Everus Construction Group, Inc.

Note 4 –Acquisitions

On April 1, 2026, the Company acquired 100% of the issued and outstanding equity interests of SE&M Constructors, LLC, SE&M of the Triangle, LLC and SECO Rentals, LLC (collectively, “SE&M”). SE&M, founded in 1923 and headquartered in Elm City, North Carolina, provides mechanical, electrical and plumbing services to customers across a variety of sectors, including pharmaceutical, complex industrial and healthcare. The Company believes the acquisition enhances its services capabilities, expands its geographic footprint in the Southeastern U.S., where it sees strong industry tailwinds, and deepens its exposure to attractive end-markets. SE&M is included in the Company’s E&M segment.

The Company acquired SE&M for initial base consideration of $158 million, subject to certain closing adjustments, funded by cash on hand. Cash consideration paid at closing was $161.7 million, and was reflective of the initial base consideration adjusted in accordance with the terms of the purchase agreement for acquired cash, outstanding indebtedness, and target working capital. Transaction terms also allow for potential contingent consideration up to $12.0 million, or approximately 8% of the initial base consideration, based on certain post-acquisition financial performance targets over aone year period.

On September 1, 2026, the Company acquired 100% of the issued and outstanding equity interests of Epsilon Industries Inc., incorporated in Canada, including 100% of the assets of its wholly owned U.S. subsidiary Epsilon, LLC (collectively, “Epsilon”). Epsilon has extensive off-site modular construction capabilities across multiple, strategically located facilities in the U.S. and Canada with nationwide distribution. The Company expects the acquisition to complement its off-site construction capabilities, expand its geographic reach and enhance its presence in key end markets, including data center, advanced manufacturing and healthcare. Epsilon is included in the Company’s E&M segment.

The Company acquired Epsilon for initial base consideration of $295 million, subject to certain customary closing adjustments, funded by a combination of borrowings under the Company’s credit facilities and cash on hand. Cash consideration paid at closing was $260.9 million, and was reflective of the initial base consideration adjusted in accordance with the terms of the purchase agreement for working capital, leakage, and certain liabilities assumed. In addition, transaction terms specify the Company assume a reorganization tax liability of $27.8 million as a component of the consideration transferred. As a result, total purchase consideration was $288.7 million. The $27.8 million reorganization tax liability was included within Taxes payable on the unaudited condensed consolidated balance sheet as of September 30, 2026.

The Company accounted for both of these transactions as acquisitions of businesses using the acquisition method under ASC 805, Business Combinations (Topic 805).

The Company incurred $6.7 million and $10.3 million of acquisition-related costs for the three and nine months ended September 30, 2026, respectively, in connection with the acquisitions completed during the nine months ended September 30, 2026. These acquisition-related costs were included in Selling, general and administrative expenses on the unaudited condensed consolidated statements of income.

Purchase Price Allocation

The Company is finalizing the purchase price allocations related to the acquisitions completed during the nine months ended September 30, 2026, and adjustments to the respective preliminary purchase price allocations may occur, since certain necessary data is not yet available to complete the respective allocations. Final valuations of intangible assets and goodwill acquired, contingent consideration liabilities, tax liabilities and the finalization of closing working capital may cause future adjustments to the preliminary purchase price allocations. The Company will finalize the purchase price allocations during the respective 12-month periods following the respective acquisition dates.

The following table summarizes the preliminary purchase price allocations of the consideration transferred or estimated to be transferred and the acquisition-date fair value of identifiable assets acquired and liabilities assumed for acquisitions completed during the nine months ended September 30, 2026:

During the third quarter of 2026, the Company repaid the $22.3 million current portion of long-term debt assumed in the Epsilon acquisition.

Contingent Consideration

Acquisition-date fair value of contingent consideration that is not subject to continued employment of the sellers was determined using a Monte Carlo simulation model with a risk-free rate of 3.66%, earnings before interest, taxes, depreciation and amortization (“EBITDA”) volatility of 58.00%, EBITDA risk premium of 9.16%, and a credit risk-adjusted discount rate of 7.00%. Any changes in the final valuation of the acquisition-date fair value of the contingent consideration related to additional information about facts and circumstances that existed at the acquisition date will adjust the acquisition’s purchase price allocation, since it was included as part of the preliminary consideration transferred or estimated to be transferred. However, changes in the fair value of the contingent consideration relating to periods following the acquisition date will be recognized in earnings on the unaudited condensed consolidated statements of income.

Contingent consideration that is subject to continued employment of the sellers is recorded as post-combination expense over the period earned.

In addition to the contingent consideration mentioned above, there is $7.7 million of cash retention bonuses and $7.3 million of restricted stock units (“RSUs”), at target, that are classified as post-combination transactions, since these transactions are considered contingent consideration that is subject to continued employment of the respective sellers. The cash retention bonuses can be earned up to 18 months and 36 months following the acquisition date of SE&M and Epsilon, respectively. The RSUs granted to SE&M and Epsilon employees will vest in equal installments over athree-year period from the respective grant dates. Post-combination expense will be recorded over the requisite service periods.

The Company incurred $2.3 million and $2.8 million of post-combination expenses for the three and nine months ended September 30, 2026, respectively, in connection with the acquisitions completed during the nine months ended September 30, 2026. These post-combination expenses were included in Selling, general and administrative expenses on the unaudited condensed consolidated statements of income.

Intangible Assets

The fair value of finite-lived intangible assets acquired, including the gross intangible asset values and appropriate amortization periods, was determined using the following valuation methodologies. Customer relationships and backlog were valued using the multi-period excess earnings method, which utilized various significant inputs and assumptions, including future revenues, contributory asset charges, discount rates, customer attrition rates and tax amortization benefits. Trade names and trademarks were valued using the relief-from-royalty method, which utilized various significant inputs and assumptions, including market royalty rates, forecasted revenues, expected useful lives and obsolescence assumptions, and tax amortization benefits.

The following finite-lived intangible assets were acquired as a result of the acquisitions:

The fair value of the indefinite-lived intangible assets acquired was determined using the relief from royalty method-profit split analysis, which utilized various significant inputs and assumptions, including market royalty rates, operating history, brand reputation, discount rates, long-term growth and capitalization rates, and tax amortization benefits.

The following indefinite-lived intangible assets were acquired as a result of the SE&M acquisition:

The Company did not incur costs to renew or extend the term of acquired intangible assets during the nine months ended September 30, 2026.

Goodwill

Goodwill recognized in connection with the acquisitions was recorded within the E&M segment.

The full $69.0 million of goodwill related to the SE&M acquisition is expected to be deductible for U.S. income tax purposes. Of the $163.4 million of goodwill related to the Epsilon acquisition, the full amount is expected to be deductible for U.S. income tax purposes, while $119.9 million is not expected to be deductible for Canadian income tax purposes.

Impact of Acquisitions

The results of operations of the acquisitions were included in the Company’s unaudited condensed consolidated statements of income for the reporting periods following the respective acquisition dates. For the three and nine months ended September 30, 2026, the acquired businesses contributed $43.7 million and $77.1 million of operating revenues, respectively, and $4.8 million and $3.0 million of net loss, respectively. In addition, the preliminary purchase price allocations of acquisition-date fair value of identifiable assets acquired and liabilities assumed, as well as any measurement period adjustments, were included in the Company’s unaudited condensed consolidated balance sheet as of September 30, 2026.

The pro forma effects on our consolidated results of operations related to the SE&M acquisition were not material to reported revenues or net income.

The pro forma effects on our consolidated results of operations related to the Epsilon acquisition were deemed impracticable to include, given (a) such information would be subject to significant estimation uncertainty requiring the Company to make estimates and assumptions, including significant contract-level analysis, regarding the acquired business’ historical financial results that may ultimately prove inaccurate or not sufficiently reliable and (b) Epsilon did not prepare its historical financial statements under U.S. GAAP, or IFRS, and used an output-based revenue measurement approach that is not fully aligned with ASC 606.