed by the Company in the year ended December 31, 2021.

Due to the timing of the acquisition, preliminary purchase price allocation has not yet been completed.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data