What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-25 compared with 2025-02-26 · 70 added, 71 removed, 449 unchanged (24% of the section changed)

5 unchanged sentences

The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the fiscal years ended December 31, 2025 and 2024.

For a discussion of changes from the fiscal year ended December 31, 2023 to the fiscal year ended December 31, 2022, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 (filed February 28, 2024).

For a discussion of changes for the fiscal year ended December 31, 2024 to the fiscal year ended December 31, 2023, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 (filed February 26, 2025).

Overview-Introduction

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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.

The majority of C&I contracts cover electrical contracting services for data centers, airports, hospitals, 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.

For the year ended December 31, 2025, our C&I revenues were $1.66 billion, or 45.3%, of our revenue, compared to $1.48 billion, or 44.1%, of our revenue for the year ended December 31, 2024 and $1.55 billion, or 42.7%, of our revenue for the year ended December 31, 2023.

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

We believe legislative actions aimed at supporting infrastructure improvements in the United States may positively impact long-term demand, particularly in connection with electric power infrastructure, transportation and clean energy spending.

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

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.

We believe legislative actions aimed at supporting infrastructure improvements in the United States may positively impact long-term demand, and opportunity in both of our reporting segments, particularly in connection with electric power infrastructure, expansion of domestic manufacturing, and transportation spending.

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

Prolonged uncertainty in the business environment and higher inflation could also impact customer demand and our profitability.

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

Consequently, we believe we will 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.

Significant construction on any large, multi-year projects awarded in 2025 will not likely have a large impact on our 2025 results.

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

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.

Any large, multi-year projects awarded in 2026 will not likely have a large impact on our 2026 results because significant construction activity would not occur until 2027 or later.

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

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

We continue to see strong activity in many 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.

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We expect to see an increase in the distribution market opportunities during in 2026.

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.

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 data centers, transportation, health care, manufacturing, clean energy and warehousing.

In addition, the United States has experienced decades of underfunded economic expansion and aging infrastructure that have challenged the capacity of public transportation and water 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.

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During 2025 and 2024, the Company repurchased 639,207 and 643,549 shares, respectively of its common stock under repurchase programs at a weighted-average price of $117.33 and $116.54 per share, respectively.

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 believe the borrowing availability under our $490 million revolving credit facility, our cash on hand 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.

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Most of our capital expenditures supported opportunities in our T&D business.

We plan to continue to evaluate our needs for additional equipment and tooling.

We plan to continue to evaluate our needs for additional equipment and tooling to support future growth.

Understanding Backlog

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Some of our revenue does not appear in our periodic backlog reporting because the award of the project, as well as the execution of the work, can all take place within the period.

For many of our unit-price, time-and-equipment, time-and-materials and cost-plus contracts, we only include projected revenue for a three-month period in the calculation of backlog, although these types of contracts are generally awarded as part of MSAs that typically have a one- to three-year duration from execution.

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

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It is typical during the winter months that parts of the country may experience snow or rainfall, which can affect our crews’ ability to work efficiently.

Recent abnormal weather patterns including those related to excessive rainfall and increased thaw and freeze cycles also affect our crews’ ability to work efficiently.

Abnormal weather patterns including those related to excessive rainfall and increased thaw and freeze cycles also affect our crews’ ability to work efficiently.

Additionally, our T&D customers often cannot remove their T&D lines from service during the summer months, when consumer demand for electricity is at its peak, delaying maintenance and repair services.

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Interest expense (5,648) (0.2) (6,525) (0.2)

Other income (expense), net (1,479) — (38) —

Other expense, net (663) — (1,479) —

Income before provision for income taxes 161,284 4.4 46,493 1.4

1 unchanged sentence

Net income $ 118,416 3.2 % $ 30,263 0.9 %

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, 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.

Revenues increased $295.6 million, or 8.8%, to $3.66 billion for the year ended December 31, 2025 from $3.36 billion for the year ended December 31, 2024.

The increase was primarily due to an increase of $173.6 million in C&I revenue, and increase of $63.2 million in revenue on distribution projects and an increase of $58.7 million in revenue on transmission projects.

Gross margin for the year ended December 31, 2025 increased to 11.6% compared to 8.6% for the year ended December 31, 2024.

The increase in gross margin was primarily due to significant changes in our estimated gross profit on certain projects resulting in a net gross margin decrease of 1.4% for the year ended December 31, 2025, compared to a net gross margin decrease of 4.4% for the year ended December 31, 2024.

During the year ended December 31, 2025, significant estimate changes negatively impacted gross margin by 2.4%, largely related to an increase in costs associated with labor and project inefficiencies on certain projects and unfavorable change orders.

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.

During the year ended December 31, 2024, gross margin was primarily impacted by negative significant estimate changes in our estimated gross profit on certain T&D clean energy projects and a C&I project.

Gross profit increased $133.5 million, or 46.0%, to $423.8 million for year ended December 31, 2025 from $290.3 million for the year ended December 31, 2024, due to higher margins and revenues.

SG&A was $256.4 million for the year ended December 31, 2025, an increase of $18.2 million from $238.2 million for the year ended December 31, 2024.

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.

The year-over-year increase was primarily due to an increase in employee incentive compensation costs and an increase in employee-related expenses to support future growth.

These increases were partially offset by $10.3 million of contingent compensation expense related to a prior acquisition and recognized during the year ended December 31, 2024, which did not recur.

Gains from the sale of property and equipment in the year ended December 31, 2025 were $4.3 million compared to $6.9 million in the year ended December 31, 2024.

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Interest expense was $5.6 million for the year ended December 31, 2025 compared to $6.5 million for the year ended December 31, 2024.

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.

This decrease was primarily attributable to lower interest rates during the year ended December 31, 2025 as compared to the year ended December 31, 2024.

Other expense was $0.7 million for the year ended December 31, 2025 compared to $1.5 million for the year ended December 31, 2024.

The change was largely due to higher foreign currency losses from changes in exchange rates on intercompany receivables recognized during the year ended December 31, 2024.

Income tax expense was $42.9 million for the year ended December 31, 2025, with an effective tax rate of 26.6%, compared to $16.2 million for the year ended December 31, 2024, with an effective tax rate of 34.9%.

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.

The decrease in the tax rate for the year ended December 31, 2025 was primarily due to changes in state tax rates used to measure our state deferred income taxes and lower permanent difference items, partially offset by lower stock compensation excess tax benefits.

Net income increased to $118.4 million for the year ended December 31, 2025 from $30.3 million for the year ended December 31, 2024.

The increase was primarily for the reasons stated above.

Segment Results

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Transmission & Distribution

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, 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.

Revenues for our T&D segment for the year ended December 31, 2025 were $2.00 billion compared to $1.88 billion for the year ended December 31, 2024, an increase of $121.9 million, or 6.5%.

The increase in revenue was related to an increase of $63.2 million in revenue on distribution projects, and an increase of $58.7 million in revenue on transmission projects.

Operating income for our T&D segment for the year ended December 31, 2025 was $157.6 million compared to $69.4 million for the year ended December 31, 2024, an increase of $88.2 million, or 127.2%.

Operating income as a percentage of revenues for our T&D segment increased to 7.9% for the year ended December 31, 2025 from 3.7% for the year ended December 31, 2024.

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 0.5% for the year ended December 31, 2025, compared to a net decrease of 5.5% for the year ended December 31, 2024.

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.

During the year ended December 31, 2025, significant estimated gross profit changes negatively impacted operating income as a percentage of revenues by 1.1% primarily related to labor and project inefficiencies on certain projects.

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

During the year ended December 31, 2024, T&D operating income margin was negatively impacted by significant estimated gross profit changes related to clean energy projects.

Commercial & Industrial

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.

Revenues for our C&I segment for the year ended December 31, 2025 were $1.66 billion compared to $1.48 billion for the year ended December 31, 2024, an increase of $173.6 million, or 11.7%.

The increase in revenue was related to an increase of $195.6 million in revenue on fixed priced contracts, partially offset by a decrease of $15.6 million on T&E contracts and a decrease of $6.3 million in revenues on unit price work.

Operating income for our C&I segment for the year ended December 31, 2025 was $97.2 million compared to $48.0 million for the year ended December 31, 2024, an increase of $49.2 million, or 102.3%.

Operating income, as a percentage of revenues, for our C&I segment increased to 5.9% for the year ended December 31, 2025 from 3.2% for the year ended December 31, 2024.

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.

Operating income margin was positively impacted during the year ended December 31, 2025, by a larger portion of our C&I projects progressing at higher contractual margins, some of which are nearing completion.

Additionally, C&I operating income for the year ended December 31, 2024 was negatively impacted by contingent compensation expense related to a prior acquisition, that did not recur during the year ended December 31, 2025.

C&I operating income margin during the year ended December 31, 2025 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 year ended December 31, 2025, compared to a net decrease of 2.9% for the year ended December 31, 2024.

Significant estimated gross profit changes negatively impacted operating income as a percentage of revenues by 4.1%, primarily related to an increase in costs associated with labor and project inefficiencies on certain projects and unfavorable change orders.

These decreases were partially offset by positive significant estimated gross profit changes totaling 1.5% and largely related to better-than-anticipated productivity, favorable change orders and a favorable job closeout.

The increase in corporate expenses for the year ended December 31, 2025 was primarily attributable to an increase in employee incentive compensation costs and 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 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 is a non-GAAP measure used by management that we define as net income plus 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.

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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 $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 $239.5 million year-over-year increase in cash provided by operating activities was primarily due to favorable net changes in operating assets and liabilities of $151.5 million, and an increase in net income of $88.2 million.

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 $109.6 million and the favorable change of $59.3 million in other liabilities, partially offset by the net unfavorable changes of $23.6 million in prepaid expenses and other assets.

The net favorable changes of $109.6 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.

The favorable change of $59.3 million in other liabilities was primarily due to changes in our employee incentive compensation accruals and the timing of employee related wage and tax payments.

The unfavorable change of $23.6 million in prepaid expenses and other assets was primarily due to prepayment of materials required for certain projects.

During the years ended December 31, 2025 and 2024, we used net cash of $86.2 million and $67.2 million, respectively, in investing activities.

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During the years ended December 31, 2025 and 2024, we used cash of $94.1 million, and $40.0 million, respectively in financing activities.

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.

The $94.1 million of cash used in financing activities in the year ended December 31, 2025 consisted primarily of $75.0 million of share repurchases under our prior share repurchase program, $11.0 million of net payments under our revolving line of credit, $4.4 million of payments for equipment notes, $2.6 million of shares repurchased to satisfy tax obligations under our stock compensation programs and $1.1 million of payments for finance lease obligations.

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 prior share repurchase program, $7.1 million of payments under our master equipment loan agreements, $5.9 million of shares repurchased to satisfy tax obligations under our stock compensation programs and $1.2 million of payments for finance lease obligations, partially offset by $45.2 million of net borrowings under our revolving line of credit.

We believe our $408.3 million borrowing availability under our revolving line of credit as of December 31, 2025, cash on hand, future cash flow from operations and our ability to utilize short-term and long-term leases will provide sufficient liquidity for our short-term and long-term needs.

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

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

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

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

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The Company was in compliance with all of its financial covenants under the Credit Agreement as of December 31, 2025.

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.

We had $47.4 million and $58.4 million in borrowings outstanding under the Facility as of December 31, 2025 and December 31, 2024, respectively.

Letters of Credit

Some of our vendors require letters of credit to ensure reimbursement for amounts they are disbursing on our behalf, such as to beneficiaries under our insurance programs.

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.

In addition, from time to time, certain customers require us to post letters of credit to guarantee performance under our contracts.

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

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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.

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.

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

However, to the extent payment is required for any such claims, the amount paid could be material and could adversely affect cash flows.

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

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, 2025 and 2024, we had one outstanding Equipment Note collateralized by equipment and vehicles owned by us.

As of December 31, 2025 and 2024, we also had one other equipment note outstanding collateralized by a vehicle owned by us.

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

The Company’s leases have remaining terms ranging from 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.

The Company’s leases have remaining terms ranging from less than one to twelve 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.

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Performance and Payment Bonds and Parent Guarantees

Many customers, particularly in connection with new construction, require us to post performance and payment bonds typically issued by a surety or insurance company.

Many customers, particularly in connection with new construction, require us to post performance and payment bonds typically issued by a surety or financial institution.

These bonds provide a guarantee to the customer that we will perform under the terms of a contract and that we will pay subcontractors and vendors.

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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, 2025, none of the Company's 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

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In addition, we estimate a cost accrual every quarter that represents unbilled invoicing activity for services performed by subcontractors and suppliers during the quarter, and estimate revenue from the contract cost portion of this accrual based on current gross margin rates to be consistent with our cost method of revenue recognition.

The estimated value of unbilled amounts are determined using a regression analysis that estimates value based on our historical experience, and is adjusted for large individual projects.

The estimated value of unbilled amounts is determined using a regression and other types of analysis, as well as management judgment to produce an estimated value based on the Company’s historical experience, and is adjusted for large individual projects.

The profit and corresponding revenue is recognized over the contract term based on costs incurred under the cost-to-cost method.

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Conversely, if the amount billed to the customer is greater than the recognized revenue, a contract liability is recorded.

Therefore, retainage amounts are reflected in contract assets or contract liabilities depending on the net contract position of the particular contract.

Additionally, the contract liability includes a liability for the excess of costs over revenues for all contracts that are in a loss position.

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

however, the warranty period does not typically exceed one year.

however, the warranty period does not typically exceed two years.

Historically, warranty claims have not been material.

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We grant trade credit, on a non-collateralized basis (with the exception of lien rights against the property in certain cases) to our customers, and we are subject to potential credit risk related to changes in business and overall economic activity.

We analyze specific accounts receivable balances, historical bad debts, customer credit-worthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts.

We analyze specific accounts receivable balances, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts.

In the event that a customer balance is deemed to be uncollectible the account balance is written-off against the allowance for doubtful accounts.

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