ECG 10-K & 10-Q changes, risk factors and insider trading

From time to time, we may pursue claims against customers to recover costs incurred on a project in excess of the original contract amount. These additional costs may be incurred in connection with project delays including other trades, or changes in project scope or specifications. While we generally negotiate with the customer for additional compensation, we may be unable to obtain, through negotiation, arbitration, litigation or otherwise, adequate compensation for the additional work performed or expenses incurred. These claims can be the subject of lengthy and costly legal proceedings, making it often difficult to accurately predict when these claims will be fully resolved. When these types of events occur and unresolved claims are pending, we may invest significant working capital pending the resolution of the relevant claims. When appropriate, we establish provisions against possible exposures and adjust these provisions from time to time, but assumptions and estimates related to these exposures might prove to be inadequate or inaccurate. Failure to recover, or to recover in a timely manner, on these claims could have a material adverse effect on our liquidity and financial results.

For 2024, our customer base was reasonably concentrated, with the top 10 customers accounting for approximately 33% of total operating revenues of $2.85 billion, but no single customer accounting for more than 10% individually. However, at the segment level, no single customer accounted for more than 10% of total E&M segment revenues, but revenues from a single customer accounted for approximately 17% of total T&D segment revenues.

We currently generate, and expect to continue to generate, at least in the short-term, a significant portion of our revenues from data center and other similar high tech and advanced technology contracts. The loss of, or reduction in business from, these types of contracts could have a material adverse effect on our business.

We currently generate a significant portion of our revenues from data center and other similar high tech and advanced technology contracts and our revenue mix has changed significantly in the last couple of years. Data center capacity and load growth, as well as other advanced technology growth, creates tremendous opportunities, but also presents risks and challenges for us and our customers. These types of projects generally require continuous, adequate power sources, transmission capacity and permitting obligations in some cases. With the rise in power generation required by these type of projects, it does however create some uncertainties surrounding the longevity of this type of work and if it will be sustained in the future. While we believe there is still strong demand for these types of projects in the foreseeable future, we cannot guarantee that will be the case. The loss of, or reduction in business from, these types of contracts could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Further, the timing of our price increases may lag behind the timing of the underlying increases in commodity or material prices. Even if we are able to raise the prices of our products, consumers might react negatively to such price increases, which could have a material adverse effect on, among other things, our brands, reputation, and sales. If our competitors substantially lower their prices, we may lose customers and mark down prices. Our profitability may be impacted by lower prices, which may negatively impact gross profit and gross margin.

Additionally, our fixed-price contracts generally do not allow us to adjust our prices and, as a result, increases in material or fuel costs could reduce our profitability with respect to projects in progress. For example, in recent years, we have experienced supply chain delays, including long lead times for certain materials and equipment, as well as an escalation in material and fuel prices, to varying degrees. These disruptions resulted in declines in gross profit and gross margin for certain of our operations. Fluctuations in the price of energy and commodity materials, whether resulting from fluctuations in market supply or demand, geopolitical conditions, including supply chain disruptions and sanctions as a result of foreign wars or conflicts and recent shipping lane disruptions, an increase in trade protection measures such as tariffs, or the disruption, modification, or cancellation of multilateral trade agreements, may adversely affect our customers and as a result cause them to curtail the use of our services.

Insurance losses are accrued based upon our estimates of the ultimate liability for claims reported and an estimate of claims incurred but not yet reported. Insurance liabilities are difficult to assess and estimate due to unknown factors, including the frequency and severity of injuries, the magnitude of damage to or loss of property or the environment, the determination of our liability in proportion to other parties, estimates of incidents not reported and the effectiveness of our safety programs, and as a result, our actual losses may exceed our estimates. There can be no assurance that our current or past insurance coverages will be sufficient or effective under all circumstances or against all claims and liabilities to which we may be subject.

We generally renew our insurance policies on an annual basis; therefore, deductibles and levels of insurance coverages may change in future periods. There can be no assurance that any of our existing insurance coverages will be renewed upon the expiration of the coverage period or that future coverage will be available at reasonable and competitive rates or at the required limits. The cost of our insurance has increased over time, which was experienced during our most recent renewal process, and we expect it will continue to increase in the future. In addition, insurers may fail, cancel our coverage, increase the cost of coverage, determine to exclude certain items from coverage, or otherwise be unable to provide us with adequate insurance coverage.

In addition, we perform work in hazardous environments and our employees are exposed to a number of hazards. In locations or environments where claims have become more frequent or severe in recent years, insurance may become difficult or impossible to obtain. Our contracts may require us to indemnify our customers, project owners and other parties for injury, damage or loss arising out of our presence at its customers’ location, or in the performance of our work, in both cases regardless of fault. Our contracts may also require warranties for materials and workmanship.

Our contracts may also require us to name the customer and others as an additional insured party under our insurance policies. We maintain limited insurance coverage against these and other risks associated with our business. This insurance may not protect us against liability for certain events, and we cannot guarantee that our insurance will be adequate in risk coverage or policy limits to cover all losses or liabilities that we may incur. Any future damages caused by our services that are not covered by insurance or are in excess of policy limits could negatively affect our business, financial condition, results of operations and cash flows.

Artificial intelligence ("AI") technologies present a growing range of risks to our business. Threat actors are using AI to execute increasingly sophisticated fraud schemes as well as advanced cyber attacks.

Internally, the use of AI tools in business functions carries risks of inaccurate outputs, data exposure, and security vulnerabilities, while a rapidly evolving regulatory landscape around AI governance, data privacy, and algorithmic accountability could increase compliance costs and legal liability.

Business operations and activities in certain locations are seasonal, and operations are affected by weather conditions. Construction services and related specialty contracting services typically follow the activity in the construction industry, with heavier workloads in the spring, summer and fall. As a result, seasonality has negatively affected, and could continue to negatively affect, our results of operations, financial position and cash flows.

Our business is based in part on government-funded infrastructure projects and building activities, and any associated regulatory changes or requirements in these areas could have an adverse effect on us.

Critical accounting estimates are defined as estimates that require us to make assumptions about matters that are uncertain at the time the estimates were made, and changes in the estimates could have a material impact on our financial position or results of operations. Our critical accounting estimates are subject to judgments and uncertainties that affect the application of the significant accounting policies. As additional information becomes available, or actual amounts are determinable, the recorded estimates are revised. Consequently, our financial position or results of operations may be materially different when reported under varying conditions or when using different assumptions in the application of the following critical accounting estimates. For more information, refer to Note 2 – Basis of Presentation and Summary of Significant Accounting Policies in the consolidated financial statements and Critical Accounting Estimates included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations contained elsewhere in this 2025 Annual Report.

As discussed in further detail in Note 2 – Basis of Presentation and Summary of Significant Accounting Policies in the consolidated financial statements and Critical Accounting Estimates included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations contained elsewhere in this 2025 Annual Report, contract revenue is recognized over time using the input method, based on progress measured by costs incurred relative to total estimated costs for a performance obligation. Revenues are recorded proportionate to the costs incurred, reflecting progress toward the transfer of goods or services to the customer. Consequently, changes in estimates, or variations of actual results from previous projections, on an unusually large project, or on a number of average size projects, could be material and could have an adverse impact on our financial condition, results of operations, and cash flows.

Backlog is a common measurement in the construction services industry. Our determination of backlog can include projects that have a written award, a letter of intent, a notice to proceed, an agreed upon work order to perform work on mutually accepted terms, and conditions and change orders or claims to the extent management believes additional contract revenues will be earned and are deemed probable of collection. Contracts are subject to delays, defaults or cancellations; changes in scope of services to be provided; and adjustments to costs. Backlog may also be affected by project delays or cancellations resulting from weather conditions, external market factors and economic factors beyond our control, among other things. Accordingly, there is no assurance that backlog will be realized. The timing of contract awards, including contracts awarded underneath master service agreements, duration of large new contracts and the mix of services can significantly affect backlog. Backlog at any given point in time may not accurately represent the revenue or net income that is realized in any period, and backlog as of the end of the quarter or year may not be indicative of the revenue and net income expected to be earned in the following year. Backlog should not be relied upon as a standalone indicator of future results.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and are required to prepare our financial statements according to the rules and regulations required by the SEC. Our failure to prepare and disclose this information in a timely manner or to otherwise comply with applicable law could subject us to penalties under federal securities laws, expose us to lawsuits and restrict our ability to access financing. In addition, the Sarbanes-Oxley Act requires that, among other things, we establish and maintain effective internal controls and procedures for financial reporting and disclosure purposes. Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules. We cannot guarantee that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective. If we are not able to maintain or document effective internal control over financial reporting, our independent registered public accounting firm will not be able to certify as to the effectiveness of our internal control over financial reporting.

When we acquire a business, goodwill is recorded for the excess amount paid for the business over the net fair value of the tangible and identifiable intangible assets of the business acquired. As of both December 31, 2025 and 2024, the balance sheet included goodwill of $143.2 million. Intangible assets were fully amortized during 2025, and as such, the Company wrote off the remaining $10.5 million of finite-lived intangible assets cost and associated accumulated amortization related to customer relationships. As of December 31, 2024, the balance sheet included $0.1 million of intangible assets related to customer relationships.

There can be no assurance that we are in full compliance with all applicable laws and regulations or interpretations of these laws and regulations at all times or that we will be able to comply with any future laws, regulations or interpretations of these laws and regulations.

We are self-insured for the health care benefits for eligible employees, subject to certain deductible thresholds. However, health care costs continue to increase. Increasing quantities of large individual health care claims and an overall increase in total health care claims could have an adverse impact on our operating results, financial position and liquidity. Complying with any new legislation and regulation at both the federal and state level related to health care, unemployment tax rates and workers' compensation rates, among others, could adversely affect our financial position, results of operations and cash flows, as well change our benefit programs and costs.

The trading market of our common stock has existed only for a limited period of time following the Separation and Distribution, and our stock price and trading volume may fluctuate significantly.

A public market for our common stock has only existed for a limited period of time following the Separation and Distribution. The trading price of our common stock has been and may continue to be volatile and the trading volume may fluctuate and cause significant price variations to occur. For many reasons, including the other risks identified in this section, the market price of our common stock may be more volatile than that of our market peers. We cannot predict the prices at which our common stock may trade.

In the future, your percentage ownership in us may be diluted because of equity awards that have been and will be granted to our directors, officers and employees or otherwise as a result of equity issuances for acquisitions or capital market transactions. Our employees have stock-based awards relating to shares of our common stock, including awards that were converted to Everus stock-based awards from MDU Resources stock-based awards following the Distribution. Any currently granted stock-based awards or awards that will be granted in future will have a dilutive effect on our earnings per share, which could adversely affect the market price of shares of our common stock. From time to time, we will issue additional stock-based awards to our employees under our employee benefits plans.

In addition, our certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock that have such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our common stock respecting dividends and distributions, as our board of directors (“board”) generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred stock could affect the residual value of the common stock.

For a discussion and analysis of our results of operations and financial condition for the year ended December 31, 2024, as compared to the year ended December 31, 2023, refer to Part II. Item 7A. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission on February 28, 2025, which is available free of charge on the SEC’s website at www.sec.gov and our corporate website at investors.everus.com.

We focus on safely executing projects; providing a superior return on investment by building new and strengthening existing customer relationships; ensuring quality service; effectively managing costs; retaining, developing and recruiting talented employees; growing through organic and strategic acquisition opportunities; and focusing efforts on projects that will permit higher margins while properly managing risk. The growth we have experienced in recent years is due in part to the project awards in the end markets and submarkets served and the ability to support national customers in most of the regions in which we operate. Our strong presence in the Western, Midwestern and Eastern regions of the United States has driven opportunities in data centers, high tech, hospitality and utilities, while customer expansion nationwide continues to extend our reach through partnerships through our 15 wholly owned operating companies. At Everus, people are our core, and we prioritize integrity, safety and growth through comprehensive training, hands-on development, safety compliance metrics and strong union partnerships to instill a safety first culture and ethical leadership across all levels.

Economic and Industry Factors Impacting Our Business

We have experienced increased insurance costs and anticipate continued increases in insurance costs. Premiums in the insurance industry have risen due to many factors, such as economic inflation and a rise in insurance carriers’ losses, in particular for wildfire risks. We experienced these aforementioned impacts with coverage for our insurance lines on a standalone basis following the Separation and again saw increases in insurance costs during our latest renewal cycle partially in part to our revenue growth during 2025 at the time of renewal. However, we are continuing to formulate strategies to minimize these costs and/or ensuring these costs are built into our bidding opportunities going forward.

Despite these increased costs, we are focused on growing our total revenues, expanding gross margins, managing costs and generating cash, all of which would result in increased operating income.

We continued to have bidding opportunities in the specialty contracting markets we operated in during 2025, as evidenced by our backlog, even with our revenue growth during the fiscal year. Our backlog supports strong project opportunities across our diverse service offerings, particularly for data center, undergrounding and hospitality work. With our successful track record of executing on complex projects, our long-term customer relationships, safe and skilled workforce, quality of service and effective cost management, we believe we remain well-positioned to benefit from favorable demand drivers, including high tech reshoring, data center construction and utility infrastructure investments, giving us the opportunity to continue securing and executing profitable projects in the future.

Following the Separation, we rely on our own credit and financing arrangements and incur interest expense associated with those arrangements. For additional information related to our current financing arrangements, refer to Note 7 – Debt in the consolidated financial statements contained elsewhere in this 2025 Annual Report.

Operating Revenues

Changes in estimates associated with performance obligations that were satisfied or partially satisfied prior to the previous year end positively net impacted revenues and accounted for approximately 3.0% of revenues for the year ended December 31, 2025, compared to 2.9% of revenues for the year ended December 31, 2024.

For the year ended December 31, 2025, the changes in estimates mentioned above favorably accounted for approximately 4.2% of revenues, compared to 3.8% of revenues for the year ended December 31, 2024. Favorable impacts to revenues were primarily due to project pull forward, labor efficiencies and favorable impacts from projected cost changes, including material costs, project risk mitigation and change orders. However, these changes in estimates unfavorably accounted for approximately 1.2% of revenues for the year ended December 31, 2025, compared to 0.9% of revenues for the year ended December 31, 2024. Unfavorable impacts to revenues were primarily due to labor inefficiencies related to sequencing on projects and unfavorable impacts from project delays and cost overruns.

Gross Profit

Gross profit for the year ended December 31, 2025, was $454.1 million, an increase of $114.6 million, or 33.8%, from $339.5 million for the year ended December 31, 2024. The increase was primarily from continued revenue growth due to increased workloads and project timing, partially offset by changes in project mix. Gross margin increased to 12.1% for the year ended December 31, 2025, compared to 11.9% for the year ended December 31, 2024.

Operating Income

Operating income for the year ended December 31, 2025, was $264.8 million, an increase of $74.8 million, or 39.4%, from $189.9 million for the year ended December 31, 2024. The increase was primarily driven by increased gross profit, partially offset by increased SG&A expenses, both of which are discussed above. Operating income margin increased to 7.1% for the year ended December 31, 2025, compared to 6.7% for the year ended December 31, 2024. See “Segment Results of Operations–Year Ended December 31, 2025, Compared to Year Ended December 31, 2024” for further comparative analysis of segment operating income and “Corporate and Other” category operating income for the years indicated.

Interest Income

For the year ended December 31, 2025, we earned interest income of $4.6 million, including $4.3 million from our central cash management program, including daily cash sweep and money market deposit account programs, and $0.3 million from our Captive Cell. There were no such activities earning interest income for the year ended December 31, 2024.

NM - Not Meaningful

Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025

The following table sets forth our consolidated selected statements of income data, with percentages of operating revenues for the interim periods indicated, as well as the percentage change from the prior comparative interim period:

Operating revenues for the six months ended June 30, 2026, were $2.27 billion, an increase of $520.4 million, or 29.8%, from $1.75 billion for the six months ended June 30, 2025. E&M revenues grew $483.6 million, or 35.5%, with SE&M contributing $33.4 million. T&D revenues increased $34.5 million, or 8.7%. See “Segment Results of Operations–Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025” for further comparative analysis of segment revenues for the periods indicated.

Changes in estimates associated with performance obligations that were satisfied or partially satisfied in prior periods positively net impacted revenues and accounted for approximately 5.1% of revenues for the six months ended June 30, 2026, compared to 4.2% of revenues for the six months ended June 30, 2025.

For the six months ended June 30, 2026, the changes in estimates mentioned above favorably accounted for approximately 5.9% of revenues, compared to 5.4% of revenues for the six months ended June 30, 2025. Favorable impacts to revenues were primarily due to labor efficiencies and favorable impacts from projected cost changes, including material costs, project risk mitigation and change orders. However, these changes in estimates unfavorably accounted for approximately 0.8% of revenues for the six months ended June 30, 2026, compared to 1.2% of revenues for the six months ended June 30, 2025. Unfavorable impacts to revenues were primarily due to labor inefficiencies related to sequencing on projects and unfavorable impacts from project delays and cost overruns.

Cost of Sales

Cost of sales for the six months ended June 30, 2026, was $1.95 billion, an increase of $419.1 million, or 27.3%, from $1.54 billion for the six months ended June 30, 2025. This increase primarily related to higher E&M and T&D operating costs due to increased workloads and changes in project mix, partially offset by efficient project execution. Labor, material, subcontractor, and equipment and tools costs increased $163.2 million, $102.4 million, $90.4 million, and $36.0 million, respectively, along with higher other job expenses of $27.1 million.

Gross Profit

Gross profit for the six months ended June 30, 2026, was $313.7 million, an increase of $101.3 million, or 47.7%, from $212.4 million for the six months ended June 30, 2025. The increase was primarily due to continued revenue growth from increased workloads, project timing and efficient project execution, partially offset by changes in project mix. Gross margin improved to 13.8% for the six months ended June 30, 2026, compared to 12.2% for the six months ended June 30, 2025.

Selling, General and Administrative Expenses

SG&A expenses for the six months ended June 30, 2026, were $124.2 million, an increase of $35.3 million, or 39.7%, from $88.9 million for the six months ended June 30, 2025. The increase was driven primarily by higher labor of $20.5 million, to support operational growth and performance of the business, higher business development expenses of $3.6 million, higher amortization expenses of $3.1 million largely from the SE&M acquisition, higher net credit loss expenses of $2.1 million, higher insurance expenses of $1.9 million and higher other SG&A expenses of $5.8 million, including higher insurance, rent, and office expenses, partially offset by lower professional service-related expenses of $1.7 million.

Operating income for the six months ended June 30, 2026 was $189.5 million, an increase of $66.0 million, or 53.4%, from $123.5 million for the six months ended June 30, 2025. The increase was primarily driven by increased gross profit, partially offset by increased SG&A expenses, both of which are discussed above. Operating income margin increased to 8.4% for the six months ended June 30, 2026, compared to 7.1% for the six months ended June 30, 2025. See “Segment Results of Operations–Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025” for further comparative analysis of segment operating income and “Corporate and Other” category operating income for the periods indicated.

Interest Income

Interest income for the six months ended June 30, 2026 was $3.6 million, an increase of $2.1 million, from $1.5 million for the six months ended June 30, 2025. The increase was primarily driven by increased interest income of $1.9 million from our central cash management program, including daily cash sweep and money market deposit account programs, as well as $0.2 million of earned interest income from our captive insurance arrangement for the six months ended June 30, 2026.

Interest Expense

Interest expense for the six months ended June 30, 2026, was $9.2 million, a decrease of $1.8 million, or 16.4%, from $11.0 million for the six months ended June 30, 2025. The decrease is primarily related to average lower debt balances under the Term Loan and average lower interest rates during the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

Other Income, Net

Other income, net for the six months ended June 30, 2026, was $2.1 million, a decrease of $0.4 million, or 16.0%, from $2.5 million for the six months ended June 30, 2025. Other income, net contained miscellaneous income and expense activities, including rebates and bank fees.

Income Taxes

Income taxes for the six months ended June 30, 2026, were $49.7 million, an increase of $16.7 million, or 50.6%, from $33.0 million for the six months ended June 30, 2025, reflecting higher income taxes from greater pretax income for the period. The effective tax rate was 25.9% for the six months ended June 30, 2026, compared to 26.9% for the six months ended June 30, 2025.

Income from Equity Method Investments

Income from equity method investments for the six months ended June 30, 2026, was $5.9 million, consistent with $6.0 million for the six months ended June 30, 2025.

Net Income

Net income for the six months ended June 30, 2026, was $142.2 million, an increase of $52.7 million, or 58.9%, from $89.5 million for the six months ended June 30, 2025. The increase was primarily from increased gross profit, partially offset by higher SG&A expenses and higher income taxes on greater pretax income. Net income margin increased to 6.3% for the six months ended June 30, 2026, compared to 5.1% for the six months ended June 30, 2025.

We report our results under two reportable, operating segments: E&M and T&D. The following table sets forth segment revenues, segment operating income and “Corporate and Other” category operating income for the periods indicated, with segment revenues compared to total consolidated revenues and operating income margins for the interim periods indicated, as well as the percentage change from the prior comparative interim period:

1.Corporate and Other operating income percentage of revenues was calculated by dividing Corporate and Other operating income by consolidated revenues for the periods indicated.

E&M segment revenues for the three months ended June 30, 2026, were $1,010.3 million, an increase of $296.7 million, or 41.6%, from $713.6 million for the three months ended June 30, 2025. The increase was primarily driven by higher workloads in the commercial and industrial end markets, particularly continued growth in the data center submarket, partially offset by lower institutional end market activity. SE&M contributed $33.4 million for the three months ended June 30, 2026.

•Commercial revenues grew $245.4 million, primarily from higher data center and hospitality submarket activity due to increased workloads from increased demand for services, partially offset by lower project activity in the commercial submarket.

•Industrial revenues increased $70.4 million, primarily due to increased activity in the high tech and manufacturing submarkets.

•Service & other had higher revenues of $3.5 million, as a result of increased repair and maintenance demand.

•Institutional revenues declined $19.5 million, primarily from lower project activity due to project timing and decreased demand for services in the education and government submarkets.

•Renewables revenues decreased $3.1 million, reflecting decreased commercial submarket activity.

Changes in estimates associated with performance obligations that were satisfied or partially satisfied prior to the previous year end positively net impacted E&M revenues and accounted for approximately 6.9% of E&M revenues for the three months ended June 30, 2026, compared to 5.1% of E&M revenues for the three months ended June 30, 2025.

For the three months ended June 30, 2026, the changes in estimates mentioned above favorably accounted for approximately 7.8% of E&M revenues, compared to 7.0% of E&M revenues for the three months ended June 30, 2025. However, these changes in estimates unfavorably accounted for approximately 0.9% of E&M revenues for the three months ended June 30, 2026, compared to 1.9% of E&M revenues for the three months ended June 30, 2025. The primary drivers of favorable and unfavorable impacts to revenues were previously mentioned in the consolidated results of operations sections above.

T&D segment revenues for the three months ended June 30, 2026, were $227.5 million, an increase of $15.1 million, or 7.1%, from $212.4 million for the three months ended June 30, 2025. The increase was driven by higher utility end-market revenues, partially offset by lower workloads in the transportation end market.

•Utility revenues increased $20.1 million, primarily from increased project activity across several submarkets, particularly distribution and transmission, partially offset by decreased submarket activity in the gas submarket due to the timing of project availability.

•Transportation revenues decreased $5.0 million, with reduced project activity in the traffic signalization and street lighting submarkets.

Changes in estimates associated with performance obligations that were satisfied or partially satisfied prior to the previous year end positively net impacted T&D revenues and accounted for approximately 2.6% of T&D revenues for the three months ended June 30, 2026, compared to 5.8% of T&D revenues for the three months ended June 30, 2025.

For the three months ended June 30, 2026, the changes in estimates mentioned above favorably accounted for approximately 5.9% of T&D revenues, compared to 7.6% of T&D revenues for the three months ended June 30, 2025. However, these changes in estimates unfavorably accounted for approximately 3.3% of T&D revenues for the three months ended June 30, 2026, compared to 1.8% of T&D revenues for the three months ended June 30, 2025. The primary drivers of favorable and unfavorable impacts to revenues were previously mentioned in the consolidated results of operations sections above.

E&M segment operating income for the three months ended June 30, 2026, was $100.5 million, an increase of $41.3 million, or 69.8%, from $59.2 million for the three months ended June 30, 2025. The increase was primarily from E&M segment revenue growth and higher gross profit across multiple end markets, particularly commercial, institutional and service & other, due to increased workloads, project timing and efficiency gains on certain projects, partially offset by changes in project mix. E&M gross margin increased to 14.5% for the three months ended June 30, 2026, compared to 12.0% for the three months ended June 30, 2025.