Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Company
We are a provider of professional, technical and consulting services to utilities, private industry, and public agencies at all levels of government. As resource and infrastructure needs undergo continuous change, we help organizations and their communities evolve and thrive by providing a wide range of technical services for energy solutions, greenhouse gas reduction, and government infrastructure. Through engineering, program management, policy advisory, and software and data management, we plan, design and deliver trusted, comprehensive, innovative, and proven solutions to improve efficiency, resiliency, and sustainability in energy and infrastructure to our clients.
Our broad portfolio of services operates within two financial reporting segments: (1) Energy and (2) Engineering and Consulting. The interfaces and synergies between these segments are important elements of our strategy to design and deliver trusted, comprehensive, innovative, and proven solutions and services for our customers.
Our Energy segment provides specialized, innovative, comprehensive energy solutions to businesses, utilities, state agencies, municipalities, and non-profit organizations in the U.S. Our experienced engineers, consultants, and staff help our clients realize cost and energy savings by tailoring efficient and cost-effective solutions to assist in optimizing energy spend. Our energy efficiency services include comprehensive audit and surveys, program design, master planning, demand reduction, grid optimization, benchmarking analyses, design engineering, construction management, performance contracting, installation, alternative financing, measurement and verification services, and advances in software and data analytics for long-term planning.
Our Engineering and Consulting segment provides civil engineering-related construction management, building and safety, city engineering office management, city planning, civil design, geotechnical, material testing and other engineering consulting services to our clients. Our engineering services include traffic, bridges, rail, port, water, mining and other civil engineering projects. We also provide economic and financial consulting to public agencies. Lastly, we supplement the engineering services that we offer our clients by offering expertise and support for the various financing techniques public agencies utilize to finance their operations and infrastructure. We also support the mandated reporting and other requirements associated with these financings. We provide financial advisory services for municipal securities but do not provide underwriting services.
36
Table of Contents
Results of Operations
First Quarter Overview
The following table sets forth, for the periods indicated, certain information derived from our condensed consolidated statements of comprehensive income (1) :
Three Months Ended
April 4,
March 29,
2025
2024
$ Change
% Change
(in thousands, except percentages)
Contract revenue
$
152,386
100.0
%
$
122,489
100.0
%
$
29,897
24.4
%
Direct costs of contract revenue:
Salaries and wages
27,677
18.2
21,512
17.6
6,165
28.7
Subcontractor services and other direct costs
67,048
44.0
53,559
43.7
13,489
25.2
Total direct costs of contract revenue
94,725
62.2
75,071
61.3
19,654
26.2
Gross profit
57,661
37.8
47,418
38.7
10,243
21.6
General and administrative expenses:
Salaries and wages, payroll taxes and employee benefits
31,108
20.4
26,509
21.6
4,599
17.3
Facilities and facilities related
2,624
1.7
2,445
2.0
179
7.3
Stock-based compensation
2,426
1.6
1,390
1.1
1,036
74.5
Depreciation and amortization
4,440
2.9
3,592
2.9
848
23.6
Other
10,027
6.6
8,121
6.6
1,906
23.5
Total general and administrative expenses
50,625
33.2
42,057
34.3
8,568
20.4
Income (loss) from operations
7,036
4.6
5,361
4.4
1,675
31.2
Other income (expense):
Interest expense
(1,802)
(1.2)
(2,137)
(1.7)
335
(15.7)
Other, net
(41)
(0.0)
704
0.6
(745)
(105.8)
Total other income (expense)
(1,843)
(1.2)
(1,433)
(1.2)
(410)
28.6
Income (Loss) before income tax expense
5,193
3.4
3,928
3.2
1,265
32.2
Income tax expense (benefit)
506
0.3
986
0.8
(480)
(48.7)
Net income (loss)
$
4,687
3.1
$
2,942
2.4
$
1,745
59.3
(1) Percentages are expressed as a percentage of contract revenue and may not total due to rounding .
37
Table of Contents
The following tables provides information about disaggregated revenue of our two segments, Energy and Engineering and Consulting, by contract type, client type and geographical region:
Three months ended April 4, 2025
Energy
Engineering and
Consulting
Total
(in thousands)
Contract Type
Time-and-materials
$
11,602
$
18,060
$
29,662
Unit-based
47,707
6,255
53,962
Fixed price
66,939
1,823
68,762
Total (1)
$
126,248
$
26,138
$
152,386
Client Type
Commercial
$
13,515
$
1,811
$
15,326
Government
48,324
24,272
72,596
Utilities (2)
64,409
55
64,464
Total (1)
$
126,248
$
26,138
$
152,386
Geography (3)
Domestic
$
126,248
$
26,138
$
152,386
Three months ended March 29, 2024
Energy
Engineering and
Consulting
Total
(in thousands)
Contract Type
Time-and-materials
$
8,537
$
16,399
$
24,936
Unit-based
46,957
4,511
51,468
Fixed price
45,252
833
46,085
Total (1)
$
100,746
$
21,743
$
122,489
Client Type
Commercial
$
7,203
$
1,580
$
8,783
Government
35,820
20,098
55,918
Utilities (2)
57,723
65
57,788
Total (1)
$
100,746
$
21,743
$
122,489
Geography (3)
Domestic
$
100,746
$
21,743
$
122,489
(1) Amounts may not add to the totals due to rounding.
(2) Includes the portion of revenue related to small business programs paid by the end user/customer.
(3) Revenue from our foreign operations were not material for the three months ended April 4, 2025 and March 29, 2024 .
Three Months Ended April 4, 2025 Compared to Three Months Ended March 29, 2024
Contract revenue. Consolidated contract revenue increased $29.9 million, or 24.4%, in the three months ended April 4, 2025, compared to the three months ended March 29, 2024, reflecting increased demand for our services in both our Energy segment and our Engineering and Consulting segment.
Contract revenue in our Energy segment increased $25.5 million, or 25.3%, in the three months ended April 4, 2025, compared to the three months ended March 29, 2024, primarily as a result of increased demand for energy efficiency and electrification services under utility programs, higher construction management revenues, higher planning and advisory consulting revenues, and the incremental revenues from our acquisitions of Enica Engineering, PLCC. (“Enica”) and Alternative Power Generation, Inc. (“APG”).
Contract revenue in our Engineering and Consulting segment increased $4.4 million, or 20.2%, in the three months ended April 4, 2025, compared to the three months ended March 29, 2024, primarily due to increased demand for services provided to our clients, combined with the incremental revenues from our acquisition of Alpha Inspections, Inc. (“Alpha”).
38
Table of Contents
Direct costs of contract revenue. Direct costs of consolidated contract revenue increased $19.7 million, or 26.2%, for the three months ended April 4, 2025, compared to the three months ended March 29, 2024, primarily as a result of the increase and change of mix in contract revenues as described above. As a percentage of contract revenue, direct salaries and wages increased to 18.2% in the three months ended April 4, 2025 from 17.6% in the three months ended March 29, 2024, while subcontractor services and other direct costs was relatively flat for the three months ended April 4, 2025 compared to the three months ended March 29, 2024.
Direct costs of contract revenue in our Energy segment increased $17.7 million, or 27.1%, for the three months ended April 4, 2025, compared to the three months ended March 29, 2024. Direct costs of contract revenue for the Engineering and Consulting segment increased $2.0 million, or 20.0%, in the three months ended April 4, 2025, compared to the three months ended March 29, 2024.
Subcontractor services and other direct costs increased by $13.5 million, or 25.2%, in the three months ended April 4, 2025 , compared to the three months ended March 29, 2024, primarily due to the increase in utility program revenues and construction management revenues, which utilize a higher percentage of material cost and installation subcontracting. S alaries and wages increased by $6.2 million, or 28.7%, in the three months ended April 4, 2025, compared to the three months ended March 29, 2024, primarily as a result of the increases in contract revenue as described above.
Gross Profit . Gross profit increased 21.6% to $57.7 million, or 37.8% gross margin, for the three months ended April 4, 2025, compared to gross profit of $47.4 million, or 38.7% gross margin, for the three months ended March 29, 2024. The decrease in our gross margin was primarily driven by changes in the mix of revenues as described above.
General and administrative expenses. General and administrative (“G&A”) expenses increased $8.6 million, or 20.4%, to $50.6 million in the three months ended April 4, 2025, compared to $42.1 million for the three months ended March 29, 2024. G&A expenses consisted of an increase of $7.0 million, or 21.9%, in the Energy segment combined with an increase of $1.4 million, or 15.5%, in the Engineering and Consulting segment, and an increase of $0.2 million, or 17.1%, in unallocated corporate expenses.
The overall increase in G&A expenses consisted of an increase of $4.6 million in salaries and wages, payroll taxes and employee benefits, an increase of $1.9 million in other general and administrative expenses, an increase of $1.0 million in stock-based compensation, and an increase of $0.8 million in depreciation and amortization. The increase in salaries and wages, payroll taxes and employee benefits was primarily due to an increase in incentive compensation, consistent with the improvement in operating profit, and higher fringe benefit costs. The increase in other general and administrative expenses was primarily due to increased professional service fees and computer-related expenses. The increase in stock-based compensation expenses was primarily related to new stock grants to current employees and executives at a higher stock price. The increase in depreciation and amortization was primarily related to higher amortization of intangible assets from recent acquisitions.
Income (loss) from operations. Operating income increased to $7.0 million for the three months ended April 4, 2025, compared to an operating income of $5.4 million for the three months ended March 29, 2024 , as a result of the factors noted above.
Total other expense, net. Total other expense, net, increased $0.4 million, or 28.6%, for the three months ended April 4, 2025, compared to the three months ended March 29, 2024, primarily due to a one-time charge related to a facility lease modification, partially offset by lower interest expense resulting from the reduced interest rate spread derived from lower debt leverage levels under our credit facilities.
Income tax expense (benefit). We recorded an income tax expense of $0.5 million for the three months ended April 4, 2025, an effective tax rate of 9.8% on income before income tax expense, compared to an income tax expense of $1.0 million for the three months ended March 29, 2024, an effective tax rate of 25.1% on income before tax expense. The reduction in the effective tax rate resulted from increases in discrete items related to stock compensation deductions and additional energy-efficiency building deductions.
39
Table of Contents
Net income (loss). Our net income was $4.7 million for the three months ended April 4, 2025, as compared to a net income of $2.9 million for the three months ended March 29, 2024. The increase in net income was primarily attributable to the increase in income from operations combined with the lower effective tax rate.
Liquidity and Capital Resources
Three Months Ended
April 4,
March 29,
2025
2024
(in thousands)
Net cash provided by (used in):
Operating activities
$
3,311
$
26,949
Investing activities
(34,764)
(1,952)
Financing activities
(4,341)
(1,469)
Net increase (decrease) in cash and cash equivalents
$
(35,794)
$
23,528
Sources of Cash
Our primary sources of liquidity for the next 12 months and beyond are cash generated from operations, cash and cash equivalents, and available borrowings under our revolving credit facility under the Credit Agreement (the “Revolving Credit Facility”) . We believe that our cash and cash equivalents, cash generated by operating activities, and available borrowings under our Revolving Credit Facility will be sufficient to finance our operating activities for at least the next 12 months.
As of April 4, 2025 , we had a fully drawn $100 million term loan with $87.5 million outstanding (the “Term Loan”, and collectively with the Revolving Credit Facility, the “Credit Facilities”), and a $50.0 million Revolving Credit Facility with no borrowed amounts and $1.6 million in letters of credit issued, each scheduled to mature on September 29, 2026. In addition, as of April 4, 2025, we had $38.4 million of unrestricted cash and cash equivalents. As of April 4, 2025, unhedged borrowings under our Credit Facilities, exclusive of the effects of upfront fees, undrawn fees and issuance cost amortization, bore interest at an annual rate of 6.4%.
On May 5, 2025 (the “Closing Date”), we entered into the Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”). The Amended and Restated Credit Agreement (A) increased the borrowing limit under the Revolving Credit Facility to $100.0 million, (B) reduced the Term Loan A (“TLA”) commitment to $50.0 million, (C) provided a new $50.0 million Delayed Draw Term Loan (the “Delayed Draw Term Loan,” and together with the Revolving Credit Facility and TLA, the “Credit Facilities”), and (D) extended the maturity date of the Credit Facilities to May 5, 2030. In connection with the Amended and Restated Credit Agreement, the Company borrowed $38.4 million under the Revolving Credit Facility which it used to repay a portion of the TLA such that, on the Closing Date, the outstanding principal amount of the TLA was $50.0 million. See Part I, Item 1, Note 6, “Debt Obligations”, Note 14, “Subsequent Events” of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, and Part II, Item 8, Note 5, “Debt Obligations”, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 27, 2024, for information regarding our indebtedness, including information about borrowings and repayments, principal repayment terms, interest rates, covenants, and other key terms of our outstanding indebtedness.
Cash Flows from Operating Activities
Cash flows provided by operating activities were $3.3 million for the three months ended April 4, 2025, as compared to cash flows provided by operating activities of $26.9 million for the three months ended March 29, 2024 . Cash flows from operating activities primarily consists of net income, adjusted for non-cash charges, such as depreciation and amortization and stock-based compensation, plus or minus changes in current operating assets and liabilities. Cash flows provided by operating activities for the three months ended April 4, 2025, resulted primarily from the increase in earnings and working capital requirements. Cash flows provided by operating activities for the three months ended March 29, 2024, resulted primarily from the increase in earnings and lower working capital requirements
40
Table of Contents
due to a reduction in revenues from the three months ended December 29, 2023 to the three months ended March 29, 2024.
Cash Flows from Investing Activities
Ca sh flows used in investing activities were $34.8 million for the three months ended April 4, 2025, as compared to cash flows used in investing activities of $2.0 million for the three months ended March 29, 2024. Cash flows used in investing activities for the three months ended April 4, 2025 were primarily due to cash paid for acquisitions, combined with cash paid for the development of proprietary software and the purchase of computers and equipment. Cash flows used in investing activities for the three months ended March 29, 2024 were primarily due to cash paid for the development of software and the purchase of computers and equipment.
Cash Flows from Financing Activities
Cash flows used in financing activities were $4.3 million for the three months ended April 4, 2025, as compared to cash flows used in financing activities of $1.5 million for the three months ended March 29, 2024. Cash flows used in financing activities for the three months ended April 4, 2025 were primarily attributable to the $2.9 million cash used to pay withholding taxes on stock grants, the repayments of $2.5 million under our Term Loan, partially offset by $1.5 million of proceeds from sales of common stock under employee stock purchase plan. Cash flows used in financing activities for the three months ended March 29, 2024 were primarily attributable to the repayments of $1.9 million under our Term Loan, and $0.8 million cash used to pay withholding taxes on stock grants, partially offset by $1.4 million of proceeds from sales of common stock under employee stock purchase plan.
Under certain utility contracts, we periodically receive cash deposits to be held in trust for the payment of energy incentive rebates to be sent directly to the utility’s end-customer on behalf of the utility. We act solely as the utility’s agent to distribute these funds to the end-customer and, accordingly, we classify these contractually restricted funds as restricted cash. Because these funds are held in trust for pass through to the utility’s customers and have no impact on our working capital or operating cash flows, these cash receipts are presented in the condensed consolidated statement of cash flows as financing cash inflows, “Receipt of restricted cash”, with the subsequent payments classified as financing cash outflows, “Payment of restricted cash.”
Off-Balance Sheet Arrangements
We do not have any off-balance sheet financing arrangements or liabilities. In addition, our policy is not to enter into futures or forward contracts. Finally, we do not have any majority-owned subsidiaries or any interests in, or relationships with, any special-purpose entities that are not included in the consolidated financial statements. We have, however, an administrative services agreement with Genesys in which we provide Genesys with ongoing administrative, operational and other non-professional support services. We manage Genesys and have the power to direct the activities that most significantly impact Genesys’ performance, in addition to being obligated to absorb expected losses from Genesys. Accordingly, we are the primary beneficiary of Genesys and consolidate Genesys as a variable interest entity.
41
Table of Contents
Short and Long-term Uses of Cash
General
Our principal uses of cash are to fund operating expenses, support working capital requirements, finance capital expenditures, and pay down outstanding debt. From time to time, we also use cash to help fund business acquisitions. Our cash and cash equivalents are impacted by the timing of when we invoice and are paid by our customers for services rendered and when we pay expenses as reflected in the change in our outstanding accounts payable and accrued expenses.
Contractual Obligations
The following table sets forth our known contractual obligations as of April 4, 2025:
Less than
More than
Contractual Obligations
Total
1 Year
1 - 3 Years
3 - 5 Years
5 Years
(in thousands)
Debt (1)
$
86,943
$
2,500
$
84,443
$
—
$
—
Interest payments on debt outstanding (2)
7,676
5,238
2,438
—
—
Operating leases
14,390
5,840
6,759
1,791
—
Finance leases
2,704
1,233
1,380
91
—
Total contractual cash obligations
$
111,713
$
14,811
$
95,020
$
1,882
$
—
(1) Debt includes $86.9 million outstanding on our Term Loan, net of issuance costs, and no borrowed amounts outstanding on our Revolving Credit Facility as of April 4, 2025. We have assumed no future borrowings or repayments (other than at maturity) for purposes of this table. Our Term Loan is scheduled to mature on September 29, 2026.
(2) Borrowings under our Term Loan and Revolving Credit Facility bear interest at a variable rate. Future interest payments on our Credit Facility are estimated using floating rates in effect as of April 4, 2025.
We are obligated to pay earnout payments in connection with our acquisitions of Enica and APG. We are obligated to pay up to $6.0 million in cash if Enica exceeds certain financial targets during the two years after the Enica closing date of October 23, 2024 and are obligated to pay up to $18.0 million in cash if APG exceeds certain financial targets during the three years after the APG closing date of March 3, 2025. As of April 4, 2025, we had contingent consideration payable of $16.9 million related to the acquisitions of Enica and APG. For fiscal year 2024, our statement of operations includes $0.5 million of interest accretion (excluding fair value adjustments) related to the contingent consideration.
Outstanding Indebtedness
See Part I, Item 1, Note 6, “ Debt Obligations ”, Note 14, “ Subsequent Events ”, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, and Part II, Item 8, Note 5, “ Debt Obligations ”, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 27, 2024, for information regarding our indebtedness, including information about new borrowings and repayments, principal repayment terms, interest rates, covenants, and other key terms of our outstanding indebtedness.
Interest Rate Swap
From time to time, we enter into interest rate swap agreements to moderate our exposure to fluctuations in interest rates underlying our variable rate debt. For more information, see Part I, Item 3, “ Quantitative and Qualitative Disclosures About Market Risk ”, and Note 5, “ Derivative Financial Instruments ”, to the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
42
Table of Contents
Impact of Inflation
Due to the average duration of our projects and our ability to negotiate prices as contracts end and new contracts begin, historically, our operations have not been materially impacted by inflation.
While not material to our results of operations and financial condition, we have experienced higher cost of materials and delays in our supply chain for equipment. The prices of finished products from manufacturers are subject to fluctuation and increases. It is difficult to accurately measure the impact of inflation, tariffs, price escalation, raw material costs, and other factors that impact the cost of finished goods due to the imprecise nature of the estimates required.
We are often able to mitigate the impact of future price increases by entering into fixed price purchase orders for materials and equipment, and subcontracts on our projects, as well as, when appropriate, including cost escalation factors into our proposals. Despite our best mitigation efforts, significant price increases in equipment and disruptions to our supply chain could materially impact our results of operations and financial condition. In addition, inflationary pressures, including expectations of future inflation, may impact the customers of our utility clients, which may lead to delayed or deferred decisions regarding expenditures to improve energy efficiency, and therefore potentially impact our future revenues.
Impact of Certain Federal Policies
Federal policies related to tariffs and renewable energy incentives have been subject to frequent and significant changes from executive orders issued by the new federal administration. While we have not experienced a material impact to our operating results or our outlook for future business, there can be no assurance that these measures will not impact our ability to procure cost-effective pricing of materials used in our projects at various building sites, or result in a reduction in demand for our services as a result of inflation, lead times, or other impacts that may derive from changes in the current administration’s executive orders.
Components of Revenue and Expense
Contract Revenue
We generally provide our services under contracts, purchase orders or retainer letters. The agreements we enter into with our clients typically incorporate one of three principal types of pricing provisions: time-and-materials, unit-based, and fixed price. Revenue on our time-and-materials and unit-based contracts are recognized as the work is performed in accordance with specific terms of the contract. As of April 4, 2025, 20% of our contracts are time-and-materials contracts, 35% are unit-based contracts, and 45% are fixed price contracts, compared to 20% are time-and-materials contracts, 42% are unit-based contracts, and 38% are fixed price contracts, as of March 29, 2024.
Some of these contracts include maximum contract prices, but contract maximums are often adjusted to reflect the level of effort to achieve client objectives and thus the majority of these contracts are not expected to exceed the maximum. Contract revenue on our fixed price contracts is determined on the percentage of completion method based generally on the ratio of direct costs incurred to date to estimated total direct costs at completion. Many of our fixed price contracts involve a high degree of subcontracted fixed price effort and are relatively short in duration, thereby lowering the risks of not properly estimating the percent complete.
Adjustments to contract cost estimates are made in the periods in which the facts requiring such revisions become known. When the revised estimate indicates a loss, such loss is recognized in the current period in its entirety. Claims and change orders that have not been finalized are evaluated to determine whether or not a change has occurred in the enforceable rights and obligations of the original contract. If these non-finalized changes qualify as a contract modification, a determination is made whether to account for the change in contract value as a modification to the existing contract, or a separate contract and revenue under the claims or change orders is recognized accordingly. Costs related to un-priced change orders are expensed when incurred, and recognition of the related revenue is based on the
43
Table of Contents
assessment above of whether or not a contract modification has occurred. Estimated profit for un-priced change orders is recognized only if collection is probable.
Our contracts come up for renewal periodically and at the time of renewal may be subject to renegotiation, which could impact the profitability of that contract. In addition, during the term of a contract, public agencies may request additional or revised services which may impact the economics of the transaction. Most of our contracts permit our clients, with prior notice, to terminate the contracts at any time without cause. While we have a large volume of contracts, the renewal, termination or modification of a contract, in particular contracts with Consolidated Edison, the Dormitory Authority-State of New York, the New York City Housing Authority, and utility programs associated with Los Angeles Department of Water and Power and Southern California Edison, may have a material effect on our consolidated operations.
Some of our contracts include certain performance guarantees, such as a guaranteed energy saving quantity. Such guarantees are generally measured upon completion of a project. In the event that the measured performance level is less than the guaranteed level, any resulting financial penalty, including any additional work that may be required to fulfill the guarantee, is estimated and charged to direct expenses in the current period. We have not experienced any significant costs under such guarantees.
Direct Costs of Contract Revenue
Direct costs of contract revenue consist primarily of that portion of salaries and wages that have been incurred in connection with revenue producing projects. Direct costs of contract revenue also include material costs, subcontractor services, equipment and other expenses that are incurred in connection with revenue producing projects. Direct costs of contract revenue exclude that portion of salaries and wages related to marketing efforts, vacations, holidays and other time not spent directly generating revenue under existing contracts. Such costs are included in general and administrative expenses. Additionally, payroll taxes, bonuses and employee benefit costs for all of our personnel are included in general and administrative expenses since no allocation of these costs is made to direct costs of contract revenue.
Other companies may classify as direct costs of contract revenue some of the costs that we classify as general and administrative costs. We expense direct costs of contract revenue when incurred.
General and Administrative Expenses
G&A expenses include the costs of the marketing and support staff, other marketing expenses, management and administrative personnel costs, payroll taxes, bonuses and employee benefits for all of our employees and the portion of salaries and wages not allocated to direct costs of contract revenue for those employees who provide our services. G&A expenses also include facility costs, depreciation and amortization, professional services, legal and accounting fees and administrative operating costs. Within G&A expenses, “Other” includes expenses such as professional services, legal and accounting, computer costs, travel and entertainment, marketing costs and acquisition costs. We expense general and administrative costs when incurred.
Critical Accounting Policies
We have prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”). To prepare these financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses in the reporting period. Our actual results may differ from these estimates. We have adopted accounting policies and practices that are generally accepted in the industry in which we operate.
There have been no material changes in our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for our fiscal year ended December 27, 2024. Please refer to Part II, Item 7 of our
44
Table of Contents
Annual Report on Form 10-K for the fiscal year ended December 27, 2024 for a discussion of our critical accounting policies and estimates.
Recent Accounting Standards
For a description of recently issued and adopted accounting pronouncements, including adoption dates and expected effects on our results of operations and financial condition, see Part I, Item 1, Note 2, “ Recent Accounting Pronouncements ”, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
45
Table of Contents
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.