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What changed in IES Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of IES Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+261 added−238 removedSource: 10-K (2024-11-22) vs 10-K (2023-12-07)

Top changes in IES Holdings, Inc.'s 2024 10-K

261 paragraphs added · 238 removed · 198 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

46 edited+5 added−3 removed76 unchanged
Biggest changeA significant portion of our Residential business volume is generated from long-term, repeat customers, some of whom use IES as a preferred provider for major projects. Our long-term strategy is to continue to be a leading provider of electrical services to the residential market, and to continue to expand our offerings of plumbing and HVAC services.
Biggest changeOur sales efforts include a variety of strategies, including a concentrated focus on national and regional homebuilders and multi-family developers and a local sales strategy for single and multi-family housing projects. A significant portion of our Residential business volume is generated from long-term, repeat customers, some of whom use IES as a preferred provider for major projects.
Most of Tontine’s shares are registered for resale on a shelf registration statement filed by the Company with the SEC.
Most of Tontine’s shares are registered for resale on a resale shelf registration statement filed by the Company with the SEC.
Our long-term strategy is to be a leader in custom-engineered metal enclosed bus systems and generator enclosures and the preferred solutions provider of outsourced electro-mechanical services, repairs, and manufacturing to our select markets. Competition Our competition ranges from small, single location service centers to large, multi-national companies. Our Custom Power Solutions business competes with domestic and international manufacturers and distributors.
Our long-term strategy is to be a leader in custom-engineered metal enclosed bus systems and generator enclosures and the preferred solutions provider of outsourced electro-mechanical services, repairs, and manufacturing to our select markets. Competition Our competition ranges from small, single location service centers to large, multi-national companies. Our Custom Engineered Solutions business competes with domestic and international manufacturers and distributors.
While we may use acquisitions to build our presence in the industries we serve, we will also consider potential acquisitions in other industries, which could result in changes in our operations from those historically conducted by us. OPERATING SEGMENTS The Company’s reportable segments consist of the consolidated business segments identified above, which offer different services and are managed separately.
While we may use acquisitions to build our presence in the industries we serve, we will also consider potential acquisitions in other industries, which could result in changes in our operations from those historically conducted by us. 3 OPERATING SEGMENTS The Company’s reportable segments consist of the consolidated business segments identified above, which offer different services and are managed separately.
In addition to the Code of Ethics for Financial Executives, we have adopted a Code of Business Conduct and Ethics for directors, officers and employees (the Legal Compliance and Corporate Policy Manual), and established Corporate Governance Guidelines and adopted charters outlining the duties of our Audit, Human Resources and Compensation and Nominating/Governance Committees, copies of which may be found on our website.
In addition to the Code of Ethics for Financial Executives, we have adopted a Code of Business Conduct and Ethics for directors, officers and employees (the Legal Compliance and Corporate Policy Manual), and established Corporate Governance Guidelines and 11 adopted charters outlining the duties of our Audit, Human Resources and Compensation and Nominating/Governance Committees, copies of which may be found on our website.
We also provide 6 mechanical services such as maintenance agreements, installation, or replacement of mechanical equipment for commercial and industrial facilities. This segment provides services for a variety of project types, including office buildings, manufacturing facilities, data centers, wind farms, solar facilities, municipal infrastructure and health care facilities.
We also provide mechanical services such as maintenance agreements, installation, or replacement of mechanical equipment for commercial and industrial facilities. This segment provides services for a variety of project types, including office buildings, manufacturing facilities, data centers, wind farms, solar facilities, municipal infrastructure and health care facilities.
Our design services range from budget assistance to providing design-build and LEED (Leadership in Energy & Environmental Design) solutions to our end customers. Our maintenance and emergency services include critical plant shutdown, troubleshooting, emergency testing, preventative maintenance, and constant presence.
Our design services range from budget assistance to providing design-build and LEED (Leadership in Energy & Environmental Design) solutions to our end customers. Our maintenance and emergency services include 6 critical plant shutdown, troubleshooting, emergency testing, preventative maintenance, and constant presence.
We perform services across the United States from our 19 offices, which includes the segment headquarters located in Tempe, Arizona, and also provide dedicated onsite teams at our customers’ sites. Industry Overview Our Communications segment is driven by demand for computing and storage resources as a result of technology advancements and obsolescence and changes in data consumption patterns.
We perform services across the United States from our 24 offices, which includes the segment headquarters located in Tempe, Arizona, and also provide dedicated onsite teams at our customers’ sites. Industry Overview Our Communications segment is driven by demand for computing and storage resources as a result of technology advancements and obsolescence and changes in data consumption patterns.
McLauchlin was with Dynegy Inc., where she served as Senior Vice President and Controller from March 2009 to June 2011 and from June 2004 to March 2009 served in various other capacities in finance and accounting. She began her career with PricewaterhouseCoopers LLP after receiving her Master of Accounting from Rice University. Ms. McLauchlin is a Certified Public Accountant.
McLauchlin was employed by Dynegy Inc., where she served as Senior Vice President and Controller from March 2009 to June 2011 and from June 2004 to March 2009 served in various other capacities in finance and accounting. She began her career with PricewaterhouseCoopers LLP after receiving her Master of Accounting from Rice University. Ms. McLauchlin is a Certified Public Accountant.
Gendell held senior investment management positions at several other private investment firms, including Odyssey Partners, L.P., and began his career in investment banking over 35 years ago at Smith Barney, Harris Upham & Co., where he was involved in capital markets, corporate finance and M&A activity. Matthew J.
Gendell held senior investment management positions at several other private investment firms, including Odyssey Partners, L.P., and began his career in investment banking over 40 years ago at Smith Barney, Harris Upham & Co., where he was involved in capital markets, corporate finance and M&A activity. Matthew J.
Failure to comply with applicable regulations could result in substantial fines or revocation of our operating licenses or an inability to perform government work. 9 CAPITAL FACILITIES During fiscal year 2023, the Company maintained a revolving credit facility, as further described in Item 7.
Failure to comply with applicable regulations could result in substantial fines or revocation of our operating licenses or an inability to perform government work. 9 CAPITAL FACILITIES During fiscal year 2024, the Company maintained a revolving credit facility, as further described in Item 7.
At September 30, 2023, our Communications business has a record level of backlog. However, if customers in our end markets reduce their capital budgets due to economic, technological or other factors, this could result in a decrease in activity for our Communications segment.
At September 30, 2024, our Communications business has a record level of backlog. However, if customers in our end markets reduce their capital budgets due to economic, technological or other factors, this could result in a decrease in activity for our Communications segment.
Tontine’s sale of all or any portion of its shares could result in a change of control of the Company, which would trigger the change of control provisions in a number of our material agreements, including our credit agreement, bonding agreements with our sureties and our executive severance plan.
Tontine’s sale of all or a significant portion of its shares could result in a change of control of the Company, which would trigger the change of control provisions in a number of our material agreements, including our credit agreement, bonding agreements with our sureties and our executive severance plan.
He served as President of IES Communications from January 2017 to December 2021 and as Vice President of Operations of the segment from March 2007 to December 2016. Tracy A. McLauchlin , 54, has served as Senior Vice President, Chief Financial Officer and Treasurer of the Company since May 2015.
He served as President of IES Communications from January 2017 to December 2021 and as Vice President of Operations of the segment from March 2007 to December 2016. Tracy A. McLauchlin , 55, has served as Senior Vice President, Chief Financial Officer and Treasurer of the Company since May 2015.
Paper copies of these documents are also available free of charge upon written request to us. 11
Paper copies of these documents are also available free of charge upon written request to us.
Demand in the data center market remains strong, and we continue to provide structured cabling services for applications such as data centers, distribution centers, and high-tech manufacturing facilities. As technology evolves, we are focused on expanding our capabilities as an integrator of audio-visual and other building technology offerings, which continue to experience strong demand.
Demand in the data center market remains strong, and we continue to provide technology infrastructure services for applications such as data centers, distribution centers, and high-tech manufacturing facilities. As technology evolves, we are focused on expanding our capabilities as an integrator of audio-visual and other building technology offerings, which continue to experience strong demand.
No single customer accounted for more than 10% of our consolidated revenues during each of the years ended September 30, 2022 and 2021. We emphasize developing and maintaining relationships with our customers by providing superior, high-quality service. Management at each of our segments is responsible for determining sales strategies and sales activities.
No single customer accounted for more than 10% of our consolidated revenues during the year ended September 30, 2022. We emphasize developing and maintaining relationships with our customers by providing superior, high-quality service. Management at each of our segments is responsible for determining sales strategies and sales activities.
The Residential segment also provides services for the installation of residential solar power, both for new construction and existing residences. The Residential segment is made up of 80 total locations, which include the segment headquarters in Houston, Texas. These locations geographically cover the Sun-Belt, Western, Mid-Atlantic and Northeastern regions of the United States.
The Residential segment also provides services for the installation of residential solar power, both for new construction and existing residences. The Residential segment is made up of 75 total locations, which include the segment headquarters in Houston, Texas. These locations geographically cover the Sun-Belt, Western, Mid-Atlantic, Midwest and Northeastern regions of the United States.
The Commercial & Industrial segment consists of 16 locations, which includes the segment headquarters in Houston, Texas. Geographically, these locations cover Texas, Nebraska, Oregon, Wisconsin, and the Southeast and Mid-Atlantic regions.
The Commercial & Industrial segment consists of 17 locations, which includes the segment headquarters in Houston, Texas. Geographically, these locations cover Texas, Nebraska, Oregon, Wisconsin, and the Southeast and Mid-Atlantic regions.
Mary K. Newman , 43, has served as Vice President, General Counsel and Corporate Secretary of the Company since December 2019. Prior to joining IES, Ms.
Mary K. Newman , 44, has served as Vice President, General Counsel and Corporate Secretary of the Company since December 2019. Prior to joining IES, Ms.
“ Risk Factors ” of this Annual Report on Form 10-K. CUSTOMERS We have a diverse customer base. During the year ended September 30, 2023, one customer accounted for 12.0% of our consolidated revenues and no other customer accounted for more than 10% of our consolidated revenues.
“ Risk Factors ” of this Annual Report on Form 10-K. CUSTOMERS We have a diverse customer base. During both of the years ended September 30, 2024 and 2023, one customer accounted for 12.0% of our consolidated revenues and no other customer accounted for more than 10% of our consolidated revenues.
At all of our segments, partly as a result of the COVID-19 pandemic, we expanded online training offerings to help meet the needs of our changing workplaces. We believe our investment in training supports employee motivation and retention at the same time that it improves productivity and performance.
At all of our segments, partly in response to the COVID-19 pandemic, we expanded online training offerings to help meet the needs of our changing workplaces. We believe our investment in training supports employee motivation and retention at the same time that it improves productivity and performance.
This segment serves the steel, railroad, marine, petrochemical, pipeline, pulp and paper, wind energy, mining, automotive, power generation, scrap yards, data center, and utility industries. Our Infrastructure Solutions segment is comprised of 12 locations in Alabama, Georgia, Illinois, Indiana, Ohio, Oklahoma and West Virginia, and is headquartered in Massillon, Ohio.
This segment serves the steel, railroad, marine, petrochemical, pipeline, pulp and paper, wind energy, mining, automotive, power generation, scrap yards, data center, and utility industries. Our Infrastructure Solutions segment is comprised of 13 locations in Alabama, Georgia, Illinois, Indiana, Ohio, Oklahoma, Pennsylvania, South Carolina and West Virginia, and is headquartered in Massillon, Ohio.
Our Custom Power Solutions business includes the manufacture of custom commercial and industrial generator enclosures and the manufacture of custom-engineered power distribution equipment, including metal enclosed bus duct solutions used in power distribution.
Our Custom Engineered Solutions business includes the manufacture of custom commercial and industrial generator enclosures, the manufacture of custom-engineered power distribution equipment, including metal enclosed bus duct solutions used in power distribution, and structural steel fabrication and services.
The increase in our backlog year over year was primarily driven by strong demand and increased market share within our all segments.
The increase in our backlog year over year was primarily driven by strong demand and increased market share.
Our safety leadership continuously monitors and addresses safety performance, provides regular training and educational programs on safety and participates in numerous industry safety organizations. LOCATIONS As of September 30, 2023, we have 129 domestic locations.
Our safety leadership continuously monitors and addresses safety performance, provides regular training and educational programs on safety and participates in numerous industry safety organizations. 10 LOCATIONS As of September 30, 2024, we have 131 domestic locations.
Our human capital management objectives include recruiting, retaining, developing, incentivizing and integrating our current and prospective employees as well as prioritizing and protecting their safety. Our Employees At September 30, 2023, we had 8,427 employees, of which 8,357 were full-time employees. We are party to two collective bargaining agreements covering fewer than 40 employees within our Infrastructure Solutions segment.
Our human capital management objectives include recruiting, retaining, developing, incentivizing and integrating our current and prospective employees as well as prioritizing and protecting their safety. Our Employees At September 30, 2024, we had 9,485 employees, of which 9,423 were full-time employees. We are party to two collective bargaining agreements covering fewer than 30 employees within our Infrastructure Solutions segment.
These agreements are excluded from remaining performance obligations until work begins. We expect that $1,091.2 million of our September 30, 2023 backlog will result in revenue during fiscal 2024, with the remaining $466.8 million expected to be realized in fiscal 2025; however, there can be no assurance that this backlog will be completed within expected time frames or at all.
These agreements are excluded from remaining performance obligations until work begins. We expect that $1.3 billion of our September 30, 2024 backlog will result in revenue during fiscal 2025, with the remaining $0.5 billion expected to be realized in fiscal 2026; however, there can be no assurance that this backlog will be completed within expected time frames or at all.
Simmes , 48, was appointed President and Chief Operating Officer of the Company effective December 7, 2023; he previously served as Chief Operating Officer of the Company from December 3, 2021 to December 6, 2023. Mr. Simmes has spent 30 years at IES and its predecessors in a variety of roles.
Simmes , 49, has served as President and Chief Operating Officer of the Company since December 7, 2023; he previously served as Chief Operating Officer of the Company from December 3, 2021 to December 6, 2023. Mr. Simmes has spent 31 years at IES and its predecessors in a variety of roles.
Many state and local regulations governing electricians and mechanical services require permits and licenses to be held by individuals. In some cases, a required permit or license held by a single individual may be sufficient to authorize specified activities for all our electricians or mechanical service technicians who work in the state or county that issued the permit or license.
In some cases, a required permit or license held by a single individual may be sufficient to authorize specified activities for all our electricians or mechanical service technicians who work in the state or county that issued the permit or license.
We are committed to diversity and inclusion in the workplace, and our policies prohibit discrimination based on race, color, creed, gender, gender identity, sexual orientation, religion, marital status, national origin, disability, protected veteran status and relatives of protected veterans and any other status protected by local, state or federal law.
We are committed to diversity and inclusion in the workplace, and our policies prohibit discrimination based on race, color, sex, gender, gender identity, sexual orientation, religion, marital status, national origin, ethnicity, citizenship status, religious creed or belief, physical or mental disability, protected veteran status and relatives of protected veterans, marital or familial status, legally protected medical condition, genetic information and any other status protected by local, state or federal law.
Although we operate in multiple states, the majority of our single-family revenues are derived from services provided in Texas and Florida. The Texas market also remains an important part of our multi-family business; however, the majority of our multi-family revenue is earned across the Mid-Atlantic and Southeast.
Although we operate in multiple states, the majority of our single-family revenues are derived from services provided in Texas and Florida. The majority of our multi-family revenue is earned in Texas and across the Mid-Atlantic and Southeast regions.
We monitor project bidding and management practices at various levels within the Company. We maintain automobile, general liability and construction defect insurance for third-party health, bodily injury and property damage, as well as pollution coverage and workers’ compensation coverage, which we consider appropriate to insure against these risks. Our third-party insurance is subject to deductibles for which we establish reserves.
We 7 maintain automobile, general liability and construction defect insurance for third-party health, bodily injury and property damage, as well as pollution coverage and workers’ compensation coverage, which we consider appropriate to insure against these risks. Our third-party insurance is subject to deductibles for which we establish reserves.
The table below describes the percentage of our total revenues attributable to each of our four segments over 3 each of the last three years (percentage columns may not add due to rounding): Year Ended September 30, 2023 2022 2021 $ % $ % $ % (Dollars in thousands, Percentage of revenues) Communications $ 600,776 25.3 % $ 559,777 25.8 % $ 445,968 29.0 % Residential 1,279,504 53.8 % 1,131,414 52.2 % 687,347 44.7 % Infrastructure Solutions 217,353 9.1 % 167,113 7.7 % 146,980 9.6 % Commercial & Industrial 279,594 11.8 % 308,504 14.2 % 256,198 16.7 % Total Consolidated $ 2,377,227 100.0 % $ 2,166,808 100.0 % $ 1,536,493 100.0 % For additional financial information by segment, see Note 11, “Operating Segments” in the notes to our Consolidated Financial Statements.
The table below describes the percentage of our total revenues attributable to each of our four segments over each of the last three years (percentage columns may not add due to rounding): Year Ended September 30, 2024 2023 2022 $ % $ % $ % (Dollars in thousands, Percentage of revenues) Communications $ 776,474 26.9 % $ 600,776 25.3 % $ 559,777 25.8 % Residential 1,388,840 48.2 % 1,279,504 53.8 % 1,131,414 52.2 % Infrastructure Solutions 351,096 12.2 % 217,353 9.1 % 167,113 7.7 % Commercial & Industrial 367,948 12.8 % 279,594 11.8 % 308,504 14.2 % Total Consolidated $ 2,884,358 100.0 % $ 2,377,227 100.0 % $ 2,166,808 100.0 % For additional financial information by segment, see Note 11, “Operating Segments” in the notes to our Consolidated Financial Statements.
However, such protections are not included in every contract or project, and in such cases, we may not be fully reimbursed for increases in commodity prices by our customers and may be exposed to commodity price volatility on longer-term projects where we have prepaid for commodities. 7 RISK MANAGEMENT The primary risks in our existing operations include project bidding and management, bodily injury, property and environmental damage, and construction defects.
However, such protections are not included in every contract or project, and in such cases, we may not be fully reimbursed for increases in commodity prices by our customers and may be exposed to commodity price volatility on longer-term projects where we have prepaid for commodities.
Tontine owns approximately 58 percent of our outstanding common stock based on Amendment No. 27 to the Schedule 13D filed by Tontine with the United States Securities and Exchange Commission (the "SEC") on September 8, 2023, and the Company's shares outstanding as of November 30, 2023.
Tontine owns approximately 55 percent of our outstanding common stock based on a Form 4 filed by Tontine with the United States Securities and Exchange Commission (the "SEC") on September 16, 2024, and the Company's shares outstanding as of November 18, 2024.
For example, our Residential segment has established the IES Residential Education Center, a dedicated facility that trains employees from around the country in the technical skills necessary for a successful career in residential electrical contracting.
For example, our Residential segment has established two residential education centers, which are dedicated facilities that train employees from around the country in the technical skills necessary for successful careers in residential electrical, plumbing and HVAC contracting.
The table below summarizes our remaining performance obligations and backlog by segment: September 30, 2023 2022 Remaining Performance Obligations Agreements without an enforceable obligation (1) Backlog Remaining Performance Obligations Agreements without an enforceable obligation (1) Backlog (Dollars in millions) Communications $ 369,928 $ 42,239 $ 412,167 $ 322,772 $ 63,664 $ 386,436 Residential 414,179 103,657 517,836 404,038 120,119 524,157 Infrastructure Solutions 109,082 240,683 349,765 54,030 120,552 174,582 Commercial & Industrial 250,234 28,010 278,244 186,161 15,113 201,274 Total $ 1,143,423 $ 414,589 $ 1,558,012 $ 967,001 $ 319,448 $ 1,286,449 (1) Our backlog includes signed agreements and letters of intent that we do not have a legal right to enforce prior to beginning work.
The table below summarizes our remaining performance obligations and backlog by segment: September 30, 2024 2023 Remaining Performance Obligations Agreements without an enforceable obligation (1) Backlog Remaining Performance Obligations Agreements without an enforceable obligation (1) Backlog (Dollars in millions) Communications $ 448,783 $ 66,878 $ 515,661 $ 369,928 $ 42,239 $ 412,167 Residential 329,364 95,124 424,488 414,179 103,657 517,836 Infrastructure Solutions 100,815 426,749 527,564 109,082 240,683 349,765 Commercial & Industrial 296,733 21,708 318,441 250,234 28,010 278,244 Total $ 1,175,695 $ 610,459 $ 1,786,154 $ 1,143,423 $ 414,589 $ 1,558,012 (1) Our backlog includes signed agreements and letters of intent that we do not have a legal right to enforce prior to beginning work.
Gendell is the founder and managing member of Tontine, the majority stockholder of the Company. Mr. Gendell formed Tontine in 1995 and manages all of the investment decisions at the firm. Prior to forming Tontine, Mr.
Gendell has also served as a director and as Chairman of the Board since November 2016. Mr. Gendell is the founder and managing member of Tontine, our controlling shareholder. Mr. Gendell formed Tontine in 1995 and manages all of the investment decisions at the firm. Prior to forming Tontine, Mr.
A significant portion of our Communications business volume is generated from long-term, repeat customers, some of whom use IES as a preferred provider for major projects. Our long-term strategy is to improve our position as a preferred solutions and services provider to large national corporations and strategic local companies.
Our long-term strategy is to improve our position as a preferred solutions and services provider to large national corporations and strategic local companies.
Although we expect fiscal 2024 multi-family revenues will be supported by our current backlog, the anticipated reduction in multi-family housing starts may impact our ability to maintain current levels of backlog. Sales and Marketing Demand for our Residential services is highly dependent on the number of single-family and multi-family home starts in the markets we serve.
As a result, we expect a reduction in multi-family revenue for fiscal 2025 compared with fiscal 2024. Sales and Marketing Demand for our Residential services is highly dependent on the number of single-family and multi-family home starts in the markets we serve.
Gendell, 64, has served as the Chief Executive Officer of the Company since October 1, 2020; he previously served as Interim Chief Executive Officer from July 31, 2020 to September 30, 2020. Mr. Gendell has also served as a director and as Chairman of the Board since November 2016. Mr.
EXECUTIVE OFFICERS OF THE REGISTRANT Certain information with respect to each executive officer is as follows: Jeffrey, L. Gendell, 65, has served as the Chief Executive Officer of the Company since October 1, 2020; he previously served as Interim Chief Executive Officer from July 31, 2020 to September 30, 2020. Mr.
In addition to our 2 executive and corporate offices, as of September 30, 2023, we have 19 locations within our Communications business, 80 locations within our Residential business, 12 locations within our 10 Infrastructure Solutions business and 16 locations within our Commercial & Industrial business.
In addition to our 2 executive and corporate offices, as of September 30, 2024, we have 24 locations within our Communications business, 75 locations within our Residential business, 13 locations within our Infrastructure Solutions business and 17 locations within our Commercial & Industrial business. This geographic diversity helps to reduce our exposure to unfavorable economic developments in any given region.
Although supply of most raw materials normalized during fiscal 2023, we continue to experience longer lead times in sourcing certain components. Such delays may lead to project inefficiencies resulting from schedule extensions. We are also exposed to increases in the prices of certain commodities.
Delivery times are typically short for most raw materials and standard components, but during periods of peak demand, may extend to one month or more. Fluctuations in lead times in sourcing certain components may lead to project inefficiencies resulting from schedule extensions. We are also exposed to increases in the prices of certain commodities.
Sales and Marketing Our sales strategy relies on a concentrated business development effort, with centralized marketing programs and direct end-customer communications and relationships. Due to the mission critical nature of the facilities we service, our end-customers significantly rely upon our past performance record, technical expertise and specialized knowledge.
Due to the mission critical nature of the facilities we service, our end-customers significantly rely upon our past performance record, technical expertise and specialized knowledge. A significant portion of our Communications business volume is generated from long-term, repeat customers, some of whom use IES as a preferred provider for major projects.
Entering fiscal 2024, we are cautious about demand for single-family housing, as higher interest rates on mortgages and the impacts of inflation on materials and labor costs have resulted in a decline in housing affordability. We also expect a slowing in multi-family housing starts, as changing credit conditions have made it more difficult and more expensive to finance new projects.
In our single-family business, we remain cautious about demand for single-family housing, as elevated mortgage rates and the impacts of inflation on materials and labor costs have resulted in a decline in housing affordability. In addition, expectations of falling interest rates over the next year could cause consumers to delay home purchases in anticipation of lower mortgage costs.
Removed
Our sales efforts include a variety of strategies, including a concentrated focus on national and regional homebuilders and multi-family developers and a local sales strategy for single and multi-family housing projects. Our cable and solar revenues are typically generated through third parties specializing in these industries who select us as a preferred provider of installation services.
Added
While demand remains strong across our key end markets, the pace of growth in this business may also be slowed by the availability of labor. Sales and Marketing Our sales strategy relies on a concentrated business development effort, with centralized marketing programs and direct end-customer communications and relationships.
Removed
Delivery times are typically short for most raw materials and standard components, but during periods of peak demand, may extend to one month or more. However, during fiscal 2021 and 2022, supply chain interruptions became increasingly common, primarily as a result of the COVID-19 pandemic and its aftermath.
Added
However, in the longer term, we still expect strong demand for new single-family housing. In our multi-family business, elevated interest rates in fiscal 2024 and tighter lending conditions for project owners have resulted in a reduction in backlog at September 30, 2024 compared with September 30, 2023.
Removed
This geographic diversity helps to reduce our exposure to unfavorable economic developments in any given region. EXECUTIVE OFFICERS OF THE REGISTRANT Certain information with respect to each executive officer is as follows: Jeffrey, L.
Added
Our long-term strategy is to continue to be a leading provider of electrical services to the residential market, and to continue to expand our offerings of plumbing and HVAC services into markets where we previously offered only electrical services, while also expanding all service offerings into new geographic markets.
Added
RISK MANAGEMENT The primary risks in our existing operations include project bidding and management, bodily injury, property and environmental damage, and construction defects. We monitor project bidding and management practices at various levels within the Company.
Added
Many state and local regulations governing electricians and mechanical services require permits and licenses to be held by individuals engaged in such services.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

59 edited+23 added−8 removed97 unchanged
Biggest changeRisks Relating to our Financial Results, Financing and Liquidity Negative conditions in the credit and capital markets may adversely impact our ability to operate our business. In the past, the level of demand from our customers for our services has been adversely impacted by slowdowns in our customers' industries as well as in the economy in general.
Biggest changeContinued labor constraints may limit our ability to grow and may limit our profitability due to the impact of rising wages. 17 Risks Relating to our Financial Results, Financing and Liquidity The impact on our customers of negative conditions in the credit and capital markets may adversely affect our business.
Sales of a substantial number of shares of our common stock by holders of our common stock, including Tontine, or the perception that such sales could occur, could adversely affect the market price of our common stock by introducing a large number of shares into the market.
Substantial sales of our common stock could adversely affect our stock price. Sales of a substantial number of shares of our common stock by holders of our common stock, including Tontine, or the perception that such sales could occur, could adversely affect the market price of our common stock by introducing a large number of shares into the market.
Although our information technology systems, networks and infrastructure are protected through our policies, procedures and physical and software safeguards, our information technology environment is still vulnerable to natural disasters, power losses, telecommunication failures, deliberate intrusions, inadvertent user misuse or error, computer viruses, malicious code, ransomware attacks, acts of terrorism and other cyber security risks, which could cause a loss of critical data, or release of sensitive information.
Although our information technology systems, networks and infrastructure are protected through our policies, procedures and physical and software safeguards, our information technology environment is still vulnerable to natural disasters, power losses, telecommunication failures, deliberate intrusions, inadvertent user misuse or error, computer viruses, malicious code, ransomware 16 attacks, acts of terrorism and other cyber security risks, which could cause a loss of critical data, or release of sensitive information.
Alternatively, if a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, the claims as to which they are intended to apply, then we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial position or results of operations.
Alternatively, if a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, the claims as to which they are intended to apply, then we may incur additional costs associated with 20 resolving such matters in other jurisdictions, which could adversely affect our business, financial position or results of operations.
Alternatively, our failure to diversify from existing markets may limit our future growth. In addition, we have made, and may continue to make, strategic investments in debt or equity securities of publicly traded and privately held companies, including early-stage companies and more established companies. We are subject to risks associated with these investments.
Alternatively, our failure to diversify from existing markets may limit our future growth. In addition, we have made, and may continue to make, investments in debt or equity securities of publicly traded and privately held companies, including early-stage companies and more established companies. We are subject to risks associated with these investments.
In addition, if our safety record were to substantially deteriorate over time, our customers could cancel our contracts or not award us future business. Our current insurance coverage may not be adequate, and we may not be able to obtain insurance at acceptable rates, or at all.
In addition, if our safety record were to substantially deteriorate over time, our customers could cancel our contracts or not award us future business. 15 Our current insurance coverage may not be adequate, and we may not be able to obtain insurance at acceptable rates, or at all.
Other covenants, among other things, limit our ability to provide liens, restrict fundamental changes, limit transactions with affiliates and subsidiaries, restrict changes to our organization documents, limit asset dispositions, limit investments, 17 limit the ability to incur debt, restrict certain payments to shareholders, limit our ability to repurchase our stock, and limit the ability to change the nature of our business.
Other covenants, among other things, limit our ability to provide liens, restrict fundamental changes, limit transactions with affiliates and subsidiaries, restrict changes to our organization documents, limit asset dispositions, limit investments, limit the ability to incur debt, restrict certain payments to shareholders, limit our ability to repurchase our stock, and limit the ability to change the nature of our business.
We cannot guarantee that any member of management at the corporate or operating segment level will continue in their capacity for any particular period of time, and there is significant 16 competition in our industry for managerial personnel.
We cannot guarantee that any member of management at the corporate or operating segment level will continue in their capacity for any particular period of time, and there is significant competition in our industry for managerial personnel.
While we have experienced increased liquidity in our stock during recent years compared with historical levels, we cannot say with certainty that a more active and liquid trading market for our common stock will continue to develop.
While we have experienced increased liquidity in our stock during recent years compared with historical levels, we cannot say with certainty that a more active and liquid trading market for our common stock will continue to 19 develop.
Accordingly, our performance in any particular quarter may not be indicative of the results that can be expected for any other quarter or for the entire year. 14 We may experience difficulties in managing our billings and collections.
Accordingly, our performance in any particular quarter or year may not be indicative of the results that can be expected for any other quarter, for the entire year, or for any other year. We may experience difficulties in managing our billings and collections.
When appropriate, we establish provisions against possible exposures, and we adjust these provisions from time to time, but our 13 assumptions and estimates related to these exposures might prove to be inadequate or inaccurate.
When appropriate, we establish provisions against possible exposures, and we adjust these provisions from time to time, but our assumptions and estimates related to these exposures might prove to be inadequate or inaccurate.
Pursuant to a resale shelf registration statement filed by the Company, Tontine has the ability to resell any or all of its registered shares from time to time in one or more offerings as long as the registration statement remains effective and the Company remains eligible to use it, as described further in the registration statement and in any prospectus supplement filed in connection with an offering pursuant to the shelf registration statement.
Pursuant to such resale shelf registration statement, Tontine has the ability to resell any or all of its registered shares from time to time in one or more offerings as long as the registration statement remains effective and the Company remains eligible to use it, as described further in the registration statement and in any prospectus supplement filed in connection with an offering pursuant to the shelf registration statement.
This is subject to our operational performance, as well as general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
This is subject to our operational performance, as well as general economic, financial, capital market, competitive, legislative, regulatory and other factors that are beyond our control.
Prolonged uncertainties in the credit market, or the return of constrained credit market conditions, including the impact of rising interest rates on the housing markets, could have adverse effects on our customers, which would adversely affect our financial condition and results of operations.
Prolonged uncertainties in the credit market, or the return of constrained credit market conditions, including the impact of interest rates in the housing markets, could adversely affect demand, which would have adverse effects on our financial condition and results of operations.
The impact of the COVID-19 pandemic or any future epidemics, pandemics or other public health emergencies on our business is difficult to predict, but adverse impacts could include the potential for job site closures or work stoppages, supply chain disruptions, delays in awarding new project bids, construction delays, reduced demand for our services, delays in our ability to collect from our customers, or illness of management or other employees.
The impact of future epidemics, pandemics or other public health emergencies on our business is difficult to predict, but adverse impacts could include the potential for job site closures or work stoppages, supply chain disruptions, delays in 14 awarding new project bids, construction delays, reduced demand for our services, delays in our ability to collect from our customers, or illness of management or other employees.
We have a work force of over 8,000 employees, and our labor costs may fluctuate based on availability of and demand for workers as well as other labor related risks, including risks related to collective bargaining agreements, benefits arrangements, wage and hour claims and other compensation arrangements.
We have a work force of over 9,000 employees, and our labor costs may fluctuate based on availability of and demand for workers as well as other labor related risks, including risks related to collective bargaining agreements, benefits arrangements, increased healthcare costs, wage and hour claims and other compensation arrangements.
Our ability to continue to grow our business, including through acquisitions and the funding of working capital requirements, as well as our ability to make payments on or refinance any indebtedness we may incur, will depend on our ability to generate cash in the future.
Our ability to continue to grow our business, including through acquisitions and the funding of working capital requirements, as well as our ability to make payments on or refinance any indebtedness we may incur, will depend on our ability to access capital markets and generate cash from operations in the future.
Tontine’s sale of all or any portion of its shares could result in a change of control of the Company, which would trigger the change of control provisions in a number of our material agreements, including our credit agreement, bonding agreements with our sureties, and our executive severance plan.
Tontine’s sale of all or a significant portion of its shares could result in a change of control of the Company, which may trigger the change of control provisions in a number of our material agreements, including our credit agreement, bonding agreements with our sureties, and our executive severance plan.
Variations from estimated contract costs along with other risks inherent in performing fixed price contracts, including our ability to successfully manage projects, may result in actual revenue and gross profits for a project differing from those we originally estimated and could result in losses on projects.
Variations from estimated contract costs along with other risks inherent in performing fixed price contracts, including our ability to successfully manage and execute projects, have in the past resulted in, and may in the future result in, actual revenue and gross profits for a project differing from those we originally estimated and could result in losses on projects.
In all of our businesses, we are subject to potential claims and litigation, including contractual disputes, warranty claims, and claims related to our compliance with legal and regulatory requirements.
Litigation and claims can cause unexpected losses. In all of our businesses, we are subject to potential claims and litigation, including contractual disputes, warranty claims, and claims related to our compliance with legal and regulatory requirements.
Although we currently do not have any intention of issuing additional common stock (other than pursuant to our equity compensation plans) or preferred stock, we may do so in the future in order to meet our capital needs.
Although we currently do not have any intention of issuing additional common stock (other than pursuant to our equity compensation plans) or preferred stock, we may do so in the future as consideration for certain acquisitions and in order to meet our capital needs.
It is not possible for us to predict the future level of demand for our services by these customers, and if one or more of them were to significantly delay, reduce or curtail activity, or stop accepting bids from us, it could have a material impact on our operating results.
Although we have long-standing relationships with some of these significant customers, it is not possible for us to predict the future level of demand for our services by these customers, and if one or more of them were to significantly delay, reduce or curtail activity, or stop accepting bids from us, it could have a material impact on our operating results.
Reductions in backlog due to cancellation of one or more contracts by a customer or for other reasons could significantly reduce the revenue and profit we actually receive from contracts included in backlog.
Reductions in backlog due to cancellation of one or more contracts by a customer or for other reasons, or our failure to execute projects in backlog as expected, could significantly reduce the revenue and profit we actually receive from contracts included in backlog.
One customer represented approximately 12.0% of our consolidated revenue in fiscal 2023, and we have certain other customers that are also significant to our individual operating segments.
We have one customer that represented approximately 12.0% of our consolidated revenue in fiscal 2024, and there are other customers that are significant to our individual operating segments.
As of September 30, 2023, we had the ability to issue 619,735 shares of common stock, including upon the exercise of options, as future grants under our existing equity compensation plans.
As of September 30, 2024, we had the ability to issue 581,169 shares of common stock, including upon the exercise of options, as future grants under our existing equity compensation plans.
Risks Relating to the Operations of our Business Demand for our services is cyclical and vulnerable to economic downturns affecting the industries we serve. Demand for our services has been, and will likely continue to be, cyclical in nature and vulnerable to downturns in the general economy, as well as in the construction industry and the housing market.
Risks Relating to the Operations of our Business Demand for our services is cyclical and vulnerable to economic downturns affecting the industries we serve. Demand for our services has been, and will likely continue to be, cyclical in nature and vulnerable to downturns in the construction industry, the housing market, and other industries in which our end customers operate.
In addition, if we do not comply with these laws and regulations, we could be subject to material administrative, civil or criminal penalties, or other substantial liabilities. Compliance with future changes in environmental laws and regulations, including those relating to climate change, could require significant expenditures.
In addition, if we do not comply with these laws and regulations, we could be subject to material administrative, civil or criminal penalties, or other substantial liabilities. Compliance with current and future environmental laws and regulations, including those relating to climate change, could adversely impact our business.
Some of our past acquisitions and investments have not performed as expected, and there is no assurance that future acquisitions and investments will perform as expected or generate a positive return on investment due to factors we could not predict prior to the acquisition or due to incorrect investment assumptions.
Some of our past acquisitions and investments have not performed as expected, and there is no assurance that future acquisitions and investments will perform as expected or generate a positive return on investment due to factors we could not predict prior to the acquisition or due to incorrect investment assumptions. 13 Acquisitions, dispositions and other strategic transactions that we may pursue could have a negative effect on our results of operations.
Our authorized capital includes 100,000,000 shares of common stock and 10,000,000 shares of preferred stock. As of September 30, 2023, we had 22,049,529 shares of common stock issued, 20,194,218 shares of common stock outstanding and no shares of preferred stock issued or outstanding.
Our authorized capital includes 100,000,000 shares of common stock and 10,000,000 shares of preferred stock. As of September 30, 2024, we had 22,049,529 shares of common stock issued, 19,971,670 shares of common stock outstanding and no shares of preferred stock issued or outstanding.
In addition, due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of any such actions or proceedings, which could result in significant expense, damage to our reputation and diversion of management’s attention from our business.
In addition, due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of any such actions or proceedings, which could result in significant expense, damage to our reputation and diversion of management’s attention from our business. Latent defect litigation is normal for residential home builders in some parts of the country.
While we have taken what we believe are appropriate precautions to minimize safety risks, we have experienced serious accidents in the past and may experience additional accidents in the future. Serious accidents may subject us to penalties, civil litigation or criminal prosecution. Our insurance does not cover all types or amounts of liabilities.
While we have invested significant efforts in our safety programs in an effort to minimize safety risks, we have experienced serious accidents in the past and may experience additional accidents in the future. Serious accidents may subject us to penalties, civil litigation or criminal prosecution. Our insurance does not cover all types or amounts of liabilities.
Internal controls over financial reporting and disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objective will be met.
General Risks Our internal controls over financial reporting and our disclosure controls and procedures may not prevent all possible errors that could occur. Internal controls over financial reporting and disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objective will be met.
No assurance can be given that our insurance or our provisions for incurred claims and incurred but not reported claims will be adequate to cover all losses or liabilities we may incur in our operations; nor can we provide assurance that we will be able to maintain adequate insurance at reasonable rates. Litigation and claims can cause unexpected losses.
No assurance can be given that our insurance or our provisions for incurred claims and incurred but not reported claims will be adequate to cover all losses or liabilities we may incur in our operations, including employee health care costs, which have increased in recent years; nor can we provide assurance that we will be able to maintain adequate insurance at reasonable rates.
If a taxing authority differs with our tax positions, our results may be adversely affected. Our effective tax rate and cash paid for taxes are impacted by the tax positions that we have adopted. Taxing authorities may not always agree with the positions we have taken.
Changes in tax positions or changes in tax laws may adversely affect our results. Our effective tax rate and cash paid for taxes are impacted by the tax positions that we have adopted. Taxing authorities may not always agree with the positions we have taken.
While the exclusive forum provision applies to state and federal law claims, our shareholders will not be deemed to have waived our compliance with, and the exclusive forum provision will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under, the federal securities laws, including the Exchange Act, or the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 19 General Risks Our internal controls over financial reporting and our disclosure controls and procedures may not prevent all possible errors that could occur.
While the exclusive forum provision applies to state and federal law claims, our shareholders will not be deemed to have waived our compliance with, and the exclusive forum provision will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under, the federal securities laws, including the Exchange Act, or the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
In addition, a lack of skilled labor or increased turnover rates within our employee base could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees. Continued labor constraints may limit our ability to grow and may limit our profitability due to the impact of rising wages.
In addition, a lack of skilled labor or increased turnover rates within our employee base could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees.
At September 30, 2023, we had recorded $92.4 million of goodwill on our Consolidated Balance Sheets.
At September 30, 2024, we had recorded $94.0 million of goodwill on our Consolidated Balance Sheets.
There are also several large private regional companies and a small number of large public companies from which we face competition in these industries.
The industries in which we compete are highly fragmented and are generally served by many small, owner-operated private companies. There are also several large private regional companies and a small number of large public companies from which we face competition in these industries.
To the extent climate change results in an increase in extreme weather events and adverse weather conditions, the likelihood of a negative impact on our results of operations may increase. Due to differing regional economic conditions, our results may fluctuate from period to period. Our quarterly results may also be affected by regional economic conditions that affect the construction market.
To the extent climate change results in an increase in extreme weather events and adverse weather conditions, the likelihood of a negative impact on our results of operations may increase. Our results may fluctuate from period to period due to cyclicality, regional economic conditions, or other factors.
We cannot provide assurance that our business will generate sufficient cash flow from operations or asset sales or that future borrowings will be available to us under our credit facility in an amount sufficient to enable us to complete acquisitions, to service any debt we may incur or to fund our other liquidity needs.
There can be no assurance that our business will generate sufficient cash flow from operations or asset sales, or have access to sources of cash from the capital markets or from borrowings under our credit facility, in amounts sufficient to enable us to complete acquisitions, to service any debt we may incur or to fund our other liquidity needs.
The COVID-19 pandemic has adversely impacted our business, and this pandemic, along with other potential public health emergencies, could have a future materially adverse impact on our business, including our financial condition, cash flows and results of operations.
Epidemics, pandemics, and other potential public health emergencies could have a future materially adverse impact on our business, including our financial condition, cash flows and results of operations. Pandemics and other public health emergencies, such as the COVID-19 pandemic, have had adverse impacts on our results of operations in the past.
Changes in law, regulations or requirements, or a material failure to comply with any of them, could increase our costs and have other negative impacts on our business by, among other things, increasing costs, harming our reputation and, in some instances, causing us to be in violation of our contractual obligations. 15 Disruptions to the proper functioning of our information technology systems or security breaches of our critical data, sensitive information or information technology systems could disrupt operations and cause increases in costs, decreases in revenues and/or harm to our reputation.
Changes in law, regulations or requirements, or a material failure to comply with any of them, could increase our costs and have other negative impacts on our business by, among other things, increasing costs, harming our reputation and, in some instances, causing us to be in violation of our contractual obligations.
In a weak economic environment, particularly in a period of restrictive credit markets, we may experience greater difficulties in collecting payments from, and negotiating change orders and/or claims with, our customers due to, among other reasons, a diminution in our ultimate customers’ access to the credit markets.
Any such deferrals would inhibit our growth and would adversely affect our results of operations. In a weak economic environment, particularly in a period of restrictive credit markets, we may experience greater difficulties in collecting payments from our customers due to, among other reasons, a diminution in our ultimate customers’ access to the credit markets.
A significant portion of our revenue is recognized using the percentage-of-completion method of accounting, utilizing the cost-to-cost method, which results in our recognizing contract revenues and earnings ratably over the contract term in proportion to contract costs incurred. The earnings or losses recognized on individual contracts are based on estimates of contract revenues, costs and profitability.
Our use of percentage-of-completion accounting could result in a reduction or elimination of previously reported profits. A significant portion of our revenue is recognized using the percentage-of-completion method of accounting, utilizing the cost-to-cost method, which results in our recognizing contract revenues and earnings ratably over the contract term in proportion to contract costs incurred.
Additionally, Tontine is in the business of investing in companies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us or act as suppliers or customers of the Company.
Additionally, Tontine is in the business of investing in companies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us or act as suppliers or customers of the Company. Most of Tontine's shares are registered for resale on a resale shelf registration statement filed by the Company with the SEC.
Acquisitions, dispositions and other strategic transactions that we may pursue could have a negative effect on our results of operations. We are actively seeking to engage in acquisitions of operations, assets and investments, or to develop new types of work or processes, and we may seek to engage in dispositions of certain operations, assets or investments from time to time.
We are actively seeking to engage in acquisitions of operations, assets and investments, or to develop new types of work or processes, and we may seek to engage in dispositions of certain operations, assets or investments from time to time.
If the costs associated with labor and commodities, such as copper, aluminum, steel, electrical components, fuel, and certain plastics, increase due to low supply, inflation, general market conditions, supply chain disruptions and delays, or other forces, losses may be incurred.
Depending upon the size of a particular project, variations from estimated contract costs can have a significant impact on our operating results. 12 If the costs associated with labor and commodities, such as copper, aluminum, steel, electrical components, fuel, and certain plastics, increase due to low supply, inflation, general market conditions, supply chain disruptions and delays, or other forces, losses may be incurred.
Some of our materials have been and may continue to be subject to sudden and significant price increases, and continued high demand and low supply for those resources may lead to additional price increases. We are also exposed to volatility in energy prices, particularly as they relate to fuel prices for our fleet vehicles.
Some of our materials have been and may continue to be subject to sudden and significant price increases, and continued high demand and low supply for those resources may lead to additional price increases.
We review our estimates of contract revenue, costs and profitability on an ongoing basis.
The earnings or losses recognized on individual contracts are based on estimates of contract revenues, costs and profitability. We review our estimates of contract revenue, costs and profitability on an ongoing basis.
In addition, our ability to secure new contracts depends on our ability to maintain all required electrical, construction, mechanical and business licenses. If we fail to successfully transfer, renew or obtain such licenses where applicable, we 12 may be unable to compete for new business.
In addition, we are required to maintain certain electrical, construction, mechanical and business licenses. If we fail to successfully transfer, renew or obtain such licenses where applicable, we may experience increased costs and other negative impacts on our business.
Tontine owns approximately 58 percent of the Company’s outstanding common stock based on Amendment No. 27 to the Schedule 13D filed by Tontine with the SEC on September 8, 2023, and the Company's shares outstanding as of November 30, 2023.
Tontine owns approximately 55 percent of the Company’s outstanding common stock based on a Form 4 filed by Tontine with the SEC on September 16, 2024, and the Company's shares outstanding as of November 18, 2024.
If clients delay in paying or fail to pay a significant amount of our outstanding receivables, or we fail to successfully negotiate a significant portion of our change orders and/or claims with customers, it could have an adverse effect on our liquidity, results of operations, and financial position. We have adopted tax positions that a taxing authority may view differently.
If clients delay in paying or fail to pay a significant amount of our outstanding receivables, it could have an adverse effect on our liquidity, results of operations, and financial position. To fund our working capital requirements, complete acquisitions and service any debt we may incur, we may require a significant amount of cash.
Regulatory requirements could result in significant compliance costs and liabilities. We have operations throughout the United States and are subject to multiple state and local regulations. In addition, our segments, particularly our Commercial & Industrial segment, may be subject to federal laws and requirements applicable to government contractors.
Any increases in our latent defect claims and litigation could place pressure on our profitability. Regulatory requirements could result in significant compliance costs and liabilities. We have operations throughout the United States and are subject to multiple state and local regulations.
Our 129 locations are located in 28 states, which exposes us to a variety of different state and local laws and regulations, including those pertaining to electrical contractor and other licensing requirements. These laws and regulations govern many aspects of our business, and there are often different standards and requirements in different locations.
If we fail to comply with those requirements, we may be subject to fines, penalties or suspension from doing business with the federal government. Our 131 locations are located in 27 states, which exposes us to a variety of different state and local laws and regulations, including those pertaining to electrical contractor and other licensing requirements.
Because of this, it may be more difficult for shareholders to sell a substantial number of shares for the same price at which shareholders could sell a smaller number of shares. 18 We may issue additional shares of common stock, preferred stock or convertible securities that will dilute the percentage ownership interest of existing stockholders and may dilute the book value per share of our common stock.
This lower liquidity, along with the other risk factors discussed herein, may impact our stock price in the future. We may issue additional shares of common stock, preferred stock or convertible securities that will dilute the percentage ownership interest of existing stockholders and may dilute the book value per share of our common stock.
The failure to bid and be awarded projects, cancellations of projects or delays in project start dates could affect our ability to deploy our assets profitably. Further, when we are awarded contracts, we face additional risks that could affect whether, or when, work will begin.
The failure to bid and be awarded projects, cancellations of projects or delays in project start dates could affect our ability to deploy our assets profitably. In addition, our ability to secure new contracts depends on our ability to maintain all required electrical, construction, mechanical and business licenses.
Extreme weather conditions (such as hurricanes or other storms, droughts, extreme heat or cold, wildfires and floods) may limit the availability of resources, increase our costs, damage property, disrupt our workforce, or may cause projects to be cancelled. As we have expanded our operations in coastal areas, particularly Florida, these risks have increased.
Extreme weather conditions (such as hurricanes or other storms, droughts, extreme heat or cold, wildfires and floods) have from time to time had, and may in the future have, a negative impact on our business, including by limiting the availability of resources, increasing our costs, damaging property, disrupting our workforce, or causing projects to be delayed or cancelled.
We could experience a decrease in profitability if we are unable to replace canceled, completed or expired contracts with new work.
We could experience a decrease in profitability if we are unable to replace canceled, completed or expired contracts with new work. We derive a meaningful portion of our revenues from a small number of customers, and the loss of one or more of these customers could adversely affect our revenues, results of operations, and financial condition.
To fund our working capital requirements, complete acquisitions and service any debt we may incur, we may require a significant amount of cash. Our ability to generate cash depends on many factors that are beyond our control.
Our ability to generate cash from operations or to access the capital markets for required funding depends on many factors that are beyond our control.
Removed
The highly competitive nature of our industries could affect our profitability by reducing our revenues or profit margins. The industries in which we compete are highly fragmented and are generally served by many small, owner-operated private companies.
Added
We could be adversely impacted by changes in general economic conditions, including the effects of inflation, supply chain constraints, and an economic downturn or recession.
Removed
Depending upon the size of a particular project, variations from estimated contract costs can have a significant impact on our operating results.
Added
Our business and the industries in which we operate are vulnerable to changing macroeconomic conditions, including supply chain constraints, high rates of inflation, changes in consumer sentiment, elevated interest rates, and market disruptions resulting from a number of factors, including geo-political events such as the Ukraine-Russia war, the conflict in the Middle East, and trade tensions between the U.S. and China.
Removed
The COVID-19 pandemic and its impact on markets, the supply chain, and availability of labor has had a number of adverse impacts on our results of operations, and it continues to influence trends affecting our business.
Added
These and other market factors have negatively impacted, and may continue to negatively impact, our revenues and our cost for labor, materials, utilities, and other goods and services as well as our ability to collect on our outstanding receivables, to the extent our customers are affected by the same negative conditions.
Removed
Although supply of most raw materials normalized during fiscal 2023, we may continue to experience increased prices or longer delivery times for certain materials necessary for our projects.
Added
Further, if the U.S. economy experiences a downturn or recession, our customers may be unable to obtain financing for new projects, or they may decide to delay or cancel projects even if they have credit available to them.
Removed
Latent defect litigation is normal for residential home builders in some parts of the country, as well as in certain areas of the commercial market. Any increases in our latent defect claims and litigation could place pressure on the profitability of the Residential and Commercial & Industrial segments of our business.
Added
As a result, these conditions have had, and they or any similar future conditions may continue to have, adverse impacts on our business, financial condition and results of operations. The highly competitive nature of our industries could affect our profitability by reducing our revenues or profit margins.
Removed
Any such deferrals would inhibit our growth and would adversely affect our results of operations.
Added
If we fail to successfully transfer, renew or obtain such licenses where applicable, we may be unable to compete for new business. Further, when we are awarded contracts, we face additional risks that could affect whether, or when, work will begin.
Removed
Our use of percentage-of-completion accounting could result in a reduction or elimination of previously reported profits, and we may be adversely impacted by new accounting, control and operating procedures.
Added
We rely on third parties, including subcontractors and suppliers, in connection with many of our projects and a failure to retain subcontractors or obtain supplies, or increased costs as a result of using these third parties, could adversely impact our revenues, results of operations, and financial condition.
Removed
Substantial sales of our common stock could adversely affect our stock price. Most of Tontine's shares are registered for resale on a resale shelf registration statement filed by the Company with the SEC.
Added
We hire third-party subcontractors to perform work on certain of our projects, and if we are unable to retain qualified subcontractors or if our subcontractors do not perform in accordance with their obligations, we have in the past incurred, and may in the future incur, additional costs or experience delays in project execution, which could subject us to contractual penalties.
Added
We also rely on suppliers for the materials necessary to complete our projects, and if a supplier fails to provide supplies when scheduled or at a higher than price than expected, project delays and additional costs could have an adverse effect on our operating results.
Added
In addition, our ability to recover on contract change orders could be negatively impacted by our customers' reduced access to capital in a weak economic environment, particularly in a period of restrictive credit markets.
Added
A portion of our business operates in certain geographic areas, such as Texas and Florida, where these risks are elevated. If the cost of property insurance in those or other geographic areas increases, or if it becomes more difficult to obtain, it could have a negative impact on customer demand, particularly in our Residential segment.
Added
Factors arising from the cyclicality of industries in which we operate, including the timing of new customer contracts, may result in significant fluctuations in our operating results on a quarterly or annual basis. Our results from period to period may also be affected by regional economic conditions that affect the construction market.
Added
In addition, we maintain most of our employee health insurance coverage on a self-insured basis and are responsible for losses up to our stop loss coverage, which sets a limit on our liability for claim costs.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties At September 30, 2023, we maintained branch offices, warehouses, sales facilities and administrative offices at 129 locations. The majority of our facilities are leased. We lease our executive office located in Greenwich, Connecticut and our corporate office located in Houston, Texas.
Biggest changeItem 2. Properties At September 30, 2024, we maintained branch offices, warehouses, sales facilities and administrative offices at 131 locations. The majority of our facilities are leased. We lease our executive office located in Greenwich, Connecticut and our corporate office located in Houston, Texas.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. MINE SAFETY DISCLOSURES 20 PART II Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 21 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 23 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 36 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 38
Biggest changeItem 4. MINE SAFETY DISCLOSURES 22 PART II Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 23 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 25 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 39 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 40

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table presents information with respect to purchases of common stock by the Company during the three months ended September 30, 2023 : Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan Maximum Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Plan July 1, 2023 – July 31, 2023 — $— — $ 37,588,964 August 1, 2023 – August 31, 2023 — $— — $ 37,588,964 September 1, 2023 – September 30, 2023 1,063 $65.87 — $ 37,588,964 Total 1,063 $65.87 — $ 37,588,964 21 Five-Year Stock Performance Graph The graph below compares the cumulative five year total return provided shareholders on IES Holdings, Inc.'s common stock relative to the cumulative total returns of the Russell 2000 index and a customized peer group of four companies that includes Comfort Systems USA Inc., MYR Group Inc., Sterling Infrastructure, Inc. and Primoris (collectively, the “Peer Group”).
Biggest changeThe following table presents information with respect to purchases of common stock by the Company during the three months ended September 30, 2024 : Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan Maximum Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Plan July 1, 2024 – July 31, 2024 124,892 $140.75 119,041 $ 200,000,000 August 1, 2024 – August 31, 2024 573 $173.62 — $ 200,000,000 September 1, 2024 – September 30, 2024 12,738 $145.92 12,738 $ 198,141,288 Total 138,203 $141.37 131,779 $ 198,141,288 23 Five-Year Stock Performance Graph The graph below compares the cumulative five year total return provided shareholders on IES Holdings, Inc.'s common stock relative to the cumulative total returns of (i) the Russell 2000 index, (ii) a customized peer group of four companies that includes Comfort Systems USA Inc., MYR Group Inc., Sterling Infrastructure, Inc. and Primoris (the "Peer Group (Old)") and (iii) a revised customized peer group of five companies that includes Comfort Systems USA Inc., MYR Group Inc., Sterling Infrastructure, Inc., Primoris and Installed Building Products, Inc.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in the Russell 2000 index, and in the peer group on September 30, 2018, and its relative performance is tracked through September 30, 2023.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in the Russell 2000 index, and in the peer group on September 30, 2019, and its relative performance is tracked through September 30, 2024.
Item 5. Market for Registrant’s Common Equity; Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the Nasdaq Global Market under the ticker symbol “IESC.” As of November 30, 2023, the closing market price of our common stock was $69.97 per share and there were approximately 339 holders of record.
Item 5. Market for Registrant’s Common Equity; Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the Nasdaq Global Market under the ticker symbol “IESC.” As of November 18, 2024, the closing market price of our common stock was $264.67 per share and there were approximately 299 holders of record.
During the year ended September 30, 2023 , we repurchased 224,013 shares of common stock at an average price of $31.06 per share for a total aggregate purchase price of $7.0 million . The Company had $37.6 million remaining under its stock repurchase authorization at September 30, 2023.
During the year ended September 30, 2024 , we repurchased 289,284 shares of common stock at an average price of $136.34 per share for a total aggregate purchase price of $39.4 million . The Company had $198.1 million remaining under its stock repurchase authorization at September 30, 2024.
The timing and amount of purchases under the program are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
S hare purchases are made for cash in open market transactions at prevailing market prices or in privately negotiated transactions or otherwise. The timing and amount of purchases under the program are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
Comparison of Five Year Cumulative Total Return* Among IES Holdings, Inc., the Russell 2000 Index, and a Peer Group *$100 invested on September 30, 2018 in stock or index, including reinvestment of dividends.
Comparison of Five Year Cumulative Total Return* Among IES Holdings, Inc., the Russell 2000 Index, and a Peer Group *$100 invested on September 30, 2019 in stock or index, including reinvestment of dividends. 2019 2020 2021 2022 2023 2024 IES Holdings, Inc. $ 100.00 $ 154.30 $ 221.90 $ 134.14 $ 319.91 $ 969.50 Russell 2000 100.00 100.39 148.26 113.42 123.54 156.60 Peer Group (Old) 100.00 87.47 156.40 149.30 311.92 530.14 Peer Group (New) 100.00 112.47 182.94 169.80 344.19 594.52 24
In December 2022, our Board of Directors terminated our previous stock repurchase program and authorized a new $40 million stock repurchase program. S hare purchases are made for cash in open market transactions at prevailing market prices or in privately negotiated transactions or otherwise.
In December 2022, our Board of Directors terminated our previous stock repurchase program and authorized a new $40 million stock repurchase program. In July 2024, the Company fully utilized the amount remaining under this $40 million authorization. On July 31, 2024, the Board authorized a new $200 million stock repurchase program.
Removed
Year Ended September 30, 2018 2019 2020 2021 2022 2023 IES Holdings, Inc. $ 100.00 $ 105.59 $ 162.92 $ 234.31 $ 141.64 $ 337.79 Russell 2000 100.00 91.11 91.47 135.08 103.33 112.56 Peer Group 100.00 86.68 95.08 173.71 164.32 344.56 22
Added
(the “Peer Group (New)”). The change from the Peer Group (Old) to the Peer Group (New) was made to better reflect companies relevant to the Company's current business.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

79 edited+29 added−27 removed91 unchanged
Biggest changeYear Ended September 30, 2023 2022 2021 $ % $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 2,377,227 100.0 % $ 2,166,808 100.0 % $ 1,536,493 100.0 % Cost of services 1,932,688 81.3 % 1,847,878 85.3 % 1,248,495 81.3 % Gross profit 444,539 18.7 % 318,930 14.7 % 287,998 18.7 % Selling, general and administrative expenses 298,625 12.6 % 262,714 12.1 % 202,251 13.2 % Contingent consideration 277 — % 277 — % 211 — % Gain on sale of assets (14,139) (0.6) % (69) — % (47) — % Operating income 159,776 6.7 % 56,008 2.6 % 85,583 5.6 % Interest and other expense, net 1,228 0.1 % 3,007 0.1 % 676 — % Operating income before income taxes 158,548 6.7 % 53,001 2.4 % 84,907 5.5 % Provision for income taxes 38,761 1.6 % 12,815 0.6 % 16,231 1.1 % Net income 119,787 5.0 % 40,186 1.9 % 68,676 4.5 % Net income attributable to noncontrolling interest (11,499) (0.5) % (5,424) (0.3) % (2,018) (0.1) % Net income attributable to IES Holdings, Inc. $ 108,288 4.6 % $ 34,762 1.6 % $ 66,658 4.3 % 2023 Compared to 2022 Consolidated revenues for the year ended September 30, 2023, were $210.4 million higher than for the year ended September 30, 2022, an increase of 9.7%, with increases at our Communications, Residential and Infrastructure Solutions operating segments, partially offset by a decrease at our Commercial & Industrial segment.
Biggest changeYear Ended September 30, 2024 2023 2022 $ % $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 2,884,358 100.0 % $ 2,377,227 100.0 % $ 2,166,808 100.0 % Cost of services 2,187,768 75.8 % 1,932,688 81.3 % 1,847,878 85.3 % Gross profit 696,590 24.2 % 444,539 18.7 % 318,930 14.7 % Selling, general and administrative expenses 396,684 13.8 % 298,625 12.6 % 262,714 12.1 % Contingent consideration 714 — % 277 — % 277 — % Gain on sale of assets (1,684) (0.1) % (14,139) (0.6) % (69) — % Operating income 300,876 10.4 % 159,776 6.7 % 56,008 2.6 % Interest and other (income) expense, net (3,790) (0.1) % 1,228 0.1 % 3,007 0.1 % Income from operations before income taxes 304,666 10.6 % 158,548 6.7 % 53,001 2.4 % Provision for income taxes 72,165 2.5 % 38,761 1.6 % 12,815 0.6 % Net income 232,501 8.1 % 119,787 5.0 % 40,186 1.9 % Net income attributable to noncontrolling interest (13,385) (0.5) % (11,499) (0.5) % (5,424) (0.3) % Net income attributable to IES Holdings, Inc. $ 219,116 7.6 % $ 108,288 4.6 % $ 34,762 1.6 % 2024 Compared to 2023 Consolidated revenues for the year ended September 30, 2024, were $507.1 million higher than for the year ended September 30, 2023, an increase of 21.3%, with increases at all of our operating segments.
See further discussion below of changes in revenues for our individual segments. Our overall gross profit percentage increased to 18.7% during the year September 30, 2023, as compared to 14.7% during the year ended September 30, 2022. Gross profit as a percentage of revenue increased at all four of our operating segments.
See further discussion below of changes in revenues for our individual segments. Our overall gross profit percentage increased to 18.7% during the year ended September 30, 2023, as compared to 14.7% during the year ended September 30, 2022. Gross profit as a percentage of revenue increased at all four of our operating segments.
Our Infrastructure Solutions segment’s gross profit for the year ended September 30, 2023, increased by $25.8 million, or 89.9%, as compared to the year ended September 30, 2022.
Our Infrastructure Solutions segment’s gross profit for the year ended September 30, 2023, increased by $25.8 million, 30 or 89.9%, as compared to the year ended September 30, 2022.
Investing Activities Net cash provided by investing activities was $2.8 million for the year ended September 30, 2023, compared to $29.5 million of net cash used in investing activities in the year ended September 30, 2022.
Net cash provided by investing activities was $2.8 million for the year ended September 30, 2023, compared to $29.5 million of net cash used in investing activities in the year ended September 30, 2022.
Net cash used in financing activities for the year ended September 30, 2023 included net repayments on our credit facility of $82.7 million, distributions to noncontrolling interests of $11.5 million under operating agreements in connection with certain acquisitions, and $8.3 million used for the repurchase 33 of our common stock, including repurchases to satisfy statutory withholding requirements upon the vesting of employee stock compensation.
Net cash used in financing activities for the year ended September 30, 2023 included net repayments on our credit facility of $82.7 million, distributions to noncontrolling interests of $11.5 million under operating agreements in connection with certain acquisitions, and $8.3 million used for the repurchase of our common stock, including repurchases to satisfy statutory withholding requirements upon the vesting of employee stock compensation.
Gendell was an employee of Tontine from 2004 until January 2018. OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS As is common in our industry, we have entered into certain off-balance sheet arrangements that expose us to increased risk. Our significant off-balance sheet transactions include letter of credit obligations, firm commitments for materials and surety guarantees.
Gendell was an employee of Tontine from 2004 until January 2018. 36 OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS As is common in our industry, we have entered into certain off-balance sheet arrangements that expose us to increased risk. Our significant off-balance sheet transactions include letter of credit obligations, firm commitments for materials and surety guarantees.
In December 2022, the Company entered into an amendment of the sublease agreement, which was set to terminate on February 28, 2023, to extend the term of the agreement through August 31, 2024 and to increase the monthly payments from approximately $8 thousand to approximately $9 thousand effective March 1, 2023.
In December 2022, the Company entered into an amendment of the sublease agreement, which was set to terminate on February 28, 2023, to extend the term of the agreement through August 31, 2024 and to increase the monthly payments from approximately $8 to approximately $9 effective March 1, 2023.
As of September 30, 2023, we were in compliance with the financial covenants under the Amended Credit Agreement, requiring that we maintain: • a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement), measured quarterly on a trailing four-quarter basis at the end of each quarter, of at least 1.1 to 1.0; and • minimum Liquidity of at least 10% of the Maximum Revolver Amount, or $15.0 million; with, for purposes of this covenant, at least 50% of our Liquidity comprised of Excess Availability (as defined in the Amended Credit Agreement).
As of September 30, 2024, we were in compliance with the financial covenants under the Amended Credit Agreement, requiring that we maintain: • a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement), measured quarterly on a trailing four-quarter basis at the end of each quarter, of at least 1.1 to 1.0; and • minimum Liquidity of at least 10% of the Maximum Revolver Amount, or $15.0 million; with, for purposes of this covenant, at least 50% of our Liquidity comprised of Excess Availability (as defined in the Amended Credit Agreement).
During the year ended September 30, 2023, the sale of assets, including the sale of STR, provided cash of $20.6 million, which was partially offset by $17.7 million used for capital expenditures.
During the year ended September 30, 2023, the sale of assets, 35 including the sale of STR, provided cash of $20.6 million, which was partially offset by $17.7 million used for capital expenditures.
For a further discussion of the industries in which we operate, please see Item 1. “ Business - Operating Segments ” of this Annual Report on Form 10-K.
For further discussion of the industries in which we operate, please see Item 1. “ Business - Operating Segments ” of this Annual Report on Form 10-K.
These commitments are typically for terms of less than one year and require us to buy minimum quantities of materials at specified intervals at a fixed price over the term. As of September 30, 2023, we did not have any such firm commitments to purchase materials outstanding.
These commitments are typically for terms of less than one year and require us to buy minimum quantities of materials at specified intervals at a fixed price over the term. As of September 30, 2024, we did not have any such firm commitments to purchase materials outstanding.
Business Outlook While there are differences among the Company’s segments, on an overall basis, increased demand for the Company’s services and the Company’s previous investment in growth initiatives and other business-specific factors discussed below resulted in aggregate year-over-year revenue growth in fiscal 2023 as compared to fiscal 2022.
Business Outlook While there are differences among the Company’s segments, on an overall basis, increased demand for the Company’s services and the Company’s previous investment in growth initiatives and other business-specific factors discussed below resulted in aggregate year-over-year revenue growth in fiscal 2024 as compared to fiscal 2023.
Additionally, gross profit for the year ended September 30, 2023 was positively impacted by an increase in revenues from our generator enclosure business as discussed above, as well as improved operating margins in our custom power solutions business.
Additionally, gross profit for the year ended September 30, 2023 was positively impacted by an increase in revenues from our generator enclosure business as discussed above, as well as improved operating margins in our custom engineered solutions business.
Approximately 10.2% of our revenues are earned from contracts where we are paid on a time and materials basis. Our most significant cost drivers are the cost of labor and materials. These costs may vary from the costs we originally estimated.
Approximately 10.0% of our revenues are earned from contracts where we are paid on a time and materials basis. Our most significant cost drivers are the cost of labor and materials. These costs may vary from the costs we originally estimated.
Our Residential segment’s revenues increased by $148.1 million, or 13.1%, during the year ended September 30, 2023, as compared to the year ended September 30, 2022. The increase was driven by the impact of price increases in connection with higher materials costs and continued strong demand, particularly in the Florida single-family market.
Our Residential segment’s revenues increased by $148.1 million, or 13.1%, during the year ended September 30, 2023, as compared to the year ended September 30, 2022. The increase was driven by the impact of price increases in connection with higher materials costs and continued strong demand, particularly in the Florida single-family electrical, plumbing and HVAC market.
Our ability to generate cash depends on many externally influenced factors, including demand for our services, the availability of projects at margins acceptable to us, the ultimate collectability of our receivables, our ability to borrow on our credit facility, and our ability to raise funds in the capital markets, among many other factors.
Our ability to generate or otherwise access cash depends on many externally influenced factors, including demand for our services, the availability of projects at margins acceptable to us, the ultimate collectability of our receivables, our ability to borrow on our credit facility, and our ability to raise funds in the capital markets, among many other factors.
Other income of $1.8 million in the year ended September 30, 2023 was primarily the result of gains on investments in equity securities of $1.0 million.
Total other income, net of $1.8 million in the year ended September 30, 2023 was primarily the result of gains on investments in equity securities of $1.0 million.
At September 30, 2023, we had $4.2 million in outstanding letters of credit and no outstanding borrowings under our revolving credit facility. Investments From time to time, the Company invests in non-controlling positions in the debt or equity securities of other businesses.
At September 30, 2024, we had $4.8 million in outstanding letters of credit and no outstanding borrowings under our revolving credit facility. Investments From time to time, the Company invests in non-controlling positions in the debt or equity securities of other businesses.
Accordingly, Tontine has the ability to exercise significant control over our affairs, including the election of directors and most actions requiring the approval of shareholders. We are a party to a sublease agreement with Tontine Associates for corporate office space in Greenwich, Connecticut.
Accordingly, Tontine has the ability to exercise significant control over our affairs, including the election of directors and most actions requiring the approval of shareholders. The Company is a party to a sublease agreement with Tontine Associates, for corporate office space in Greenwich, Connecticut.
Although the terms of our contracts vary considerably, approximately 89.8% of our revenues are based on either a fixed price or unit price basis in which we agree to do the work for a fixed amount for the entire project (fixed price) or for units of work performed (unit price).
Although the terms of our contracts vary considerably, approximately 90.0% of our revenues are based on either a fixed price or unit price basis in which we agree to do the work for a fixed amount for the entire project (fixed price) or for units of work performed (unit price).
During the year ended September 30, 2022, we incurred interest expense of $3.0 million primarily comprised of interest expense on an average outstanding balance of $82.3 million under our revolving credit facility, in addition to fees on an average letter of credit balance of $4.5 million under our revolving credit facility and an average unused line of credit balance of $49.2 million. 30 During the year ended September 30, 2021, we incurred interest expense of $1.0 million primarily comprised of interest expense from our revolving credit facility and fees on an average letter of credit balance of $5.7 million under our revolving credit facility and an average unused line of credit balance of $77.4 million.
During the year ended September 30, 2022, we incurred interest expense of $3.0 million primarily comprised of interest expense on an average outstanding balance of $82.3 million under our revolving credit facility, in addition to fees on an average letter of credit balance of $4.5 million under our revolving credit facility and an average unused line of credit balance of $49.2 million.
At September 30, 2023, $4.2 million of our outstanding letters of credit were to collateralize our insurance programs. 34 From time to time, we may enter into firm purchase commitments for materials such as copper wire and aluminum wire, which we expect to use in the ordinary course of business.
At September 30, 2024, $4.8 million of our outstanding letters of credit were to collateralize our insurance programs. From time to time, we may enter into firm purchase commitments for materials such as copper wire and aluminum wire, which we expect to use in the ordinary course of business.
The tax years ended September 30, 2020 and forward are subject to federal audit as are prior tax years, to the extent of unutilized net operating losses generated in those years. We anticipate that approximately $6.6 million in liabilities for unrecognized tax benefits, including accrued interest, may be reversed in the next twelve months.
The tax years ended September 30, 2021 and forward are subject to federal audit as are prior tax years, to the extent of unutilized net operating losses generated in those years. 38 We anticipate that approximately $10.8 million in liabilities for unrecognized tax benefits, including accrued interest, may be reversed in the next twelve months.
Communications 2023 Compared to 2022 Year Ended September 30, 2023 2022 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 600,776 100.0 % $ 559,777 100.0 % Cost of services 494,964 82.4 % 490,959 87.7 % Gross Profit 105,812 17.6 % 68,818 12.3 % Selling, general and administrative expenses 54,344 9.0 % 46,717 8.3 % Loss on sale of assets 12 — % 12 — % Operating Income 51,456 8.6 % 22,089 3.9 % Revenue.
Selling, general and administrative expenses as a percentage of revenue in the Communications segment were 8.5% during the year ended September 30, 2024, compared to 9.0% for the year ended September 30, 2023. 27 2023 Compared to 2022 Year Ended September 30, 2023 2022 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 600,776 100.0 % $ 559,777 100.0 % Cost of services 494,964 82.4 % 490,959 87.7 % Gross Profit 105,812 17.6 % 68,818 12.3 % Selling, general and administrative expenses 54,344 9.0 % 46,717 8.3 % Loss on sale of assets 12 — % 12 — % Operating Income 51,456 8.6 % 22,089 3.9 % Revenue.
In assessing the realizability of deferred tax assets at September 30, 2023, we concluded, based upon the assessment of positive and negative evidence, that it is more likely than not that the Company will generate sufficient taxable income to realize its $20.4 million of deferred tax assets.
In assessing the realizability of deferred tax assets at September 30, 2024, we concluded, based upon the assessment of positive and negative evidence, that it is more likely than not that the Company will generate sufficient taxable income to realize its $22.5 million of deferred tax assets.
Revenues recognized on a percentage-of-completion basis, all of which are fixed price or cost plus arrangements, comprised approximately 52% of our total revenue for the year ended September 30, 2023.
Revenues recognized on a percentage-of-completion basis, all of which are fixed price or cost plus arrangements, comprised approximately 55% of our total revenue for the 37 year ended September 30, 2024.
The current liability “Billings in excess of costs and estimated earnings” represents billings in excess of revenues recognized. Costs and estimated earnings in excess of billings are amounts considered recoverable from customers based on different measures of performance, including achievement of specific milestones, completion of specified units or completion of the contract.
Costs and estimated earnings in excess of billings are amounts considered recoverable from customers based on different measures of performance, including achievement of specific milestones, completion of specified units or completion of the contract.
Commercial & Industrial 2023 Compared to 2022 Year Ended September 30, 2023 2022 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 279,594 100.0 % $ 308,504 100.0 % Cost of services 248,295 88.8 % 290,314 94.1 % Gross Profit 31,299 11.2 % 18,190 5.9 % Selling, general and administrative expenses 25,225 9.0 % 30,557 9.9 % Gain on sale of assets (13,198) (4.7) % (55) — % Operating Income (Loss) 19,272 6.9 % (12,312) (4.0) % Revenue.
As discussed above, our results for the year ended September 30, 2023 include a pretax gain on sale of $13.0 million from the sale of STR in October 2022. 31 2023 Compared to 2022 Year Ended September 30, 2023 2022 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 279,594 100.0 % $ 308,504 100.0 % Cost of services 248,295 88.8 % 290,314 94.1 % Gross Profit 31,299 11.2 % 18,190 5.9 % Selling, general and administrative expenses 25,225 9.0 % 30,557 9.9 % Gain on sale of assets (13,198) (4.7) % (55) — % Operating Income (Loss) 19,272 6.9 % (12,312) (4.0) % Revenue.
Our Fixed Charge Coverage Ratio is calculated as follows (with capitalized terms as defined in the Amended Credit Agreement): (i) our trailing twelve month EBITDA, less Non-Financed Capital Expenditures (other than capital expenditures financed by means of an advance under the credit facility), cash taxes and all Restricted Junior Payments consisting of certain Pass-Through Tax Liabilities, divided by (ii) the sum of our cash interest (other than interest paid-in-kind, amortization of financing fees, and other non-cash interest expense) and principal debt payments (other than repayment of principal on advances under the credit facility and including cash payments with respect to capital leases), any management, consulting, monitoring, and advisory fees paid to an affiliate, and all Restricted Junior Payments (other than Pass-Through Tax Liabilities) and other cash distributions; provided, that if we make an acquisition consented to by our lenders, the components of the Fixed Charge Coverage Ratio will be calculated for such fiscal period after giving pro forma effect to the acquisition assuming that such transaction has occurred on the first day of such period (including pro forma adjustments arising out of events which are directly attributable to such acquisition, are factually supportable, and are expected to have a continuing impact, in each case to be reasonably agreed to by our lenders). 32 As defined in the Amended Credit Agreement, EBITDA is calculated as consolidated net income (or loss), less extraordinary gains, interest income, non-operating income and income tax benefits and decreases in any change in LIFO reserves, plus stock compensation expense, non-cash extraordinary losses (including, but not limited to, a non-cash impairment charge or write-down), Interest Expense, income taxes, depreciation and amortization, and increases in any change in LIFO reserves for such period, determined on a consolidated basis in accordance with GAAP.
Our Fixed Charge Coverage Ratio is calculated as follows (with capitalized terms as defined in the Amended Credit Agreement): (i) our trailing twelve month EBITDA, less Non-Financed Capital Expenditures (other than capital expenditures financed by means of an advance under the credit facility), cash taxes and all Restricted Junior Payments consisting of certain Pass-Through Tax Liabilities, divided by (ii) the sum of our cash interest (other than interest paid-in-kind, amortization of financing fees, and other non-cash interest 34 expense) and principal debt payments (other than repayment of principal on advances under the credit facility and including cash payments with respect to capital leases), any management, consulting, monitoring, and advisory fees paid to an affiliate, and all Restricted Junior Payments (other than Pass-Through Tax Liabilities) and other cash distributions; provided, that if we make an acquisition consented to by our lenders, the components of the Fixed Charge Coverage Ratio will be calculated for such fiscal period after giving pro forma effect to the acquisition assuming that such transaction has occurred on the first day of such period (including pro forma adjustments arising out of events which are directly attributable to such acquisition, are factually supportable, and are expected to have a continuing impact, in each case to be reasonably agreed to by our lenders).
Operating activities provided net cash of $153.9 million during the year ended September 30, 2023, as compared to $16.3 million of net cash provided in the year ended September 30, 2022.
Operating activities provided net cash of $234.4 million during the year ended September 30, 2024, as compared to $153.9 million of net cash provided in the year ended September 30, 2023.
Days sales outstanding decreased to 51 at September 30, 2023 from 58 at September 30, 2022. While the rate of collections may vary, our typically secured position, resulting from our ability in general to secure liens against our customers’ overdue receivables, offers some protection that collection will occur eventually to the extent that our security retains value.
While the rate of collections may vary, our typically secured position, resulting from our ability in general to secure liens against our customers’ overdue receivables, offers some protection that collection will occur eventually to the extent that our security retains value.
Selling, general and administrative expenses as a percentage of revenue in the Communications segment were 8.3% during the year ended September 30, 2022, compared to 9.3% for the year ended September 30, 2021, as we benefited from the scale of our operations.
Selling, general and administrative expenses as a percentage of revenue in the Communications segment were 9.0% during the year ended September 30, 2023, compared to 8.3% for the year ended September 30, 2022.
Our overall gross profit percentage decreased to 14.7% during the year ended September 30, 2022, as compared to 18.7% during the year ended September 30, 2021. Gross profit as a percentage of revenue decreased at all four of our operating segments. See further discussion below of changes in gross margin for our individual segments.
See further discussion below of changes in revenues for our individual segments. Our overall gross profit percentage increased to 24.2% during the year September 30, 2024, as compared to 18.7% during the year ended September 30, 2023. Gross profit as a percentage of revenue increased at all four of our operating segments.
The increase in operating cash flow resulted primarily from increased earnings and a reduction in cash used in working capital during the year ended September 30, 2023 compared to the year ended September 30, 2022 Operating activities provided net cash of $16.3 million during the year ended September 30, 2022, as compared to $37.9 million of net cash provided in the year ended September 30, 2021.
The increase in operating cash flow resulted primarily from increased earnings partially offset by an increase in cash used in working capital during the year ended September 30, 2024 compared to the year ended September 30, 2023 Operating activities provided net cash of $153.9 million during the year ended September 30, 2023, as compared to $16.3 million of net cash provided in the year ended September 30, 2022.
Revenue in our single-family business 26 increased by $135.8 million for the year ended September 30, 2023, compared to the year ended September 30, 2022, while multi-family and other revenue increased by $12.3 million. Gross Profit.
Revenue in our single-family electrical business increased by $56.8 million for the year ended September 30, 2023, compared to the year ended September 30, 2022, and revenue in our single-family plumbing & HVAC business increased by $79.0 million, while multifamily and other revenue increased by $12.3 million. Gross Profit.
Selling, general and administrative expenses as a percentage of revenues in the Residential segment decreased to 12.7% during the year ended September 30, 2022, from 13.5% during the year ended September 30, 2021, as we benefited from the increased scale of our operations. 27 Infrastructure Solutions 2023 Compared to 2022 Year Ended September 30, 2023 2022 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 217,353 100.0 % $ 167,113 100.0 % Cost of services 162,905 74.9 % 138,444 82.8 % Gross Profit 54,448 25.1 % 28,669 17.2 % Selling, general and administrative expenses 26,260 12.1 % 25,129 15.0 % Gain on sale of assets (1,029) (0.5) % (46) — % Operating Income 29,217 13.4 % 3,586 2.1 % Revenue.
The sale of this excess land will have no impact on the operations of the facility. 2023 Compared to 2022 Year Ended September 30, 2023 2022 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 217,353 100.0 % $ 167,113 100.0 % Cost of services 162,905 74.9 % 138,444 82.8 % Gross Profit 54,448 25.1 % 28,669 17.2 % Selling, general and administrative expenses 26,260 12.1 % 25,129 15.0 % Gain on sale of assets (1,029) (0.5) % (46) — % Operating Income 29,217 13.4 % 3,586 2.1 % Revenue.
Residential 2023 Compared to 2022 Year Ended September 30, 2023 2022 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 1,279,504 100.0 % $ 1,131,414 100.0 % Cost of services 1,026,524 80.2 % 928,161 82.0 % Gross Profit 252,980 19.8 % 203,253 18.0 % Selling, general and administrative expenses 169,737 13.3 % 144,100 12.7 % Contingent consideration 277 — % 277 — % Loss on sale of assets 69 — % 20 — % Operating Income 82,897 6.5 % 58,856 5.2 % Revenue.
The increase was driven primarily by higher personnel costs in connection with a reorganization of the segment's management structure in fiscal 2023 and increased incentive profit sharing for division management resulting from higher earnings. 2023 Compared to 2022 Year Ended September 30, 2023 2022 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 1,279,504 100.0 % $ 1,131,414 100.0 % Cost of services 1,026,524 80.2 % 928,161 82.0 % Gross Profit 252,980 19.8 % 203,253 18.0 % Selling, general and administrative expenses 169,737 13.3 % 144,100 12.7 % Contingent consideration 277 — % 277 — % Loss on sale of assets 69 — % 20 — % Operating Income 82,897 6.5 % 58,856 5.2 % Revenue.
For the year ended September 30, 2022, we recorded income tax expense of $12.8 million, which reflects a $0.8 million benefit related to the recognition of previously unrecognized tax benefits. For the year ended September 30, 2021, we recorded income tax expense of $16.2 million, which reflects a $5.1 million benefit related to the recognition of previously unrecognized tax benefits.
For the year ended September 30, 2023, we recorded income tax expense of $38.8 million, which reflects a higher pretax income than in the year ended September 30, 2022. For the year ended September 30, 2022, we recorded income tax expense of $12.8 million, which reflects a $0.8 million benefit related to the recognition of previously unrecognized tax benefits.
During the year ended September 30, 2023, our current assets exclusive of cash decreased to $595.5 million, as compared to $599.6 million as of September 30, 2022.
During the year ended September 30, 2024, our current assets exclusive of cash increased to $770.9 million, as compared to $595.5 million as of September 30, 2023.
We must reimburse the sureties for any expenses or outlays they incur on our behalf. To date, we have not been required to make any reimbursements to our sureties for bond-related costs. As is common in the surety industry, sureties issue bonds on a project-by-project basis and can decline to issue bonds at any time.
To date, we have not been required to make any reimbursements to our sureties for bond-related costs. As is common in the surety industry, sureties issue bonds on a project-by-project basis and can decline to issue bonds at any time. We believe that our relationships with our sureties will allow us to provide surety bonds as they are required.
At September 30, 2023, our Liquidity was $218.5 million, our Excess Availability was $142.8 million (or greater than 50% of minimum Liquidity), and our Fixed Charge Coverage Ratio was 6.3:1.0.
At September 30, 2024, our Liquidity was $244.2 million, our Excess Availability was $143.4 million (or greater than 50% of minimum Liquidity), and our Fixed Charge Coverage Ratio was 3.4:1.0.
Selling, general and administrative expenses as a percentage of revenue decreased to 12.1% for the year ended September 30, 2022 from 13.2% for the year ended September 30, 2021, as we benefited from the increased scale of our operations.
Selling, general and administrative expenses as a percentage of revenue decreased from 12.1% for the year ended September 30, 2023, to 10.7% for the year ended September 30, 2024 as we benefited from the scale of our operations. Gain on Sale of Assets.
INTEREST AND OTHER EXPENSE, NET Year Ended September 30, 2023 2022 2021 (In thousands) Interest expense $ 2,754 $ 2,771 $ 764 Deferred financing charges 268 199 198 Total interest expense 3,022 2,970 962 Other (income) expense, net (1,794) 37 (286) Total interest and other expense, net 1,228 3,007 676 During the year ended September 30, 2023, we incurred interest expense of $3.0 million primarily comprised of interest expense on an average outstanding balance of $26.9 million under our revolving credit facility and on our finance lease agreements, in addition to fees on an average letter of credit balance of $4.7 million under our revolving credit facility and an average unused line of credit balance of $117.8 million.
INTEREST AND OTHER EXPENSE, NET Year Ended September 30, 2024 2023 2022 (In thousands) Interest expense $ 1,051 $ 2,754 $ 2,771 Deferred financing charges 287 268 199 Total interest expense 1,338 3,022 2,970 Interest income (4,042) (564) (10) Other (income) expense, net (1,086) (1,230) 47 Total other (income) expense, net (5,128) (1,794) 37 Total interest and other (income) expense, net (3,790) 1,228 3,007 During the year ended September 30, 2024, we incurred interest expense of $1.3 million primarily comprised of interest expense on our finance lease agreements and fees on an average letter of credit balance of $5.5 million under our revolving credit facility and an average unused line of credit balance of $144.5 million.
Claims and unapproved change orders are recorded at estimated realizable value when collection is probable and can be reasonably estimated. We do not recognize profits on construction costs incurred in connection with claims. Claims made by us involve negotiation and, in certain cases, litigation. Such litigation costs are expensed as incurred. Business Combinations .
We do not recognize profits on construction costs incurred in connection with claims. Claims made by us involve negotiation and, in certain cases, litigation. Such litigation costs are expensed as incurred. Business Combinations .
Our results for the year ended September 30, 2023 include a pretax gain of $13.0 million from the sale of STR Mechanical, LLC (“STR”), which previously operated as part of our Commercial & Industrial segment, on October 7, 2022, and a pretax gain of $1.0 million from the sale of excess land at our Infrastructure Solutions segment. 24 2022 Compared to 2021 Consolidated revenues for the year ended September 30, 2022, were $630.3 million higher than for the year ended September 30, 2021, an increase of 41.0%, with increases at all four of our operating segments, driven by strong demand and the contribution of businesses acquired in fiscal 2021.
Our results for the year ended September 30, 2023 included a pretax gain of $13.0 million from the sale of STR Mechanical, LLC (“STR”), which previously operated as part of our Commercial & Industrial segment, on October 7, 2022. 26 2023 Compared to 2022 Consolidated revenues for the year ended September 30, 2023, were $210.4 million higher than for the year ended September 30, 2022, an increase of 9.7%, with increases at our Communications, Residential and Infrastructure Solutions operating segments, partially offset by a decrease at our Commercial & Industrial segment.
We believe that our relationships with our sureties will allow us to provide surety bonds as they are required. However, current market conditions, as well as changes in our sureties' assessment of our operating and financial risk, could cause our sureties to decline to issue bonds for our work.
However, current market conditions, as well as changes in our sureties' assessment of our operating and financial risk, could cause our sureties to decline to 33 issue bonds for our work.
("Tontine Associates"), together with its affiliates (collectively, "Tontine") is the Company's controlling stockholder, owning approximately 58 percent of the Company’s outstanding common stock based on Amendment No. 27 to the Schedule 13D filed by Tontine with the SEC on September 8, 2023 and the Company's shares outstanding as of November 30, 2023.
("Tontine Associates"), together with its affiliates (collectively, "Tontine") is the Company's controlling stockholder, owning approximately 55 percent of the Company’s outstanding common stock based on a Form 4 filed by Tontine with the SEC on September 16, 2024 and the Company's shares outstanding as of November 18, 2024.
These bonds provide a guarantee to the customer that we will perform under the terms of our contract and that we will pay our subcontractors and vendors. If we fail to perform under the terms of our contract or to pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond.
If we fail to perform under the terms of our contract or to pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. We must reimburse the sureties for any expenses or outlays they incur on our behalf.
The lease has terms at market rates, and payments by the Company are at a rate consistent with that paid by Tontine Associates to its landlord. On December 6, 2018, the Company entered into a Board Observer Letter Agreement (the "Observer Agreement") with Tontine Associates in order to assist Tontine in managing its investment in the Company.
On December 6, 2018, the Company entered into a Board Observer Letter Agreement (the "Observer Agreement") with Tontine Associates in order to assist Tontine in managing its investment in the Company.
Our Communications segment’s revenues increased by $113.8 million, or 25.5%, during the year ended September 30, 2022, compared to the year ended September 30, 2021. This increase primarily resulted from increased demand from our data center customers. Gross Profit.
Our Communications segment’s revenues increased by $175.7 million, or 29.2%, during the year ended September 30, 2024, compared to the year ended September 30, 2023. This increase primarily resulted from increased demand from our data center, high-tech manufacturing and e-commerce distribution center customers. Gross Profit.
Our Communications segment’s gross profit during the year ended September 30, 2022, decreased $16.0 million, or 18.8%, as compared to the year ended September 30, 2021. Gross profit as a percentage of revenue decreased from 19.0% for the year ended September 30, 2021 to 12.3% for the year ended September 30, 2022.
Our Communications segment’s gross profit during the year ended September 30, 2024, increased $46.8 million, or 44.2%, as compared to the year ended September 30, 2023. Gross profit as a percentage of revenue increased from 17.6% for the year ended September 30, 2023 to 19.7% for the year ended September 30, 2024.
WORKING CAPITAL During the year ended September 30, 2023, working capital exclusive of cash decreased by $2.8 million from September 30, 2022, reflecting a $4.1 million decrease in current assets excluding cash and a $1.3 million decrease in current liabilities during the period.
WORKING CAPITAL During the year ended September 30, 2024, working capital exclusive of cash increased by $53.4 million from September 30, 2023, reflecting a $175.4 million increase in current assets excluding cash partially offset by a $122.0 million increase in current liabilities during the period.
Selling, general and administrative expenses as a percentage of revenue decreased from 11.0% for the year ended September 30, 2021 to 9.9% for the year ended September 30, 2022.
Selling, general and administrative expenses as a percentage of revenue increased to 13.8% for the year ended September 30, 2024 from 12.6% for the year ended September 30, 2023.
Our Commercial & Industrial segment’s selling, general and administrative expenses during the year ended September 30, 2022 increased $2.4 million, or 8.5%, compared to the year ended September 30, 2021.
Our Communications segment’s selling, general and administrative expenses increased $11.4 million, or 21.0% during the year ended September 30, 2024, as compared to the year ended September 30, 2023.
We generally do not incur significant costs related to obtaining contracts, or initial set-up or mobilization costs, prior to the start of a project.
We generally do not incur significant costs related to obtaining contracts, or initial set-up or mobilization costs, prior to the start of a project. When significant pre‑contract costs are incurred, they will be capitalized and amortized on a percentage of completion basis over the life of the contract.
When significant pre‑contract costs are incurred, they will be capitalized and amortized on a percentage of completion basis over the life of the contract. 35 The current asset “Costs and estimated earnings in excess of billings” represents revenues recognized in excess of amounts billed that management believes will be billed and collected within the next twelve months.
The current asset “Costs and estimated earnings in excess of billings” represents revenues recognized in excess of amounts billed that management believes will be billed and collected within the next twelve months. The current liability “Billings in excess of costs and estimated earnings” represents billings in excess of revenues recognized.
PROVISION FOR INCOME TAXES For the year ended September 30, 2023, we recorded income tax expense of $38.8 million, which reflects a higher pretax income than in the year ended September 30, 2022.
PROVISION FOR INCOME TAXES For the year ended September 30, 2024, we recorded income tax expense of $72.2 million, which reflects a higher pretax income than in the year ended September 30, 2023, partially offset by $5.5 million of non-cash tax benefits from the recognition of previously unrecognized tax benefits in fiscal 2024.
Selling, general and administrative expenses as a percentage of revenue decreased from 16.3% for the year ended September 30, 2021, to 15.0% for the year ended September 30, 2022.
Selling, general and administrative expenses as a percentage of revenue in the Residential segment increased to 16.4% during the year ended September 30, 2024, from 13.3% during the year ended September 30, 2023.
We believe the bonding capacity currently provided by our sureties is adequate for our current operations and will be adequate for our operations for the foreseeable future.
We believe the bonding capacity currently provided by our sureties is adequate for our current operations and will be adequate for our operations for the foreseeable future. As of September 30, 2024, the estimated cost to complete our bonded projects was approximately $133.9 million.
As a result, gross profit as a percentage of revenue decreased from 11.1% for the year ended September 30, 2021, to 5.9% for the year ended September 30, 2022. Selling, General and Administrative Expenses.
Gross profit as a percent of revenue increased to 30.0% for the year ended September 30, 2024 compared to 25.1% for the year ended September 30, 2023. Selling, General and Administrative Expenses.
Investing activities for the year ended September 30, 2021 include $7.4 million of capital expenditures and $92.5 million for the acquisition of businesses. Financing Activities Net cash used in financing activities was $105.8 million in the year ended September 30, 2023.
Net cash used in financing activities was $105.8 million in the year ended September 30, 2023.
As of September 30, 2023, the estimated cost to complete our bonded projects was approximately $151.2 million. 31 LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2023, we had cash and cash equivalents of $75.8 million and $142.8 million of availability under our revolving credit facility.
LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2024, we had cash and cash equivalents of $100.8 million and $143.4 million of availability under our revolving credit facility.
Net cash used in investing activities was $29.5 million for the year ended September 30, 2022, compared to $99.6 million of net cash used in investing activities in the year ended September 30, 2021.
Financing Activities Net cash used in financing activities was $100.5 million in the year ended September 30, 2024.
Selling, general and administrative expenses as a percentage of revenues in the Residential segment increased to 13.3% during the year ended September 30, 2023, from 12.7% during the year ended September 30, 2022. 2022 Compared to 2021 Year Ended September 30, 2022 2021 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 1,131,414 100.0 % $ 687,347 100.0 % Cost of services 928,161 82.0 % 553,546 80.5 % Gross Profit 203,253 18.0 % 133,801 19.5 % Selling, general and administrative expenses 144,100 12.7 % 92,761 13.5 % Contingent consideration 277 — % 211 — % Loss on sale of assets 20 — % 86 — % Operating Income 58,856 5.2 % 40,743 5.9 % Revenue.
Selling, general and administrative expenses as a percentage of revenues in the Residential segment increased to 13.3% during the year ended September 30, 2023, from 12.7% during the year ended September 30, 2022. 29 Infrastructure Solutions 2024 Compared to 2023 Year Ended September 30, 2024 2023 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 351,096 100.0 % $ 217,353 100.0 % Cost of services 245,743 70.0 % 162,905 74.9 % Gross Profit 105,353 30.0 % 54,448 25.1 % Selling, general and administrative expenses 37,394 10.7 % 26,260 12.1 % Contingent consideration 678 0.2 % — — % Gain on sale of assets (184) (0.1) % (1,029) (0.5) % Operating Income 67,465 19.2 % 29,217 13.4 % Revenue.
We expect our capital expenditures will range from $15 million to $20 million for the year ending on September 30, 2024. The COVID-19 pandemic and its impact on markets, the supply chain and the labor force continue to be areas of focus for our business as we work to protect our workforce and serve our customers.
We expect our capital expenditures will range from $45 million to $55 million for the year ending on September 30, 2025. 25 While the COVID-19 pandemic's impact on markets, the supply chain and the labor force had significantly less of an impact on our business in fiscal 2024 compared with prior fiscal years, COVID-19 and any future pandemic or other public health emergency could impact our workforce, customers and suppliers in the future.
During the year ended September 30, 2022, our selling, general and administrative expenses were $262.7 million, an increase of $60.5 million, or 29.9% over the year ended September 30, 2021, driven by increased personnel costs, primarily at our Residential operating segment, in connection with its growth, and the impact of businesses acquired during fiscal 2021, including amortization of intangible assets.
During the year ended September 30, 2024, our selling, general and administrative expenses were $396.7 million, an increase of $98.1 million, or 32.8% over the year ended September 30, 2023, driven by increased personnel costs, primarily at our Residential operating segment, and higher incentive compensation across our business as a result of higher earnings.
Our Residential segment's selling, general and administrative expenses increased by $51.3 million, or 55.3%, during the year ended September 30, 2022, compared to the year ended September 30, 2021. Selling, general and administrative expenses incurred at the businesses acquired during fiscal 2021, including amortization of intangible assets, contributed $21.3 million of the increase.
Our Residential segment's selling, general and administrative expenses increased by $58.6 million, or 34.5%, during the year ended September 30, 2024, compared to the year ended September 30, 2023.
Revenues in our Infrastructure Solutions segment increased by $20.1 million, or 13.7% during the year ended September 30, 2022 compared to the year ended September 30, 2021. The increase in revenue was driven primarily by increased demand at our generator enclosure business as well as the acquisition of Wedlake Fabricating, Inc.
Revenues in our Infrastructure Solutions segment increased by $133.7 million, or 61.5% during the year ended September 30, 2024 compared to the year ended September 30, 2023. The increase in revenues was driven primarily by continued strong demand in our custom engineered solutions manufacturing businesses. We also acquired Greiner Industries, Inc.
Our Infrastructure Solutions segment’s selling, general and administrative expenses during the year ended September 30, 2022, increased $1.2 million compared to the year ended September 30, 2021, primarily as a result of expenses incurred at the Wedlake business acquired during the first fiscal quarter of 2021.
Our Infrastructure Solutions segment’s selling, general and administrative expenses during the year ended September 30, 2024, increased $11.1 million, or 42.4%, compared to the year ended September 30, 2023, primarily as a result of increased employee compensation cost to support growth in the business, in part due to the acquisition of Greiner in April 2024, and increased incentive profit sharing resulting from higher earnings.
Further, we believe our strong balance sheet and flexible operating model position us to navigate challenges we may encounter in a more uncertain economy. To continue to grow our business, including through acquisitions and the funding of working capital, we may require a significant amount of cash.
However, availability of labor and capacity could constrain the rate at which we are able to grow this business. To continue to grow our business, including through acquisitions and the funding of working capital, we may require a significant amount of cash.
These decreases were largely offset by an increase in billings in excess of costs and estimated earnings driven by increased activity in our Residential multi-family business. Surety Many customers, particularly in connection with new construction, require us to post performance and payment bonds issued by a surety.
Surety Many customers, particularly in connection with new construction, require us to post performance and payment bonds issued by a surety. These bonds provide a guarantee to the customer that we will perform under the terms of our contract and that we will pay our subcontractors and vendors.
Our Communications segment’s selling, general and administrative expenses increased $5.3 million, or 12.9% during the year ended September 30, 2022, as compared to the year ended September 30, 2021. The increase is a result of higher personnel costs in connection with the growth of our business, as well as higher wages in an increasingly competitive labor market.
Our Commercial & Industrial segment’s selling, general and administrative expenses during the year ended September 30, 2024 increased $7.7 million, or 30.5%, compared to the year ended September 30, 2023. The increase was driven primarily by increased employee compensation cost, including higher incentive compensation as a result of higher earnings.
During the year ended September 30, 2022, our Residential segment gross profit increased by $69.5 million, or 51.9%, as compared to the year ended September 30, 2021. The increase in gross profit was driven primarily by contributions from the businesses acquired in fiscal 2021 and higher volumes, partly offset by increased commodity prices.
Our Residential segment’s revenues increased by $109.3 million, or 8.5%, during the year ended September 30, 2024, as compared to the year ended September 30, 2023. The increase was primarily driven by an $81.0 million increase in revenues from our plumbing and HVAC business as we expanded our offerings during the year ended September 30, 2024.
Selling, general and administrative expenses as a percentage of revenue in the Communications segment were 9.0% during the year ended September 30, 2023, compared to 8.3% for the year ended September 30, 2022. 25 2022 Compared to 2021 Year Ended September 30, 2022 2021 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 559,777 100.0 % $ 445,968 100.0 % Cost of services 490,959 87.7 % 361,197 81.0 % Gross Profit 68,818 12.3 % 84,771 19.0 % Selling, general and administrative expenses 46,717 8.3 % 41,373 9.3 % (Gain)/Loss on sale of assets 12 — % (4) — % Operating Income 22,089 3.9 % 43,402 9.7 % Revenue.
Communications 2024 Compared to 2023 Year Ended September 30, 2024 2023 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 776,474 100.0 % $ 600,776 100.0 % Cost of services 623,844 80.3 % 494,964 82.4 % Gross Profit 152,630 19.7 % 105,812 17.6 % Selling, general and administrative expenses 65,752 8.5 % 54,344 9.0 % (Gain) loss on sale of assets (18) — % 12 — % Operating Income 86,896 11.2 % 51,456 8.6 % Revenue.
Revenues in our Commercial & Industrial segment increased $52.3 million, or 20.4%, during the year ended September 30, 2022, compared to the year ended September 30, 2021. During the year ended September 30, 2022, we benefited from the start-up of projects that were delayed in fiscal 2021.
Revenues in our Commercial & Industrial segment increased $88.4 million, or 31.6%, during the year ended September 30, 2024, compared to the year ended September 30, 2023. The increase primarily relates to a large data center project. Gross Profit .
As discussed above, our results for the year ended September 30, 2023 include a pretax gain on sale of $13.0 million from the sale of STR in October 2022. 29 2022 Compared to 2021 Year Ended September 30, 2022 2021 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 308,504 100.0 % $ 256,198 100.0 % Cost of services 290,314 94.1 % 227,704 88.9 % Gross Profit 18,190 5.9 % 28,494 11.1 % Selling, general and administrative expenses 30,557 9.9 % 28,172 11.0 % Gain on sale of assets (55) — % (92) — % Operating Income (Loss) (12,312) (4.0) % 414 0.2 % Revenue.
Commercial & Industrial 2024 Compared to 2023 Year Ended September 30, 2024 2023 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 367,948 100.0 % $ 279,594 100.0 % Cost of services 293,741 79.8 % 248,295 88.8 % Gross Profit 74,207 20.2 % 31,299 11.2 % Selling, general and administrative expenses 32,925 8.9 % 25,225 9.0 % Gain on sale of assets (114) — % (13,198) (4.7) % Operating Income (Loss) 41,396 11.3 % 19,272 6.9 % Revenue.
Additionally, we distributed $7.0 million to noncontrolling interests under operating agreements in connection with certain acquisitions. Net cash provided by financing activities was $31.2 million in the year ended September 30, 2021. For the year ended September 30, 2021, we borrowed a net $40.0 million on our revolving credit facility.
Additionally, we distributed $7.0 million to noncontrolling interests under operating agreements in connection with certain acquisitions. CONTROLLING SHAREHOLDER Tontine Associates, L.L.C.
Inclusive of these acquired businesses, revenue in our single-family business increased by $371.1 million for the year ended September 30, 2022, compared to the year ended September 30, 2021, while multi-family and other revenue increased by $73.0 million. Gross Profit.
Our Commercial & Industrial segment’s gross profit during the year ended September 30, 2024 increased by $42.9 million, or 137.1%, as compared to the year ended September 30, 2023, and gross profit as a percentage of revenue increased from 11.2% for the year ended September 30, 2023 to 20.2% for the year ended September 30, 2024.
The transition to and setup of the new facility were completed during the third quarter of fiscal 2022. Gross profit as a percent of revenue decreased to 17.2% for the year ended September 30, 2022 compared to 27.8% for the year ended September 30, 2021.
During the year ended September 30, 2024, our Residential segment gross profit increased by $111.4 million, or 44.0%, as compared to the year ended September 30, 2023, and gross margin as a percentage of revenue increased to 26.2% during the year ended September 30, 2024 from 19.8% for the year ended September 30, 2023.
Removed
Our business segments each have their own unique set of factors influencing demand for our services. While we are entering the year with strong backlog levels in each of our business segments, we are also closely monitoring weakness in the residential construction market and, more generally, heightened uncertainty regarding the future direction of the overall economy.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+5 added−1 removed1 unchanged
Biggest changeFor additional information see “Risk Factors” in Item 1A of this Annual Report on Form 10-K. 36 Commodity Risk Our exposure to significant market risks includes fluctuations in commodity prices including, but not limited to, copper, aluminum, steel, electrical components, fuel, and certain plastics.
Biggest changeCommodity Risk Our exposure to significant market risks includes fluctuations in commodity prices including, but not limited to, copper, aluminum, steel, electrical components, fuel, and certain plastics. Commodity price risks may have an impact on our results of operations due to the fixed nature of many of our contracts.
If SOFR were to increase, our interest payment obligations on any then-outstanding borrowings would increase, having a negative effect on our cash flow and financial condition. We had no borrowings outstanding under our revolving credit facility as of September 30, 2023. 37
The Amended Credit Agreement uses SOFR as the benchmark for establishing the interest rate charged on our borrowings. If SOFR were to increase, our interest payment obligations on any then-outstanding borrowings would increase, having a negative effect on our cash flow and financial condition. We had no borrowings outstanding under our revolving credit facility as of September 30, 2024. 39
Commodity price risks may have an impact on our results of operations due to the fixed nature of many of our contracts. Over the long-term, we expect to be able to pass along a portion of these costs to our customers, as market conditions in the construction industry will allow.
Over the long-term, we expect to be able to pass along a portion of these costs to our customers, as market conditions in the construction industry will allow.
We currently do not maintain any hedging contracts that would limit our exposure to variable rates of interest when we have outstanding borrowings under our revolving credit facility. The Amended Credit Agreement uses SOFR as the benchmark for establishing the interest rate charged on our borrowings.
All of the long-term debt outstanding under our revolving credit facility is structured on floating rate terms. We currently do not maintain any hedging contracts that would limit our exposure to variable rates of interest when we have outstanding borrowings under our revolving credit facility.
Commodity price risks may have an impact on our results of operations due to the fixed price nature of many of our contracts. We are also exposed to interest rate risk with respect to any debt obligations we may incur on our credit facility.
Commodity price risks may have an impact on our results of operations due to the fixed price nature of many of our contracts. We are exposed to market price volatility as the fair value of our investments in marketable securities may fluctuate in response to changes in market value of such securities.
Removed
Interest Rate Risk Floating rate debt, where the interest rate fluctuates periodically, exposes us to short-term changes in market interest rates. All of the long-term debt outstanding under our revolving credit facility is structured on floating rate terms.
Added
We are also exposed to interest rate risk with respect to any debt obligations we may incur on our credit facility. For additional information see “Risk Factors” in Item 1A of this Annual Report on Form 10-K.
Added
Investment Risk We are exposed to market price volatility for our investments in marketable securities which are carried at fair value measured using market prices, with gains and losses included in Other (income) expense, net on our Consolidated Statements of Comprehensive Income.
Added
Changes in the market value of these investments could create volatility in our reported earnings from period to period, and a decline in value of our investments could have an adverse impact on our reported earnings.
Added
Changes in market value of investments measured at fair value resulted in an unrealized gain of $1.8 million in the year ended September 30, 2024.
Added
As of September 30, 2024, we had investments in marketable securities with a fair value of $35.0 million, and a 10% change in the market value of these investments would cause a $3.5 million impact to our pre-tax income. Interest Rate Risk Floating rate debt, where the interest rate fluctuates periodically, exposes us to short-term changes in market interest rates.

Other IESC 10-K year-over-year comparisons