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

Our business is subject to a variety of risks and uncertainties, including, but not limited to, the risks and uncertainties described below. You should carefully consider the risks described below, together with all other information included in this report, including information contained in the “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures about Market Risk” sections. Our business, financial condition, results of operations orand cash flows could be adversely affected by the occurrence of any of these events, which could cause actual results to differ materially from expected and historical results, and the trading price of our common stock could decline.

The demand for our services is dependent upon the existence of construction projects and service requirements within the markets in which we operate. Any period of economic recession affecting a market or industry in which we transact business is likely to adversely impact our business. Many of the projects we work on have long lifecycles from conception to completion, and the bulk of our performance generally occurs late in a construction project’s lifecycle. We experience the results of economic trends well after an economic cycle begins,begins and therefore have generally continued to experience the results of an economic recession well after conditions in the general economy have improved.

The industries and markets in which we operate have always been and will continue to be vulnerable to macroeconomic downturns because they are cyclical in nature. When there is a reduction in demand, it often leads to greater price competition as well as decreased revenue and profit. The lasting effects of a recession can also increase economic instability with our vendors, subcontractors, developers, and general contractors, which can increase our liability exposure and result in us not being paid in full or at all on some projects, thus decreasing our revenue and profit. Further, to the extent some of our vendors, subcontractors, developers, or general contractors seek bankruptcy protection, such bankruptcywe will likely force us to incur additional costs in attorneys’ fees,fees as well asand other professional consultants,consultant fees and expenses in connection with pursuing payment in such bankruptcy proceedings, and such increased expenses will likely result in decreased revenue and profit. Additionally, because 5.4%5.0% of our revenue for the year ended December 31, 20242025 was attributable to projects in the government sector, a reduction in federal, state, or local government spending in our industries and markets could resulthave inan decreasedadverse revenueeffect on our business, financial condition, results of operations and profitcash for us.flows.

Our contract prices are established largely based on estimates and assumptions ofregarding our projected costs, including assumptions about: future economic conditions; prices, including commodity prices and inflation; availability of labor, including the costs of providing labor, equipment, and materials; and other factors outside our control. If our estimates or assumptions prove to be inaccurate, circumstances change in a way that renders our assumptions and estimates inaccurate or we fail to successfully execute the work, cost overruns may occur, and we could experience reduced profits or a loss for affected projects. For instance, unanticipated technical problems may arise, we could have difficulty obtaining permits or approvals, local laws, labor costs or labor conditions could change, bad weather could delay construction, raw materials prices could increase, our suppliers or subcontractors may fail to perform as expected or site conditions may be different than we expected. Further, rising inflation may result in higher costs for labor and materials needed to complete our contracts, and we may be unable to pass these heightened costs to our customers. We are also exposed to increases in energy prices, particularly as they relate to gasoline prices. Additionally, in certain circumstances, we guarantee project completion or the achievement of certain acceptance and performance testing levels by a scheduled date. Failure to meet schedule or performance requirements typically results in additional costs to us, and in some cases, we may also create liability for consequential and liquidated damages. Performance problems for existing and future projects could cause our actual results of operations to differ materially from those we anticipate and could damage our reputation within our industry and our customer base.

Backlog reflects revenue still to be recognized under contracted or committed installation and replacement project work. Our backlog as of December 31, 20242025 was $5.99$11.94 billion. The predictive value of backlog information is limited to indications of general revenue direction over the near term, and we cannot guarantee that the revenue projected from our backlog will be realized or, if realized, will be profitable. Projects may remain in our backlog for an extended period of time, or project cancellations or scope adjustments may occur with respect to contracts reflected in our backlog. Such changes maycould adverselyhave affecta thematerial revenuesadverse effect on our business, financial condition, results of operations and profitcash we ultimately realize on these projects.flows.

The loss of one or a few customers could adversely affect our business, financial condition andcondition, results of operations.operations and cash flows.

A fewlimited number of customers have in the past and may in the future account for a significant portion of our revenues.revenue. For example, in 2024,2025, one customer represented approximately 13.3%12.8% of our consolidated revenue. Although we have long - standing relationships with many of our significant customers and believe that our portfolio of customers is reasonably diverse, one or a numbermore of our significant customers may unilaterally reduce, fail to renew, or terminate their contracts with us in the future. A loss of business from a significant customer, or a number of significant customers, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Rising inflation and/orinflation, interest ratesrate volatility and an economic recession or downturn may have an adverse effect on our business, financial condition andcondition, results of operations.operations, and cash flows.

The global economy has recently experienced high rates of inflation, which increased our costs for labor, materials, utilities and other goods and services. In effortsorder to combat inflation, the U.S. Federal Reserve raised interest rates multiple times in recent years and may do so again in 20252026 (or may slow any rate reductions from what the market currently anticipates). Economic factors, including inflation and fluctuations in interest rates,rate volatility, may have a negative impact on our business. For instance, we have exposure to changes in interest rates under our revolving credit facility, and as interest rates increase, our debt service obligations on our variable rate indebtedness will increase even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, may correspondingly decrease. Furthermore, theThe cost of our materials, labor, utilities and other goods and services may continue to rise as a result of continued inflation and further interest rate hikes, and we may not be able to offset such higher costs through price increases. OurFurther, inabilitythere are concerns that the United States economy could experience a recession. As a result, these conditions have, and they or failureany similar future conditions may continue to dohave, soan couldadverse harmeffect on our business, financial position andcondition, results of operations.operations and cash flows.

The markets we serve are highly fragmented and competitive. Our industry is characterized by many small companies whose activities are geographically concentrated. We compete on the basis of our technical expertise and experience, financial and operational resources, nationwide presence, industry reputation and dependability. While we believe our customers consider a number of these factors in awarding available contracts, a large portion of our work is awarded through a bid process. Consequently, price is often the principal factor in determining which contractor is selected, especially on smaller, less complex projects. Smaller competitors are sometimes able to win bids for these projects based on price alone due to their lower cost and financial return requirements. We expect competition to continue in our industry, presenting us with significant challenges in our ability to maintain strong growth rates and acceptable profit margins. We also expect increased competition from in-house service providers because some of our customers have employees who perform service work similar to the services we provide. Vertical consolidation could also contribute to competition in our industry. Moreover, if we do not employ new technologies as quickly or efficiently as our competitors, or if our competitors develop or utilize more cost-effective or customer-preferred technologies (such as data analytics, artificial intelligence and other new and emerging technologies) that give them a competitive advantage in the proposal bidding and selection process, it could have a material adverse effect on our ability to win and retain business from customers. If we are unable to meet these competitive challenges, we will lose market share to our competitors and experience an overall reduction in our profits. In addition, our profitability would be impaired if we have to reduce our prices to remain competitive.

We expect to continue pursuingto pursue selective acquisitions of businesses. We cannot guarantee that we will be able to identify acquisitions or that we will be able to consummate transactions on terms and conditions acceptable to us, or that acquired businesses will be profitable. Acquisitions may expose us to additional business risks different than those we have traditionally experienced. We also may encounter difficulties integrating acquired businesses and successfully managing the growth we expect to experience from these acquisitions.

The failure to successfully integrate acquisitions could have an adverse effect on our business, financial condition andcondition, results of operations.operations, and cash flows.

Recent labor shortages may also lead to higher wages for employees and higher costs to purchase the services of third parties. Increases in labor costs, such as increases in minimum wage requirements, wage inflation and/or increased overtime, reduce our profitability and that of our customers. Increases in such labor costs for a prolonged period of time could have a material adverse effect on theour company’sbusiness, financial condition andcondition, results of operations.operations, and cash flows.

We carry a significant amount of goodwill and identifiable intangible assets on our consolidatedConsolidated Balance Sheets. Goodwill is the excess of purchase price over the fair value of the net assets of acquired businesses. We assess goodwill for impairment each year, and more frequently if circumstances suggest an impairment may have occurred. We have determined in the past and may again determine in the future that a significant impairment has occurred in the value of our unamortized intangible assets or fixed assets, which could require us to write off a portion of our assets and could adverselyhave affectan adverse effect on our financial condition or our reportedand results of operations.

In the past we have expanded,been required to increase, and it is possible we will continuein the future be required to expand,increase, the number and percentage of total contract dollars thatfor requirewhich we utilize an underlying surety bond. Historically, surety market conditions have experienced times of difficultyvolatility as a result of significant losses incurred by many surety companies and the results of macroeconomic trends outside of our control, such as the current volatility in the capital markets and the possibility of an extended economic downturn or recession. Consequently, during times when less overall bonding capacity is available in the market, surety terms have become more expensive and more restrictive. If we are not ableunable to maintain a sufficient level of bonding capacity in the future, it could preclude our ability to bid for certain contracts or successfully contract with some customers. Additionally, even if we continue to be able to access bonding capacity to sufficiently bond future work, we may be required to post collateral to secure bonds, which would decrease the liquidity we would have available for other purposes. Our surety providers are under no commitment to guarantee our access to new bonds in the future; thus, our ability to access or increase bonding capacity is at the sole discretion of our surety providers. If our surety companies were to limit or eliminate our access to bonds, our alternatives would include seeking bonding capacity from other surety companies, increasing business with clients that do not require bonds and posting other forms of collateral for project performance, such as letters of credit or cash. We may be unable to secure these alternatives in a timely manner, on acceptable terms, or at all. As such, if we were to experience an interruption or reduction in the availability of bonding capacity, it is likely we would be unable to compete for or work on certain projects.

Because of the nature of our contracts, at times we commit resources to projects prior to receiving payments from the customer in amounts sufficient to cover expenditures on projects as they are incurred. Delays in customer payments may require us to make a working capital investment. If a customer defaults in making their payments on a project to which we have devoted resources, it could have a material negativeadverse effect on our business, financial condition andcondition, results of operations.operations and cash flows.

We may need to perform our work under a variety of conditions, including but not limited to, difficult terrain, difficult site conditions and busy urban centers where delivery of materials and availability of labor may be impacted, clean-room environments where strict procedures must be followed and sites that may have been exposed to harsh and hazardous conditions and outbreaks of infectious disease. Extreme weather conditions (such as storms, droughts, extreme heat or cold, wildfires and floods) may limit the availability of resources, increase our costs, or may cause projects to be delayed or cancelled. To the extent climate change results in an increase in extreme weather events and adverse weather conditions, the likelihood of a negative impact on our results of operations may increase. If we are unable to manage the conditions required for certain of our jobs, including the availability of sufficient labor, adherence to environmental, health and safety or other standards, and adequately addressing harsh or hazardous conditions, our businessbusiness, financial condition, results of operations, and financialcash conditionflows could be materially and adversely affected.

Our business can be highly cyclical and subject to seasonal and other variations that can result in significant differences in operating results from quarter to quarter. Moreover, our business may be adversely affected by severe weather in areas where we have significant operations.operations, which could have a material adverse effect on our financial condition, results of operations, and cash flows. Repercussions of severe weather conditions may include:

Legislation,Evolving nationwidelegislation, protocols,foreign and domestic policy, regulation or other restrictions related to climate change could negatively impact our operations or our customers’ operations. IncreasingDiverging concerns about climate change and other environmental issues may result in additionalvarying environmental regulations and restrictions.restrictions on our operations. Operating in a number of jurisdictions could make our compliance with laws relating to climate change rules more complex and expensive and potentially expose us to greater levels of legal risks associated with our compliance. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the federal, state, or local regulatory agencies, could increase the costs of projects for our customers or, in some cases, prevent a project from going forward, which could in turn have ana material adverse effect on our business, financial condition andcondition, results of operations.operations and cash flows. Our failure to comply with any applicable laws could lead to penalties and adversely impact our reputation, customer attraction and retention, access to capital and employee retention.

Continuing worldwide political and economic uncertainties may adversely affect our revenuebusiness, financial condition, results of operations, and profitability.cash flows.

The last several years have been periodically marked by worldwide political and economic concerns,uncertainty resulting from a number of factors, including the COVID-19 pandemic, decreased consumer confidence, the effects of international conflicts such as the wars between Russia and Ukraine and unrest in the Middle East, supply chain disruptions, tariffs, rising energy costs and inflation. This instabilityuncertainty canhas made (and may continue to make) it extremely difficult for our customers, our vendors and us to accurately forecast and plan future business activities, and could causelead to constrained spending on our services, delays and a lengthening of our business development efforts, the demand for more favorable pricing or other terms, and/or difficulty in collection of our accounts receivable. Our government clients may face budget deficits that prohibit them from funding proposed and existing projects. Further, ongoing political and economic instability has caused (and could continue to cause) supply chain disruptions and volatility in the globalcapital markets, supplywhich chainmay disruptions,increase risingour inflationcosts of capital and interest rates and the wars between Russia and Ukraine and unrest in the Middle East, could limit our ability to access the capital markets at a time when we would like, or need, to raise capital,capital. whichThese conditions could have ana impactmaterial adverse effect on our abilitybusiness, tofinancial reactconditions, toresults changingof business conditions or new opportunities. If economic conditions remain uncertain or weaken, or government spending is reduced, our revenueoperation and profitabilitycash could be adversely affected.flows.

Our business is labor intensive, and many of our operations experience a high rate of employee turnover. At times of low unemployment rates in the United States, it is typically more difficult for us to find qualified personnel at low cost in some geographic areas where we operate. Additionally, our business is managed by a small number of key executive and operational officers. We may be unable to hire and retain the sufficient skilled labor force necessary to operate efficiently and to support our growth strategy. Our labor expenses may increase as a result of a shortage in the supply of skilled personnel. Labor shortages, including the recent U.S. labor shortage, increased labor costs or the loss of key personnel maycould reducehave a material adverse effect on our profitabilitybusiness, financial condition, results of operations, and negativelycash impact our business.flows. Further, our relationships with some customers could suffer if we are unable to retain the employees with whom those customers primarily work and have established relationships.

We believe that our practice of placing significant decision-making powerspower with local management is important to our successful growth and allows us to be responsive to opportunities and to our customers’ needs. However, this practice presents certain risks, including the risk that we may be slower or less effective in our attempts to identify or react to problems affecting an important business than we would under a more centralized structure or that we would be slower to identify a misalignment between a subsidiary’s and the Company’s overall business strategy.strategy of the Company and any of our subsidiaries. Further, if a subsidiary location fails to follow the Company’s compliance policies, we could be made party to a contract, arrangement or situation that requires the assumption of large liabilities or has less advantageous terms than is typically found in the market.

The growth that we have experienced in the past, that we are currently experiencing, and that we may experience in the future, may provide challenges to our organization, requiring us to expand our personnel and our operations. Growth may strain our infrastructure, operations and other managerial and operating resources. We have also experienced in the past severe constriction in the markets in which we operate and, as a result, in our operating requirements. Failing to maintain the appropriate cost structure during a particular economic cycle may result in our incurring costs that affect our profitability or failing to be prepared for unprecedented growth. If our business resources become strained or over-burdensome, our earnings may be adversely affected, and we may be unable to increase revenue growth. Further, we may undertake contractual commitments that exceed our labor, managerial or other resources, which could alsohave adverselya affectmaterial adverse effect on our earningsbusiness, financial condition, results of operations and ourcash ability to increase revenue growthflows and cause material reputational or other harm.

We use and rely significantly on sophisticated information technology systems, networks,systems and infrastructureinfrastructure, including computer systems, hardware, software, technology and online sites and networks (collectively, “IT Systems”), in conducting our day-to-day operations, providing services to certain customers and protecting sensitive Company information. InWe addition,own weand manage some of these IT Systems but also rely on third-party software and information technologytechnology, including but not limited to cloud computing services, for certain of our critical accounting, project management and financial information systems. We alsoand certain of our third-party providers collect and retain information about our customers, stockholders, vendors and employees, withincluding theinformation expectationabout byindividuals, suchas thirdwell partiesas beingproprietary thatinformation webelonging willto adequatelyour protectbusiness such(collectively, information.“Confidential Information”).

WhileMoreover, wecyberattacks haveare security,expected internalto controlaccelerate on a global basis in frequency and technologymagnitude measuresas threat actors are becoming increasingly sophisticated in placeusing techniques and tools—including artificial intelligence to protectengage ourin systemsautomated, targeted, and networks,coordinated theseattacks—that measures could fail as a result of a cyber-attack, other third-party action, employee error, malfeasance or othercircumvent security failure.controls, Inevade thedetection ordinaryand courseremove offorensic business, we have been targeted by malicious cyber-attacks.evidence. Because the techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. As a result, we may be required to expend significant resources to protect against the threat of system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches. Any of these events could damage our reputation and have a material adverse effect on our business, results of operations, financial condition and cash flows.

We regularlyalso periodically evaluate the need to upgrade or replace our systemsIT and network infrastructureSystems to protect our information technology environment, to stay current on vendor supported products and to improve the efficiency and scope of our systemsIT Systems and information technology capabilities. The implementation of new systemsIT Systems and information technology could adversely impact our operations by requiring substantial capital expenditures, diverting management’s attention, or causing delays or difficulties in transitioning to new systems.IT Systems. In addition, our systemsIT Systems implementations may not result in productivity improvements at the levels anticipated. IT Systems implementation disruption and any other information technology disruption, if not anticipated and appropriately mitigated, could have an adverse effect on our business. Any failure by us or our third party vendors to maintain the security, proper function and availability of our IT Systems or Confidential Information could result in financial losses, interrupt our operations, damage to our reputation, cause us to be in default of material contracts and subject us to liability claims or proceedings (such as class actions), regulatory investigations or enforcement actions, fines and penalties, and/or significant incident response, system restoration or remediation and future compliance costs, any of which could materially and adversely affect our business, financial condition, results of operations, cash flows, and the value of our securities.

We insure various general liability, workers’ compensation, property and auto risks as well as other risks through a variety of direct insurance policies and a captive insurance company that are reinsured for risks above certain deductibles and retentions. All of our insurance policies and programs are subject to high deductibles and retentions; as such, we are, in effect, self-insured for substantially all of our typicalcustomary claims. We hire an actuary to determine any liabilities for unpaid claims and associated expenses for the three major lines of coverage (workers’ compensation, general liability and auto liability). The determination of these claims and expenses and the appropriateness of the estimated liability are reviewed and updated quarterly. However, insurance liabilities are difficult to assess and estimate due to the many relevant factors, the effects of which are often unknown, including the severity of an injury, the determination of our liability in proportion to other parties, the number of incidents that have occurred but are not reported and the effectiveness of our safety program. Our accruals are based on known facts, historical trends (both internal trends and industry averages) and our reasonable estimate of our future expenses. We believe our accruals are adequate. However, our risk management strategies and techniques may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk. If any of the variety of instruments, processes or strategies we use to manage our exposure to various types of risk are not effective, we may incur losses that are not covered by our insurance policies or that exceed our accruals or coverage limits.

Our credit agreement and related restrictive and financial covenants are more fully described in Note 9 of “Notes to Consolidated Financial Statements.” Our failure to comply with any of these covenants under the credit agreement, or to pay principal, interest or other amounts when due thereunder, would constitute an event of default under the credit agreement. Default under our credit agreement could result in (1i) us no longer being entitled to borrow under the agreement; (2ii) termination of the agreement; (3iii) acceleration of the maturity of outstanding indebtedness under the agreement; and/or (4iv) foreclosure on any collateral securing the obligations under the agreement. If we are unable to service our debt obligations or fund our other liquidity needs, we could be forced to curtail our operations, reorganize our capital structure (including through bankruptcy proceedings) or liquidate some or all of our assets in a manner that could cause holders of our securities to experience a partial or total loss of their investment in us.

We arehave in the past, and will likely to continue to be in the future, named as a defendant in legal proceedings claiming damages from us in connection with the operation of our business. We also may be required to indemnify third parties for litigation brought against such third parties, even if we are not a defendant. These actions and proceedings may involve claims for, among other things, compensation for alleged personal injury, workers’ compensation, employment discrimination, breach of contract or property damage. In addition, we may be subject to class action lawsuits involving allegations of violations of the Fair Labor Standards Act and state wage and hour laws. Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of any such actions or proceedings. We also are, and are likely to continue to be, from time to timetime, a plaintiff in legal proceedings against customers, in which we seek to recover payment of contractual amounts we are owed as well as claims for increased costs we incur. When appropriate, we establish provisions against possible exposures, and we adjust these provisions from time to time according to ongoing exposure. If our assumptions and estimates related to these exposures prove to be inadequate or inaccurate, weit could experiencehave a reductionmaterial inadverse effect on our profitabilitybusiness, financial condition, results of operations, and liquiditycash and a weakening of our financial condition.flows. In addition, claims, lawsuits and proceedings may harm our reputation or divert management resources away from operating our business.

We typically warrant the services we provide, guaranteeing the work performed against defects in workmanship and the material we supply. Historically, warranty claims have not been material as our customers evaluate much of the work we perform for defects shortly after work is completed. However, if warranty claims occur, we could be required to repair or replace warrantied items at our cost. In addition, in some circumstances, our customers may elect to repair or replace the warrantied item by using the services of another provider and require us to pay for the cost of the repair or replacement. Costs incurred as a result of warranty claims could adversely affect our operatingbusiness, financial condition, results of operations, and financialcash condition.flows.

Misconduct by our employees, subcontractors or partners or our overall failure to comply with laws or regulations could harm our reputation, damage our relationships with customers, reduce our revenue and profits, and subject us to criminal and civil enforcement actions.

Misconduct, fraud, non-compliance with applicable laws and regulations, or other improper activities by one or more of our employees, directors, executive officers, subcontractors or partners could have a significant negative impact on our business and reputation. Examples of such misconduct include employee or subcontractor theft, personal misconduct and failure to comply with health and safety standards, laws and regulations,regulations (including environmental laws), customer requirements, environmental laws and any other applicable laws or regulations. While we take precautions to prevent and detect these activities, such precautions may not be effective and are subject to inherent limitations, including human error and fraud. Our failure to comply with applicable laws or regulations or acts of misconduct could subject us to fines and penalties, harm our reputation, lead to loss of the services of employees or members of management, damage our relationships with customers, reducehave a material adverse effect on our revenuebusiness, financial condition, results of operations, and profitscash flows, and subject us to criminal and civil enforcement actions.

Our 178190 locations are located in 27 states, which exposes us to a variety of different state and local laws and regulations, particularly those pertaining to contractor licensing requirements. These laws and regulations govern many aspects of our business, and there are often different standards and requirements in different locations. In addition, our subsidiaries that perform work for federal government entities are subject to additional federal laws and regulatory and contractual requirements. Changes in any of these laws, or any of our subsidiaries’ material failure to comply with them, can adversely impact our operationsbusiness, financial condition, results of operations, and cash flows by, among other things, increasing costs, distracting management’s time and attention from other items, and harming our reputation.

Government contractors must comply with many regulations and other requirements that relate to the award, administration and performance of government contracts. A violation of these laws and regulations could result in imposition of fines and penalties, the termination of a government contract or debarment from bidding on government contracts in the future. Further, despite our decentralized nature, a violation at one of our locations could impact other locations’ ability to bid on and perform government contracts. Additionally, because of our decentralized nature, we face risks in maintaining compliance with all local, state and federal government contracting requirements. Because 5.4%5.0% of our revenue for the year ended December 31, 20242025 was attributable to projects in the government sector, prohibitions against bidding on future government contracts could have an adverse effect on our business, financial condition andcondition, results of operations.operations, and cash flows.

PastPast, current and future environmental, social, governance, sustainability, safety and health regulations could impose significant additional costs on us that could reduce our profits.

HVAC systems are subject to various environmental statutes and regulations, including the federal Clean Air Act and those regulating the production, servicing and disposal of certain ozone-depleting refrigerants used in HVAC systems. There can be no assurance that the regulatory environment in which we operate will not change significantly in the future. Various local, state and federal laws and regulations impose licensing standards on technicians who install and service HVAC systems. Additional laws, regulations and standards apply to contractors who perform work that is being funded by public money, particularly federal public funding. Our failure to comply with these laws and regulations could subject us to substantial fines, the loss of our licenses or potentially debarment from future publicly funded work. It is impossible to predict the full nature and effect of judicial, legislative or regulatory developments relating to health and safety regulations and environmental protection regulations applicable to our operations. Additionally, industries in which our customers or potential customers operate may be affected by new or changing environmental, safety, health or other regulatory requirements, leading to decreased demand for our services and potentially impacting our business, financial condition, results of operations, cash flows and ability to grow.

Additionally, actual or perceived environmental, social and corporate governance (“ESG”) and other sustainability matters and our response to these matters could harm our business. IncreasingDiverging and varied governmental and societal attention to ESG and sustainability matters, including expanding mandatory and voluntary reporting, diligence and disclosure on topics such as climate change, human capital, labor and risk oversight, could expand the nature, scope, and complexity of matters that we are required to control, assess, and report. If we are unable to adequately address such ESG and sustainability matters or fail to comply with all laws, regulations, policies and related interpretations, it could negatively impact our reputation and our business results.

Our projects are conducted at a variety of sites including construction sites and industrial facilities. Each location is subject to numerous safety risks, including fall risks, electrocutions, fires, explosions, mechanical failures, weather-related incidents, transportation accidents, damage to equipment and, with respect to indoor sites, an increased risk of infectious disease. These hazards can cause personal injury and loss of life, severe damage to or destruction of property and equipment and other consequential damages and could lead to suspension of operations, large damage claims and, in extreme cases, criminal liability. While we have taken what we believe are appropriate precautions to minimize safety risks and continuously focus on adopting improved safety practices, we have experienced serious accidents, including fatalities, in the past and may experience additional accidents in the future. Serious accidents may subject us to penalties, civil litigation or criminal prosecution. Claims for damages to property or persons, including claims for bodily injury or loss of life, could result in significant costs and liabilities, which could adversely affect our business, financial condition andcondition, results of operations.operations, and cash flows. Poor safety performance could also jeopardize our relationships with our customers, negatively impact employee morale and harm our reputation.

We conduct business acrossthroughout the United States and file income taxes in the federal and variousvirtually all state jurisdictions. Significant judgment is required in our accounting for income taxes. In the ordinary course of our business, there are transactions and calculations in which the ultimate tax determination is uncertain. Our accounting for income taxes requires significant judgments and may be impacted by changes to our assessment of our projected tax liability, including our ability to realize deductions or credits in various tax jurisdictions. Moreover, we may be affected by our ability to utilize, or in the valuation of, our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business. Changes in tax lawslaws, tax rates and regulations, in addition toand/or changes and conflicts in related interpretations andof tax laws, regulations or other tax guidance, could also materially impact our provision for income taxes, deferred tax assets and liabilities, and liabilities for uncertain tax positions.

Issues relating to tax audits or examinations and any related interest or penalties and uncertainty in obtaining deductions or credits claimed in various jurisdictions could also impact the accounting for income taxes. Our results of operations are reported based on our determination of the amount of taxes we owe in various tax jurisdictions, and our provision for income taxes and tax liabilities are subject to review or examination by taxing authorities in applicable tax jurisdictions. An adverseThe outcome of such a review or examination including any related tax liabilities, interest or penalties, could adversely affect our operating results and financial condition. Further, the results of tax examinations and audits could have a negative impact on our business, financial condition, results of operation, and cash flows where the results differ from the liabilities recorded in our financial statements.

The market price of our common stock may change significantly in response to various factors and events beyond our control. A variety of events may cause the market price of our common stock to fluctuate significantly, including the following: (i) the risk factors described in this Annual Report on Form 10-K; (ii) a shortfall in operating revenue or net income from that expected by securities analysts and investors; (iii) quarterly fluctuations in our operating results; (iv) changes in securities analysts’ estimates of our financial performance or that of our competitors or companies in our industry generally; (v) general conditions in our customers’ industries; (vi) general conditions in the securities markets; (vii) our announcements of significant contracts, milestones and acquisitions; (viii) our relationship with other companies; (ix) our investors’ view of the sectors and markets in which we operate; and (x) additions or departures of key personnel. Some companies that have volatile market prices for their securities have been subject to security class action suits filed against them. If a suit were to be filed against us, regardless of the outcome, it could result in substantial costs and a diversion of our management’s attention and resources. This could have a material adverse effect on our business, financial condition, results of operationsoperations, and financialcash condition.flows.

Our certificate of incorporation authorizes our Board of Directors to issue, without stockholder approval, one or more series of preferred stock having such preferences, powers and relative, participating, optional and other rights (including preferences over the common stock respecting dividends and distributions and voting rights) as the Board of Directors may determine. The issuance of this “blank-check” preferred stock could render more difficult or discourage an attempt to obtain control by means of a tender offer, merger, proxy contest or otherwise. Additionally, certain provisions of the Delaware General Corporation Law or even certain provisions of our credit agreement may also discourage takeover attempts that have not been approved by the Board of Directors.Board.

In our mechanical business segment, customers hire us to ensure heating, ventilation and air conditioning (“HVAC”) systems deliver specified or generally expected heating, cooling, conditioning and circulation of air in a facility. This entails installing core system equipment such as packaged heating and air conditioning units, or in the case of larger facilities, separate core components such as chillers, boilers, air handlers, and cooling towers. We also typically install connecting and distribution elements such as piping and ducting.

In our electrical business segment, our principal business activity is electrical construction and engineering in the commercial and industrial field.fields. We also perform electrical logistics services and electrical service work.

Approximately 91.1%92.7% of our revenue is earned on a project basis for installation services in newly constructed facilities or for replacement of systems in existing facilities. When competing for project business, we usually estimate the costs we will incur on a project,project and then propose a bid to the customer that includes a contract price and other performance and payment terms. Our bid price and terms are intended to cover our estimated costs on the project and provide a profit margin to us commensurate with the value of the installed system to the customer, the risk that project costs or duration will vary from estimate, the schedule on which we will be paid, the opportunities for other work that we might forego by committing capacity to this project, and other costs that we incur to support our operations but which are not specific to the project. Typically, customers will seek pricing from competitors for a given project. While the criteria on which customers select a provider vary widely and include factors such as quality, technical expertise, on-time performance, post-project support and service, and company history and financial strength, we believe that price for value is the most influential factor for most customers in choosing a mechanical or electrical installation and service provider.

In addition to project work, approximately 8.9%7.3% of our revenue represents maintenance and repair service on already installed HVAC, electrical, and controls systems. This kind of work usually takes from a few hours to a few days to perform. Prices to the customer are based on the equipment and materials used in the service as well as technician labor time. We usually bill the customer for service work when it is complete, typically with payment terms of up to thirty days. We also provide maintenance and repair serviceservices under ongoing contracts. Under these contracts, we are paid regular monthly or quarterly amounts and provide specified service based on customer requirements. These agreements typically are for one or more years and frequently contain thirty-30- to sixty-day60-day cancellation notice periods.

InWe 2020, the advent of a global pandemic led to some delays in service and construction, including delayed project starts and air pockets or pauses during 2020 and 2021. Wehave experienced increasing demand insince 2022, 2023culminating andin 2024an andunprecedented weoverall demand environment in 2025. We currently expect that the demand environment, especially for manufacturing and technology customers, will remain at high levels leadingduring into2026. 2025. WhileOver the impactslast fromseveral theyears, supply chain shortageswe have improved,also weexperienced continueincreases to experience increasedin labor costs and delays in delivery of certain materials and equipment. We expectanticipate that constraintscost pressures and intermittent delays in our supply chain will continuepersist to abate inover the nearnext term;several however, we anticipate that pressure on cost and availability, especially for skilled labor, will continue in 2025.quarters.

We have a credit facility in place with terms we believe are favorable that does not expire until JulyOctober 2027.2030. As of December 31, 2024,2025, we had $770.0$921.0 million of credit available to borrow under our credit facility. We have strong surety relationships to support our bonding needs, and we believe our relationships with the surety markets are strong and benefit from our operating history and financial position. We have generated positive free cash flow in each of the last twenty-six27 calendar years and will continue our emphasis in this area. We believe that the relative size and strength of our Balance Sheet and surety relationships, as compared to most companies in our industry, represent competitive advantages for us.

As discussed at greater length in “Results of Operations” below, we expect price competition to continue as local and regional industry participants compete for customers. We will continue to invest in our service business, to pursue the more active sectors in our markets, and to emphasize our regional and national account business.

We had 4447 operating locations as of December 31, 2023.2024. In the first quarter of 2024,2025, we splitcompleted onethe acquisition of ourCentury Contractors, LLC (“Century”), which reports as a separate operating location. In the second quarter of 2025, we combined two operating locations into twoone operating location. Additionally, we completed the acquisition of Right Way Plumbing & Mechanical LLC (“Right Way”), which reports as a separate operating locations.location. Additionally,In the fourth quarter of 2025, we completed the acquisitions of SummitFeyen-Zylstra Industrial Construction,Holdings, LLC (“SummitFeyen Zylstra”) and JMeisner & S Mechanical Contractors,Electric, Inc. (“J&SMeisner”), which both report as separate operating locations. We had 4750 operating locations as of December 31, 2024.2025. Acquisitions are included in our results of operations from the respective acquisition date. The same-store comparison from 20242025 to 2023,2024, as described below, excludes Summit,Feyen which was acquired on February 1, 2024, J&S, which was acquired on February 1, 2024, nine months of results for DECCO, Inc. (“DECCO”),Zylstra, which was acquired on October 2,1, 2023,2025, andMeisner, which was acquired on October 1, 2025, Right Way, which was acquired May 1, 2025, Century, which was acquired on January 1, 2025, one month of results for Eldeco,Summit IncIndustrial Construction, LLC (“EldecoSummit”), which was acquired on February 1, 2023.2024 and one month of results for J & S Mechanical Contractors, Inc. (“J&S”), which was acquired on February 1, 2024. An operating location is included in the same-store comparison on the first day it has comparable prior year operating data, except for immaterial acquisitions that are often absorbed and integrated with existing operations.

Revenue—Revenue increased $1.82$2.07 billion, or 35.0%,29.5%, to $7.03$9.10 billion in 20242025 compared to 2023.2024. The increase included a 12.1%3.4% increase related to the Summit,Feyen Zylstra, Meisner, Right Way, Century, Summit and J&S, DECCO, and EldecoS acquisitions, as well as a 22.9%26.1% increase in revenue related to same-store activity. The same-store revenue growth was largely driven by strong market conditions, including the increase in our backlog. The increase in demand has been particularlyespecially strong in the technology sectorsector, suchparticularly asfor data centers and chip plants.centers.

Revenue for our mechanical segment increased $1.58$1.15 billion, or 40.1%,20.7%, to $5.53$6.67 billion in 20242025 compared to 2023.2024. Of this increase, $619.8$169.3 million resulted from the acquisition of Summit,Right Way, Century, Summit and J&S, and DECCO, and $961.8$976.8 million was attributable to same-store activity. The same-store revenue increase primarily resulted from an increase in activity in the technology sector at twoone of our TexasNorth Carolina operations ($321.2$267.5 million), our NorthTexas Carolinamodular operation ($147.5$206.5 million), one of our Indiana operations ($137.2 million) and one of our Virginia operations ($129.4$109.7 million).

Revenue for our electrical segment increased $239.1$928.0 million, or 19.0%,61.9%, to $1.50$2.43 billion in 20242025 compared to 2023.2024. Of this increase, $66.8 million resulted from the acquisition of Feyen Zylstra and Meisner, and $861.2 million was attributable to same-store activity. The same-store revenue increase primarily resulted from an increase in activity in the technology sector at our Texas electrical operation ($158.0 million) and in the manufacturing sector at one of our South Carolina operations ($41.4$649.3 million).

Backlog as of December 31, 20242025 was $5.99$11.94 billion, a 5.5%27.4% increase from September 30, 20242025 backlog of $5.68$9.38 billion and a 16.2%99.3% increase from December 31, 20232024 backlog of $5.16$5.99 billion. The sequential backlog increase wasincluded the acquisitions of Feyen Zylstra ($90.9 million) and Meisner ($72.5 million), as well as a same-store increase of $2.40 billion, or 25.6%. Same-store sequential backlog increased primarily adue result ofto increased project bookings and strong market conditions in the technology sector at our Texas modular operation ($1.20 billion) and one of our Texas operations ($345.8$539.9 million). The sequential backlog increase was partially offset by the completion of project workand in the technologymanufacturing sector at one of our TexasNorth electricalCarolina operationoperations ($52.6$372.2 million). The year-over-year backlog increase included the acquisitions of SummitRight Way ($297.9$106.2 million), Century ($91.6 million), Feyen Zylstra ($90.9 million) and J&SMeisner ($97.0$72.5 million), as well as a same-store increase of $441.6$5.59 million,billion, or 8.6%.93.2%. Same-store year-over-year backlog increased primarily due to increased project bookings and strong market conditions in the technology sector at our Texas electricalmodular operation ($206.3$1.48 billion), one of our North Carolina operations ($1.26 billion), one of our Indiana operations ($901.1 million) and at, one of our Texas operations ($183.2 million), in the healthcare sector at our Mississippi operation ($76.6$850.2 million) and in the education sector at one of our FloridaTexas operationselectrical operation ($74.0$803.4 million). The year-over-year backlog increase was partially offset by the completion of project work in the manufacturing sector at our North Carolina operations ($68.9 million) and in the manufacturing and technology sectors at one of our Indiana operations ($67.1 million).

Gross Profit—Gross profit increased $485.9$719.5 million, or 49.1%,48.7%, to $1.48$2.20 billion in 20242025 as compared to 2023.2024. The increase included a $86.8$44.8 million, or 8.8%,3.0%, increase related to the Summit,Feyen Zylstra, Meisner, Right Way, Century, Summit and J&S, DECCO, and EldecoS acquisitions, as well as a $399.1$674.6 million, or 40.3%,45.7%, increase on a same-store basis. The same-store increase in gross profit was primarily driven by both higher revenues in the current year as well as improved execution in our operations, including increased volumes at our Texas electrical operation ($161.5 million), one of our North Carolina operations ($71.6 million) and one of our Indiana operations ($76.0 million). Additionally, we achieved improvements in project execution at our Texas electricalmodular operation ($90.8 million) and one of our South Carolina operations ($19.9 million). Two of our Texas operations achieved both higher volumes and improvements in project execution ($131.7 million). Additionally, we achieved increased volumes at one of our Virginia operations ($28.0 million), one of our Tennessee operations ($22.6 million) and our North Carolina operation ($19.8$124.3 million). As a percentage of revenue, gross profit increased from 19.0% in 2023 to 21.0% in 2024,2024 to 24.1% in 2025, primarily due to the factors discussed above and improvements in our electricalmechanical segment gross profit margin.

Selling, General and Administrative Expenses (“SG&A”)—SG&A increased $155.6$153.2 million, or 27.1%,21.0%, to $730.1$883.3 million for 20242025 as compared to 2023.2024. On a same-store basis, excluding amortization expense, SG&A increased $116.6$124.9 million, or 21.7%.18.5%. The same-store increase is primarily due to higher same-store revenue and increased compensation costs ($90.7$96.6 million), largely attributable to increased headcount and increased cost of labor. Amortization expense for intangible assets increased $17.1$5.5 million during the period primarily as a result of the Summit,Right J&SWay, Century and DECCOSummit acquisitions. As a percentage of revenue, SG&A decreased from 11.0% in 2023 to 10.4% in 2024 to 9.7% in 2025 due to leverage resulting from the increase in revenue.

Interest Income—Interest income increased $8.1$10.1 million, or 230.9%,87.0%, in 20242025 as compared to 2023.2024. The increase in interest income is due to both an increase in our average cash balance and higher interest rates compared to the prior year.

Interest Expense—Interest expense decreasedincreased $3.6$2.4 million, or 35.3%,35.5%, in 20242025 as compared to 2023.2024. The decreaseincrease in interest expense is primarily due to aan decreaseincrease in our average outstanding debt balance compared to the prior year. Additionally, we expensed $0.3 million in 2025 related to unamortized debt issuance costs for lenders who exited the credit facility when we amended our senior credit facility in August of 2025.

Changes in the Fair Value of Contingent Earn-out Obligations—The contingent earn-out obligations are measured at fair value each reporting period, and changes in estimates of fair value are recognized in earnings. Expense from changes in the fair value of contingent earn-out obligations increaseddecreased $64.5$54.7 million, or 273.4%,62.0%, in 20242025 compared to 2023.2024. This increasedecrease was primarily caused by higherlower earn-out expenses atfor Summit, driven by stronger actual current earnings and forecasted results. Expense or income fromlarger changes in earn-outtheir valuationsforecasted may be more volatileresults in futurethe periodsprior dueyear toand largeas a result of them reaching their maximum cumulative earn-out agreements for acquisitions that closed in 2024.target.

Our provision for income taxes for 20242025 was $144.1$270.9 million with an effective tax rate of 21.6%,20.9%, as compared to the provision for income taxes of $64.8$144.1 million with an effective tax rate of 16.7%21.6% for 2023.2024. The effective rate for 2025 was slightly lower than the 21% federal statutory rate primarily due to a $30.5 million credit for increasing research activities (“R&D tax credit”) (2.4%) partially offset by $30.3 million of net state income taxes (2.3%). The effective rate for 2024 was slightly higher than the 21% federal statutory rate primarily due to $21.6 million of net state income taxes (3.9%3.2%) and nondeductible expenses (1.5%), partially offset by thea credit$23.2 for increasing research activities (the “R&D tax credit”) (4.1%). The effective rate for 2023 was lower than the 21% federal statutory rate due to themillion R&D tax credit (6.3%) and an increase in the R&D tax credit for the 2022 tax year (2.8%). These R&D tax credit benefits were partially offset by net state income taxes (3.7%) and nondeductible expenses (1.5%3.5%). Refer to Note 11 in the Consolidated Financial Statements for a reconciliation of the federal statutory raterates to the effective tax rates reflected in our financial statements.

We experienced strongan ongoingunprecedented demand environment in 2024,2025, althoughand we continue to experience increased labor costs and impacts fromintermittent supply chain shortages, including delays in delivery of certain materials and equipment. We are recognizing these challenges in our job planning and pricing, and we are ordering materials on an earlier timeline and seeking to collaborate with customers to share supply risks and to mitigate the effects of these challenges. We have been generally successful in maintaining productivity and in procuring needed materials despite ongoing challenges.

We have a good pipeline of opportunities and potential backlog. Considering our substantial advance bookings, we currentlyanticipate anticipatehigh ongoing demand leading to solid earnings in 2025.2026. Although we are preparing for a wide range of future challenges and economic circumstances, including a potential recession, we currently expect that supportive conditions for our industry, especially for our industrial and technology customers, are likely to continue in 2025.2026.

Our business does not require significant amounts of investment in long-term fixed assets. The substantial majority of the capital used in our business is working capital that funds our costs of labor and installed equipment deployed in project work until our customer pays us. Customary terms in our industry allow customers to withhold a small portion of the contract price until after we have completed the work, typically for six months. Amounts withheld under this practice are known as retention or retainage. Our average project duration, together with typical retention terms, generally allowallows us to complete the realization of revenue and earnings in cash within one year.

On March 29, 2007, our Board of Directors approved a stock repurchase program to acquire up to 1.0 million shares of our outstanding common stock. Subsequently, the Board has from time to time increased the number of shares that may be acquired under the program and approved extensions of the program. On AugustMay 7,16, 2024,2025, the Board approved an extension to the program by increasing the shares authorized for repurchase by 0.4 million shares. Since the inception of the repurchase program, the Board has approved 11.411.8 million shares to be repurchased. As of December 31, 2024,2025, we have repurchased a cumulative total of 10.410.9 million shares at an average price of $31.41$50.15 per share under the repurchase program.

The share repurchases will be made from time to time at our discretion in the open market or privately negotiated transactionstransactions, including pursuant to Rule 10b5-1 share repurchase plans, as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. The Board may modify, suspend, extend or terminate the program at any time. During the year ended December 31, 2024,2025, we repurchased 0.20.4 million shares for approximately $58.3$217.9 millionmillion, inclusive of the applicable excise tax, at an average price of $329.14$489.40 per share.

WeOn haveAugust an27, $850.02025, millionwe amended our senior credit facility (as amended, the “Facility”) arranged by Wells Fargo Bank, National Association, as administrative agent, and provided by a syndicate of banks, which increases our borrowing capacity from $850.0 million to $1.10 billion. The Facility is composed of a revolving credit line guaranteed by certain of our subsidiaries.subsidiaries, in the amount of $1.10 billion. The Facility also provides for an accordion or increase option not to exceed the greater of (a) $250$500 million and (b) 1.0x Credit Facility Adjusted EBITDA (as defined below), as well as a sublimit of up to $175.0 million issuable in the form of additional revolving commitments or incremental term loans. The line of credit includes a sublimit for up to $200.0 million of letters of credit.credit and a sublimit for up to $75.0 million of swingline loans. The Facility expires inon JulyOctober 20271, 2030 and is secured by a first lien on substantially all of our personal property except for assets related to projects subject to surety bonds and the equity of, and assets held by, certain unrestricted subsidiaries and our wholly owned captive insurance company, and a second lien on our assets related to projects subject to surety bonds. As a result of the amendment, $0.3 million of unamortized costs associated with lenders who exited the Facility were written off to interest expense in the third quarter of 2025. The remaining $1.0 million of unamortized costs from the previous facility will be deferred and amortized over the term of the new Facility. In 2025, we incurred approximately $3.7 million in financing and professional costs in connection with the amendment to the Facility, which, combined with previously unamortized costs of $1.0 million, are being amortized on a straight-line basis as a non-cash charge to interest expense over the remaining term of the Facility. As of December 31, 2024,2025, we had no$100.0 million of outstanding borrowings on the revolving credit facility, $80.0$79.0 million in letters of credit outstanding and $770.0$921.0 million of credit available.

Net Leverage Ratio—The Facility requires that the ratio of (a) our Consolidated Total Indebtedness (as defined in the Facility) minus unrestricted cash and cash equivalents up to $100,000,000, to (b) our Credit Facility Adjusted EBITDA not exceed 3.50 to 1.00 as of the end of each fiscal quarter.quarter; provided that, for the first four fiscal quarters ending after a material acquisition, such maximum Net Leverage Ratio steps up to 4.00 to 1.00.

Interest Coverage Ratio—The Facility requires that the ratio of (a) Credit Facility Adjusted EBITDA to (b) consolidated interest expense, defined as all interest paid or accrued on indebtedness during the period excluding amortization of debt incurrence expenses, original issue discount, and mark-to-market interest expense, be at least 3.00 to 1.00. Credit Facility Adjusted EBITDA and consolidated interest expense are calculated for purposes of this covenant for the four fiscal quarters ending as of any given quarterly covenant compliance measurement date.

Other Restrictions—The Facility (a) permits unlimited acquisitions when the Company’s Net Leverage Ratio is less than or equal to 3.25 to 1.00,1.00; or 3.75 to 1.00 for the first four fiscal quarters ending after a material acquisition, (b) expands certain baskets for permitted indebtedness and liens, and (c) permits unlimited distributions, stock repurchases, and investments when the Net Leverage Ratio is less than or equal to 2.75 to 1.00.

As part of the consideration used to acquire eight companies, weWe have outstanding notes to the former owners of the acquired companies. Together, these notes had an outstanding balance of $67.6$44.6 million as of December 31, 2024.2025. At December 31, 2025, future principal payments of notes to former owners by maturity year were as follows (dollars in thousands):

We have generated positive net free cash flow for the last twenty-six27 calendar years, much of which occurred during challenging economic and industry conditions. We also continue to have significant borrowing capacity under our credit facility, and we maintain what we feel are reasonable cash balances. We believe these factors will provide us with sufficient liquidity to fund our operations for the foreseeable future.

Under standard terms in the surety market, sureties issue bonds on a project-by-project basis,basis and can decline to issue bonds at any time. Historically, approximately 10% to 20% of our business has required bonds. While we currently have strong surety relationships to support our bonding needs, future market conditions or changes in ourthe sureties’ assessmentassessments of our operating and financial risk could cause our sureties to decline to issue bonds for our work. If that were to occur, our alternatives include doing more business that does not require bonds, posting other forms of collateral for project performance, such as letters of credit or cash, and seeking bonding capacity from other sureties. We would likely also encounter concerns from customers, suppliers and other market participants as to our creditworthiness. While we believe our general operating and financial characteristics would enable us to ultimately respond effectively to an interruption in the availability of bonding capacity, such an interruption would likely cause our revenue and profits to decline in the near term.

We are a national provider of comprehensive mechanical and electrical installation, renovation, maintenance, repairrepair, and replacement services within the mechanical and electrical services industries. We operate primarily in the commercial, industrialindustrial, and institutional markets and perform most of our work in technology, manufacturing, healthcare, education, government, office, and retail facilities. We operate our business in two business segments: mechanical and electrical.

As of MarchJune 31,30, 2026, we had 8,0488,941 projects in process. Our average project takes six to nine months to complete, with an average contract price of approximately $3.3 million. Our projects generally require working capital funding of equipment and labor costs. Customer payments on periodic billings generally do not recover these costs until late in the job. Our average project duration, together with typical retention terms as discussed above, generally allow us to complete the realization of revenue and earnings in cash within one year. We have what we consider to be a well-diversified distribution of revenue across end-use sectors that we believe reduces our exposure to negative developments in any given sector. Because of the integral nature of our services to most buildings, we have the legal right in almost all cases to attach liens to buildings or related funding sources when we have not been fully paid for installing systems, except with respect to some government buildings. The service work that we do, which is discussed further below, usually does not give rise to lien rights.

We also perform larger projects. Taken together, projects with contract prices of $2 million or more totaled $24.73$28.06 billion of aggregate contract valueprice as of MarchJune 31,30, 2026, or approximately 94% of a total aggregate contract valueprice for all projects in progress, totaling $26.39$29.88 billion. Generally, projects closer in size to $2 million will be completed in one year or less. It is unusual for us to work on a project that exceeds two years in length.

A stratification of projects in progress as of MarchJune 31,30, 2026, by aggregate contract price, is as follows:

We have experienced increasing demand since 2022, culminating in an unprecedented overall demand environment in 2025 and through the firstsecond quarter of 2026. We currently expect that the demand environment, especially for manufacturing and technology customers, will remain at high levels during 2026. Over the last several years, we have also experienced increases in labor costs and delays in delivery of certain materials and equipment. We anticipate that cost pressures and intermittent delays in our supply chain will persist over the next several quarters.

We have a credit facility in place with terms we believe are favorable that does not expire until October 2030. As of MarchJune 31,30, 2026, we had $1.02$1.01 billion of credit available to borrow under our credit facility. We have strong surety relationships to support our bonding needs, and we believe our relationships with the surety markets are strong and benefit from our operating history and financial position. We have generated positive free cash flow in each of the last 27 calendar years and will continue our emphasis in this area. We believe that the relative size and strength of our Balance Sheet and surety relationships, as compared to most companies in our industry, represent competitive advantages for us.

Management believes that there have been no significant changes during the three months ended MarchJune 31,30, 2026,2026 to the items that we disclosed as our “Critical Accounting Estimates” in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended December 31, 2025. A summary of significant accounting policies and a summary of recent accounting pronouncements applicable to our Consolidated Financial Statements are included in Note 2, “Summary of Significant Accounting Policies and Estimates.”

We had 50 operating locations as of December 31, 20252025. andIn Marchthe 31,second 2026.quarter of 2026, we completed the acquisition of R.C. Hunt Electric, LLC (“Hunt”), which reports as a separate operating location. We didhad not make any changes to51 operating locations during the first quarteras of June 30, 2026. Acquisitions are included in our results of operations from the respective acquisition date. The same-store comparison from 2026 to 2025, as described below, excludes Hunt, which was acquired on May 1, 2026, Feyen-Zylstra Holdings, LLC (“Feyen Zylstra”), which was acquired on October 1, 2025, Meisner Electric, Inc. (“Meisner”), which was acquired on October 1, 2025, and four months of results for Right Way Plumbing & Mechanical LLC (“Right Way”), which was acquired on May 1, 2025. An operating location is included in the same-store comparison on the first day it has comparable prior year operating data, except for immaterial acquisitions that are often absorbed and integrated with existing operations.

Revenue—Revenue for the firstsecond quarter of 2026 increased $1.03$1.09 billion, or 56.5%,50.3%, to $2.87$3.27 billion compared to the same period in 2025. The increase included a 5.0%6.5% increase primarily related to the Hunt, Feyen Zylstra, Meisner, and Right WayMeisner acquisitions, as well as a 51.5%43.8% increase in revenue related to same-store activity. The same-store revenue growth was largely driven by strong market conditions, including the increase in our backlog. The increase in demand has been especially strong in the technology sector, particularly for data centers.

Revenue for our mechanical segment increased $658.4$658.0 million, or 47.0%,40.2%, to $2.06$2.30 billion for the firstsecond quarter of 2026 compared to the same period in 2025. Of this increase, $20.8$8.4 million resulted from the acquisition of Right Way and $637.6$649.6 million was attributable to same-store activity. The same-store revenue increase primarily resulted from an increase in activity in the technology sector at one of our Texas operations ($181.4$219.4 million), one of our Indiana operations ($137.7$123.6 million), and one of our North Carolina operations ($133.1$115.5 million).

Revenue for our electrical segment increased $375.6$434.3 million, or 87.5%,81.2%, to $804.7$969.0 million for the firstsecond quarter of 2026 compared to the same period in 2025. Of this increase, $70.0$132.6 million resulted from the acquisition of Hunt, Feyen ZylstraZylstra, and Meisner and $305.6$301.7 million was attributable to same-store activity. The same-store revenue increase primarily resulted from an increase in activity in the technology sector at our Texas electrical operation ($200.9$186.6 million).

Backlog as of MarchJune 31,30, 2026 was $12.45$14.06 billion, a 4.3% increase from December 31, 2025 backlog of $11.94 billion, and an 80.8%12.9% increase from March 31, 2026 backlog of $12.45 billion, and a 73.1% increase from June 30, 2025 backlog of $6.89$8.12 billion. The sequential backlog increase included the acquisition of Hunt ($217.4 million), as well as a same-store increase of $1.39 billion, or 11.2%. Same-store sequential backlog growth was primarily a result of increased project bookings in the technology sector at one of our NorthTexas Carolinaelectrical operationsoperation ($255.5$1.00 millionbillion) and one of our VirginiaTexas operationsmodular operation ($214.5$510.2 million). The sequential backlog increase was partially offset by completion of project work in the technology sector at one of our IndianaNorth Carolina operations ($120.1$118.5 million). The year-over-year backlog increase included the acquisitions of Right WayHunt ($96.0$217.4 million), Feyen Zylstra ($88.3$86.6 million), and Meisner ($61.0$54.5 million), and, as well as a same-store increase of $5.32$5.58 billion, or 77.2%.68.7%. Same-store year-over-year backlog growth was primarily attributable to increased project bookings in the technology sector at our Texas modular operation ($1.50$1.87 billion), our Texas electrical operation ($1.13 billion), one of our Texas operations ($860.0 million), one of our North Carolina operations ($1.20 billion), one of our Texas operations ($899.3$671.9 million), and one of our Indiana operations ($669.5 million), and our Texas electrical operation ($663.8$540.3 million).

Gross Profit—Gross profit increased $351.0$334.3 million, or 87.0%,65.6%, to $754.4$844.2 million for the firstsecond quarter of 2026 as compared to the same period in 2025. The increase included a $17.5$21.0 million, or 4.3%,4.1%, increase related to the Hunt, Feyen Zylstra, Meisner, and Right Way acquisitions, as well as a $333.5$313.3 million, or 82.7%,61.5%, increase on a same-store basis. The same-store increase in gross profit was driven by a 51.5%43.8% increase in same storesame-store revenues in the current year, as well as improved execution in our operations across numerous operating locations. During the first quarter of 2026, we benefited from favorable developments on projects nearing completion, including change orders received on certain jobs during the quarter, of approximately $43.1 million. These favorable developments impacted both our mechanical and electrical segments, with the largest portion benefiting the mechanical segment. As a percentage of revenue, gross profit for the firstsecond quarter increased from 22.0%23.5% in 2025 to 26.3%25.9% in 2026, primarily due to the factors discussed above and improvements in our mechanical segment gross profit margin.

Selling, General and Administrative Expenses (“SG&A”)—SG&A increased $74.1$76.6 million, or 38.0%,36.4%, to $269.0$287.0 million for the firstsecond quarter of 2026 as compared to 2025. On a same-store basis, excluding amortization expense, SG&A increased $62.1$57.9 million, or 34.4%.29.6%. The same-store increase was primarily due to higher same-store revenue and increased compensation costs ($54.0$49.1 million), largely attributable to increased headcount and increased cost of labor. Amortization expense increased $1.8$2.7 million during the period, primarily as a result of the Hunt, Feyen Zylstra, Meisner, and Right WayMeisner acquisitions. As a percentage of revenue, SG&A for the firstsecond quarter decreased from 10.6%9.7% in 2025 to 9.4%8.8% in 2026 due to leverage resulting from the increase in revenue.

Interest Income—Interest income increased $4.2$8.2 million, or 99.5%,292.0%, to $8.5$11.1 million for the second quarter of 2026 as compared to the same period in 2025. Interest income increased $12.5 million, or 176.1%, to $19.6 million for the first quartersix months of 2026 as compared to the same period in 2025. The increase in interest income for the second quarter and first quartersix months of 2026 was primarily due to an increase in our average cash balance compared to the prior year.

Changes in the Fair Value of Contingent Earn-out Obligations—The contingent earn-out obligations are measured at fair value each reporting period, and changes in estimates of fair value are recognized in earnings. Expense from changes in the fair value of contingent earn-out obligations for the firstsecond quarter of 2026 increaseddecreased $6.6$2.0 million, or 175.9%,49.8%, as compared to the same period in 2025. The decrease in earn-out expense for the second quarter was primarily due to lower expense at one of our Texas operations, as a result of them achieving their maximum cumulative earn-out target in the prior year. The decrease in earn-out expense was offset by higher expense at one of our North Carolina operations due to higher actual and projected earnings. Expense from changes in the fair value of contingent earn-out obligations for the first six months of 2026 increased $4.6 million, or 58.5%, as compared to the same period in 2025. The increase in earn-out expense for the first six months of 2026 was primarily driven by higher actual and projected earnings at Feyen Zylstra. The increase in earn-out expense was partially offset by lower expenses at one of our Texas operations, as a result of them achieving their maximum cumulative earn-out target in the prior year.

Provision for Income Taxes—Our provision for income taxes for the threesix months ended MarchJune 31,30, 2026 was $111.8$236.4 million with an effective tax rate of 23.2%22.5% as compared to a provision for income taxes of $38.7$104.4 million with an effective tax rate of 18.6%20.7% for the same period in 2025. The effective tax rate for 2026 was higher than the 21% federal statutory rate primarily due to $12.7$26.9 million of net state income taxes (2.6%) and $4.2$6.8 million of nontaxable or nondeductible items (0.9%0.7%), partially offset by a $7.2$12.8 million credit for increasing research activities (“R&D tax credit”) (1.5%1.2%) and a $6.5 million reduction in net unrecognized tax benefits including net interest income from settlement with the Internal Revenue Service (“IRS”) for the 2019 and 2020 tax years (0.6%). The effective tax rate for 2025 was slightly lower than the 21% federal statutory rate primarily due to an $11.8 million R&D tax credit (2.3%) and recognizing $8.9 million of net interest income on our 2022 federal overpayment (4.3%) and a $6.3 million R&D tax credit (3.0%1.8%), partially offset by $7.0$15.5 million of net state income taxes (3.3%3.1%) and $2.5$2.3 million of nontaxable or nondeductible items (1.2%0.5%).

We experienced an unprecedented demand environment in 2025 and through the first quartersix months of 2026, and we continue to experience increased labor costs and intermittent supply chain shortages, including delays in delivery of certain materials and equipment. We are recognizing these challenges in our job planning and pricing, and we are ordering materials on an earlier timeline and seeking to collaborate with customers to share supply risks and to mitigate the effects of these challenges. We have been generally successful in maintaining productivity and in procuring needed materials despite ongoing challenges.

Net Cash Provided by (Used in) Operating Activities—Cash flow from operations is primarily influenced by demand for our services and operating margins but can also be influenced by working capital needs associated with the various types of services that we provide. In particular, working capital needs may increase when we commence large volumes of work under circumstances where project costs, primarily associated with labor, equipment, and subcontractors, are required to be paid before the receivables resulting from the work performed are billed and collected. Working capital needs are generally higher during the late winter and spring months as we prepare and plan for the increased project demand when favorable weather conditions exist in the summer and fall months. Conversely, working capital assets are typically converted to cash during the late summer and fall months as project completion is underway. These seasonal trends are sometimes offset by changes in the timing of major projects, which can be impacted by the weather, project delays, or accelerations and other economic factors that may affect customer spending.

Net cash provided by operating activities was $388.8$1.53 millionbillion during the first threesix months of 2026 compared to $88.0$164.5 million net cash used in operating activities during the same period in 2025. The $476.8$1.36 millionbillion increase in net cash provided by operating activities was primarily driven by higher earnings before non-cash expenses such as amortization of intangible assets in the current year and a $317.4$684.7 million benefit from changes in billings in excess of costs and estimated earnings and deferred revenue driven by timing of customer billings and payments, including more net advance payments received in the current year as compared to the prior year. We also had a $535.6 million benefit from increases in accounts payable and other current liabilities driven by the size and timing of payments, including an $80.0 million federal tax payment in the first quarter of 2025 that otherwise would have been paid in the second half of 2024, as a result of tax relief from the Internal Revenue ServiceIRS due to Hurricane Beryl that did not recur in the current year. We also had a $122.0 million benefit from changes in billings in excess of costs and estimated earnings and deferred revenue driven by timing of customer billings and payments. These increases in cash were partially offset by a $263.0$393.5 million increase in receivables, net. In 2023, we filed our 2022 federal tax return requesting a refund of our $107.1 million overpayment, which was received in April 2025 and positively impacted the second quarter of 2025 cashflow, which did not recur in 2026. Along with the refund, we received $11.3 million (or $8.9 million, net of tax) of interest income that reduced our provision for income taxes in the first quarter of 2025.

Net Cash Used in Investing Activities—During the first threesix months of 2026, net cash used in investing activities was $184.0$467.5 million compared to $96.8$183.0 million during the same period in 2025. The $87.2$284.5 million increase in net cash used in investing activities was primarily attributable to a $103.0$188.9 million of building purchasepurchases during the first quartersix months of 2026 to support growth in our modular business. We expect capital expenditures for the full year of 2026 to be higher than our recent average as we continue to invest in the growth of our business. The increase in capital expenditures was partially offset by a decrease in cash paid (net of cash acquired) for acquisitions in the current year compared to the same period in 2025.

Net Cash Used in Financing Activities—Net cash used in financing activities was $136.6$187.9 million for the first threesix months of 2026 compared to $160.4$199.8 million during the same period in 2025. The $23.9$11.9 million decrease in net cash used in financing activities was primarily due to a decrease in share repurchases of $88.8 million and a decrease in payments for contingent consideration related to acquisitions of $45.8$103.1 million in the current year compared to the same period in 2025. TheseThis decreasesdecrease werewas partially offset by an increase in debt payments in the current year compared to the same period in 2025.

Free Cash Flow—We define free cash flow as net cash provided by operating activities, less customary capital expenditures, plus the proceeds from asset sales. We believe free cash flow, by encompassing both profit margins and the use of working capital over our approximately one year working capital cycle, is an effective measure of operating effectiveness and efficiency. We have included free cash flow information here for this reason,reason and because we are often asked about it by third parties evaluating us. However, free cash flow is not considered under generally accepted accounting principles to be a primary measure of an entity’s financial results, and accordingly free cash flow should not be considered an alternative to operating income, net income, or amounts shown in our consolidated statements of cash flows as determined under generally accepted accounting principles. Free cash flow may be defined differently by other companies.

On March 29, 2007, our Board of Directors (the “Board”) approved a stock repurchase program to acquire up to 1.0 million shares of our outstanding common stock. Subsequently, the Board has from time to time increased the number of shares that may be acquired under the program and approved extensions of the program. On May 16, 2025, the Board approved an extension to the program by increasing the shares authorized for repurchase by 0.4 million shares. Since the inception of the repurchase program, the Board has approved 11.8 million shares to be repurchased. As of MarchJune 31,30, 2026, we have repurchased a cumulative total of 10.9 million shares at an average price of $50.37$50.88 per share under the repurchase program.

The share repurchases will be made from time to time at our discretion in the open market or privately negotiated transactions, including pursuant to Rule 10b5-1 share repurchase plans, as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. The Board may modify, suspend, extend, or terminate the program at any time. During the threesix months ended MarchJune 31,30, 2026, we repurchased less than 0.1 million shares for approximately $2.5$8.2 million, inclusive of the applicable excise tax, at an average price of $998.27$1,438.19 per share.

On August 27, 2025, we amended our senior credit facility (as amended, the “Facility”) arranged by Wells Fargo Bank, National Association, as administrative agent, and provided by a syndicate of banks, which increases our borrowing capacity from $850.0 million to $1.10 billion. The Facility is composed of a revolving credit line guaranteed by certain of our subsidiaries, in the amount of $1.10 billion. The Facility also provides for an accordion or increase option not to exceed the greater of (a) $500.0 million and (b) 1.0x Credit Facility Adjusted EBITDA (as defined in the Facility), in the form of additional revolving commitments or incremental term loans. The line of credit includes a sublimit for up to $200.0 million of letters of credit and a sublimit for up to $75.0 million of swingline loans. The Facility expires on October 1, 2030 and is secured by a first lien on substantially all of our personal property, except for assets related to projects subject to surety bonds and the equity of and assets held by certain unrestricted subsidiaries and our wholly owned captive insurance company and a second lien on our assets related to projects subject to surety bonds. As a result of the amendment, $0.3 million of unamortized costs associated with lenders who exited the Facility were written off to interest expense in the third quarter of 2025. The remaining $1.0 million of unamortized costs from the previous facility will be deferred and amortized over the term of the new Facility. In 2025, we incurred approximately $3.7 million in financing and professional costs in connection with the amendment to the Facility, which, combined with previously unamortized costs of $1.0 million, are being amortized on a straight-line basis as a non-cash charge to interest expense over the remaining term of the Facility. As of MarchJune 31,30, 2026, we had no outstanding borrowings on the revolving credit facility, $82.8$87.8 million in letters of credit outstanding, and $1.02$1.01 billion of credit available.

As of MarchJune 31,30, 2026, we have $82.8$87.8 million in letter of credit commitments, of which $64.1$69.1 million will expire in 2026 and $18.7 million will expire in 2027. The substantial majority of these letters of credit are posted with insurers who disburse funds on our behalf in connection with our workers’ compensation, auto liabilityliability, and general liability insurance program. These letters of credit provide additional security to the insurers that sufficient financial resources will be available to fund claims on our behalf, many of which develop over long periods of time, should we ever encounter financial duress. Posting of letters of credit for this purpose is a common practice for entities that manage their self-insurance programs through third-party insurers as we do. While some of these letter of credit commitments expire in the next 12 months, we expect nearly all of them, particularly those supporting our insurance programs, will be renewed annually.

The Facility contains financial covenants defining various financial measures and the level of these measures with which we must comply. Covenant compliance is assessed as of each quarter end. We were in compliance with all of our financial covenants as of MarchJune 31,30, 2026.

We have outstanding notes to the former owners of our acquired companies. Together, these notes had an outstanding balance of $38.5$53.5 million as of MarchJune 31,30, 2026. On MarchJune 31,30, 2026, future principal payments of notes to former owners by maturity year were as follows (dollars in thousands):