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What changed in COMFORT SYSTEMS USA INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of COMFORT SYSTEMS USA 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.

+185 added−199 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in COMFORT SYSTEMS USA INC's 2024 10-K

185 paragraphs added · 199 removed · 165 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeDiversity and inclusion are among our leadership’s key priorities, including steps to accelerate progress in outreach, representation, development, and advancement of underrepresented groups within our Company. Our Board of Directors and Board committees provide oversight on certain human capital matters, including our diversity and inclusion strategy.
Biggest changeOur Board of Directors and Board committees provide oversight on certain human capital matters, including our diversity and inclusion strategy. Insurance and Litigation The primary insured risks in our operations are bodily injury, property damage and workers’ compensation injuries.
Culture and Core Values —Our values define, inform, and guide the way we operate both within our Company and in the communities where we do business. Our core values are to be safe; be honest; be respectful; be innovative; and be collaborative.
Culture and Core Values —Our values define, inform, and guide the way we operate both within the Company and in the communities where we do business. Our core values are to be safe; be honest; be respectful; be innovative; and be collaborative.
Everyone at our Company shares a responsibility for doing business ethically and in a sustainable manner, preserving our good name. We ensure that this responsibility applies at every level in our organization, and everyone from officers and directors to our field personnel is responsible for overseeing these efforts.
Everyone at the Company shares a responsibility for doing business ethically and in a sustainable manner, preserving our good name. We ensure that this responsibility applies at every level in our organization, and everyone from officers and directors to our field personnel is responsible for overseeing these efforts.
We have centralized certain administrative functions such as insurance, employee benefits, training, safety programs, marketing and cash management to enable our local operating management to focus on pursuing new business opportunities and improving operating efficiencies.
We have centralized certain administrative functions such as insurance, employee benefits, training, safety programs, and cash management to enable our local operating management to focus on pursuing new business opportunities and improving operating efficiencies.
In 2023, we continued our efforts to adhere to voluntary reporting standards by (i) submitting to CDP (formerly the Carbon Disclosure Project), wherein, among other things, we disclosed the results of our annual greenhouse gas emissions inventory, and (ii) publishing our 2022 sustainability report, which followed the Task Force on Climate-related Financial Disclosures and the Sustainability Accounting Standard Board’s standards for the Engineering and Construction Services industry and the Global Reporting Initiative Standards: Core option.
In 2024, we continued our efforts to adhere to voluntary reporting standards by (i) submitting to CDP (formerly the Carbon Disclosure Project), wherein, among other things, we disclosed the results of our annual greenhouse gas emissions inventory, and (ii) publishing our 2023 sustainability report, which followed the Task Force on Climate-related Financial Disclosures and the Sustainability Accounting Standard Board’s standards for the Engineering and Construction Services industry and the Global Reporting Initiative Standards: Core option.
We provide numerous training programs for management, sales, and leadership, as well as on-the-job training, technical training, apprenticeship programs, attractive benefit packages and career advancement opportunities within our Company.
We provide numerous training programs for management, sales, and leadership, as well as on-the-job training, technical training, apprenticeship programs, attractive benefit packages and career advancement opportunities within the Company.
The primary manufacturers of the major components in a commercial MEP system are: Trane, Carrier, York, Daikin (chillers and roof tops units), Baltimore Aircoil and SPX (cooling towers), Schneider Electric, Eaton, ABB (electrical switchgear), Caterpillar, Cummins, Kohler (power generators), Johnson Controls, Automated Logic and Siemens (building automation).
The primary manufacturers of the major components in a commercial MEP system are: Trane, Carrier, York, Daikin (chillers and roof top units), Baltimore Aircoil and SPX (cooling towers), Schneider Electric, Eaton, ABB (electrical switchgear), Caterpillar, Cummins, Kohler (power generators), Johnson Controls, Automated Logic and Siemens (building automation).
These values set the foundation for our Code of Conduct, which applies to all employees, officers, and directors of the Comfort Systems USA family of companies. The Code of Conduct is regularly reinforced to the Company’s employees and management through periodic ethics, equal opportunity employment, and anti-corruption 7 Table of Contents trainings.
These values set the foundation for our Code of Conduct, which applies to all employees, officers, and directors of the Comfort Systems USA family of companies. The Code of Conduct is regularly reinforced to the Company’s employees and management through periodic ethics, equal opportunity employment, and anti-corruption 7 Table of Contents training.
We believe that the work we perform to optimize and upgrade systems and to enable wise controls helps Comfort Systems USA to optimize energy use and fundamentally reduce our nation’s carbon footprint. Strategy At Comfort Systems USA, Inc., our core purpose is to “Build Legacies” with our people, customers, and the companies who join us.
We believe that the work we perform to optimize and upgrade systems and controls helps Comfort Systems USA to optimize energy use and fundamentally reduce our nation’s carbon footprint. Strategy At Comfort Systems USA, Inc., our core purpose is to “Build Legacies” with our people, customers, and the companies who join us.
Project contracts typically provide for periodic billings to the customer as we meet progress milestones or incur cost on the project. Project contracts in our industry also frequently allow for a small portion of progress billings or contract price to be withheld by the customer until after we have completed the work.
Project contracts typically provide for periodic billings to the customer as we meet progress milestones or incur costs on the project. Project contracts in our industry also frequently allow for a small portion of progress billings or contract price to be withheld by the customer until after we have completed the work.
We do not expect warranty claims to have a material adverse effect on our financial position or results of operations. 8 Table of Contents Competition The mechanical and electrical contracting industries are highly competitive and consist of thousands of local and regional companies.
We do not expect warranty claims to have a material adverse effect on our financial position or results of operations. Competition The mechanical and electrical contracting industries are highly competitive and consist of thousands of local and regional companies.
If we fail to comply with applicable regulations, we could be subject to substantial fines or revocation of our operating licenses. 9 Table of Contents Many state and local regulations governing the MEP services trades require individuals to hold permits and licenses.
If we fail to comply with applicable regulations, we could be subject to substantial fines or revocation of our operating licenses. Many state and local regulations governing the MEP services trades require individuals to hold permits and licenses.
We have procedures to reduce commodity cost exposure such as purchasing commodities early for projects, as well as selectively including time or market-based escalation and escape provisions in bids and contracts.
We have procedures to reduce commodity cost exposure, including costs due to tariffs, such as purchasing commodities early for projects, as well as selectively including time or market-based escalation and escape provisions in bids and contracts.
Additionally, our employment screening process seeks to determine that prospective employees have requisite skills, sufficient background references and acceptable driving records, if applicable. Our rate of incidents recordable under the standards of the Occupational Safety and Health Administration (“OSHA”) per one hundred employees per year, also known as the OSHA recordable rate, was 1.10 during 2023.
Additionally, our employment screening process seeks to determine that prospective employees have requisite skills, sufficient background references and acceptable driving records, if applicable. Our rate of incidents recordable under the standards of the Occupational Safety and Health Administration (“OSHA”) per one hundred employees per year, also known as the OSHA recordable rate, was 0.97 during 2024.
Sales and Marketing We have a diverse customer base, with our top customer representing 14% of consolidated 2023 revenue. Our largest customer can change from year to year. Management and a dedicated sales force are responsible for developing and maintaining successful long-term relationships with key customers.
Sales and Marketing We have a diverse customer base, with our top customer representing 13.3% of consolidated 2024 revenue. Our largest customer can change from year to year. Management and a dedicated sales force are responsible for developing and maintaining successful long-term relationships with key customers.
We build, install, maintain, repair and replace mechanical, electrical and plumbing (“MEP”) systems throughout our 44 operating units with 172 locations in 131 cities throughout the United States. We operate primarily in the commercial, industrial and institutional MEP markets and perform most of our services in manufacturing, healthcare, education, office, technology, retail and government facilities.
We build, install, maintain, repair and replace mechanical, electrical and plumbing (“MEP”) systems throughout our 47 operating units with 178 locations in 136 cities throughout the United States. We operate primarily in the commercial, industrial and institutional MEP markets and perform most of our services in manufacturing, healthcare, education, office, technology, retail and government facilities.
This average project size, when taken together with the approximately 11.0% of our revenue derived from maintenance and service, provides us with a broad base of work in the construction services sector.
This average project size, when taken together with the approximately 8.9% of our revenue derived from maintenance and service, provides us with a broad base of work in the construction services sector.
Amounts withheld under this practice are known as retention or retainage. Renovation, Expansion, Maintenance, Monitoring, Repair and Replacement Services for Existing Buildings —Our renovation, expansion, maintenance, monitoring, repair and replacement services in existing buildings comprised approximately 45.2% of our consolidated 2023 revenue. Maintenance and repair services are provided either in response to service calls or under a service agreement.
Amounts withheld under this practice are known as retention or retainage. Renovation, Expansion, Maintenance, Monitoring, Repair and Replacement Services for Existing Buildings —Our renovation, expansion, maintenance, monitoring, repair and replacement services in existing buildings comprised approximately 43.3% of our consolidated 2024 revenue. Maintenance and repair services are provided either in response to service calls or under a service agreement.
Our distribution of revenue in 2023 by end-use sector was as follows: ​ ​ ​ ​ Manufacturing 33.6 % Technology ​ 21.4 % Healthcare 10.6 % Education 9.5 % Office Buildings 7.7 % Retail, Restaurants and Entertainment 6.0 % Government 5.8 % Multi-Family and Residential 3.5 % Other 1.9 % Total 100.0 % ​ Approximately 89.0% of our revenue is earned on a project basis for installation of systems in newly constructed or existing facilities.
Our distribution of revenue in 2024 by end-use sector was as follows: ​ ​ ​ ​ Technology ​ 33.2 % Manufacturing 27.3 % Education 10.0 % Healthcare 8.3 % Office Buildings 6.0 % Retail, Restaurants and Entertainment 5.4 % Government 5.4 % Multi-Family and Residential 2.0 % Other 2.4 % Total 100.0 % ​ Approximately 91.1% of our revenue is earned on a project basis for installation of systems in newly constructed or existing facilities.
To improve our competitive position, we focus on both the consultative “design and build” installation market and the maintenance, repair, and replacement market to develop and strengthen customer relationships.
To improve our competitive position, we 8 Table of Contents focus on both the consultative “design and build” installation market and the maintenance, repair, and replacement market to develop and strengthen customer relationships.
Human Capital Resources Employees —As of December 31, 2023, we had approximately 15,800 employees as compared to approximately 14,100 employees as of December 31, 2022. We have collective bargaining agreements covering 7 employees. We have not experienced and do not expect any significant strikes or work stoppages and believe our relations with employees covered by collective bargaining agreements are good.
Human Capital Resources Employees —As of December 31, 2024, we had approximately 18,300 employees as compared to approximately 15,800 employees as of December 31, 2023. We have collective bargaining agreements covering 50 employees. We have not experienced and do not expect any significant strikes or work stoppages and believe our relations with employees covered by collective bargaining agreements are good.
These raw materials and components are generally available from a variety of domestic or foreign suppliers at competitive prices. During ordinary times, delivery times are typically short for most raw materials and standard components. However, during periods of peak demand, including recent residual effects of the COVID-19 pandemic, lead-times for certain components may extend to several months.
These raw materials and components are generally available from a variety of domestic or foreign suppliers at competitive prices. During ordinary times, delivery times are typically short for most raw materials and standard components. However, during periods of peak demand, lead-times for certain components may extend to several months.
Construction and Installation Services for New Buildings —Our installation business related to newly constructed facilities, which comprised approximately 54.8% of our consolidated 2023 revenue, involves the design, engineering, integration, installation and start-up of MEP and related systems.
Construction and Installation Services for New Buildings —Our installation business related to newly constructed facilities, which comprised approximately 56.7% of our consolidated 2024 revenue, involves the design, engineering, integration, installation and start-up of MEP and related systems.
Our average project takes six to nine months to complete, with an average contract price of approximately $1.1 million. We also perform larger project work, with 1,004 contracts in progress at December 31, 2023 with contract prices in excess of $2 million. Our largest project in progress at December 31, 2023 had a contract price of $149.6 million.
Our average project takes six to nine months to complete, with an average contract price of approximately $1.8 million. We also perform larger project work, with 1,046 contracts in progress at December 31, 2024 with contract prices in excess of $2 million. Our largest project in progress at December 31, 2024 had a contract price of $168.9 million.
Substantially all of our consolidated 2023 revenue was derived from commercial, industrial and institutional customers and multi-family residential projects. Approximately 54.8% of our revenue was attributable to installation services in newly constructed facilities and 45.2% was attributable to renovation, expansion, maintenance, repair and replacement services in existing buildings.
Substantially all of our consolidated 2024 revenue was derived from commercial, industrial and institutional customers and multi-family residential projects. Approximately 56.7% of our revenue was attributable to installation services in newly constructed facilities and 43.3% was attributable to renovation, expansion, maintenance, repair and replacement services in existing buildings.
Our consolidated 2023 revenue was derived from the following service industries: ​ ​ ​ ​ ​ Percentage of Service Activity ​ Revenue Mechanical Services 75.8 % Electrical Services ​ 24.2 % Total 100.0 % Industry Overview We believe that commercial, industrial, and institutional mechanical and electrical contracting generate annual revenue in the United States of approximately $350 billion.
Our consolidated 2024 revenue was derived from the following service industries: ​ ​ ​ ​ ​ Percentage of Service Activity ​ Revenue Mechanical Services 78.7 % Electrical Services ​ 21.3 % Total 100.0 % Industry Overview We believe that commercial, industrial, and institutional mechanical and electrical contracting generate annual revenue in the United States of approximately $550 billion.
Our industry can be broadly divided into two categories: ● construction of and installation in new buildings, which provided approximately 54.8% of our revenue in 2023, and ● renovation, expansion, maintenance, repair and replacement in existing buildings, which provided the remaining 45.2% of our 2023 revenue.
Our industry can be broadly divided into two categories: ● construction of and installation in new buildings, which provided approximately 56.7% of our revenue in 2024, and ● renovation, expansion, maintenance, repair and replacement in existing buildings, which provided the remaining 43.3% of our 2024 revenue.
Leverage Resources and Capabilities —We believe significant operating efficiencies can be achieved by leveraging resources among our operating locations. We have shifted certain fabrication activities to centralized locations to increase asset utilization. We opportunistically allocate our engineering, field, and supervisory labor from one operation to another to use our employee base more fully, meet our customers’ needs and share expertise.
We have shifted certain fabrication activities to centralized locations to increase asset utilization. We opportunistically allocate our engineering, field, and supervisory labor from one operation to another to use our employee base more fully, meet our customers’ needs and share expertise.
As of December 31, 2023, we had 10,481 projects in process with an aggregate contract value of approximately $12.0 billion. Our average project takes six to nine months to complete, with an average contract price of approximately $1.1 million.
As of December 31, 2024, we had 7,935 projects in process with an aggregate contract value of approximately $14.35 billion. Our average project takes six to nine months to complete, with an average contract price of approximately $1.8 million.
Excel at Modular and Off-Site Construction —We believe that modular and off-site construction – the ability to build superior quality plants and systems away from the construction site – will become increasingly important in complex construction projects.
Excel at Modular and Off-Site Construction —We believe that modular and off-site construction – the ability to build superior quality plants and systems away from the construction site – will become increasingly important in complex construction projects. Accordingly, we have invested in that capability through acquisitions, and after acquisition we have further invested in improving and growing that service offering.
Accordingly, through our acquisitions, we have invested in that capability, and after acquisition we have further invested in improving and growing that service offering. This has led to meaningful growth in our ability to provide this expertise. Through recent and ongoing development and acquisitions, we plan to continue to improve our unmatched capability in mechanical off-site or modular construction.
This has led to meaningful growth in our ability to provide this expertise. Through development and acquisitions, we plan to continue to improve our unmatched capability in mechanical off-site or modular construction.
Because we have very large per incident deductibles, the vast majority of our claims are paid by us, so as a practical matter we self-insure the great majority of these risks.
We retain the risk for workers’ compensation, employer’s liability, auto liability, general liability and employee group health claims resulting from uninsured deductibles per-incident or occurrence. Because we have very large per incident deductibles, the vast majority of our claims are paid by us, so as a practical matter we self-insure the great majority of these risks.
Our operations are subject to the federal Clean Air Act, as amended, which governs air emissions and imposes specific requirements on the use and handling of ozone-depleting refrigerants generally classified as chlorofluorocarbons (“CFCs”) or hydrochlorofluorocarbons (“HCFCs”).
We seek to ensure that, where possible, we have two employees who hold any such permits or licenses that may be material to our operations in a particular geographic region. 9 Table of Contents Our operations are subject to the federal Clean Air Act, as amended, which governs air emissions and imposes specific requirements on the use and handling of ozone-depleting refrigerants generally classified as chlorofluorocarbons (“CFCs”) or hydrochlorofluorocarbons (“HCFCs”).
This level was 52% better than the most recently published OSHA rate for our industry. Diversity and Inclusion —We are an equal opportunity employer, and we welcome and celebrate our teams’ differences, experiences, and beliefs.
Diversity and Inclusion —We are an equal opportunity employer, and we welcome and celebrate our teams’ differences, experiences, and beliefs.
Focus on Industrial, Commercial and Institutional Markets —We focus on the industrial, commercial, and institutional building markets, including construction, maintenance, repair, and replacement services. We believe that 4 Table of Contents these complex markets are attractive because of their growth opportunities, large and diverse customer base, attractive margins, and potential for long-term relationships with building owners.
We believe that 4 Table of Contents these complex markets are attractive because of their growth opportunities, large and diverse customer bases, attractive margins, and potential for long-term relationships with building owners. Leverage Resources and Capabilities —We believe significant efficiencies can be achieved by leveraging resources among our operating locations.
We continually invest in training, including programs for project managers, field superintendents, service managers, service technicians, sales managers, estimators, and leadership and development of key managers and leaders.
Attract, Retain and Invest in our Employees —We seek to attract and retain quality employees by providing an enhanced career path that offers a stable income, attractive benefits, and excellent growth opportunities. We continually invest in training, including programs for project managers, field superintendents, service managers, service technicians, sales managers, estimators, and leadership and development of key managers and leaders.
We also use our combined spend to gain purchasing advantages on products and services such as MEP components, raw materials, services, vehicles, bonding, insurance, and employee benefits. Attract, Retain and Invest in our Employees —We seek to attract and retain quality employees by providing an enhanced career path that offers a stable income, attractive benefits, and excellent growth opportunities.
We also use our combined spend to gain purchasing advantages on products and services such as MEP components, raw materials, services, vehicles, bonding, insurance, and employee benefits. Focus on Industrial, Commercial and Institutional Markets —We focus on the industrial, commercial, and institutional building markets, including construction, maintenance, repair, and replacement services.
Removed
Insurance and Litigation The primary insured risks in our operations are bodily injury, property damage and workers’ compensation injuries. We retain the risk for workers’ compensation, employer’s liability, auto liability, general liability and employee group health claims resulting from uninsured deductibles per-incident or occurrence.
Removed
We seek to ensure that, where possible, we have two employees who hold any such permits or licenses that may be material to our operations in a particular geographic region.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeCompliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies, could increase the costs of projects for our customers or, in some cases, prevent a project from going forward, which could in turn have an adverse effect on our financial condition and results of operations. 14 Table of Contents Continuing worldwide political and economic uncertainties may adversely affect our revenue and profitability. ​ The last several years have been periodically marked by political and economic concerns, including the COVID-19 pandemic, decreased consumer confidence, the effects of international conflicts such as the wars between Russia and Ukraine and between Israel and Hamas, tariffs, energy costs and inflation.
Biggest changeCompliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies, could increase the costs of projects for our customers or, in some cases, prevent a project from going forward, which could in turn have an adverse effect on our financial condition and results of operations.
We typically negotiate contract language through which we are granted certain relief from force majeure events in private client contracts and review and attempt to mitigate force majeure events in both public and private 21 Table of Contents client contracts.
We typically negotiate contract language through which we are granted certain relief from force majeure 21 Table of Contents events in private client contracts and review and attempt to mitigate force majeure events in both public and private client contracts.
The costs of employee health insurance have been increasing in recent years due to rising health care costs, legislative changes, and general economic conditions. Additionally, we may incur additional costs as a result of the Patient Protection and Affordable Care Act (the “Affordable Care Act”) that was signed into law in March 2010.
The costs of employee health insurance have been increasing in recent years due to rising healthcare costs, legislative changes, and general economic conditions. Additionally, we may incur additional costs as a result of the Patient Protection and Affordable Care Act (the “Affordable Care Act”) that was signed into law in March 2010.
As such, the adoption and expansion of trade restrictions such as those adopted in response to Russia’s invasion of Ukraine, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has in the past and may continue to adversely impact demand for our products, our costs, our customers, our suppliers, and the United States economy, which in turn could have an adverse effect on our business, financial condition and results of operations. ​ Tax matters, including changes in corporate tax laws and disagreements with taxing authorities, could impact our results of operations and financial condition.
As such, the adoption and expansion of trade restrictions such as those adopted in response to Russia’s invasion of Ukraine, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has in the past and may continue to adversely impact demand for our services, our costs, our customers, our suppliers, and the United States economy, which in turn could have an adverse effect on our business, financial condition and results of operations. ​ Tax matters, including changes in corporate tax laws and disagreements with taxing authorities, could impact our results of operations and financial condition.
Federal Reserve raised interest rates multiple times in recent years and may do so again in 2024 (or may slow any rate reductions from what the market currently anticipates). Economic factors, including inflation and fluctuations in interest rates, may have a negative impact on our business.
Federal Reserve raised interest rates multiple times in recent years and may do so again in 2025 (or may slow any rate reductions from what the market currently anticipates). Economic factors, including inflation and fluctuations in interest rates, may have a negative impact on our business.
In response to Russia’s invasion of Ukraine in February 2022, the United States and other countries imposed trade sanctions against Russia, which impacted global operations and financial performance. We, our suppliers and our customers import certain raw materials, components and other products from foreign suppliers.
In response to Russia’s invasion of Ukraine in 2022, the United States and other countries imposed trade sanctions against Russia and Belarus, which impacted global operations and financial performance. We, our suppliers and our customers import certain raw materials, components and other products from foreign suppliers.
Climate change may create physical and financial risk to our business. Physical risks from climate change could, among other things, include an increase in extreme weather events (such as floods or hurricanes), rising sea levels and limitations on water availability and quality.
Climate change may create physical and financial risk to our business. Physical risks from climate change could, among other things, include an increase in extreme weather events (such as wildfires, floods and hurricanes), rising sea levels and limitations on water availability and quality.
Our 172 locations are located in 27 states, which exposes us to a variety of different state and local laws and regulations, particularly those pertaining to contractor licensing requirements. These laws and regulations govern many aspects of our business, and there are often different standards and requirements in different locations.
Our 178 locations are located in 27 states, which exposes us to a variety of different state and local laws and regulations, particularly those pertaining to contractor licensing requirements. These laws and regulations govern many aspects of our business, and there are often different standards and requirements in different locations.
Consequently, during times when less overall bonding capacity is available in the market, surety terms have become more expensive and more restrictive. If we are not able to maintain a sufficient level of bonding capacity in the future, it could preclude our ability to bid for certain contracts or successfully contract with some customers.
Consequently, during times when less overall bonding capacity is available in the market, surety 13 Table of Contents terms have become more expensive and more restrictive. If we are not able to maintain a sufficient level of bonding capacity in the future, it could preclude our ability to bid for certain contracts or successfully contract with some customers.
Any period of economic recession affecting a market or industry in which we 10 Table of Contents transact business is likely to adversely impact our business. Many of the projects we work on have long lifecycles from conception to completion, and the bulk of our performance generally occurs late in a construction project’s lifecycle.
Any period of economic recession affecting a market or industry in which we transact business is likely to adversely impact our business. Many of the projects we work on have long lifecycles from conception to completion, and the bulk of our performance generally occurs late in a construction project’s lifecycle.
If our surety companies 13 Table of Contents were to limit or eliminate our access to bonds, our alternatives would include seeking bonding capacity from other surety companies, increasing business with clients that do not require bonds and posting other forms of collateral for project performance, such as letters of credit or cash.
If our surety companies were to limit or eliminate our access to bonds, our alternatives would include seeking bonding capacity from other surety companies, increasing business with clients that do not require bonds and posting other forms of collateral for project performance, such as letters of credit or cash.
The implementation of new systems and information 16 Table of Contents technology could adversely impact our operations by requiring substantial capital expenditures, diverting management’s attention, or causing delays or difficulties in transitioning to new systems. In addition, our systems implementations may not result in productivity improvements at the levels anticipated.
The implementation of new systems and information technology could adversely impact our operations by requiring substantial capital expenditures, diverting management’s attention, or causing delays or difficulties in transitioning to new systems. In addition, our systems implementations may not result in productivity improvements at the levels anticipated.
An adverse outcome of such a review or examination could adversely affect our operating results and 20 Table of Contents financial condition. Further, the results of tax examinations and audits could have a negative impact on our financial results and cash flows where the results differ from the liabilities recorded in our financial statements.
An adverse outcome of such a review or examination could adversely affect our operating results and financial condition. Further, the results of tax examinations and audits could have a negative impact on our financial results and cash flows where the results differ from the liabilities recorded in our financial statements.
Such extreme weather conditions may limit the availability of resources, increasing the costs of our projects, or may cause projects to be delayed or cancelled. Legislation, nationwide protocols, regulation or other restrictions related to climate change could negatively impact our operations or our customers’ operations.
Such extreme weather conditions may limit the availability of resources, increasing the costs of our projects, or may cause projects to be delayed or cancelled. 14 Table of Contents Legislation, nationwide protocols, regulation or other restrictions related to climate change could negatively impact our operations or our customers’ operations.
Our results of operations are reported based on our determination of the amount of taxes we owe in various tax jurisdictions, and our provision for income taxes and tax liabilities are subject to review or examination by taxing authorities in applicable tax jurisdictions.
Our results of operations are reported based on our determination of the amount of taxes we owe in various tax jurisdictions, and our provision for income taxes and tax liabilities are subject to review or examination by taxing authorities in applicable tax 20 Table of Contents jurisdictions.
Our business may be affected by the work environment. ​ We may need to perform our work under a variety of conditions, including but not limited to, difficult terrain, difficult site conditions and busy urban centers where delivery of materials and availability of labor may be impacted, clean-room environments where strict procedures must be followed and sites that may have been exposed to harsh and hazardous conditions and outbreaks of infectious disease, such as the COVID-19 pandemic.
Our business may be affected by the work environment. ​ We may need to perform our work under a variety of conditions, including but not limited to, difficult terrain, difficult site conditions and busy urban centers where delivery of materials and availability of labor may be impacted, clean-room environments where strict procedures must be followed and sites that may have been exposed to harsh and hazardous conditions and outbreaks of infectious disease.
Additionally, because 5.8% of our revenue for the year ended December 31, 2023 was attributable to projects in the government sector, a reduction in federal, state, or local government spending in our industries and markets could result in decreased revenue and profit for us.
Additionally, because 5.4% of our revenue for the year ended December 31, 2024 was attributable to projects in the government sector, a reduction in federal, state, or local government spending in our industries and markets could result in decreased revenue and profit for us.
Because 5.8% of our revenue for the year ended December 31, 2023 was attributable to projects in the government sector, prohibitions against bidding on future government contracts could have an adverse effect on our financial condition and results of operations.
Because 5.4% of our revenue for the year ended December 31, 2024 was attributable to projects in the government sector, prohibitions against bidding on future government contracts could have an adverse effect on our financial condition and results of operations.
Our projects are conducted at a variety of sites including construction sites and industrial facilities. Each location is subject to numerous safety risks, including fall risks, electrocutions, fires, explosions, mechanical failures, weather-related incidents, transportation accidents, damage to equipment and, with respect to indoor sites, an increased risk of COVID-19 outbreaks.
Our projects are conducted at a variety of sites including construction sites and industrial facilities. Each location is subject to numerous safety risks, including fall risks, electrocutions, fires, explosions, mechanical failures, weather-related incidents, transportation accidents, damage to equipment and, with respect to indoor sites, an increased risk of infectious disease.
To the extent we make acquisitions, a number of risks will result, including: ● the assumption of material liabilities (including for environmental-related costs); ● failure of due diligence to uncover situations that could result in legal exposure or to quantify the true liability exposure from known risks; ● the diversion of management’s attention from the management of daily operations to the integration of operations; ● difficulties in the assimilation and retention of employees, in the assimilation of different cultures and practices, in the assimilation of broad and geographically dispersed personnel and operations, and the retention of employees generally; ● the risk of additional financial and accounting challenges and complexities in areas such as tax planning, treasury management, financial reporting and internal controls; and ● we may not be able to realize the cost savings or other financial benefits we anticipated prior to the acquisition. ​ The failure to successfully integrate acquisitions could have an adverse effect on our business, financial condition and results of operations. 12 Table of Contents Third parties contribute significantly to our completion of many projects and labor shortages or increased labor costs from third parties could adversely impact our results of operations.
To the extent we make acquisitions, a number of risks will result, including: ● the assumption of material liabilities (including for environmental-related costs); ● failure of due diligence to uncover situations that could result in legal exposure or to quantify the true liability exposure from known risks; ● the diversion of management’s attention from the management of daily operations to the integration of operations; ● difficulties in the assimilation and retention of employees, in the assimilation of different cultures and practices, in the assimilation of broad and geographically dispersed personnel and operations, and the retention of employees generally; ● the risk of additional financial and accounting challenges and complexities in areas such as tax planning, treasury management, financial reporting and internal controls; and 12 Table of Contents ● we may not be able to realize the cost savings or other financial benefits we anticipated prior to the acquisition. ​ The failure to successfully integrate acquisitions could have an adverse effect on our business, financial condition and results of operations.
Backlog reflects revenue still to be recognized under contracted or committed installation and replacement project work. Our backlog as of December 31, 2023 was $5.16 billion.
Backlog reflects revenue still to be recognized under contracted or committed installation and replacement project work. Our backlog as of December 31, 2024 was $5.99 billion.
For example, the U.S. government has recently pursued a new approach to trade policy, including renegotiating or terminating certain existing bilateral or multi-lateral trade agreements. It has also imposed tariffs on certain foreign goods and raised the possibility of imposing significant, additional tariff increases or expanding the tariffs to capture other types of goods.
For example, the U.S. government has adopted an evolving approach to trade policy, including renegotiating or terminating certain existing bilateral or multi-lateral trade agreements. It has also imposed tariffs on certain foreign goods and raised the possibility of imposing significant, additional tariff increases or expanding the tariffs to capture other types of goods.
While we have taken what we believe are appropriate precautions to minimize safety risks, we have experienced serious accidents, including fatalities, in the past and may experience additional accidents in the future. Serious accidents may subject us to penalties, civil litigation or criminal prosecution.
While we have taken what we believe are appropriate precautions to minimize safety risks and continuously focus on adopting improved safety practices, we have experienced serious accidents, including fatalities, in the past and may experience additional accidents in the future. Serious accidents may subject us to penalties, civil litigation or criminal prosecution.
If we are unable to service our debt obligations or fund our other liquidity needs, we could be forced to curtail our operations, reorganize our capital structure (including through bankruptcy proceedings) or liquidate some or all of our assets in a manner that could cause holders of our securities to experience a partial or total loss of their investment in us. 17 Table of Contents Our inability to properly utilize our workforce could have a negative impact on our profitability.
If we are unable to 17 Table of Contents service our debt obligations or fund our other liquidity needs, we could be forced to curtail our operations, reorganize our capital structure (including through bankruptcy proceedings) or liquidate some or all of our assets in a manner that could cause holders of our securities to experience a partial or total loss of their investment in us.
Further, ongoing economic instability in the global markets, including from the COVID-19 pandemic, supply chain disruptions, rising inflation and interest rates and the wars between Russia and Ukraine and between Israel and Hamas, could limit our ability to access the capital markets at a time when we would like, or need, to raise capital, which could have an impact on our ability to react to changing business conditions or new opportunities.
Further, ongoing economic instability in the global markets, supply chain disruptions, rising inflation and interest rates and the wars between Russia and Ukraine and unrest in the Middle East, could limit our ability to access the capital markets at a time when we would like, or need, to raise capital, which could have an impact on our ability to react to changing business conditions or new opportunities.
We could be adversely impacted by the effects of inflation, supply chain disruptions, capital market volatility and an economic recession or downturn. The global economy has recently experienced high rates of inflation and market and economic volatility, resulting from a number of factors, including the war between Russia and Ukraine, the war between Israel and Hamas, and supply chain constraints.
We could be adversely impacted by the effects of inflation, supply chain disruptions, capital market volatility and an economic recession or downturn. The global economy continues to experience high rates of inflation and market and economic volatility, resulting from a number of factors, including the war between Russia and Ukraine, unrest in the Middle East, and supply chain constraints.
These disruptions created challenges in key back-office functions that required workarounds and alternative procedures. Because the techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
Because the techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
Any failure by us or our third party vendors to maintain the security, proper function and availability of information technology and systems could result in financial losses, interrupt our operations, damage our reputation, cause us to be in default of material contracts and subject us to liability claims or regulatory penalties, any of which could materially and adversely affect our business and the value of our securities.
Any failure by us or our third party vendors to maintain the security, proper function and availability of information technology and systems could result in financial losses, interrupt our operations, damage our reputation, cause us to be in default of material contracts and subject us to liability claims or regulatory penalties, any of which could materially and adversely affect our business and the value of our securities. 16 Table of Contents In addition, current and future laws and regulations governing data privacy and the unauthorized disclosure of confidential information may pose complex compliance challenges and result in additional costs.
Future legislation could also have an impact on our business. The status of the Affordable Care Act, any amendment, repeal or replacement thereof, is currently uncertain.
Future legislation could also have an impact on our business, including potential healthcare reform efforts under the Trump administration, the nature and impact of which are uncertain. The status of the Affordable Care Act, any amendment, repeal or replacement thereof, is currently uncertain.
Further, we may undertake contractual commitments that exceed our labor, managerial or other resources, which could also adversely affect our earnings and our ability to increase revenue growth and cause material reputational or other harm. Information technology system failures, network disruptions or cybersecurity breaches could adversely affect our business.
If our business resources become strained or over-burdensome, our earnings may be adversely affected, and we may be unable to increase revenue growth. Further, we may undertake contractual commitments that exceed our labor, managerial or other resources, which could also adversely affect our earnings and our ability to increase revenue growth and cause material reputational or other harm.
The extent to which we utilize our workforce affects our profitability. Underutilizing our workforce could result in lower gross margins and, consequently, a decrease in short-term profitability. On the other hand, overutilization of our workforce could negatively impact safety, employee satisfaction and project execution, leading to a potential decline in future project awards.
On the other hand, overutilization of our workforce could negatively impact safety, employee satisfaction and project execution, leading to a potential decline in future project awards.
We also collect and retain information about our customers, stockholders, vendors and employees, with the expectation by such third parties being that we will adequately protect such information.
In addition, we also rely on third-party software and information technology for certain of our critical accounting, project management and financial information systems. We also collect and retain information about our customers, stockholders, vendors and employees, with the expectation by such third parties being that we will adequately protect such information.
As a result, we may be required to expend significant resources to protect against the threat of system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches.
As a result, we may be required to expend significant resources to protect against the threat of system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches. Any of these events could damage our reputation and have a material adverse effect on our business, results of operations, financial condition and cash flows.
Further, if a subsidiary location fails to follow the Company’s compliance policies, we could be made party to a contract, arrangement or situation that requires the assumption of large liabilities or has less advantageous terms than is typically found in the market.
Further, if a subsidiary location fails to follow the Company’s compliance policies, we could be made party to a contract, arrangement or situation that requires the assumption of large liabilities or has less advantageous terms than is typically found in the market. 15 Table of Contents If we do not effectively manage our backlog and the size and cost of our operations, our existing infrastructure may become either strained or over-burdensome, and we may be unable to increase or sustain revenue growth.
Goodwill is the excess of purchase price over the fair value of the net assets of acquired businesses. We assess goodwill for impairment each year, and more frequently if circumstances suggest an impairment may have occurred.
We assess goodwill for impairment each year, and more frequently if circumstances suggest an impairment may have occurred.
As a result, these conditions have, and they or any similar future conditions may continue to have, significant adverse impacts on our business, financial condition and results of operations. 11 Table of Contents Rising inflation and/or interest rates may have an adverse effect on our business, financial condition and results of operations. In efforts to combat inflation, the U.S.
As a result, these conditions have, and they or any similar future conditions may continue to have, significant adverse impacts on our business, financial condition and results of operations. The loss of one or a few customers could adversely affect our business, financial condition and results of operations.
We experience the results of economic trends well after an economic cycle begins, and therefore have generally continued to experience the results of an economic recession well after conditions in the general economy have improved.
We experience the results of economic trends well after an economic cycle begins, and therefore have generally continued to experience the results of an economic recession well after conditions in the general economy have improved. 10 Table of Contents The industries and markets in which we operate have always been and will continue to be vulnerable to macroeconomic downturns because they are cyclical in nature.
The continuing and evolving threat of cyber-attacks has also resulted in increased regulatory focus on risk management and prevention.
A failure to comply with such laws and regulations could result in penalties or fines, legal liabilities or reputational harm. The continuing and evolving threat of cyber-attacks has also resulted in increased regulatory focus on risk management and prevention.
We use and rely significantly on sophisticated information technology systems, networks, and infrastructure in conducting our day-to-day operations, providing services to certain customers and protecting sensitive Company information. In addition, we also rely on third-party software and information technology for certain of our critical accounting, project management and financial information systems.
Information technology system failures, network disruptions or cybersecurity breaches could adversely affect our business. We use and rely significantly on sophisticated information technology systems, networks, and infrastructure in conducting our day-to-day operations, providing services to certain customers and protecting sensitive Company information.
We hire third-party subcontractors to perform work and depend on third-party suppliers to provide equipment and materials necessary to complete our projects. If we are unable to retain qualified subcontractors or suppliers, or if our subcontractors or suppliers do not perform as anticipated for any reason, our execution, reputation and profitability could be harmed.
If we are unable to retain qualified subcontractors or suppliers, or if our subcontractors or suppliers do not perform as anticipated for any reason, our execution, reputation and profitability could be harmed. Recent labor shortages may also lead to higher wages for employees and higher costs to purchase the services of third parties.
The industries and markets in which we operate have always been and will continue to be vulnerable to macroeconomic downturns because they are cyclical in nature. When there is a reduction in demand, it often leads to greater price competition as well as decreased revenue and profit.
When there is a reduction in demand, it often leads to greater price competition as well as decreased revenue and profit.
Increases in such labor costs for a prolonged period of time could have a material adverse effect on the company’s financial condition and results of operations. Earnings for future periods may be impacted by impairment charges for goodwill and intangible assets. We carry a significant amount of goodwill and identifiable intangible assets on our consolidated Balance Sheets.
Earnings for future periods may be impacted by impairment charges for goodwill and intangible assets. We carry a significant amount of goodwill and identifiable intangible assets on our consolidated Balance Sheets. Goodwill is the excess of purchase price over the fair value of the net assets of acquired businesses.
Recent labor shortages may also lead to higher wages for employees and higher costs to purchase the services of third parties. Increases in labor costs, such as increases in minimum wage requirements, wage inflation and/or increased overtime, reduce our profitability and that of our customers.
Increases in labor costs, such as increases in minimum wage requirements, wage inflation and/or increased overtime, reduce our profitability and that of our customers. Increases in such labor costs for a prolonged period of time could have a material adverse effect on the company’s financial condition and results of operations.
Any of these events could damage our reputation and, while the April 2019 incident did not have such effects, have a material adverse effect on our business, results of operations, financial condition and cash flows.
A loss of business from a significant customer, or a number of significant customers, could have a material adverse effect on our business, financial condition, results of operations and cash flows. Rising inflation and/or interest rates may have an adverse effect on our business, financial condition and results of operations. In efforts to combat inflation, the U.S.
Removed
If we do not effectively manage our backlog and the size and cost of our operations, our existing infrastructure may become either strained or over-burdensome, and we may be unable to increase or sustain revenue growth.
Added
A few customers have in the past and may in the future account for a significant portion of our revenues. For example, in 2024, one customer represented approximately 13.3% of our consolidated revenue.
Removed
If our business resources become strained or over-burdensome, our earnings may be adversely affected, and we may be unable to increase revenue 15 Table of Contents growth.
Added
Although we have 11 Table of Contents long - standing relationships with many of our significant customers and believe that our portfolio of customers is reasonably diverse, one or a number of significant customers may unilaterally reduce, fail to renew, or terminate their contracts with us in the future.
Removed
In April 2019, for example, our information technology infrastructure was impacted by a ransomware attack virus, which caused a substantial majority of our operating locations to experience loss of access to certain data and outages affecting systems including accounting, payroll, billing, job report and management and other software environments.
Added
Third parties contribute significantly to our completion of many projects and labor shortages or increased labor costs from third parties could adversely impact our results of operations. We hire third-party subcontractors to perform work and depend on third-party suppliers to provide equipment and materials necessary to complete our projects.
Removed
In addition, current and future laws and regulations governing data privacy and the unauthorized disclosure of confidential information may pose complex compliance challenges and result in additional costs. A failure to comply with such laws and regulations could result in penalties or fines, legal liabilities or reputational harm.
Added
Continuing worldwide political and economic uncertainties may adversely affect our revenue and profitability. ​ The last several years have been periodically marked by political and economic concerns, including the COVID-19 pandemic, decreased consumer confidence, the effects of international conflicts such as the wars between Russia and Ukraine and unrest in the Middle East, tariffs, energy costs and inflation.
Added
As cybersecurity threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. The inability to implement, maintain and upgrade adequate safeguards could have a material adverse effect on our business.
Added
Our inability to properly utilize our workforce could have a negative impact on our profitability. The extent to which we utilize our workforce affects our profitability. Underutilizing our workforce could result in lower gross margins and, consequently, a decrease in short-term profitability.
Added
If we are unable to pass the costs of such tariffs on to our customer base or otherwise mitigate such costs, or if demand for our services decreases due to the higher cost, our results of operations could be materially adversely affected.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company’s cybersecurity policies, standards, and practices are integrated into the Company’s risk management process. The Board oversees information technology, data security, and cybersecurity risk management through regular reports and presentations from the CISO and other management members. Vance Tang, Chair of the Nominating, Governance, and Sustainability Committee, serves as the Board Liaison for Cybersecurity. Mr.
Biggest changeThe Company’s cybersecurity policies, standards, and practices are integrated into the Company’s risk management process. The Board oversees information technology, data security, and cybersecurity risk management through regular reports and presentations from the CISO and other management members. The Risk Committee meets at least annually to define and improve the risk-mapping process and considers any updates at least quarterly.
However, because of the inherent nature of cybersecurity threats and the evolution of such threats over time, the Company’s processes, oversight and risk management cannot provide absolute assurance that a cybersecurity threat will not have a material effect on the Company in the future. ​ 23 Table of Contents Governance ​ The Company has established a risk committee (the “Risk Committee”) consisting of executive officers, including the Company’s Chief Information Security Officer (“CISO”), that is directly responsible for the Company’s risk management process.
However, because of the inherent nature of cybersecurity threats and the evolution of such threats over time, the Company’s processes, oversight and risk management cannot provide absolute assurance that a cybersecurity threat will not have a material effect on the Company in the future. ​ 23 Table of Contents Governance ​ The Company has established a risk committee (the “ Risk Committee ”) consisting of executive officers, including the Company’s Chief Information Security Officer (“CISO”) , that is directly responsible for the Company’s risk management process.
Removed
Tang has completed extensive training on cybersecurity risk mitigation, including certification related to completion of the NACD Cyber Risk Oversight Program. The Risk Committee meets at least annually to define and improve the risk-mapping process and considers any updates at least quarterly.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. Properties As of December 31, 2023, we owned 16 properties. Other than these owned properties, we lease the real property and buildings from which we operate. Our facilities are located in 27 states and consist of offices, shops and fabrication, maintenance and warehouse facilities.
Biggest changeITEM 2. Properties As of December 31, 2024, we owned 20 properties. Other than these owned properties, we lease the real property and buildings from which we operate. Our facilities are located in 27 states and consist of offices, shops and fabrication, maintenance and warehouse facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe net gain of $5.1 million was recorded primarily as an increase in gross profit in our Consolidated Statements of Operations. ​ As of December 31, 2023, we recorded an accrual for unresolved matters, which is not material to our financial statements, based on our analysis of likely outcomes related to the respective matters; however, it is possible that the ultimate outcome and associated costs will deviate from our estimates and that, in the event of an unexpectedly adverse outcome, we may experience additional costs and expenses in future periods.
Biggest changeThe net gain of $5.1 million was recorded primarily as an increase in gross profit in our Consolidated Statements of Operations. ​ 24 Table of Contents As of December 31, 2024, we recorded an accrual for unresolved matters, which is not material to our financial statements, based on our analysis of likely outcomes related to the respective matters; however, it is possible that the ultimate outcome and associated costs will deviate from our estimates and that, in the event of an unexpectedly adverse outcome, we may experience additional costs and expenses in future periods.
In the first quarter of 2023, we recorded a pre-tax gain of $6.8 million from legal developments and settlements that primarily relate to disputes with customers regarding the outcome of completed projects as well as an obligation to perform subcontract work under two executed letters of intent for subsequent projects that we believed were not enforceable.
In 2023, we recorded a pre-tax gain of $6.8 million from legal developments and settlements that primarily relate to disputes with customers regarding the outcome of completed projects as well as an obligation to perform subcontract work under two executed letters of intent for subsequent projects that we believed were not enforceable.
The largest change resulted from favorable developments related to a dispute with a customer regarding the outcome of a completed project as well as the obligation to perform subcontract work under two executed letters of intent for subsequent projects that we 24 Table of Contents believed were not enforceable.
The largest change resulted from favorable developments related to a dispute with a customer regarding the outcome of a completed project as well as the obligation to perform subcontract work under two executed letters of intent for subsequent projects that we believed were not enforceable.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring the year ended December 31, 2023, we repurchased 0.1 million shares for approximately $21.3 million at an average price of $152.75 per share. ​ 27 Table of Contents During the year ended December 31, 2023, we purchased our common shares in the following amounts at the following average prices: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares Maximum Number of ​ ​ ​ ​ ​ ​ ​ Purchased as Part of ​ Shares that May Yet Be ​ ​ Total Number of ​ Average Price ​ Publicly Announced Plans ​ Purchased Under the Plans Period ​ Shares Purchased ​ Paid Per Share ​ or Programs (1) ​ or Programs January 1 - January 31 17,100 ​ $ 116.89 10,133,946 810,179 ​ February 1 - February 28 8,500 ​ $ 122.13 10,142,446 801,679 ​ March 1 - March 31 3,800 ​ $ 139.69 10,146,246 797,879 ​ April 1 - April 30 22,200 ​ $ 132.20 10,168,446 775,679 ​ May 1 - May 31 300 ​ $ 149.28 10,168,746 775,379 ​ June 1 - June 30 1,500 ​ $ 152.26 10,170,246 773,879 ​ July 1 - July 31 500 ​ $ 154.60 10,170,746 773,379 ​ August 1 - August 31 — ​ $ — 10,170,746 773,379 ​ September 1 - September 30 9,750 ​ $ 175.37 10,180,496 763,629 ​ October 1 - October 31 65,250 ​ $ 164.81 10,245,746 698,379 ​ November 1 - November 30 5,278 ​ $ 186.26 10,251,024 693,101 ​ December 1 - December 31 5,300 ​ $ 189.79 10,256,324 687,801 ​ ​ 139,478 ​ $ 152.75 10,256,324 687,801 ​ (1) Purchased as part of a program announced on March 29, 2007 under which, since the inception of this program, 10.9 million shares have been approved for repurchase. ​ Under our stock incentive plans, employees may elect to have us withhold common shares to satisfy statutory federal, state and local tax withholding obligations arising on the vesting of restricted stock awards and exercise of options.
Biggest changeDuring the year ended December 31, 2024, we repurchased 0.2 million shares for approximately $58.3 million at an average price of $329.14 per share. ​ During the year ended December 31, 2024, we purchased our common shares in the following amounts at the following average prices: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares Maximum Number of ​ ​ ​ ​ ​ ​ ​ Purchased as Part of ​ Shares that May Yet Be ​ ​ Total Number of ​ Average Price ​ Publicly Announced Plans ​ Purchased Under the Plans Period ​ Shares Purchased ​ Paid Per Share ​ or Programs (1) ​ or Programs January 1 - January 31 1,500 ​ $ 196.89 10,257,824 686,301 ​ February 1 - February 29 — ​ $ — 10,257,824 686,301 ​ March 1 - March 31 — ​ $ — 10,257,824 686,301 ​ April 1 - April 30 — ​ $ — 10,257,824 686,301 ​ May 1 - May 31 13,650 ​ $ 307.97 10,271,474 672,651 ​ June 1 - June 30 21,347 ​ $ 311.09 10,292,821 651,304 ​ July 1 - July 31 32,219 ​ $ 305.13 10,325,040 619,085 ​ August 1 - August 31 44,192 ​ $ 315.12 10,369,232 986,319 ​ September 1 - September 30 23,550 ​ $ 314.55 10,392,782 962,769 ​ October 1 - October 31 17,250 ​ $ 388.27 10,410,032 945,519 ​ November 1 - November 30 22,400 ​ $ 395.39 10,432,432 923,119 ​ December 1 - December 31 1,050 ​ $ 428.70 10,433,482 922,069 ​ ​ 177,158 ​ $ 329.14 10,433,482 922,069 ​ (1) Purchased as part of a program announced on March 29, 2007 under which, since the inception of this program, 11.4 million shares have been approved for repurchase. ​ Under our stock incentive plans, employees may elect to have us withhold common shares to satisfy statutory federal, state and local tax withholding obligations arising on the vesting of restricted stock awards and exercise of options.
Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities On March 29, 2007, our Board of Directors (the “Board”) approved a stock repurchase program to acquire up to 1.0 million shares of our outstanding common stock.
Recent Sales of Unregistered Securities None. ​ 27 Table of Contents Issuer Purchases of Equity Securities On March 29, 2007, our Board of Directors (the “Board”) approved a stock repurchase program to acquire up to 1.0 million shares of our outstanding common stock.
Subsequently, the Board has from time to time increased the number of shares that may be acquired under the program and approved extensions of the program. On May 17, 2022, the Board approved an extension to the program by increasing the shares authorized for repurchase by 0.7 million shares.
Subsequently, the Board has from time to time increased the number of shares that may be acquired under the program and approved extensions of the program. On August 7, 2024, the Board approved an extension to the program by increasing the shares authorized for repurchase by 0.4 million shares.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our Common Stock is traded under the symbol FIX on the New York Stock Exchange. As of February 16, 2024, there were approximately 262 stockholders of record of our Common Stock, and the last reported sale price on that date was $248.50 per share.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our Common Stock is traded under the symbol FIX on the New York Stock Exchange. As of February 14, 2025, there were approximately 231 stockholders of record of our Common Stock, and the last reported sale price on that date was $391.22 per share.
Since the inception of the repurchase program, the Board has approved 10.9 million shares to be repurchased. As of December 31, 2023, we have repurchased a cumulative total of 10.3 million shares at an average price of $26.27 per share under the repurchase program.
Since the inception of the repurchase program, the Board has approved 11.4 million shares to be repurchased. As of December 31, 2024, we have repurchased a cumulative total of 10.4 million shares at an average price of $31.41 per share under the repurchase program.
Added
As of December 31, 2024, the Company is no longer included in the Russell 2000 Index. Given that construction-specific indexes include engineering firms, general contractors, and other organizations that derive a majority of their revenue from providing professional services, we do not believe there is an industry specific index that serves as an accurate comparison to our performance.
Added
While not directly comparable, the Company believes that the S&P 400 Capital Good Index is an appropriate trade or line of business index given that the Company is included within the index and the index includes not only construction and engineering companies, but also companies that manufacture and install building products and electrical equipment.
Added
We intend to use the S&P 400 Capital Goods Index, rather than the Russell 2000 Index, for the purpose of Item 201(e) of Regulation S-K going forward. In accordance with Item 201(e) of Regulation S-K, the stock performance graph above includes the Russell 2000 Index and the S&P 400 Capital Goods Index.

Item 7. Management's Discussion & Analysis

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

70 edited+10 added−27 removed69 unchanged
Biggest changeChanges in strategy and/or market condition may result in adjustments to recorded intangible asset balances or their useful lives. ​ Results of Operations (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2023 2022 2021 ​ Revenue ​ $ 5,206,760 100.0 % $ 4,140,364 100.0 % $ 3,073,636 100.0 % Cost of services ​ 4,216,251 81.0 % 3,398,756 82.1 % 2,510,429 81.7 % Gross profit ​ 990,509 19.0 % 741,608 17.9 % 563,207 18.3 % Selling, general and administrative expenses ​ 574,423 11.0 % 489,344 11.8 % 376,309 12.2 % Gain on sale of assets ​ (2,302) — ​ (1,585) — ​ (1,540) (0.1) % Operating income ​ 418,388 8.0 % 253,849 6.1 % 188,438 6.1 % Interest income ​ 3,492 0.1 % 46 — ​ 24 — ​ Interest expense ​ (10,281) (0.2) % (13,352) (0.3) % (6,196) (0.2) % Changes in the fair value of contingent earn-out obligations ​ (23,607) (0.5) % (4,819) (0.1) % 7,820 0.3 % Other income ​ 202 — ​ 134 — ​ 188 — ​ Income before income taxes ​ 388,194 7.5 % 235,858 5.7 % 190,274 6.2 % Provision (benefit) for income taxes ​ 64,796 ​ ​ ​ (10,089) ​ ​ ​ 46,926 ​ ​ ​ Net income ​ $ 323,398 ​ ​ ​ $ 245,947 ​ ​ ​ $ 143,348 ​ ​ ​ ​ 2023 Compared to 2022 We had 42 operating locations as of December 31, 2022.
Biggest changeChanges in strategy and/or market condition may result in adjustments to recorded intangible asset balances or their useful lives. ​ 32 Table of Contents Results of Operations (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2024 2023 2022 ​ Revenue ​ $ 7,027,476 100.0 % $ 5,206,760 100.0 % $ 4,140,364 100.0 % Cost of services ​ 5,551,065 79.0 % 4,216,251 81.0 % 3,398,756 82.1 % Gross profit ​ 1,476,411 21.0 % 990,509 19.0 % 741,608 17.9 % Selling, general and administrative expenses ​ 730,072 10.4 % 574,423 11.0 % 489,344 11.8 % Gain on sale of assets ​ (3,030) — ​ (2,302) — ​ (1,585) — ​ Operating income ​ 749,369 10.7 % 418,388 8.0 % 253,849 6.1 % Interest income ​ 11,554 0.2 % 3,492 0.1 % 46 — ​ Interest expense ​ (6,648) (0.1) % (10,281) (0.2) % (13,352) (0.3) % Changes in the fair value of contingent earn-out obligations ​ (88,146) (1.3) % (23,607) (0.5) % (4,819) (0.1) % Other income ​ 432 — ​ 202 — ​ 134 — ​ Income before income taxes ​ 666,561 9.5 % 388,194 7.5 % 235,858 5.7 % Provision (benefit) for income taxes ​ 144,128 ​ ​ ​ 64,796 ​ ​ ​ (10,089) ​ ​ ​ Net income ​ $ 522,433 ​ ​ ​ $ 323,398 ​ ​ ​ $ 245,947 ​ ​ ​ ​ 2024 Compared to 2023 We had 44 operating locations as of December 31, 2023.
The substantial majority of these letters of credit are posted with insurers who disburse funds on our behalf in connection with our workers’ 39 Table of Contents compensation, auto liability and general liability insurance program.
The substantial majority of these letters of credit are posted with 39 Table of Contents insurers who disburse funds on our behalf in connection with our workers’ compensation, auto liability and general liability insurance program.
The amended Facility also provides for an accordion or increase option not to exceed the greater of (a) $250 million and (b) 1.0x Credit Facility Adjusted EBITDA (as defined below), as well as a sublimit of up to $175.0 million issuable in the form of letters of credit.
The Facility also provides for an accordion or increase option not to exceed the greater of (a) $250 million and (b) 1.0x Credit Facility Adjusted EBITDA (as defined below), as well as a sublimit of up to $175.0 million issuable in the form of letters of credit.
Credit Facility Adjusted EBITDA and consolidated interest expense are calculated for purposes of this covenant for the four fiscal quarters ending as of any given quarterly covenant compliance measurement date. ​ Other Restrictions —The Facility (a) permits unlimited acquisitions when the Company’s Net Leverage Ratio is less than or equal to 3.25 to 1.00, (b) expands certain baskets for permitted indebtedness and liens, and (c) permits unlimited distributions, stock repurchases, and investments when the Net Leverage Ratio is less than or equal to 2.75 to 1.00. ​ While the Facility’s financial covenants do not specifically govern capacity under the Facility, if our debt level under the Facility at a quarter-end covenant compliance measurement date were to cause us to violate the Facility’s Net Leverage Ratio covenant, our borrowing capacity under the Facility and the favorable terms that we currently have could be negatively impacted. ​ We were in compliance with all of our financial covenants as of December 31, 2023. ​ Notes to Former Owners As part of the consideration used to acquire eight companies, we have outstanding notes to the former owners.
Credit Facility Adjusted EBITDA and consolidated interest expense are calculated for purposes of this covenant for the four fiscal quarters ending as of any given quarterly covenant compliance measurement date. ​ Other Restrictions —The Facility (a) permits unlimited acquisitions when the Company’s Net Leverage Ratio is less than or equal to 3.25 to 1.00, (b) expands certain baskets for permitted indebtedness and liens, and (c) permits unlimited distributions, stock repurchases, and investments when the Net Leverage Ratio is less than or equal to 2.75 to 1.00. ​ While the Facility’s financial covenants do not specifically govern capacity under the Facility, if our debt level under the Facility at a quarter-end covenant compliance measurement date were to cause us to violate the Facility’s Net Leverage Ratio covenant, our borrowing capacity under the Facility and the favorable terms that we currently have could be negatively impacted. ​ We were in compliance with all of our financial covenants as of December 31, 2024. ​ Notes to Former Owners As part of the consideration used to acquire eight companies, we have outstanding notes to the former owners of the acquired companies.
Our average project duration, together with typical retention terms, generally allow us to complete the realization of revenue and earnings in cash within one year. 2023 Compared to 2022 Cash Provided by Operating Activities —Cash flow from operations is primarily influenced by demand for our services and operating margins but can also be influenced by working capital needs associated with the various types of services that we provide.
Our average project duration, together with typical retention terms, generally allow us to complete the realization of revenue and earnings in cash within one year. 2024 Compared to 2023 Cash Provided by Operating Activities —Cash flow from operations is primarily influenced by demand for our services and operating margins but can also be influenced by working capital needs associated with the various types of services that we provide.
Posting of letters of credit for this purpose is a common practice for entities that manage their self-insurance programs through third-party insurers as we do. While some of these letter of credit commitments expire in 2024, we expect nearly all of them, particularly those supporting our insurance programs, will be renewed annually.
Posting of letters of credit for this purpose is a common practice for entities that manage their self-insurance programs through third-party insurers as we do. While some of these letter of credit commitments expire in 2025, we expect nearly all of them, particularly those supporting our insurance programs, will be renewed annually.
We have generated positive free cash flow in each of the last twenty-five calendar years and will continue our emphasis in this area. We believe that the relative size and strength of our Balance Sheet and surety relationships, as compared to most companies in our industry, represent competitive advantages for us.
We have generated positive free cash flow in each of the last twenty-six calendar years and will continue our emphasis in this area. We believe that the relative size and strength of our Balance Sheet and surety relationships, as compared to most companies in our industry, represent competitive advantages for us.
Project contracts typically provide for periodic billings to the customer as we meet progress milestones or incur cost on the project. Project contracts in our industry also frequently allow for a small portion of progress billings or contract price to be withheld by the customer until after we have completed the work.
Project contracts typically provide for periodic billings to the customer as we meet progress milestones or incur costs on the project. Project contracts in our industry also frequently allow for a small portion of progress billings or contract price to be withheld by the customer until after we have completed the work.
We perform the majority of this work with our own employees, with the balance being subcontracted to third parties that meet our performance qualifications. Profile and Management of Our Operations We manage our 44 operating units based on a variety of factors.
We perform the majority of this work with our own employees, with the balance being subcontracted to third parties that meet our performance qualifications. Profile and Management of Our Operations We manage our 47 operating units based on a variety of factors.
Accordingly, we devote considerable attention to operating unit management quality, stability, and contingency planning, including related considerations of compensation and non-competition protection where applicable. Economic and Industry Factors As a mechanical and electrical services provider, we operate in the broader nonresidential construction services industry and are affected by trends in this sector.
Accordingly, we devote considerable attention to operating unit management quality, stability, and contingency planning, including related considerations of compensation and non-competition protection where applicable. 30 Table of Contents Economic and Industry Factors As a mechanical and electrical services provider, we operate in the broader nonresidential construction services industry and are affected by trends in this sector.
These factors may result in revisions to estimated costs and, therefore, revenue. Such revisions are frequently based on further estimates and subjective assessments. Variations from estimated project costs could have a significant impact on our operating results, depending on project size, and the recoverability of the variation from change orders collected from customers.
These factors may result in revisions to estimated costs and, therefore, revenue. Such revisions are frequently based on further estimates and subjective assessments. Variations from 31 Table of Contents estimated project costs could have a significant impact on our operating results, depending on project size, and the recoverability of the variation from change orders collected from customers.
Introduction and Overview We are a national provider of comprehensive mechanical and electrical installation, renovation, maintenance, repair and replacement services within the mechanical and electrical services industries. We operate primarily in the commercial, industrial and institutional markets and perform most of our work in manufacturing, healthcare, education, office, technology, retail and government facilities.
Introduction and Overview We are a national provider of comprehensive mechanical and electrical installation, renovation, maintenance, repair and replacement services within the mechanical and electrical services industries. We operate primarily in the commercial, industrial and institutional markets and perform most of our work in manufacturing, healthcare, education, 28 Table of Contents office, technology, retail and government facilities.
However, free cash flow is not considered under generally accepted accounting principles to be a primary measure of an entity’s financial results, and accordingly free cash flow should not be considered an 36 Table of Contents alternative to operating income, net income, or amounts shown in our Consolidated Statements of Cash Flows as determined under generally accepted accounting principles.
However, free cash flow is not considered under generally accepted accounting principles to be a primary measure of an entity’s financial results, and accordingly free cash flow should not be considered an alternative to operating income, net income, or amounts shown in our Consolidated Statements of Cash Flows as determined under generally accepted accounting principles.
Additional margins are then added to these two rates. ​ Certain of our vendors require letters of credit to ensure reimbursement for amounts they are disbursing on our behalf, such as to beneficiaries under our self-funded insurance programs.
Additional margins are then added to these two rates. ​ 37 Table of Contents Certain of our vendors require letters of credit to ensure reimbursement for amounts they are disbursing on our behalf, such as to beneficiaries under our self-funded insurance programs.
We have what we consider to be a well-diversified distribution of revenue across end-use sectors that we believe reduces our exposure to negative developments in any given sector.
We have what we consider to be a well-diversified distribution of revenue across end-use sectors that we believe reduces our exposure to negative 29 Table of Contents developments in any given sector.
Significant judgments and estimates are required in the determination of our income taxes, including the ability to recover our 31 Table of Contents deferred tax assets based on assumptions about future taxable income.
Significant judgments and estimates are required in the determination of our income taxes, including the ability to recover our deferred tax assets based on assumptions about future taxable income.
The effective rate for 34 Table of Contents 2023 was lower than the 21% federal statutory rate due to the current year R&D tax credit (6.3%) and an increase in the R&D tax credit for the 2022 tax year (2.8%). These R&D tax credit benefits were partially offset by net state income taxes (3.7%) and nondeductible expenses (1.5%).
The effective rate for 2023 was lower than the 21% federal statutory rate due to the R&D tax credit (6.3%) and an increase in the R&D tax credit for the 2022 tax year (2.8%). These R&D tax credit benefits were partially offset by net state income taxes (3.7%) and nondeductible expenses (1.5%).
As discussed in Note 11 “Income Taxes,” included in our Consolidated Balance Sheet at December 31, 2023 is $20.6 million of liabilities for uncertain tax positions, or unrecognized tax benefits. We believe it is reasonably possible that a reduction of up to $5.3 million in unrecognized tax benefits could occur within the next twelve months.
As discussed in Note 11 “Income Taxes,” included in our Consolidated Balance Sheet at December 31, 2024 is $30.1 million of liabilities for uncertain tax positions, or unrecognized tax benefits. We believe it is reasonably possible that a reduction of up to $5.3 million in unrecognized tax benefits could occur within the next twelve months.
These margins are frequently less than fixed-price contract margins because there is less risk of unrecoverable cost overruns in cost-plus or time and materials work. As of December 31, 2023, we had 10,481 projects in process. Our average project takes six to nine months to complete, with an average contract price of approximately $1.1 million.
These margins are frequently less than fixed-price contract margins because there is less risk of unrecoverable cost overruns in cost-plus or time and materials work. As of December 31, 2024, we had 7,935 projects in process. Our average project takes six to nine months to complete, with an average contract price of approximately $1.8 million.
Subsequently, the Board has from time to time increased the number of shares that may be acquired under the program and approved extensions of the program. On May 17, 2022, the Board approved an extension to the program by increasing the shares authorized for repurchase by 0.7 million shares.
Subsequently, the Board has from time to time increased the number of shares that may be acquired under the program and approved extensions of the program. On August 7, 2024, the Board approved an extension to the program by increasing the shares authorized for repurchase by 0.4 million shares.
These seasonal trends are sometimes offset by changes in the timing of major projects, which can be impacted by the weather, project delays or accelerations and other economic factors that may affect customer spending. We generated $639.6 million of cash flow from operating activities during 2023 compared with $301.5 million during 2022.
These seasonal trends are sometimes offset by changes in the timing of major projects, which can be impacted by the weather, project delays or accelerations and other economic factors that may affect customer spending. We generated $849.1 million of cash flow from operating activities during 2024 compared to $639.6 million during 2023.
As of December 31, 2023, we had $779.8 million of credit available to borrow under our credit facility. We have strong surety relationships to support our bonding needs, and we believe our relationships with the surety markets are strong and benefit from our operating history and financial position.
As of December 31, 2024, we had $770.0 million of credit available to borrow under our credit facility. We have strong surety relationships to support our bonding needs, and we believe our relationships with the surety markets are strong and benefit from our operating history and financial position.
Approximately 89.0% of our revenue is earned on a project basis for installation services in newly constructed facilities or for replacement of systems in existing facilities.
Approximately 91.1% of our revenue is earned on a project basis for installation services in newly constructed facilities or for replacement of systems in existing facilities.
We also continue to have significant borrowing capacity under our 38 Table of Contents credit facility, and we maintain what we feel are reasonable cash balances.
We also continue to have significant borrowing capacity under our credit facility, and we maintain what we feel are reasonable cash balances.
These fees range from 0.15% to 0.25% per annum, based on the Net Leverage Ratio. ​ 37 Table of Contents Interest expense included the following primary elements (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Interest expense on notes to former owners ​ $ 1,365 ​ $ 1,139 ​ $ 1,052 ​ Interest expense on borrowings and unused commitment fees ​ 7,507 ​ 10,955 ​ 3,371 ​ Interest expense (income) on interest rate swaps ​ ​ — ​ ​ (332) ​ ​ 499 ​ Interest expense on finance leases ​ ​ — ​ ​ 4 ​ ​ 57 ​ Letter of credit fees ​ 724 ​ 800 ​ 679 ​ Amortization of debt financing costs ​ 685 ​ 786 ​ 538 ​ Total ​ $ 10,281 ​ $ 13,352 ​ $ 6,196 ​ ​ The Facility contains financial covenants defining various financial measures and the levels of these measures with which we must comply.
These fees range from 0.15% to 0.25% per annum, based on the Net Leverage Ratio. ​ Interest expense included the following primary elements (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 Interest expense on notes to former owners ​ $ 3,616 ​ $ 1,365 ​ $ 1,139 ​ Interest expense on borrowings and unused commitment fees ​ 1,434 ​ 7,507 ​ 10,955 ​ Interest expense (income) on interest rate swaps ​ ​ — ​ ​ — ​ ​ (332) ​ Interest expense on finance leases ​ ​ — ​ ​ — ​ ​ 4 ​ Letter of credit fees ​ 911 ​ 724 ​ 800 ​ Amortization of debt financing costs ​ 687 ​ 685 ​ 786 ​ Total ​ $ 6,648 ​ $ 10,281 ​ $ 13,352 ​ ​ The Facility contains financial covenants defining various financial measures and the levels of these measures with which we must comply.
Taken together, projects with contract prices of $2 million or more totaled $10.2 billion of aggregate contract value as of December 31, 2023, or approximately 86%, out of a total contract value for all projects in progress of $12.0 billion. Generally, projects closer in size to $2 million will be completed in one year or less.
Taken together, projects with contract prices of $2 million or more totaled $12.78 billion of aggregate contract value as of December 31, 2024, or approximately 89%, out of a total contract value for all projects in progress of $14.35 billion. Generally, projects closer in size to $2 million will be completed in one year or less.
We expect that constraints and delays will continue to abate in 2024; however, we anticipate that pressure on cost and availability, especially for skilled labor, will continue throughout 2024. We have a credit facility in place with terms we believe are favorable that does not expire until July 2027.
We expect that constraints and delays in our supply chain will continue to abate in the near term; however, we anticipate that pressure on cost and availability, especially for skilled labor, will continue in 2025. We have a credit facility in place with terms we believe are favorable that does not expire until July 2027.
As of December 31, 2023, we had no outstanding borrowings on the revolving credit facility, $70.2 million in letters of credit and $779.8 million of credit available. ​ There are two interest rate options for borrowings under the Facility, the Base Rate Loan (as defined in the Facility) option and the Secured Overnight Financing Rate (“SOFR”) Loan option.
As of December 31, 2024, we had no outstanding borrowings on the revolving credit facility, $80.0 million in letters of credit outstanding and $770.0 million of credit available. ​ There are two interest rate options for borrowings under the Facility, the Base Rate Loan (as defined in the Facility) option and the Secured Overnight Financing Rate (“SOFR”) Loan option.
Since the inception of the repurchase program, the Board has approved 10.9 million shares to be repurchased. As of December 31, 2023, we have repurchased a cumulative total of 10.3 million shares at an average price of $26.27 per share under the repurchase program.
Since the inception of the repurchase program, the Board has approved 11.4 million shares to be repurchased. As of December 31, 2024, we have repurchased a cumulative total of 10.4 million shares at an average price of $31.41 per share under the repurchase program.
We also perform electrical logistics services, electrical service work, and electrical construction and engineering services. 28 Table of Contents In both our mechanical and electrical business segments, our responsibilities usually require conforming the systems to pre-established engineering drawings and equipment and performance specifications, which we frequently participate in establishing.
In our electrical business segment, our principal business activity is electrical construction and engineering in the commercial and industrial field. We also perform electrical logistics services and electrical service work. In both our mechanical and electrical business segments, our responsibilities usually require conforming the systems to pre-established engineering drawings and equipment and performance specifications, which we frequently participate in establishing.
Although we are preparing for a wide range of challenges and economic circumstances, including an eventual recession, we currently expect that supportive conditions for our industry, especially for our industrial and technology customers, are likely to continue in 2024. ​ Liquidity and Capital Resources ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 2021 ​ ​ (in thousands) ​ Cash provided by (used in): ​ ​ ​ ​ ​ Operating activities ​ $ 639,568 ​ $ 301,531 ​ $ 180,151 ​ Investing activities ​ (193,008) ​ (97,178) ​ (246,722) ​ Financing activities ​ (298,624) ​ (205,915) ​ 70,451 ​ Net increase (decrease) in cash and cash equivalents ​ $ 147,936 ​ $ (1,562) ​ $ 3,880 ​ Free cash flow: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash provided by operating activities ​ $ 639,568 ​ $ 301,531 ​ $ 180,151 ​ Purchases of property and equipment ​ (94,838) ​ (48,359) ​ (22,330) ​ Proceeds from sales of property and equipment ​ 5,951 ​ 2,858 ​ 3,101 ​ Free cash flow ​ $ 550,681 ​ $ 256,030 ​ $ 160,922 ​ Cash Flow Our business does not require significant amounts of investment in long-term fixed assets.
Although we are preparing for a wide range of future challenges and economic circumstances, including a potential recession, we currently expect that supportive conditions for our industry, especially for our industrial and technology customers, are likely to continue in 2025. 35 Table of Contents Liquidity and Capital Resources ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 2022 ​ ​ (in thousands) ​ Cash provided by (used in): ​ ​ ​ ​ ​ Operating activities ​ $ 849,057 ​ $ 639,568 ​ $ 301,531 ​ Investing activities ​ (343,509) ​ (193,008) ​ (97,178) ​ Financing activities ​ (160,759) ​ (298,624) ​ (205,915) ​ Net increase (decrease) in cash and cash equivalents ​ $ 344,789 ​ $ 147,936 ​ $ (1,562) ​ Free cash flow: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash provided by operating activities ​ $ 849,057 ​ $ 639,568 ​ $ 301,531 ​ Purchases of property and equipment ​ (111,071) ​ (94,838) ​ (48,359) ​ Proceeds from sales of property and equipment ​ 5,538 ​ 5,951 ​ 2,858 ​ Free cash flow ​ $ 743,524 ​ $ 550,681 ​ $ 256,030 ​ Cash Flow Our business does not require significant amounts of investment in long-term fixed assets.
The increase in demand has been particularly strong in the technology and manufacturing sectors such as data centers, chip plants, food, pet food and pharmaceuticals.
The increase in demand has been particularly strong in the technology sector such as data centers and chip plants.
In addition, discrete items, such as tax law changes, judgments and legal structures can impact our effective tax rate. These items can also include the tax treatment for impairment of goodwill and other intangible assets, changes in fair value of acquisition-related assets and liabilities, uncertain tax positions, and accounting for losses associated with underperforming operations.
These items can also include the tax treatment for impairment of goodwill and other intangible assets, changes in fair value of acquisition-related assets and liabilities, uncertain tax positions, and accounting for losses associated with underperforming operations.
Of this increase, $12.8 million resulted from the acquisition of DECCO, and $754.7 million was attributable to same-store activity.
Of this increase, $619.8 million resulted from the acquisition of Summit, J&S, and DECCO, and $961.8 million was attributable to same-store activity.
The $92.7 million increase in cash used is primarily due to higher net repayments on debt in the current year driven by strong operating cash flows. 2022 Compared to 2021 For a discussion of the period-to-period comparison of 2022 to 2021, please refer to “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—2022 Compared to 2021” in our Annual Report on Form 10-K for the year ended December 31, 2022.
The $137.8 million decrease in cash used is primarily due to higher net repayments of debt 36 Table of Contents in the prior year as operating cash flows were used to pay down outstanding debt, partially offset by increased share repurchases of $36.7 million in the current year. 2023 Compared to 2022 For a discussion of the period-to-period comparison of 2023 to 2022, please refer to “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—2023 Compared to 2022” in our Annual Report on Form 10-K for the year ended December 31, 2023.
The following table presents our operating segment backlog (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ December 31, 2022 Backlog: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mechanical Segment ​ $ 4,027,927 78.1 % ​ $ 3,299,630 81.2 % Electrical Segment ​ 1,129,449 21.9 % ​ 764,113 18.8 % Total ​ $ 5,157,376 100.0 % ​ $ 4,063,743 100.0 % ​ Backlog as of December 31, 2023 was $5.16 billion, a 20.3% increase from September 30, 2023 backlog of $4.29 billion and a 26.9% increase from December 31, 2022 backlog of $4.06 billion.
The following table presents our operating segment backlog (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ December 31, 2023 Backlog: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mechanical Segment ​ $ 4,687,619 78.2 % ​ $ 4,027,927 78.1 % Electrical Segment ​ 1,306,347 21.8 % ​ 1,129,449 21.9 % Total ​ $ 5,993,966 100.0 % ​ $ 5,157,376 100.0 % ​ Backlog as of December 31, 2024 was $5.99 billion, a 5.5% increase from September 30, 2024 backlog of $5.68 billion and a 16.2% increase from December 31, 2023 backlog of $5.16 billion.
At December 31, 2023, future principal payments of notes to former owners by maturity year are as follows (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ Range of Stated ​ December 31, 2023 ​ Interest Rates 2024 ​ $ 4,800 ​ 2.5 % 2025 ​ 21,645 ​ 2.3 - 3.0 % 2026 ​ 14,125 ​ 2.5 - 5.5 % 2027 ​ ​ 3,500 ​ 5.5 % Total ​ $ 44,070 ​ ​ ​ ​ Outlook We have generated positive net free cash flow for the last twenty-five calendar years, much of which occurred during challenging economic and industry conditions.
Together, these notes had an outstanding balance of $67.6 million as of December 31, 2024. 38 Table of Contents At December 31, 2024, future principal payments of notes to former owners by maturity year are as follows (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ Range of Stated ​ December 31, 2024 ​ Interest Rates 2025 ​ $ 5,968 ​ 2.3 - 2.5 % 2026 ​ ​ 30,625 ​ 2.5 - 5.5 % 2027 ​ 26,000 ​ 5.5 % 2028 ​ ​ 5,000 ​ 5.5 % Total ​ $ 67,593 ​ ​ ​ ​ Outlook We have generated positive net free cash flow for the last twenty-six calendar years, much of which occurred during challenging economic and industry conditions.
Our provision for income taxes for 2023 was $64.8 million with an effective tax rate of 16.7%, as compared to a benefit for income taxes of $10.1 million with a negative effective tax rate of 4.3% for 2022.
Our provision for income taxes for 2024 was $144.1 million with an effective tax rate of 21.6%, as compared to the provision for income taxes of $64.8 million with an effective tax rate of 16.7% for 2023.
Acquisitions are included in our results of operations from the respective acquisition date. The same-store comparison from 2023 to 2022, as described below, excludes Eldeco, which was acquired on February 1, 2023, DECCO, which was acquired on October 2, 2023, and three months of results for Atlantic Electric, LLC (“Atlantic”), which was acquired on April 1, 2022.
Acquisitions are included in our results of operations from the respective acquisition date. The same-store comparison from 2024 to 2023, as described below, excludes Summit, which was acquired on February 1, 2024, J&S, which was acquired on February 1, 2024, nine months of results for DECCO, Inc.
We are recognizing these challenges in our job planning and pricing, and we are ordering materials on an earlier timeline and seeking to collaborate with customers to share supply risks and to mitigate the effects of these challenges. ​ We have a good pipeline of opportunities and potential backlog, and we have been generally successful in maintaining productivity and in procuring needed materials despite ongoing challenges.
We are recognizing these challenges in our job planning and pricing, and we are ordering materials on an earlier timeline and seeking to collaborate with customers to share supply risks and to mitigate the effects of these challenges.
Spending decisions for building construction, renovation and system replacement are generally made on a project basis, usually with some degree of discretion as to when and if projects proceed.
Spending decisions for building construction, renovation and system replacement are generally made on a project basis, usually with some degree of discretion as to when and if projects proceed. With larger amounts of capital, time, and discretion involved, spending decisions are affected to a significant degree by uncertainty, particularly concerns about economic and financial conditions and trends.
However, same-store SG&A, excluding amortization, is not considered under generally accepted accounting principles to be a primary measure of an entity’s financial results, and accordingly, should not be considered an alternative to SG&A as shown in our Consolidated Statements of Operations. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2023 2022 ​ (in thousands) ​ SG&A ​ $ 574,423 ​ $ 489,344 ​ Less: SG&A from companies acquired ​ (15,989) ​ — ​ Less: Amortization expense ​ (38,234) ​ (36,426) ​ Same-store SG&A, excluding amortization expense ​ $ 520,200 ​ $ 452,918 ​ Interest Income —Interest income increased $3.4 million in 2023 as compared to 2022.
However, same-store SG&A, excluding amortization, is not considered under generally accepted accounting principles to be a primary measure of an entity’s financial results, and accordingly, should not be considered an alternative to SG&A as shown in our Consolidated Statements of Operations. 34 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 ​ (in thousands) ​ SG&A ​ $ 730,072 ​ $ 574,423 ​ Less: SG&A from companies acquired ​ (21,951) ​ — ​ Less: Amortization expense ​ (55,369) ​ (38,234) ​ Same-store SG&A, excluding amortization expense ​ $ 652,752 ​ $ 536,189 ​ Interest Income —Interest income increased $8.1 million, or 230.9%, in 2024 as compared to 2023.
Operating Environment and Management Emphasis In 2020, the advent of a global pandemic led to some delays in service and construction, including delayed project starts and air pockets or pauses during 2020 and 2021.
We have experienced periods of time when economic weakness caused a significant slowdown in decisions to proceed with installation and replacement project work. Operating Environment and Management Emphasis In 2020, the advent of a global pandemic led to some delays in service and construction, including delayed project starts and air pockets or pauses during 2020 and 2021.
The same-store revenue increase primarily resulted from an increase in activity in the technology sector at one of our Texas operations ($260.0 million) and our North Carolina operation ($158.0 million), and in the manufacturing sector at one of our Indiana operations ($92.4 million) and another one of our Texas operations ($49.2 million). ​ Revenue for our electrical segment increased $298.8 million, or 31.1%, to $1.26 billion in 2023 compared to 2022.
The same-store revenue increase primarily resulted from an increase in activity in the technology sector at two of our Texas operations ($321.2 million), our North Carolina operation ($147.5 million) and one of our Virginia operations ($129.4 million). ​ Revenue for our electrical segment increased $239.1 million, or 19.0%, to $1.50 billion in 2024 compared to 2023.
The same-store revenue increase of $176.6 million was primarily attributable to an increase in activity in the technology sector at our Texas electrical operation ($96.3 million) and in the manufacturing sector at our North Carolina electrical operation ($49.4 million). ​ Backlog reflects revenue still to be recognized under contracted or committed installation and replacement project work.
The increase primarily resulted from an increase in activity in the technology sector at our Texas electrical operation ($158.0 million) and in the manufacturing sector at one of our South Carolina operations ($41.4 million). ​ 33 Table of Contents Backlog reflects revenue still to be recognized under contracted or committed installation and replacement project work.
The $95.8 million increase in cash used primarily relates to an increase in cash paid (net of cash acquired) for acquisitions and higher purchases of property and equipment to support the growth in our business in the current year compared to 2022. ​ Cash Used in Financing Activities —Cash used in financing activities was $298.6 million for 2023 compared to $205.9 million during 2022.
The $150.5 million increase in cash used primarily relates to an increase in cash paid (net of cash acquired) for acquisitions in the current year compared to 2023. ​ Cash Used in Financing Activities —Cash used in financing activities was $160.8 million for 2024 compared to $298.6 million during 2023.
The following table presents our operating segment revenue (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 ​ 2022 Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mechanical Segment ​ $ 3,946,022 75.8 % ​ $ 3,178,475 76.8 % Electrical Segment ​ 1,260,738 24.2 % ​ 961,889 23.2 % Total ​ $ 5,206,760 100.0 % ​ $ 4,140,364 100.0 % ​ Revenue for our mechanical segment increased $767.5 million, or 24.1%, to $3.95 billion in 2023 compared to 2022.
The following table presents our operating segment revenue (in thousands, except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 ​ 2023 Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mechanical Segment ​ $ 5,527,604 78.7 % ​ $ 3,946,022 75.8 % Electrical Segment ​ 1,499,872 21.3 % ​ 1,260,738 24.2 % Total ​ $ 7,027,476 100.0 % ​ $ 5,206,760 100.0 % ​ Revenue for our mechanical segment increased $1.58 billion, or 40.1%, to $5.53 billion in 2024 compared to 2023.
The same-store increase in gross profit was broad-based and was primarily driven by higher revenues in the current year including increased volumes at one of our Texas operations ($40.8 million), our North Carolina operation ($29.5 million) and our Texas electrical operation ($25.9 million).
The same-store increase in gross profit was primarily driven by both higher revenues in the current year as well as improved execution in our operations, including improvements in project execution at our Texas electrical operation ($90.8 million) and one of our South Carolina operations ($19.9 million).
Of the $10.0 million increase, $4.9 million related to the R&D tax credit for the 2022 tax year. 2022 Compared to 2021 For a discussion of the period-to-period comparison of 2022 to 2021, please refer to “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—2022 Compared to 2021” in our Annual Report on Form 10-K for the year ended December 31, 2022.
Refer to Note 11 in the Consolidated Financial Statements for a reconciliation of the federal statutory rate to the effective tax rates reflected in our financial statements. 2023 Compared to 2022 For a discussion of the period-to-period comparison of 2023 to 2022, please refer to “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—2023 Compared to 2022” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Outlook We experienced strong ongoing demand in 2023, and, although we have largely recovered from negative impacts caused by the COVID-19 pandemic, we continue to experience increased labor costs, supply constraints, and delays in delivery of various materials and equipment.
Outlook We experienced strong ongoing demand in 2024, although we continue to experience increased labor costs and impacts from supply chain shortages, including delays in delivery of certain materials and equipment.
The increase included a $14.2 million, or 1.9%, increase related to the Eldeco, DECCO and Atlantic acquisitions, as well as a $234.7 million, or 31.7%, increase on a same-store basis.
The increase included a $86.8 million, or 8.8%, increase related to the Summit, J&S, DECCO, and Eldeco acquisitions, as well as a $399.1 million, or 40.3%, increase on a same-store basis.
An operating location is included in the same-store comparison on the first day it has comparable prior year operating data, except for immaterial acquisitions that are often absorbed and integrated with existing operations. 32 Table of Contents Revenue —Revenue increased $1.07 billion, or 25.8%, to $5.21 billion in 2023 compared to 2022.
(“DECCO”), which was acquired on October 2, 2023, and one month of results for Eldeco, Inc (“Eldeco”), which was acquired on February 1, 2023. An operating location is included in the same-store comparison on the first day it has comparable prior year operating data, except for immaterial acquisitions that are often absorbed and integrated with existing operations.
It is unusual for us to work on a project that exceeds two years in length. 29 Table of Contents A stratification of projects in progress as of December 31, 2023, by contract price, is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate ​ ​ ​ ​ Contract ​ ​ No. of ​ Price Value Contract Price of Project ​ Projects ​ (millions) Under $2 million 9,477 ​ $ 1,722.1 ​ $2 million - $10 million 743 ​ 3,346.2 ​ $10 million - $20 million 125 ​ 1,761.0 ​ $20 million - $40 million 96 ​ 2,688.2 ​ Greater than $40 million 40 ​ 2,448.7 ​ Total 10,481 ​ $ 11,966.2 ​ ​ In addition to project work, approximately 11.0% of our revenue represents maintenance and repair service on already installed HVAC, electrical, and controls systems.
A stratification of projects in progress as of December 31, 2024, by contract price, is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate ​ ​ ​ ​ Contract ​ ​ No. of ​ Price Value Contract Price of Project ​ Projects ​ (millions) Under $2 million 6,889 ​ $ 1,564.7 ​ $2 million - $10 million 726 ​ 3,236.6 ​ $10 million - $20 million 138 ​ 1,947.4 ​ $20 million - $40 million 114 ​ 3,253.0 ​ Greater than $40 million 68 ​ 4,343.3 ​ Total 7,935 ​ $ 14,345.0 ​ ​ In addition to project work, approximately 8.9% of our revenue represents maintenance and repair service on already installed HVAC, electrical, and controls systems.
Changes in the Fair Value of Contingent Earn-out Obligations —The contingent earn-out obligations are measured at fair value each reporting period, and changes in estimates of fair value are recognized in earnings. Expense from changes in the fair value of contingent earn-out obligations increased $18.8 million in 2023 compared to 2022.
The decrease in interest expense is primarily due to a decrease in our average outstanding debt balance compared to the prior year. Changes in the Fair Value of Contingent Earn-out Obligations —The contingent earn-out obligations are measured at fair value each reporting period, and changes in estimates of fair value are recognized in earnings.
The increase included a 3.3% increase related to the Eldeco, DECCO and Atlantic acquisitions, as well as a 22.5% increase in revenue related to same-store activity. The same-store revenue growth was largely driven by strong market conditions.
Revenue —Revenue increased $1.82 billion, or 35.0%, to $7.03 billion in 2024 compared to 2023. The increase included a 12.1% increase related to the Summit, J&S, DECCO, and Eldeco acquisitions, as well as a 22.9% increase in revenue related to same-store activity. The same-store revenue growth was largely driven by strong market conditions, including the increase in our backlog.
The substantial majority of the capital used in our business is working capital that funds our costs of labor and installed equipment 35 Table of Contents deployed in project work until our customer pays us.
The substantial majority of the capital used in our business is working capital that funds our costs of labor and installed equipment deployed in project work until our customer pays us. Customary terms in our industry allow customers to withhold a small portion of the contract price until after we have completed the work, typically for six months.
We have included same-store SG&A, excluding amortization, because we believe it is an effective measure of comparative results of operations.
As a percentage of revenue, SG&A decreased from 11.0% in 2023 to 10.4% in 2024 due to leverage resulting from the increase in revenue. We have included same-store SG&A, excluding amortization expense, because we believe it is an effective measure of comparative results of operations.
The same-store sequential backlog increase was primarily a result of increased project bookings in the manufacturing sector at our North Carolina operation ($268.2 million), in the technology sector at one of our Texas operations ($266.9 million) and in the healthcare sector at one of our Virginia operations ($203.6 million).
The sequential backlog increase was primarily a result of increased project bookings and strong market conditions in the technology sector at one of our Texas operations ($345.8 million). The sequential backlog increase was partially offset by the completion of project work in the technology sector at our Texas electrical operation ($52.6 million).
Provision (Benefit) for Income Taxes —We conduct business throughout the United States in virtually all fifty states. Our effective tax rate changes based upon our relative profitability, or lack thereof, in the federal and various state jurisdictions with differing tax rates and rules.
Our effective tax rate changes based upon our relative profitability, or lack thereof, in the federal and various state jurisdictions with differing tax rates and rules. In addition, discrete items, such as tax law changes, judgments and legal structures can impact our effective tax rate.
The table below summarizes current and long-term material cash requirements as of December 31, 2023, which we expect to fund primarily with operating cash flows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ending December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2024 2025 2026 2027 2028 Thereafter Total Notes to former owners ​ $ 4,800 ​ $ 21,645 ​ $ 14,125 ​ $ 3,500 ​ $ — ​ $ — ​ $ 44,070 ​ Other debt ​ ​ 67 ​ 56 ​ 19 ​ — ​ — ​ — ​ 142 ​ Interest payable ​ 1,329 ​ 899 ​ 378 ​ ​ 145 ​ — ​ — ​ 2,751 ​ Operating lease obligations ​ 35,653 ​ 33,968 ​ 30,348 ​ 26,158 ​ 22,448 ​ 148,371 ​ 296,946 ​ Total ​ $ 41,849 ​ $ 56,568 ​ $ 44,870 ​ $ 29,803 ​ $ 22,448 ​ $ 148,371 ​ $ 343,909 ​ As of December 31, 2023, we have $70.2 million in letter of credit commitments, of which $44.8 million will expire in 2024, $25.3 million will expire in 2025, and $0.1 million will expire in 2026.
The table below summarizes current and long-term material cash requirements as of December 31, 2024, which we expect to fund primarily with operating cash flows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ending December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2025 2026 2027 2028 2029 Thereafter Total Notes to former owners ​ $ 5,968 ​ $ 30,625 ​ $ 26,000 ​ $ 5,000 ​ $ — ​ $ — ​ $ 67,593 ​ Other debt ​ ​ 74 ​ 72 ​ 29 ​ 22 ​ 545 ​ — ​ 742 ​ Interest payable ​ 3,314 ​ 2,485 ​ 1,038 ​ ​ 56 ​ 3 ​ — ​ 6,896 ​ Operating lease obligations ​ 41,442 ​ 37,819 ​ 33,246 ​ 29,286 ​ 25,518 ​ 170,630 ​ 337,941 ​ Total ​ $ 50,798 ​ $ 71,001 ​ $ 60,313 ​ $ 34,364 ​ $ 26,066 ​ $ 170,630 ​ $ 413,172 ​ As of December 31, 2024, we have $80.0 million in letter of credit commitments, of which $56.1 million will expire in 2025 and $23.9 million will expire in 2026.
We experienced increasing demand in 2022 and 2023, and we expect that the demand environment, especially for industrial and technology customers, will remain at high levels in 2024.
We experienced increasing demand in 2022, 2023 and 2024 and we expect that the demand environment, especially for manufacturing and technology customers, will remain at high levels leading into 2025. While the impacts from the supply chain shortages have improved, we continue to experience increased labor costs and delays in delivery of certain materials and equipment.
Additionally, we achieved improvements in project execution at our Kentucky electrical operation ($30.0 million) and another one of our Texas operations ($23.6 million). As a percentage of revenue, gross profit increased from 17.9% in 2022 to 19.0% in 2023, primarily due to the factors discussed above and improvements in our electrical segment gross profit margin.
As a percentage of revenue, gross profit increased from 19.0% in 2023 to 21.0% in 2024, primarily due to the factors discussed above and improvements in our electrical segment gross profit margin. ​ Selling, General and Administrative Expenses (“SG&A”) —SG&A increased $155.6 million, or 27.1%, to $730.1 million for 2024 as compared to 2023.
The year-over-year backlog increase included the acquisitions of Eldeco ($150.7 million) and DECCO ($29.7 million) as well as a same-store increase of $913.3 million, or 22.5%.
The year-over-year backlog increase included the acquisitions of Summit ($297.9 million) and J&S ($97.0 million) as well as a same-store increase of $441.6 million, or 8.6%.
The $338.1 million increase in cash provided by operating activities was primarily driven by higher pre-tax income in the current year, a $123.1 million benefit from billings in excess of costs and deferred revenue, attributable to the timing of billings and various project work due to favorable payment terms and timely payments, and a $43.4 million benefit from increases in accounts payable and accrued liabilities driven by the size and timing of payments.
The $209.5 million increase in cash provided by operating activities was primarily driven by higher earnings before non-cash expenses such as amortization of intangible assets in the current year and a $366.4 million benefit from increases in accounts payable and accrued liabilities driven by the size and timing of payments, including postponement of federal tax payments.
This increase was primarily caused by higher expenses at our Kentucky electrical operation and Eldeco, driven by stronger actual current earnings and forecasted results. Expense or income from changes in earn-out valuations may be more volatile in future periods due to large earn-out agreements for acquisitions that closed in the first quarter of 2024.
Expense from changes in the fair value of contingent earn-out obligations increased $64.5 million, or 273.4%, in 2024 compared to 2023. This increase was primarily caused by higher expenses at Summit, driven by stronger actual current earnings and forecasted results.
Same-store year-over-year backlog was broad-based, and increased primarily due to increased project bookings in the healthcare and office building sectors at one of our Virginia operations ($271.5 million), in the manufacturing sector at our North Carolina operation ($202.9 million) and in the technology sector at our Texas electrical operation ($84.0 million). ​ 33 Table of Contents Gross Profit —Gross profit increased $248.9 million, or 33.6%, to $990.5 million in 2023 as compared to 2022.
Same-store year-over-year backlog increased primarily due to increased project bookings in the technology sector at our Texas electrical operation ($206.3 million) and at one of our Texas operations ($183.2 million), in the healthcare sector at our Mississippi operation ($76.6 million) and in the education sector at one of our Florida operations ($74.0 million).
The decrease in interest expense is primarily due to a decrease in our average outstanding balance, partially offset by an increase in our average interest rate on our borrowings in 2023 as compared to the prior year.
The increase in interest income is due to both an increase in our average cash balance and higher interest rates compared to the prior year. Interest Expense —Interest expense decreased $3.6 million, or 35.3%, in 2024 as compared to 2023.
During the year ended December 31, 2023, we repurchased 0.1 million shares for approximately $21.3 million at an average price of $152.75 per share.
During the year ended December 31, 2024, we repurchased 0.2 million shares for approximately $58.3 million at an average price of $329.14 per share. Debt Revolving Credit Facility We have an $850.0 million senior credit facility (the “Facility”) provided by a syndicate of banks, which is composed of a revolving credit line guaranteed by certain of our subsidiaries.
The benefit from these advance payments received in 2023 will reverse when project costs are incurred, except to the extent that additional advanced payments are received.
These increases were partially offset by a $317.0 million change in billings in excess of costs and deferred revenue due to more advance payments received in the prior year. We have received large advance payments in the current and prior years that will reverse when project costs are incurred, except to the extent that additional advance payments are received.
Amortization expense increased $1.8 million during the period primarily as a result of the Eldeco, Atlantic and DECCO acquisitions. As a percentage of revenue, SG&A decreased from 11.8% in 2022 to 11.0% in 2023 due to leverage resulting from the increase in revenue.
On a same-store basis, excluding amortization expense, SG&A increased $116.6 million, or 21.7%. The same-store increase is primarily due to higher same-store revenue and increased compensation costs ($90.7 million), largely attributable to increased headcount and increased cost of labor. Amortization expense increased $17.1 million during the period primarily as a result of the Summit, J&S and DECCO acquisitions.
Removed
In our electrical business segment, our principal business activity is electrical construction and engineering in the commercial and industrial field.
Added
It is unusual for us to work on a project that exceeds two years in length.
Removed
With larger amounts of capital, 30 Table of Contents time, and discretion involved, spending decisions are affected to a significant degree by uncertainty, particularly concerns about economic and financial conditions and trends. We have experienced periods of time when economic weakness caused a significant slowdown in decisions to proceed with installation and replacement project work.
Added
In the first quarter of 2024, we split one of our operating locations into two separate operating locations. Additionally, we completed the acquisitions of Summit Industrial Construction, LLC (“Summit”) and J & S Mechanical Contractors, Inc. (“J&S”), which both report as separate operating locations. We had 47 operating locations as of December 31, 2024.
Removed
Although we have largely recovered from negative impacts caused by the COVID-19 pandemic, we continue to experience increased labor costs, supply constraints and cost increases, and delays in delivery of various materials and equipment.
Added
The year-over-year backlog increase was partially offset by the completion of project work in the manufacturing sector at our North Carolina operations ($68.9 million) and in the manufacturing and technology sectors at one of our Indiana operations ($67.1 million). ​ Gross Profit —Gross profit increased $485.9 million, or 49.1%, to $1.48 billion in 2024 as compared to 2023.
Removed
In the first quarter of 2023, we completed the acquisition of Eldeco, Inc. (“Eldeco”), which reports as a separate operating location. In the fourth quarter of 2023, we completed the acquisition of DECCO, Inc. (“DECCO”), which reports as a separate operating location. We had 44 operating locations as of December 31, 2023.
Added
Two of our Texas operations achieved both higher volumes and improvements in project execution ($131.7 million). Additionally, we achieved increased volumes at one of our Virginia operations ($28.0 million), one of our Tennessee operations ($22.6 million) and our North Carolina operation ($19.8 million).
Removed
The increase primarily resulted from the acquisition of Eldeco ($115.5 million), as well as an additional three months of revenue related to the Atlantic acquisition ($6.7 million).
Added
Expense or income from changes in earn-out valuations may be more volatile in future periods due to large earn-out agreements for acquisitions that closed in 2024. Provision for Income Taxes —We conduct business throughout the United States in virtually all fifty states.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed4 unchanged
Biggest changeThere were no outstanding borrowings on the revolving credit facility as of December 31, 2023. We measure certain assets at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired.
Biggest changeWe measure certain assets at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. We did not recognize any impairments in the current year on those assets required to be measured at fair value on a nonrecurring basis.
The following table presents principal amounts (stated in thousands) and related average interest rates by year of maturity for our debt obligations at December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ending December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2024 2025 2026 2027 2028 Thereafter Total Fixed Rate Debt ​ $ 4,867 ​ $ 21,701 ​ $ 14,144 ​ $ 3,500 ​ $ — ​ $ — ​ $ 44,212 ​ Average Interest Rate ​ 3.2% ​ 3.3% ​ 4.3% ​ 5.5% ​ — ​ — ​ 3.8% ​ The weighted average interest rate applicable to the borrowings under the revolving credit facility was approximately 5.7% as of December 31, 2022.
The following table presents principal amounts (stated in thousands) and related average interest rates by year of maturity for our debt obligations at December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ending December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2025 2026 2027 2028 2029 Thereafter Total Fixed Rate Debt ​ $ 6,042 ​ $ 30,697 ​ $ 26,029 ​ $ 5,022 ​ $ 545 ​ $ — ​ $ 68,335 ​ Average Interest Rate ​ 5.0% ​ 5.3% ​ 5.5% ​ 5.5% ​ 6.0% ​ — ​ 5.4% ​ There were no outstanding borrowings on the revolving credit facility as of December 31, 2024 and 2023.
We did not recognize any impairments in the current year on those assets required to be measured at fair value on a nonrecurring basis. The valuation of the Company’s contingent earn-out payments is determined using a probability weighted discounted cash flow method.
The valuation of the Company’s contingent earn-out payments is determined using a probability weighted discounted cash flow method.

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