What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-28 compared with 2023-02-22 · 108 added, 126 removed, 1109 unchanged (17% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2023 , 2022 and 2021

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

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2023 , 2022 and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 2023 , 2022 and 2021

13 unchanged sentences

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 2023 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, 2023 and has issued an attestation report on MYR Group’s internal control over financial reporting which appears herein.

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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.

8 unchanged sentences

Critical Audit Matter

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.

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

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– 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

52 unchanged sentences

Additional paid-in capital 162,386 161,427

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

Accumulated other comprehensive loss ( 3,880 ) ( 6,300 )

Retained earnings 492,529 404,908

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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

8 unchanged sentences

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

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

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

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

4 unchanged sentences

Settlement of stock repurchase program — ( 26 ) — ( 241 ) — ( 2,627 ) ( 2,868 ) — ( 2,868 )

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

Other comprehensive income — — — — 2,420 — 2,420 — 2,420

Balance at December 31, 2023 $ — 16,684 $ 167 $ 162,386 $ ( 3,880 ) $ 492,529 $ 651,202 $ — $ 651,202

29 unchanged sentences

Cash flows from financing activities:

Net borrowings (repayments) under revolving lines of credit 12,915 — ( 103,820 )

Borrowings under revolving lines of credit 562,901 198,697 —

Repayments under revolving lines of credit ( 562,615 ) ( 185,782 ) —

Payment of principal obligations under equipment notes ( 4,598 ) ( 1,047 ) ( 24,917 )

2 unchanged sentences

Proceeds from exercise of stock options 20 40 498

Debt refinancing costs ( 2,129 ) — —

Repurchase of common stock ( 2,868 ) ( 36,981 ) —

19 unchanged sentences

MYR Group Inc.

(the “Company”) is a holding company of specialty electrical construction service providers and is currently conducting operations through wholly-owned subsidiaries.

(the “Company”) is a holding company of specialty electrical construction service providers conducting operations through wholly-owned subsidiaries.

The Company performs construction services in two business segments:

1 unchanged sentence

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 on electric transmission, distribution networks, substation facilities and clean energy projects include design, engineering, procurement, construction, upgrade, maintenance and repair services.

T&D provides a broad range of services on electric transmission, distribution networks, substation facilities, clean energy projects and electric vehicle charging infrastructure.

T&D services 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.

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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Under the equity method the net investment in joint ventures is stated as a single item on the Company’s consolidated balance sheets.

If an investment in a joint venture contains a recourse or unfunded commitments to provide additional equity, distributions and/or losses in excess of the investment a liability is recorded in other current liabilities on the Company’s consolidated balance sheets.

For joint ventures which the Company does not have a controlling interest, the Company’s share of any profits and assets and its share of any losses and liabilities are recognized based on the Company’s stated percentage partnership interest in the joint venture, and are normally recorded by the Company one month in arrears.

If an investment in a joint venture contains a recourse or unfunded commitment to provide additional equity, distributions and/or losses in excess of the investment a liability is recorded in other current liabilities on the Company’s consolidated balance sheets.

For joint ventures which the Company does not have a controlling interest, the Company’s share of any profits and assets and its share of any losses and liabilities are recognized based on the Company’s stated percentage partnership interest in the joint venture and are typically recorded by the Company one month in arrears.

The investments in joint ventures are recorded at cost and the carrying amounts are adjusted to recognize the Company’s proportionate share of cumulative income or loss, additional contributions made and dividends and capital distributions received.

10 unchanged sentences

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 gains or losses, recorded in other income (expense), net, for the year ended December 31, 2023 and 2022, were no t significant, and losses were $ 0.1 million for the year ended December 31, 2021.

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.

6 unchanged sentences

These change orders and/or claims are in the process of being negotiated in the normal course of business, and a portion of these recognized revenues had been included in multiple periods.

These aggregate amounts, which were included in “Contract assets” in the accompanying consolidated balance sheets, represent the Company’s estimates of additional contract revenues that were earned and probable of collection, however, the amount ultimately realized could be significantly higher or lower than the estimated amount.

however, the amount ultimately realized could be significantly higher or lower than the estimated amount.

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.

1 unchanged sentence

The estimates are reviewed and revised quarterly, as needed.

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.

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.

Additional discussion on the impact of these estimate changes can be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

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.

of $ 6.6 million and diluted earnings per common share attributable to MYR Group Inc.

7 unchanged sentences

Stock-Based Compensation

The Company determines compensation expense for stock-based awards based on the estimated fair values at the grant date and recognize the related compensation expense over the vesting period.

The Company uses the straight-line amortization method to recognize compensation expense related to stock-based awards, such as restricted stock and restricted stock units, that have only service conditions.

The Company determines compensation expense for stock-based awards based on the estimated fair values at the grant date and recognizes the related compensation expense over the vesting period.

The Company uses the straight-line amortization method to recognize compensation expense related to stock-based awards, such as restricted stock units, that have only service conditions.

This method recognizes stock compensation expense on a straight-line basis over the requisite service period for the entire award.

The Company recognizes compensation expense related to performance awards that vest based on internal performance metrics and service conditions on a straight-line basis over the service period, but adjust inception-to-date expense based upon our determination of the potential achievement of the performance target at each reporting date.

The Company recognizes compensation expense related to performance awards that vest based on internal performance metrics and service conditions on a straight-line basis over the service period, but adjusts inception-to-date expense based upon our determination of the potential achievement of the performance target at each reporting date.

The Company recognizes compensation expense related to performance awards with market-based performance metrics on a straight-line basis over the requisite service period.

11 unchanged sentences

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

As of December 31, 2022 and 2021, the Company held its cash in checking accounts or in highly liquid money market funds.

As of December 31, 2023 and 2022, the Company held its cash in checking accounts or in highly liquid money market accounts.

The Company’s banking arrangements allow the Company to fund outstanding checks when presented to financial institutions for payment.

The Company funds all intraday bank balances overdrafts during the same business day.

Checks issued and outstanding in excess of bank balance are recorded in accounts payable on the Company’s consolidated balance sheets and are reflected as a financing activity on the Company’s Consolidated Statements of Cash Flows.

The Company funds all intraday bank balance overdrafts during the same business day.

Checks issued and outstanding in excess of bank balances are recorded in accounts payable on the Company’s consolidated balance sheets and are reflected as a financing activity on the Company’s Consolidated Statements of Cash Flows.

Accounts Receivable and Allowance for Doubtful Accounts

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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 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 .

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

22 unchanged sentences

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 deductible for each line of coverage is up to $ 1.0 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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The Company considers the applicability and impact of all ASUs.

The Company, based on its assessment, determined that any recently issued or proposed ASUs not listed below are either not applicable to the Company or may have minimal impact on its Financial Statements.

Recently Adopted Accounting Pronouncements

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.

Under the new guidance the acquirer is required to recognize contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 as if the acquirer had originated the contracts.

The update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued.

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

The Company, based on its assessment, determined that any recently issued or proposed ASUs not listed below are either not applicable to the Company or will have minimal impact on its Financial Statements when adopted.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant reportable segment expenses and other disclosure requirements.

The update is effective for annual reporting periods beginning after December 15, 2023, with early adoption permitted.

The guidance requires application on a retrospective basis.

The Company is currently evaluating the impact of the new standard on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction.

The guidance also includes certain other amendments intended to improve the effectiveness of income tax disclosures.

The update is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted.

The amendments in this pronouncement should be applied on a prospective basis, with the option to apply them retrospectively.

The Company is currently evaluating the impact of the new standard on the Company’s income tax disclosures.

Powerline Plus Ltd

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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.

The Company finalized the purchase price accounting relating to the acquisition of the Powerline Plus Companies during the year ended December 31, 2022.

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.

As of December 31, 2023 and 2022, the fair value of the contingent earn-out consideration was zero and $ 0.2 million, respectively.

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 $ 17.0 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.

Changes in contingent earn-out consideration, subsequent to the acquisition, of approximately $ 0.2 million and $ 0.7 million were recorded in other income, for the year ended December 31, 2023 and 2022, respectively.

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.

1 unchanged sentence

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.

No changes in margin guarantee adjustments on contracts, subsequent to the acquisition, have been recorded for the year ended December 31, 2023 and 2022.

Future margin guarantee adjustments, if any, will be recognized in other income in 2024.

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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

Contracts with customers usually stipulate the timing of payment, which is defined by the terms found within the various contracts under which work was performed during the period.

Therefore, contract assets and liabilities are created when the timing of costs incurred on work performed does not coincide with the billing terms, which frequently include retention provisions contained in each contract.

Therefore, contract assets and liabilities are created when the timing of costs incurred on work performed does not coincide with the billing terms.

These contracts frequently include retention provisions contained in each contract.

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.

5 unchanged sentences

Contract assets, net $ 420,616 $ 300,615 $ 120,001

The Company’s consolidated balance sheets present contract liabilities which contain deferred revenue and an accrual for contracts in a loss provision.

The Company’s consolidated balance sheets present contract liabilities that contain deferred revenue and an accrual for contracts in a loss provision.

Contract liabilities consisted of the following at December 31:

5 unchanged sentences

(in thousands) 2023 2022 Change

Contract assets $ 300,615 $ 225,075 $ 75,540

Contract assets, net $ 420,616 $ 300,615 $ 120,001

Contract liabilities ( 240,411 ) ( 227,055 ) ( 13,356 )

16 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.

19 unchanged sentences

Total current obligations

11,276 10,838

Operating lease obligations

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Long-term operating lease obligations $ 314 $ 25,775 $ 26,089

The financing component for finance lease obligations represents the interest component of finance leases that will be recognized as interest expense in future periods.

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

1 unchanged sentence

The terms and rental rates of these leases are at market rental rates.

Lease expense associated with these leases was $ 2.7 million, $ 2.4 million and $ 0.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2023, the minimum lease payments required under these leases totaled $ 12.9 million, which are due over the next 5.7 years.

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The Company’s long-term debt was based on variable and fixed interest rates at December 31, 2023 and 2022.

Long-term debt, if any, with variable interest rates are based on rates for new issues with similar remaining maturities, and approximated carrying value.

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.

Long-term debt with variable interest rates is based on rates for new issues with similar remaining maturities, and approximated carrying value.

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

As of December 31, 2023, the fair value 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 value of future amounts potentially payable to the former owners of the acquired Powerline Plus Companies, if the Powerline Plus Companies achieve certain performance targets over a three-year post-acquisition period.

The fair value 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.

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Total intangible assets $ 114,050 $ 30,534 $ 83,516 $ 112,996 $ 25,439 $ 87,557

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.

10 unchanged sentences

Union dues and benefits 26,107 21,500

Taxes 6,574 4,605

Payroll, sales and other taxes 13,903 6,574

Profit sharing and thrift plan 8,592 9,119

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Other equipment note 4/11/2022 4.55 % Monthly 5 44 55

23,040 27,638

Total debt 36,241 40,553

3 unchanged sentences

Credit Agreement

On September 13, 2019, the Company entered into a five-year amended and restated credit agreement (the “Credit Agreement”) with a syndicate of banks led by JPMorgan Chase Bank, N.A.

and Bank of America, N.A, that provides for a $ 375 million facility (the “Facility”), subject to certain financial covenants as defined in the Credit Agreement, that may be used for revolving loans of which $ 150 million may be used for letters of credit.

The Facility also allows for revolving loans and letters of credit in Canadian dollars and other currencies, up to the U.S.

dollar equivalent of $ 75 million.

On May 31, 2023, the Company entered into a five-year third amended and restated credit agreement with a maturity date of May 31, 2028, (the “Credit Agreement”) through a syndicate of banks led by JPMorgan Chase Bank, N.A.

and Bank of America, N.A, that provides for a $ 490 million revolving credit facility (the “Facility”), subject to certain financial covenants as defined in the Credit Agreement.

The Facility allows for revolving loans in Canadian dollars and other non-US currencies, up to the U.S.

dollars equivalent of $ 150 million.

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.

The Company has an expansion option to increase the commitments under the Facility or enter into incremental term loans, subject to certain conditions, by up to an additional $ 200 million upon receipt of additional commitments from new or existing lenders.

1 unchanged sentence

Additionally, subject to certain exceptions, the Company’s domestic subsidiaries also guarantee the repayment of all amounts due under the Credit Agreement.

The Credit Agreement provides for customary events of default.

If an event of default occurs and is continuing, on the terms and subject to the conditions set forth in the Credit Agreement, amounts outstanding under the Facility may be accelerated and may become or be declared immediately due and payable.

Borrowings under the Credit Agreement are used for refinancing existing indebtedness, working capital, capital expenditures, acquisitions, share repurchases, and other general corporate purposes.

Borrowings under the Credit Agreement are used to refinance existing indebtedness, and to provide for future working capital, capital expenditures, acquisitions and other general corporate purposes.

Amounts borrowed under the Credit Agreement bear interest, at the Company’s option, at a rate equal to either (1) the Alternate Base Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 0.25 % to 1.00 %;

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).

Letters of credit issued under the Facility are subject to a letter of credit fee of 1.00 % to 1.75 % for non-performance letters of credit or 0.50 % to 0.875 % for performance letters of credit, based on the Company’s consolidated Leverage Ratio.

The Company is subject to a commitment fee of 0.15 % to 0.25 %, based on the Company’s consolidated Leverage Ratio, on any unused portion of the Facility.

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.

or (2) the Term Benchmark Rate (as defined in the Credit Agreement) plus an applicable margin ranging from 1.25 % to 2.00 %.

The applicable margin is determined based on the Company’s Net Leverage Ratio (as defined in the Credit Agreement).

The Credit Agreement establishes Adjusted Term Secured Overnight Financing Rate ("SOFR") (as defined in the Credit Agreement) as the benchmark rate in replacement of LIBOR.

Letters of credit issued under the Facility are subject to a letter of credit fee of 1.25 % to 2.00 % for non-performance letters of credit or 0.625 % to 1.00 % for performance letters of credit, based on the Company’s Net Leverage Ratio.

The Company is subject to a commitment fee of 0.20 % to 0.30 %, based on the Company’s Net Leverage Ratio, on any unused portion of the Facility.

The Credit Agreement restricts certain types of payments when the Company’s Net Leverage Ratio, after giving pro forma effect thereto, exceeds 2.75 .

The weighted average interest rate on borrowings outstanding on the Facility for the year ended December 31, 2023, was 7.07 % 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).

Under the Credit Agreement, the Company is subject to certain financial covenants including a maximum Net Leverage Ratio of 3.0 and a minimum Interest Coverage Ratio (as defined in the Credit Agreement) of 3.0 .

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 December 31, 2023.

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.

As permitted, debt issuance costs have been deferred and are presented as an asset within other assets, which is amortized as interest expense over the term of the line of credit.

As of December 31, 2023, the Company had $ 13.2 million of borrowings outstanding under the Facility and letters of credit outstanding under the Facility of approximately $ 34.4 million, including $ 27.1 million related to the Company's payment obligation under its insurance programs and approximately $ 7.3 million related to contract performance obligations.

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

The Company had remaining deferred debt issuance costs totaling $ 2.2 million as of December 31, 2023, mostly related to the Credit Agreement.

As permitted, debt issuance costs have been deferred and are presented as an asset within other assets, which is amortized as interest expense over the term of the Credit Agreement.

On May 31, 2023, the Company had remaining deferred debt issuance costs related to its previous credit agreement totaling $ 0.4 million, which is being amortized over the life of the Credit Agreement.

Equipment Notes

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The Company’s remaining performance obligations include projects that have a written award, a letter of intent, a notice to proceed or an agreed-upon work order to perform work on mutually accepted terms and conditions.

The following table summarizes the amount of remaining performance obligations as of December 31, 2022 that the Company expects to be realized and the amount of the remaining performance obligations that the Company reasonably estimates will not be recognized within the next twelve months.

The timing of when remaining performance obligations are recognized is evaluated quarterly and is largely driven by the estimated start date and duration of the underlying projects.

The following table summarizes the total amount of remaining performance obligations as of December 31, 2023 that the Company expects to be realized, the amount of the remaining performance obligations that the Company reasonably estimates will be recognized within the next twelve months, and the amount estimated to be recognized after the next twelve months.

Remaining Performance Obligations as of December 31, 2023

(in thousands) Total Amount estimated to not be

recognized within 12 months

(in thousands) Total Amount estimated to be

recognized within 12 months Amount estimated to be

recognized after 12 months

T&D $ 769,128 $ 722,765 $ 46,363

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Total $ 2,301,147 $ 1,867,008 $ 434,139

The Company expects a vast majority of the remaining performance obligations to be recognized within twenty-four months, although the timing of the Company’s performance is not always under its control.

The Company estimates approximately 95% or more of the remaining performance obligations will be recognized within twenty-four months, including approximately 80% of the remaining performance obligations estimated to be recognized within twelve months, although the timing of the Company’s performance is not always under its control.

The timing of when remaining performance obligations are recognized by the Company can vary considerably and is impacted by multiple variables including, but not limited to:

changes in the estimated versus actual start time of a project;

the availability of labor, equipment and materials;

changes in project workflow;

project delays and accelerations;

and the timing of final contract settlements.

Additionally, the difference between the remaining performance obligations and backlog is due to the exclusion of a portion of the Company’s MSAs under certain contract types from the Company’s remaining performance obligations as these contracts can be canceled for convenience at any time by the Company or the customer without considerable cost incurred by the customer.

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federal income tax expense 4.4 4.5 4.7

Change in valuation allowance — — 0.1

Tax differential on foreign earnings 0.7 0.6 0.5

3 unchanged sentences

Provision to return adjustments, net 0.7 0.7 0.4

Global intangible low tax income — — 0.9

Section 162(m) limitation 2.5 2.4 1.1

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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.

We expect future earnings to be reinvested.

Accordingly, as of December 31, 2022, no expense for U.S.

income taxes or foreign withholding taxes was recorded.

Earnings from the Company’s Canadian subsidiaries are indefinitely reinvested in Canada, therefore as of December 31, 2023, the Company had no undistributed earnings or withholding deferral associated with its Canadian subsidiaries.

The Company is subject to taxation in various jurisdictions.

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Purchase Commitments

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 .

As of December 31, 2023, the Company had approximately $ 32.5 million in outstanding purchase orders for certain construction equipment, with cash payments scheduled to occur in 2024.

Insurance and Claims Accruals

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

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 deductible per occurrence for each line of coverage is up to $ 1.0 million.

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

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The Company does not believe that any of these proceedings, separately or in the aggregate, would be expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

The Company is routinely subject to other civil claims, litigation and arbitration, and regulatory investigations arising in the ordinary course of our present business as well as in respect of our divested businesses.

The Company is routinely subject to other civil claims, litigation and arbitration, and regulatory investigations arising in the ordinary course of business.

Some of these claims and litigations include claims related to the Company’s current services and operations, the Company believes that it has strong defenses to these claims as well as insurance coverages that could contribute to any settlement or liability in the event claims are not resolved in our favor.

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During the years ended December 31, 2023, 2022 and 2021, the intrinsic value of stock options exercised was $ 0.1 million, $ 0.1 million and $ 1.2 million, respectively.

The following table summarizes information with respect to stock options outstanding and exercisable under the Company’s plans at December 31, 2022:

Options Outstanding and Exercisable

Exercise Price Number Of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term

$ 24.68 – $ 24.68

869 $ 24.68 0.2 years

Time-Vested Stock Awards

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IBEW Local Union 1249 Pension Fund 15-6035161 001 Green 12/31/2022 Green 12/31/2021 5,706 3,791 3,684 No No

Laborers Local Union 158 Pension Fund 23-6580323 001 Green 12/31/2022 Green 12/31/2021 3,246 256 37 No No

Defined Contribution Plans:

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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, 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.

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, 2021 and 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 or was one of the top-ten highest contributors to that plan, for the plan years ended March 31, 2023, 2022 and 2021, in the National Electrical Benefit Fund’s Form 5500 as providing more than five percent of the total contributions to that plan or was one of the top-ten highest contributors to that plan, for the plan years ended December 31, 2022, 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 or was one of the top-ten highest contributors to that plan, for the plan years ended June 30, 2022, 2021 and 2020.

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 five percent of the total contributions to that plan or was one of the top-ten highest contributors to that plan, for the plan year ended June 30, 2022, 2021 and 2020, and in the IBEW Local 332 Pension Plan Part A’s Form 5500 as providing more than five percent of the total contributions to that plan or was one of the top-ten highest contributors to that plan, for the plan years ended December 31, 2022.

Segment Information

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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 and lower voltage underground and overhead distribution systems and clean energy projects.

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

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

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Commercial and Industrial:

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.

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Diluted $ 5.40 $ 4.91 $ 4.95

For the years ended December 31, 2022, 2021 and 2020, certain common stock equivalents were excluded from the calculation of dilutive securities because their inclusion would either have been anti-dilutive or, for stock options, the exercise prices of those stock options were greater than the average market price of the Company’s common stock for the period.

For the years ended December 31, 2023, 2022 and 2021, certain common stock equivalents were excluded from the calculation of dilutive securities because their inclusion would have been anti-dilutive.

All of the Company’s non-participating unvested restricted shares were included in the computation of weighted average dilutive securities.

6 unchanged sentences

The Company’s prior $ 75.0 million repurchase program that commenced on May 9, 2023 expired on November 8, 2023.

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.

During 2023 the Company repurchased 25,042 shares of its common stock under multiple repurchase programs at a weighted-average price of $ 114.55 per share.

All of the shares repurchased were retired.

1 unchanged sentence

As of December 31, 2023, the Company had $ 72.5 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.

During 2023 and 2022, the Company repurchased 76,150 and 68,675 shares of stock, respectively, for approximately $ 7.9 million and $ 6.8 million, respectively, from its employees to satisfy tax obligations on shares vested under the LTIP.

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

1 unchanged sentence

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