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What changed in Willdan Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Willdan Group, 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.

+222 added−225 removedSource: 10-K (2024-03-08) vs 10-K (2023-03-10)

Top changes in Willdan Group, Inc.'s 2024 10-K

222 paragraphs added · 225 removed · 172 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

51 edited+23 added−21 removed99 unchanged
Biggest changeThe following table presents the approximate percentage of our consolidated contract revenue attributable to each financial reporting segment. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2022 2021 2020 Energy ​ 83 % 81 % 83 % Engineering and Consulting 17 % 19 % 17 % During fiscal year 2022, we derived 14.4% of our Energy segment contract revenues from one customer; the Los Angeles Department of Water and Power (“LADWP”), and had no individual customers that accounted for more than 10% of our Engineering and Consulting segment revenues. . 4 Table of Contents For further information related to our financial reporting segments, see Part II, Item 8, Note 9, Segment and Geographical Information , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Biggest changeDuring fiscal year 2023, we had no individual customers that accounted for more than 10% of our Engineering and Consulting segment contract revenues. 4 Table of Contents For further information related to our financial reporting segments, see Part II, Item 8, Note 9, Segment and Geographical Information , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Energy Services Our Energy segment provides specialized, innovative, comprehensive energy solutions to businesses, utilities, state agencies, municipalities, and non-profit organizations. Our experienced engineers, consultants, and staff help our clients realize cost and energy savings by tailoring efficient and cost-effective solutions to assist in optimizing energy spend.
Energy Services Our Energy segment provides specialized, innovative, and comprehensive energy solutions to businesses, utilities, state agencies, municipalities, and non-profit organizations. Our experienced engineers, consultants, and staff help our clients realize cost and energy savings by tailoring efficient and cost-effective solutions to assist in optimizing energy spend.
We consider our principal competitive advantages to be our reputation for dependability, technical knowledge and industry expertise of employees, quality of services and solutions, and the scope and scale of our service offerings. We believe that no single competitor has sufficient market share to influence the markets in which we operate in.
We consider our principal competitive advantages to be our reputation for dependability, technical knowledge and industry expertise of employees, quality of services and solutions, and the scope and scale of our service offerings. We believe that no single competitor has sufficient market share to influence the markets in which we operate.
We collaborate with the LADWP through the Commercial Direct Install Program, which is a small business lighting energy efficiency program that serves all commercial customers in LADWP territory with demand up to 250kW. On average, this program typically implements approximately 8,000 energy efficiency projects a year and has implemented over 100,000 projects since program inception in 2008.
We collaborate with the LADWP through the Commercial Direct Install Program, which is a small business lighting energy efficiency program that serves all commercial customers in LADWP territory with demand up to 250kW. On average, this program typically implements approximately 8,000 energy efficiency projects a year and has implemented over 103,000 projects since program inception in 2008.
Over that time, we have saved the LADWP and its customers over half a million MWh per year and almost one hundred MW of peak demand and also provided lead generation identifying roughly 10,000 water efficiency upgrades. We also collaborate with Duke Energy - Progress to manage the small business direct install program in North Carolina and South Carolina.
Over that time, we have saved the LADWP and its customers over half a million MWh per year and almost one hundred MW of peak demand and also provided lead generation identifying over 5,000 water efficiency upgrades. We also collaborate with Duke Energy - Progress to manage the small business direct install program in North Carolina and South Carolina.
QBS requires the selection of the most technically qualified firms for a project, while the financial and legal terms of the engagement are generally secondary. Our competition varies geographically. Although we provide services in several states, we may be stronger in certain service lines in some geographical areas than in other regions.
QBS requires the selection of the most technically qualified firms for a project, while the financial and legal terms of the engagement are generally secondary. 12 Table of Contents Our competition varies geographically. Although we provide services in several states, we may be stronger in certain service lines in some geographical areas than in other regions.
We believe that we are well positioned to capitalize on the ongoing expansion and transformation of the energy and infrastructure environments as they adapt to climate change, electrification, and technology advancements. We operate our business through a nationwide network of offices spread across 22 states, the District of Columbia, and the Canadian province of Alberta.
We believe that we are well positioned to capitalize on the ongoing expansion and transformation of the energy and infrastructure environments as they adapt to climate change, electrification, and technology advancements. We operate our business through a nationwide network of offices spread across 22 states, the District of Columbia, the Canadian province of Alberta, and the Commonwealth of Puerto Rico.
Consolidated Edison has been a customer of ours since 2009. 10 Table of Contents ​ In connection with our acquisition of substantially all of the assets of Genesys in March 2016, we entered into an administrative services agreement with Genesys pursuant to which our subsidiary, WES, provides Genesys with ongoing administrative, operational and other non-professional support services.
Consolidated Edison has been a customer of ours since 2009. ​ In connection with our acquisition of substantially all of the assets of Genesys in March 2016, we entered into an administrative services agreement with Genesys pursuant to which our subsidiary, WES, provides Genesys with ongoing administrative, operational and other non-professional support services.
The SEC maintains an Internet site that contains reports, proxy, and information statements and other information regarding our filings at http://www.sec.gov. ​ 16 Table of Contents
The SEC maintains an Internet site that contains reports, proxy, and information statements and other information regarding our filings at http://www.sec.gov. ​ ​ 17 Table of Contents
In addition, many of our multi-year utility program management contracts exceed $10,000,000 and, two of our largest contracts provide contract limits in excess of $100,000,000 in revenue over a period of five years for the management of utility incentive programs for the implementation of energy efficiency measures.
In addition, many of our multi-year utility program management contracts exceed $10,000,000 and, two of our largest contracts have provided contract limits in excess of $100,000,000 in revenue over a period of five years for the management of utility incentive programs for the implementation of energy efficiency measures.
Our staff performs review of all case files, inspection of properties, filing notices and complaints against violators, documenting, and preparing violation cases for the district attorney’s office and/or County counsel and testifying in court. We assist in the entitlement/development process consisting of general land use, zoning and building violations. ● State of Nevada, Building and Safety Services.
Our staff performs review of all case files, inspection of properties, filing notices and complaints against violators, documenting, and preparing violation cases for the district attorney’s office and/or County counsel and testifying in court. We assist in the entitlement/development process consisting of general land use, zoning and building violations. ● City of Phoenix, Building and Safety Services.
Our CEO works in collaboration with our Lead Independent Director, who is appointed biannually by the Board. Our Board is comprised of a diverse group of academics, financial advisors and industry practitioners with extensive experience in the governance and direction of publicly-traded enterprises.
Our Chairman and our CEO work in collaboration with our Lead Independent Director, who is appointed biannually by the Board. Our Board is comprised of a diverse group of academics, financial advisors and industry practitioners with extensive experience in the governance and direction of publicly-traded enterprises.
The name and logo of our proprietary software, MuniMagic+ SM , our California energy efficiency CEDA, as well as our proprietary platform as a service VIEWPOINT are also registered marks, and we have registered a federal copyright for the source code for the MuniMagic+ SM software.
The name and logo of our proprietary 16 Table of Contents software, MuniMagic+ SM , our California energy efficiency CEDA, as well as our proprietary platform as a service VIEWPOINT are also registered marks, and we have registered a federal copyright for the source code for the MuniMagic+ SM software.
Serving the two City departments was a team of full-time engineers, scientists, managers, observers/inspectors, project managers, administrative support staff, and a team of subconsultants. All work was accomplished through a task order process that defined the scope of work, time of performance, and cost of services. ● City of Palm Springs, California, Engineering and Construction Management Services.
Serving the two City departments was a team of full-time engineers, scientists, managers, observers/inspectors, project managers, administrative support staff, and a team of subconsultants. All work was accomplished through a task order process that defined the scope of work, time of performance, and cost of services. ● City of Long Beach, California, Engineering and Construction Management Services.
The majority of our contracts typically range from $1,000 to $10,000,000 in contract revenue; however, several of our construction management service contracts exceed $20,000,000 and range up to $90,000,000 in construction value.
The majority of our contracts typically range from $1,000 to $10,000,000 in contract revenue; however, several of our construction management service contracts exceed $20,000,000 and can range up to $130,000,000 in construction value.
The Board has determined that our directors, except for our CEO, are independent under the rules of the listing standards for the Nasdaq Global Market and the Securities Exchange Act of 1934, as amended. As the director most familiar with our business and industry, we believe our CEO is best suited to serve as Chairman of our Board.
Brisbin, our former CEO, are independent under the rules of the listing standards for the Nasdaq Global Market and the Securities Exchange Act of 1934, as amended. As the director most familiar with our business and industry, we believe that our former CEO is best suited to serve as Chairman of our Board.
An integral part of our ability to attract and retain qualified talent depends on our ability to maintain a culture reflective of the diverse communities that we serve. Our Workforce As of December 30, 2022, we employed a total of 1,491 employees, excluding contractors.
An integral part of our ability to attract and retain qualified talent depends on our ability to maintain a culture reflective of the diverse communities that we serve. Our Workforce As of December 29, 2023, we employed a total of 1,616 employees, excluding contractors.
Our team began collecting additional human capital metrics, such as employee gender ratios and other demographic information, and we have expanded the roster of universities at which we conduct recruiting activities. We also invested in our employee development strategy by expanding our employee training and professional development programs.
In 2021, we began collecting additional human capital metrics, such as employee gender ratios and other demographic information, and we have expanded the roster of universities at which we conduct recruiting activities. We continue to invest in our employee development strategy by expanding our employee training and professional development programs.
The services include meetings and project coordination with Los Angeles County and various municipalities as well as field review, equipment inventory, reporting for recommended improvements, traffic signal base plans, traffic signal improvement plans and traffic signal utility plans for 29 signalized intersections along the Lower Azusa/Los Angeles Street corridor. ● County of Orange, California, Code Enforcement Services.
The services include meetings and project coordination with Los Angeles County and various municipalities as well as field review, equipment inventory, reporting for recommended improvements, traffic signal base plans, traffic signal improvement plans, traffic signal utility plans and engineering estimates for multiple signalized intersections along various street corridors. ● County of Orange, California, Code Enforcement Services.
We were responsible for the study, design, and construction management that included the retrofit of 200 standard-flow fume hoods to low-flow, high-efficiency hoods and the installation of high-entrainment fume hood exhaust systems, new lab make-up air units with heat recovery, liquid desiccant dehumidification systems, new supply air risers and general exhaust risers throughout the tower, new hot water and chilled water risers, new central station air handling equipment, new high-temperature hot water to low-temperature hot water heat exchangers, and a lab fit-out with chilled beam secondary heating and cooling. ● San Diego Gas and Electric (“SDG&E”), California .
We were responsible for the study, design, and construction management that included the retrofit of 200 standard-flow fume hoods to low-flow, high-efficiency hoods and the installation of high-entrainment fume hood exhaust systems, new lab make-up air units with heat recovery, liquid desiccant dehumidification systems, new supply air risers and general exhaust risers throughout the tower, new hot water and chilled water risers, new central station air handling equipment, new high-temperature hot water to low-temperature hot water heat exchangers, and a lab fit-out with chilled beam secondary heating and cooling. ● Pueblo School District 70 Infrastructure Improvement, Colorado.
We provide peak-load reduction and energy capacity to SDG&E by coordinating the installation of proven energy efficiency measures, including chiller retrofits, chiller variable-frequency drives (“VFDs”), HVAC VFDs, evaporative cooling, demand control ventilation, two-way valves, and chilled water pump VFDs. These measures produce both peak-load reductions and energy savings. ● Baldwin High School, Kansas.
We provided peak-load reduction and energy capacity to SDG&E by coordinating the installation of proven energy efficiency measures, including chiller retrofits, chiller variable-frequency drives (“VFDs”), HVAC VFDs, evaporative cooling, demand control ventilation, two-way valves, and chilled water pump VFDs. These measures produced both peak-load reductions and energy savings. ● Entergy Corporation, Louisiana.
We also support the mandated reporting and other requirements associated with these financings. We provide financial advisory services for municipal securities but do not provide underwriting services. In general, contracts for engineering and consulting services are awarded by public agencies based primarily upon the qualifications of the engineering or consulting professional, rather than the proposed fees.
We provide financial advisory services for municipal securities but do not provide underwriting services. In general, contracts for engineering and consulting services are awarded by public agencies based primarily upon the qualifications of the engineering or consulting professional, rather than the proposed fees.
Each subgroup is led by a chair or co- chairpersons championing the needs and well-being of stakeholders, including employees. Collectively, the subgroups positively impact professional development, community outreach and business by creating and embracing cultural initiatives.
Each subgroup is led by a chair or co- chairpersons championing the needs and well-being of stakeholders, including employees. Collectively, the subgroups positively impact professional development, community outreach and business by creating and embracing cultural initiatives. Our employees are highly engaged in the formation of Employee Resource Groups (“ERGs”).
Award and incentive fees are recorded when they are fixed and determinable and consider customer contract terms. 11 Table of Contents For time-and-materials and fixed price contracts, we bill our clients periodically in accordance with the contract terms, based on costs incurred on either an hourly fee basis or on a percentage of completion basis or upon the achievement of certain prescribed milestones, as the project progresses.
For time-and-materials and fixed price contracts, we bill our clients periodically in accordance with the contract terms, based on costs incurred on either an hourly fee basis or on a percentage of completion basis or upon the achievement of certain prescribed milestones, as the project progresses.
The effort included the virtual survey of more than 4,000 publicly owned facilities in the city, detailed building energy modeling of prototypical city facilities, and transformation of these analyses into a comprehensive plan for the implementation of new renewable electricity sources, a heat electrification initiative, improved building energy efficiency and changes in wastewater, transportation, and other processes to meet the established goals. 6 Table of Contents Engineering and Consulting Services Our Engineering and Consulting segment provides civil engineering-related construction management, building and safety, city engineering office management, city planning, civil design, geotechnical, material testing and other engineering consulting services to our clients.
The effort included the virtual survey of more than 4,000 publicly owned facilities in the city, detailed building energy modeling of prototypical city facilities, and transformation of these analyses into a comprehensive 6 Table of Contents plan for the implementation of new renewable electricity sources, a heat electrification initiative, improved building energy efficiency and changes in wastewater, transportation, and other processes to meet the established goals.
The following table presents, for the periods indicated, the approximate percentage of our contract revenue subject to each type of pricing provision: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2022 2021 2020 Time-and-materials 20 % 24 % 26 % Unit-based 45 % 54 % 46 % Fixed price 35 % 22 % 28 % Total 100 % 100 % 100 % In relation to the pricing provisions, our service-related contracts, including operations and maintenance services and a variety of technical assistance services, are accounted for over the period of performance, in proportion to the cost of performance.
We typically mitigate some of these risks through the use of fixed price subcontracts for services, material, and equipment. 11 Table of Contents The following table presents, for the periods indicated, the approximate percentage of our contract revenue subject to each type of pricing provision: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2023 2022 2021 Time-and-materials 19 % 20 % 24 % Unit-based 42 % 45 % 54 % Fixed price 39 % 35 % 22 % Total 100 % 100 % 100 % In relation to the pricing provisions, our service-related contracts, including operations and maintenance services and a variety of technical assistance services, are accounted for over the period of performance, in proportion to the cost of performance.
LoadSEER was developed to provide unique insights and modeling capability for distributed energy resources and the evolving distribution grid. The application is used in short- and long-term circuit-level planning and to proactively integrate renewables, energy storage, and efficiency investments.
We supported Entergy’s investments in grid data and analytics capabilities across its electric distribution footprint through a software license for LoadSEER. LoadSEER was developed to provide unique insights and modeling capability for distributed energy resources and the evolving distribution grid. The application is used in short- and long-term circuit-level planning and to proactively integrate renewables, energy storage, and efficiency investments.
We are committed to accountability for our actions and goals. With our commitment to corporate governance principles, we have adopted, among other measures, a Code of Ethical Conduct, as well charters for each of the four standing committees of our Board of Directors (“Board”).
With our commitment to corporate governance principles, we have adopted, among other measures, a Code of Ethical Conduct, as well charters for each of the four standing committees of our Board of Directors (“Board”). These governance measures promote effective functioning of our Board and its committees, protecting our interests as a whole.
This has led to energy-efficient upgrades at over 320,000 commercial buildings, schools, hospitals, and other public buildings. Willdan’s program management activities for various utilities have yielded more than 8.2 billion kWh savings, and 97 million therms reductions over the past 15 years. We are committed to the continuous improvement and protection of our planet.
This has led to energy-efficient upgrades at over 370,000 commercial buildings, schools, hospitals, and other public buildings. Our program management activities for various utilities have yielded more than 8.8 billion kWh savings, and 110 million therms reductions over the past 16 years.
Our engineering services include traffic, bridges, rail, port, water, mining and other civil engineering projects. We also provide economic and financial consulting to public agencies. Lastly, we supplement the engineering services that we offer our clients by offering expertise and support for the various financing techniques public agencies utilize to finance their operations and infrastructure.
We also provide economic and financial consulting to public agencies. Lastly, we supplement the engineering services that we offer our clients by offering expertise and support for the various financing techniques public agencies utilize to finance their operations and infrastructure. We also support the mandated reporting and other requirements associated with these financings.
Willdan employees are highly engaged in the formation of Employee Resource Groups (“ERG”), fostering a greater sense of community while increasing employee engagement, inclusiveness, representation, and collaboration. All employees have the opportunity to initiate, join, and lead ERGs. Employee Engagement and Development Continuous growth requires continued investment in people, innovation, and new opportunities.
We believe that ERGs foster a greater sense of community while increasing employee engagement, inclusiveness, representation, and collaboration. All employees have the opportunity to initiate, join, and lead ERGs. Employee Engagement and Development Sustaining long-term growth requires continued investment in people, innovation, and new opportunities.
Our culture is focused on hiring, empowering, and retaining highly talented employees and professionals with the diverse background and expertise required to develop solutions for the current and future energy and infrastructure challenges and to help us consistently raise the bar and drive innovation forward. 13 Table of Contents To encourage more diverse and talented people to join our team, we partner with professional organizations that represent and support a diverse pool of applicants.
Our culture is focused on hiring, empowering, and retaining highly talented employees and professionals with the diverse background and expertise required to develop solutions for the current and future energy and infrastructure challenges and to help us consistently raise the bar and drive innovation forward.
We commenced providing energy efficiency services in 2008 with the acquisition of Intergy and since then, through organic growth and acquisitions, our client base has grown to include investor-owned and other public utilities, as well as substantial energy users in government and business.
Willdan, a Delaware corporation, was formed in 2006 to serve as our holding company for the expanding subsidiary operations. We commenced providing energy efficiency services in 2008 and since then, through organic growth and acquisitions, our client base has grown to include investor-owned and other public utilities, as well as substantial energy users in government and business.
These governance measures promote effective functioning of our Board and its committees, protecting our interests as a whole. The measures articulate shared expectations for how the Board, its committees, and our management should perform their respective functions. Annually, the Board works with our senior management team on a detailed, multi-year strategic plan, reviewing goal progress each quarter.
The measures articulate shared expectations for how the Board, its committees, and our management should perform their respective functions. Annually, the Board works with our senior management team on a detailed, multi-year strategic plan, reviewing goal progress each quarter. The Board also oversees efforts by Willdan’s senior management team in managing mitigation of environmental and social risks.
We help clients reduce carbon intensity to become cleaner, more sustainable organizations through measurement and goal setting, sustainable engineering designs, installation of more efficient lighting, heating and cooling measures and the development and implementation of master plans for environmental sustainability, carbon reduction and energy efficiency to meet specific goals.
We provide planning and policy analysis for governments, regulators, and utilities, as well as innovative financing programs that bring the benefit of clean energy to underserved neighborhoods and disadvantaged customers. 15 Table of Contents We help clients reduce carbon intensity to become cleaner, more sustainable organizations through measurement and goal setting, sustainable engineering designs, installation of more efficient lighting, heating and cooling measures and the development and implementation of master plans for environmental sustainability, carbon reduction and energy efficiency to meet specific goals.
Our largest clients are based in New York and California. In fiscal year 2022, services provided to clients in California accounted for 41.7% of our consolidated contract revenue and services provided to clients in New York accounted for 22.8% of our consolidated contract revenue.
In fiscal year 2023, services provided to clients in California accounted for 45.1% of our consolidated contract revenue and services provided to clients in New York accounted for 24.7% of our consolidated contract revenue.
The following table sets forth the number of our employees in each of our business segments and our holding company: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2022 2021 2020 Energy 781 860 748 Engineering and Consulting 623 619 531 Holding Company Employees (Willdan Group, Inc.) 87 81 74 Total 1,491 1,560 1,353 ​ Diversity, Equity and Inclusion ​ Willdan has a culture of acceptance and individuality, where all employees feel respected, included, and encouraged to contribute their unique perspectives, develop innovative ideas, and bring their best skills to work each day.
See Part I, Item 1A, "Risk Factors" included in this Annual Report on Form 10-K for a discussion of the risks related to the loss of key personnel or our inability to attract and retain qualified personnel. 13 Table of Contents The following table sets forth the number of our employees in each of our business segments and our holding company: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2023 2022 2021 Energy 814 781 860 Engineering and Consulting 714 623 619 Holding Company Employees (Willdan Group, Inc.) 88 87 81 Total 1,616 1,491 1,560 ​ Diversity, Equity and Inclusion ​ Willdan has a culture of acceptance and individuality, where all employees feel respected, included, and encouraged to contribute their unique perspectives, develop innovative ideas, and bring their best skills to work each day.
Insurance To address the hazards inherent in our business, we maintain insurance coverage through the following policies: commercial general liability, automobile liability, workers’ compensation and employer’s liability, cyber liability, professional liability and umbrella/excess liability.
Insurance To address the hazards inherent in our business, we maintain insurance coverage through the following policies: commercial general liability, automobile liability, workers’ compensation and employer’s liability, cyber liability, professional liability and umbrella/excess liability. However, if any claims, settlements, or judgements, individually or in the aggregate, exceed our policy limits, we are liable to pay these claims from our assets.
At all locations, we provide our employees with performance assessments and evaluations and professional development opportunities including access to job specific training. We also provide our employees with training on workplace culture and enrichment through our learning platform, which covers topics such as harassment, creating healthy work environments, inclusion, ethics and compliance.
We also provide our employees with training on workplace culture and enrichment through our learning platform, which covers topics such as anti-harassment, creating healthy work environments, inclusion, ethics and compliance. To measure our human capital objectives, we continuously engage with our employees.
Community Training As part of our community outreach, in the beginning of 2020 we established and financed the Willdan Clean Energy Academy (“WCEA”) which offers free training in energy efficiency skills and career services to disadvantaged workers in the New York City area.
In fiscal 2023, we expanded our online learning and development platform and launched a new intra-net employee communication platform. Community Training In 2020, we established and financed the Willdan Clean Energy Academy (“WCEA”), which offers free training and career services to disadvantaged workers in the New York City area.
To support this effort, we provide full-service program implementation including outreach and direct sales to potential commercial customers, on-site energy efficiency assessments, direct implementation of energy savings measures and subcontractor management.
Both programs help customers save energy, lower their bills and protect the environment by providing financial incentives to identify and buy down the cost of energy efficiency measures. To support this effort, we provide full-service program implementation including outreach and direct sales to potential commercial customers, on-site energy efficiency assessments, direct implementation of energy savings measures and participating contractor management.
The lost-time incident rate (LTIR) is the number of lost-time injuries that occurred in a given period, relative to the total number of hours worked in the same period.
A RCR describes the number of employees per 100 full-time employees that have been involved in an OSHA recordable injury or illness. The LTIR is the number of lost-time injuries that occurred in a given period, relative to the total number of hours worked in the same period.
Our corporate governance practices set clear expectations and responsibilities for leaders, employees, and partners to create long-term, competitive returns for shareholders and lasting value for all stakeholders. 15 Table of Contents We are committed to conducting business in a legal, ethical, and trustworthy manner; strictly upholding our regulatory obligations everywhere we operate; and complying with both the letter and spirit of our business policies and values.
We are committed to conducting business in a legal, ethical, and trustworthy manner; strictly upholding our regulatory obligations everywhere we operate; and complying with both the letter and spirit of our business policies and values. We are committed to accountability for our actions and goals.
We continue to implement programs across these four states and have completed over 28,000 projects for Duke Energy resulting in over 840,000 MWh in savings to small businesses.
We continue to implement programs across these four states and have completed over 30,000 projects for Duke Energy resulting in over 890,000 MWh in savings to small businesses. 10 Table of Contents We implement Consolidated Edison’s Small and Medium Business Program across the utility's New York City and Westchester County service area.
We acted as Owner’s Representative and Construction Manager responsible for coordinating all aspects of the construction, including coordination with the City’s Building Inspection Staff. ● Contra Costa County, California, City Engineering Services. We provided finance review, financial analysis, and contract administration services for the Contra Costa County Public Works Department.
We acted as the Owner’s Representative and Construction Manager responsible for coordinating all aspects of the construction, including coordination with the City’s Building Inspection Staff. ● County of Los Angeles, California, Traffic Design and Operational Support Services. We provide professional traffic engineering services for Traffic Signal Synchronization Project.
However, if any claims, settlements, or judgements, individually or in 12 Table of Contents the aggregate, exceed our policy limits, we are liable to pay these claims from our assets. We believe our coverage limits reasonably protect us from any material adverse impact that may arise from these insured risks.
We believe our coverage limits reasonably protect us from any material adverse impact that may arise from these insured risks.
As of December 30, 2022, we had approximately 2,200 open projects. During fiscal year 2022, we had one customer that accounted for more than 10% of our consolidated contract revenues. For fiscal year 2022, the LADWP accounted for 12.0% of our consolidated contract revenue. For fiscal year 2022, our top 10 customers accounted for 54.6% of our consolidated contract revenues.
As of December 29, 2023, we had approximately 2,300 open projects. During fiscal year 2023, we had no individual customers that accounted for more than 10% of our consolidated contract revenues and our top 10 customers accounted for 52.7% of our consolidated contract revenues. Our largest clients are based in California and New York.
The projects consisted of installation of photo voltaic and parking lot lighting upgrades, a new baseball clubhouse, and the complete structural upgrade and remodel of several historic buildings at the Reno campus. ● Property Assessed Clean Energy (“PACE”). PACE is a financing mechanism that enables low-cost, long-term funding for energy efficiency, renewable energy and water conservation projects.
Willdan provided municipal services in a variety of professional and technical administrative and finance measures. ● Property Assessed Clean Energy (“PACE”). PACE is a financing mechanism that enables low-cost, long-term funding for energy efficiency, renewable energy and water conservation projects.
After giving effect to renewals and extensions, the Consolidated Edison contract continues through the end of 2023. The SMB program, Consolidated Edison's largest energy efficiency program, helps customers save energy, lower their bills and protect the environment by providing financial incentives to identify and buy down the cost of energy efficiency measures.
After giving effect to renewals and extensions, this Consolidated Edison contract continues through the end of 2025. We also implement the Consolidated Edison Multifamily program, their largest energy efficiency program. After giving effect to renewals and extensions, that contract continues through the end of 2024.
We continuously strive to improve upon our engagement between employees and management teams to drive our company goals and enhance the employee experience. We aim to develop capable leadership that can meet the challenges of business growth while instilling a supportive and inclusive culture.
We continuously strive to improve upon our engagement between employees and management teams to drive our company goals and enhance the employee experience. At all locations, we provide our employees with performance assessments and evaluations and professional development opportunities including access to job specific training.
For context, lost-time injuries are those occurring in the workplace and resulting in an employee’s inability to work the next full workday. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2022 2021 2020 RCR ​ 0.69 0.83 0.78 LTIR ​ 0.26 0.74 0.35 ​ A recordable case rate (RCR) describes the number of employees per 100 full-time employees that have been involved in an OSHA recordable injury or illness.
We track and report all safety incidents and use metrics such as recordable case rate (“RCR”) and lost-time incident rate (“LTIR”). For context, lost-time injuries are those occurring in the workplace and resulting in an employee’s inability to work the next full workday.
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Willdan, a Delaware corporation, was formed in 2006 to serve as our holding company for the expanding subsidiary operations.
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The following table presents the approximate percentage of our consolidated contract revenue attributable to each financial reporting segment. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2023 2022 2021 Energy ​ 84 % 83 % 81 % Engineering and Consulting 16 % 17 % 19 % During fiscal year 2023, we derived 22.7% of our Energy segment contract revenues from two customers, the Los Angeles Department of Water and Power (“LADWP”) and the Dormitory Authority State of New York (“DASNY”).
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We provided a central plant HVAC replacement and building wide HVAC controls installation. We installed a new chilled water and boiler plant and refurbished two large air handling units.
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Pueblo School District 70 has 25+ schools and support facilities covering approximately 1.5 million square-feet. We were responsible for development, design, and construction management of nearly 150 energy efficiency and infrastructure improvement projects district wide.
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We also installed new heating hot water control valves on all variable air volume boxes and new HVAC controls to ensure the achievement of specified energy cost savings for the school. ● Entergy Corporation, Louisiana. We supported Entergy’s investments in grid data and analytics capabilities across its electric distribution footprint through a software license for LoadSEER.
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These projects included multiple building additions, several major interior renovations, district-wide LED upgrade, 10 building-wide HVAC and controls projects, 11 roof replacements, a dozen major parking lot improvements and replacements, and multiple CCTV and public address system replacements. ● San Diego Gas and Electric (“SDG&E”), California .
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We provided construction management and public works inspection services related to the City’s Police Department Remodel Project. The project involved the remodeling of the training center, lobby, records area, detective bureau, and men’s and women’s locker rooms.
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Engineering and Consulting Services Our Engineering and Consulting segment provides civil engineering-related construction management, building and safety, city engineering office management, city planning, civil design, geotechnical, material testing and other engineering consulting services to our clients. Our engineering services include traffic, bridges, rail, port, water, mining and other civil engineering projects.
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Willdan provided municipal services in a variety of professional and technical administrative and finance measures. ● County of Los Angeles, California, Traffic Engineering Services. We provide professional traffic engineering services for the Lower Azusa Road/Los Angeles Street Traffic Signal Synchronization Project.
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We provided construction management and public works inspection services for the City’s capital improvement and street maintenance programs. The projects involve building tenet improvements, landscaping, asphalt overlays, ADA compliance ramps, sidewalks, storm drains, water lines, sewer installations, underground utility improvements and other appurtenant work.
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We provided building safety/plan check services for the State of Nevada Public Works Department since 2007. Projects for the State of Nevada included several for the University of Nevada, Las Vegas and Reno campuses.
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We have provided Building Safety, Building Inspection and Building and Fire plan review services to the City of Phoenix Building and Fire Departments since 2001. Willdan Building Inspectors and Reviewers report to the City of Phoenix where the city provides assignments. Inspectors are assigned residential new construction, additions, and remodel inspections.
Removed
In January 2017, we announced a new three-year contract with Consolidated Edison to implement Consolidated Edison’s Small and Medium Business Direct Install (“SMB”) program across the utility's New York City and Westchester County service area. It continues the process of diversifying the program offerings.
Added
Fire plan reviewers are assigned commercial fire protection systems and Fire Code reviews. Plan reviewers are assigned residential new construction, additions and remodels reviews. ● Contra Costa County, California, Financial Services. We provided finance review, financial analysis, and contract administration services for the Contra Costa County Public Works Department.
Removed
Willdan typically mitigates some of these risks through the use of fixed price subcontracts for services, material, and equipment.
Added
Award and incentive fees are recorded when they are fixed and determinable and consider customer contract terms.
Removed
See Part I, Item 1A, "Risk Factors" included in this Annual Report on Form 10-K for a discussion of the risks related to the loss of key personnel or our inability to attract and retain qualified personnel.
Added
To encourage more diverse and talented people to join our team, we partner with professional organizations that represent and support a diverse pool of applicants.
Removed
During fiscal year 2021, we initiated an annual company-wide employee engagement survey. We have since worked to incorporate feedback that we received by expanding our use of internal diversity and human capital metrics and recruiting efforts and improving access to professional development programs.
Added
We provide several mechanisms for our employees to provide their feedback, including direct discussions with managers, company-wide employee surveys, and leadership meetings. We review the company-wide employee survey results and implement 14 Table of Contents action plans aimed at enhancing employee satisfaction and alignment with our overall human capital strategy.
Removed
We launched our 2022 survey in late fiscal year 2022 and are in the process of analyzing the results with the goal to implement applicable feedback in 2023.
Added
In 2021, we increased the funding for this outreach effort, expanding WCEA to the Los Angeles City area. In 2022, WCEA celebrated 500+ graduates and achieved a 73%+ successful employment outcome rate for unemployed and under-employed students/participants. The WCEA supports a diverse workforce and collaborates with community-based organizations and workforce centers to support energy efficiency workforce development.
Removed
In 2021, Willdan increased the funding for this outreach effort and the WCEA expanded to the Los Angeles City Area. At the end of 2022, WCEA reached 500 graduates and achieved over 40% participant job placement.
Added
Workplace Safety The health and safety of our employees is a core value and we continuously strive to provide a working environment that is reflective of that belief. At Willdan, our leadership embraces and supports the efforts required to drive the proactive management of risk and the elevation of our safety culture.
Removed
The WCEA supports a diverse workforce and collaborates with community-based organizations and workforce centers to support energy efficiency workforce development. 14 Table of Contents Workplace Safety Willdan is committed to maintaining a safe work environment for all of our employees, both inside our facilities and at project job sites.
Added
We recognize the important role that every employee plays in preventing work-related injuries. Training is an integral part of our Health and Safety Program and all employees receive the relevant safety training for their assigned tasks.
Removed
We recognize the critical role that all of our employees play in sustaining a safe and compliant work environment, and we understand that our leaders are responsible for the ongoing improvement of operational discipline and a safety culture.
Added
For those working on project sites, this includes a project-safety orientation prior to beginning work on the site, participation in weekly tailgate meetings, and additional in-depth safety training for those supervising or conducting job site observations. Safety orientations also extend to our subcontractors and visitors who must access our project sites.
Removed
Every employee and subcontractor is expected to apply this approach when performing all work activities and safety plans and processes are an integral part of all our field projects.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

47 edited+12 added−10 removed158 unchanged
Biggest changeIf we cannot make scheduled payments on our debt or comply with the other covenants under our Credit Agreement, we will be in default and the lenders under our Credit Agreement could terminate their commitments to loan money and could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation.
Biggest changeIf we cannot make scheduled payments on our debt or comply with the other covenants under our Credit Agreement (as defined in Part II, Item 8, Note 5, “ Debt Obligations ” of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K), we will be in default and the lenders under our Credit Agreement could terminate their commitments to loan money and could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation. ​ We may not be able to obtain capital when desired on favorable terms, if at all, or without dilution to our stockholders, which may impact our ability to execute on our current or future business strategies.
Our future revenue and growth prospects could be adversely affected if other contractors eliminate or reduce their subcontracts or teaming arrangement relationships with us, or if a government agency terminates or reduces these other contractors’ programs, does not award them new contracts, or refuses to pay under a contract. 18 Table of Contents Supply chain constraints and labor shortages could negatively impact our business, financial condition and results of operations.
Our future revenue and growth prospects could be adversely affected if other contractors eliminate or reduce their subcontracts or teaming arrangement relationships with us, or if a government agency terminates or reduces these other contractors’ programs, does not award them new contracts, or refuses to pay under a contract. 19 Table of Contents Supply chain constraints and labor shortages could negatively impact our business, financial condition and results of operations.
This significant level of indebtedness could have important negative consequences to us, including making it more difficult to satisfy our obligations on our outstanding debt obligations; making it more difficult to obtain financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes; requiring us to use more of our excess cash flow to pay interest and principal on our debt, which will reduce the amount of money available to finance our operations and other business activities; increasing our vulnerability to general economic downturns and adverse industry conditions; potentially limiting our flexibility in planning for, or reacting to, changes in our business and in our industry in general; exposing us to the risk of increased interest rates because the debt outstanding under our term loan and revolving credit facility bear interest at variable rates; placing us at a competitive disadvantage compared to our competitors that have less debt; and potentially limiting our ability to comply with the financial and other restrictive covenants in our debt instruments which, among other things, require us to maintain specified financial ratios, and could result in an event of default that, if not cured or waived, could have a material adverse effect on our business or prospects.
An increase in the level of indebtedness could have important negative consequences to us, including making it more difficult to satisfy our obligations on outstanding debt obligations; making it more difficult to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes; requiring us to use more of our excess cash flow to pay interest and principal on our debt, which will reduce the amount of money available to finance our operations and other business activities; increasing our vulnerability to general economic downturns and adverse industry conditions; potentially limiting our flexibility in planning for, or reacting to, changes in our business and in our industry in general; exposing us to the risk of increased interest rates because the debt outstanding under our term loan and revolving credit facility bear interest at variable rates; placing us at a competitive disadvantage compared to our competitors that have less debt; and potentially limiting our ability to comply with the financial and other restrictive covenants in our debt instruments which, among other things, require us to maintain specified financial ratios, and could result in an event of default that, if not cured or waived, could have a material adverse effect on our business or prospects.
If our goodwill or other intangible assets become impaired, then our profits may be significantly reduced. Because we have recently completed a number of acquisitions, goodwill and other intangible assets represent a substantial portion of our assets.
If our goodwill or other intangible assets become impaired, then our profits may be significantly reduced. Because we have completed a number of acquisitions, goodwill and other intangible assets represent a substantial portion of our assets.
Our Credit Agreement limits or restricts our and our subsidiaries ability to, among other things, incur, create or assume additional indebtedness; incur, create or assume liens securing debt or other encumbrances on our assets; purchase, hold or acquire unpermitted acquisitions or investments; make loans or advances; pay dividends or make distributions to our stockholders; purchase or redeem our stock; repay indebtedness that is junior to indebtedness under our Credit Agreement; acquire the assets of, or merge or consolidate with, other companies; and sell, lease, or otherwise dispose of assets.
Our Credit Agreement limits or restricts our and our subsidiaries’ ability to, among other things, incur, create or assume additional indebtedness; incur, create or assume liens securing debt or other encumbrances on our assets; purchase, hold or acquire unpermitted acquisitions or investments; make loans or advances; pay dividends or make distributions to our stockholders; purchase or redeem our stock; repay indebtedness that is junior to indebtedness under our Credit Agreement; acquire the assets of, or merge or consolidate with, other companies; and sell, lease, or otherwise dispose of assets.
Those regulatory mandates, including mandates for greenhouse gas reductions, the composition of energy generation sources, the amount of energy consumption reductions, 17 Table of Contents the cost effectiveness of those reductions and the various terms under which those mandates are to be delivered set firm boundaries within which the utilities may contract with third parties such as Willdan.
Those regulatory mandates, including mandates for greenhouse gas reductions, the composition of energy generation sources, the amount of energy consumption reductions, 18 Table of Contents the cost effectiveness of those reductions and the various terms under which those mandates are to be delivered set firm boundaries within which the utilities may contract with third parties such as Willdan.
In general, subject to some exceptions, Section 203 prohibits a Delaware corporation from engaging in any business combination with any 29 Table of Contents “interested stockholder” (which is generally defined as an entity or person who, together with the person’s affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the corporation), for a three-year period following the date that the stockholder became an interested stockholder.
In general, subject to some exceptions, Section 203 prohibits a Delaware corporation from engaging in any business combination with any “interested stockholder” (which is generally defined as an entity or person who, together with the person’s affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the corporation), for a three-year period following the date that the stockholder became an interested stockholder.
Our 21 Table of Contents failure to comply with applicable laws or regulations, or acts of misconduct could subject us to fines and penalties, loss of security clearances, and suspension or debarment from contracting, any or all of which could harm our reputation, reduce our revenue and profits, and subject us to criminal and civil enforcement actions.
Our 22 Table of Contents failure to comply with applicable laws or regulations, or acts of misconduct could subject us to fines and penalties, loss of security clearances, and suspension or debarment from contracting, any or all of which could harm our reputation, reduce our revenue and profits, and subject us to criminal and civil enforcement actions.
We may not be able to effect any such 22 Table of Contents alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations.
We may not be able to effect any such 23 Table of Contents alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations.
If a client determines not to proceed with the completion of the project or if the client defaults on its payment obligations, we may face difficulties in collecting payment of amounts due to us for the costs previously incurred or for the amounts previously expended to purchase equipment or supplies. ​ Our use of the percentage-of-completion method of revenue recognition on our fixed price contracts could result in a reduction or reversal of previously recorded revenue and profits.
If a client determines not to proceed with the completion of the project or if the client defaults on its payment obligations, we may face difficulties in collecting payment of amounts due to us for the costs previously incurred or for the amounts previously expended to purchase equipment or supplies. ​ 20 Table of Contents Our use of the percentage-of-completion method of revenue recognition on our fixed price contracts could result in a reduction or reversal of previously recorded revenue and profits.
The loss of the services of any of these key personnel could adversely affect our business, results of operations and financial condition. Unavailability of third-party insurance coverage would increase our overall risk exposure as well as disrupt the management of our business operations.
The loss of the services of any of these key personnel could adversely affect our business, results of operations and financial condition. Unavailability or cancellation of third-party insurance coverage would increase our overall risk exposure as well as disrupt the management of our business operations.
In any such event, we would have no right to seek lost fees or other damages. If a client were to terminate, decline to exercise options under, or curtail further 24 Table of Contents performance under one or more of our major contracts, it could have a material adverse effect on our business, results of operations and financial condition.
In any such event, we would have no right to seek lost fees or other damages. If a client were to terminate, decline to exercise options under, or curtail further performance under one or more of our major contracts, it could have a material adverse effect on our business, results of operations and financial condition.
Changes in federal, state and local tax laws and regulations could adversely affect our business, results of operations and financial condition. Because we primarily provide services to municipalities, public utilities and other public agencies, we are more susceptible to the unique risks associated with government contracts. We primarily work for utilities, municipalities and other public agencies.
Changes in federal, state and local tax laws and regulations could adversely affect our business, results of operations and financial condition. 25 Table of Contents Because we primarily provide services to municipalities, public utilities and other public agencies, we are more susceptible to the unique risks associated with government contracts. We primarily work for utilities, municipalities and other public agencies.
Contract proposals and negotiations are complex and frequently involve a lengthy bidding and selection process. If we are not able to replace the revenue from expiring contracts, either through follow-on contracts or new contracts, our business, results of operations and financial condition may be adversely affected.
Contract proposals, negotiations, and software licenses are complex and frequently involve a lengthy bidding and selection process. If we are not able to replace the revenue from expiring contracts, either through follow-on contracts or new contracts, or secure new software licenses, our business, results of operations and financial condition may be adversely affected.
The goodwill impairment test requires us to determine the fair value of our reporting units, which are the components at or one level below our reportable segments. In determining fair value, we make significant judgments and estimates, including assumptions about our strategic plans with regard to our operations.
The goodwill impairment test requires us to determine the fair value of our reporting units, which are the components at or 28 Table of Contents one level below our reportable segments. In determining fair value, we make significant judgments and estimates, including assumptions about our strategic plans with regard to our operations.
Legislation is proposed periodically, particularly in the states of New York and California, that attempts to limit the ability of governmental agencies to contract with private consultants to provide services. Should such changes occur 28 Table of Contents and be upheld, demand for our services may be materially adversely affected.
Legislation is proposed periodically, particularly in the states of California and New York, that attempts to limit the ability of governmental agencies to contract with private consultants to provide services. Should such changes occur and be upheld, demand for our services may be materially adversely affected.
We cannot predict the timing or form of any current or future regulatory or law enforcement initiatives, and any such initiatives could have a material adverse effect on our business, results of operations and financial condition. 27 Table of Contents Our acquired businesses may underperform relative to our expectations.
We cannot predict the timing or form of any current or future regulatory or law enforcement initiatives, and any such initiatives could have a material adverse effect on our business, results of operations and financial condition. Our acquired businesses may underperform relative to our expectations.
Events outside our control, such as natural and man-made disasters, as well as terrorist actions, war or armed hostilities between countries or non-state actors, pandemics or other public health emergencies (such as the Covid-19 pandemic or future resurgences of the Covid-19 pandemic), could negatively impact the economies in which we operate by causing the closure of offices, interrupting projects, and forcing the relocation of employees.
Events outside our control, such as natural and man-made disasters, as well as terrorist actions, war or armed hostilities between countries or non-state actors, pandemics, resurgences of pandemics, or other public health emergencies, could negatively impact the economies in which we operate by causing the closure of offices, interrupting projects, and forcing the relocation of employees.
Profitability on these contracts is driven by 19 Table of Contents control over the number of hours required to execute the tasks, the mix of staff utilized and the percentage of staff time expended on directly billable activities. Many of our time-and-materials contracts are subject to maximum contract values.
Profitability on these contracts is driven by control over the number of hours required to execute the tasks, the mix of staff utilized and the percentage of staff time expended on directly billable activities. Many of our time-and-materials contracts are subject to maximum contract values.
Further, we face exposure to personal injury claims in the event that an individual is injured because of our negligence or the negligence of one of our subcontractors. Moreover, we may not have adequate resources in the event of a successful claim against us.
Further, we face exposure to personal injury claims in the event that an individual is injured because of 21 Table of Contents our negligence or the negligence of one of our subcontractors. Moreover, we may not have adequate resources in the event of a successful claim against us.
Even if we win a particular 25 Table of Contents contract through competitive bidding, our profit margins may be depressed or we may even suffer losses as a result of the costs incurred through the bidding process and the need to lower our prices to overcome competition.
Even if we win a particular contract through competitive bidding, our profit margins may be depressed or we may even suffer losses as a result of the costs incurred through the bidding process and the need to lower our prices to overcome competition.
The loss of key utility programs or key clients (or financial difficulties at this utility program or these clients, which result in nonpayment or nonperformance) could have a significant and adverse effect on our business, results of operations and financial condition.
The loss of key utility programs or key clients (or financial difficulties at this utility program or these clients, which result in nonpayment or nonperformance) could have a significant and adverse effect on our business, results of 24 Table of Contents operations and financial condition.
In addition, performance of projects can be affected by a number of factors beyond our control, including, among other things, unavoidable delays from government inaction, public opposition, inability to obtain financing, weather conditions, unavailability of vendor materials (including but not limited to import restrictions or pandemics or other public health emergencies such as the recent coronavirus outbreak), changes in the project scope of services requested by our clients, industrial accidents, environmental hazards, and labor disruptions.
In addition, performance of projects can be affected by a number of factors beyond our control, including, among other things, unavoidable delays from government inaction, public opposition, inability to obtain financing, weather conditions, unavailability of vendor materials (including but not limited to import restrictions or pandemics or other public health emergencies such as the Covid-19 pandemic), changes in the project scope of services requested by our clients, industrial accidents, environmental hazards, and labor disruptions.
Risks Related to Indebtedness Our substantial leverage and significant debt service obligations due to debt incurred in connection with our acquisitions could adversely affect our business, results of operations and financial condition. Our financial performance could be adversely affected by our substantial debt leverage.
Risks Related to Liquidity and Indebtedness Our leverage and debt service obligations due to debt incurred in connection with our acquisitions could adversely affect our business, results of operations and financial condition. Our financial performance could be adversely affected by our debt leverage.
Cyber security breaches or other systems and information technology interruption could result in liability, harm our reputation and impact our ability to operate. We rely heavily on computer, information, and communications technology and systems to operate. We store and process increasingly large amounts of confidential information concerning our employees, customers, contractors and vendors.
Cyber security breaches or other systems and information technology interruptions could result in liability, harm our reputation and impact our ability to operate. We rely on computer, information, and communications technology and systems to operate. We store and process large amounts of confidential information concerning our employees, customers, contractors, and vendors.
Certain organizations that provide corporate governance and other corporate risk information to investors and shareholders have developed, and others may in the future develop, scores and ratings to evaluate companies and investment funds based upon ESG or “sustainability” metrics.
Certain organizations that provide corporate governance and other corporate risk information to investors and shareholders have developed, and others may in the future develop, scores and ratings to evaluate 29 Table of Contents companies and investment funds based upon ESG or “sustainability” metrics.
If we fail to conduct due diligence on our potential targets effectively, we may, for example, not identify problems at target companies, or fail to recognize incompatibilities or other obstacles to successful integration.
If we fail to conduct due diligence on our potential targets effectively, we may, for example, not identify problems at target companies, or fail to recognize 27 Table of Contents incompatibilities or other obstacles to successful integration.
We had no goodwill impairment in fiscal years 2022, 2021, or 2020.
We had no goodwill impairment in fiscal years 2023, 2022, or 2021.
While we include appropriate disclaimers in the reports that we prepare for our clients, once we produce such written work product, we do not always have the ability to control the manner in which our clients use such information.
Once we produce written reports for our clients, we do not always have the ability to control the manner in which our clients use such information, even if we include appropriate disclaimers in such written work product.
Employee, agent, or partner misconduct, or our failure to comply with anti-bribery and other laws or regulations, could harm our reputation, reduce our revenue and profits, and subject us to criminal and civil enforcement actions.
These actions, if required, may be costly or unavailable on terms acceptable to us. Employee, agent, or partner misconduct, or our failure to comply with anti-bribery and other laws or regulations, could harm our reputation, reduce our revenue and profits, and subject us to criminal and civil enforcement actions.
We may also face reputational damage in the event our corporate responsibility initiatives or objectives, including with respect to board diversity, do not meet the standards set by our investors, shareholders, lawmakers, listing exchanges or other constituencies, or if we are unable to achieve an acceptable ESG or sustainability rating from third party rating services.
We may also face reputational damage in the event our corporate responsibility initiatives, objectives, reporting, or disclosure controls, including with respect matters such as to board diversity and climate change, do not meet the expectations of our investors, shareholders, lawmakers, listing exchange or other constituencies, or if we are unable to achieve an acceptable ESG or sustainability rating from third party rating services.
If we experience system interruptions and delays from cybersecurity attacks or otherwise, such as from natural disasters, telecommunications failures, acts of war or terrorism, and similar events or disruptions, it could suspend or stop our operations, and could have a material adverse effect on our business, results of operations and financial condition, and could negatively impact our clients.
If we experience system interruptions and delays from cybersecurity attacks or otherwise, it could suspend or stop our operations, and could have a material adverse effect on our business, results of operations and financial condition, and could negatively impact our clients.
Cybersecurity attacks in particular are evolving, and we face the constant risk of cybersecurity threats, including, among other things, computer viruses, malicious code, attacks by computer hackers, organized cyber-attacks, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and/or corruption of data.
Cybersecurity attacks in particular are evolving, and we and the third parties upon which we rely face the constant risk of cybersecurity threats, including, among other things, computer viruses, malicious code, attacks by computer hackers, organized cyber-attacks, ransomware attacks, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, encryption, access to, release or other compromise of confidential or sensitive information.
A partially or completely uninsured claim, if successful and of significant magnitude, could have a material adverse effect on our liquidity. 20 Table of Contents If any of our third-party insurers fail, suddenly cancel our coverage, or otherwise are unable to provide us with adequate insurance coverage, then our overall risk exposure and our operational expenses would increase and the management of our business operations would be disrupted.
If any of our third-party insurers fail, suddenly cancel our coverage, or otherwise are unable to provide us with adequate insurance coverage, then our overall risk exposure and our operational expenses would increase and the management of our business operations would be disrupted.
In the event the lenders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. 23 Table of Contents Risks Related to Our Clients and Our Projects If we have a loss or reduction of business from a key customer or key utility programs, it could result in significant harm to our revenue, profitability and financial condition.
Risks Related to Our Clients and Our Projects If we have a loss or reduction of business from a key customer or key utility programs, it could result in significant harm to our revenue, profitability and financial condition.
Ongoing focus on corporate responsibility matters by investors and other parties as described above may impose additional costs or expose us to new risks General Risk Factors Our bylaws, our certificate of incorporation and Delaware law contain provisions that could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our current management.
General Risk Factors Our bylaws, our certificate of incorporation and Delaware law contain provisions that could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our current management.
A change in the individuals responsible for selecting consultants for and awarding contracts on behalf of a public agency (for example, due to an election) could adversely affect our ability to retain an existing contract with or obtain additional contracts from such public agency.
A change in the individuals responsible for selecting consultants for and awarding contracts on behalf of a public agency (for example, due to an election) could adversely affect our ability to retain an existing contract with or obtain additional contracts from such public agency. 26 Table of Contents If our business partners fail to perform their contractual obligations on a project, we could be exposed to legal liability, loss of reputation and profit reduction or loss on the project.
We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially adversely affect our financial position and results of operations.
Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially adversely affect our financial position and results of operations.
Our Credit Agreement also requires that we maintain a maximum total leverage ratio and a minimum fixed charge coverage ratio, tested on a quarterly basis, which we may not be able to achieve.
Our Credit Agreement also requires that we maintain a maximum total net leverage ratio and a minimum fixed charge coverage ratio, tested on a quarterly basis, which we may not be able to achieve. The covenants may additionally impair our ability to finance future operations or capital needs or to engage in other favorable business activities.
These conditions, combined with tightening labor markets resulting from elevated resignation rates among U.S. workers, could increase the cost and difficulty of recruiting and retaining employees, or could result in project delays or cancellations which could negatively impact our operations and financial results. ​ Resurgences of the Covid-19 pandemic and health and safety measures intended to slow its spread could adversely affect our business, results of operations, and financial condition.
These conditions, combined with tightening labor markets resulting from elevated resignation rates among U.S. workers, could increase the cost and difficulty of recruiting and retaining employees, or could result in project delays or cancellations which could negatively impact our operations and financial results. ​ Our profitability could suffer if we are not able to maintain adequate utilization of our workforce.
These additional costs include liquidated damages paid under contractual penalty provisions, which can be substantial and can accrue on a regular basis. 26 Table of Contents Risks Related to Growth and Acquisitions Acquisitions could disrupt our operations and adversely impact our business, results of operations and financial condition as a result of our failure to conduct due diligence effectively, or our inability to successfully integrate the acquiree.
Risks Related to Growth and Acquisitions Acquisitions could disrupt our operations and adversely impact our business, results of operations and financial condition as a result of our failure to conduct due diligence effectively, or our inability to successfully integrate the acquiree.
These prepayment obligations could have an adverse effect on our business, results of operations and financial condition. Furthermore, if we are unable to repay the amounts due and payable under the Credit Agreement, the lenders could proceed against the collateral granted to them to secure that indebtedness.
Furthermore, if we are unable to repay the amounts due and payable under the Credit Agreement, the lenders could proceed against the collateral granted to them to secure that indebtedness. In the event the lenders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.
The covenants may additionally impair our ability to finance future operations or capital needs or to engage in other favorable business activities. Failing to comply with these covenants could result in an event of default under the Credit Agreement, which could result in us being required to repay the amounts outstanding prior to maturity.
Failing to comply with these covenants could result in an event of default under the Credit Agreement, which could result in us being required to repay the amounts outstanding prior to maturity. These prepayment obligations could have an adverse effect on our business, results of operations and financial condition.
Failure to meet any of the milestone requirements could result in additional costs, and the amount of such additional costs could exceed the projected profits on the project.
Failure to meet any of the milestone requirements could result in additional costs, and the amount of such additional costs could exceed the projected profits on the project. These additional costs include liquidated damages paid under contractual penalty provisions, which can be substantial and can accrue on a regular basis.
In addition, if we are unable to prevent third parties from infringing or misappropriating our trademarks or other proprietary information, our competitive position could be adversely affected.
In addition, if we are unable to prevent third parties from infringing or misappropriating our trademarks or other proprietary information, our competitive position could be adversely affected. Assertions by third parties of infringement, misappropriation or other violations by us of their intellectual property rights could result in significant costs and substantially harm our business, financial condition and operating results.
If our business partners fail to perform their contractual obligations on a project, we could be exposed to legal liability, loss of reputation and profit reduction or loss on the project. We routinely enter into subcontracts and, occasionally, joint ventures, teaming arrangements, and other contractual arrangements so that we can jointly bid and perform on a particular project.
We routinely enter into subcontracts and, occasionally, joint ventures, teaming arrangements, and other contractual arrangements so that we can jointly bid and perform on a particular project. Success under these arrangements depends in large part on whether our business partners fulfill their contractual obligations satisfactorily.
Further, improper disclosure of confidential information of our employees, customers, contractors and vendors could harm our reputation and subject us to liability. 30 Table of Contents ​ ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Further, improper disclosure of confidential, proprietary or sensitive information of our employees, customers, contractors and vendors could harm our reputation and subject us to liability and other harms. Data privacy risks, including evolving laws, regulations, and other obligations, may result in business interruption and increased costs and liabilities.
Removed
In fiscal year 2020, and during part of the fiscal year 2021, the Covid-19 pandemic impacted the energy services industry and our results of operations.
Added
A partially or completely uninsured claim, if successful and of significant magnitude, could have a material adverse effect on our liquidity.
Removed
Resurgences of the Covid-19 pandemic could subject us to various risks and uncertainties that could materially adversely affect our business, results of operations and financial condition including: the possibility that some of our clients will request deferral, modification or reduction in their contractual work orders with us or, in the case of those clients that we service under a purchase order model, if such clients reduce or cancel the amount of work requested relative to historical practices; fewer subcontractors being available to complete our work if our subcontractors must limit or cease operations or declare bankruptcy as a result of a resurgence of the Covid-19 pandemic; our clients becoming insolvent or initiating bankruptcy or similar proceedings, which would adversely affect our ability to collect contractual payments from such clients for work that may have already been completed and result in decreased revenues; the impact on our results of operations and financial condition resulting from a temporary suspension in capital expenditures from our government clients; and increased difficulty in executing our growth strategy, which could result in fewer acquisition opportunities for us compared to historical levels. ​ Our profitability could suffer if we are not able to maintain adequate utilization of our workforce.
Added
We may face from time to time, allegations that we or a supplier or customer have violated the rights of third parties, including patent, trademark and other intellectual property rights.
Removed
Our Amended and Restated Credit Agreement (as amended by the First Amendment, dated as of August 15, 2019, the Second Amendment, dated as of November 6, 2019, the Third Amendment, dated as of May 6, 2020, the Fourth Amendment, dated April 30, 2021, the Fifth Amendment, dated March 8, 2022, the Sixth Amendment, dated August 2, 2022, and the Seventh Amendment, dated November 1, 2022, the “Credit Agreement”) restricts our ability to dispose of assets and use the proceeds from those dispositions and also restricts our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due.
Added
If, with respect to any claim against us for violation of third-party intellectual property rights, we are unable to prevail in the litigation or retain or obtain sufficient rights or develop non-infringing intellectual property or otherwise alter our business practices on a timely or cost-efficient basis, our business, financial condition or results of operations may be adversely affected.
Removed
We may not be able to obtain capital when desired on favorable terms, if at all, or without dilution to our stockholders, which may impact our ability to execute on our current or future business strategies.
Added
Any infringement, misappropriation or related claims, whether or not meritorious, are time consuming, divert technical and management personnel and are costly to resolve. As a result of any such dispute, we may have to develop non-infringing technology, pay damages, enter into royalty or licensing agreements, cease utilizing products or services or take other actions to resolve the claims.
Removed
On one occasion, we secured waivers from our lenders in order to waive non-compliance with certain financial covenants under our Credit Agreement, and we cannot guarantee that in the future we will be able to secure waivers in the event of non-compliance.
Added
Ongoing focus on corporate responsibility matters by investors and other parties as described above, as well as disclosure regulations, may impose additional costs or expose us to new risks.
Removed
Success under these arrangements depends in large part on whether our business partners fulfill their contractual obligations satisfactorily.
Added
We also rely in part on third-party software and information technology vendors to run certain parts of our information technology systems and our business. If our third-party service providers experience a cyber security breach or other interruption, we could experience adverse consequences. 30 Table of Contents In the ordinary course of business, we have been targeted by malicious cyber-attacks.
Removed
Board diversity is an ESG topic that is, in particular, receiving heightened attention by investors, shareholders, lawmakers and listing exchanges. Certain states, including California where we maintain our principal executive offices, have passed laws requiring companies to meet certain gender and ethnic diversity requirements on their boards of directors.
Added
While we have implemented security measures designed to protect against cyber security breaches, there can be no assurance that these measures will be effective. We take steps designed to detect, mitigate, and remediate vulnerabilities in our information systems (such as our hardware and/or software, including that of third parties upon which we rely).
Removed
If we are unable to recruit, attract and/or retain qualified members of our board of directors to maintain compliance with the diversity requirements of this California mandate within the prescribed timelines, we could be exposed to financial penalties.
Added
We may not, however, detect and remediate all such vulnerabilities including on a timely basis. Further, we may experience delays in developing and deploying remedial measures and patches designed to address identified vulnerabilities. Vulnerabilities could be exploited and result in a cyber security breach or other interruption.
Removed
We must ensure that we are at all times compliant with various privacy laws, rules, and regulations. The risk of failing to comply with these laws, rules, and regulations increases as we continue to expand. We also rely in part on third-party software and information technology vendors to run certain parts of our information technology systems.
Added
Laws, regulations and other obligations (including without limitation applicable guidance, industry standards, external and internal privacy and security policies and statements, and contractual requirements) relating to personal data and data privacy are constantly evolving, as federal, state, local and foreign governments adopt new measures addressing data privacy. These laws impose stringent obligations.
Removed
We must ensure that all of our vendors who have access to our information also have the appropriate privacy policies, procedures and protections in place. In the ordinary course of business, we have been targeted by malicious cyber-attacks.
Added
For example, the California Consumer Privacy Act, as amended (“CCPA”), which applies to business representative and other types of personal data of California residents, provides for fines of up to $7,500 per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages.
Added
Our privacy obligations, including applicable laws and regulations, may be interpreted or applied in a manner that is inconsistent with each other and may complicate our existing data privacy practices. Evolving compliance and operational requirements under the privacy laws of the jurisdictions in which we operate, regulations, and other obligations have become increasingly burdensome and complex.
Added
Our failure to comply (or perceived failure to comply) with these obligations could result in costly enforcement actions (including regulatory proceedings, investigations, fines, penalties, audits, and inspections), litigation (including class action claims) or mass arbitration demands, penalties and fines, require us to change our business practices or cause business interruptions, and may lead to liabilities and other harms. 31 Table of Contents ​ ITEM 1B.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeIn total, our facilities contain approximately 255,000 square feet of office space and are subject to leases that expire through 2027. We rent a small portion of this total space on a month-to-month basis.
Biggest changeIn addition to the U.S. locations, we also have one office in Canada and one office in the Commonwealth of Puerto Rico. In total, our facilities contain approximately 243,000 square feet of office space and are subject to leases that expire through 2029. We rent a small portion of this total space on a month-to-month basis.
ITEM 2. PROPERTIES Our corporate headquarters is located at 2401 East Katella Avenue, Anaheim, California, where we lease approximately 18,000 square feet of office space. In addition, we lease office space in 50 other locations nationwide, principally in California and New York, and also have one office in Canada.
ITEM 2. PROPERTIES Our corporate headquarters is located at 2401 East Katella Avenue, Anaheim, California, where we lease approximately 18,000 square feet of office space. In addition, we lease office space in 44 other locations nationwide, principally in California and New York.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed6 unchanged
Biggest changeIn accordance with accounting standards regarding loss contingencies, we accrue an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and we disclose the amount accrued and an estimate of any reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements not to be misleading.
Biggest changeIn accordance with accounting standards regarding loss contingencies, we accrue an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and we 33 Table of Contents disclose the amount accrued and an estimate of any reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for our financial statements not to be misleading.
However, in the opinion of our management, after consulting with legal counsel, and taking into account insurance coverage, the ultimate liability related to current outstanding claims and lawsuits is not expected to have a material adverse effect on our financial statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 31 Table of Contents PART II
However, in the opinion of our management, after consulting with legal counsel, and taking into account insurance coverage, the ultimate liability related to current outstanding claims and lawsuits is not expected to have a material adverse effect on our financial statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 34 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

2 edited+0 added−0 removed0 unchanged
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 31 ​ PART II ​ ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 32 ITEM 6. RESERVED 34 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 35 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 52 ITEM 8.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 34 ​ PART II ​ ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 35 ITEM 6. RESERVED 37 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 38 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 54 ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 53 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 102 ITEM 9A. CONTROLS AND PROCEDURES 102
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 55 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 103 ITEM 9A. CONTROLS AND PROCEDURES 103

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−1 removed6 unchanged
Biggest changeThe old peer group consists of Ameresco, Inc., Charah Solutions, Inc., Cypress Environmental Partners LP, Exponent, Inc., Hill International, Inc., Limbach Holdings, Inc., NV5 Global, Inc., RCM Technologies, Inc., and Resources Connection, Inc. The peer group investment is weighted by market capitalization as of December 29, 2017 and is adjusted monthly.
Biggest changeThe peer group investment is weighted by market capitalization as of December 28, 2018 and is adjusted monthly.
Stockholders As of March 8, 2023, there were 158 stockholders of record of our common stock. This number does not include persons who hold our common stock in nominee or “street name” accounts through brokers or banks. Dividends We did not declare or pay cash dividends on our common stock in fiscal years 2022, 2021, or 2020.
Stockholders As of March 6, 2024, there were 171 stockholders of record of our common stock. This number does not include persons who hold our common stock in nominee or “street name” accounts through brokers or banks. Dividends We did not declare or pay cash dividends on our common stock in fiscal years 2023, 2022, or 2021.
An investment of $100, with reinvestment of all dividends, is assumed to have been made in our common stock, in the peer group, and in the Nasdaq Composite on December 29, 2017, and the relative performance of each is tracked through and including December 30, 2022.
An investment of $100, with reinvestment of all dividends, is assumed to have been made in our common stock, in the peer group, and in the Nasdaq Composite on December 28, 2018, and the relative performance of each is tracked through and including December 29, 2023.
The stock price performance shown in the graph is not necessarily indicative of future stock price performance. 32 Table of Contents Recent Sales of Unregistered Securities None.
The stock price performance shown in the graph is not necessarily indicative of future stock price performance. 35 Table of Contents Recent Sales of Unregistered Securities None. Issuer Repurchases of Equity Securities None. ​ 36 Table of Contents
Removed
Issuer Repurchases of Equity Securities During the fiscal quarter ended December 30, 2022, we made the following repurchases of shares of our common stock from employees to satisfy tax withholding obligations incurred in connection with the vesting of restricted stock: ​ ​ ​ ​ ​ ​ Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares That May Yet be Purchased Under the Plans or Programs October 1, 2022 – October 28, 2022 2,036 $14.26 — — October 29, 2022 – November 25, 2022 305 $16.70 — — November 26, 2022 – December 30, 2022 — — — — TOTAL 2,341 $14.58 — — ​ ​ ​ ​ 33 Table of Contents
Added
In the event that a peer group company is acquired and/or delisted, we remove that company from our peer group on such corresponding acquisition date and/or delisting date.

Item 7. Management's Discussion & Analysis

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

57 edited+12 added−19 removed114 unchanged
Biggest changeWe provide financial advisory services for municipal securities but do not provide underwriting services. ​ 35 Table of Contents Results of Operations Summary Comparison of 2022, 2021, and 2020 The following table sets forth, for the periods indicated, certain information derived from our consolidated statements of comprehensive income (1) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2022 ​ 2021 ​ 2020 ​ ​ (in thousands, except percentages) Contract revenue ​ $ 429,138 ​ 100.0 % ​ $ 353,755 ​ 100.0 % ​ $ 390,980 ​ 100.0 % Direct costs of contract revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries and wages ​ ​ 82,972 ​ 19.3 ​ ​ ​ 65,648 ​ 18.6 ​ ​ ​ 65,149 ​ 16.7 ​ Subcontractor services and other direct costs ​ ​ 202,587 ​ 47.2 ​ ​ ​ 152,233 ​ 43.0 ​ ​ ​ 196,438 ​ 50.2 ​ Total direct costs of contract revenue ​ ​ 285,559 ​ 66.5 ​ ​ ​ 217,881 ​ 61.6 ​ ​ ​ 261,587 ​ 66.9 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit ​ ​ 143,579 ​ 33.5 ​ ​ ​ 135,874 ​ 38.4 ​ ​ ​ 129,393 ​ 33.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ General and administrative expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries and wages, payroll taxes and employee benefits ​ ​ 81,801 ​ 19.1 ​ ​ ​ 73,812 ​ 20.9 ​ ​ ​ 71,229 ​ 18.2 ​ Facilities and facilities related ​ ​ 9,287 ​ 2.2 ​ ​ ​ 9,896 ​ 2.8 ​ ​ ​ 10,481 ​ 2.7 ​ Stock-based compensation ​ ​ 8,373 ​ 2.0 ​ ​ ​ 16,563 ​ 4.7 ​ ​ ​ 16,113 ​ 4.1 ​ Depreciation and amortization ​ ​ 17,489 ​ 4.1 ​ ​ ​ 17,146 ​ 4.8 ​ ​ ​ 18,743 ​ 4.8 ​ Other ​ ​ 33,692 ​ 7.9 ​ ​ ​ 27,148 ​ 7.7 ​ ​ ​ 29,054 ​ 7.4 ​ Total general and administrative expenses ​ ​ 150,642 ​ 35.1 ​ ​ ​ 144,565 ​ 40.9 ​ ​ ​ 145,620 ​ 37.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) from operations ​ ​ (7,063) ​ (1.6) ​ ​ ​ (8,691) ​ (2.5) ​ ​ ​ (16,227) ​ (4.2) ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ (5,328) ​ (1.2) ​ ​ ​ (3,869) ​ (1.1) ​ ​ ​ (5,068) ​ (1.3) ​ Other, net ​ ​ 939 ​ 0.2 ​ ​ ​ 156 ​ 0.0 ​ ​ ​ 1,626 ​ 0.4 ​ Total other income (expense) ​ ​ (4,389) ​ (1.0) ​ ​ ​ (3,713) ​ (1.0) ​ ​ ​ (3,442) ​ (0.9) ​ Income (Loss) before income tax expense ​ ​ (11,452) ​ (2.7) ​ ​ ​ (12,404) ​ (3.5) ​ ​ ​ (19,669) ​ (5.0) ​ Income tax expense (benefit) ​ ​ (3,004) ​ (0.7) ​ ​ ​ (3,987) ​ (1.1) ​ ​ ​ (5,173) ​ (1.3) ​ Net income (loss) ​ $ (8,448) ​ (2.0) ​ ​ $ (8,417) ​ (2.4) ​ ​ $ (14,496) ​ (3.7) ​ ​ (1) Percentages are expressed as a percentage of contract revenue and may not total due to rounding. ​ 36 Table of Contents The following tables provides information about disaggregated revenue of our two segments, Energy and Engineering and Consulting by contract type, client type, and geographical region: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ Energy Engineering and Consulting Total ​ (in thousands, except percentage) Contract Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Time-and-materials ​ $ 32,491 ​ $ 53,584 ​ $ 86,075 Unit-based ​ ​ 180,509 ​ ​ 14,296 ​ ​ 194,805 Fixed price ​ ​ 144,460 ​ ​ 3,798 ​ ​ 148,258 Total (1) ​ $ 357,460 ​ $ 71,678 ​ $ 429,138 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Client Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 29,782 ​ $ 5,566 ​ $ 35,348 Government ​ ​ 126,494 ​ ​ 65,969 ​ ​ 192,463 Utilities ​ ​ 201,184 ​ ​ 143 ​ ​ 201,327 Total (1) ​ $ 357,460 ​ $ 71,678 ​ $ 429,138 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Geography (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ 357,460 ​ $ 71,678 ​ $ 429,138 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ Energy Engineering and Consulting Total ​ (in thousands, except percentage) Contract Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Time-and-materials ​ $ 34,004 ​ $ 52,209 ​ $ 86,213 Unit-based ​ ​ 180,311 ​ ​ 10,688 ​ ​ 190,999 Fixed price ​ ​ 72,069 ​ ​ 4,474 ​ ​ 76,543 Total (1) ​ $ 286,384 ​ $ 67,371 ​ $ 353,755 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Client Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 24,541 ​ $ 5,323 ​ $ 29,864 Government ​ ​ 65,249 ​ ​ 61,899 ​ ​ 127,148 Utilities ​ ​ 196,594 ​ ​ 149 ​ ​ 196,743 Total (1) ​ $ 286,384 ​ $ 67,371 ​ $ 353,755 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Geography (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ 286,384 ​ $ 67,371 ​ $ 353,755 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2020 ​ Energy Engineering and Consulting Total ​ (in thousands, except percentage) Contract Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Time-and-materials ​ $ 47,912 ​ $ 53,840 ​ $ 101,752 Unit-based ​ ​ 170,991 ​ ​ 9,195 ​ ​ 180,186 Fixed price ​ ​ 105,275 ​ ​ 3,767 ​ ​ 109,042 Total (1) ​ $ 324,178 ​ $ 66,802 ​ $ 390,980 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Client Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 36,212 ​ $ 5,155 ​ $ 41,367 Government ​ ​ 93,821 ​ ​ 61,412 ​ ​ 155,233 Utilities ​ ​ 194,145 ​ ​ 235 ​ ​ 194,380 Total (1) ​ $ 324,178 ​ $ 66,802 ​ $ 390,980 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Geography (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ 324,178 ​ $ 66,802 ​ $ 390,980 ​ ​ (1) Revenue from our Canadian operations were not material for fiscal years 2022, 2021, and 2020. ​ 37 Table of Contents Fiscal Year 2022 Compared to Fiscal Year 2021 Contract revenue.
Biggest changeWe provide financial advisory services for municipal securities but do not provide underwriting services. ​ 38 Table of Contents Results of Operations Summary Comparison of 2023, 2022, and 2021 The following table sets forth, for the periods indicated, certain information derived from our consolidated statements of comprehensive income (1) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ (in thousands, except percentages) Contract revenue ​ $ 510,095 ​ 100.0 % ​ $ 429,138 ​ 100.0 % ​ $ 353,755 ​ 100.0 % Direct costs of contract revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries and wages ​ ​ 89,915 ​ 17.6 ​ ​ ​ 82,972 ​ 19.3 ​ ​ ​ 65,648 ​ 18.6 ​ Subcontractor services and other direct costs ​ ​ 240,413 ​ 47.1 ​ ​ ​ 202,587 ​ 47.2 ​ ​ ​ 152,233 ​ 43.0 ​ Total direct costs of contract revenue ​ ​ 330,328 ​ 64.8 ​ ​ ​ 285,559 ​ 66.5 ​ ​ ​ 217,881 ​ 61.6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit ​ ​ 179,767 ​ 35.2 ​ ​ ​ 143,579 ​ 33.5 ​ ​ ​ 135,874 ​ 38.4 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ General and administrative expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries and wages, payroll taxes and employee benefits ​ ​ 95,556 ​ 18.7 ​ ​ ​ 81,801 ​ 19.1 ​ ​ ​ 73,812 ​ 20.9 ​ Facilities and facilities related ​ ​ 9,565 ​ 1.9 ​ ​ ​ 9,287 ​ 2.2 ​ ​ ​ 9,896 ​ 2.8 ​ Stock-based compensation ​ ​ 5,323 ​ 1.0 ​ ​ ​ 8,373 ​ 2.0 ​ ​ ​ 16,563 ​ 4.7 ​ Depreciation and amortization ​ ​ 16,431 ​ 3.2 ​ ​ ​ 17,489 ​ 4.1 ​ ​ ​ 17,146 ​ 4.8 ​ Other ​ ​ 30,818 ​ 6.0 ​ ​ ​ 33,692 ​ 7.9 ​ ​ ​ 27,148 ​ 7.7 ​ Total general and administrative expenses ​ ​ 157,693 ​ 30.9 ​ ​ ​ 150,642 ​ 35.1 ​ ​ ​ 144,565 ​ 40.9 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) from operations ​ ​ 22,074 ​ 4.3 ​ ​ ​ (7,063) ​ (1.6) ​ ​ ​ (8,691) ​ (2.5) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ (9,413) ​ (1.8) ​ ​ ​ (5,328) ​ (1.2) ​ ​ ​ (3,869) ​ (1.1) ​ Other, net ​ ​ 1,930 ​ 0.4 ​ ​ ​ 939 ​ 0.2 ​ ​ ​ 156 ​ 0.0 ​ Total other income (expense) ​ ​ (7,483) ​ (1.5) ​ ​ ​ (4,389) ​ (1.0) ​ ​ ​ (3,713) ​ (1.0) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (Loss) before income tax expense ​ ​ 14,591 ​ 2.9 ​ ​ ​ (11,452) ​ (2.7) ​ ​ ​ (12,404) ​ (3.5) ​ Income tax expense (benefit) ​ ​ 3,665 ​ 0.7 ​ ​ ​ (3,004) ​ (0.7) ​ ​ ​ (3,987) ​ (1.1) ​ Net income (loss) ​ $ 10,926 ​ 2.1 ​ ​ $ (8,448) ​ (2.0) ​ ​ $ (8,417) ​ (2.4) ​ ​ (1) Percentages are expressed as a percentage of contract revenue and may not total due to rounding. ​ 39 Table of Contents The following tables provides information about disaggregated revenue of our two segments, Energy and Engineering and Consulting by contract type, client type, and geographical region: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ Energy Engineering and Consulting Total ​ (in thousands) Contract Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Time-and-materials ​ $ 35,582 ​ $ 63,530 ​ $ 99,112 Unit-based ​ ​ 199,040 ​ ​ 15,753 ​ ​ 214,793 Fixed price ​ ​ 192,354 ​ ​ 3,836 ​ ​ 196,190 Total (1) ​ $ 426,976 ​ $ 83,119 ​ $ 510,095 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Client Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 31,162 ​ $ 5,866 ​ $ 37,028 Government ​ ​ 159,935 ​ ​ 76,972 ​ ​ 236,907 Utilities (2) ​ ​ 235,879 ​ ​ 281 ​ ​ 236,160 Total (1) ​ $ 426,976 ​ $ 83,119 ​ $ 510,095 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Geography (3) ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ 426,976 ​ $ 83,119 ​ $ 510,095 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ Energy Engineering and Consulting Total ​ (in thousands) Contract Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Time-and-materials ​ $ 32,491 ​ $ 53,584 ​ $ 86,075 Unit-based ​ ​ 180,509 ​ ​ 14,296 ​ ​ 194,805 Fixed price ​ ​ 144,460 ​ ​ 3,798 ​ ​ 148,258 Total (1) ​ $ 357,460 ​ $ 71,678 ​ $ 429,138 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Client Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 29,782 ​ $ 5,566 ​ $ 35,348 Government ​ ​ 126,494 ​ ​ 65,969 ​ ​ 192,463 Utilities (2) ​ ​ 201,184 ​ ​ 143 ​ ​ 201,327 Total (1) ​ $ 357,460 ​ $ 71,678 ​ $ 429,138 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Geography (3) ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ 357,460 ​ $ 71,678 ​ $ 429,138 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ Energy Engineering and Consulting Total ​ (in thousands) Contract Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Time-and-materials ​ $ 34,004 ​ $ 52,209 ​ $ 86,213 Unit-based ​ ​ 180,311 ​ ​ 10,688 ​ ​ 190,999 Fixed price ​ ​ 72,069 ​ ​ 4,474 ​ ​ 76,543 Total (1) ​ $ 286,384 ​ $ 67,371 ​ $ 353,755 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Client Type ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 24,541 ​ $ 5,323 ​ $ 29,864 Government ​ ​ 65,249 ​ ​ 61,899 ​ ​ 127,148 Utilities (2) ​ ​ 196,594 ​ ​ 149 ​ ​ 196,743 Total (1) ​ $ 286,384 ​ $ 67,371 ​ $ 353,755 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Geography (3) ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ 286,384 ​ $ 67,371 ​ $ 353,755 ​ (1) Amounts may not add to the totals due to rounding.
Recent Accounting Standards ​ For a description of recently issued and adopted accounting pronouncements, including adoption dates and expected effects on our results of operations and financial condition, see Part II, Item 8, Note 2, “ Recent Accounting Pronouncements ”, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. ​ 51 Table of Contents
Recent Accounting Standards ​ For a description of recently issued and adopted accounting pronouncements, including adoption dates and expected effects on our results of operations and financial condition, see Part II, Item 8, Note 2, “ Recent Accounting Pronouncements ”, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. ​ 53 Table of Contents
Billings do not necessarily correlate with revenue recognized using the percentage-of-completion method of revenue recognition. 48 Table of Contents Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based upon our review of all outstanding amounts on a quarterly basis.
Billings do not necessarily correlate with revenue recognized using the percentage-of-completion method of revenue recognition. 50 Table of Contents Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based upon our review of all outstanding amounts on a quarterly basis.
Any reduction in the estimated fair value of our Energy segment could result in an impairment charge of goodwill associated with this segment in future periods. 49 Table of Contents Business Combinations The acquisition method of accounting for business combinations requires us to use significant estimates and assumptions, including fair value estimates, as of the business combination date.
Any reduction in the estimated fair value of our Energy segment could result in an impairment charge of goodwill associated with this segment in future periods. 51 Table of Contents Business Combinations The acquisition method of accounting for business combinations requires us to use significant estimates and assumptions, including fair value estimates, as of the business combination date.
We recognize interest and penalties related to unrecognized tax benefits in income tax expense. 50 Table of Contents For further discussion of our income taxes, see Part II, Item 8, Note 11, “ Income Taxes ” of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
We recognize interest and penalties related to unrecognized tax benefits in income tax expense. 52 Table of Contents For further discussion of our income taxes, see Part II, Item 8, Note 11, “ Income Taxes ” of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
We expense general and administrative costs when incurred. 45 Table of Contents Critical Accounting Policies This discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”).
We expense general and administrative costs when incurred. 47 Table of Contents Critical Accounting Policies This discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”).
We do not consider these types of warranties to be separate performance obligations. 47 Table of Contents In some cases, we have a master service or blanket agreement with a customer under which each task order releases us to perform specific portions of the overall scope in the service contract.
We do not consider these types of warranties to be separate performance obligations. 49 Table of Contents In some cases, we have a master service or blanket agreement with a customer under which each task order releases us to perform specific portions of the overall scope in the service contract.
In addition, the percentage-of-completion method is a common method of revenue recognition in our industry. 46 Table of Contents Many of our fixed price contracts involve a high degree of subcontracted fixed price effort and are relatively short in duration, thereby lowering the risks of not properly estimating the percent complete.
In addition, the percentage-of-completion method is a common method of revenue recognition in our industry. 48 Table of Contents Many of our fixed price contracts involve a high degree of subcontracted fixed price effort and are relatively short in duration, thereby lowering the risks of not properly estimating the percent complete.
We did not recognize any goodwill impairment charges in fiscal years 2022, 2021, or 2020. We test our goodwill for impairment at the level of our reporting units, which are components of our operating segments.
We did not recognize any goodwill impairment charges in fiscal years 2023, 2022, or 2021. We test our goodwill for impairment at the level of our reporting units, which are components of our operating segments.
The decrease in stock-based compensation expenses was primarily related to previously awarded stock grants reaching the end of their corresponding vesting periods. The decrease in facilities and facility related expenses was due 38 Table of Contents to satisfied facility leases that were not renewed. Depreciation and amortization was relatively flat for the fiscal year 2022 compared to fiscal year 2021.
The decrease in stock-based compensation expenses was primarily related to previously awarded stock grants reaching the end of their corresponding vesting periods. The decrease in facilities and facility related expenses was due to satisfied facility leases that were not renewed. Depreciation and amortization was relatively flat for the fiscal year 2022 compared to fiscal year 2021.
We have provided a summary of our significant accounting policies in Part II, Item 8, Note 1, Organization and Operations of the Company , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
We have provided a summary of our significant accounting policies in Part II, Item 8, Note 1, “ Organization and Operations of the Company” , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Because these funds are held in trust for pass through to the utility’s customers and have no impact on our working capital or operating cash flows, these cash receipts are presented in the consolidated statement of cash flows as financing cash inflows, “Receipt of restricted cash”, with the subsequent payments classified as financing cash outflows, “Payment of restricted cash.”.
Because these funds are held in trust for pass through to the utility’s customers and have no impact on our working capital or operating cash flows, these cash receipts are presented in the consolidated statement of 44 Table of Contents cash flows as financing cash inflows, “Receipt of restricted cash”, with the subsequent payments classified as financing cash outflows, “Payment of restricted cash”.
For further information on the types of contracts under which we perform our services, see Part II, Item 8, Note 1, Organization and Operations of the Company, of the Notes to consolidated financial statements included in this Annual Report on Form 10-K. Goodwill We test our goodwill at least annually for possible impairment.
For further information on the types of contracts under which we perform our services, see Part II, Item 8, Note 1, “Organization and Operations of the Company”, of the Notes to consolidated financial statements included in this Annual Report on Form 10-K. Goodwill We test our goodwill at least annually for possible impairment.
The increase in G&A expenses consisted of an increase of $9.2 million in the Energy segment combined with an increase of $2.3 million in the Engineering and Consulting segment, partially offset by a decrease of $5.4 million in unallocated corporate expenses.
The increase in G&A expenses consisted of an increase of $9.2 million in the Energy segment combined with an increase of $2.3 million in the Engineering and Consulting 42 Table of Contents segment, partially offset by a decrease of $5.4 million in unallocated corporate expenses.
If these non-finalized changes qualify as a contract modification, a determination is made whether to account for the change in contract value as a modification to the existing contract, or a separate contract and revenue under the claims or change orders is recognized accordingly.
If these non-finalized changes qualify as a contract modification, a determination is made whether to account for the change in contract value as a modification to the 46 Table of Contents existing contract, or a separate contract and revenue under the claims or change orders is recognized accordingly.
During fiscal years 2022, 2021 and 2020, we did not have any acquisitions. Income Taxes Income taxes are accounted for under the asset and liability method.
During fiscal years 2023, 2022 and 2021, we did not have any material acquisitions. Income Taxes Income taxes are accounted for under the asset and liability method.
Our net loss was relatively flat for fiscal year 2022, compared to fiscal year 2021, as a result of the factors described above. Fiscal Year 2021 Compared to Fiscal Year 2020 Contract revenue.
Our net loss was relatively flat for fiscal year 2022, compared to fiscal year 2021, as a result of the factors described above.
The decrease in G&A expenses consisted of a decrease of $2.6 million in the Energy segment combined with a decrease of $1.7 million in the unallocated corporate expenses, partially offset by an increase of $3.3 million in the Engineering and Consulting segment.
The increase in G&A expenses consisted of an increase of $3.8 million in the Energy segment combined with an increase of $6.5 million in the Engineering and Consulting segment, partially offset by a decrease of $3.2 million in unallocated corporate expenses.
Cash Flows from Operating Activities Cash flows provided by operating activities were $9.4 million, $9.8 million, and $47.0 million for fiscal years 2022, 2021, and 2020, respectively. Cash flow from operating activities primarily consists of net income, adjusted for non-cash charges, such as depreciation and amortization and stock-based compensation, plus or minus changes in current operating assets and liabilities.
Cash Flows from Operating Activities Cash flows provided by operating activities were $39.2 million, $9.4 million, and $9.8 million for fiscal years 2023, 2022, and 2021, respectively. Cash flows from operating activities primarily consists of net income, adjusted for non-cash charges, such as depreciation and amortization and stock-based compensation, plus or minus changes in current operating assets and liabilities.
Impact of Inflation Due to the average duration of our projects and our ability to negotiate prices as contracts end and new contracts begin, historically, our operations have not been materially impacted by inflation. ​ While immaterial to our results of operations and financial condition, we have experienced higher cost of materials and delays in our supply chain for equipment during fiscal year 2022, and we expect these higher costs and delays in our supply chain to persist through fiscal year 2023.
Impact of Inflation Due to the average duration of our projects and our ability to negotiate prices as contracts end and new contracts begin, historically, our operations have not been materially impacted by inflation. While immaterial to our results of operations and financial condition, we have experienced higher cost of materials and delays in our supply chain for equipment.
Accordingly, we are the primary beneficiary of Genesys and consolidate Genesys as a variable interest entity. 42 Table of Contents Short and Long-term Uses of Cash General Our principal uses of cash are to fund operating expenses, support working capital requirements, finance capital expenditures, and pay down outstanding debt.
Accordingly, we are the primary beneficiary of Genesys and consolidate Genesys as a variable interest entity. Short and Long-term Uses of Cash General Our principal uses of cash are to fund operating expenses, support working capital requirements, finance capital expenditures, and pay down outstanding debt. From time to time, we also use cash to help fund business acquisitions.
Costs related to un-priced change orders are expensed when incurred, and recognition of the related revenue is based on the assessment above of whether or not a contract modification has occurred.
Costs related to un-priced change orders are expensed when incurred, and recognition of the related revenue is based on the assessment above of whether or not a contract modification has occurred. Estimated profit for un-priced change orders is recognized only if collection is probable.
Cash flows provided by operating activities for fiscal year 2022 were unfavorably impacted by higher working capital requirements required to support the increase in contract revenues.
Cash flows provided by operating activities for fiscal year 2023 resulted primarily from the increase in earnings, combined with lower working capital requirements . Cash flows provided by operating activities for fiscal year 2022 were unfavorably impacted by higher working capital requirements required to support the increase in contract revenues.
From time to time, we also use cash to help fund business acquisitions. Our cash and cash equivalents are impacted by the timing of when we are paid by our customers for services rendered and when we pay expenses as reflected in the change in our outstanding accounts payable and accrued expenses.
Our cash and cash equivalents are impacted by the timing of when we are paid by our customers for services rendered and when we pay expenses as reflected in the change in our outstanding accounts payable and accrued expenses.
Such costs are included in general and administrative expenses. Additionally, payroll taxes, bonuses and employee benefit costs for all of our personnel are included in general and administrative expenses since no allocation of these costs is made to direct costs of contract revenue.
Additionally, payroll taxes, bonuses and employee benefit costs for all of our personnel are included in general and administrative expenses since no allocation of these costs is made to direct costs of contract revenue. Other companies may classify as direct costs of contract revenue some of the costs that we classify as general and administrative costs.
Cash Flows from Financing Activities Cash flows provided by financing activities was $8.4 million in fiscal year 2022 compared to cash flows used in financing activities of $18.5 million, and $19.0 million for fiscal years 2021, and 2020, respectively.
Cash Flows from Financing Activities Cash flows used in financing activities were $23.8 million for fiscal year 2023 compared to cash flows provided by financing activities of $8.4 million for fiscal year 2022 and cash flows used in financing activities of $18.5 million in fiscal year 2021.
Outstanding Indebtedness See Part II, Item 8, Note 5, “ Debt Obligations ”, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for information regarding our indebtedness, including information about new borrowings and repayments, principal repayment terms, interest rates, covenants, and other key terms of our outstanding indebtedness.
Outstanding Indebtedness See Part II, Item 8, Note 5, “ Debt Obligations ”, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for information regarding our indebtedness, including information about new borrowings and repayments, principal repayment terms, interest rates, covenants, and other key terms of our outstanding indebtedness. 45 Table of Contents Insurance Premiums We have also financed, from time to time, insurance premiums by entering into unsecured notes payable with insurance companies.
Within G&A expenses, the increase of $2.6 million for salaries and wages, payroll taxes and employee benefits, combined with the increase of $0.5 million in stock-based compensation was offset by the decrease of $0.6 million in facilities and facility related expenses, combined with the decrease of $1.6 million in depreciation and amortization and the decrease of $1.9 million in other general and administrative expenses.
Within G&A expenses, the increase of $13.8 million in salaries and wages, payroll taxes and employee benefits was partially offset by a decrease of $3.1 million in stock-based compensation, a decrease of $2.9 million in other general and administrative expenses, and a decrease of $1.1 million in depreciation and amortization.
Such guarantees are generally measured upon completion of a project. In the event that the measured performance level is less than the guaranteed level, any resulting financial penalty, including any additional work that may be required to fulfill the guarantee, is estimated and charged to direct expenses in the current period.
In the event that the measured performance level is less than the guaranteed level, any resulting financial penalty, including any additional work that may be required to fulfill the guarantee, is estimated and charged to direct expenses in the current period. We have not experienced any significant costs under such guarantees.
As of December 30, 2022, 20% of our contracts are time-and-materials contracts, 45% are unit-based contracts, and 35% are fixed price contracts, compared to 24% for time-and-materials contracts, 54% for unit-based contracts, and 22% for fixed price contract s, as of December 31, 2021.
As of December 29, 2023, 19% of our contracts are time-and-materials contracts, 42% are unit-based contracts, and 39% are fixed price contracts, compared to 20% for time-and-materials contracts, 45% for unit-based contracts, and 35% for fixed price contract s, as of December 30, 2022.
We have assumed no future borrowings or repayments (other than at maturity) for purposes of this table. Our Credit Facilities are scheduled to mature on June 26, 2024. (2) Borrowings under our Delayed Draw Term Loan bear interest at a variable rate.
We have assumed no future borrowings or repayments (other than at maturity) for purposes of this table. Our Term Loan is scheduled to mature on September 29, 2026. (2) Borrowings under our Term Loan and Revolving Credit Facility bear interest at a variable rate.
Cash flows used in investing activities for fiscal year 2022 were primarily due to cash paid for the development of software and the purchase of computers and other equipment. Cash flows used in investing activities for fiscal year 2021 were primarily due to cash paid for software development cost and the purchase of computers and other equipment.
Cash Flows from Investing Activities Cash flows used in investing activities were $11.5 million, $9.5 million, and $8.5 million for fiscal years 2023, 2022, and 2021, respectively. Cash flows used in investing activities for fiscal years 2023, 2022, and 2021 were primarily due to cash paid for the development of software and the purchase of computers and other equipment.
See part II, Item 8, Note 5, “ Debt Obligations ”, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for information regarding our financing arrangements related to our insurance premiums. 43 Table of Contents Interest Rate Swap From time to time, we enter into interest rate swap agreements to moderate our exposure to fluctuations in interest rates underlying our variable rate debt.
See part II, Item 8, Note 5, “ Debt Obligations ”, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for information regarding our financing arrangements related to our insurance premiums.
Direct costs of contract revenue also include material costs, subcontractor services, equipment and other expenses that are incurred in connection with revenue producing projects. Direct costs of contract revenue exclude that portion of salaries and wages related to marketing efforts, vacations, holidays and other time not spent directly generating revenue under existing contracts.
Direct costs of contract revenue exclude that portion of salaries and wages related to marketing efforts, vacations, holidays and other time not spent directly generating revenue under existing contracts. Such costs are included in general and administrative expenses.
As of December 30, 2022, we had fully drawn the $100 million secured term A loan with $65.0 million outstanding (the “Term A Loan” and, collectively with the Revolving Credit Facility and the Delayed Draw Term Loan, the “Credit Facilities”), a $50.0 million Revolving Credit Facility with no borrowed amounts outstanding and $4.1 million in letters of credit issued, and a fully drawn $50.0 million Delayed Draw Term Loan with $41.0 million outstanding, each scheduled to mature on June 26, 2024.
As of 43 Table of Contents December 29, 2023, we had a fully drawn $100 million term loan with $98.1 million outstanding (the “Term Loan”), and a $50.0 million Revolving Credit Facility with no borrowed amounts and $4.1 million in letters of credit issued, each scheduled to mature on September 29, 2026.
We recorded an income tax benefit of $4.0 million for fiscal year 2021 compared to a tax benefit of $5.2 million for fiscal year 2020.
Income tax expense (benefit) . We recorded an income tax expense of $3.7 million for fiscal year 2023 compared to a tax benefit of $3.0 million for fiscal year 2022.
While we have a large volume of contracts, the renewal, termination or modification of a contract, in particular contracts with Consolidated Edison, DASNY, and utility programs associated with LADWP, Southern California Edison, and Duke Energy Corp., may have a material effect on our consolidated operations. Some of our contracts include certain performance guarantees, such as a guaranteed energy saving quantity.
While we have a large volume of contracts, the renewal, termination or modification of a contract, in particular contracts with Consolidated Edison, the Dormitory Authority-State of New York, the New York City Housing Authority, and utility programs associated with Los Angeles Department of Water and Power, and Duke Energy Corp., may have a material effect on our consolidated operations.
The reduction in our net loss was primarily driven by increased gross profit margins combined with lower operating expenses. 40 Table of Contents Liquidity and Capital Resources ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ 2022 ​ ​ 2021 ​ ​ 2020 ​ ​ (in thousands) Net cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating activities ​ $ 9,433 ​ $ 9,803 ​ $ 47,025 Investing activities ​ ​ (9,527) ​ ​ (8,454) ​ ​ (5,059) Financing activities ​ ​ 8,358 ​ ​ (18,533) ​ ​ (19,013) Net increase (decrease) in cash and cash equivalents ​ $ 8,264 ​ $ (17,184) ​ $ 22,953 ​ Sources of Cash Our primary sources of liquidity for the next 12 months and beyond are our cash and cash equivalents and borrowings under our secured revolving facility under the Credit Agreement (the “Revolving Credit Facility”).
Liquidity and Capital Resources ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ 2023 ​ ​ 2022 ​ ​ 2021 ​ ​ (in thousands) Net cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating activities ​ $ 39,214 ​ $ 9,433 ​ $ 9,804 Investing activities ​ ​ (11,457) ​ ​ (9,527) ​ ​ (8,454) Financing activities ​ ​ (23,845) ​ ​ 8,358 ​ ​ (18,534) Net increase (decrease) in cash and cash equivalents ​ $ 3,912 ​ $ 8,264 ​ $ (17,184) ​ Sources of Cash Our primary sources of liquidity for the next 12 months and beyond are cash generated from operations, cash and cash equivalents, and available borrowings under our revolving credit facility under the Credit Agreement (the “Revolving Credit Facility”).
We have not experienced any significant costs under such guarantees. Direct Costs of Contract Revenue Direct costs of contract revenue consist primarily of that portion of salaries and wages that have been incurred in connection with revenue producing projects.
Direct Costs of Contract Revenue Direct costs of contract revenue consist primarily of that portion of salaries and wages that have been incurred in connection with revenue producing projects. Direct costs of contract revenue also include material costs, subcontractor services, equipment and other expenses that are incurred in connection with revenue producing projects.
In addition, a s of December 30, 2022, we had $8.8 million of cash and cash equivalents. As of December 30, 2022, borrowings under our Credit Facilities, exclusive of the effects of upfront fees, undrawn fees and issuance cost amortization, bore interest at 8.3%.
As of December 29, 2023, we were in compliance with the covenants contained in the Credit Agreement and borrowings under our Credit Facilities, exclusive of the effects of upfront fees, undrawn fees and issuance cost amortization, bore interest at an annual rate of 8.5%.
In addition, during the term of a contract, public agencies may request additional or revised services which may impact the economics of the transaction. Most of our contracts permit our clients, with prior notice, to terminate the contracts at any time without cause.
Our contracts come up for renewal periodically and at the time of renewal may be subject to renegotiation, which could impact the profitability on that contract. In addition, during the term of a contract, public agencies may request additional or revised services which may impact the economics of the transaction.
Cash flows used in financing activities for fiscal year 2020 were primarily attributable to repayments of $42.0 million under our Term A Loan and revolving line of credit, a payment of $2.9 million in employee payroll taxes related to the vesting of performance-based restricted stock units, and payments of $1.4 million for contingent consideration related to prior acquisitions, partially offset by $24.0 million of borrowings under our Revolving Credit Facility.
Cash flows used in financing activities for fiscal year 2023 were primarily attributable to the disbursement of $10.7 million in restricted cash for utility rebate incentives, payments of $4.0 million for contingent consideration related to prior acquisitions, combined with repayments and borrowings of $112.9 million and $105.0 million, respectively, under our term loan facility and line of credit, which resulted primarily from refinancing our Prior Credit Facility.
Subcontractor services and other direct costs decreased $44.2 million, or 22.5%, in fiscal year 2021 compared to fiscal year 2020, primarily due to the decrease in construction management activities. ​ As a percentage of contract revenue, salaries and wages increased to 18.6% of contract revenue for fiscal year 2021 from 16.7% for fiscal year 2020 and subcontractor services and other direct costs decreased to 43.0% of contract revenue for fiscal year 2021 from 50.2% of contract revenue for the fiscal year 2020, for the reasons noted above. 39 Table of Contents ​ Gross Profit .
Subcontractor services and other direct costs increased $37.8 million, or 18.7%, and salaries and wages increased by $7.0 million, or 8.4%, in fiscal year 2023 compared to fiscal year 2022, primarily as a result of the increases in contract revenue. Gross Profit .
Other companies may classify as direct costs of contract revenue some of the costs that we classify as general and administrative costs. We expense direct costs of contract revenue when incurred.
We expense direct costs of contract revenue when incurred.
Contract revenue in our Engineering and Consulting segment was relatively flat in fiscal year 2021 compared to fiscal year 2020. Direct costs of contract revenue.
Direct costs of contract revenue in our Energy segment increased $39.4 million, or 15.6%, in fiscal year 2023 compared to fiscal year 2022. Direct costs of contract revenue for the Engineering and Consulting segment increased $5.4 million, or 16.0%, for the fiscal year 2023 compared to fiscal year 2022.
Direct costs of consolidated contract revenue decreased $43.7 million, or 16.7%, in fiscal year 2021 compared to fiscal year 2020, primarily as a result of decreased construction management activities in our Energy segment and the impact of having one fewer week in fiscal year 2021 as compared to fiscal year 2020.
Direct costs of consolidated contract revenue increased $44.8 million, or 15.7%, in fiscal year 2023 compared to fiscal year 2022, primarily as a result of the increase, and change of mix, in contract revenues as described above.
Direct costs of contract revenue for the Engineering and Consulting segment decreased $2.7 million, or 7.4%, for the fiscal year 2021 compared to fiscal year 2020, primarily due to a reduction in scope of work from one of our customers combined with the impact of having one fewer week in fiscal year 2021 as compared to fiscal year 2020.
Contract revenue in our Engineering and Consulting segment increased $11.4 million, or 16.0%, in fiscal year 2023 compared to fiscal year 2022, primarily due to increased demand for services provided to our clients. Direct costs of contract revenue.
G&A expenses decreased by $1.1 million, or 0.7%, in the fiscal year 2021 compared to the fiscal year 2020.
General and administrative (“G&A”) expenses increased by $7.1 million, or 4.7%, in fiscal year 2023 compared to fiscal year 2022.
Gross profit increased 5.0% to $135.9 million, or 38.4% gross margin, for fiscal 2021 compared to $129.4 million, or a 33.1% gross margin for fiscal 2020.
Gross profit increased 25.2% to $179.8 million, or a 35.2% gross margin, for fiscal year 2023 compared to $143.6 million, or a 33.5% gross margin for fiscal year 2022.
A recent amendment to our Revolving Credit Facility limits our borrowing capacity under our Revolving Credit Facility to no more than $10.0 million at any time during the period from November 1, 2022 through the date on which financial statements and compliance documents have been received by the administrative agent under the Credit Agreement for the fiscal quarter ending March 31, 2023, as described in Part II, Item 8, Note 5, “ Debt Obligations”, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
As described in Part II, Item 8, Note 5, “ Debt Obligations ,” of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K , on September 29, 2023, we and certain of our subsidiaries entered into the Credit Agreement with a syndicate of financial institutions as lenders and BMO, as administrative agent.
Contractual Obligations The following table sets forth our known contractual obligations as of December 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than ​ ​ ​ ​ More than Contractual Obligations ​ Total ​ 1 Year ​ 1 - 3 Years ​ 3 - 5 Years ​ 5 Years ​ ​ ( in thousands) ​ Long term debt (1) ​ $ 107,447 ​ $ 16,903 ​ $ 90,544 ​ $ — ​ $ — ​ Interest payments on debt outstanding (2) ​ ​ 11,911 ​ ​ 8,213 ​ ​ 3,698 ​ ​ — ​ ​ — ​ Operating leases ​ 13,224 ​ 4,625 ​ 6,053 ​ 2,546 ​ — ​ Finance leases ​ 2,714 ​ 1,113 ​ 1,365 ​ 236 ​ — ​ Total contractual cash obligations ​ $ 135,296 ​ $ 30,854 ​ $ 101,660 ​ $ 2,782 ​ $ — ​ (1) Long-term debt includes $65.0 million outstanding on our Term A Loan, no amounts outstanding on our Revolving Credit Facility, and $41.0 million outstanding on our Delayed Draw Term Loan as of December 30, 2022.
Contractual Obligations The following table sets forth our known contractual obligations as of December 29, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than ​ ​ ​ ​ More than Contractual Obligations ​ Total ​ 1 Year ​ 1 - 3 Years ​ 3 - 5 Years ​ 5 Years ​ ​ (in thousands) ​ Debt (1) ​ $ 97,431 ​ $ 8,452 ​ $ 88,979 ​ $ — ​ $ — ​ Interest payments on debt outstanding (2) ​ ​ 19,946 ​ ​ 7,976 ​ ​ 11,970 ​ ​ — ​ ​ — ​ Operating leases ​ 14,295 ​ 4,537 ​ 7,189 ​ 2,465 ​ 104 ​ Finance leases ​ 2,370 ​ 1,186 ​ 1,074 ​ 110 ​ — ​ Total contractual cash obligations ​ $ 134,042 ​ $ 22,151 ​ $ 109,212 ​ $ 2,575 ​ $ 104 ​ (1) Debt includes $98.1million outstanding on our Term Loan, net of issuance costs, and no borrowed amounts outstanding on our Revolving Credit Facility as of December 29, 2023.
The increase in total other expense, net is primarily due to lower interest income partially offset by lower interest expense as a result of lower borrowings under our credit facilities and the impact of having one fewer week in fiscal year 2021 as compared to fiscal year 2020. Income tax expense (benefit).
The increase in total other expense, net is primarily due to higher interest expense as a 41 Table of Contents result of the increase in market interest rates which directly affected our variable interest rates under our credit facilities, combined with a one-time charge of $0.5 million for unamortized debt issuance costs related to our prior credit facilities, partially offset by interest income related to bank deposits.
Direct cost of contract revenue in our Energy segment decreased $41.0 million, or 18.2%, in fiscal year 2021 compared to fiscal year 2020, primarily as a result of the reasons described above.
Contract revenue in our Energy segment increased $69.6 million, or 19.4%, in fiscal year 2023 compared to fiscal year 2022, primarily as a result of higher demand across the full spectrum of our energy services including increases in software licensing revenue.
As a percentage of contract revenue, the operating loss was 2.5% for fiscal 2021 compared to an operating loss of 4.2% for fiscal 2020. The increase in operating margin was attributable to increased gross profit combined with lower G&A expenses. Total other expense, net.
Operating income was $22.1 million for fiscal year 2023, compared to an operating loss of $7.1 million for fiscal year 2022, as a result of the factors noted above. Total other expense, net . Total other expense, net, increased $3.1 million, or 70.5%, in fiscal year 2023 compared to fiscal year 2022.
The increase in stock-based compensation expenses was primarily related to new stock grants to current employees and executives. The decrease in facilities and facilities related expenses was attributed to satisfied facility leases that were not renewed. The decrease in depreciation and amortization was primarily related to lower amortization of intangible assets derived from prior acquisitions.
The decrease in other general and administrative expenses was primarily due to contingent consideration expense related to prior acquisitions that occurred during fiscal year 2022 that did not recur in fiscal year 2023. The decrease in depreciation and amortization was primarily related to lower amortization of intangible assets from prior acquisitions. Income (loss) from operations .
Future interest payments on our Delayed Draw Term Loan Facility are estimated using floating rates in effect as of December 30, 2022. ​ We are obligated to pay earn-out payments in connection with our 2019 acquisition of Energy and Environmental Economics, Inc.
Future interest payments on our Credit Facility are estimated using floating rates in effect as of December 29, 2023. ​ As of December 29, 2023, we did not have any remaining contingent consideration payable related to any prior acquisitions.
Consolidated contract revenue decreased $37.2 million, or 9.5%, in fiscal year 2021 compared to fiscal year 2020, primarily due to decreased contract revenues from our construction management activities in our Energy segment and the impact of having one fewer week in fiscal year 2021 as compared to fiscal year 2020, partially offset by increased planning and advisory contract revenues including software licensing.
Consolidated contract revenue increased $81.0 million, or 18.9%, in fiscal year 2023 compared to fiscal year 2022, primarily due to incremental revenues in both our Energy segment and in our Engineering and Consulting segment.
Removed
Contract revenue related to Energy segment construction management projects decreased as a result of the completion of a number of Energy segment projects and delays in the start-up of construction of new Energy segment projects.
Added
(2) Includes the portion of revenue related to small business programs paid by the end user/customer. (3) Revenue from our foreign operations were not material for fiscal years 2023, 2022 and 2021. ​ 40 Table of Contents Fiscal Year 2023 Compared to Fiscal Year 2022 Contract revenue.
Removed
Contract revenue in our Energy segment decreased $37.8 million, or 11.7%, in fiscal year 2021 compared to fiscal year 2020, primarily as a result of decreased contract revenues from construction management activities as described above and the impact of having one fewer week in fiscal year 2021 as compared to fiscal year 2020, partially offset by increased planning and advisory contract revenues including software licensing.
Added
As a percentage of contract revenue, direct salaries and wages decreased to 17.6% in fiscal year 2023, from 19.3% in the fiscal 2022, while subcontractor services and other direct costs was relatively flat for the fiscal year 2023 compared to fiscal year 2022.
Removed
Salaries and wages were relatively flat in fiscal year 2021 compared to the fiscal year 2020.
Added
The increase in gross margin was primarily driven by higher software licensing revenue and changes in the mix of revenues as described above combined with the absence of project startup costs for new utility programs that were incurred during fiscal year 2022 but did not recur in the in fiscal year 2023. ​ General and administrative expenses.
Removed
The increase in our gross margin was primarily driven by changes in the mix of revenues resulting from the reduction in construction management services which have a relatively lower gross margin profile due to their relatively higher content of pass-through subcontractor and materials costs. ​ General and administrative expenses.
Added
The increase in salaries and wages, payroll taxes and employee benefits was primarily due to an increase in incentive compensation, consistent with the improvement in operating profit, increased costs related to employee benefits, and increases in employee compensation as a result of additional employee headcount as well as employee compensation increases.
Removed
The decrease in G&A expenses in the Energy segment and unallocated corporate expenses was primarily attributed to lower amortization of intangibles combined with lower other general and administrative expenses, partially offset by higher wage and related benefit costs. The increase in G&A expenses in the Engineering and Consulting segment was primarily attributed to higher wage and related benefit costs.
Added
The decrease in stock-based compensation expenses was primarily related to previously awarded stock grants reaching the end of their corresponding vesting periods, partially offset by new equity awards being issued at lower stock prices.
Removed
The increase in wage and related benefit costs was primarily attributed to having restored wage reductions taken during our second quarter of fiscal 2020 aimed at preserving liquidity as a result of the Covid-19 pandemic.
Added
The tax expense is primarily attributable to the income before income tax combined with the non-recurrence of a one-time tax benefit recognized during fiscal year 2022 related to additional energy efficiency building deductions. Net income (loss) . Our net income was $10.9 million for fiscal year 2023, as compared to a net loss of $8.4 million for fiscal year 2022.
Removed
The increase in salaries and wages, payroll taxes and employee benefits was primarily attributable to having restored, during our third quarter of fiscal year 2020, certain actions taken during the second quarter of our fiscal year 2020 aimed at preserving liquidity in the early stages of the Covid-19 pandemic, such as a temporary cash wage reduction for salaried employees, as well as instituting a reduction in workforce, primarily through unpaid furloughs.
Added
The increase in net income was primarily attributable to the increase in revenue and gross profit, partially offset by higher interest expense and income tax expense. Fiscal Year 2022 Compared to Fiscal Year 2021 Contract revenue.
Removed
The decrease in other general and administrative expenses was primarily related to decreased earn-out expenses, partially offset by increases in professional services combined with increases in computer-related expenses. Income (loss) from operations . Operating loss was $8.7 million for fiscal 2021, compared to a loss of $16.2 million for fiscal 2020, as a result of the factors noted above.
Added
In addition, as of December 29, 2023, we had $23.4 million of unrestricted cash and cash equivalents.
Removed
Total other expense, net, was $3.7 million for fiscal 2021 compared to $3.4 million for fiscal 2020.
Added
In addition, as of December 29, 2023, we did not have any arrangements involving the potential incurrence of future contingent consideration .
Removed
The decrease in the income tax benefit is primarily attributable to the increase in valuation allowance recorded against certain state-specific deferred tax assets combined with a reduction in energy efficiency deductions, partially offset by additional tax benefits related to the net operating loss carryback provision of the CARES Act. Net income (loss) .
Added
Interest Rate Swap From time to time, we enter into interest rate swap agreements to moderate our exposure to fluctuations in interest rates underlying our variable rate debt.
Removed
Our net loss was $8.4 million for fiscal 2021, as compared to a net loss of $14.5 million for fiscal 2020.
Added
Most of our contracts permit our clients, with prior notice, to terminate the contracts at any time without cause.
Removed
As of December 30, 2022, we had not borrowed under the Revolving Credit Facility, and we were in compliance with the covenants contained in the Credit Agreement.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+2 added−2 removed1 unchanged
Biggest changeBased upon the amount of our outstanding indebtedness as of December 30, 2022, a one percentage point increase in the effective interest rate would change our annual interest expense by approximately $1.1 million in fiscal year 2022. ​ The Term A Loan amortizes quarterly in installments of $2.5 million beginning with the fiscal quarter ending September 27, 2019, with a final payment of all then remaining principal and interest due on the maturity date of June 26, 2024, subject to certain prepayment obligations based on our excess cash flow.
Biggest changeBased upon the amount of our outstanding indebtedness as of December 29, 2023, a one percentage point increase in the effective interest rate would change our annual interest expense by approximately $1.0 million in fiscal year 2023.
The value of a financial instrument may change as a result of changes in interest rates, exchange rates, commodity prices, equity prices and other market changes. Market risk is attributed to all market risk sensitive financial instruments, including long-term debt. As of December 30, 2022, we had cash and cash equivalents of $8.8 million.
The value of a financial instrument may change as a result of changes in interest rates, exchange rates, commodity prices, equity prices and other market changes. Market risk is attributed to all market risk sensitive financial instruments, including long-term debt. As of December 29, 2023, we had cash and cash equivalents of $23.4 million.
After the First Pricing Date, borrowings under the Credit Agreement will bear interest at either a Base Rate (as defined in the Credit Agreement) or SOFR, at our option, and in each case, plus an applicable margin, which applicable margin will range from 0.125% to 1.25% with respect to Base Rate borrowings and 1.125% to 2.25% with respect to SOFR borrowings, depending on the Total Leverage Ratio (as defined in the Credit Agreement); provided, that SOFR cannot be less than 0.00%, with the specific pricing reset on each date on which the administrative agent receives the required financial statements under the Credit Agreement for the fiscal quarter then ended.
Pursuant to the Credit Agreement, (as described in Part II, Item 8, Note 5, “ Debt Obligations ,” of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K), borrowings under the Credit Agreement bear interest at either a Base Rate (as defined in the Credit Agreement) or the adjusted Secured Overnight Financing Rate (“SOFR”), at the Company’s option, and in each case, plus an applicable margin, which applicable margin ranges from 0.75% to 2.00% with respect to Base Rate borrowings and 1.75% to 3.00% with respect to SOFR borrowings, depending on the Company’s Total Net Leverage Ratio (as defined in the Credit Agreement); provided, that SOFR and the Base Rate cannot be less than 0.00%, with the specific pricing reset on each date on which the Administrative Agent receives the required financial statements under the Credit Agreement for the fiscal quarter then ended.
We are subject to interest rate risk in connection with our Term A Loan and borrowings, if any, under our Revolving Credit Facility and Delayed Draw Term Loan, each of which bears interest at variable rates.
This amount represents cash on hand in business checking accounts with BMO Bank, N.A. We do not engage in trading activities and do not participate in foreign currency transactions. We are subject to interest rate risk in connection with our Term Loan and borrowings, if any, under our Revolving Credit Facility, each of which bears interest at variable rates.
We will also pay a commitment fee for the unused portion of the Revolving Credit Facility and the Delayed Draw Term Loan, which will range from 0.15% to 0.40% per annum depending on the Total Leverage Ratio, and fees on the face amount of any letters of credit outstanding under the Revolving Credit Facility, which will range from 0.84% to 1.688% per annum, in each case, depending on whether such letter of credit is a performance or financial letter of credit and the Total Leverage Ratio.
The Company must also pay a commitment fee for the unused portion of the Revolving Credit Facility, which ranges from 0.20% to 0.40% per annum depending on the Company’s Total Net Leverage Ratio, and fees on the face amount of any letters of credit outstanding under the Revolving Credit Facility, which range from 1.3125% to 2.25% per annum, in each case, depending on the Company’s Total Net Leverage Ratio, as well as customary fronting fees payable to BMO as letter of credit issuer.
As of December 30, 2022, $65.0 million was outstanding under our Term A Loan, $41.0 million was outstanding under our Delayed Draw Term Loan, no borrowed amounts were outstanding and $4.1 million in letters of credit were issued under the Revolving Credit Facility.
As of December 29, 2023, $98.1 million was outstanding under our Term Loan, and we had no borrowed amounts outstanding and $4.1 million in letters of credit were issued under our Revolving Credit Facility. Each of our Term Loan and Revolving Credit Facility mature on September 29, 2026 and are governed by our Credit Agreement.
Each borrowing under our Delayed Draw Term Loan will amortize quarterly in an amount equal to 2.5% of the aggregate outstanding borrowings under the Delayed Draw Term Loan, beginning with the first full fiscal quarter ending after the initial borrowing date, with a final payment of all then remaining principal and interest due on the maturity date of June 26, 2024, subject to certain prepayment obligations based on our excess cash flow. ​ ​ 52 Table of Contents
The Term Loan will amortize quarterly in an amount equal to (i) 7.5% per annum for the first year ending after the Closing Date and (ii) 10.0% per annum for the second and third years ending after the Closing Date, with a final payment of all then remaining principal and interest due on the maturity date of September 29, 2026.
Removed
This amount represents cash on hand in business checking accounts with BMO Harris Bank, N.A. We do not engage in trading activities and do not participate in foreign currency transactions.
Added
The amounts outstanding under the Credit Facilities may be prepaid in whole or in part at any time without penalty (other than customary breakage costs). On November 30, 2023, we entered into an interest rate swap agreement for $50.0 million notional amount.
Removed
Each of our Term A Loan, Revolving Credit Facility, and Delayed Draw Term Loan mature as of June 26, 2024 and are governed by our Credit Agreement. ​ Pursuant to the Credit Agreement, (as described in Part II, Item 8, Note 5, “Debt Obligations,” of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K), during the period from November 1, 2022 until the date on which the administrative agent receives the required financial statements under the Credit Agreement for the fiscal quarter ended March 31, 2023 (the “First Pricing Date”) , (A) borrowings under the Credit Agreement will bear interest at Secured Overnight Financing Rate (“SOFR”) plus 4.00%; provided, that SOFR cannot be less than 0.00%, and (B) we will pay a commitment fee of 0.50% per annum for the unused portion of the Revolving Credit Facility.
Added
The interest swap agreement was designated as a cash flow hedge to fix the variable interest rate on a portion of the outstanding principal amount under our Term Loan. The interest rate swap fixed rate is 4.77% and expires on September 29, 2026. ​ ​ ​ ​ 54 Table of Contents

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