Limbach Holdings, Inc.
For the period ended Mar 31, 2026. Filed May 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 5, 2026
LMB$53.45-1.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-04.
0001628280-25-049021
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-05.
0001628280-26-030678
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 139 previous paragraphs and 138 current paragraphs.
60 unchanged; 39 reworded; 39 added; 31 removed; 9 previous and 0 current paragraphs rearranged.
Tables are not compared: 17 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (39)
Current report
The Company is a building systems solutions firm that designs, delivers, and maintains mechanical (heating, ventilation, and air conditioning), electrical, plumbing, and controls (“MEPC”) systems. The Company partners with building owners and operators of mission-critical facilities across healthcare, industrial and manufacturing, data centers, life sciences, higher education, and cultural and entertainment markets. With approximately 1,600 team members across 21 offices throughout the Eastern and Midwestern regions of the United States, the Company strives to be an indispensable partner by combining its national capabilities with strong local execution and talent to deliver proactive, safe, and reliable solutions for complex facilities. Operating on a connected platform, the Company integrates engineering expertise with field execution to provide customized MEPC infrastructure solutions that address both operational and capital project needs, optimizing performance, enhancing reliability, and ensuring long-term safety.
Current report
The Company’s revenue is primarily derived from construction-type and services contracts to deliver MEPC systems services to its customers. Such work is primarily performed under fixed-price, modified fixed-price, and time and materials contracts over periods of typically less than two years.
Current report
Construction-type contract revenue is primarily derived from fixed-price and modified fixed-price contracts. For the majority of these contracts, the Company’s performance obligations are satisfied over time because the customer controls the asset as it is created or enhanced or because the Company’s performance does not create an asset with an alternative use and the Company has an enforceable right to payment for performance completed to date. For contracts satisfied over time, the Company recognizes revenue using an input method based on costs incurred relative to total estimated costs at completion (the cost-to-cost method), which management believes depicts the transfer of control of services to the customer. The Company believes its extensive experience with MEPC systems projects, together with its internal cost estimation and review processes, enables it to reasonably estimate contract costs and mitigate the risk of cost overruns.
Current report
With respect to service contracts, the Company’s service arrangements generally include (i) fixed-price service contracts, typically for maintenance, repair and retrofit work over a period, commonly one year, and (ii) time and materials or similar service work performed on an as-needed basis. Revenue from fixed-price service contracts is generally recognized over time on a systematic basis that depicts performance over the contract term, which is typically on a straight-line basis when services are provided evenly over the contract period. Revenue derived from time and materials and other service work is recognized when the services are performed.
Current report
Selling, General and Administrative
Current report
Acquisition-related Retention Expense and Contingent Consideration
Current report
Amortization of Intangibles
Current report
Other (Expenses) Income
Current report
Revenue for the three months ended March 31, 2026 increased by $5.8 million, or 4.3%, to $138.9 million, compared to $133.1 million for the three months ended March 31, 2025. The increase in revenue was primarily attributable to the acquisition of Pioneer Power, which contributed $23.5 million of acquisition-related revenue for the three months ended March 31, 2026. Acquisition-related revenue represents incremental revenue generated in 2026 by an acquired business only for the twelve-month period subsequent to its respective acquisition date. After such period, the results of acquired businesses are included within the Company’s organic operations, and period-over-period changes are discussed on a combined basis. This increase was offset by a revenue decline in the Company’s organic operations of $17.8 million for the three months ended March 31, 2026. The decline in organic revenue reflects the impact of lower bookings in the middle of 2025 and normal seasonal patterns among industrial customers. More recent booking activity has strengthened significantly, which the Company expects will drive revenue growth as the year progresses.
Current report
GCR revenue for the three months ended March 31, 2026 decreased by $3.7 million, or 8.6%, to $39.0 million, compared to $42.7 million for the three months ended March 31, 2025. The decrease in period-over-period GCR revenue was primarily attributable to lower GCR organic revenue of $12.9 million. This decline was partially offset by an incremental increase in GCR acquisition-related revenue of approximately $9.2 million from the Pioneer Power acquisition.
Current report
The Company's gross profit for the three months ended March 31, 2026 decreased by $5.5 million, or 15.1%, to $31.2 million, compared to $36.7 million for the three months ended March 31, 2025. The decrease was primarily driven by lower gross margin percentages in both our ODR and GCR segments.
Current report
ODR gross profit decreased $3.2 million, or 12.1%, as segment margins declined to 23.0% from 28.9% in the prior year period, despite higher revenue. The decrease in gross margin was primarily driven by lower fixed cost absorption due to seasonal revenue levels and higher fixed costs, the absence of higher net project write-ups that benefited the prior-year period and the current lower margin profile of Pioneer Power. As the Company advances its integration strategy of Pioneer Power, management expects gross margins to improve as 2026 progresses. Operational and pricing improvement initiatives are underway to enhance profitability at Pioneer Power with the goal of bringing gross margins in line with the Company average over the next two to three years.
Current report
GCR gross profit decreased $2.4 million, or 22.5%, reflecting lower revenue and a decline in segment gross margin to 21.0% compared to 24.7% in the prior year period. The decrease in gross margin was primarily due to lower margin work associated with Pioneer Power and the absence of higher total net project write ups that benefited the prior-year period.
Current report
As a result, total gross profit margin decreased to 22.4% for the three months ended March 31, 2026 from 27.6% for the same period in 2025.
Current report
Selling, General and Administrative
Current report
The Company's total SG&A expenses for the three months ended March 31, 2026 increased by approximately $1.6 million, or 6.0%, compared to the three months ended March 31, 2025. The increase in total SG&A included $0.6 million of acquisition-related SG&A expenses associated with Pioneer Power. Acquisition-related SG&A represents SG&A expenses incurred in 2026 by an acquired business only for the twelve-month period subsequent to its respective acquisition date. After such period, the results of acquired businesses are included within the Company’s organic operations, and period-over-period changes are discussed on a combined basis. Organic SG&A increased approximately $1.0 million primarily due to a $1.6 million increase in payroll related expenses, partly offset by a $0.3 million decrease in travel and entertainment related expenses. SG&A expense, as a percentage of revenue, increased to 20.2% for the three months ended March 31, 2026 as compared to 19.9% for the three months ended March 31, 2025.
Current report
Acquisition-Related Retention Expense and Contingent Consideration
Current report
Acquisition-related retention and contingent consideration expenses were $0.1 million and $0.4 million for the three months ended March 31, 2026 and 2025. For the three months ended March 31, 2026, these expenses included approximately $0.1 million of acquisition-related retention expense associated with the Pioneer Power transaction, which was not incurred in the prior year period. As part of the Pioneer Power acquisition, the Company entered into retention agreements with certain key employees of the acquired business. Retention-related compensation is recognized as expense ratably over the requisite service period, which extends through December 2027, and is contingent upon continued employment.
Current report
In addition, the Company recognized a less than $0.1 million increase in the fair value of contingent consideration during the three months ended March 31, 2026, compared to a $0.4 million increase during the three months ended March 31, 2025. The change in the fair value of contingent consideration represents a non-cash expense and was primarily attributable to updated estimates regarding the probability of achieving the gross profit targets underlying the earnout arrangements as of March 31, 2026 and 2025.
Current report
Amortization of Intangibles
Current report
Total amortization expense for the three months ended March 31, 2026 and 2025 was $1.8 million and $1.9 million, respectively. The period-over-period decrease in amortization expense was primarily due to certain finite-lived intangible assets becoming fully amortized. This decrease was partially offset by incremental amortization expense related to intangible assets recognized in connection with the Pioneer Power acquisition, which was not included in the prior-year period.
Current report
Other (Expenses) Income
Current report
The Company also believes that starting in 2026, certain of the markets in which it sources materials, equipment and in certain instances subcontracted services have experienced, and may continue to experience, consolidation. Given this trend, the Company continues to actively manage these supplier and subcontractor relationships with the ultimate view and goal of providing services to the Company’s customers in an effort to be an indispensable building systems solutions firm.
Current report
Notwithstanding those active managerial efforts with that goal in mind, the Company understands that if it is not successful in these managerial efforts that increased consolidation among suppliers and/or subcontractors could over time impair our ability to deliver services efficiently, competitively price our offerings, or meet customer expectations.
Current report
Strategy
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Pillar I
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Organic ODR Growth. In focusing on improved profitability and sustainable, quality growth, the Company has dedicated its resources toward the organic growth of its ODR segment, as the scope of services provided within this segment typically yields higher margins compared to its GCR segment. For fiscal year 2025, the Company further expanded its growth within the ODR segment where it generated 75.1% of its total consolidated revenue, achieving its 2025 ODR segment revenue target of 70% - 80%. Going forward, the Company believes its disciplined, owner-focused operating model, supported by a full life cycle of engineered solutions and craft expertise, positions it as a long-term partner to building owners with mission-critical systems. Although ODR represented 71.9% of total consolidated revenue for the three months ended March 31, 2026, compared to 75.1% for fiscal year 2025, the Company does not view this variation as indicative of a change in its long-term strategy or expected revenue mix and continues to expect ODR to represent approximately 75% to 80% of total revenue for the full year.
Current report
National Customer Solutions. The Company continues to advance its national customer strategy through a dedicated professional services team that provides owner advisory, construction program management and related support services for customers with complex, mission-critical building systems and infrastructure needs. These services include capital planning to assist customers in planning, prioritizing and executing both the design and construction of capital initiatives and infrastructure projects, while enabling coordinated delivery, standardized workflows and consistent execution across the Company’s operating footprint. The National Customer Solutions team is focused on enhancing alignment between local and national teams, allowing the Company to deliver a more integrated and consistent customer experience across geographies. Through this approach, the Company seeks to deepen customer relationships and increase the value delivered to its customers. The Company expects to continue driving revenue and margin expansion through its national healthcare customer relationships, while further expanding dedicated national teams to grow its presence in its data center and industrial and manufacturing market verticals.
Current report
Sales Enablement. To support organic revenue growth, the Company continues to invest in sales enablement initiatives. These efforts include the continued development of centralized functions, tools and processes intended to support sellers across operating locations, enhance coordination between local and national sales efforts, and improve visibility into customer opportunities and pipeline activity. By equipping sales teams with shared resources, training and standardized workflows, the Company seeks to drive more disciplined opportunity management, support cross-selling of services and solutions, and enable a more seamless customer experience across its geographic footprint. Management believes these sales enablement initiatives strengthen execution, enhance productivity and support scalable, margin-accretive growth over the long term as the business continues to expand.
Current report
Pillar II
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Pillar III
Current report
Growth Through Acquisitions. As the Company’s business generates increasing cash flow and earnings, management believes it is well-positioned to pursue targeted acquisitions as a strategic capital investment. The Company continues to build its internal capabilities, processes and leadership capacity necessary to evaluate, execute and integrate acquisitions on a disciplined and repeatable basis, while seeking to leverage existing systems, national and geographic presence and operational investments to their maximum potential over time. The Company remains focused on disciplined capital deployment and cultural alignment to ensure acquisitions contribute to long-term value creation. See Note 3 – Acquisitions in the accompanying notes to the Company’s condensed consolidated financial statements for further information on the Company’s most recent acquisition activity.
Current report
The prices of key inputs used in the Company’s projects and service operations, including steel, pipe, copper, and certain equipment and components, remain subject to volatility, including increases driven by inflation, tariffs, supply constraints, and price escalation. These factors can, at times, be material to the Company’s results of operations and financial condition, particularly on fixed-price projects and where equipment lead times extend beyond procurement windows. During the three months ended March 31, 2026, the Company continued to experience selective pricing pressure and extended lead times for certain materials and equipment, although such impacts were not material to its consolidated results of operations or financial condition.
Current report
Where appropriate, the Company seeks to mitigate these impacts by (i) incorporating cost escalation assumptions and/or escalation provisions into bids and proposals, (ii) limiting bid acceptance periods, (iii) procuring materials and equipment earlier in the project lifecycle, including through fixed-price purchase orders where feasible, and (iv) negotiating with suppliers and subcontractors to manage pricing and delivery terms. Despite these efforts, sustained inflationary pressures, supply chain disruptions, labor shortages, or rapid changes in tariff regimes could increase costs, reduce margins, and/or require the Company to defer or re-sequence projects, which could adversely affect the pace at which backlog converts to revenue.
Current report
The Company continues to monitor developments in U.S. trade policy, including tariffs imposed under Section 232 of the Trade Expansion Act of 1962 on imported steel, aluminum, and certain derivative products, as well as the potential for additional duties, exemptions, or retaliatory measures. These actions could increase costs, impact the availability and lead times of certain materials and components, and alter competitive dynamics. In the Company’s ODR segment, which generally operates on shorter sales cycles, the Company can often adjust pricing to reflect cost increases; however, may still be unable to recover all cost increases in a timely manner, particularly for fixed-price contracts and long-lead equipment orders. Accordingly, the Company cannot predict the ultimate impact of tariffs or other trade restrictions on its business, results of operations, or financial condition.
Current report
Cash Flows (Used in) Provided by Operating Activities
Current report
(2)The Company refined the presentation of contract-related balances within operating activities of the consolidated statements of cash flows. Changes in contract assets and contract liabilities are now presented on a net basis, rather than as separate line items, to align with the Company’s presentation of net contract positions. Prior-period amounts have been conformed for comparability, where applicable. This presentation change did not impact net cash provided by operating activities.
Current report
The change in operating cash flows during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily attributable to a $5.8 million decrease in net income, a $6.0 million unfavorable change in accounts payable, including retainage, due to the timing of vendor payments and a $2.2 million increase in payments of contingent consideration liability in excess of acquisition-date fair value. In addition, there was a $2.1 million unfavorable change in contract assets and contract liabilities, net, and a $1.6 million unfavorable change in other current assets, each reflecting the timing of billings, collections and other working capital activity. These uses of cash were partially offset by a $3.7 million favorable change in accounts receivable due to the timing of cash collections and a $5.3 million favorable change in accrued expenses and other current liabilities due to the timing of payments.
Current report
See Note 6 – Debt in the accompanying notes to the Company’s condensed consolidated financial statements for further information.
Removed paragraphs (31)
Previous report
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 report
The Company generates revenue principally from fixed-price construction contracts to deliver mechanical, plumbing, and electrical construction services to its customers. The duration of the Company’s contracts generally ranges from three months to two years. Revenue from fixed-price contracts is recognized on the cost-to-cost method, measured by the relationship of total cost incurred to total estimated contract costs. Revenue from time and materials service contracts is recognized as services are performed. The Company believes that its extensive experience in mechanical, plumbing, and electrical projects, and its internal cost review procedures during the bidding process, enable it to reasonably estimate costs and mitigate the risk of cost overruns on fixed-price contracts.
Previous report
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 report
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 report
Revenue for the three months ended September 30, 2025 increased by $50.7 million, or 37.8%, to $184.6 million, compared to $133.9 million for the three months ended September 30, 2024. The increase in revenue was primarily attributable to both growth within the Company’s existing operations and the impact of recent acquisitions completed in the second half of 2024 and July 2025.
Previous report
Mechanical and Kent Island transactions. These acquisitions contributed approximately $37.1 million in ODR revenue in the current period.
Previous report
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 report
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 report
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 report
Acquisition-related retention and contingent consideration expenses were $0.6 million for both the three months ended September 30, 2025 and 2024. These expenses for the three months ended September 30, 2025 included $0.3 million of retention-related expense associated with the Pioneer Power Transaction, which did not occur in the prior-year period. In addition, the Company recognized a $0.3 million increase in the fair value of contingent consideration during the current quarter, compared to a $0.6 million increase in the fair value of contingent consideration during the three months ended September 30, 2024.
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Revenue
Previous report
Revenue for the nine months ended September 30, 2025 increased by $84.8 million, or 22.6%, to $459.9 million, compared to $375.1 million for the nine months ended September 30, 2024. The increase in revenue was primarily attributable to both growth within the Company’s existing operations and the impact of recent acquisitions completed in the second half of 2024 and middle of 2025.
Previous report
ODR revenue for the nine months ended September 30, 2025 increased by $90.7 million, or 36.3%, to $340.7 million, compared to $250.0 million for the nine months ended September 30, 2024. 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 Pioneer Power, Consolidated Mechanical and Kent Island transactions. These acquisitions contributed approximately $54.8 million in ODR revenue in the current period.
Previous report
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.
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Gross Profit
Previous report
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 report
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 report
Acquisition-related retention and contingent consideration expenses were $1.8 million for the nine months ended September 30, 2025, compared to $2.3 million for the nine months ended September 30, 2024. These expenses for the nine months ended September 30, 2025 included $0.3 million of retention-related expense associated with the Pioneer Power Transaction, which did not occur in the prior-year period. In addition, the Company recognized a $1.5 million increase in the fair value of contingent consideration during the nine months ended September 30, 2025, compared to a $2.3 million increase in the fair value of contingent consideration during the nine months ended September 30, 2024.
Previous report
As part of the acquisition of Pioneer Power, the Company entered into retention agreements with certain key employees of the acquired business. Retention-related compensation is recognized as expense ratably over the service period, which runs through December 2027, and is contingent on continued employment. The change in fair value of contingent consideration reflects updated estimates of the acquired business’s projected performance relative to the earnout targets established at the time of acquisition. 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 report
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.
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Income Taxes
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Outlook for 2025
Previous report
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 report
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 report
Given the broad suite of offerings to customers within the Company’s market concentrations, management uses a variety of factors to attempt to predict the outlook for the Company. The Company monitors key competitors and customers in order to gauge relative performance and the outlook for the future. The Company regularly performs detailed evaluations of different market verticals in which it serves to proactively detect trends and to adapt its strategies accordingly, including potential triggers and actions to be taken under recessionary scenarios.
Previous report
The Company continues to monitor the impact that the inflationary cost environment has on its cost structure. Although global supply chain and resource constraints have improved throughout the year, the Company’s performance may be impacted by future developments that are uncertain. In addition, geopolitical risks and macroeconomic events could cause disruptions to operations, supply chains and end markets, tightening credit conditions, higher interest rates, global banking uncertainty and the possibility of deteriorating overall economic conditions which could negatively impact the Company’s business.
Previous report
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 report
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 report
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 report
(2) On June 27, 2025, LFS, LHLLC, and other designated parties entered into the Second Amendment to the Second A&R Wintrust Credit Agreement with Wintrust, as administrative agent, and the other lenders party thereto. The Second Amendment to the Second A&R Wintrust Credit Agreement provides for, among other things, an upsize of the aggregate principal amount of the senior secured revolving credit facility from $50.0 million to $100.0 million. See Note 6 for further discussion.
Previous report
On June 27, 2025, LFS, LHLLC, and other designated parties entered into the Second Amendment to the Second A&R Wintrust Credit Agreement with Wintrust, as administrative agent, and the other lenders party thereto, which amends that certain Second A&R Wintrust Credit Agreement, dated as of May 5, 2023 (as amended by that certain First Amendment to the Second A&R Wintrust Credit Agreement, dated as of March 13, 2024). The Second Amendment to the Second A&R Wintrust Credit Agreement provides for, among other things, (i) an upsize of the aggregate principal amount of the senior secured revolving credit facility from $50.0 million to $100.0 million, (ii) modifying the definition of “L/C Sublimit” to increase the sublimit for the issuance of letters of credit from $10.0 million to $20.0 million, (iii) an extension of the revolving credit scheduled maturity date from February 24, 2028 to July 1, 2030, (iv) a decrease in the applicable margins for Term SOFR and Prime Rate (each defined in the Second Amendment to the Second A&R Wintrust Credit Agreement) revolving loans as determined with reference to LFS’s Senior Leverage Ratio (as defined in the Second Amendment to the Second A&R Wintrust Credit Agreement), (v) a term loan conversion feature, allowing LFS, subject to certain conditions, to convert outstanding revolving loans into one or more term loan tranches, (vi) the removal of certain covenant requirements, specifically in relation to LFS’s Borrowing Base, as formerly defined in the Second A&R Wintrust Credit Agreement, and (vii) modification to certain defined terms to reflect updated operational and financial terms. See Note 6 for further discussion.
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Previous wording
•Life sciences, including organizations and companies whose work is centered around research and development focused on living things;
Current wording
•Life sciences, including organizations and companies whose work is centered around research and development focused on living organisms and biological systems;
Previous wording
The Company operates in two segments, (i) ODR, in which the Company performs owner direct projects and/or provides maintenance or service primarily on mechanical, plumbing or electrical systems, building controls and specialty contracting projects to existing buildings direct to, or assigned by, building owners or property managers, and (ii) GCR, in which the Company generally manages new construction or renovation projects that involve primarily mechanical, plumbing, or electrical services awarded to the Company by general contractors or construction managers.
Current wording
The Company operates in two segments, (i) ODR, in which the Company performs owner direct projects and/or provides maintenance or service primarily on MEPC systems, and specialty contracting projects to existing buildings direct to, or assigned by, building owners or operators, and (ii) GCR, in which the Company generally manages new construction or renovation projects that involve primarily MEPC systems awarded to the Company by general contractors or construction managers. The Company's work is primarily performed under fixed-price, modified fixed-price, and time and materials contracts over periods of typically less than two years.
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, 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.
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 in the accompanying notes to the Company’s condensed consolidated financial statements for further information on the Company’s intangible assets.
Previous wording
Other (expenses) income consists primarily of interest expense incurred in connection with the Company's debt, gains or losses associated with the disposition of property and equipment, changes in fair value of interest rate swaps, and interest income earned from its overnight repurchase agreements and money market investments and the Company's interest rate swap agreement. Deferred financing costs are amortized to interest expense using the effective interest method.
Current wording
Other (expenses) income consists primarily of interest expense incurred in connection with the Company’s indebtedness, gains and losses on dispositions of property and equipment, changes in the fair value of the Company’s interest rate swap, and interest income earned on overnight repurchase agreements. Deferred financing costs are amortized to interest expense using the effective interest method.
Previous wording
The Company is taxed as a C corporation and its financial results include the effects of federal income taxes, which will be paid at the parent level.
Current wording
The Company is taxed as a C corporation, and its financial results include the effects of federal income taxes, which are paid at the parent level.
Previous wording
The Company’s provision for income taxes (including federal, state and local taxes) is calculated based on the estimated annual effective tax rate. The Company accounts for income taxes in accordance with ASC Topic 740 - Income Taxes, which requires the use of the asset and liability method. Under this method, deferred tax assets and liabilities and income or expense are recognized for the expected future tax consequences of temporary differences between the financial statement carrying values and their respective tax bases, using enacted tax rates expected to be applicable in the years in which the temporary differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes.
Current wording
The Company’s provision for income taxes (including federal, state and local income taxes) is calculated based on the estimated annual effective tax rate. The Company accounts for income taxes in accordance with Accounting Standards Update (“ASC”) Topic 740 — Income Taxes, which requires an asset and liability approach. Under this approach, deferred tax assets and liabilities and income or expense are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, using enacted tax rates expected to apply in the periods in which those temporary differences are expected to reverse. Changes in deferred tax assets and liabilities are included in the provision for income taxes.
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. As a result, period-over-period comparisons may not be fully indicative of ongoing trends in our operating performance.
Current wording
In order to provide a more meaningful discussion of period-over-period changes in the Company’s operating results, the Company may discuss the impact of acquisitions on revenue, gross profit, selling, general and administrative expenses, and operating income. Because acquired businesses are included in the Company’s results only from their respective acquisition dates, the size and timing of acquisitions may affect the comparability of period-over-period results. Accordingly, such comparisons may not be fully indicative of ongoing trends in the Company’s operating performance.
Previous wording
On July 1, 2025, the Company completed an acquisition of Woodbury, Minnesota-based mechanical contractor, Pioneer Power, Inc. (“Pioneer Power”), for a purchase price at closing of $66.1 million paid through a combination of available cash and the Company’s revolving credit facility (the “Pioneer Power Transaction”). Pioneer Power is a provider of industrial and institutional mechanical solutions serving healthcare, food, power/utility, oil refining and other select markets in the greater Twin Cities region of Minnesota and upper Midwest region. The acquisition further expands the Company’s footprint in the core Midwest region and extends its reach into new geographic markets in the upper Midwest.
Current wording
On July 1, 2025, the Company completed an acquisition of Woodbury, Minnesota-based mechanical contractor, Pioneer Power, Inc. (“Pioneer Power”), for a purchase price at closing of $66.1 million paid through a combination of available cash and the Company’s revolving credit facility (the “Pioneer Power Transaction”). Pioneer Power is a provider of industrial and institutional mechanical solutions serving healthcare, food, power/utility, oil refining and other select markets in the greater Twin Cities region of Minnesota and upper Midwest region. The acquisition further expanded the Company’s footprint in the core Midwest region and extends its reach into new geographic markets in the upper Midwest. See Note 3 – Acquisition in the accompanying notes to the Company’s condensed consolidated financial statements for further information on the Company’s acquisition of Pioneer Power.
Previous wording
The Company manages and measures the performance of its business in two operating segments: ODR and GCR. Segment information is prepared on the same basis that the Company’s CODM reviews operating results for the purposes of allocating resources and assessing performance. The Company's CODM is comprised of its President and Chief Executive Officer and Executive Vice President and Chief Financial Officer.
Current wording
The Company manages and measures the performance of its business in two operating segments: ODR and GCR. Segment information is prepared on the same basis that the Company’s Chief Operating Decision Maker (“CODM”) reviews operating results for the purposes of allocating resources and assessing performance. The Company’s CODM is comprised of its President and Chief Executive Officer and Executive Vice President and Chief Financial Officer.
Previous wording
ODR revenue for the three months ended September 30, 2025 increased by $48.4 million, or 52.0%, to $141.4 million, compared to $93.0 million for the three months ended September 30, 2024. This increase was primarily attributable to the Company's continued focus on the accelerated growth of its ODR business and as a result of the Pioneer Power, Consolidated
Current wording
ODR revenue for the three months ended March 31, 2026 increased by $9.4 million, or 10.4%, to $99.8 million, compared to $90.4 million for the three months ended March 31, 2025. This increase was primarily attributable to the acquisition of Pioneer Power, which contributed approximately $14.3 million in ODR revenue in the current period. The Company’s organic ODR operations decreased approximately $4.9 million, primarily due to the timing of sales and backlog burn across certain markets.
Previous wording
The Company recorded revisions in its contract estimates for certain ODR and GCR projects; however, the Company did not record any material gross profit write-ups or write-downs that had a net gross profit impact of $0.5 million or more during the three months ended September 30, 2025 and 2024.
Current wording
The Company recorded revisions in its contract estimates for certain ODR and GCR projects; however, the Company did not record any material gross profit write-ups or write-downs that had a net gross profit impact of $1.0 million or more during the three months ended March 31, 2026 and 2025.
Previous wording
As part of the acquisition of Pioneer Power, the Company entered into retention agreements with certain key employees of the acquired business. Retention-related compensation is recognized as expense ratably over the service period, which runs through December 2027, and is contingent on continued employment. The change in fair value of contingent consideration reflects updated estimates of the acquired business’s projected performance relative to the earnout targets established at the time of acquisition. 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
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 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.
Current wording
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 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.
Current wording
Total other expenses for the three months ended March 31, 2026 increased approximately $0.5 million as compared to total other income for the three months ended March 31, 2025. 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, as well as a $0.2 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.
Previous 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.
Current wording
The Company recorded an income tax benefit of $3.7 million for the three months ended March 31, 2026 compared to $2.2 million for the three months ended March 31, 2025. The effective tax rate was (505.6)% and (27.8)% for the three months ended March 31, 2026 and 2025, 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, 2026 and 2025 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 533.3% and 53.5% for the three months ended March 31, 2026 and 2025 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. 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.
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 — Revenue from Contracts with Customers in the accompanying notes to its condensed consolidated financial statements.
Previous 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.
Current wording
The Company's ODR backlog was $276.4 million and $255.8 million as of March 31, 2026 and December 31, 2025, respectively. These amounts reflect unrecognized revenue expected to be recognized over the remaining terms of its construction-type and service contracts. Based on historical trends, the Company currently estimates that 82% of its ODR backlog as of March 31, 2026 will be recognized as revenue over the remainder of 2026. The Company's 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 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.
Current wording
The Company's GCR backlog was $188.2 million and $141.8 million as of March 31, 2026 and December 31, 2025, respectively. 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 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 67% of its GCR backlog as of March 31, 2026 will be recognized as revenue over the remainder of 2026. 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 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.
Current wording
The Company continues to monitor evolving macroeconomic conditions and heightened geopolitical risks. Economic and trade policy uncertainty has remained elevated in 2026. Rising trade tensions and changes in trade policy, including tariffs, global conflicts, labor disruptions, and evolving regulations may continue to contribute to inflationary pressures, supply chain disruptions, and pricing and lead-time volatility for certain materials and equipment. The Company continues to work closely with suppliers and subcontractors to mitigate potential shortages and manage supply and pricing volatility. The Company anticipates continued uncertainty with respect to inflation and other macroeconomic trends for the foreseeable future.
Previous wording
While the impact of these factors remains uncertain, the Company continues to evaluate the extent to which they may impact its business, financial condition or results of operations. There can be no assurance that the Company's actions will serve to mitigate such impacts in future periods. In periods of economic uncertainty, businesses and organizations may delay or cancel large capital projects, such as new construction or major mechanical system upgrades. The Company’s service contracts and maintenance work often remain stable or even increase, as customers prioritize maintaining existing systems over capital- intensive replacements. Further, economic downturns may lead to increased competition and pricing pressures, impacting revenue and margins. The Company believes that its diversified customer offerings reduce its exposure to market volatility. While the Company believes its remaining performance obligations are firm, and its customers have not provided the Company with indications that they no longer wish to proceed with planned projects, prolonged delays in the receipt of critical equipment could result in the Company's customers seeking to terminate existing or pending agreements. Any of these events could have a material adverse effect on the Company’s business, financial condition and/or results of operations.
Current wording
The Company continues to evaluate the extent to which these conditions may impact its business, financial condition, and results of operations. During periods of economic uncertainty, customers may delay or cancel large capital projects, including new construction or significant mechanical system upgrades. At the same time, demand for the Company’s service, maintenance, and repair offerings may remain stable or increase as customers prioritize maintaining existing systems over capital-intensive replacements. Economic uncertainty may also result in increased competition and pricing pressure, which could adversely affect revenue and margins. The Company believes its diversified service offerings and customer base help reduce exposure to market volatility. While the Company believes its remaining performance obligations generally represent firm commitments, project timing may shift due to customer scheduling decisions or the availability and timing of critical equipment. Prolonged delays could result in customers seeking to defer, modify, or terminate existing or pending agreements. Any of these events could have a material adverse effect on the Company’s business, financial condition, and results of operations.
Previous wording
In addition, in October 2025, portions of the U.S. federal government experienced a partial shutdown due to the lapse in appropriations. While the ultimate duration and scope of the shutdown remain uncertain, potential impacts on the Company may include delays in the approval and funding of federally sponsored projects, interruptions in the issuance of new contracts, and deferred decision-making by government agencies. To date, the Company has not experienced a material impact on its operations or financial results as a direct result of the U.S. federal government partial shutdown. The Company continues to monitor developments closely and remains focused on mitigating any potential near-term disruptions arising from the shutdown.
Current wording
In addition, the U.S. federal government experienced a lapse in appropriations that resulted in a partial shutdown from October 1, 2025 through November 12, 2025. The shutdown contributed to delays in the approval and funding of federally sponsored projects, interruptions in the issuance of new contracts, and deferred decision-making by government agencies. The Company experienced impacts to its operations as a result of the shutdown; however, those impacts were not material to its financial position or results of operations. The Company continues to monitor for any potential ongoing effects on project timing, awards, or customer procurement activity.
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 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:
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. The Company employs a three-pillar approach to scale its business: (i) improve profitability and drive quality organic revenue growth; (ii) expand margins through enhanced and expanded customer solutions; and (iii) scale through acquisitions. To accomplish these objectives, the Company currently is executing the following initiatives:
Previous wording
In the Company’s GCR segment, its efforts continue to focus on improving project execution and profitability by pursuing opportunities that are smaller in size and shorter in duration than they have been historically, and where it can leverage its captive design and engineering services. The Company believes that it is appropriate in the current contracting environment to reduce risk and exposure to large, complex, non-owner direct projects where the trend has been for such jobs to provide risks that are difficult to mitigate. Currently, management believes the historical industry pricing and associated risks for this type of work does not align with the Company’s stakeholders’ expectations, and therefore, the Company continues to take steps to actively reduce these risks as it looks at future job selection and as it completes current jobs.
Current wording
Improved GCR Segment Margins. In the Company’s GCR segment, the Company has been able to improve the margins by focusing on improving project execution and profitability by pursuing opportunities that are smaller in size and shorter in duration and where it can leverage its captive design and engineering services. The Company believes that it is appropriate to reduce risk and exposure to large, complex, non-owner direct projects where such projects have historically presented risks that can be difficult to mitigate, which does not align with the Company’s risk-adjusted return expectations. Going forward, the Company believes it has reached a level in which the GCR segment stabilizes as a result of its disciplined focus on smaller, shorter-duration projects that are expected to contribute more consistent gross margins.
Previous wording
The Company continues to focus on expanding its margins by evolving and enhancing its current offerings to building owners. This initiative reflects the Company’s commitment to driving sustainable growth, increasing operational efficiency and delivering greater value to its stakeholders. This evolution is designed to align more closely with current market demands, emerging customer preferences and operational efficiencies, which together contribute to margin expansion. The Company aims to differentiate itself from its competitors by being a one-stop-shop for building owners, capable of providing a full life-cycle of engineered solutions and craft expertise. By meeting diverse customer needs under one roof, the Company deepens customer loyalty. The Company believes that building owners value the convenience and reliability of a single point of contact, which fosters long-term partnerships, reoccurring business and may open doors to larger capital projects. In addition, by evolving its offerings, the Company is able to capture a greater share of the value chain.
Current wording
Margin Expansion Through Evolved Solutions. The Company continues to focus on expanding its margins by enhancing and expanding its solutions to building owners. This initiative reflects the Company’s commitment to driving sustainable growth, increasing operational efficiency and delivering greater value to its stakeholders. This evolution is intended to align more closely with current market demands, emerging customer preferences and operational efficiencies, which together contribute to margin expansion. The Company aims to differentiate itself from its competitors by being a single-source provider for building owners, capable of providing a full life cycle of engineered solutions and craft expertise. By meeting diverse customer needs under one roof, the Company deepens customer loyalty. The Company believes that building owners value the convenience and reliability of a single point of contact, which fosters long-term partnerships, reoccurring business and may open doors to larger capital projects and being able to capture a greater share of the overall value chain. The Company continues to expand its owner-direct offerings which include integrated facility planning, service and maintenance, equipment replacement and retrofits, rental equipment, MEPC infrastructure upgrades, and energy efficiency and decarbonization analysis and projects. These capabilities enable the Company to leverage its professional services platform to support multi-location regional and national customers. Additionally, the Company continues to evaluate opportunities to broaden and enhance its customer solutions to address evolving customer needs.
Previous wording
Severe weather can impact the Company’s operations. In the northern climates where it operates, and to a lesser extent the southern climates as well, severe winters can slow the Company’s productivity on construction projects, which shifts revenue and gross profit recognition to a later period. The Company’s maintenance operations may also be impacted by mild or severe weather. Mild weather tends to reduce demand for its maintenance services, whereas severe weather may increase the demand for its maintenance and time-and-materials services. The Company’s operations also experience mild cyclicality, as building owners typically work through maintenance and capital projects at an increased level during the third and fourth calendar quarters of each year.
Current wording
Severe weather can impact the Company’s operations. In the northern climates where it operates, and to a lesser extent the southern climates as well, severe winters can slow the Company’s productivity on projects, which shifts revenue and gross profit recognition to a later period. The Company’s maintenance operations may also be impacted by mild or severe weather. Mild weather tends to reduce demand for its maintenance services, whereas severe weather may increase the demand for its maintenance and time and materials services. The Company’s operations also experience cyclicality, as the Company tends to see customer budgets being allocated in the first quarter of the year and an increased level of maintenance and capital project execution during the third and fourth calendar quarters of each year.
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, 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.
Current wording
The Company's existing current backlog is projected to support a portion 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
As discussed above and in Note 6, as of September 30, 2025, the Company was in compliance with all financial maintenance covenants as required by its credit facility.
Current wording
As discussed above and in Note 6 – Debt in the accompanying notes to the Company’s condensed consolidated financial statements, as of March 31, 2026, the Company was in compliance with all financial maintenance covenants as required by its credit facility.
Previous wording
(1)Represents non-cash activity associated with depreciation and amortization, provision for credit losses, non-cash stock-based compensation expense, operating lease expense, amortization of debt issuance costs, deferred income tax provision, gain or loss on sale of property and equipment, changes in fair value of contingent consideration and changes in the fair value of the Company's interest rate swap.
Current wording
(1)Represents non-cash activity associated with depreciation and amortization, provision for credit losses, non-cash stock-based compensation expense, operating lease expense, amortization of debt issuance costs, deferred income tax provision, gain or loss on sale of property and equipment, acquisition-related retention expense and contingent consideration and changes in the fair value of the Company's interest rate swap.
Previous 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.
Current wording
During the three months ended March 31, 2026, the Company used $7.8 million in cash from its operating activities, which consisted of cash used in working capital of $15.9 million, partly offset by net income of $4.4 million and certain non-cash adjustments of $3.7 million. During the three months ended March 31, 2025, the Company generated $2.2 million from 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.
Previous 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.
Current wording
Cash flows used in investing activities were $0.1 million and $1.9 million for the three months ended March 31, 2026 and 2025, respectively. Cash used in investing activities for the three months ended March 31, 2026 included a cash outflow of $0.4 million related to the purchase of property and equipment, 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, 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.
Previous wording
Aside from the rental equipment purchases in 2025 and 2024, the majority of the Company's cash used for investing activities in both periods was for capital additions pertaining to tools and equipment, computer software and hardware purchases, office furniture and office related leasehold improvements.
Current wording
Aside from the rental equipment purchases in 2025, the majority of the Company's cash used for investing activities in both periods was for capital additions pertaining to tools and equipment, computer software and hardware purchases, office furniture and office related leasehold improvements.
Previous 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.
Current wording
Cash flows provided by financing activities were $12.3 million for the three months ended March 31, 2026 compared to cash flows used in financing activities of $7.2 million for the three months ended March 31, 2025. During the three months ended March 31, 2026, the Company borrowed $54.5 million on its revolving credit facility and recognized additional financing cash inflows of $5.9 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. These financing cash inflows were partially offset by $32.1 million of repayments on the Company's revolving credit facility, $12.0 million in taxes paid related to the net share settlement of equity awards, $1.3 million for payments on finance leases and payments of $3.5 million and $2.5 million to the former owners of Industrial Air and Kent Island, respectively, related to their earnout arrangements, of which $3.1 million was collectively recognized as a cash outflow from financing activities.
Previous 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.
Current wording
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.
Previous 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.
Current wording
Management continued to devote additional resources to its billing and collection efforts during the three months ended March 31, 2026. 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 $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.
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 $15.8 million as of March 31, 2026, 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 $60.7 million of availability as of March 31, 2026) 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 September 30, 2025 and December 31, 2024, the Company had approximately $111.0 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.
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 March 31, 2026 and December 31, 2025, the Company had approximately $119.8 million and $156.6 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 – Commitments and Contingencies in the accompanying notes to the Company’s condensed consolidated financial statements for further information.
Previous wording
The Company is self-insured related to medical and dental claims under policies with annual per-claimant and annual aggregate stop-loss limits. The Company accrues for the unfunded portion of costs for both reported claims and claims incurred but not reported. The liability for unfunded reported claims and future claims is reflected on the condensed consolidated balance sheets as a current liability in accrued expenses and other current liabilities. See Note 13 for further discussion.
Current wording
The Company is self-insured related to medical and dental claims under policies with annual per-claimant and annual aggregate stop-loss limits. The Company accrues for the unfunded portion of costs for both reported claims and claims incurred but not reported. The liability for unfunded reported claims and future claims is reflected on the condensed consolidated balance sheets as a current liability in accrued expenses and other current liabilities. See Note 13 – Commitments and Contingencies in the accompanying notes to the Company’s condensed consolidated financial statements for further information.
Previous wording
The Company participates in approximately 60 MEPPs that provide retirement benefits to certain union employees in accordance with various collective bargaining agreements (“CBAs”). As one of many participating employers in these MEPPs, the Company is responsible with the other participating employers for any plan underfunding. The Company’s contributions to a particular MEPP are established by the applicable CBAs; however, required contributions may increase based on the funded status of an MEPP and legal requirements of the Pension Protection Act of 2006 (the “PPA”), which requires substantially underfunded MEPPs to implement a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) to improve its funded status. Factors that could impact funded status of an MEPP include, without limitation, investment performance, changes in the participant demographics, decline in the number of contributing employers, changes in actuarial assumptions and the utilization of extended amortization provisions. Assets contributed to the MEPPs by the Company may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to an MEPP, the unfunded obligations of the MEPP may be borne by the remaining participating employers.
Current wording
The Company participates in approximately 70 MEPPs that provide retirement benefits to certain union employees in accordance with various collective bargaining agreements (“CBAs”). As one of many participating employers in these MEPPs, the Company is responsible with the other participating employers for any plan underfunding. The Company’s contributions to a particular MEPP are established by the applicable CBAs; however, required contributions may increase based on the funded status of an MEPP and legal requirements of the Pension Protection Act of 2006 (the “PPA”), which requires substantially underfunded MEPPs to implement a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) to improve its funded status. Factors that could impact funded status of an MEPP include, without limitation, investment performance, changes in the participant demographics, decline in the number of contributing employers, changes in actuarial assumptions and the utilization of extended amortization provisions. Assets contributed to the MEPPs by the Company may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to an MEPP, the unfunded obligations of the MEPP may be borne by the remaining participating employers.
Previous wording
See Note 2 to the Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements.
Current wording
See Note 2 – Significant Accounting Policies in the accompanying notes to the Company’s condensed consolidated financial statements for a discussion of recent accounting pronouncements.
Rearranged previous paragraphs (9)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
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 report — wording carried elsewhere
Comparison of Results of Operations for the nine months ended September 30, 2025 and 2024
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
(1)As a percentage of ODR revenue.
Previous report — wording carried elsewhere
(2)As a percentage of GCR revenue.
Previous report — wording carried elsewhere
(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 report — wording carried elsewhere
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 report — wording carried elsewhere
Cash Flows Provided by Operating Activities