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

The following is a discussion and analysis of our financial condition and results of operations asfor ofthe Marchthree 31,and six months ended June 30, 2026, and should be read in conjunction with our unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report. This discussion and analysis contains forward-looking statements, including statements regarding industry outlook, our expectations for the future of our business and our liquidity and capital resources as well as other non-historical statements. These statements are based on current expectations and are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in this Quarterly Report, including the “Cautionary Note Regarding Forward-Looking Statements,” and “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. Our actual results may differ materially from those contained in or implied by these forward-looking statements. We disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Our revenues, profit, margins and other results of operations can be influenced by a variety of factors in any given period, including those described under the section entitled “Risk Factors” included elsewhere in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2025, and those factors have caused fluctuations in our results in the past and are expected to cause fluctuations in our results of operations in the future. For additional information, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key -Key Factors Affecting Our Performance” included in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to the these factors since our Annual Report.

For infrastructure services providers, backlog can be an indicator of future revenue. As of MarchJune 31,30, 2026 and December 31, 2025, our Total Backlog was $8,166 million and $8,024$8,860 million, respectively, which includes all Signed Backlog, Awarded Backlog, and Estimated Corrective Maintenance Backlog.

A discussion of our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 is set forth below.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

The following table summarizes our consolidated results of operations for the three months ended MarchJune 31,30, 2026 and 2025, including as a percentage of revenue, as well as the dollar and percentage change from the prior year’s three months ended:

Revenue increased by $269.0$415.3 million to $676.8$951.2 million for the three months ended MarchJune 31,30, 2026 compared to $407.8$536.0 million for the three months ended MarchJune 31,30, 2025, which was primarily driven by an increase in new construction ofand $246.9the million, revenuescontribution from acquisition activity of $26.1$427.0 million, offset by a decrease in existing infrastructure of $1.5$8.4 million attributable to a significant repair project in 2025 that did not recur in 2026 and a decrease of project development sales of $2.5$3.2 million.

Cost of revenue increased by $209.0$388.7 million to $557.7$811.6 million for the three months ended MarchJune 31,30, 2026 compared to $348.7$422.9 million for the three months ended MarchJune 31,30, 2025, whichin generallyline correlates towith the increase in revenues. Gross profit as a percentage of revenue increaseddecreased for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 primarily due to productivityproject efficienciesperformance partlyincluding relatedcontingency torelease favorablefrom weatherlater conditionsstage projects, the impact from a significant repair project, and higher development sales, all during the three months ended June 30, 2025. Additional decreases in partsgross profit as a percentage of the country, improved pricing and vendor recoveries related to prior period reserves, partially offset by a one-time development expense impairmentrevenue related to the terminationprospective 2026 classification of the project development business andcertain non-cash compensation expenseand primarilyannual fromincentive faircompensation valueaccruals adjustmentsin toCost RUAof liability.revenue rather than Selling, general and administrative expense.

Selling, general and administrative expenses increased by $75.3$11.5 million to $111.4$52.6 million for the three months ended MarchJune 31,30, 2026 compared to $36.1$41.2 million for the three months ended MarchJune 31,30, 2025,2025. whichThe increase was primarily asdriven aby result of an increase of $59.6$8.2 million of higher non-cash compensation expenseexpense, including a $4.3 million increase related to the modification ofmodified legacy equity awards in connection with the IPO reorganization, which resulted in a $52.3$2.6 million one-timeincrease charge, as well as $2.3 million fair value adjustment to RUA liability based on fair value of stock price and $1.5 million offrom restricted stock and stock option grants.grants, and a $1.3 million increase in the fair value of the RUA liability due to changes in our stock price. The increase was also drivenreflected bya $13.8$4.6 million related to more investment in the organization to support administrative needs and new growth, $3.3and $2.4 million of non-recurring costs related to mergerstransaction and acquisitions, integration costs,costs. andThese costsincreases to prepare the company for an initial public offering,were partially offset by $0.7prospective million2026 classification of certain non-cash compensation and annual incentive compensation accruals in Cost of revenue rather than Selling, general and administrative expense, as well as lower depreciationcosts expense.incurred to prepare for the IPO in 2026.

Amortization expense increased by $1.1$3.5 million to $14.9$17.3 million for the three months ended MarchJune 31,30, 2026 compared to $13.8 million for the three months ended MarchJune 31,30, 2025, which was a result of amortization expense related to newly acquired intangible assets resulting from recent acquisitions.

Interest expense decreased by $5.8$12.7 million to $6.9$1.4 million for the three months ended MarchJune 31,30, 2026 compared to $12.7$14.1 million for the three months ended MarchJune 31,30, 2025, which was primarily driven by lower interest expense as a result of the retirement of the termTerm loanLoans from proceeds from the IPO in February 2026.

Income tax expense, netexpense increased by $3.9$4.8 million to $4.2$5.8 million for the three months ended MarchJune 31,30, 2026, compared to $0.3$1.0 million for the three months ended MarchJune 31,30, 2025. The increase primarily resulted from the Companyus becoming subject to U.S. federal, state and local income taxes on itsour allocable share of taxable income of SOLV Energy Holdings LLC following the IPO and Transactions, as well as from the impact of a one-time, non-cash stock-based compensation charge related to the modification of legacy equity awards that was not deductible for income tax purposes.

The following discussion describes certain line items in our condensed consolidated statements of operations. There have been no material changes to the components of our results of operations described in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2025, except as described below.

In connection with the Transactions, our wholly-owned subsidiary was appointed as the sole managing member of SOLV Energy Holdings LLC pursuant to the SOLV Energy Holdings LLC Agreement. Because we indirectly manage and operate the business and control the strategic decisions and day-to-day operations of SOLV Energy Holdings LLC and also have a substantial financial interest in SOLV Energy Holdings LLC,Holdings, we consolidate the financial results of SOLV Energy Holdings LLC,Holdings, and a portion of our net income (loss) is allocated to the non-controlling interest to reflect the entitlement of the Continuing Equity Owners to a portion of SOLV Energy Holdings LLC’sHoldings’ net income (loss). We hold approximately 57.0%61.1% of the LLC Interests, which includes the impacts of the underwriters’ over-allotment exercise, and the remaining LLC Interests are held by the Continuing Equity Owners.

Our business was historically operated through SOLV Energy Holdings LLC,Holdings, a limited liability company. For U.S. federal income tax purposes, SOLV Energy Holdings LLC was historically treated as an entity disregarded as separate from SOLV Energy Parent Holdings LP, a Delaware limited partnership that iswas a partnership for U.S. federal income tax purposes. As a disregarded entity, SOLV Energy Holdings LLC was not subject to U.S. federal income tax; however, historical income tax expense reflects certain state and local taxes, and Spartan Infrastructure, Inc. (a subsidiary of SOLV Energy Holdings LLC) is a corporation for U.S. federal income tax purposes that is subject to U.S. federal, state and local corporate income tax.

In connection with the Transactions, SOLV Energy Holdings LLC became taxable as a partnership for U.S. federal income tax purposes (which will be a continuation of SOLV Energy Parent Holdings LP for U.S. federal income tax purposes) and SOLV Energy, Inc. acquired LLC Interests in SOLV Energy Holdings LLC.Holdings. As a partnership for U.S. federal income tax purposes, SOLV Energy Holdings LLC will generally not be subject to U.S. federal income tax. As a result of its ownership of LLC Interests, SOLV Energy, Inc., which is a corporation for U.S. federal income tax purposes, will beis subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income of SOLV Energy Holdings LLC and will beis taxed at the prevailing corporate tax rates.

On February 12, 2026, we completed our IPO and received $552.5 million net proceeds from the sale of 23,575,000 shares of our Class A common stock at a price to the public of $25.00 per share. The net proceeds from our IPO were used to purchase 23,575,000 newly issued LLC Interests directly from LLCHoldings at a price per unit equal to the IPO price per share of Class A common stock.

In connection with the IPO, SOLV Energy Inc. caused SOLV Energy Holdings LLC to use the net proceeds received from the sale of LLC Interests to SOLV Energy, Inc. to repay in full approximately $405.6 million of amounts due upon repayment under the Term Loans, and the remainder for general corporate purposes, which could include growth initiatives, including potential merger and acquisition opportunities. Additionally, we have entered into the New Revolving Credit Facility with various lenders in an aggregate amount of approximately $200.0 million.

We have historically funded our operations and business activities primarily from cash flows from operating activities as well as borrowings under our Prior Credit Facilities. As of MarchJune 31,30, 2026, we had $384.9$364.0 million of cash, $191.5$186.6 million of undrawn availability under our New Revolving Credit Facility and $8.5$13.4 million in letters of credit issued and outstanding. We believe that our existing cash balances, cash flows from our operations and borrowings under our New Revolving Credit Facility will be sufficient to fund our operations for at least the next twelve months.

We are a holding company and have no material assets other than our ownership of LLC Interests. We have no independent means of generating revenue. The SOLV Energy Holdings LLC Agreement provides for the payment of certain distributions to the Continuing Equity Owners and to us in amounts sufficient to cover the income taxes imposed on such members with respect to the allocation of taxable income from SOLV Energy Holdings LLC as well as to cover our obligations under the Tax Receivable Agreement and other administrative expenses.

Regarding the ability of SOLV Energy Holdings LLC to make distributions to us, the terms of our New Revolving Credit Facility contain covenants that may restrict SOLV Energy Holdings LLC or its subsidiaries from paying such distributions, subject to certain exceptions (including with respect to post-IPO public company expenses). Further, SOLV Energy Holdings LLC is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of SOLV Energy Holdings LLC (with certain exceptions) exceed the fair value of its assets.

To the extent we are unable to make payments under the Tax Receivable Agreement for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore accelerate payments due under the Tax Receivable Agreement. In addition, if SOLV Energy Holdings LLC does not have sufficient funds to make distributions, our ability to declare and pay cash dividends will also be restricted or impaired.

The following tables present a summary of our consolidated statements of cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025:

Net cash flow provided by operating activities for the threesix months ended MarchJune 31,30, 2026 was a net cash inflow of $14.2$46.0 million, a decrease of $6.0$4.8 million as compared to a net cash inflow of $20.2$50.8 million for the threesix months ended MarchJune 31,30, 2025. This decrease was primarily driven by higher net cash outflows of $58.1$95.7 million related to operating assets and liabilities, primarily supplier deposits and materials inventory, partially offset by incrementala $90.9 million increase in net income ofafter $52.2 million, adjustedadjusting for non-cash items.

Net cash flow used in investing activities for the threesix months ended MarchJune 31,30, 2026 was a net cash outflow of $10.4$16.0 million, a decrease of $3.1$45.1 million as compared to a net cash outflow of $13.5$61.1 million for the threesix months ended MarchJune 31,30, 2025. This decrease was primarily driven by a $7.7 million increase in capital expenditures, partially offset by a $10.8$55.8 million decrease in cash paid for acquisitions.acquisitions, partially offset by a $10.6 million increase in capital expenditures.

Net cash flow used in financing activities for the threesix months ended MarchJune 31,30, 2026 was a net cash outflow of $13.8$61.0 million, an increase of $8.2$26.7 million as compared to a net cash outflow of $5.6$34.3 million for the threesix months ended MarchJune 31,30, 2025. This increase was primarily driven by the increase of theterm debt repayments from extinguishment of term debt of $404.2$403.2 million, incrementalrepurchase of LLC interests of $291.7 million, increased distributions to members of SOLV Energy Holdings LLC of $97.0$112.6 million, $47.0 million of term debt and equipment financing borrowings in 2025, a $5.5 million increase for payment of deferred acquisition consideration, a $3.5$8.7 million increase in payments for offeringequity costs, a $2.8 million increase in payments forand debt issuance costscosts, and a $0.9$2.2 million increase in the payment of financingfinance leases,leases and equipment financing, offset by net proceeds from issuance of Class A common stock in the IPO of $552.5$844.2 million.

Our unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with GAAP, which requires us to make estimates and assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and on other factors that we believe to be reasonable. Actual results may differ from those estimates. We review these estimates on a periodic basis to ensure reasonableness. Although actual amounts may differ from such estimated amounts, we believe such differences are not likely to be material. For additional detail regarding our critical accounting policies and estimates, please see our discussion included in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to the Company’sour critical accounting estimates since our Annual Report, except as described below.

SOLV Energy Holdings LLC was historically an entity disregarded as separate from SOLV Energy Parent Holdings LP for U.S. federal income tax purposes. In connection with the Transactions, SOLV Energy Holdings LLC became taxable as a partnership under the appropriate provisions of the Code and will be a continuation of SOLV Energy Parent Holdings LP for U.S. federal income tax purposes. Therefore, federal income taxes are payable by the unitholders and no provisions are made for federal income taxes with respect to income of SOLV Energy Holdings LLC in the consolidated financial statements. However, although various state and local income taxes are imposed on a “flow- through” basis and are thus payable by the unitholders, SOLV Energy Holdings LLC has historically been subject to certain state and local income taxes at the entity level. In addition, one or more subsidiaries of SOLV Energy Holdings LLC are corporations for U.S. federal income tax purposes that are subject to U.S. federal, state and local corporate income tax.

After the closing of the IPO, we became subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of SOLV Energy Holdings LLC and are taxed at the prevailing corporate tax rates. In addition to tax expenses, we may incur expenses related to our operations, plus expected payments under the Tax Receivable Agreement, which may be significant. We intend to cause SOLV Energy Holdings LLC to make distributions in an amount sufficient to allow us to pay our tax obligations and operating expenses, including distributions to fund any payments due under the Tax Receivable Agreement. We will account for the income tax effects and corresponding Tax Receivable Agreement’s effects resulting from future taxable exchanges or redemptions of LLC Interests held by Continuing Equity Owners and its permitted transferees by recognizing an increase in deferred tax assets, based on enacted tax rates at the date of the purchase or redemption.

Further, we evaluated the likelihood that we will realize the benefit represented by the deferred tax asset and, to the extent that we estimate that it is more likely than not that we will not realize the benefit, we will reduce the carrying amount of the deferred tax asset with a valuation allowance. The amounts to be recorded for both the deferred tax assets and the liability for our obligations under the Tax Receivable Agreement will be estimated at the time of any purchase or redemption and is expected to be accounted for as aan reductionadjustment to member’s equity, and the effects of changes in any of our estimates after this date will be included in net income (loss). Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income (loss). In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will be realized and, when necessary, a valuation allowance is established. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. A change in the assessment of such consequences, such as realization of deferred tax assets, changes in tax laws or interpretations thereof could materially impact our results.