Limbach Holdings, Inc.

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 1,300 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.

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 1,700 team members in 21 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

Selling, general and administrative (“SG&A”) expenses consist primarily of personnel costs for the Company's administrative, estimating, human resources, safety, information technology, legal, finance and accounting team members and executives. Also included in SG&A expenses are non-personnel costs, such as travel-related expenses, legal and other professional fees and other corporate expenses to support the growth of the Company's business and to meet the compliance requirements associated with operating as a public company. Those costs include accounting, human resources, information technology, legal personnel, additional consulting, legal and audit fees, insurance costs, Board of Directors’ compensation and the costs of achieving and maintaining compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

Current wording

Selling, general and administrative (“SG&A”) expenses consist primarily of personnel costs for the Company's administrative, estimating, human resources, safety, information technology, legal, finance and accounting team members and executives. Also included in SG&A expenses are non-personnel costs, such as travel-related expenses, legal and other professional fees and other corporate expenses to support the growth of the Company's business and to meet the compliance requirements associated with operating as a public company. Those costs include additional consulting, legal and audit fees, insurance costs, Board of Directors’ compensation and the costs of achieving and maintaining compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

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. 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

Certain of the Company's prior acquisitions include contingent earnout arrangements in which the Company may be required to make additional payments contingent upon the acquired businesses achieving specified performance targets over specified periods. 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 on the Company's contingent earnout arrangements.

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. 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, Consolidated Mechanical and Pioneer Power-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

In order to provide a more meaningful period-over-period discussion of the Company’s operating results, the Company may discuss amounts generated or incurred (revenues, gross profit, selling, general and administrative expenses, and operating income) from companies acquired. The amounts discussed reflect the acquired companies’ operating results in the current reported period only for the time period these entities were not owned by the Company in the comparable prior reported period.

Current wording

In order to provide a more meaningful period-over-period discussion of the Company’s operating results, the Company may discuss amounts generated or incurred (revenues, gross profit, selling, general and administrative expenses, and operating income) from companies acquired. The amounts discussed reflect the acquired companies’ operating results in the current reported period only for the time period these entities were not owned by the Company in the comparable prior reported period. As a result, period-over-period comparisons may not be fully indicative of ongoing trends in our operating performance.

Previous wording

On December 2, 2024, the Company completed an acquisition of Owensboro, Kentucky-based specialty mechanical contractor, Consolidated Mechanical, for a purchase price at closing of $23.0 million. The transaction also provided for an earnout of up to $2.0 million potentially being paid out over 2026 and 2027. Consolidated Mechanical serves the heavy industrial, power and commercial markets. Consolidated Mechanical is a premier provider of mechanical, millwright, steel fabrication, plumbing construction, maintenance, and outage services to owners of complex process systems in the industrial sector. The acquisition extends the Company’s reach into the industrial sector, with new exposure to the power generation, food processing, manufacturing, and metal markets in Kentucky, Illinois and Michigan.

Current wording

On December 2, 2024, the Company completed an acquisition of Owensboro, Kentucky-based specialty mechanical contractor, Consolidated Mechanical, LLC (“Consolidated Mechanical”), for a purchase price at closing of $23.0 million. The transaction also provided for an earnout of up to $2.0 million potentially being paid out over 2026 and 2027. Consolidated Mechanical serves the heavy industrial, power and commercial markets. Consolidated Mechanical is a premier provider of mechanical, millwright, steel fabrication, plumbing construction, maintenance, and outage services to owners of complex process systems in the industrial sector. The acquisition extends the Company’s reach into the industrial sector, with new exposure to the power generation, food processing, manufacturing, and metal markets in Kentucky, Illinois and Michigan.

Previous wording

On September 3, 2024, the Company completed an acquisition of Laurel, MD-based specialty mechanical contractor, Kent Island Mechanical, for a purchase price at closing of $15.0 million. The transaction also provided for an earnout of up to $5.0 million potentially being paid out over 2025 and 2026. Kent Island is a leading provider of building systems solutions in the Greater Washington, DC metro area, including suburban Maryland and Northern Virginia. Kent Island excels in designing, engineering, installing, servicing, and maintaining mechanical and plumbing systems for complex facilities. The acquisition expands the Company’s market share within its existing operating footprint, provides further exposure to an attractive customer base and supports the Company's continued ODR growth strategy.

Current wording

On September 3, 2024, the Company completed an acquisition of Laurel, MD-based specialty mechanical contractor, Kent Island Mechanical, LLC (“Kent Island”), for a purchase price at closing of $15.0 million. The transaction also provided for an earnout of up to $5.0 million potentially being paid out over 2025 and 2026. Kent Island is a leading provider of building systems solutions in the Greater Washington, DC metro area, including suburban Maryland and Northern Virginia. Kent Island excels in designing, engineering, installing, servicing, and maintaining mechanical and plumbing systems for complex facilities. The acquisition expands the Company’s market share within its existing operating footprint, provides further exposure to an attractive customer base and supports the Company's continued ODR growth strategy.

Previous 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.

Current wording

(3)Included within selling, general and administrative expenses was $1.9 million and $1.6 million of non-cash stock-based compensation expense for the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Revenue for the six months ended June 30, 2025 increased by $34.1 million, or 14.2%, compared to the six months ended June 30, 2024. ODR revenue increased by $42.3 million, or 27.0%, while GCR revenue decreased by $8.2 million, or 9.7%. 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 six months ended June 30, 2024.

Current wording

GCR revenue for the three months ended September 30, 2025 increased by $2.3 million, or 5.6%, to $43.2 million, compared to $40.9 million for the three months ended September 30, 2024. The increase in period-over-period GCR segment revenue was primarily associated with the operations of Pioneer Power and Kent Island, partially offset by the Company's continued focus on the execution of its mix-shift strategy to ODR. These acquisitions contributed approximately $10.3 million in GCR revenue in the current period.

Previous wording

The Company's gross profit for the three months ended June 30, 2025 increased by $6.3 million, or 18.9%, compared to the three months ended June 30, 2024. ODR gross profit increased $6.2 million, or 24.6%, due to an increase in revenue despite slightly lower segment margins of 29.0% versus 30.6% resulting from certain ODR-related project write-ups recognized in the second quarter 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 $0.1 million, or 1.1%, due to higher segment margins of 24.7% compared to 20.6% on project work period-over-period, despite lower revenue and certain GCR-related project write-ups recognized in the second quarter of 2024 that did not recur in the current period. The total gross profit percentage increased from 27.4% for the three months ended June 30, 2024 to 28.0% 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 three months ended September 30, 2025 increased by $8.6 million, or 23.7%, compared to the three months ended September 30, 2024. ODR gross profit increased $6.0 million, or 20.3%, due to an increase in revenue despite lower segment margins of 25.2% versus 31.9%. The decrease in ODR segment margins was primarily attributable to the impact of Pioneer Power, which operates at a lower gross margin profile relative to the Company’s legacy ODR operations. Management is focused on aligning the acquired Pioneer Power operations with the Company’s broader operating model to improve profitability over time. GCR gross profit increased $2.5 million, or 39.3%, due to an increase in revenue and higher segment margins of 20.8% compared to 15.8% period-over-period. The total gross profit percentage decreased from 27.0% for the three months ended September 30, 2024 to 24.2% for the same period ended in 2025, mainly driven by the decrease in ODR gross margins due to the lower gross margin profile of Pioneer Power, which was also partially offset by the Company continuing to be more selective when pursuing GCR work.

Previous wording

The Company's SG&A expense for the three months ended June 30, 2025 increased by approximately $3.5 million, or 14.9%, compared to the three months ended June 30, 2024. The Company’s SG&A expense for the three months ended June 30, 2025 increased primarily due to a $1.7 million increase in professional services fees including those incurred with the successful acquisition of Pioneer Power, Inc. (“PPI”) on July 1, 2025, a $1.6 million increase in payroll related expenses, and a $0.1 million increase in non-cash stock-based compensation 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 June 30, 2024. Although SG&A expense increased period-over-period, SG&A expense as a percentage of revenue decreased to 18.7% for the three months ended June 30, 2025 as compared to 19.0% for the three months ended June 30, 2024.

Current wording

The Company's SG&A expense for the three months ended September 30, 2025 increased by approximately $4.6 million, or 19.3%, compared to the three months ended September 30, 2024. The Company’s SG&A expense for the three months ended September 30, 2025 increased primarily due to a $2.3 million increase in payroll related expenses, a $1.5 million aggregate increase in SG&A-related expenses associated with Pioneer Power and Consolidated Mechanical, and a $0.4 million increase in non-cash stock-based compensation expenses. Pioneer Power and Consolidated Mechanical were not acquired entities of the Company during the three months ended September 30, 2024. Although SG&A expense increased period-over-period, SG&A expense as a percentage of revenue decreased to 15.3% for the three months ended September 30, 2025 as compared to 17.7% for the three months ended September 30, 2024 primarily due to the increased revenue in the third quarter of 2025 as a result of the Pioneer Power acquisition.

Previous 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.

Current wording

Total amortization expense for the three months ended September 30, 2025 and 2024 was $2.4 million and $0.9 million, respectively. The period-over-period increase in amortization expense was a result of the Pioneer Power and Consolidated Mechanical acquisitions, which resulted in higher amortization expense in the current year period as the related intangible assets from the acquisitions were not included in the prior-year comparative period. 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 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.

Current wording

Total other expenses for the three months ended September 30, 2025 increased approximately $0.8 million as compared to the three months ended September 30, 2024. The change period-over-period was primarily driven by a $0.8 million increase in interest expense related to greater borrowings under the Company’s revolving credit facility and higher financing costs associated with a larger vehicle fleet period-over-period, as well as a $0.5 million decrease in interest income due to reduced cash and cash equivalent balances period-over-period and lower yields on invested balances. Partially offsetting these changes was a $0.3 million increase in gains associated with the disposition of certain property and equipment as part of the Company’s ongoing asset management and fleet optimization efforts and a lower loss recognized in connection with the change in fair value of the Company's interest rate swap arrangement.

Previous wording

The Company recorded an income tax provision of $3.0 million for the three months ended June 30, 2025 compared to $2.4 million for the three months ended June 30, 2024. The effective tax rate was 27.9% and 28.7% for the three 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.

Current wording

The Company recorded an income tax provision of $3.8 million for the three months ended September 30, 2025 compared to $3.4 million for the three months ended September 30, 2024. The effective tax rate was 30.0% and 31.2% for the three months ended September 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.

Previous wording

Comparison of Results of Operations for the six months ended June 30, 2025 and 2024

Current wording

Comparison of Results of Operations for the nine months ended September 30, 2025 and 2024

Previous wording

The following table presents operating results for the six months ended June 30, 2025 and 2024 in dollars and expressed as a percentage of total revenue (except as indicated below), as compared below:

Current wording

The following table presents operating results for the nine months ended September 30, 2025 and 2024 in dollars and expressed as a percentage of total revenue (except as indicated below), as compared below:

Previous wording

(3)Included within selling, general and administrative expenses was $3.2 million and $2.7 million of non-cash stock-based compensation expense for the six months ended June 30, 2025 and 2024, respectively.

Current wording

(3)Included within selling, general and administrative expenses was $5.2 million and $4.3 million of non-cash stock-based compensation expense for the nine months ended September 30, 2025 and 2024, respectively.

Previous 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.

Current wording

GCR revenue for the nine months ended September 30, 2025 decreased by $5.9 million, or 4.7%, to $119.2 million, compared to $125.1 million for the nine months ended September 30, 2024. 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 and Pioneer Power. These acquisitions contributed approximately $21.4 million in GCR in the current period.

Previous 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.

Current wording

The Company's gross profit for the nine months ended September 30, 2025 increased by $20.5 million, or 20.4%, compared to the nine months ended September 30, 2024. ODR gross profit increased $16.3 million, or 21.1%, due to an increase in revenue despite lower segment margins of 27.4% versus 30.9% resulting from certain ODR-related project write-ups recognized in 2024 that did not reoccur 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 $4.3 million, or 18.1%, due to higher margins on project work period-over-period despite lower revenue. The total gross profit percentage decreased slightly from 26.8% for the nine months ended September 30, 2024 to 26.4% for the same period ended in 2025, mainly driven by the decrease in ODR gross margins due to the lower gross margin profile of Pioneer Power which was also partially offset by the Company continuing to be more selective when pursuing GCR work.

Previous 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.

Current wording

The Company recorded revisions in its contract estimates for certain ODR and GCR projects. During the nine months ended September 30, 2025, the Company recorded material gross profit write-ups on two GCR projects for a total of $1.5 million that had a net gross profit impact of $0.5 million or more. The Company did not record any material gross profit write-downs that had a net gross profit impact of $0.5 million or more during the nine months ended September 30, 2025. During the nine months ended September 30, 2024, the Company recorded material gross profit write-ups on four ODR projects and two GCR projects for a total of $3.9 million and $1.5 million, respectively, and one GCR project gross profit write-down for a total of $0.6 million that had a net gross profit impact of $0.5 million or more.

Previous 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.

Current wording

The Company's SG&A expense for the nine months ended September 30, 2025 increased by approximately $11.7 million, or 16.7%, compared to the nine months ended September 30, 2024. The Company’s SG&A expense for the nine months ended September 30, 2025 mainly increased due to a $5.1 million increase in payroll related expenses, an aggregate $2.5 million increase in SG&A-related expenses associated with certain entities that were acquired in the second half of 2024 and mid-2025 for which there is no comparable period results, a $1.8 million increase in professional services fees including those incurred with the successful acquisition of Pioneer Power on July 1, 2025, a $0.8 million increase in non-cash stock-based compensation expenses and a $0.3 million increase in travel and entertainment related expenses. Although SG&A expense increased period-over-period, SG&A expense as a percentage of revenue decreased to 17.7% for the nine months ended September 30, 2025 as compared to 18.6% for the nine months ended September 30, 2024 primarily due to the increased revenue in the third quarter of 2025 as a result of the Pioneer Power acquisition.

Previous wording

Total amortization expense for the six months ended June 30, 2025 and 2024 was $3.6 million and $2.1 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 six months ended June 30, 2025. 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 nine months ended September 30, 2025 and 2024 was $6.0 million and $3.0 million, respectively. The period-over-period increase in amortization expense was a result of the Pioneer Power, Consolidated Mechanical and Kent Island acquisitions, which resulted in higher amortization expense in the current year period as the related intangible assets from the acquisitions were not included in, or were included for only a portion of, the prior-year comparative period. 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 six months ended June 30, 2025 was approximately $0.2 million as compared to $0.9 million for the six months ended June 30, 2024. The change period-over-period was primarily driven by a $0.4 million decrease in interest income due to reduced cash and cash equivalent balances period-over-period and lower yields on invested balances, a $0.2 million increase in interest expense related to higher financing costs associated with a larger vehicle fleet period-over-period and a current period loss recognized in connection with the change in fair value of the Company's interest rate swap arrangement. Partially offsetting these changes was a $0.2 million increase in gains associated with the disposition of certain property and equipment related to increased asset sales during the current period.

Current wording

Total other expenses for the nine months ended September 30, 2025 was approximately $0.6 million as compared to total other income of $0.9 million for the nine months ended September 30, 2024. The change period-over-period was primarily driven by a $0.9 million increase in interest expense related to greater borrowings under the Company’s revolving credit facility and higher financing costs associated with a larger vehicle fleet period-over-period, as well as a $0.9 million decrease in interest income due to reduced cash and cash equivalent balances period-over-period and lower yields on invested balances. Partially offsetting these changes was a $0.5 million increase in gains associated with the disposition of certain property and equipment as part of the Company’s ongoing asset management and fleet optimization efforts.

Previous 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.

Current wording

The Company recorded an income tax provision of $4.5 million for the nine months ended September 30, 2025 compared to $5.5 million for the nine months ended September 30, 2024. The effective tax rate was 14.5% and 20.6% for the nine months ended September 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 nine months ended September 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 refers to its estimated revenue on uncompleted contracts, including the amount of revenue on contracts for which work has not begun, less the revenue it had recognized under such contracts, as “backlog.” Backlog includes unexercised contract options. The Company’s backlog includes projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions. Additionally, the difference between the Company’s backlog and remaining performance obligations is due to the portion of unexercised contract options that are excluded, under certain contract types, from the Company’s remaining performance obligations as these contracts can be canceled for convenience at any time by the Company or the customer without considerable cost incurred by the customer. 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. Additional information related to the Company’s remaining performance obligations is provided in Note 4.

Current wording

The Company refers to its estimated revenue on uncompleted contracts, including the amount of revenue on contracts for which work has not begun, less the revenue it had recognized under such contracts, as “backlog.” Backlog includes unexercised contract options. The Company’s backlog includes projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions. Additionally, the difference between the Company’s backlog and remaining performance obligations is due to the portion of unexercised contract options that are excluded, under certain contract types, from the Company’s remaining performance obligations as these contracts can be canceled for convenience at any time by the Company or the customer without considerable cost incurred by the customer. While backlog provides a measure of work expected to be performed in future periods, it is not necessarily a reliable indicator of future revenue or overall performance of the Company. A substantial portion of the Company’s contracts, particularly within its ODR operations, are short-cycle in nature and may be awarded and substantially completed within a short period following award. These projects typically have short lead times and rapid burn rates and, as a result, are generally not included in reported backlog. Consequently, fluctuations in reported backlog may not correlate with changes in overall market demand, revenue generation, or operational performance. Additional information related to the Company’s remaining performance obligations is provided in Note 4.

Previous 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.

Current wording

The Company's ODR backlog as of September 30, 2025 was $241.6 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 44% of its ODR backlog as of September 30, 2025 will be recognized as revenue over the remainder of 2025. The Company's ODR backlog increased due to its continued focus on the accelerated growth of its ODR business and as a result of backlog contributions resulting from the Pioneer Power Transaction.

Previous 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.

Current wording

The Company's GCR backlog as of September 30, 2025 was $121.2 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 31% of its GCR backlog as of September 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 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.

Current wording

The Company is closely monitoring evolving macroeconomic conditions and heightened geopolitical risks. During the first nine months 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

The Company focuses on creating value for building owners by developing long-term relationships and becoming an indispensable partner to building owners with mission-critical systems. For 2025, the key objectives of the Company’s strategy are to 1) improve profitability and generate quality growth in its operations by shifting to the ODR segment; 2) expand margins through evolved offerings, and 3) scale the business through acquisitions. To accomplish these objectives, the Company currently is executing the following initiatives:

Current wording

The Company focuses on creating value for building owners by developing long-term relationships and becoming an indispensable partner to building owners with mission-critical systems. For 2025, the key objectives of the Company’s strategy are and have been to i) improve profitability and generate quality growth in its operations by shifting to the ODR segment; ii) expand margins through evolved offerings, and iii) scale the business through acquisitions. To accomplish these objectives, the Company has been and currently is executing the following initiatives:

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%. 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.

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 nine months ended September 30, 2025, the Company's ODR segment increased as a percentage of total consolidated revenue to 74.1%, 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. 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.

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 3, on July 1, 2025, the Company completed an acquisition of Woodbury, Minnesota-based mechanical contractor, Pioneer Power, 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 of Minnesota and upper Midwest region. Pioneer Power 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 Pioneer Power 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 Company's cash flows are primarily impacted period to period by fluctuations in working capital. Factors such as the Company's contract mix, commercial terms, days sales outstanding (“DSO”) and delays in the start of projects may impact its working capital. In line with industry practice, the Company accumulates costs during a given month then bills those costs in the current month for many of its contracts. While labor costs associated with these contracts are paid weekly and salary costs associated with the contracts are paid bi-monthly, certain subcontractor costs are generally not paid until the Company receives payment from its customers (contractual “pay-if-paid” terms). The Company has not historically experienced a large volume of write-offs related to its receivables and contract assets. The Company regularly assesses its receivables for collectability and provides allowances for credit losses where appropriate. The Company believes that its reserves for its expected credit losses are appropriate as of June 30, 2025 and December 31, 2024, but adverse changes in the economic environment may impact certain of its customers’ ability to access capital and compensate the Company for its services, as well as impact project activity for the foreseeable future.

Current wording

The Company's cash flows are primarily impacted period to period by fluctuations in working capital. Factors such as the Company's contract mix, commercial terms, days sales outstanding (“DSO”) and delays in the start of projects may impact its working capital. In line with industry practice, the Company accumulates costs during a given month and then bills those costs in the current month for many of its contracts. While labor costs associated with these contracts are paid weekly and salary costs associated with the contracts are paid bi-monthly, certain subcontractor costs are generally not paid until the Company receives payment from its customers (contractual “pay-if-paid” terms). The Company has not historically experienced a large volume of write-offs related to its receivables and contract assets. The Company regularly assesses its receivables for collectability and provides allowances for credit losses where appropriate. The Company believes that its reserves for its expected credit losses are appropriate as of September 30, 2025 and December 31, 2024, but adverse changes in the economic environment may impact certain of its customers’ ability to access capital and compensate the Company for its services, as well as impact project activity for the foreseeable future.

Previous 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.

Current wording

During the nine months ended September 30, 2025, the Company generated $17.6 million in cash from its operating activities, which consisted of net income of $26.8 million and certain non-cash adjustments of $23.7 million, partly offset by cash used in working capital of $32.9 million. During the nine months ended September 30, 2024, the Company generated $17.5 million from its operating activities, which consisted of net income of $21.0 million and certain non-cash adjustments of $17.2 million, partly offset by cash used in working capital of $20.8 million.

Previous 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.

Current wording

The change in operating cash flows during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was relatively flat. The Company recognized a $5.7 million period-over-period increase in net income, a $15.4 million period-over-period increase in cash inflow related to the change in accounts payable, including retainage, which was due to the timing of cash payments and a $6.5 million increase in cash inflow related to the change in non-cash operating activities. Partially offsetting these cash inflows was an $13.7 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 $9.0 million period-over-period cash outflow 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 $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.

Current wording

Cash flows used in investing activities were $67.9 million and $17.7 million for the nine months ended September 30, 2025 and 2024, respectively. Cash used in investing activities for the nine months ended September 30, 2025 included a cash outflow of $65.7 million associated with the Pioneer Power Transaction, net of cash acquired, and a cash outflow of $3.6 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 $1.3 million in proceeds from the sale of property and equipment. Cash used in investing activities for the nine months ended September 30, 2024 included a cash outflow of $12.7 million associated with the Kent Island Transaction, net of cash acquired, and $6.2 million in cash outflows related to the purchase of property and equipment, which was primarily associated with the purchase of certain rental equipment to expand customer service offerings. These cash outflows were partially offset by $1.2 million in proceeds from the sale of property and equipment.

Previous wording

Cash Flows Used in Financing Activities

Current wording

Cash Flows Provided by (Used in) Financing Activities

Previous 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.

Current wording

Cash flows provided by financing activities were $15.2 million for the nine months ended September 30, 2025 compared to cash flows used in financing activities of $8.4 million for the nine months ended September 30, 2024. During the nine months ended September 30, 2025, the Company borrowed $41.8 million on its revolving credit facility and recognized additional financing cash inflows of $6.3 million associated with the sale of shares to satisfy employee tax withholding requirements and $0.6 million associated with proceeds from employee contributions to the ESPP. These financing cash inflows were partially offset by $17.3 million of repayments on the Company's revolving credit facility, $10.7 million in taxes paid related to the net share settlement of equity awards, $3.1 million for payments on finance leases and 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.

Previous 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.

Current wording

During the nine months ended September 30, 2024, the Company paid approximately $5.2 million in taxes related to the net share settlement of equity awards, $2.3 million for payments on finance leases and made $3.5 million in aggregate payments to the former owners of JMLLC, CSLLC and ACME related to their respective 2023 earnout arrangements, of which $1.3 million was recognized as a cash outflow from financing activities. These cash financing outflows were partially offset by $0.4 million associated with proceeds from employee contributions to the ESPP.

Previous 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.

Current wording

Management continued to devote additional resources to its billing and collection efforts during the nine months ended September 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 $38.9 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.

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 $9.8 million as of September 30, 2025, cash payments to be received from existing and new customers, and availability of borrowing under the A&R Wintrust Revolving Loan (pursuant to which we had $60.4 million of availability as of September 30, 2025) will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months.