What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-10-30 compared with 2024-07-31 · 127 added, 120 removed, 291 unchanged (46% of the section changed)

24 unchanged sentences

These factors will cause us to carry impacted projects at lower margins until their completion and may result in decelerations in project opportunities and awards.

We had consolidated revenues for the six months ended June 30, 2024 of $1.64 billion, of which 57.7% was attributable to our T&D customers and 42.3% was attributable to our C&I customers.

Our consolidated revenues for the six months ended June 30, 2023 were $1.7 billion.

For the six months ended June 30, 2024, our net income and EBITDA (1) were $3.7 million and $35.1 million, respectively, compared to $45.4 million and $88.4 million, respectively, for the six months ended June 30, 2023.

We had consolidated revenues for the nine months ended September 30, 2024 of $2.53 billion, of which 56.5% was attributable to our T&D customers and 43.5% was attributable to our C&I customers.

Our consolidated revenues for the nine months ended September 30, 2023 were $2.64 billion.

For the nine months ended September 30, 2024, our net income and EBITDA (1) were $14.3 million and $72.3 million, respectively, compared to $66.9 million and $135.4 million, respectively, for the nine months ended September 30, 2023.

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

1 unchanged sentence

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 2024 will not likely have a large impact on 2024 results.

Significant construction on any large, multi-year projects awarded in the remainder of 2024 will not likely begin until 2025.

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

13 unchanged sentences

We continue to implement strategies that are designed to further expand our capabilities and effectively allocate capital.

We have focused on strengthening our balance sheet by maintaining a low level of variable rate outstanding debt in the current higher interest rate environment and by increasing our revolving credit facility to $490 million on May 31, 2023.

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

During the six months ended June 30, 2024, the Company repurchased 117,422 shares of its common stock under our repurchase program at a weighted-average price of $138.47 per share.

As of June 30, 2024, we had $58.7 million of remaining availability to purchase shares under our share repurchase program, which continues in effect until November 8, 2024, or until the authorized funds are exhausted.

We have maintained a strong balance sheet, while also supporting our organic growth with capital expenditures and working capital and repurchasing our shares.

During the nine months ended September 30, 2024, the Company repurchased 643,549 shares of its common stock under our repurchase program at a weighted-average price of $116.54 per share, exhausting substantially all of the authorized funds under our share repurchase program.

We believe the borrowing availability under our $490 million revolving credit facility and future cash flow from operations will enable us to support the organic growth of our business, pursue acquisitions and opportunistically repurchase shares.

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

11 unchanged sentences

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 $2.54 billion at June 30, 2024, compared to $2.51 billion at December 31, 2023 and $2.73 billion at June 30, 2023.

Our backlog at June 30, 2024 increased $118.5 million from March 31, 2024.

Backlog in the T&D segment decreased $22.5 million and C&I backlog increased $141.0 million compared to March 31, 2024.

Our backlog as of June 30, 2024 included our proportionate share of joint venture backlog totaling $188.7 million, compared to $4.0 million at March 31, 2024.

Our backlog was $2.60 billion at September 30, 2024, compared to $2.51 billion at December 31, 2023 and $2.62 billion at September 30, 2023.

Our backlog at September 30, 2024 increased $54.4 million from June 30, 2024.

Backlog in the T&D segment decreased $32.0 million and C&I backlog increased $86.3 million compared to June 30, 2024.

Our backlog as of September 30, 2024 included our proportionate share of joint venture backlog totaling $186.2 million, compared to $188.7 million at June 30, 2024.

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, and the amount estimated to be recognized after the next twelve months:

Backlog at June 30, 2024

Backlog at September 30, 2024

(in thousands) Total Amount estimated to be

7 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

6 unchanged sentences

Gain on sale of property and equipment (1,750) (0.2) (754) (0.1) (4,745) (0.2) (3,293) (0.1)

Income (loss) from operations (20,707) (2.5) 32,438 3.6 3,564 0.3 59,864 3.5

Income from operations 20,361 2.3 32,027 3.4 23,925 1.0 91,891 3.5

Other income (expense):

2 unchanged sentences

Other income (expense), net 112 — (91) — (421) — (61) —

Income (loss) before provision for income taxes (22,137) (2.6) 31,597 3.5 959 0.2 58,668 3.4

Income tax expense (benefit) (6,860) (0.8) 9,324 1.0 (2,703) — 13,232 0.7

Net income (loss) $ (15,277) (1.8) % $ 22,273 2.5 % $ 3,662 0.2 % $ 45,436 2.7 %

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Revenues decreased $59.7 million or 6.7%, to $828.9 million for the three months ended June 30, 2024 from $888.6 million for the three months ended June 30, 2023.

The decrease was primarily due to a decrease of $39.8 million in revenue on transmission projects, a decrease of $14.2 million in C&I revenue, and a decrease of $5.8 million in revenue on distribution projects.

Income before provision for income taxes 18,530 2.1 30,843 3.3 19,489 0.8 89,511 3.4

Income tax expense 7,881 0.9 9,331 1.0 5,178 0.2 22,563 0.9

Net income $ 10,649 1.2 % $ 21,512 2.3 % $ 14,311 0.6 % $ 66,948 2.5 %

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Revenues decreased $51.5 million or 5.5%, to $888.0 million for the three months ended September 30, 2024 from $939.5 million for the three months ended September 30, 2023.

The decrease was primarily due to a decrease of $81.0 million in revenue on transmission projects, offset by an increase of $15.3 million in C&I revenue, and an increase of $14.3 million in revenue on distribution projects.

Gross margin.

Gross margin for the three months ended June 30, 2024 decreased to 4.9% compared to 10.1% for the three months ended June 30, 2023.

The decrease in gross margin was primarily impacted by significant changes in our estimated gross profit on certain projects resulting in a net gross margin decrease of 7.2% for the three months ended June 30, 2024, compared to a net decrease of 1.3% for the three months ended June 30, 2023.

During the three months ended June 30, 2024, significant estimate changes negatively impacted gross margin by 9.1%, primarily related to clean energy projects in T&D, the unfavorable impact of a C&I project as well as an increase in costs associated with labor, project inefficiencies and schedule compression on certain projects.

In addition, significant estimate changes in gross profit positively impacted gross margin by 1.9% and largely related to favorable change orders, better-than-anticipated productivity, a favorable job closeout and favorable materials pricing on a project.

Gross margin also benefited by approximately 0.2% from favorable joint venture results during the three months ended June 30, 2024.

Gross margin for the three months ended September 30, 2024 decreased to 8.7% compared to 9.8% for the three months ended September 30, 2023.

The decrease in gross margin was primarily impacted by significant changes in our estimated gross profit on certain projects resulting in a net gross margin decrease of 3.9% for the three months ended September 30, 2024, compared to a net decrease of 1.3% for the three months ended September 30, 2023.

During the three months ended September 30, 2024, significant estimate changes negatively impacted gross margin by 4.7%, primarily related to clean energy projects in T&D, the unfavorable impact of a C&I project, as well as an increase in costs associated with unfavorable job closeouts, and labor and project inefficiencies.

In addition, significant estimate changes in gross profit positively impacted gross margin by 0.8% and largely related to better-than-anticipated productivity and a favorable change order.

Gross profit.

Gross profit was $40.8 million for the three months ended June 30, 2024 compared to $90.1 million for the three months ended June 30, 2023.

Gross profit was $77.3 million for the three months ended September 30, 2024 compared to $92.4 million for the three months ended September 30, 2023.

The decrease of $15.1 million, or 16.3%, was due to lower margin and lower revenues.

Selling, general and administrative expenses.

Selling, general and administrative expenses (“SG&A”) were $61.8 million for the three months ended June 30, 2024 compared to $57.8 million for the three months ended June 30, 2023.

The period-over-period increase of $4.0 million was primarily due to an increase of $3.6 million related to contingent compensation expense related to a prior acquisition and an increase in employee-related expenses to support future growth, partially offset by a decrease in employee incentive compensation costs.

Selling, general and administrative expenses (“SG&A”) were $57.5 million for the three months ended September 30, 2024 compared to $59.9 million for the three months ended September 30, 2023.

The period-over-period decrease of $2.4 million was primarily due to a decrease in employee incentive compensation costs and a decrease of $1.1 million of contingent compensation expense related to a prior acquisition, partially offset by an increase in employee-related expenses to support future growth.

Gain on sale of property and equipment .

Gains from the sale of property and equipment for the three months ended June 30, 2024 were $1.5 million compared to $1.3 million for the three months ended June 30, 2023.

Gains from the sale of property and equipment for the three months ended September 30, 2024 were $1.8 million compared to $0.8 million for the three months ended September 30, 2023.

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, 2024 and 2023.

Income tax expense (benefit).

Income tax benefit was $6.9 million for the three months ended June 30, 2024, with an effective tax rate of 31.0%, compared to the expense of $9.3 million for the three months ended June 30, 2023, with an effective tax rate of 29.5%.

The increase in the tax rate for the three months ended June 30, 2024 was primarily due to higher other permanent difference items.

Net income (loss).

Net loss was $15.3 million for the three months ended June 30, 2024 compared to net income of $22.3 million for the three months ended June 30, 2023.

Interest expense was $2.0 million for three months ended September 30, 2024 compared to $1.3 million for the three months ended September 30, 2023.

This increase was attributable to higher average outstanding debt balances during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Income tax expense.

Income tax expense was $7.9 million for the three months ended September 30, 2024, with an effective tax rate of 42.5%, compared to the expense of $9.3 million for the three months ended September 30, 2023, with an effective tax rate of 30.3%.

The increase in the tax rate for the three months ended September 30, 2024 was primarily due to higher permanent difference items mostly related to deductibility limits of contingent compensation, associated with a prior acquisition, which was successfully achieved during the third quarter of 2024, as well as higher U.S.

taxes on Canadian income.

Net income was $10.6 million for the three months ended September 30, 2024 compared to net income of $21.5 million for the three months ended September 30, 2023.

The decrease was primarily due to the reasons stated earlier.

Segment Results

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 (loss) as a percentage of segment net sales:

Three months ended June 30,

Three months ended September 30,

(dollars in thousands) Amount Percent Amount Percent

3 unchanged sentences

Total $ 888,043 100.0 % $ 939,476 100.0 %

Operating income (loss):

Operating income:

Transmission & Distribution $ 17,568 3.6 % $ 36,262 6.6 %

4 unchanged sentences

Transmission & Distribution

Revenues for our T&D segment for the three months ended June 30, 2024 were $458.2 million compared to $503.7 million for the three months ended June 30, 2023, a decrease of $45.5 million, or 9.0%.

The decrease in revenue was related to a decrease of $39.8 million in revenue on transmission projects and a decrease of $5.8 million in revenue on distribution projects.

Revenues from transmission projects represented 61.7% and 64.0% of T&D segment revenue for the three months ended June 30, 2024 and 2023, respectively.

Operating loss for our T&D segment for the three months ended June 30, 2024 was $8.3 million, a decrease of $46.0 million, or 122.0%, from the three months ended June 30, 2023.

As a percentage of revenues, operating loss for our T&D segment was 1.8% for the three months ended June 30, 2024 compared to operating income of 7.5% for the three months ended June 30, 2023.

Operating income (loss) margin was impacted by significant changes in our estimated gross profit on certain projects resulting in a net operating income (loss) margin decrease of 10.5% for the three months ended June 30, 2024, compared to a net decrease of 1.2% for the three months ended June 30, 2023.

During the three months ended June 30, 2024, significant estimated gross profit changes negatively impacted operating income (loss) as a percentage of revenues by 10.5% and related to clean energy projects.

Losses on these projects were primarily related to contractual disputes, labor and project inefficiencies, higher labor and contract related costs and unfavorable weather conditions.

Revenues for our T&D segment for the three months ended September 30, 2024 were $481.9 million compared to $548.6 million for the three months ended September 30, 2023, a decrease of $66.7 million, or 12.2%.

The decrease in revenue was related to a decrease of $81.0 million in revenue on transmission projects offset by an increase of $14.3 million in revenue on distribution projects.

Revenues from transmission projects represented 57.4% and 65.2% of T&D segment revenue for the three months ended September 30, 2024 and 2023, respectively.

Operating income for our T&D segment for the three months ended September 30, 2024 was $17.6 million, a decrease of $18.7 million, or 51.6%, from the three months ended September 30, 2023.

As a percentage of revenues, operating income for our T&D segment was 3.6% for the three months ended September 30, 2024 compared to operating income of 6.6% for the three months ended September 30, 2023.

Operating income margin was impacted by significant changes in our estimated gross profit on certain projects resulting in a net operating income margin decrease of 5.0% for the three months ended September 30, 2024, compared to a net decrease of 1.9% for the three months ended September 30, 2023.

During the three months ended September 30, 2024, significant estimated gross profit changes negatively impacted operating income as a percentage of revenues by 5.8% with 5.5% of the impact related to losses on certain clean energy projects.

Losses on these projects were primarily related to unfavorable weather conditions, labor and project inefficiencies, higher labor and contract related costs and contractual disputes.

In addition, schedule extensions caused by owner-furnished panel delays led to increased costs on two clean energy projects.

Many of these projects have reached mechanical completion and the remaining projects are anticipated to reach mechanical completion in the third and fourth quarters of 2024.

Additionally, T&D operating income margin was negatively impacted by higher fleet depreciation and maintenance expenses and a decrease in work in progress.

Many of these projects have reached mechanical completion and the remaining projects are anticipated to reach mechanical completion in the fourth quarter of 2024.

Significant estimated gross profit changes were also negatively impacted by an unfavorable job closeout.

These decreases were partially offset by positive significant estimated gross profit changes totaling 0.8% and largely related to better-than-anticipated productivity.

Additionally, T&D operating income margin was negatively impacted by a decrease in work in progress.

Commercial & Industrial

Revenues for our C&I segment for the three months ended June 30, 2024 were $370.7 million compared to $384.9 million for the three months ended June 30, 2023, a decrease of $14.2 million, or 3.7%, which was primarily due to the delayed start of certain projects.

The decrease in revenue was related to a decrease of $6.7 million in revenue on fixed priced contracts, a decrease of $4.8 million in revenues on unit price work, and a decrease of $2.7 million on T&E contracts.

Operating income for our C&I segment for the three months ended June 30, 2024 was $1.6 million, a decrease of $11.0 million, over the three months ended June 30, 2023.

As a percentage of revenues, operating income for our C&I segment was 0.4% for the three months ended June 30, 2024 compared to 3.3% for the three months ended June 30, 2023.

Operating income margin was impacted by significant changes in our estimated gross profit on certain projects resulting in a net operating income margin decrease of 3.1% for the three months ended June 30, 2024, compared to a net decrease of 1.4% for the three months ended June 30, 2023.

Revenues for our C&I segment for the three months ended September 30, 2024 were $406.2 million compared to $390.9 million for the three months ended September 30, 2023, an increase of $15.3 million, or 3.9%.

The increase in revenue was related to an increase of $11.6 million in revenue on fixed priced contracts, an increase of $6.8 million on T&E contracts, offset by a decrease of $3.1 million in revenues on unit price work.

Operating income for our C&I segment for the three months ended September 30, 2024 was $20.3 million, an increase of $6.4 million, over the three months ended September 30, 2023.

As a percentage of revenues, operating income for our C&I segment was 5.0% for the three months ended September 30, 2024 compared to 3.6% for the three months ended September 30, 2023.

Operating income margin was positively impacted during the three months ended September 30, 2024, by the continued benefit of higher margins on certain projects nearing completion, due to better-than-anticipated productivity and previous favorable change orders.

Operating income margin was also impacted by significant changes in our estimated gross profit on certain projects resulting in a net operating income margin decrease of 2.6% for the three months ended September 30, 2024, compared to a net decrease of 0.3% for the three months ended September 30, 2023.

Significant estimated gross profit changes negatively impacted operating income as a percentage of revenues by 3.5%, with 2.9% of the impact from a single project that is anticipated to reach substantial completion during the fourth quarter of 2024.

The loss from this project was primarily due to scope additions, increased labor costs related to schedule compression and lower productivity due to access and workflow issues.

C&I operating income margin was also negatively impacted by an increase in costs associated with labor, project inefficiencies and schedule compression on certain projects.

These decreases were partially offset by positive significant estimated gross profit changes totaling 4.3% and largely related to favorable change orders, better-than-anticipated productivity, a favorable job closeout and favorable materials pricing on a project.

Additionally, C&I operating income margin was negatively impacted by approximately 1.0% due to higher contingent compensation expense related to a prior acquisition, partially offset by approximately 0.4% due to favorable joint venture results.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Revenues decreased $55.7 million or 3.3%, to $1.64 billion for the six months ended June 30, 2024 from $1.70 billion for the six months ended June 30, 2023.

The decrease was primarily due to a decrease of $55.4 million in C&I revenue, and a decrease of $24.0 million in revenue on transmission projects, partially offset by an increase of $23.5 million in revenue on distribution projects.

Significant estimated gross profit changes were also negatively impacted by an unfavorable job closeout and labor and project inefficiencies.

These decreases were partially offset by positive significant estimated gross profit changes totaling 0.9% and largely related to better-than-anticipated productivity and favorable change orders.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Revenues decreased $107.2 million or 4.1%, to $2.53 billion for the nine months ended September 30, 2024 from $2.64 billion for the nine months ended September 30, 2023.

The decrease was primarily due to a decrease of $105.0 million in revenue on transmission projects and a decrease of $40.1 million in C&I revenue, partially offset by an increase of $37.8 million in revenue on distribution projects.

Gross margin.

Gross margin for the six months ended June 30, 2024 decreased to 7.7% compared to 10.3% for the six months ended June 30, 2023.

The decrease in gross margin was primarily impacted by significant changes in our estimated gross profit on certain projects resulting in a net gross margin decrease of 4.2% for the six months ended June 30, 2024, compared to a net decrease of 1.0% for the six months ended June 30, 2023.

During the six months ended June 30, 2024, significant estimate changes negatively impacted gross margin by 5.9%, primarily related to clean energy projects in T&D, labor and project inefficiencies, the unfavorable impact of a C&I project, an increase in costs associated with schedule compression on certain projects and an unfavorable change order.

In addition, significant estimate changes in gross profit positively impacted gross margin by 1.7% and mainly related to better-than-anticipated productivity, favorable change orders and a favorable job closeout.

Gross margin also benefited by approximately 0.3% from favorable joint venture results during the six months ended June 30, 2024.

Gross margin for the nine months ended September 30, 2024 decreased to 8.1% compared to 10.1% for the nine months ended September 30, 2023.

The decrease in gross margin was primarily impacted by significant changes in our estimated gross profit on certain projects resulting in a net gross margin decrease of 4.4% for the nine months ended September 30, 2024, compared to a net decrease of 1.2% for the nine months ended September 30, 2023.

During the nine months ended September 30, 2024, significant estimate changes negatively impacted gross margin by 5.7%, primarily related to clean energy projects in T&D, the unfavorable impact of a C&I project, labor and project inefficiencies, an increase in costs associated with schedule compression on certain projects, an unfavorable change order and an unfavorable job closeout.

In addition, significant estimate changes in gross profit positively impacted gross margin by 1.3% and mainly related to better-than-anticipated productivity, favorable change orders and favorable job closeouts.

Gross margin also benefited by approximately 0.2% from favorable joint venture results during the nine months ended September 30, 2024.

Gross profit.

Gross profit was $127.1 million for the six months ended June 30, 2024 compared to $174.5 million for the six months ended June 30, 2023.

Gross profit was $204.4 million for the nine months ended September 30, 2024 compared to $266.9 million for the nine months ended September 30, 2023.

The decrease of $62.5 million, or 23.4% was due to lower margin and lower revenues.

Selling, general and administrative expenses.

SG&A was $124.1 million for the six months ended June 30, 2024 compared to $114.7 million for the six months ended June 30, 2023.

The period-over-period increase of $9.4 million was primarily due to an increase of $5.3 million related to contingent compensation expense related to a prior acquisition and an increase in employee-related expenses to support future growth.

SG&A was $181.5 million for the nine months ended September 30, 2024 compared to $174.6 million for the nine months ended September 30, 2023.

The period-over-period increase of $6.9 million was primarily due to an increase of $4.2 million of contingent compensation expense related to a prior acquisition and an increase in employee-related expenses to support future growth, partially offset by a decrease 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, 2024 were $3.0 million compared to $2.5 million for the six months ended June 30, 2023.

Gains from the sale of property and equipment for the nine months ended September 30, 2024 were $4.7 million compared to $3.3 million for the nine months ended September 30, 2023.

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 $2.3 million for the six months ended June 30, 2024 compared to $1.7 million for the six months ended June 30, 2023.

This increase was primarily attributable to higher interest rates, partially offset by lower average debt balances during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Income tax expense (benefit).

Income tax benefit was $2.7 million for the six months ended June 30, 2024, with an effective tax rate of (281.9%), compared to the expense of $13.2 million for the six months ended June 30, 2023, with an effective tax rate of 22.6%.

The change in the tax rate for the six months ended June 30, 2024 was primarily due to lower pretax income and higher other permanent difference items, offset by lower stock compensation excess tax benefits.

Net income was $3.7 million for the six months ended June 30, 2024 compared to $45.4 million for the six months ended June 30, 2023.

Interest expense was $4.3 million for the nine months ended September 30, 2024 compared to $3.1 million for the nine months ended September 30, 2023.

This increase was primarily attributable to higher average debt balances during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Income tax expense.

Income tax expense was $5.2 million for the nine months ended September 30, 2024, with an effective tax rate of 26.6%, compared to the expense of $22.6 million for the nine months ended September 30, 2023, with an effective tax rate of 25.2%.

The change in the tax rate for the nine months ended September 30, 2024 was primarily due to lower pretax income and higher other permanent difference items, offset by lower stock compensation excess tax benefits.

The increase in permanent difference items primarily related to deductibility limits of contingent compensation, associated with a prior acquisition, as well as higher U.S.

taxes on Canadian income.

Net income was $14.3 million for the nine months ended September 30, 2024 compared to $66.9 million for the nine months ended September 30, 2023.

The decrease 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, 2024 were $948.6 million compared to $949.1 million for the six months ended June 30, 2023, a decrease of $0.5 million.

The decrease in revenue was related to a decrease of $24.0 million in revenue on transmission projects, mostly offset by an increase of $23.5 million in revenue on distribution projects.

Revenues from transmission projects represented 62.9% and 65.4% of T&D segment revenue for the six months ended June 30, 2024 and 2023, respectively.

Operating income for our T&D segment for the six months ended June 30, 2024 was $21.5 million, a decrease of $49.1 million, or 69.5%, from the six months ended June 30, 2023.

As a percentage of revenues, operating income for our T&D segment was 2.3% for the six months ended June 30, 2024 compared to 7.4% for the six months ended June 30, 2023.

Operating income margin was impacted by significant changes in our estimated gross profit on certain projects resulting in a net operating income margin decrease of 5.7% for the six months ended June 30, 2024, compared to a net decrease of 0.8% for the six months ended June 30, 2023.

During the six months ended June 30, 2024, significant estimated gross profit changes negatively impacted operating income as a percentage of revenues by 5.9% and related to clean energy projects.

Revenues for our T&D segment for the nine months ended September 30, 2024 were $1.43 billion compared to $1.50 billion for the nine months ended September 30, 2023, a decrease of $67.2 million.

The decrease in revenue was related to a decrease of $105.0 million in revenue on transmission projects, offset by an increase of $37.8 million in revenue on distribution projects.

Revenues from transmission projects represented 61.0% and 65.3% of T&D segment revenue for the nine months ended September 30, 2024 and 2023, respectively.

Operating income for our T&D segment for the nine months ended September 30, 2024 was $39.1 million, a decrease of $67.7 million, or 63.4%, from the nine months ended September 30, 2023.

As a percentage of revenues, operating income for our T&D segment was 2.7% for the nine months ended September 30, 2024 compared to 7.1% for the nine months ended September 30, 2023.

Operating income margin was impacted by significant changes in our estimated gross profit on certain projects resulting in a net operating income margin decrease of 6.0% for the nine months ended September 30, 2024, compared to a net decrease of 1.1% for the nine months ended September 30, 2023.

During the nine months ended September 30, 2024, significant estimated gross profit changes negatively impacted operating income as a percentage of revenues by 6.3% with 6.1% of the impact related to losses on certain clean energy projects.

Losses on these projects were primarily related to contractual disputes, labor and project inefficiencies, higher labor and contract related costs and unfavorable weather conditions.

In addition, schedule extensions caused by owner-furnished panel delays led to increased costs on two clean energy projects.

Many of these projects have reached mechanical completion and the remaining projects are anticipated to reach mechanical completion in the third and fourth quarters of 2024.

Many of these projects have reached mechanical completion and the remaining projects are anticipated to reach mechanical completion in the fourth quarter of 2024.

Significant estimated gross profit changes were also negatively impacted by an unfavorable job closeout and labor and project inefficiencies.

These decreases were partially offset by positive significant estimated gross profit changes totaling 0.3% of revenues mostly related to better-than-anticipated productivity.

Additionally, T&D operating income margin was negatively impacted by higher fleet depreciation and maintenance expenses, partially offset by an increase in work in progress.

Additionally, T&D operating income margin was negatively impacted by higher fleet depreciation and maintenance expenses.

Commercial & Industrial

Revenues for our C&I segment for the six months ended June 30, 2024 were $695.8 million compared to $751.2 million for the six months ended June 30, 2023, a decrease of $55.4 million, or 7.4%, which was primarily due to the delayed start of certain projects.

The decrease in revenue was related to a decrease of $47.5 million in revenue on fixed priced contracts, a decrease of $6.1 million in revenues on unit price work and a decrease of $1.7 million on T&E contracts.

Operating income for our C&I segment for the six months ended June 30, 2024 was $13.0 million, a decrease of $10.3 million, over the six months ended June 30, 2023.

As a percentage of revenues, operating income for our C&I segment was 1.9% for the six months ended June 30, 2024, compared to 3.1% for the six months ended June 30, 2023.

Operating income margin was impacted by significant changes in our estimated gross profit on certain projects resulting in a net operating income margin decrease of 2.1% for the six months ended June 30, 2024, compared to a net decrease of 1.3% for the six months ended June 30, 2023.

Significant estimated gross profit changes negatively impacted operating income as a percentage of revenues by 5.8% and largely related to labor and project inefficiencies.

A single project that is anticipated to reach substantial completion during the fourth quarter of 2024, caused 2.0% of this negative impact.

Revenues for our C&I segment for the nine months ended September 30, 2024 were $1.10 billion compared to $1.14 billion for the nine months ended September 30, 2023, a decrease of $40.1 million, or 3.5%, which was primarily due to the delayed start of certain projects in 2024.

The decrease in revenue was related to a decrease of $36.0 million in revenue on fixed priced contracts and a decrease of $9.1 million in revenues on unit price work, offset by an increase of $5.0 million on T&E contracts.

Operating income for our C&I segment for the nine months ended September 30, 2024 was $33.3 million, a decrease of $3.9 million, over the nine months ended September 30, 2023.

As a percentage of revenues, operating income for our C&I segment was 3.0% for the nine months ended September 30, 2024, compared to 3.3% for the nine months ended September 30, 2023.

Operating income margin was impacted by significant changes in our estimated gross profit on certain projects resulting in a net operating income margin decrease of 2.4% for the nine months ended September 30, 2024, compared to a net decrease of 1.4% for the nine months ended September 30, 2023.

Significant estimated gross profit changes negatively impacted operating income as a percentage of revenues by 5.1% with 2.3% of the impact from a single project that is anticipated to reach substantial completion during the fourth quarter of 2024.

The loss from this project was primarily due to scope additions, increased labor costs related to schedule compression and lower productivity due to access and workflow issues.

Significant estimated gross profit changes were also negatively impacted by an increase in costs associated with schedule compression on certain projects and an unfavorable change order.

These decreases were partially offset by positive significant estimated gross profit changes totaling 3.7% and largely related to better-than-anticipated productivity, some of which related to clean energy projects, favorable change orders and a favorable job closeout.

Significant estimated gross profit changes were also negatively impacted by an increase in costs associated with labor and project inefficiencies, schedule compression on certain projects and an unfavorable change order.

These decreases were partially offset by positive significant estimated gross profit changes totaling 2.7% and largely related to better-than-anticipated productivity, some of which related to clean energy projects, favorable change orders and favorable job closeouts.

Additionally, C&I operating income margin was positively impacted by approximately 0.5% due to favorable joint venture results.

1 unchanged sentence

Non-GAAP Measure—EBITDA

We define EBITDA, a performance measure used by management, as net income (loss) plus interest expense net of interest income, provision for income taxes and depreciation and amortization.

We define EBITDA, a performance measure used by management, as net income plus interest expense net of interest income, provision for income taxes and depreciation and amortization.

EBITDA, a non-GAAP financial measure, does not purport to be an alternative to net income as a measure of operating performance or to net cash flows provided by operating activities as a measure of liquidity.

2 unchanged sentences

We use, and we believe investors benefit from, the presentation of EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations.

Using EBITDA as a performance measure has material limitations as compared to net income (loss), or other financial measures as defined under accounting principles generally accepted in the United States of America (“U.S.

Using EBITDA as a performance measure has material limitations as compared to net income, or other financial measures as defined under accounting principles generally accepted in the United States of America (“U.S.

GAAP”), as it excludes certain recurring items, which may be meaningful to investors.

8 unchanged sentences

Using both EBITDA and net income to evaluate the business allows management and investors to (a) assess our relative performance against our competitors and (b) monitor our capacity to generate returns for our shareholders.

The following table provides a reconciliation of net income (loss) to EBITDA:

The following table provides a reconciliation of net income to EBITDA:

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in thousands) 2024 2023 2024 2023

Net income (loss) $ (15,277) $ 22,273 $ 3,662 $ 45,436

Net income $ 10,649 $ 21,512 $ 14,311 $ 66,948

Interest expense, net 1,943 1,093 4,015 2,319

Income tax expense (benefit) (6,860) 9,324 (2,703) 13,232

Income tax expense 7,881 9,331 5,178 22,563

Depreciation & amortization 16,693 15,039 48,797 43,534

8 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(in thousands) 2024 2023 2024 2023

5 unchanged sentences

Depreciation & amortization 16,693 15,039 48,797 43,534

Income tax expense (benefit) (6,860) 9,324 (2,703) 13,232

Income tax expense 7,881 9,331 5,178 22,563

Interest expense, net 1,943 1,093 4,015 2,319

1 unchanged sentence

Liquidity, Capital Resources and Material Cash Requirements

As of June 30, 2024, we had working capital of $269.9 million.

As of September 30, 2024, we had working capital of $269.2 million.

We define working capital as current assets less current liabilities.

During the six months ended June 30, 2024, operating activities of our business provided net cash of $30.4 million, compared to $15.8 million of cash provided for the six months ended June 30, 2023.

During the nine months ended September 30, 2024, operating activities of our business provided net cash of $66.0 million, compared to $28.4 million of cash provided for the nine months ended September 30, 2023.

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

3 unchanged sentences

The favorable change of $9.4 million in other liabilities was primarily due to the timing of employee related wage and tax payments.

In the six months ended June 30, 2024, we used net cash of $42.6 million in investing activities consisting of $46.0 million for capital expenditures, partially offset by $3.4 million of proceeds from the sale of equipment.

In the six months ended June 30, 2024, financing activities used net cash of $10.3 million, consisting primarily of $14.3 million of share repurchases under our share repurchase program, $5.9 million of shares repurchased to satisfy tax obligations under our stock compensation programs and $2.6 million of payments under our equipment notes, partially offset by $11.4 million of net borrowings under our revolving line of credit.

We believe our $426.6 million borrowing availability under our revolving line of credit as of June 30, 2024, 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.

In the nine months ended September 30, 2024, we used net cash of $56.8 million in investing activities consisting of $63.6 million for capital expenditures, partially offset by $6.8 million of proceeds from the sale of equipment.

In the nine months ended September 30, 2024, financing activities used net cash of $26.0 million, consisting primarily of $75.0 million of share repurchases under our share repurchase program, $7.0 million of payments under our equipment notes and $5.9 million of shares repurchased to satisfy tax obligations under our stock compensation programs, partially offset by $64.0 million of net borrowings under our revolving line of credit.

We believe our $375.5 million borrowing availability under our revolving line of credit as of September 30, 2024, 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.

25 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, 2024.

We had $24.6 million and $13.2 million of borrowings outstanding under the Facility as of June 30, 2024 and December 31, 2023, respectively.

The Company was in compliance with all of its financial covenants under the Credit Agreement as of September 30, 2024.

We had $77.2 million and $13.2 million of borrowings outstanding under the Facility as of September 30, 2024 and December 31, 2023, respectively.

Letters of Credit

6 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, 2024, we had $38.1 million in letters of credit outstanding under our Credit Agreement, including $27.1 million related to the Company's payment obligation under its insurance programs and $11.0 million related to contract performance obligations.

As of September 30, 2024, we had $37.3 million in letters of credit outstanding under our Credit Agreement, including $32.6 million related to the Company's payment obligation under its insurance programs and $4.7 million related to contract performance obligations.

As of December 31, 2023, we had $34.4 million in letters of credit outstanding under our Credit Agreement, including $27.1 million related to the Company's payment obligations under its insurance programs and $7.3 million related to contract performance obligations.

3 unchanged sentences

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

As of June 30, 2024 and December 31, 2023, we had two outstanding Equipment Notes collateralized by equipment and vehicles owned by us.

As of June 30, 2024 and December 31, 2023, we also had one other equipment note outstanding collateralized by a vehicle owned by us.

The outstanding balance of all equipment notes was $20.4 million as of June 30, 2024 and $23.0 million as of December 31, 2023.

As of June 30, 2024, we had outstanding short-term and long-term equipment notes of approximately $6.6 million and $13.8 million, respectively.

As of September 30, 2024, we had one outstanding Equipment Note collateralized by equipment and vehicles owned by us.

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

As of September 30, 2024 and December 31, 2023, we also had one other equipment note outstanding collateralized by a vehicle owned by us.

The outstanding balance of all equipment notes was $16.0 million as of September 30, 2024 and $23.0 million as of December 31, 2023.

As of September 30, 2024, we had outstanding short-term and long-term equipment notes of approximately $4.4 million and $11.6 million, respectively.

As of December 31, 2023, we had outstanding short-term and long-term equipment notes of approximately $7.1 million and $16.0 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 $40.4 million as of June 30, 2024, consisting of short-term and long-term operating lease obligations of approximately $10.5 million and $29.9 million, respectively.

The outstanding balance of operating lease obligations was $40.6 million as of September 30, 2024, consisting of short-term and long-term operating lease obligations of approximately $11.1 million and $29.5 million, respectively.

The outstanding balance of operating lease obligations was $35.0 million as of December 31, 2023, consisting of short-term and long-term operating lease obligations of approximately $9.2 million and $25.8 million, respectively.

The outstanding balance of finance lease obligations was $3.8 million as of June 30, 2024, consisting of short-term and long-term finance lease obligations of approximately $2.2 million and $1.6 million, respectively.

The outstanding balance of finance lease obligations was $3.5 million as of September 30, 2024, consisting of short-term and long-term finance lease obligations of approximately $1.2 million and $2.3 million, respectively.

As of December 31, 2023 we had $2.3 million outstanding finance lease obligations, consisting of short-term and long-term finance lease obligations of approximately $2.0 million and $0.3 million, respectively.

Purchase Commitments for Construction Equipment

As of June 30, 2024, we had approximately $14.9 million in outstanding purchase obligations for certain construction equipment to be paid with cash outlays scheduled to occur in 2024.

As of September 30, 2024, we had approximately $5.5 million in outstanding purchase obligations for certain construction equipment to be paid with cash outlays scheduled to occur in 2024 and 2025.

Performance and Payment Bonds and Parent Guarantees

5 unchanged sentences

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

As of June 30, 2024, an aggregate of approximately $2.76 billion in original face amount of bonds issued by our sureties were outstanding.

Our estimated remaining cost to complete these bonded projects was approximately $770.1 million as of June 30, 2024.

As of September 30, 2024, an aggregate of approximately $2.83 billion in original face amount of bonds issued by our sureties were outstanding.

Our estimated remaining cost to complete these bonded projects was approximately $741.6 million as of September 30, 2024.

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, 2024 and 2023, none of our customers individually exceeded 10% of consolidated accounts receivable.

As of September 30, 2024 and 2023, 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.

51 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