What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-10-25 compared with 2023-07-26 · 101 added, 95 removed, 303 unchanged (39% of the section changed)

21 unchanged sentences

However both of our segments and supporting operations may be subject to delays and cost volatility due to supply chain disruptions, inflationary pressures, tariffs and regulatory slowdowns, which may result in decelerations in project opportunities and awards.

We had consolidated revenues for the six months ended June 30, 2023 of $1.70 billion, of which 55.8% was attributable to our T&D customers and 44.2% was attributable to our C&I customers.

Our consolidated revenues for the six months ended June 30, 2022 were $1.34 billion.

For the six months ended June 30, 2023, our net income and EBITDA (1) were $45.4 million and $88.4 million, respectively, compared to $40.4 million and $83.5 million, respectively, for the six months ended June 30, 2022.

We had consolidated revenues for the nine months ended September 30, 2023 of $2.64 billion, of which 56.7% was attributable to our T&D customers and 43.3% was attributable to our C&I customers.

Our consolidated revenues for the nine months ended September 30, 2022 were $2.14 billion.

For the nine months ended September 30, 2023, our net income and EBITDA (1) were $66.9 million and $135.4 million, respectively, compared to $58.8 million and $123.8 million, respectively, for the nine months ended September 30, 2022.

We believe there is an ongoing need for utilities to sustain investment in their transmission systems to improve reliability, reduce congestion and connect to new clean energy sources.

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The timing of multi-year transmission project awards and substantial construction activity is difficult to predict due to regulatory requirements and the permitting needed to commence construction.

Significant construction on any large, multi-year projects awarded in the remainder of 2023 will not likely have a large impact on 2023 results.

Significant construction on any large, multi-year projects awarded in the remainder of 2023 will not likely begin until 2024.

Bidding and construction activity for small to medium-size transmission projects and upgrades remain active, and we expect this trend to continue.

(1) EBITDA is a non-GAAP measure.

Refer to “Non-GAAP Measure—EBITDA” for a discussion of this measure.

We believe there is a need for further investment by utilities on their distribution systems to properly maintain or meet reliability requirements.

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We expect to see an incremental increase in distribution opportunities in the markets we serve during the rest of 2023.

(1) EBITDA is a non-GAAP measure.

Refer to “Non-GAAP Measure—EBITDA” for a discussion of this measure.

Although our C&I bidding opportunities remain strong, we may see impacts due to continued market disruptions and overall market volatility which could result in slower growth of our C&I Segment.

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This expanded availability of liquidity will allow us to take advantage of future opportunities as they arise.

Additionally, as of June 30, 2023, we had $75.0 million of remaining availability to purchase shares under our share repurchase program, which continues in effect until November 8, 2023, or until the authorized funds are exhausted.

Additionally, as of September 30, 2023, we had $75.0 million of remaining availability to purchase shares under our share repurchase program, which continues in effect until November 8, 2023, or until the authorized funds are exhausted.

We continue to manage our increasing operating costs, including increasing insurance, equipment, labor and material costs.

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Additional information related to our remaining performance obligations is provided in Note 6–Revenue Recognition in the accompanying notes to our Consolidated Financial Statements.

Our backlog was $2.73 billion at June 30, 2023, compared to $2.50 billion at December 31, 2022 and $2.44 billion at June 30, 2022.

Our backlog at June 30, 2023 increased $66.0 million from March 31, 2023.

Backlog in the T&D segment decreased $100.9 million and C&I backlog increased $166.9 million compared to March 31, 2023.

Our backlog as of June 30, 2023 included our proportionate share of joint venture backlog totaling $29.0 million, compared to $29.9 million at March 31, 2023.

Our backlog was $2.62 billion at September 30, 2023, compared to $2.50 billion at December 31, 2022 and $2.48 billion at September 30, 2022.

Our backlog at September 30, 2023 decreased $116.4 million from June 30, 2023.

Backlog in the T&D segment decreased $42.9 million and C&I backlog decreased $73.5 million compared to June 30, 2023.

Our backlog as of September 30, 2023 included our proportionate share of joint venture backlog totaling $23.5 million, compared to $29.0 million at June 30, 2023.

The following table summarizes that amount of our backlog that we believe to be firm as of the dates shown and the amount of our current backlog that we reasonably estimate will not be recognized within the next twelve months:

Backlog at June 30, 2023

Backlog at September 30, 2023

(in thousands) Total Amount estimated to not

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

10 unchanged sentences

Interest expense (1,319) (0.1) (1,134) (0.1) (3,059) (0.1) (2,235) (0.1)

Other income, net 120 — 2,277 0.3 30 — 2,262 0.2

Other income (expense), net (91) — 223 — (61) — 2,485 0.1

Income before provision for income taxes 30,843 3.3 26,108 3.2 89,511 3.4 78,430 3.6

1 unchanged sentence

Net income $ 21,512 2.3 % $ 18,436 2.3 % $ 66,948 2.5 % $ 58,808 2.7 %

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

Revenues were $888.6 million for the three months ended June 30, 2023 compared to $708.1 million for the three months ended June 30, 2022.

The increase of $180.5 million, or 25.5%, was primarily due to an increase in C&I revenue in certain geographical areas and an increase in revenue on both transmission and distribution projects.

Clean energy projects increased revenues in both of our segments during the three months ended June 30, 2023.

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Revenues were $939.5 million for the three months ended September 30, 2023 compared to $799.8 million for the three months ended September 30, 2022.

The increase of $139.7 million, or 17.5%, was primarily due to an increase in revenue on transmission projects and an increase in C&I revenue in certain geographical areas.

Clean energy projects increased revenues in both of our segments during the three months ended September 30, 2023.

Gross margin.

Gross margin was 10.1% for the three months ended June 30, 2023 compared to 11.4% for the three months ended June 30, 2022.

Gross margin was 9.8% for the three months ended September 30, 2023 compared to 10.8% for the three months ended September 30, 2022.

The decrease in gross margin was primarily due to labor and project inefficiencies, some of which were caused by supply chain disruptions and inclement weather experienced on certain projects.

Gross margin was also negatively impacted by rising costs associated with inflation.

These margin decreases were partially offset by better-than-anticipated productivity on certain projects and a favorable change order.

Changes in estimates of gross profit on certain projects resulted in gross margin decreases of 1.3% and 0.1% for the three months ended June 30, 2023 and 2022, respectively.

These margin decreases were partially offset by favorable change orders and better-than-anticipated productivity on certain projects.

Changes in estimates of gross profit on certain projects resulted in gross margin decreases of 1.3% and 0.3% for the three months ended September 30, 2023 and 2022, respectively.

Gross profit.

Gross profit was $90.1 million for the three months ended June 30, 2023 compared to $80.9 million for the three months ended June 30, 2022.

Gross profit was $92.4 million for the three months ended September 30, 2023 compared to $86.3 million for the three months ended September 30, 2022.

The increase of $6.1 million, or 7.0%, was due to higher revenues, partially offset by lower margins.

Selling, general and administrative expenses.

Selling, general and administrative expenses (“SG&A”) were $57.8 million for the three months ended June 30, 2023 compared to $52.0 million for the three months ended June 30, 2022.

The period-over-period increase of $5.8 million was primarily due to an increase in employee-related expenses to support the growth in our operations and an increase in employee incentive compensation costs.

Selling, general and administrative expenses (“SG&A”) were $59.9 million for the three months ended September 30, 2023 compared to $58.9 million for the three months ended September 30, 2022.

The period-over-period increase of $1.0 million was primarily due to an increase in employee incentive compensation costs and an increase in employee-related expenses to support the growth in our operations.

Gain on sale of property and equipment .

Gains from the sale of property and equipment for the three months ended June 30, 2023 were $1.3 million compared to $0.7 million for the three months ended June 30, 2022.

Gains from the sale of property and equipment for the three months ended September 30, 2023 were $0.8 million compared to $0.3 million for the three months ended September 30, 2022.

Gains from the sale of property and equipment are attributable to routine sales of property and equipment no longer useful or valuable to our ongoing operations.

Interest expense.

Interest expense was $1.2 million for three months ended June 30, 2023 compared to $0.7 million for the three months ended June 30, 2022.

This increase was primarily attributable to higher interest rates, partially offset by lower average debt balances, during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.

Interest expense was $1.3 million for three months ended September 30, 2023 compared to $1.1 million for the three months ended September 30, 2022.

This increase was primarily attributable to higher interest rates, partially offset by lower average debt balances, during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

Income tax expense.

Income tax expense was $9.3 million for the three months ended June 30, 2023, with an effective tax rate of 29.5%, compared to the expense of $8.2 million for the three months ended June 30, 2022, with an effective tax rate of 29.4%.

The increase in the tax rate for the three months ended June 30, 2023 was primarily due to higher other permanent difference items.

Net income was $22.3 million for the three months ended June 30, 2023 compared to $19.7 million for the three months ended June 30, 2022.

Income tax expense was $9.3 million for the three months ended September 30, 2023, with an effective tax rate of 30.3%, compared to the expense of $7.7 million for the three months ended September 30, 2022, with an effective tax rate of 29.4%.

The increase in the tax rate for the three months ended September 30, 2023 was primarily due to higher other permanent difference items.

Net income was $21.5 million for the three months ended September 30, 2023 compared to $18.4 million for the three months ended September 30, 2022.

The increase was primarily due to the reasons stated earlier.

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The following table sets forth, for the periods indicated, statements of operations data by segment, segment net sales as percentage of total net sales and segment operating income as a percentage of segment net sales:

Three months ended June 30,

Three months ended September 30,

(dollars in thousands) Amount Percent Amount Percent

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Transmission & Distribution

Revenues for our T&D segment for the three months ended June 30, 2023 were $503.7 million compared to $415.2 million for the three months ended June 30, 2022, an increase of $88.5 million, or 21.3%.

The increase in revenue was related to an increase in revenue on transmission projects, primarily related to an increase in revenue on clean energy projects, and an increase in revenue on distribution projects.

Revenues from transmission projects represented 64.0% and 60.2% of T&D segment revenue for the three months ended June 30, 2023 and 2022, respectively.

Operating income for our T&D segment for the three months ended June 30, 2023 was $37.7 million, an increase of $4.9 million, or 15.0%, from the three months ended June 30, 2022.

Revenues for our T&D segment for the three months ended September 30, 2023 were $548.6 million compared to $452.0 million for the three months ended September 30, 2022, an increase of $96.6 million, or 21.4%.

The increase in revenue was related to an increase in revenue on transmission projects, primarily related to an increase in revenue on clean energy projects.

Revenues from transmission projects represented 65.2% and 58.4% of T&D segment revenue for the three months ended September 30, 2023 and 2022, respectively.

Operating income for our T&D segment for the three months ended September 30, 2023 was $36.3 million, an increase of $2.0 million, or 5.7%, from the three months ended September 30, 2022.

The increase in T&D operating income from the prior year was primarily due to higher revenues.

As a percentage of revenues, operating income for our T&D segment was 7.5% for the three months ended June 30, 2023 compared to 7.9% for the three months ended June 30, 2022.

The decrease in T&D operating income as a percentage of revenues was primarily due to labor and project inefficiencies, some of which were caused by inclement weather on certain projects, partially offset by better-than-anticipated productivity on a project.

As a percentage of revenues, operating income for our T&D segment was 6.6% for the three months ended September 30, 2023 compared to 7.6% for the three months ended September 30, 2022.

The decrease in T&D operating income as a percentage of revenues was primarily due to labor and project inefficiencies, mainly related to clean energy projects, and inclement weather.

These decreases were partially offset by better-than-anticipated productivity.

Commercial & Industrial

Revenues for our C&I segment for the three months ended June 30, 2023 were $384.9 million compared to $292.9 million for the three months ended June 30, 2022, an increase of $92.0 million, or 31.4%, primarily due to higher revenue related to clean energy projects in certain geographical areas.

Operating income for our C&I segment for the three months ended June 30, 2023 was $12.6 million, an increase of $3.1 million, over the three months ended June 30, 2022.

Revenues for our C&I segment for the three months ended September 30, 2023 were $390.9 million compared to $347.8 million for the three months ended September 30, 2022, an increase of $43.1 million, or 12.4%, primarily due to higher revenue related to clean energy projects in certain geographical areas.

Operating income for our C&I segment for the three months ended September 30, 2023 was $13.9 million, an increase of $3.0 million, over the three months ended September 30, 2022.

The period-over-period increase in operating income was primarily due to higher revenues.

As a percentage of revenues, operating income for our C&I segment was 3.3% for the three months ended June 30, 2023 compared to 3.2% for the three months ended June 30, 2022.

The increase in C&I operating income as a percentage of revenues was primarily due to better-than-anticipated productivity on certain projects and a favorable change order.

These increases were partially offset by labor and project inefficiencies, some of which were caused by supply chain disruptions, as well as rising costs associated with inflation.

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

Revenues were $1.70 billion for the six months ended June 30, 2023 compared to $1.34 billion for the six months ended June 30, 2022.

The increase of $355.5 million, or 26.4%, was primarily due to an increase in C&I revenue in certain geographical areas and an increase in revenue on both transmission and distribution projects.

Clean energy projects increased revenue in both of our segments during the six months ended June 30, 2023.

As a percentage of revenues, operating income for our C&I segment was 3.6% for the three months ended September 30, 2023 compared to 3.1% for the three months ended September 30, 2022.

The increase in C&I operating income as a percentage of revenues was primarily due to favorable change orders and better-than-anticipated productivity on certain projects.

These increases were partially offset by labor and project inefficiencies, some of which were caused by supply chain disruptions and inclement weather.

C&I operating income margin was also negatively impacted by rising costs associated with inflation.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

Revenues were $2.64 billion for the nine months ended September 30, 2023 compared to $2.14 billion for the nine months ended September 30, 2022.

The increase of $495.1 million, or 23.1%, was primarily due to an increase in revenue on transmission projects, an increase in C&I revenue in certain geographical areas and an increase in revenue on distribution projects.

Clean energy projects increased revenue in both of our segments during the nine months ended September 30, 2023.

Gross margin.

Gross margin was 10.3% for the six months ended June 30, 2023 compared to 12.0% for the six months ended June 30, 2022.

Gross margin was 10.1% for the nine months ended September 30, 2023 compared to 11.5% for the nine months ended September 30, 2022.

The decrease in gross margin was primarily due to labor and project inefficiencies, some of which were caused by inclement weather and supply chain disruptions experienced on certain projects.

Gross margin was also negatively impacted by an increase in cost associated with an adjustment to sales tax accruals for prior periods in one of our operating areas as well as rising costs associated with inflation.

These margin decreases were partially offset by better-than-anticipated productivity on a project and a favorable change order.

Changes in estimates of gross profit on certain projects resulted in a gross margin decrease of 1.0% for the six months ended June 30, 2023 and resulted in a gross margin increase of 0.3% for the six months ended June 30, 2022.

Gross margin was also negatively impacted by rising costs associated with inflation as well as an increase in cost associated with an adjustment to sales tax accruals for prior periods in one of our operating areas.

These margin decreases were partially offset by favorable change orders and better-than-anticipated productivity on certain projects.

Changes in estimates of gross profit on certain projects resulted in a gross margin decrease of 1.2% for the nine months ended September 30, 2023 and were not significant for the nine months ended September 30, 2022.

Gross profit.

Gross profit was $174.5 million for the six months ended June 30, 2023 compared to $161.3 million for the six months ended June 30, 2022, the increase of $13.2 million, or 8.2% was due to higher revenues, partially offset by lower margins.

Gross profit was $266.9 million for the nine months ended September 30, 2023 compared to $247.7 million for the nine months ended September 30, 2022.

The increase of $19.2 million, or 7.8% was due to higher revenues, partially offset by lower margins.

Selling, general and administrative expenses.

SG&A was $114.7 million for the six months ended June 30, 2023 compared to $105.6 million for the six months ended June 30, 2022.

SG&A was $174.6 million for the nine months ended September 30, 2023 compared to $164.5 million for the nine months ended September 30, 2022.

The period-over-period increase of $10.1 million was primarily due to an increase in employee-related expenses to support the growth in our operations and an increase in employee incentive compensation costs.

Gain on sale of property and equipment.

Gains from the sale of property and equipment for the six months ended June 30, 2023 were $2.5 million compared to $1.4 million for the six months ended June 30, 2022.

Gains from the sale of property and equipment for the nine months ended September 30, 2023 were $3.3 million compared to $1.7 million for the nine months ended September 30, 2022.

Gains from the sale of property and equipment are attributable to routine sales of property and equipment no longer useful or valuable to our ongoing operations.

Interest expense.

Interest expense was $1.7 million for the six months ended June 30, 2023 compared to $1.1 million for the six months ended June 30, 2022.

This increase was primarily attributable to higher interest rates, partially offset by lower average debt balances during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.

Interest expense was $3.1 million for the nine months ended September 30, 2023 compared to $2.2 million for the nine months ended September 30, 2022.

This increase was primarily attributable to higher interest rates, partially offset by lower average debt balances during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

Income tax expense.

Income tax expense was $13.2 million for the six months ended June 30, 2023, with an effective tax rate of 22.6%, compared to the expense of $12.0 million for the six months ended June 30, 2022, with an effective tax rate of 22.8%.

The decrease in the tax rate for the six months ended June 30, 2023 was primarily due to a higher favorable impact from stock compensation excess tax benefits, partially offset by higher other permanent difference items.

Net income was $45.4 million for the six months ended June 30, 2023 compared to $40.4 million for the six months ended June 30, 2022.

Income tax expense was $22.6 million for the nine months ended September 30, 2023, with an effective tax rate of 25.2%, compared to the expense of $19.6 million for the nine months ended September 30, 2022, with an effective tax rate of 25.0%.

The increase in the tax rate for the nine months ended September 30, 2023 was primarily due to higher other permanent difference items, partially offset by a higher favorable impact from stock compensation excess tax benefits.

Net income was $66.9 million for the nine months ended September 30, 2023 compared to $58.8 million for the nine months ended September 30, 2022.

The increase was primarily due to the reasons stated earlier.

1 unchanged sentence

Six months ended June 30,

Nine months ended September 30,

(dollars in thousands) Amount Percent Amount Percent

10 unchanged sentences

Transmission & Distribution

Revenues for our T&D segment for the six months ended June 30, 2023 were $949.1 million compared to $780.1 million for the six months ended June 30, 2022, an increase of $169.0 million, or 21.7%.

Revenues for our T&D segment for the nine months ended September 30, 2023 were $1.50 billion compared to $1.23 billion for the nine months ended September 30, 2022, an increase of $265.6 million, or 21.6%.

Revenues from transmission projects represented 65.4% and 60.5% of T&D segment revenue for the six months ended June 30, 2023 and 2022, respectively.

Operating income for our T&D segment for the six months ended June 30, 2023 was $70.6 million, an increase of $7.4 million, or 11.6%, from the six months ended June 30, 2022.

Revenues from transmission projects represented 65.3% and 59.7% of T&D segment revenue for the nine months ended September 30, 2023 and 2022, respectively.

Operating income for our T&D segment for the nine months ended September 30, 2023 was $106.8 million, an increase of $9.2 million, or 9.5%, from the nine months ended September 30, 2022.

The increase in T&D operating income from the prior year was primarily due to higher revenues.

As a percentage of revenues, operating income for our T&D segment was 7.4% for the six months ended June 30, 2023 compared to 8.1% for the six months ended June 30, 2022.

The decrease in T&D operating income as a percentage of revenues was primarily due to labor and project inefficiencies some of which were caused by inclement weather.

As a percentage of revenues, operating income for our T&D segment was 7.1% for the nine months ended September 30, 2023 compared to 7.9% for the nine months ended September 30, 2022.

The decrease in T&D operating income as a percentage of revenues was primarily due to labor and project inefficiencies, some of which were associated with clean energy projects, and inclement weather.

These decreases were partially offset by a favorable change order and better-than-anticipated productivity.

Commercial & Industrial

Revenues for our C&I segment for the six months ended June 30, 2023 were $751.2 million compared to $564.6 million for the six months ended June 30, 2022, an increase of $186.6 million, or 33.0%, primarily due to higher revenue related to clean energy projects in certain geographical areas.

Operating income for our C&I segment for the six months ended June 30, 2023 was $23.3 million, an increase of $3.7 million over the six months ended June 30, 2022.

Revenues for our C&I segment for the nine months ended September 30, 2023 were $1.14 billion compared to $912.5 million for the nine months ended September 30, 2022, an increase of $229.6 million, or 25.2%, primarily due to higher revenue related to clean energy projects in certain geographical areas.

Operating income for our C&I segment for the nine months ended September 30, 2023 was $37.2 million, an increase of $6.7 million over the nine months ended September 30, 2022.

The period-over-period increase in operating income was primarily due to higher revenues.

As a percentage of revenues, operating income for our C&I segment was 3.1% for the six months ended June 30, 2023 compared to 3.5% for the six months ended June 30, 2022.

The decrease in C&I operating income as a percentage of revenues was primarily due to labor and project inefficiencies, some of which were caused by supply chain disruptions, and an increase in cost associated with an adjustment to sales tax accruals for prior periods in one of our operating areas.

C&I operating income margin was also negatively impacted by rising costs associated with inflation.

These decreases were partially offset by better-than-anticipated productivity on a project and a favorable change order.

As a percentage of revenues, operating income for our C&I segment was 3.3% for the nine months ended September 30, 2023 and 2022.

During the nine months ended September 30, 2023, C&I operating income as a percentage of revenues benefited from favorable change orders and better-than-anticipated productivity on a project.

These increases were partially offset by labor and project inefficiencies, some of which were caused by supply chain disruptions, and by rising costs associated with inflation.

C&I operating income margin was also negatively impacted by an increase in cost associated with an adjustment to sales tax accruals for prior periods in one of our operating areas.

Non-GAAP Measure—EBITDA

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in thousands) 2023 2022 2023 2022

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in thousands) 2023 2022 2023 2022

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Liquidity, Capital Resources and Material Cash Requirements

As of June 30, 2023, we had working capital of $255.6 million.

As of September 30, 2023, we had working capital of $291.6 million.

We define working capital as current assets less current liabilities.

During the six months ended June 30, 2023, operating activities of our business provided net cash of $15.8 million, compared to $60.1 million of cash provided for the six months ended June 30, 2022.

During the nine months ended September 30, 2023, operating activities of our business provided net cash of $28.4 million, compared to $73.7 million of cash provided for the nine months ended September 30, 2022.

Cash flow from operations is primarily influenced by operating margins, timing of contract performance and the type of services we provide to our customers.

The $45.3 million year-over-year decrease in cash provided by operating activities was primarily due to unfavorable net changes in operating assets and liabilities of $50.3 million, offset by an increase of $8.1 million in net income.

The unfavorable change in operating assets and liabilities was primarily due to the net unfavorable year-over-year changes in various working capital accounts that relate primarily to construction activities (accounts receivable, contract assets, accounts payable and contract liabilities) of $71.0 million partially offset by the favorable change of $18.6 million in other liabilities and by the favorable change of $8.1 million in other assets.

The unfavorable change in operating assets and liabilities was primarily due to the net unfavorable year-over-year changes in various working capital accounts that relate primarily to construction activities (accounts receivable, contract assets, accounts payable and contract liabilities) of $66.4 million, partially offset by the favorable change of $18.6 million in other liabilities.

The net unfavorable changes of $66.4 million in cash provided by working capital accounts, mainly related to construction activities, was due to the timing of billings and payments under our contracts.

The favorable change of $18.6 million in other liabilities was primarily due to changes in our employee incentive compensation accruals.

The favorable change of $8.1 million in other assets was primarily due to the timing of prepayments related to materials required for certain projects.

In the six months ended June 30, 2023, we used net cash of $38.4 million in investing activities consisting of $41.7 million for capital expenditures, partially offset by $3.3 million of proceeds from the sale of equipment.

In the six months ended June 30, 2023, financing activities used net cash of $6.0 million, consisting primarily of $7.9 million of shares repurchased to satisfy tax obligations under our stock compensation programs, $7.1 million of net borrowings under our revolving line of credit, $2.5 million of payments under our equipment notes and $2.1 million of debt refinancing costs.

We believe our $451.0 million borrowing availability under our revolving line of credit at June 30, 2023, future cash flow from operations and our ability to utilize short-term and long-term leases will provide sufficient liquidity for our short-term and long-term needs.

Our primary short-term liquidity needs include cash for operations, debt service requirements, capital expenditures, acquisition and joint venture opportunities.

We believe that we have adequate sources of liquidity to meet our long-term liquidity needs and foreseeable material cash requirements, including those associated with funding future acquisition opportunities.

In the nine months ended September 30, 2023, we used net cash of $59.8 million in investing activities consisting of $63.8 million for capital expenditures, partially offset by $4.0 million of proceeds from the sale of equipment.

In the nine months ended September 30, 2023, financing activities provided net cash of $10.9 million, consisting primarily of $26.4 million of net borrowings under our revolving line of credit, partially offset by $7.9 million of shares repurchased to satisfy tax obligations under our stock compensation programs, $4.6 million of payments under our equipment notes and $2.1 million of debt refinancing costs.

We believe our $431.8 million borrowing availability under our revolving line of credit at September 30, 2023, future cash flow from operations and our ability to utilize short-term and long-term leases will provide sufficient liquidity for our short-term and long-term needs.

Our primary short-term liquidity needs include cash for operations, debt service requirements, capital expenditures, and acquisition and joint venture opportunities.

We believe we have adequate sources of liquidity to meet our long-term liquidity needs and foreseeable material cash requirements, including those associated with funding future acquisition opportunities.

We continue to invest in developing key management and craft personnel in both our T&D and C&I segments and in procuring the specific specialty equipment and tooling needed to win and execute projects of all sizes and complexity.

7 unchanged sentences

dollar equivalent of $150 million.

Of the Facility, up to $75 million may be used for letters of credit, with an additional $75 million available for letters of credit, subject to the sole discretion of each issuing bank.

Up to $75 million of the Facility may be used for letters of credit, with an additional $75 million available for letters of credit, subject to the sole discretion of each issuing bank.

The Facility also allows for $15 million to be used for swingline loans.

14 unchanged sentences

The Credit Agreement also contains covenants including limitations on asset sales, investments, indebtedness and liens.

The Company was in compliance with all of its financial covenants under the Credit Agreement as of June 30, 2023.

We had $20.0 million of borrowings outstanding under the Facility as of June 30, 2023.

The Company was in compliance with all of its financial covenants under the Credit Agreement as of September 30, 2023.

We had $39.3 million of borrowings outstanding under the Facility as of September 30, 2023.

We had $12.9 million of borrowings outstanding under our revolving credit facility under our previous credit agreement as of December 31, 2022.

7 unchanged sentences

Currently, we do not believe it is likely that any claims will be made under any letter of credit.

As of June 30, 2023, we had $19.0 million in letters of credit outstanding under our Credit Agreement, including $11.7 million related to the Company's payment obligation under its insurance programs and approximately $7.3 million related to contract performance obligations.

As of September 30, 2023, we had $18.9 million in letters of credit outstanding under our Credit Agreement, including $11.7 million related to the Company's payment obligation under its insurance programs and approximately $7.2 million related to contract performance obligations.

As of December 31, 2022, we had $12.8 million in letters of credit outstanding under our previous credit agreement, which were almost entirely related to the Company's payment obligation under its insurance programs.

3 unchanged sentences

Each Equipment Note constitutes a separate, distinct and independent financing of equipment and contractual obligation.

As of June 30, 2023 and December 31, 2022, we had two outstanding Equipment Notes collateralized by equipment and vehicles owned by us.

As of June 30, 2023 and December 31, 2022, we also had one other equipment note outstanding collateralized by a vehicle owned by us.

The outstanding balance of all equipment notes was $25.1 million as of June 30, 2023 and $27.6 million as of December 31, 2022.

As of June 30, 2023, we had outstanding short-term and long-term equipment notes of approximately $5.2 million and $20.0 million, respectively.

As of September 30, 2023 and December 31, 2022, we had two outstanding Equipment Notes collateralized by equipment and vehicles owned by us.

As of September 30, 2023 and December 31, 2022, we also had one other equipment note outstanding collateralized by a vehicle owned by us.

The outstanding balance of all equipment notes was $23.0 million as of September 30, 2023 and $27.6 million as of December 31, 2022.

As of September 30, 2023, we had outstanding short-term and long-term equipment notes of approximately $5.3 million and $17.8 million, respectively.

As of December 31, 2022, we had an outstanding short-term and long-term Equipment Notes of approximately $5.1 million and $22.6 million, respectively.

5 unchanged sentences

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 outstanding balance of operating lease obligations was $28.5 million as of June 30, 2023, consisting of short-term and long-term operating lease obligations of approximately $9.8 million and $18.6 million, respectively.

The outstanding balance of operating lease obligations was $29.1 million as of September 30, 2023, consisting of short-term and long-term operating lease obligations of approximately $9.3 million and $19.8 million, respectively.

The outstanding balance of operating lease obligations was $30.5 million as of December 31, 2022, consisting of short-term and long-term operating lease obligations of approximately $9.7 million and $20.8 million, respectively.

The outstanding balance of finance lease obligations was $2.9 million as of June 30, 2023, consisting of short-term and long-term finance lease obligations of approximately $2.3 million and $0.6 million, respectively.

The outstanding balance of finance lease obligations was $2.5 million as of September 30, 2023, consisting of short-term and long-term finance lease obligations of approximately $2.1 million and $0.4 million, respectively.

As of December 31, 2022 we had $3.4 million outstanding finance lease obligations, consisting of short-term and long-term finance lease obligations of approximately $1.1 million and $2.3 million, respectively.

Purchase Commitments for Construction Equipment

As of June 30, 2023, we had approximately $24.7 million in outstanding purchase obligations for certain construction equipment to be paid with cash outlays scheduled to occur in 2023 and 2024.

As of September 30, 2023, we had approximately $37.4 million in outstanding purchase obligations for certain construction equipment to be paid with cash outlays scheduled to occur in 2023 and 2024.

Performance and Payment Bonds and Parent Guarantees

8 unchanged sentences

We believe that it is unlikely that we will have to fund significant claims under our surety arrangements.

As of June 30, 2023, an aggregate of approximately $2.14 billion in original face amount of bonds issued by our sureties were outstanding.

Our estimated remaining cost to complete these bonded projects was approximately $765.0 million as of June 30, 2023.

As of September 30, 2023, an aggregate of approximately $2.30 billion in original face amount of bonds issued by our sureties were outstanding.

Our estimated remaining cost to complete these bonded projects was approximately $732.2 million as of September 30, 2023.

From time to time, we guarantee the obligations of our wholly owned subsidiaries, including obligations under certain contracts with customers, certain lease agreements, and, in some states, obligations in connection with obtaining contractors’ licenses.

5 unchanged sentences

Under certain circumstances such as foreclosures or negotiated settlements, we may take title to the underlying assets in lieu of cash in settlement of receivables.

As of June 30, 2023 and 2022, none of our customers individually exceeded 10% of consolidated accounts receivable.

As of September 30, 2023 and 2022, none of our customers individually exceeded 10% of consolidated accounts receivable.

Management believes the terms and conditions in its contracts, billing and collection policies are adequate to minimize the potential credit risk.

50 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis