What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-26 compared with 2024-02-28 · 76 added, 94 removed, 444 unchanged (28% of the section changed)

17 unchanged sentences

Our C&I segment provides services in the United States and in western Canada.

Our C&I customers include facility owners and general contractors.

Our C&I customers include general contractors and facility owners.

We strive to maintain our status as a preferred provider to our T&D and C&I customers.

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We have a diverse customer base with many long-standing relationships.

We concentrate our efforts on projects where our technical and project management expertise are critical to successful and timely execution.

We concentrate our efforts on projects where our technical and project management expertise is critical to successful and timely execution.

The majority of 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, signalization and electric vehicle charging infrastructure.

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We are optimistic about infrastructure spending and believe related investment activity will continue to positively impact both our T&D and C&I markets for the foreseeable future.

We believe that regulatory reform, state clean energy portfolio standards, the aging of the electric grid, and potential overall improvement of the economy will positively impact the level of spending by our customers in all of the markets we serve.

We believe that regulatory reform, increased electricity demand, state clean energy portfolio standards, the aging of the electric grid, and potential overall improvement of the economy will positively impact the level of spending by our customers in all of the markets we serve.

Although competition remains strong, we see these trends as positive factors for us in the future.

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We believe legislative actions are likely to provide greater long-term opportunity in both of our reporting segments.

However, we expect our financial results, in both of our segments, to continue to be affected by delays and cost volatility through 2024, due to supply chain disruptions, inflationary pressures, tariffs and regulatory slowdowns.

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

Consequently, we believe we will continue to see significant bidding activity on large transmission projects going forward.

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.

Consequently, we believe we will continue to see continued bidding activity on large transmission projects going forward.

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.

1 unchanged sentence

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

As a result of reduced spending by United States utilities on their distribution systems for many years, we believe there is a need for sustained investment by utilities on their distribution systems to properly maintain or meet reliability requirements.

In 2023, we continued to see increased bidding activity in some of our electric distribution markets, as economic conditions improved in those areas.

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

We continue to see strong bidding activity in some of our electric distribution markets.

We believe the increased storm activity and destruction caused by wildfires will cause a push to strengthen utility distribution systems against catastrophic damage.

Distribution systems may also require upgrades to accommodate additional distributed energy resources and increased electrification.

Several industry and market trends are also prompting customers in the electric utility industry to seek outsourcing partners rather than performing projects internally.

These trends include an aging electric utility workforce, increasing costs and staffing constraints.

We believe electric utility employee retirements could increase with further economic recovery, which may result in an increase in outsourcing opportunities.

Our C&I bidding opportunities could be impacted by market disruptions, and as a result, the growth of our C&I market will be heavily dependent on the timing and pace of the overall market recovery.

We believe that the primary markets we serve, such as health care, transportation, data centers, warehousing, clean energy and water/waste-water projects, may be somewhat less vulnerable to economic slowing.

In addition, the United States has experienced decades of underfunded economic expansion and aging infrastructure which have challenged the capacity of public water and transportation infrastructure forcing states and municipalities to seek creative means to fund needed expansion and repair.

We believe the need for expanding public infrastructure will offer opportunity in our C&I segment for several years.

We expect to see an increase in the distribution market opportunities during in 2025.

We believe the increasing demand for electricity associated with additional power requirements, driven by increased electrification associated with new technologies, including the emergence and adoption of artificial intelligence technologies as well as increased power needs connected to the reshoring of manufacturing, will require significant investment by our customers in both of our reporting segments.

Our C&I bidding opportunities remain strong and we believe we will see continued opportunities in the primary markets we serve such as transportation, data centers, health care, clean energy and warehousing.

However, we may experience unanticipated volatility associated with potential policy changes and tariffs.

In addition, the United States has experienced decades of underfunded economic expansion and aging infrastructure that have challenged the capacity of public water and transportation infrastructure forcing states and municipalities to seek creative means to fund needed expansion and repair.

We believe the need for expanding public infrastructure in both the United States and Canada will offer opportunity in our C&I segment for several years.

Legislation and regulation that promotes domestic manufacturing could also create opportunity for our C&I segment.

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We continued to implement strategies that further expand our capabilities and effectively allocate capital.

We have focused on strengthening our balance sheet by reducing our variable rate outstanding debt in the current higher interest rate environment, which has increased our liquidity and allows us to take advantage of future opportunities as they arise.

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

During 2024 and 2023, the Company repurchased 643,549 and 25,042 shares, respectively of its common stock under repurchase programs at a weighted-average price of $116.54 and $114.55 per share, respectively.

As of December 31, 2023, we had $72.5 million of remaining availability to purchase shares under our current program, which continues in effect until May 8, 2024, or until the authorized funds are exhausted.

Additionally, on January 4, 2022, we acquired all issued and outstanding shares of capital stock of Powerline Plus Ltd.

and its affiliate (collectively, the “Powerline Plus Companies"), which expanded our distribution operations in Ontario, Canada.

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.

We believe that our financial position, positive cash flows and other operational strengths will enable us to respond to challenges and uncertainties in the markets we serve and give us the flexibility to successfully execute our strategy.

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

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

In 2024 and 2023, we invested in capital expenditures of approximately $75.9 million and $84.7 million, respectively.

94 unchanged sentences

Net income 30,263 0.9 90,990 2.5

Revenues increased $635.4 million, or 21.1%, to $3.64 billion for the year ended December 31, 2023 from $3.01 billion for the year ended December 31, 2022.

The increase was primarily due to an increase of $297.5 million in revenue on transmission projects, an increase of $291.9 million in C&I revenue across certain geographical areas and an increase of $45.9 million in revenue on distribution projects.

Clean energy projects increased revenue in both of our segments during the year ended December 31, 2023.

Gross margin.

Revenues decreased $281.6 million, or 7.7%, to $3.36 billion for the year ended December 31, 2024 from $3.64 billion for the year ended December 31, 2023.

The decrease was primarily due to a decrease of $241.1 million in revenue on transmission projects, a decrease of $72.9 million in C&I revenue, partially offset by an increase of $32.4 million in revenue on distribution projects.

Gross margin for the year ended December 31, 2024 decreased to 8.6% compared to 10.0% for the year ended December 31, 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 year ended December 31, 2024, compared to a net decrease of 1.7% for the year ended December 31, 2023.

During the year ended December 31, 2023, significant estimate changes negatively impacted gross margin by 2.1% and largely related to labor and project inefficiencies, some of which were caused by rising costs associated with supply chain disruptions, inflation and inclement weather experienced on certain projects.

In addition, significant estimate changes in gross profit positively impacted gross margin by 0.4% and mainly related to favorable change orders, better-than-anticipated productivity and favorable weather on a project.

Gross margin was also negatively impacted by inflation and an adjustment of $3.2 million associated with sales tax accruals for prior periods in one of our operating areas.

Gross profit.

Gross profit increased $20.4 million, or 5.9%, to $364.4 million for year ended December 31, 2023 from $344.0 million for the year ended December 31, 2022, due to higher revenues, partially offset by lower margins.

Selling, general and administrative expenses.

During the year ended December 31, 2024, significant estimate changes negatively impacted gross margin by 5.4% and primarily related to clean energy projects in T&D that have reached mechanical completion, the unfavorable impact of a C&I project that has reached substantial completion, 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 1.0% 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 year ended December 31, 2024.

Gross profit decreased $74.1 million, or 20.3%, to $290.3 million for year ended December 31, 2024 from $364.4 million for the year ended December 31, 2023, due to lower margins and lower revenues.

SG&A was $238.2 million for the year ended December 31, 2024, an increase of $3.6 million from $234.6 million for the year ended December 31, 2023.

The year-over-year increase was primarily due to an increase in employee-related expenses to support the growth in our operations and an increase of $5.0 million related to contingent compensation expense related to a prior acquisition.

Amortization of intangible assets .

Amortization of intangible assets was $4.9 million for the year ended December 31, 2023 compared to $9.0 million for the year ended December 31, 2022.

The period-over-period decrease of $4.1 million was primarily due to $4.0 million of intangible amortization associated with the one-year amortization of backlog acquired with the Powerline Plus Companies during the year end December 31, 2022.

Gain on sale of property and equipment.

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

Gains from the sale of property and equipment in the year ended December 31, 2024 were $6.9 million compared to $4.2 million in the year ended December 31, 2023.

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

Interest expense.

Interest expense was $6.5 million for the year ended December 31, 2024 compared to $4.9 million for the year ended December 31, 2023.

This increase was primarily attributable to higher interest rates partially offset by lower average debt balances during the year ended December 31, 2023 as compared to the year ended December 31, 2022.

Other income (expense), net .

Other income was not significant for the year ended December 31, 2023 compared to other expense of $2.7 million for the year ended December 31, 2022.

The change was largely due to funds received in the prior year under the Canadian Emergency Wage Subsidy program, which were attributable to a C&I segment company.

Income tax expense.

This increase was primarily attributable to higher average debt balances partially offset by lower interest rates during the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Other expense was $1.5 million for the year ended December 31, 2024 compared to an insignificant amount of other expense for the year ended December 31, 2023.

The change was largely due to foreign currency losses from changes in exchange rates on intercompany receivables.

Income tax expense was $16.2 million for the year ended December 31, 2024, with an effective tax rate of 34.9%, compared to $34.0 million for the year ended December 31, 2023, with an effective tax rate of 27.2%.

The increase in the tax rate for the year ended December 31, 2023 was primarily due to higher other permanent difference items, partially offset by a higher favorable impact from stock compensation excess tax benefits.

Net income increased to $91.0 million for the year ended December 31, 2023 from $83.4 million for the year ended December 31, 2022.

The increase was primarily for the reasons stated above.

The increase in the tax rate for the year ended December 31, 2024 was primarily due to higher other permanent difference items and the unrecognized benefit of deferred tax assets, 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.

Net income decreased to $30.3 million for the year ended December 31, 2024 from $91.0 million for the year ended December 31, 2023.

The decrease was primarily for the reasons stated above.

Segment Results

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Total $ 3,362,290 100.0 $ 3,643,905 100.0

Operating income (loss):

Operating income:

Transmission & Distribution $ 69,374 3.7 $ 149,703 7.2

4 unchanged sentences

Transmission & Distribution

Revenues for our T&D segment for the year ended December 31, 2023 were $2.09 billion compared to $1.75 billion for the year ended December 31, 2022, an increase of $343.4 million, or 19.7%.

The increase in revenue was related to an increase of $297.5 million in revenue on transmission projects, primarily related to an increase in revenue on clean energy projects, and an increase of $45.9 million in revenue on distribution projects.

Revenues for our T&D segment for the year ended December 31, 2024 were $1.88 billion compared to $2.09 billion for the year ended December 31, 2023, a decrease of $208.7 million, or 10.0%.

The decrease in revenue was related to a decrease of $241.1 million in revenue on transmission projects, primarily related to the mechanical completion of certain clean energy projects, partially offset by an increase of $32.4 million in revenue on distribution projects.

Revenues from transmission projects represented 60.6% and 66.1%, of T&D segment revenue for the year ended December 31, 2024 and 2023, respectively.

Operating income for our T&D segment for the year ended December 31, 2023 was $149.7 million compared to $138.9 million for the year ended December 31, 2022, an increase of $10.8 million, or 7.8%.

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

Operating income for our T&D segment for the year ended December 31, 2024 was $69.4 million compared to $149.7 million for the year ended December 31, 2023, a decrease of $80.3 million, or 53.7%.

As a percentage of revenues operating income for our T&D segment was 3.7% for the year ended December 31, 2024 compared to 7.2% for the year ended December 31, 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 5.5% for the year ended December 31, 2024, compared to a net decrease of 1.5% for the year ended December 31, 2023.

During the year ended December 31, 2023, significant estimated gross profit changes negatively impacted operating income as a percentage of revenues by 1.7% and largely related to labor and project inefficiencies, some of which were associated with clean energy projects, inclement weather, supply chain disruptions and inflation.

These decreases were partially offset by positive significant estimated gross profit changes totaling 0.2% of revenues mostly related to favorable change orders, better-than-anticipated productivity and favorable weather on a project.

Additionally, T&D operating income for the year ended December 31, 2022, was negatively impacted by $4.0 million of amortization related to the one-year amortization of backlog acquired with the Powerline Plus Companies.

During the year ended December 31, 2024, significant estimated gross profit changes negatively impacted operating income as a percentage of revenues by 5.7% with 5.5% of the impact related to losses on certain clean energy projects that have reached mechanical completion.

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

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 0.2% of revenues mostly related to better-than-anticipated productivity.

Commercial & Industrial

Revenues for our C&I segment for the year ended December 31, 2023 were $1.55 billion compared to $1.26 billion for the year ended December 31, 2022, an increase of $291.9 million, or 23.1%, primarily due to higher revenue related to clean energy projects in certain geographical areas.

The increase in revenue included an increase of $223.4 million in revenue on fixed priced contracts, an increase of $54.8 million on T&E contracts and an increase of $13.9 million in revenues on unit price work.

Revenues for our C&I segment for the year ended December 31, 2024 were $1.48 billion compared to $1.55 billion for the year ended December 31, 2023, a decrease of $72.9 million, or 4.7%, primarily due to the delayed start of certain projects in 2024.

The decrease in revenue included a decrease of $72.1 million in revenue on fixed priced contracts and a decrease of $12.1 million in revenues on unit price work, partially offset by an increase of $11.2 million on T&E contracts.

Operating income for our C&I segment for the year ended December 31, 2024 was $48.0 million compared to $45.9 million for the year ended December 31, 2023, an increase of $2.1 million, or 4.7%.

The year-over-year increase in operating income was primarily due to higher revenues as discussed above.

Operating income, as a percentage of revenues, for our C&I segment decreased to 3.0% for the year ended December 31, 2023 from 3.4% for the year ended December 31, 2022.

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 2.0% for the year ended December 31, 2023, compared to a net decrease of 0.7% for the year ended December 31, 2022.

Significant estimated gross profit changes negatively impacted operating income as a percentage of revenues by 2.6% and largely related to labor and project inefficiencies, some of which were caused by supply chain disruptions and by rising costs associated with inflation.

These decreases were partially offset by positive significant estimated gross profit changes totaling 0.6% of revenues mostly related to favorable change orders and better-than-anticipated productivity.

Additionally, C&I operating income margin was negatively impacted by an adjustment of $3.2 million associated with an adjustment to sales tax accruals for prior periods in one of our operating areas, partially offset by improved productivity on a project that started in 2023 and favorable joint venture results.

Corporate expenses for the year ended December 31, 2023 were consistent with corporate expenses for the year ended December 31, 2022.

Operating income, as a percentage of revenues, for our C&I segment increased to 3.2% for the year ended December 31, 2024 from 3.0% for the year ended December 31, 2023.

Operating income margin was positively impacted during the year ended December 31, 2024, by the continued benefit of higher margins on certain completed projects and certain projects nearing completion, these benefits largely related to better-than-anticipated productivity and favorable change orders.

The year-over-year increase in operating income margin was positively impacted by approximately 0.4% due to favorable joint venture results.

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 2.9% for the year ended December 31, 2024, compared to a net decrease of 2.0% for the year ended December 31, 2023.

Significant estimated gross profit changes negatively impacted operating income as a percentage of revenues by 5.0% with 2.3% of the impact from a single project that is substantially complete.

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 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 2.1% of revenues largely related to better-than-anticipated productivity, some of which related to clean energy projects, favorable change orders and favorable job closeouts.

The decrease in corporate expenses for the year ended December 31, 2024 was primarily attributable to a decrease in employee incentive compensation costs, partially offset by an increase in employee-related expenses to support future growth in our operations.

Non-GAAP Measures

EBITDA is a non-GAAP measure used by management that we define as net income attributable to MYR Group Inc.

plus net income from noncontrolling interests, interest expense net of interest income, income tax expense and depreciation and amortization, as shown in the following table.

EBITDA does not purport to be an alternative to net income attributable to MYR Group Inc.

as a measure of operating performance or to net cash flows provided by operating activities as a measure of liquidity.

EBITDA is a non-GAAP measure used by management that we define as net income plus net income from noncontrolling interests, interest expense net of interest income, income tax expense and depreciation and amortization, as shown in the following table.

EBITDA 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.

We believe that EBITDA is useful to investors and other external users of our Consolidated Financial Statements in evaluating our operating performance and cash flow because EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods, book value of assets, useful lives placed on assets, capital structure and the method by which assets were acquired.

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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 attributable to MYR Group Inc.

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

For the year ended December 31,

(in thousands) 2024 2023 2022

Net income attributable to MYR Group Inc.

$ 90,990 $ 83,381 $ 85,010

Net loss - noncontrolling interests — — (4)

Net income $ 30,263 $ 90,990 $ 83,381

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Certain material covenants contained within our credit agreement (the “Credit Agreement”) are based on EBITDA with certain additional adjustments as defined in the Credit Agreement.

Non-compliance with these financial covenants under the Credit Agreement — our interest coverage ratio 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) and our net leverage ratio, which is defined in the Credit Agreement as Total Net Indebtedness (as defined in the Credit Agreement), divided by Consolidated EBITDA (as defined in the Credit Agreement) — could result in our lenders requiring us to immediately repay all amounts borrowed.

If we anticipated a potential covenant violation, we would seek relief from our lenders, likely causing us to incur additional cost, and such relief might not be available, or if available, might not be on terms as favorable as those in the Credit Agreement.

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

The $96.5 million year-over-year decline in cash provided by operating activities was primarily due to unfavorable net changes in operating assets and liabilities of $93.9 million, offset by a $7.6 million increase in net income.

The unfavorable change in operating assets and liabilities was primarily due to the net unfavorable year-over-year changes in various working capital accounts that relate primarily to construction activities (accounts receivable, contract assets, accounts payable and contract liabilities) of $133.0 million, partially offset by the favorable change of $43.6 million in other liabilities.

The net unfavorable changes of $133.0 million in cash provided by working capital accounts, mainly related to construction activities, was due to the timing of billings and payments under our contracts.

The favorable change of $43.6 million in other liabilities was primarily due to the timing of employee related wage and tax payments.

The $16.1 million year-over-year increase in cash provided by operating activities was primarily due to favorable net changes in operating assets and liabilities of $74.4 million, offset by a $60.7 million decrease in net income.

The favorable change in operating assets and liabilities was primarily due to the net favorable year-over-year changes in various working capital accounts that relate primarily to construction activities (accounts receivable, contract assets, accounts payable and contract liabilities) of $119.3 million, partially offset by the unfavorable change of $50.9 million in other liabilities.

The net favorable changes of $119.3 million in cash provided by working capital accounts, mainly related to construction activities, was due to the timing of billings and payments under our contracts.

The unfavorable change of $50.9 million in other liabilities was primarily due to the timing of contingent compensation payments associated with a prior acquisition, the timing of employee related wage and tax payments and lower employee incentive compensation accruals.

During the years ended December 31, 2024 and 2023, we used net cash of $67.2 million and $79.1 million, respectively, in investing activities.

The $67.2 million of cash used in investing activities in the year ended December 31, 2024 consisted of $75.9 million for capital expenditures, partially offset by $8.7 million of proceeds from the sale of equipment.

The $185.7 million of cash used in investing activities in the year ended December 31, 2022 consisted of $110.7 million to acquire the Powerline Plus Companies and $77.1 million for capital expenditures, partially offset by $2.0 million of proceeds from the sale of equipment.

The $79.1 million of cash used in investing activities in the year ended December 31, 2023 consisted of $84.7 million for capital expenditures, partially offset by $5.6 million of proceeds from the sale of equipment.

During the years ended December 31, 2024 and 2023, we used cash of $40.0 million, and $18.4 million, respectively in financing activities.

The $18.4 million of cash used in financing activities in the year ended December 31, 2023 consisted primarily of $7.9 million of shares repurchased to satisfy tax obligations under our stock compensation programs, $4.6 million of payments under our equipment notes, $2.9 million of share repurchases under our share repurchase program, $2.1 million of debt refinancing costs and $1.1 million of repayments of finance lease obligations, partially offset by $0.3 million of net borrowings under our revolving line of credit.

The $9.3 million of cash used in financing activities in the year ended December 31, 2022 consisted primarily of $37.0 million of shares repurchases under our share repurchase program, $6.8 million of shares repurchased to satisfy tax obligations under our stock compensation programs, $1.6 million of repayments of finance lease obligations and $1.0 million of net repayments under our master equipment loan agreements.

These uses of cash during the year ended December 31, 2022, were partially offset by $24.2 million of borrowing under our equipment notes and $12.9 million of net borrowing under our revolving line of credit.

We believe our $442.4 million borrowing availability under our revolving line of credit at December 31, 2023, future cash flow from operations and our ability to utilize short-term and long-term leases will provide sufficient liquidity for our short-term and long-term needs.

The $40.0 million of cash used in financing activities in the year ended December 31, 2024 consisted primarily of $75.0 million of share repurchases under our share repurchase program, $7.1 million of payments under our equipment notes, $5.9 million of shares repurchased to satisfy tax obligations under our stock compensation programs and $1.2 million of repayments of finance lease obligations, partially offset by $45.2 million of net borrowings under our revolving line of credit.

The $18.4 million of cash used in financing activities in the year ended December 31, 2023 consisted primarily of $7.9 million of shares repurchased to satisfy tax obligations under our stock compensation programs, $4.6 million of net repayments under our master equipment loan agreements, $2.9 million of shares repurchases under our share repurchase program and $1.1 million of repayments of finance lease obligations.

We believe our $354.8 million borrowing availability under our revolving line of credit as of December 31, 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.

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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.

4 unchanged sentences

The Company was in compliance with all of its financial covenants under the Credit Agreement as of December 31, 2024.

As of December 31, 2023, we had $13.2 million debt outstanding under the Facility.

We had $12.9 million debt outstanding under a previous facility as of December 31, 2022.

We had $58.4 million and $13.2 million of borrowings outstanding under the Facility as of December 31, 2024 and December 31, 2023, respectively.

Letters of Credit

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In addition, from time to time, certain customers or our sureties require us to post letters of credit to ensure payment to our subcontractors and vendors and guarantee performance under our contracts.

Such letters of credit are generally issued by a bank or similar financial institution typically pursuant to our senior credit facility.

Such letters of credit are generally issued by a bank typically pursuant to our senior credit facility.

Each letter of credit commits the issuer to pay specified amounts to the holder of the letter of credit if the holder claims that we have failed to perform specified actions.

1 unchanged sentence

Depending on the circumstances of such a reimbursement, we may also have to record a charge to earnings for the reimbursement.

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 approximately $7.3 million related to contract performance obligations.

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

As of December 31, 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 obligations 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.

We are not aware of any claims currently asserted or threatened under any of these letters of credit that are material, individually, or in the aggregate.

1 unchanged sentence

Equipment Notes

We have entered into multiple Master Loan Agreements with multiple banks.

We have entered into multiple Master Loan and Security Agreements (the "Master Loan Agreements") with multiple finance companies.

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

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

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

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

4 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.

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.

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

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

20 unchanged sentences

Concentration of Credit Risk

We grant trade credit under contractual payment terms, generally without collateral, to our customers, which include high credit quality electric utilities, governmental entities, general contractors and builders, owners and managers of commercial and industrial properties.

Consequently, we are subject to potential credit risk related to changes in business and economic factors.

Consequently, we are subject to potential credit risk related to changes in business and economic factors throughout the United States and Canada.

However, we generally have certain statutory lien rights with respect to services provided.

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 December 31, 2023 and 2022, none of our customers individually exceeded 10.0% of our accounts receivable.

As of December 31, 2024, one customer individually exceeded 10.0% of our accounts receivable with approximately of 11.3% of the total accounts receivable amount (excluding the impact of allowance for doubtful accounts).

As of December 31, 2023, none of our customers individually exceeded 10.0% of our accounts receivable.

New Accounting Pronouncements

38 unchanged sentences

In contracts in which a significant reversal may occur, we use constraint in recognizing revenue on variable consideration.

Although we often enter into contracts that contain liquidated damage clauses, we rarely incur them, and as such, we do not include amounts associated with liquidated damage clauses until it is probable that liquidated damages will occur.

We often enter into contracts that contain liquidated damage clauses.

We do not include amounts associated with liquidated damage clauses until it is probable that liquidated damages will occur.

These items are continually monitored by multiple levels of management throughout the reporting period.

17 unchanged sentences

During the year ended December 31, 2023, changes in estimates pertaining to certain projects decreased consolidated gross margin by 1.7%.

During the year ended December 31, 2021, changes in estimates pertaining to certain projects increased consolidated gross margin by 0.4%.

During the year ended December 31, 2022, changes in estimates pertaining to certain projects decreased consolidated gross margin by 0.4%.

We provide warranties to customers on a basis customary to the industry;

39 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-K

Item 7. Management’s Discussion and Analysis