Q - Limbach Holdings,

Previous wording

The Company is a building systems solutions firm that partners with building owners and facilities managers with mission critical mechanical (heating, ventilation and air conditioning), electrical, and plumbing infrastructure. The Company strives to be an indispensable partner to its customers by providing services that are essential to the operation of their businesses. The Company has approximately 1,400 team members in 20 offices across the eastern United States. The Company’s team members uniquely combine engineering expertise with field installation skills to provide custom solutions that leverage its full life-cycle capabilities, which allows it to address both the operational and capital projects needs of its customers.

Current wording

The Company is a building systems solutions firm that partners with building owners and facilities managers with mission critical mechanical (heating, ventilation and air conditioning), electrical, and plumbing infrastructure. The Company strives to be an indispensable partner to its customers by providing services that are essential to the operation of their businesses. The Company has approximately 1,300 team members in 20 offices across the eastern United States. The Company’s team members uniquely combine engineering expertise with field installation skills to provide custom solutions that leverage its full life-cycle capabilities, which allows it to address both the operational and capital projects needs of its customers.

Previous wording

The change in fair value of contingent consideration relates to the remeasurement of the contingent consideration arrangements resulting from the acquisitions of each of ACME, Industrial Air, Kent Island and Consolidated Mechanical. As a part of the total consideration for the ACME, Industrial Air, Kent Island and Consolidated Mechanical transactions, the Company initially recognized $1.5 million, $3.2 million and $4.4 million and $0.8 million, respectively, in contingent consideration associated with their respective earnout payments. The carrying values of the ACME, Industrial Air, Kent Island and Consolidated Mechanical Earnout Payments are subject to remeasurement at fair value at each reporting date through the end of the respective earnout periods with any changes in the fair value reported as a separate component of operating income in the condensed consolidated statements of operations. See Note 8 – Fair Value Measurements in the accompanying notes to the Company’s condensed consolidated financial statements for further information.

Current wording

The change in fair value of contingent consideration relates to the remeasurement of the contingent consideration arrangements resulting from the acquisitions of each of ACME, Industrial Air, Kent Island and Consolidated Mechanical. The carrying values of the ACME, Industrial Air, Kent Island and Consolidated Mechanical Earnout Payments are subject to remeasurement at fair value at each reporting date through the end of the respective earnout periods with any changes in the fair value reported as a separate component of operating income in the condensed consolidated statements of operations. See Note 8 – Fair Value Measurements in the accompanying notes to the Company’s condensed consolidated financial statements for further information.

Previous wording

Amortization expense represents periodic non-cash charges that consist of amortization of various intangible assets primarily including favorable leasehold interests and certain customer relationships. As a result of the Jake Marshall Transaction, the Company recognized, in the aggregate, an additional $5.7 million of intangible assets associated with customer relationships with third-party customers, the acquired trade name and acquired backlog. As a result of the ACME Transaction, the Company recognized, in the aggregate, an additional $2.8 million of intangible assets associated with customer relationships with third-party customers and the acquired trade name, inclusive of the impact of certain measurement period adjustments. As a result of the Industrial Air Transaction, the Company recognized, in the aggregate, an additional $8.7 million of intangible assets associated with customer relationships with third-party customers, the acquired trade name, trademarks and intellectual property and the acquired backlog. In addition, as a result of the Kent Island Transaction, the Company recognized, in the aggregate, an additional $10.7 million of intangible assets associated with customer relationships with third-party customers, the acquired trade name and the acquired backlog. Lastly, as a result of the Consolidated Mechanical Transaction, the Company recognized, in the aggregate, an additional $10.1 million of intangible assets associated with customer relationships with third-party customers and the acquired trade name. Each of the Jake Marshall, ACME, Industrial Air, Kent Island and Consolidated Mechanical-related intangible assets were recorded under the acquisition method of accounting at their estimated fair values at the acquisition date. See Note 5 – Goodwill and Intangible Assets for further information on the Company’s intangible assets.

Current wording

Amortization expense represents periodic non-cash charges that consist of amortization of various intangible assets primarily including favorable leasehold interests and certain customer relationships. Each of the Jake Marshall, ACME, Industrial Air, Kent Island and Consolidated Mechanical-related intangible assets were recorded under the acquisition method of accounting at their estimated fair values at the acquisition date. See Note 5 – Goodwill and Intangible Assets for further information on the Company’s intangible assets.

Previous wording

(3)Included within selling, general and administrative expenses was $1.6 million and $1.2 million of non-cash stock-based compensation expense for the three months ended March 31, 2025 and 2024, respectively.

Current wording

(3)Included within selling, general and administrative expenses was $1.6 million and $1.5 million of non-cash stock-based compensation expense for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Revenue for the three months ended March 31, 2025 increased by $14.1 million compared to the three months ended March 31, 2024. ODR revenue increased by $16.1 million, or 21.7%, while GCR revenue decreased by $2.0 million, or 4.5%. The increase in period-over-period ODR segment revenue was primarily due to the Company's continued focus on the accelerated growth of its ODR business and as a result of the Consolidated Mechanical Transaction. The decrease in period-over-period GCR segment revenue was primarily due to the Company’s continued focus on the execution of its mix-shift strategy to ODR, partially offset by an increase in GCR revenue associated with the operations of Kent Island. Kent Island and Consolidated Mechanical were not acquired entities of the Company for the three months ended March 31, 2024.

Current wording

Revenue for the three months ended June 30, 2025 increased by $20.0 million, or 16.4%, compared to the three months ended June 30, 2024. ODR revenue increased by $26.2 million, or 31.7%, while GCR revenue decreased by $6.2 million, or 15.7%. The increase in period-over-period ODR segment revenue was primarily due to the Company's continued focus on the accelerated growth of its ODR business and as a result of the Consolidated Mechanical Transaction. The decrease in period-over-period GCR segment revenue was primarily due to the Company’s continued focus on the execution of its mix-shift strategy to ODR, partially offset by an increase in GCR revenue associated with the operations of Kent Island. Kent Island and Consolidated Mechanical were not acquired entities of the Company for the three months ended June 30, 2024.

Previous wording

During the three months ended March 31, 2025 and 2024, the Company recorded revisions in its contract estimates for certain ODR and GCR projects. During the three months ended March 31, 2025, the Company recorded a material gross profit write-up on one GCR project for a total of $0.9 million that had a net gross profit impact of $0.5 million or more. During the three months ended March 31, 2024, the Company recorded material gross profit write-ups on two ODR projects for a total of $2.0 million that had a net gross profit impact of $0.5 million or more. There were no material gross profit write-downs recognized during the three months ended March 31, 2025 and 2024.

Current wording

The Company recorded revisions in its contract estimates for certain ODR and GCR projects. During the three months ended June 30, 2025, the Company recorded a material gross profit write-down on one GCR project for a total of $0.6 million that had a net gross profit impact of $0.5 million or more. The Company did not record any material gross profit write-ups that had a net gross profit impact of $0.5 million or more during the three months ended June 30, 2025. During the three months ended June 30, 2024, the Company recorded material gross profit write-ups on two ODR projects and two GCR projects for a total of $1.5 million and $1.5 million, respectively, that had a net gross profit impact of $0.5 million or more. During the three months ended June 30, 2024, the Company did not record any material gross profit write-downs that had a net gross profit impact of $0.5 million or more.

Previous wording

The change in fair value of the Earnout Payments contingent consideration was an expense of $0.4 million and $0.6 million for the three months ended March 31, 2025 and 2024, respectively. These increases to the contingent liability were primarily attributable to the timing component and probability of meeting the gross profit margins associated with the contingent consideration arrangements as of March 31, 2025 and 2024. See Note 8 – Fair Value Measurements in the accompanying notes to the Company’s condensed consolidated financial statements for further information on the Company's earnout arrangements.

Current wording

The change in fair value of the Earnout Payments contingent consideration was an expense of $0.8 million and $1.1 million for the three months ended June 30, 2025 and 2024, respectively. These increases to the contingent liability were primarily attributable to the timing component and probability of meeting the gross profit margins associated with the contingent consideration arrangements as of June 30, 2025 and 2024. See Note 8 – Fair Value Measurements in the accompanying notes to the Company’s condensed consolidated financial statements for further information on the Company's earnout arrangements.

Previous wording

Total amortization expense for the three months ended March 31, 2025 and 2024 was $1.9 million and $1.1 million, respectively. The period-over-period increase is a result of the Kent Island and Consolidated Mechanical acquisitions, which were not acquired entities of the Company during the three months ended March 31, 2024. See Note 5 - Goodwill and Intangibles in the accompanying notes to the Company’s condensed consolidated financial statements for further information on the Company's intangible assets.

Current wording

Total amortization expense for the three months ended June 30, 2025 and 2024 was $1.8 million and $1.0 million, respectively. The period-over-period increase was a result of the Kent Island and Consolidated Mechanical acquisitions, which were not acquired entities of the Company during the three months ended June 30, 2024. See Note 5 - Goodwill and Intangibles in the accompanying notes to the Company’s condensed consolidated financial statements for further information on the Company's intangible assets.

Previous wording

Total other income for the three months ended March 31, 2025 was less than $0.1 million as compared to $0.7 million for the three months ended March 31, 2024. The change period-over-period was primarily driven by a $0.2 million loss period-over-period associated with the Company's interest rate swap arrangement, a $0.2 million decrease in interest income related to lower interest rates and a lower average amount of cash invested in overnight repurchase agreements and money market funds, and a $0.2 million decrease in gains associated with the disposition of certain property and equipment.

Current wording

Total other income for the three months ended June 30, 2025 was approximately $0.1 million as compared to $0.2 million for the three months ended June 30, 2024. The change period-over-period was primarily driven by a $0.2 million decrease in interest income due to reduced cash and cash equivalent balances period-over-period and lower yields on invested balances, a $0.1 million increase in interest expense related to higher financing costs associated with a larger vehicle fleet period-over-period and a higher loss recognized in connection with the change in fair value of the Company's interest rate swap arrangement. Partially offsetting these changes was a $0.3 million increase in gains associated with the disposition of certain property and equipment related to increased asset sales during the current period.

Previous wording

The Company's gross profit for the three months ended March 31, 2025 increased by $5.6 million compared to the three months ended March 31, 2024. ODR gross profit increased $4.0 million, or 18.0%, due to an increase in revenue despite slightly lower segment margins of 28.9% versus 29.8% resulting from certain ODR-related project write-ups recognized in the first quarter of 2024. GCR gross profit increased $1.6 million, or 18.3%, due to higher margins on project work period-over-period despite lower revenue. The total gross profit percentage increased from 26.1% for the three months ended March 31, 2024 to 27.6% for the same period ended in 2025, mainly driven by the mix of higher margin ODR segment work and the Company continuing to be more selective when pursuing GCR work.

Current wording

The Company's gross profit for the six months ended June 30, 2025 increased by $11.9 million, or 18.5%, compared to the six months ended June 30, 2024. ODR gross profit increased $10.2 million, or 21.5%, due to an increase in revenue despite slightly lower segment margins of 29.0% versus 30.3% resulting from certain ODR-related project write-ups recognized in the first half of 2024 that did not recur in the current year. In addition, gross margins continue to reflect the ongoing integration of acquired companies as the Company transitions them to its standardized revenue growth structure and margin recognition framework. GCR gross profit increased $1.7 million, or 10.1%, due to higher margins on project work period-over-period despite lower revenue. The total gross profit percentage increased from 26.8% for the six months ended June 30, 2024 to 27.8% for the same period ended in 2025, mainly driven by the mix of higher margin ODR segment work and the Company continuing to be more selective when pursuing GCR work.

Previous wording

The Company's SG&A expense for the three months ended March 31, 2025 increased by approximately $3.6 million compared to the three months ended March 31, 2024. The Company’s SG&A expense for the three months ended March 31, 2025 increased due to a $2.0 million increase in payroll related expenses, a $0.5 million increase in professional services fees, a $0.4 million increase in non-cash stock-based compensation expenses and a $0.2 million increase in travel and entertainment related expenses. These variances include SG&A associated with Kent Island and Consolidated Mechanical, which were not acquired entities of the Company during the three months ended March 31, 2024. As a result of these factors, SG&A expense as a percentage of revenue increased to 19.9% for the three months ended March 31, 2025 as compared to 19.2% for the three months ended March 31, 2024.

Current wording

The Company's SG&A expense for the six months ended June 30, 2025 increased by approximately $7.1 million, or 15.4%, compared to the six months ended June 30, 2024. The Company’s SG&A expense for the six months ended June 30, 2025 mainly increased due to a $3.6 million increase in payroll related expenses, a $2.2 million increase in professional services fees including those incurred with the successful acquisition of PPI on July 1, 2025, a $0.5 million increase in non-cash stock-based compensation expenses and a $0.1 million increase in travel and entertainment related expenses. These variances include SG&A associated with Kent Island and Consolidated Mechanical, which were not acquired entities of the Company during the six months ended June 30, 2024. As a result of these factors, SG&A expense as a percentage of revenue increased to 19.3% for the six months ended June 30, 2025 as compared to 19.1% for the six months ended June 30, 2024.

Previous wording

The Company recorded an income tax benefit of $2.2 million for the three months ended March 31, 2025 compared to an income tax benefit of $0.3 million for the three months ended March 31, 2024. The effective tax rate was (27.8)% and (4.5)% for the three months ended March 31, 2025 and 2024, respectively. The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate period-over-period was primarily due to state income taxes, tax credits, other permanent adjustments and discrete tax items. In particular, the Company’s effective rate for the three months ended March 31, 2025 and 2024 were materially impacted by “excess tax benefits on stock-based compensation” recognized discretely during the first quarter of each year as a result of the Company’s stock price at the RSU vesting dates resulting in increased tax deductions for the Company. This benefit reduced the effective tax rate by 53.5% and 35.1% for the three months ended March 31, 2025 and 2024 respectively, with the impact varying in prior years.

Current wording

The Company recorded an income tax provision of $0.8 million for the six months ended June 30, 2025 compared to $2.1 million for the six months ended June 30, 2024. The effective tax rate was 4.2% and 13.2% for the six months ended June 30, 2025 and 2024, respectively. The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate period-over-period was primarily due to state income taxes, tax credits, other permanent adjustments and discrete tax items. In particular, the Company’s effective rate for the six months ended June 30, 2025 and 2024 were materially impacted by “excess tax benefits on stock-based compensation” recognized discretely during the first quarter of each year as a result of the Company’s stock price at the RSU vesting dates resulting in increased tax deductions for the Company. This benefit reduced the effective tax rate by 53.5% and 35.1% for the three months ended March 31, 2025 and 2024 respectively, with the impact varying in prior years.

Previous wording

The Company's ODR backlog as of March 31, 2025 was $249.0 million compared to $225.3 million as of December 31, 2024. These amounts reflect unrecognized revenue expected to be recognized over the remaining terms of its service contracts and projects. Based on historical trends, the Company currently estimates that 87% of its ODR backlog as of March 31, 2025 will be recognized as revenue over the remainder of 2025. The Company believes its ODR backlog increased due to its continued focus on the accelerated growth of its ODR business.

Current wording

The Company's ODR backlog as of June 30, 2025 was $233.1 million compared to $225.3 million as of December 31, 2024. These amounts reflect unrecognized revenue expected to be recognized over the remaining terms of its service contracts and projects. Based on historical trends, the Company currently estimates that 65% of its ODR backlog as of June 30, 2025 will be recognized as revenue over the remainder of 2025. The Company believes its ODR backlog increased due to its continued focus on the accelerated growth of its ODR business.

Previous wording

The Company's GCR backlog as of March 31, 2025 was $120.2 million compared to $140.0 million at December 31, 2024. Projects are brought into backlog once the Company has been provided a written confirmation of award and the contract value has been established. At any point in time, the Company has a substantial volume of projects that are specifically identified and advanced in negotiations and/or documentation, however those projects are not booked as backlog until the Company has received written confirmation from the owner or the general contractor / construction manager of their intention to award it the contract and they have directed the Company to begin engineering, designing, incurring construction labor costs or procuring needed equipment and material. The Company’s GCR projects tend to be built over a 12- to 24-month schedule depending upon scope and complexity. Most major projects have a preconstruction planning phase which may require months of planning before actual construction commences. The Company is occasionally employed to deliver a “fast-track” project, where construction commences as the preconstruction planning work continues. As work on the Company’s projects progress, it increases or decreases backlog to take into account its estimate of the effects of changes in estimated quantities, changes in conditions, change orders and other variations from initially anticipated contract revenue, and the percentage of completion of the Company’s work on the projects. Based on historical trends, the Company currently estimates that 63% of its GCR backlog as of March 31, 2025 will be recognized as revenue over the remainder of 2025. Additionally, the reduction in GCR backlog has been intentional as the Company looks to focus on higher margin projects than it has done historically, as well as its focus on smaller, higher margin owner direct projects.

Current wording

The Company's GCR backlog as of June 30, 2025 was $99.5 million compared to $140.0 million at December 31, 2024. Projects are brought into backlog once the Company has been provided a written confirmation of award and the contract value has been established. At any point in time, the Company has a substantial volume of projects that are specifically identified and advanced in negotiations and/or documentation, however those projects are not booked as backlog until the Company has received written confirmation from the owner or the general contractor / construction manager of their intention to award it the contract and they have directed the Company to begin engineering, designing, incurring construction labor costs or procuring needed equipment and material. The Company’s GCR projects tend to be built over a 12- to 24-month schedule depending upon scope and complexity. Most major projects have a preconstruction planning phase which may require months of planning before actual construction commences. The Company is occasionally employed to deliver a “fast-track” project, where construction commences as the preconstruction planning work continues. As work on the Company’s projects progress, it increases or decreases backlog to take into account its estimate of the effects of changes in estimated quantities, changes in conditions, change orders and other variations from initially anticipated contract revenue, and the percentage of completion of the Company’s work on the projects. Based on historical trends, the Company currently estimates that 49% of its GCR backlog as of June 30, 2025 will be recognized as revenue over the remainder of 2025. Additionally, the reduction in GCR backlog has been intentional as the Company looks to focus on higher margin projects than it has done historically, as well as its focus on smaller, higher margin owner direct projects.

Previous wording

The Company is closely monitoring evolving macroeconomic conditions and heightened geopolitical risks. During the first quarter of 2025, there was a marked increase in economic and trade policy uncertainty globally. Rising trade tensions and changes to trade policy could adversely impact global growth and contribute to inflationary pressures. Global conflicts, tariffs, labor disruptions, and regulations continue to generate volatility in markets and can contribute to supply chain vulnerabilities and pricing fluctuations. The Company remains proactive in its collaboration with suppliers to mitigate potential shortages and reduce supply and price volatility. The Company anticipates a higher level of uncertainty with respect to inflation and other macroeconomic trends.

Current wording

The Company is closely monitoring evolving macroeconomic conditions and heightened geopolitical risks. During the first half of 2025, there was a marked increase in economic and trade policy uncertainty globally. Rising trade tensions and changes to trade policy could adversely impact global growth and contribute to inflationary pressures. Global conflicts, tariffs, labor disruptions, and regulations continue to generate volatility in markets and can contribute to supply chain vulnerabilities and pricing fluctuations. The Company remains proactive in its collaboration with suppliers to mitigate potential shortages and reduce supply and price volatility. The Company anticipates a higher level of uncertainty with respect to inflation and other macroeconomic trends for the foreseeable future.

Previous wording

In focusing on improved profitability and generating quality growth in its operation, the Company has dedicated and continues to dedicate, its resources toward the growth of its ODR segment as the scope of offerings provided within the Company’s ODR segment typically yield higher margins when compared to its GCR segment work. During fiscal year 2023, the Company eclipsed its ODR-related revenue target, generating a 50/50 segment revenue mix. For 2024, the Company further expanded its growth within the ODR segment where it generated 66.6% of total consolidated revenue, achieving its 2024 ODR segment revenue target of 65-70%. The Company believes it maintains a disciplined approach, capable of providing a full life-cycle of engineered solutions and craft expertise enabling it to be a one-stop-shop for building owners. The Company continues to make investments to expand its ODR revenue by increasing the value it can offer to building owners and continues to evaluate areas in which it could expand the breadth of its offerings to better serve its customers. In addition, the Company continues to expand its owner-direct offerings to include other digital solutions to manage and monitor the performance of building systems, including data analytics, energy consumption and sustainability. These services allow the Company to develop new revenue streams, leveraging its professional services capabilities to support multi-location regional and national customers in core end-markets, and to drive energy retrofit and performance optimization projects for building owners.

Current wording

In focusing on improved profitability and generating quality growth in its operation, the Company has dedicated and continues to dedicate, its resources toward the growth of its ODR segment as the scope of offerings provided within the Company’s ODR segment typically yield higher margins when compared to its GCR segment work. During fiscal year 2023, the Company eclipsed its ODR-related revenue target, generating a 50/50 segment revenue mix. For 2024, the Company further expanded its growth within the ODR segment where it generated 66.6% of total consolidated revenue, achieving its 2024 ODR segment revenue target of 65-70%. Through the first half of 2025, the Company's ODR segment increased as a percentage of total consolidated revenue to 72.4%, which is currently in line with its 2025 target of 70%-80%. The Company believes it maintains a disciplined approach, capable of providing a full life-cycle of engineered solutions and craft expertise enabling it to be a one-stop-shop for building owners. The Company continues to make investments to expand its ODR revenue by increasing the value it can offer to building owners and continues to evaluate areas in which it could expand the breadth of its offerings to better serve its customers. In addition, the Company continues to expand its owner-direct offerings to include other digital solutions to manage and monitor the performance of building systems, including data analytics, energy consumption and sustainability. These services allow the Company to develop new revenue streams, leveraging its professional services capabilities to support multi-location regional and national customers in core end-markets, and to drive energy retrofit and performance optimization projects for building owners.

Previous wording

Additionally, the Company believes that it can further increase its cash flow and operating income by acquiring strategically synergistic companies that will increase the Company’s geographic footprint, supplement the Company’s current business model, address capability gaps and enhance the breadth of its offerings to better serve its customers. The Company has dedicated and continues to dedicate its resources to seek opportunities to acquire and integrate businesses that have attractive market positions, supports the Company’s ODR growth strategy, expands and/or supplements the Company’s current breadth of offerings and is culturally compatible. See Note 3 for further information on the Company’s most recent acquisition activity.

Current wording

Additionally, the Company believes that it can further increase its cash flow and operating income by acquiring strategically synergistic companies that will increase the Company’s geographic footprint, supplement the Company’s current business model, address capability gaps and enhance the breadth of its offerings to better serve its customers. The Company has dedicated and continues to dedicate its resources to seek opportunities to acquire and integrate businesses that have attractive market positions, supports the Company’s ODR growth strategy, expands and/or supplements the Company’s current breadth of offerings and is culturally compatible. As discussed in Note 15, on July 1, 2025, the Company completed an acquisition of Woodbury, Minnesota-based mechanical contractor, PPI, which is a provider of industrial and institutional mechanical solutions serving healthcare, food, power/utility, oil refining and other select end markets in the Greater Twin Cities region and Upper Midwest. PPI serves owners of mission critical facilities and leverages exceptional industrial piping, HVAC and plumbing capabilities to execute complex facility shutdowns and turnarounds, capital projects, facility expansions, renovation and retrofit opportunities, and reoccurring industrial maintenance services. The acquisition of PPI aligns the Company's ODR-centric focus, and further expands the Company's footprint in the core Midwest region and extends its reach into new geographic markets in the Upper Midwest. In addition, see Note 3 for further information on the Company’s most recent acquisition activity.

Previous wording

The prices of products such as steel, pipe, copper and equipment from manufacturers are subject to fluctuation and increases. It is difficult to accurately measure the impact of inflation, tariffs and price escalation due to the imprecise nature of the estimates required. However, these effects are, at times, material to the Company’s results of operations and financial condition. During 2024, the Company experienced higher cost of materials on specific projects and delays in its supply chain for equipment and service vehicles from the manufacturers. When appropriate, the Company includes cost escalation factors into its bids and proposals, and limits the acceptance time of its bid. In addition, the Company is often able to mitigate the impact of future price increases by entering into fixed price purchase orders for materials and equipment and subcontracts on its projects.

Current wording

The prices of products such as steel, pipe, copper and equipment from manufacturers are subject to fluctuation and increases. It is difficult to accurately measure the impact of inflation, tariffs and price escalation due to the imprecise nature of the estimates required. However, these effects are, at times, material to the Company’s results of operations and financial condition. The Company has at times experienced higher cost of materials on specific projects and delays in its supply chain for equipment and service vehicles from the manufacturers. When appropriate, the Company includes cost escalation factors into its bids and proposals, and limits the acceptance time of its bid. In addition, the Company is often able to mitigate the impact of future price increases by entering into fixed price purchase orders for materials and equipment and subcontracts on its projects. Notwithstanding these efforts, if the Company experiences significant disruptions to its supply chain, it may need to delay certain projects that would otherwise be accretive to its business, and this may also impact the conversion rate of its current backlog into revenue.

Previous wording

In February 2025, the United States government imposed new import tariffs, including duties on steel and aluminum. The higher cost of imported steel and aluminum has prompted domestic suppliers to raise their own prices for these inputs. These tariffs, along with any additional duties or trade restrictions that may be enacted by the United States or other countries, could increase costs, alter competitive dynamics and reduce the availability of steel, aluminum, resins and other imported components and materials. Because the Company’s ODR segment typically operates on a short sales cycle, it can often pass cost increases on to the customers; however, the Company may be unable to offset all price increases or to secure adequate alternative sources of supply in a timely manner. Although retaliatory tariffs imposed by other countries on the United States have not yet had a material impact, future developments are uncertain, and the ultimate effect of current or future tariffs on the Company cannot be quantified at this time. Currently the environment related to both domestic and foreign tariffs is fluid and evolving and it is likely that such matters will continue to develop. Given that these matters have been hard to anticipate and are continuing to evolve it is not practical for the Company to predict what, if any, impact these matters may have on the Company in the near and long term but as those matters develop it is possible that the imposition of tariffs and similar matters may impact the Company, and in some cases in material ways.

Current wording

The Company continues to monitor recent and potential future developments in U.S. trade policy, particularly the imposition of tariffs on imported steel and aluminum products under Section 232 of the Trade Expansion Act of 1962. In 2025, the U.S. government announced and implemented several rounds of increased tariffs on steel and aluminum imports, including raising tariffs to 50% on certain products, as well as expanding the scope of coverage to include components and derivative goods. The higher cost of imported steel and aluminum has prompted domestic suppliers to raise their own prices for these inputs. These tariffs, along with any additional duties or trade restrictions that may be enacted by the United States or other countries, could increase costs, alter competitive dynamics and reduce the availability of steel, aluminum, resins and other imported components and materials. Because the Company’s ODR segment typically operates on a short sales cycle, it can often pass cost increases on to the customers; however, the Company may be unable to offset all price increases or to secure adequate alternative sources of supply in a timely manner. Although retaliatory tariffs imposed by other countries on the United States have not yet had a material impact, future developments are uncertain, and the ultimate effect of current or future tariffs on the Company cannot be quantified at this time. Currently the environment related to both domestic and foreign tariffs is fluid and evolving and it is likely that such matters will continue to develop. Given that these matters have been hard to anticipate and are continuing to evolve it is not practical for the Company to predict what, if any, impact these matters may have on the Company in the near and long term but as those matters develop it is possible that the imposition of tariffs and similar matters may impact the Company, and in some cases in material ways.

Previous wording

The Company's existing current backlog is projected to provide considerable coverage of forecasted revenue for one year from the date of the financial statement issuance. In addition to the Company's backlog, it has a substantial amount of contracts with short lead times that book-and-bill within the same reporting period and are not included in backlog. The Company's current cash balance, together with cash it expects to generate from future operations along with borrowings available under its credit facility, are expected to be sufficient to finance its short- and long-term capital requirements (or meet working capital requirements) for at least the next twelve months. In addition to the future operating cash flows of the Company, along with its existing borrowing availability and access to financial markets, the Company currently believes it will be able to meet any working capital and future operating requirements, and capital investment forecast opportunities for at least the next twelve months.

Current wording

The Company's existing current backlog is projected to provide considerable coverage of forecasted revenue for one year from the date of the financial statement issuance. In addition to the Company's backlog, the Company has a substantial amount of contracts with short lead times that book-and-bill within the same reporting period and are not included in backlog. The Company's current cash balance, together with the cash it expects to generate from future operations along with borrowings available under its credit facility, are expected to be sufficient to finance its short- and long-term capital requirements (or meet working capital requirements) for at least the next twelve months. In addition to the future operating cash flows of the Company, along with its existing borrowing availability and access to financial markets, the Company currently believes it will be able to meet any working capital and future operating requirements, and capital investment forecast opportunities for at least the next twelve months.

Previous wording

During the three months ended March 31, 2025, the Company generated $2.2 million in cash for its operating activities, which consisted of net income of $10.2 million and certain non-cash adjustments of $5.1 million, partly offset by cash used in working capital of $13.0 million. During the three months ended March 31, 2024, the Company used $3.9 million from its operating activities, which consisted of cash used in working capital of $16.2 million, partly offset by non-cash adjustments of $4.7 million and net income for the period of $7.6 million.

Current wording

During the six months ended June 30, 2025, the Company generated $4.2 million in cash for its operating activities, which consisted of net income of $18.0 million and certain non-cash adjustments of $14.1 million, partly offset by cash used in working capital of $27.9 million. During the six months ended June 30, 2024, the Company generated $12.6 million from its operating activities, which consisted of net income of $13.5 million and certain non-cash adjustments of $11.4 million, partly offset by cash used in working capital of $12.4 million.

Previous wording

The increase in operating cash flows during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily attributable to a $8.1 million period-over-period cash inflow related to the change in accounts payable, including retainage, which was due to the timing of cash payments and a $7.0 million period-over-period cash inflow related to the change in accounts receivable, which was due to the timing of cash receipts. These cash inflows were partially offset by a $5.5 million cash outflow related to the aggregate change in the Company's contract assets and liabilities and a $3.7 million cash outflow related to accrued expenses and other current liabilities.

Current wording

The decrease in operating cash flows during the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily attributable to an $18.8 million period-over-period cash outflow related to the aggregate change in the Company's contract assets and liabilities due to the timing of billings that impacted changes in working capital and a $7.3 million cash outflow related to accrued expenses and other current liabilities. These cash outflows were partially offset by a $4.4 million period-over-period increase in net income, a $6.8 million period-over-period cash inflow related to the change in accounts payable, including retainage, which was due to the timing of cash payments and a $6.0 million period-over-period cash inflow related to the change in accounts receivable, which was due to the timing of cash receipts.

Previous wording

Cash flows used in investing activities were $1.9 million and $2.0 million for the three months ended March 31, 2025 and 2024, respectively. Cash used in investing activities for the three months ended March 31, 2025 included a cash outflow of $2.2 million related to the purchase of property and equipment, which was primarily associated with the purchase of certain rental equipment to expand customer offerings. These cash outflows were partially offset by $0.3 million in proceeds from the sale of property and equipment. Cash used in investing activities for the three months ended March 31, 2024 included a cash outflow of $2.5 million related to the purchase of property and equipment, which was primarily associated with the purchase of certain rental equipment to expand customer offerings, partially offset by $0.6 million in proceeds from the sale of property and equipment.

Current wording

Cash flows used in investing activities were $2.2 million and $5.2 million for the six months ended June 30, 2025 and 2024, respectively. Cash used in investing activities for the six months ended June 30, 2025 included a cash outflow of $3.1 million related to the purchase of property and equipment, which was primarily associated with the purchase of certain rental equipment to expand customer offerings. These cash outflows were partially offset by $0.9 million in proceeds from the sale of property and equipment. Cash used in investing activities for the six months ended June 30, 2024 included a $5.8 million cash outflow related to the purchase of property and equipment, which was primarily associated with the purchase of certain rental equipment to expand customer service offerings, partially offset by $0.6 million in proceeds from the sale of property and equipment.

Previous wording

Cash flows used in financing activities were $7.2 million for the three months ended March 31, 2025 compared to $5.7 million for the three months ended March 31, 2024. During the three months ended March 31, 2025, the Company paid approximately $10.7 million in taxes related to the net share settlement of equity awards, $0.9 million for payments on finance leases and made a $3.0 million payment to the former owner of Industrial Air related to the First IA Earnout Period, of which $2.3 million was recognized as a cash outflow from financing activities. These cash financing outflows were partially offset by proceeds of $6.3 million associated with the sale of shares to satisfy employee tax withholding requirements and $0.3 million associated with proceeds from employee contributions to the ESPP.

Current wording

Cash flows used in financing activities were $8.1 million for the six months ended June 30, 2025 compared to $7.6 million for the six months ended June 30, 2024. During the six months ended June 30, 2025, the Company paid approximately $10.7 million in taxes related to the net share settlement of equity awards, $1.8 million for payments on finance leases and made a $3.0 million payment to the former owner of Industrial Air related to the First IA Earnout Period, of which $2.3 million was recognized as a cash outflow from financing activities. These cash financing outflows were partially offset by proceeds of $6.3 million associated with the sale of shares to satisfy employee tax withholding requirements and $0.4 million associated with proceeds from employee contributions to the ESPP.

Previous wording

During the three months ended March 31, 2024, the Company paid approximately $5.2 million in taxes related to net share settlement of equity awards and $0.7 million for payments on finance leases. These cash financing outflows were partially offset by $0.2 million associated with proceeds from contributions to the ESPP.

Current wording

During the six months ended June 30, 2024, the Company paid approximately $5.2 million in taxes related to the net share settlement of equity awards, $1.4 million for payments on finance leases and made a $3.0 million payment to the former owners of JMLLC and CSLLC related to the 2023 Earnout Period, of which $1.3 million was recognized as a cash outflow from financing activities. These cash financing outflows were partially offset by $0.3 million associated with proceeds from employee contributions to the ESPP.

Previous wording

(1) The Company considers all highly liquid investments purchased with a maturity of 90 days or less on the date of purchase to be cash equivalents. Cash equivalents as of March 31, 2025 consisted of certain overnight repurchase agreements and money market investments.

Current wording

(1) The Company considers all highly liquid investments purchased with a maturity of 90 days or less on the date of purchase to be cash equivalents. Cash equivalents as of June 30, 2025 consisted of certain overnight repurchase agreements.

Previous wording

Management continued to devote additional resources to its billing and collection efforts during the three months ended March 31, 2025. Management continues to expect that growth in our ODR business, which is less sensitive to the cash flow issues presented by large GCR projects, should positively impact our cash flow trends.

Current wording

Management continued to devote additional resources to its billing and collection efforts during the six months ended June 30, 2025. Management continues to expect that growth in our ODR business, which is less sensitive to the cash flow issues presented by large GCR projects, should positively impact our cash flow trends.

Previous wording

Provided that the Company’s lenders continue to provide working capital funding, the Company believes based on its current forecast that its current cash and cash equivalents of $38.1 million as of March 31, 2025, cash payments to be received from existing and new customers, and availability of borrowing under the Second A&R Wintrust Revolving Loan (pursuant to which we had $34.9 million of availability as of March 31, 2025) will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months.

Current wording

Provided that the Company’s lenders continue to provide working capital funding, the Company believes based on its current forecast that its current cash and cash equivalents of $38.9 million as of June 30, 2025, cash payments to be received from existing and new customers, and availability of borrowing under the Second A&R Wintrust Revolving Loan (pursuant to which we had $84.9 million of availability as of June 30, 2025) will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months.

Previous wording

In connection with its business, the Company is occasionally required to provide various types of surety bonds that provide an additional measure of security to its customers for its performance under certain government and private sector contracts. The Company’s ability to obtain surety bonds depends upon its capitalization, working capital, past performance, management expertise and external factors, including the capacity of the overall surety market. Surety companies consider such factors in light of the amount of the Company’s backlog that it has currently bonded and their current underwriting standards, which may change from time-to-time. The bonds, if any, the Company provides typically reflect the contract value. As of March 31, 2025 and December 31, 2024, the Company had approximately $113.0 million and $109.3 million in surety bonds outstanding, respectively. The Company believes that its $800.0 million bonding capacity provides us with a significant competitive advantage relative to many of our competitors which we believe have limited bonding capacity. See Note 13 for further discussion.

Current wording

In connection with its business, the Company is occasionally required to provide various types of surety bonds that provide an additional measure of security to its customers for its performance under certain government and private sector contracts. The Company’s ability to obtain surety bonds depends upon its capitalization, working capital, past performance, management expertise and external factors, including the capacity of the overall surety market. Surety companies consider such factors in light of the amount of the Company’s backlog that it has currently bonded and their current underwriting standards, which may change from time-to-time. The bonds, if any, the Company provides typically reflect the contract value. As of June 30, 2025 and December 31, 2024, the Company had approximately $107.3 million and $109.3 million in surety bonds outstanding, respectively. The Company believes that its $1 billion bonding capacity provides us with a significant competitive advantage relative to many of our competitors which we believe have limited bonding capacity. See Note 13 for further discussion.