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What changed in IES Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of IES Holdings, Inc.'s 2022 and 2023 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 2023 report.

+215 added−216 removedSource: 10-K (2023-12-07) vs 10-K (2022-12-06)

Top changes in IES Holdings, Inc.'s 2023 10-K

215 paragraphs added · 216 removed · 174 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeSales and Marketing Demand for our Residential services is highly dependent on the number of single-family and multi-family home starts in the markets we serve. Although we operate in multiple states, the majority of our single-family revenues are derived from services provided in Texas and Florida.
Biggest changeAlthough we expect fiscal 2024 multi-family revenues will be supported by our current backlog, the anticipated reduction in multi-family housing starts may impact our ability to maintain current levels of backlog. Sales and Marketing Demand for our Residential services is highly dependent on the number of single-family and multi-family home starts in the markets we serve.
This geographic diversity helps to reduce our exposure to unfavorable economic developments in any given region. 10 EXECUTIVE OFFICERS OF THE REGISTRANT Certain information with respect to each executive officer is as follows: Jeffrey, L.
This geographic diversity helps to reduce our exposure to unfavorable economic developments in any given region. EXECUTIVE OFFICERS OF THE REGISTRANT Certain information with respect to each executive officer is as follows: Jeffrey, L.
Backlog is a measure of revenue that we expect to recognize from work that has yet to be performed on 8 uncompleted contracts and from work that has been contracted but has not started, exclusive of short-term projects.
Backlog is a measure of revenue that we expect to recognize from work that has yet to be performed on uncompleted contracts and from work that has been contracted but has not started, exclusive of short-term projects.
This segment serves the steel, railroad, marine, petrochemical, pipeline, pulp and paper, wind energy, mining, automotive, power generation, scrap yards, data center, and utility industries. Our Infrastructure Solutions segment is comprised of 13 locations in Alabama, Georgia, Illinois, Indiana, Ohio, Oklahoma and West Virginia, and is headquartered in Massillon, Ohio.
This segment serves the steel, railroad, marine, petrochemical, pipeline, pulp and paper, wind energy, mining, automotive, power generation, scrap yards, data center, and utility industries. Our Infrastructure Solutions segment is comprised of 12 locations in Alabama, Georgia, Illinois, Indiana, Ohio, Oklahoma and West Virginia, and is headquartered in Massillon, Ohio.
The Residential segment also provides services for the installation of residential solar power, both for new construction and existing residences. The Residential segment is made up of 77 total locations, which include the segment headquarters in Houston, Texas. These locations geographically cover the Sun-Belt, Western, Mid-Atlantic and Northeastern regions of the United States.
The Residential segment also provides services for the installation of residential solar power, both for new construction and existing residences. The Residential segment is made up of 80 total locations, which include the segment headquarters in Houston, Texas. These locations geographically cover the Sun-Belt, Western, Mid-Atlantic and Northeastern regions of the United States.
At September 30, 2022, our Communications business has a record level of backlog. However, if customers in our end markets reduce their capital budgets due to economic, technological or other factors, this could result in a decrease in activity for our Communications segment.
At September 30, 2023, our Communications business has a record level of backlog. However, if customers in our end markets reduce their capital budgets due to economic, technological or other factors, this could result in a decrease in activity for our Communications segment.
Gendell, 63, has served as the Chief Executive Officer of the Company since October 1, 2020; he previously served as Interim Chief Executive Officer from July 31, 2020 to September 30, 2020. Mr. Gendell has also served as a director and as Chairman of the Board since November 2016. Mr.
Gendell, 64, has served as the Chief Executive Officer of the Company since October 1, 2020; he previously served as Interim Chief Executive Officer from July 31, 2020 to September 30, 2020. Mr. Gendell has also served as a director and as Chairman of the Board since November 2016. Mr.
We also provide 6 mechanical services such as maintenance agreements, installation, or replacement of mechanical equipment for commercial and industrial facilities. This segment provides services for a variety of project types, including office buildings, manufacturing facilities, data centers, chemical plants, refineries, wind farms, solar facilities, municipal infrastructure and health care facilities.
We also provide 6 mechanical services such as maintenance agreements, installation, or replacement of mechanical equipment for commercial and industrial facilities. This segment provides services for a variety of project types, including office buildings, manufacturing facilities, data centers, wind farms, solar facilities, municipal infrastructure and health care facilities.
The Commercial & Industrial segment consists of 19 locations, which includes the segment headquarters in Houston, Texas. Geographically, these locations cover Texas, Nebraska, Oregon, Wisconsin, and the Southeast and Mid-Atlantic regions.
The Commercial & Industrial segment consists of 16 locations, which includes the segment headquarters in Houston, Texas. Geographically, these locations cover Texas, Nebraska, Oregon, Wisconsin, and the Southeast and Mid-Atlantic regions.
Mary K. Newman , 42, has served as Vice President, General Counsel and Corporate Secretary of the Company since December 2019. Prior to joining IES, Ms.
Mary K. Newman , 43, has served as Vice President, General Counsel and Corporate Secretary of the Company since December 2019. Prior to joining IES, Ms.
Our safety leadership continuously monitors and addresses safety performance, provides regular training and educational programs on safety and participates in numerous industry safety organizations. LOCATIONS As of September 30, 2022, we have 130 domestic locations.
Our safety leadership continuously monitors and addresses safety performance, provides regular training and educational programs on safety and participates in numerous industry safety organizations. LOCATIONS As of September 30, 2023, we have 129 domestic locations.
These agreements are excluded from remaining performance obligations until work begins. We expect that $777 million of our September 30, 2022 backlog will result in revenue during fiscal 2023, with the remaining $510 million expected to be realized in fiscal 2024; however, there can be no assurance that this backlog will be completed within expected time frames or at all.
These agreements are excluded from remaining performance obligations until work begins. We expect that $1,091.2 million of our September 30, 2023 backlog will result in revenue during fiscal 2024, with the remaining $466.8 million expected to be realized in fiscal 2025; however, there can be no assurance that this backlog will be completed within expected time frames or at all.
Although supply of most raw materials has begun to normalize, we continue to experience delays in sourcing certain components. Such delays may lead to project inefficiencies resulting from schedule extensions. We are also exposed to increases in the prices of certain commodities.
Although supply of most raw materials normalized during fiscal 2023, we continue to experience longer lead times in sourcing certain components. Such delays may lead to project inefficiencies resulting from schedule extensions. We are also exposed to increases in the prices of certain commodities.
The table below describes the percentage of our total revenues attributable to each of our four segments over 3 each of the last three years (percentage columns may not add due to rounding): Year Ended September 30, 2022 2021 2020 $ % $ % $ % (Dollars in thousands, Percentage of revenues) Communications $ 559,777 25.8 % $ 445,968 29.0 % $ 395,141 33.2 % Residential 1,131,414 52.2 % 687,347 44.7 % 411,790 34.6 % Infrastructure Solutions 167,113 7.7 % 146,980 9.6 % 128,379 10.8 % Commercial & Industrial 308,504 14.2 % 256,198 16.7 % 255,546 21.5 % Total Consolidated $ 2,166,808 100.0 % $ 1,536,493 100.0 % $ 1,190,856 100.0 % For additional financial information by segment, see Note 11, “Operating Segments” in the notes to our Consolidated Financial Statements.
The table below describes the percentage of our total revenues attributable to each of our four segments over 3 each of the last three years (percentage columns may not add due to rounding): Year Ended September 30, 2023 2022 2021 $ % $ % $ % (Dollars in thousands, Percentage of revenues) Communications $ 600,776 25.3 % $ 559,777 25.8 % $ 445,968 29.0 % Residential 1,279,504 53.8 % 1,131,414 52.2 % 687,347 44.7 % Infrastructure Solutions 217,353 9.1 % 167,113 7.7 % 146,980 9.6 % Commercial & Industrial 279,594 11.8 % 308,504 14.2 % 256,198 16.7 % Total Consolidated $ 2,377,227 100.0 % $ 2,166,808 100.0 % $ 1,536,493 100.0 % For additional financial information by segment, see Note 11, “Operating Segments” in the notes to our Consolidated Financial Statements.
In addition to our two executive and corporate offices, as of September 30, 2022, we have 19 locations within our Communications business, 77 locations within our Residential business, 13 locations within our Infrastructure Solutions business and 19 locations within our Commercial & Industrial business.
In addition to our 2 executive and corporate offices, as of September 30, 2023, we have 19 locations within our Communications business, 80 locations within our Residential business, 12 locations within our 10 Infrastructure Solutions business and 16 locations within our Commercial & Industrial business.
Prior to becoming President of IES Communications in January 2017, he was the segment’s Vice President of Operations from March 2007 to December 2016 and branch manager of its Arizona operations from 2003 to 2006. Tracy A. McLauchlin , 53, has served as Senior Vice President, Chief Financial Officer and Treasurer of the Company since May 2015.
He served as President of IES Communications from January 2017 to December 2021 and as Vice President of Operations of the segment from March 2007 to December 2016. Tracy A. McLauchlin , 54, has served as Senior Vice President, Chief Financial Officer and Treasurer of the Company since May 2015.
Management at each of our segments is responsible for determining sales strategies and sales activities. CONTROLLING SHAREHOLDER A majority of our outstanding common stock is owned by Tontine Associates, L.L.C. ("Tontine Associates") and its affiliates (collectively, “Tontine”).
CONTROLLING SHAREHOLDER A majority of our outstanding common stock is owned by Tontine Associates, L.L.C. ("Tontine Associates") and its affiliates (collectively, “Tontine”).
Demand in the data center market remains strong, and we continue to provide structured cabling services for applications such as data centers, distribution centers, and high-tech manufacturing facilities. Additionally, we are continuing to expand our offerings in this market to broaden our customer base. Demand has also been strong for our audio-visual and other building technology offerings.
Demand in the data center market remains strong, and we continue to provide structured cabling services for applications such as data centers, distribution centers, and high-tech manufacturing facilities. As technology evolves, we are focused on expanding our capabilities as an integrator of audio-visual and other building technology offerings, which continue to experience strong demand.
CAPITAL FACILITIES During fiscal year 2022, the Company maintained a revolving credit facility, as further described in Item 7. “ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources ” of this Annual Report 9 on Form 10-K. For a discussion of the Company’s capital resources, see Item 7.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources ” of this Annual Report on Form 10-K. For a discussion of the Company’s capital resources, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” of this Annual Report on Form 10-K.
Simmes , 47, has served as Chief Operating Officer of the Company since December 3, 2021. Mr. Simmes has spent 28 years at IES and its predecessors in a variety of roles.
Simmes , 48, was appointed President and Chief Operating Officer of the Company effective December 7, 2023; he previously served as Chief Operating Officer of the Company from December 3, 2021 to December 6, 2023. Mr. Simmes has spent 30 years at IES and its predecessors in a variety of roles.
“ Risk Factors ” of this Annual Report on Form 10-K. CUSTOMERS We have a diverse customer base. During each of the years ended September 30, 2022, 2021 and 2020, no single customer accounted for more than 10% of our consolidated revenues. We emphasize developing and maintaining relationships with our customers by providing superior, high-quality service.
No single customer accounted for more than 10% of our consolidated revenues during each of the years ended September 30, 2022 and 2021. We emphasize developing and maintaining relationships with our customers by providing superior, high-quality service. Management at each of our segments is responsible for determining sales strategies and sales activities.
Our long-term strategy is to continue to be a leading provider of electrical services to the residential market, and to continue to expand our offerings of plumbing and HVAC services.
A significant portion of our Residential business volume is generated from long-term, repeat customers, some of whom use IES as a preferred provider for major projects. Our long-term strategy is to continue to be a leading provider of electrical services to the residential market, and to continue to expand our offerings of plumbing and HVAC services.
We believe that we have all licenses required to conduct our operations and are in material compliance with applicable regulatory requirements. Failure to comply with applicable regulations could result in substantial fines or revocation of our operating licenses or an inability to perform government work.
We believe that we have all licenses required to conduct our operations and are in material compliance with applicable regulatory requirements.
For more information, see Note 3, “Controlling Shareholder” in the notes to our Consolidated Financial Statements.
For more information, see Note 3, “Controlling Shareholder” in the notes to our Consolidated Financial Statements. 8 REMAINING PERFORMANCE OBLIGATIONS AND BACKLOG Remaining performance obligations represent the unrecognized revenue value of our contract commitments.
Tontine owns approximately 57 percent of our outstanding common stock based on a Form 4 filed by Tontine with the United States Securities and Exchange Commission (the "SEC") on December 3, 2021, and the Company's shares outstanding as of December 2, 2022.
Tontine owns approximately 58 percent of our outstanding common stock based on Amendment No. 27 to the Schedule 13D filed by Tontine with the United States Securities and Exchange Commission (the "SEC") on September 8, 2023, and the Company's shares outstanding as of November 30, 2023.
The table below summarizes our remaining performance obligations and backlog by segment: Year Ended September 30, 2022 2021 Remaining Performance Obligations Agreements without an enforceable obligation (1) Backlog Remaining Performance Obligations Agreements without an enforceable obligation (1) Backlog (Dollars in millions) Communications $ 323 $ 63 $ 386 $ 219 $ 37 $ 256 Residential 404 120 524 260 78 338 Infrastructure Solutions 54 121 175 65 63 128 Commercial & Industrial 186 15 201 169 9 178 Total $ 967 $ 319 $ 1,286 $ 713 $ 187 $ 900 (1) Our backlog includes signed agreements and letters of intent that we do not have a legal right to enforce prior to beginning work.
The table below summarizes our remaining performance obligations and backlog by segment: September 30, 2023 2022 Remaining Performance Obligations Agreements without an enforceable obligation (1) Backlog Remaining Performance Obligations Agreements without an enforceable obligation (1) Backlog (Dollars in millions) Communications $ 369,928 $ 42,239 $ 412,167 $ 322,772 $ 63,664 $ 386,436 Residential 414,179 103,657 517,836 404,038 120,119 524,157 Infrastructure Solutions 109,082 240,683 349,765 54,030 120,552 174,582 Commercial & Industrial 250,234 28,010 278,244 186,161 15,113 201,274 Total $ 1,143,423 $ 414,589 $ 1,558,012 $ 967,001 $ 319,448 $ 1,286,449 (1) Our backlog includes signed agreements and letters of intent that we do not have a legal right to enforce prior to beginning work.
HUMAN CAPITAL MANAGEMENT At IES, we believe that attracting and retaining highly qualified and motivated employees at all levels is a key driver of our continued growth and success. Our human capital management objectives include recruiting, retaining, developing, incentivizing and integrating our current and prospective employees as well as prioritizing and protecting their safety.
FINANCIAL INFORMATION For the Company’s financial information by segment, see Note 11, “Operating Segments ” in the notes to our Consolidated Financial Statements. HUMAN CAPITAL MANAGEMENT At IES, we believe that attracting and retaining highly qualified and motivated employees at all levels is a key driver of our continued growth and success.
Our cable and solar revenues are typically generated through third parties specializing in these industries who select us as a preferred provider of installation services. A significant portion of our Residential business volume is generated from long-term, repeat customers, some of whom use IES as a preferred provider for major projects.
Our sales efforts include a variety of strategies, including a concentrated focus on national and regional homebuilders and multi-family developers and a local sales strategy for single and multi-family housing projects. Our cable and solar revenues are typically generated through third parties specializing in these industries who select us as a preferred provider of installation services.
The Texas market also remains an important part of our multi-family business; however, the majority of our multi-family revenue is earned across the Mid-Atlantic and Southeast. Our sales efforts include a variety of strategies, including a concentrated focus on national and regional homebuilders and multi-family developers and a local sales strategy for single and multi-family housing projects.
Although we operate in multiple states, the majority of our single-family revenues are derived from services provided in Texas and Florida. The Texas market also remains an important part of our multi-family business; however, the majority of our multi-family revenue is earned across the Mid-Atlantic and Southeast.
Our Employees At September 30, 2022, we had 8,078 employees, of which 8,028 were full-time employees. We are party to two collective bargaining agreements covering fewer than 30 employees within our Infrastructure Solutions segment. We have not experienced, and do not expect, any work stoppage, and we believe that our relationship with our employees is strong.
Our human capital management objectives include recruiting, retaining, developing, incentivizing and integrating our current and prospective employees as well as prioritizing and protecting their safety. Our Employees At September 30, 2023, we had 8,427 employees, of which 8,357 were full-time employees. We are party to two collective bargaining agreements covering fewer than 40 employees within our Infrastructure Solutions segment.
Removed
Entering fiscal 2023, we expect continued revenue growth in our multi-family business as our strong backlog is expected to offset much of he expected impact of demand weakness in the single-family market, where we typically do not enter into long-term contracts.
Added
Entering fiscal 2024, we are cautious about demand for single-family housing, as higher interest rates on mortgages and the impacts of inflation on materials and labor costs have resulted in a decline in housing affordability. We also expect a slowing in multi-family housing starts, as changing credit conditions have made it more difficult and more expensive to finance new projects.
Removed
NET OPERATING LOSS TAX CARRYFORWARDS The Company and certain of its subsidiaries have an estimated federal net operating loss (“NOL”) of approximately $61.0 million of federal NOLs that are available to use to offset future taxable income, including approximately $55.1 million resulting from net operating losses on which a deferred tax asset is not recorded at September 30, 2022.
Added
“ Risk Factors ” of this Annual Report on Form 10-K. CUSTOMERS We have a diverse customer base. During the year ended September 30, 2023, one customer accounted for 12.0% of our consolidated revenues and no other customer accounted for more than 10% of our consolidated revenues.
Removed
A change in ownership, as defined by Internal Revenue Code Section 382, could reduce the availability of NOLs for federal and state income tax purposes. Should Tontine sell or otherwise dispose of all or a portion of its position in IES, a change in ownership could occur.
Added
Failure to comply with applicable regulations could result in substantial fines or revocation of our operating licenses or an inability to perform government work. 9 CAPITAL FACILITIES During fiscal year 2023, the Company maintained a revolving credit facility, as further described in Item 7.
Removed
In addition, a change in ownership could result from the purchase of common stock by an existing or a new 5% shareholder as defined by Internal Revenue Code Section 382.
Added
We have not experienced, and do not expect, any work stoppage, and we believe that our relationship with our employees is strong.
Removed
Should a change in ownership occur, all NOLs incurred prior to the change in ownership would be subject to limitation imposed by Internal Revenue Code Section 382, which would substantially reduce the amount of NOLs available to offset future taxable income. For more information see Note 3, “Controlling Shareholder” in the notes to our Consolidated Financial Statements.
Removed
REMAINING PERFORMANCE OBLIGATIONS AND BACKLOG Remaining performance obligations represent the unrecognized revenue value of our contract commitments.
Removed
“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” of this Annual Report on Form 10-K. FINANCIAL INFORMATION For the Company’s financial information by segment, see Note 11, “Operating Segments ” in the notes to our Consolidated Financial Statements.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA failure to comply with investor or customer expectations and standards, which are evolving and vary considerably, or the perception that we have not responded appropriately to the growing concern for ESG issues, could result in reputational harm to our business and could have an adverse effect on us. 19 In addition, organizations that provide ratings information to investors on ESG matters may assign unfavorable ratings to IES or our industries, which may lead to negative investor sentiment and the diversion of investment capital to other companies or industries, which could have a negative impact on our stock price and our costs of capital.
Biggest changeA failure to comply with investor or customer expectations and standards, which are evolving and vary considerably, or the perception that we have not responded appropriately to the growing concern for ESG issues, could result in reputational harm to our business and could have an adverse effect on us.
In addition, our ability to secure new contracts depends on our ability to maintain all required electrical, construction, mechanical and business licenses. If we fail to successfully transfer, renew or obtain such licenses where applicable, we may be unable to compete for new business.
In addition, our ability to secure new contracts depends on our ability to maintain all required electrical, construction, mechanical and business licenses. If we fail to successfully transfer, renew or obtain such licenses where applicable, we 12 may be unable to compete for new business.
Other covenants, among other things, limit our ability to provide liens, restrict fundamental changes, limit transactions with affiliates and subsidiaries, restrict changes to our organization documents, limit asset dispositions, limit investments, limit the ability to incur debt, restrict certain payments to shareholders, limit our ability to repurchase our stock, and limit the ability to change the nature of our business.
Other covenants, among other things, limit our ability to provide liens, restrict fundamental changes, limit transactions with affiliates and subsidiaries, restrict changes to our organization documents, limit asset dispositions, limit investments, 17 limit the ability to incur debt, restrict certain payments to shareholders, limit our ability to repurchase our stock, and limit the ability to change the nature of our business.
In the event of a project cancellation, we may be reimbursed for certain costs, but typically have no contractual right to the total revenues reflected in our backlog. 13 We may fail to adequately recover on contract change orders.
In the event of a project cancellation, we may be reimbursed for certain costs, but typically have no contractual right to the total revenues reflected in our backlog. We may fail to adequately recover on contract change orders.
We cannot guarantee that any member of management at the corporate or operating segment level will continue in their capacity for any particular period of time, and there is significant competition in our industry for managerial personnel.
We cannot guarantee that any member of management at the corporate or operating segment level will continue in their capacity for any particular period of time, and there is significant 16 competition in our industry for managerial personnel.
The COVID-19 pandemic and its ongoing impact on markets, the supply chain, and availability of labor has had a number of adverse impacts on our results of operations, and it continues to influence trends affecting our business.
The COVID-19 pandemic and its impact on markets, the supply chain, and availability of labor has had a number of adverse impacts on our results of operations, and it continues to influence trends affecting our business.
Accordingly, our performance in any particular quarter may not be indicative of the results that can be expected for any other quarter or for the entire year. We may experience difficulties in managing our billings and collections.
Accordingly, our performance in any particular quarter may not be indicative of the results that can be expected for any other quarter or for the entire year. 14 We may experience difficulties in managing our billings and collections.
When appropriate, we establish provisions against possible exposures, and we adjust these provisions from time to time, but our assumptions and estimates related to these exposures might prove to be inadequate or inaccurate.
When appropriate, we establish provisions against possible exposures, and we adjust these provisions from time to time, but our 13 assumptions and estimates related to these exposures might prove to be inadequate or inaccurate.
Increasing scrutiny and changing expectations from investors and customers with respect to our environmental, social and governance practices may impose additional costs on us or expose us to reputational or other risks. Investors have increased their emphasis on the environmental, social and governance ("ESG") practices of companies across all industries, including the environmental impact of operations and human capital management.
Increasing scrutiny and changing expectations from investors and customers with respect to our environmental, social and governance practices may impose additional costs on us or expose us to reputational or other risks. Investors have increased their emphasis on the environmental, social and governance (“ESG”) practices of companies across all industries, including the environmental impact of operations and human capital management.
The impact of the COVID-19 pandemic or any future epidemics or pandemics on our business is difficult to predict, but adverse impacts could include the potential for job site closures or work stoppages, supply chain disruptions, delays in awarding new project bids, construction delays, reduced demand for our services, delays in our ability to collect from our customers, or illness of management or other employees.
The impact of the COVID-19 pandemic or any future epidemics, pandemics or other public health emergencies on our business is difficult to predict, but adverse impacts could include the potential for job site closures or work stoppages, supply chain disruptions, delays in awarding new project bids, construction delays, reduced demand for our services, delays in our ability to collect from our customers, or illness of management or other employees.
Our common stock has less liquidity than many other stocks listed on the Nasdaq Global Market. Historically, the trading volume of our common stock has been relatively low when compared to other companies listed on the N asdaq Global Market or other stock exchanges.
Our common stock has less liquidity than many other stocks listed on the Nasdaq Global Market. Historically, the trading volume of our common stock has been relatively low when compared to other companies listed on the Nasdaq Global Market or other stock exchanges.
Because of the inherent limitations in a cost-effective control system, misstatements due to error could occur without being detected. Item 1B. Unresolved Staff Comments None.
Because of the inherent limitations in a control system, misstatements due to error could occur without being detected. Item 1B. Unresolved Staff Comments None.
If a taxing authority differs with our tax positions, our results may be adversely affected. Our effective tax rate, cash paid for taxes and the availability of our NOLs are impacted by the tax positions that we have adopted. Taxing authorities may not always agree with the positions we have taken.
If a taxing authority differs with our tax positions, our results may be adversely affected. Our effective tax rate and cash paid for taxes are impacted by the tax positions that we have adopted. Taxing authorities may not always agree with the positions we have taken.
Subject to applicable N asdaq Listing Rules, our Board of Directors generally has the authority, without action by or vote of the stockholders, to issue all or part of any authorized but unissued shares of common stock or preferred stock for any corporate purpose.
Subject to applicable Nasdaq Listing Rules, our Board of Directors generally has the authority, without action by or vote of the stockholders, to issue all or part of any authorized but unissued shares of common stock or preferred stock for any corporate purpose.
Certain stockholders use third-party benchmarks or scores to measure a company’s ESG practices and decide whether to invest in its common stock or engage with the company to require changes to its practices. In addition, our customers may evaluate our ESG practices or require that we adopt certain ESG policies as a condition of awarding contracts.
Certain stockholders use third-party benchmarks or scores to measure a company’s ESG practices when deciding whether to invest in its common stock or engage with the company to require changes to its practices. In addition, our customers may evaluate our ESG practices or require that we adopt certain ESG policies as a condition of awarding contracts.
Alternatively, our failure to diversify from existing markets may limit our future growth. In addition, we have made, and may continue to make, strategic investments in debt or equity securities of publicly traded and privately held companies, including early-stage companies and more established companies.
Alternatively, our failure to diversify from existing markets may limit our future growth. In addition, we have made, and may continue to make, strategic investments in debt or equity securities of publicly traded and privately held companies, including early-stage companies and more established companies. We are subject to risks associated with these investments.
Hazards related to our industry include, but are not limited to, electrocutions, fires, injuries involving ladders, machinery-caused injuries, mechanical failures and transportation accidents. These hazards can cause personal injury and loss of life, severe damage to or destruction of property and equipment, and suspension of operations. Our insurance does not cover all types or amounts of liabilities.
Hazards related to our industry include, but are not limited to, electrocutions, fires, injuries involving ladders, machinery-caused injuries, mechanical failures and transportation accidents. These hazards can cause personal injury and loss of life, severe damage to or destruction of property and equipment, and suspension of operations.
Negative conditions in the credit and capital markets may adversely impact our ability to operate our business. 17 In the past, the level of demand from our customers for our services has been adversely impacted by slowdowns in our customers' industries as well as in the economy in general.
Risks Relating to our Financial Results, Financing and Liquidity Negative conditions in the credit and capital markets may adversely impact our ability to operate our business. In the past, the level of demand from our customers for our services has been adversely impacted by slowdowns in our customers' industries as well as in the economy in general.
At September 30, 2022, we had recorded $92 million of goodwill on our Consolidated Balance Sheets.
At September 30, 2023, we had recorded $92.4 million of goodwill on our Consolidated Balance Sheets.
If clients delay in paying or fail to pay a significant amount of our outstanding receivables, or we fail to successfully negotiate a significant portion of our change orders and/or claims with customers, it could have an adverse effect on our liquidity, results of operations, and financial position.
If clients delay in paying or fail to pay a significant amount of our outstanding receivables, or we fail to successfully negotiate a significant portion of our change orders and/or claims with customers, it could have an adverse effect on our liquidity, results of operations, and financial position. We have adopted tax positions that a taxing authority may view differently.
Further, valuations of non-marketable debt and equity investments are inherently complex due to the lack of readily available market data.
Further, valuations of non-marketable debt and equity investments are inherently complex due to the lack of readily available market data and may involve subjective judgments and estimates.
We are subject to risks associated with these investments, including the inability to dispose of these investments due to lack of an active market for or contractual limitations on our ability to sell a particular investment, and the partial or complete loss of invested capital, and significant changes in the fair value of our investment portfolio could adversely impact our financial results.
In addition, we may have limited ability to dispose of these investments due to lack of an active market for or contractual limitations on our ability to sell a particular investment, and the partial or complete loss of invested capital, and significant changes in the fair value of our investment portfolio could adversely impact our financial results.
Tontine’s sale of all or any portion of its shares could result in a change of control of the Company, which would trigger the change of control provisions in a number of our material agreements, including our credit agreement, bonding agreements with our sureties, and our executive severance plan, and could trigger limitations on the availability of our NOLs under Internal Revenue Code Section 382.
Tontine’s sale of all or any portion of its shares could result in a change of control of the Company, which would trigger the change of control provisions in a number of our material agreements, including our credit agreement, bonding agreements with our sureties, and our executive severance plan.
We have a work force of over 8,000 employees, and our labor costs may fluctuate based on availability of and demand for workers as well as other labor related risks, including risks related to collective bargaining agreements, benefits arrangements, wage and hour claims and other compensation arrangements. 12 A failure to secure new contracts may adversely affect our cash flows and financial results.
We have a work force of over 8,000 employees, and our labor costs may fluctuate based on availability of and demand for workers as well as other labor related risks, including risks related to collective bargaining agreements, benefits arrangements, wage and hour claims and other compensation arrangements.
The COVID-19 pandemic has adversely impacted, and could have a future materially adverse impact on, our business, including our financial condition, cash flows and results of operations.
The COVID-19 pandemic has adversely impacted our business, and this pandemic, along with other potential public health emergencies, could have a future materially adverse impact on our business, including our financial condition, cash flows and results of operations.
To the extent climate change results in an increase in extreme weather events and adverse weather conditions, the likelihood of a negative impact on our results of operations may increase. 14 Due to differing regional economic conditions, our results may fluctuate from period to period.
To the extent climate change results in an increase in extreme weather events and adverse weather conditions, the likelihood of a negative impact on our results of operations may increase. Due to differing regional economic conditions, our results may fluctuate from period to period. Our quarterly results may also be affected by regional economic conditions that affect the construction market.
General Risks Our internal controls over financial reporting and our disclosure controls and procedures may not prevent all possible errors that could occur. Internal controls over financial reporting and disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objective will be met.
Internal controls over financial reporting and disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objective will be met.
Our quarterly results may also be affected by regional economic conditions that affect the construction market. In particular, a prolonged period of weak demand in the oil and gas industry or increased regulatory restrictions on the industry could dampen the housing market in certain regions, resulting in reduced demand for the services provided by our Residential segment.
In particular, a prolonged period of weak demand in the oil and gas industry or increased regulatory restrictions on the industry could dampen the housing market in certain regions, resulting in reduced demand for the services provided by our Residential segment.
While the exclusive forum provision applies to state and federal law claims, our shareholders will not be deemed to have waived our compliance with, and the exclusive forum provision will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under, the federal securities laws, including the Exchange Act, or the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
While the exclusive forum provision applies to state and federal law claims, our shareholders will not be deemed to have waived our compliance with, and the exclusive forum provision will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under, the federal securities laws, including the Exchange Act, or the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 19 General Risks Our internal controls over financial reporting and our disclosure controls and procedures may not prevent all possible errors that could occur.
Much of our revenue is derived from projects that are awarded through a competitive bid process. Contract bidding and negotiations are affected by a number of factors, including our own cost structure and bidding policies.
A failure to secure new contracts may adversely affect our cash flows and financial results. Much of our revenue is derived from projects that are awarded through a competitive bid process. Contract bidding and negotiations are affected by a number of factors, including our own cost structure and bidding policies.
Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies, could increase the costs of projects for us or our customers, potentially resulting in reduced profitability or a reduced demand for our services, or require us to incur substantial costs of compliance. 16 The loss of a group or several key personnel, either at the corporate or operating level, or general labor constraints could adversely affect our business.
Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies, could increase the costs of projects for us or our customers, potentially resulting in reduced profitability or a reduced demand for our services, or require us to incur substantial costs of compliance.
Changes in law, regulations or requirements, or a material failure to comply with any of them, could increase our costs and have other negative impacts on our business by, among other things, increasing costs, harming our reputation and, in some instances, causing us to be in violation of our contractual obligations.
Changes in law, regulations or requirements, or a material failure to comply with any of them, could increase our costs and have other negative impacts on our business by, among other things, increasing costs, harming our reputation and, in some instances, causing us to be in violation of our contractual obligations. 15 Disruptions to the proper functioning of our information technology systems or security breaches of our critical data, sensitive information or information technology systems could disrupt operations and cause increases in costs, decreases in revenues and/or harm to our reputation.
Latent defect litigation is normal for residential home builders in some parts of the country, as well as in certain areas of the commercial market.
Latent defect litigation is normal for residential home builders in some parts of the country, as well as in certain areas of the commercial market. Any increases in our latent defect claims and litigation could place pressure on the profitability of the Residential and Commercial & Industrial segments of our business.
However, there may be periods of time in which a disproportionate amount of our claims and litigation are concluded in the same quarter or year. If multiple matters are resolved during a given period, then the cumulative effect of these matters may be higher than the ordinary level in any one reporting period.
If multiple matters are resolved during a given period, then the cumulative effect of these matters may be higher than the ordinary level in any one reporting period.
As of September 30, 2022, we had 22,049,529 shares of common stock issued, 20,341,900 shares of common stock outstanding and no shares of preferred stock issued or outstanding. As of September 30, 2022, we had the ability to issue 713,058 shares of common stock, including upon the exercise of options, as future grants under our existing equity compensation plans.
As of September 30, 2023, we had the ability to issue 619,735 shares of common stock, including upon the exercise of options, as future grants under our existing equity compensation plans.
The loss of key personnel or the inability to hire and retain qualified employees could have an adverse effect on our business, financial condition and results of operations. Our operations depend on the continued efforts of our executive officers, senior management and management personnel at our segments.
The loss of a group or several key personnel, either at the corporate or operating level, or general labor constraints could adversely affect our business. The loss of key personnel or the inability to hire and retain qualified employees could have an adverse effect on our business, financial condition and results of operations.
Any increases in our latent defect claims and litigation could place pressure on the profitability of the Residential and Commercial & Industrial segments of our business. 15 Regulatory requirements could result in significant compliance costs and liabilities. We have operations throughout the United States and are subject to multiple state and local regulations.
Regulatory requirements could result in significant compliance costs and liabilities. We have operations throughout the United States and are subject to multiple state and local regulations. In addition, our segments, particularly our Commercial & Industrial segment, may be subject to federal laws and requirements applicable to government contractors.
Although no single customer represented more than ten percent of our consolidated revenue in fiscal 2022, we do have certain customers that are significant to our individual operating segments.
One customer represented approximately 12.0% of our consolidated revenue in fiscal 2023, and we have certain other customers that are also significant to our individual operating segments.
We may issue additional shares of common stock, preferred stock or convertible securities that will dilute the percentage ownership interest of existing stockholders and may dilute the book value per share of our common stock. Our authorized capital includes 100,000,000 shares of common stock and 10,000,000 shares of preferred stock.
Because of this, it may be more difficult for shareholders to sell a substantial number of shares for the same price at which shareholders could sell a smaller number of shares. 18 We may issue additional shares of common stock, preferred stock or convertible securities that will dilute the percentage ownership interest of existing stockholders and may dilute the book value per share of our common stock.
In addition, our segments, particularly our Commercial & Industrial segment, may be subject to federal laws and requirements applicable to government contractors. Our 130 locations are located in 27 states, which exposes us to a variety of different state and local laws and regulations, particularly those pertaining to electrical contractor and other licensing requirements.
Our 129 locations are located in 28 states, which exposes us to a variety of different state and local laws and regulations, including those pertaining to electrical contractor and other licensing requirements. These laws and regulations govern many aspects of our business, and there are often different standards and requirements in different locations.
Tontine owns approximately 57 percent of the Company’s outstanding common stock based on a Form 4 filed by Tontine with the SEC on December 3, 2021, and the Company's 18 shares outstanding as of December 2, 2022.
Tontine owns approximately 58 percent of the Company’s outstanding common stock based on Amendment No. 27 to the Schedule 13D filed by Tontine with the SEC on September 8, 2023, and the Company's shares outstanding as of November 30, 2023.
Claims are sometimes made and lawsuits filed for amounts in excess of their value or in excess of the amounts for which they are eventually resolved. Claims and litigation normally follow a predictable course of time to resolution.
We also have in the past been, and may in the future be, subject to employment-related claims including workers' compensation, employment discrimination, and wage and hour claims. Claims are sometimes made and lawsuits filed for amounts in excess of their value or in excess of the amounts for which they are eventually resolved.
We continue to experience increased prices, longer delivery times, or limited availability for certain materials necessary for our projects, notably copper, aluminum, steel, electrical components, fuel, and certain plastics.
Although supply of most raw materials normalized during fiscal 2023, we may continue to experience increased prices or longer delivery times for certain materials necessary for our projects.
Removed
These laws and regulations govern many aspects of our business, and there are often different standards and requirements in different locations.
Added
While we have taken what we believe are appropriate precautions to minimize safety risks, we have experienced serious accidents in the past and may experience additional accidents in the future. Serious accidents may subject us to penalties, civil litigation or criminal prosecution. Our insurance does not cover all types or amounts of liabilities.
Removed
Disruptions to the proper functioning of our information technology systems or security breaches of our critical data, sensitive information or information technology systems could disrupt operations and cause increases in costs, decreases in revenues and/or harm to our reputation.
Added
Claims and litigation normally follow a predictable course of time to resolution. However, there may be periods of time in which a disproportionate amount of our claims and litigation are concluded in the same quarter or year.
Removed
Risks Relating to our Financial Results, Financing and Liquidity Availability of net operating losses may be reduced by a change in ownership. A change in ownership, as defined by Internal Revenue Code Section 382, could reduce the availability of NOLs for federal and state income tax purposes.
Added
In addition, data privacy laws and regulations governing the unauthorized disclosure of confidential information may pose compliance challenges and result in additional costs for our businesses. A failure to comply with such laws and regulations could result in penalties or fines, legal liabilities or reputational harm.
Removed
Should Tontine sell or otherwise dispose of all or a portion of its position in IES, a change in ownership could occur. A change in ownership could also result from the purchase of common stock by an existing or a new 5% shareholder as defined by Internal Revenue Code Section 382.
Added
Our operations depend on the continued efforts of our executive officers, senior management and management personnel at our segments.
Removed
As of September 30, 2022, we have approximately $61.0 million of federal NOLs that are available to use to offset future taxable income, including approximately $55.1 million resulting from net operating losses on which a deferred tax asset is not recorded.
Added
Our authorized capital includes 100,000,000 shares of common stock and 10,000,000 shares of preferred stock. As of September 30, 2023, we had 22,049,529 shares of common stock issued, 20,194,218 shares of common stock outstanding and no shares of preferred stock issued or outstanding.
Removed
Should a change in ownership occur, all NOLs incurred prior to the change in ownership would be subject to limitation imposed by Internal Revenue Code Section 382, which would substantially reduce the amount of NOLs currently available to offset taxable income. We have adopted tax positions that a taxing authority may view differently.
Added
In addition, organizations that provide ratings information to investors on ESG matters may assign unfavorable ratings to IES or our industries, which may lead to negative investor sentiment and the diversion of investment capital to other companies or industries, which could have a negative impact on our stock price and our costs of capital.
Removed
Because of this, it may be more difficult for shareholders to sell a substantial number of shares for the same price at which shareholders could sell a smaller number of shares.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties At September 30, 2022, we maintained branch offices, warehouses, sales facilities and administrative offices at 130 locations. The majority of our facilities are leased. We lease our executive office located in Greenwich, Connecticut and our corporate office located in Houston, Texas.
Biggest changeItem 2. Properties At September 30, 2023, we maintained branch offices, warehouses, sales facilities and administrative offices at 129 locations. The majority of our facilities are leased. We lease our executive office located in Greenwich, Connecticut and our corporate office located in Houston, Texas.
We believe that our properties are adequate for our current needs and that suitable additional or replacement space will be available as required. For a breakdown of our offices by segment, see Item 1. “ Business —Operating Segments ” of this Annual Report on Form 10-K. 20
We believe that our properties are adequate for our current needs and that suitable additional or replacement space will be available as required. For a breakdown of our offices by segment, see Item 1. “ Business —Operating Segments ” of this Annual Report on Form 10-K.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table presents information with respect to purchases of common stock by the Company during the three months ended September 30, 2022: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan Maximum Number of Shares That May Yet Be Purchased Under the Publicly Announced Plan as of September 30, 2022 July 1, 2022 – July 31, 2022 88,092 $30.86 88,092 536,639 August 1, 2022 – August 31, 2022 48,939 $32.47 48,939 487,700 September 1, 2022 – September 30, 2022 129,680 $28.90 129,680 358,020 Total 266,711 $30.20 266,711 358,020 Five-Year Stock Performance Graph The graph below compares the cumulative five year total return provided shareholders on IES Holdings, Inc.'s common stock relative to the cumulative total returns of the Russell 2000 index and a customized peer group of four companies that includes Comfort Systems USA Inc., MYR Group Inc., Sterling Construction Company Inc. and Primoris (collectively, the "Peer Group").
Biggest changeThe following table presents information with respect to purchases of common stock by the Company during the three months ended September 30, 2023 : Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan Maximum Dollar Value of Shares That May Yet Be Purchased Under the Publicly Announced Plan July 1, 2023 – July 31, 2023 — $— — $ 37,588,964 August 1, 2023 – August 31, 2023 — $— — $ 37,588,964 September 1, 2023 – September 30, 2023 1,063 $65.87 — $ 37,588,964 Total 1,063 $65.87 — $ 37,588,964 21 Five-Year Stock Performance Graph The graph below compares the cumulative five year total return provided shareholders on IES Holdings, Inc.'s common stock relative to the cumulative total returns of the Russell 2000 index and a customized peer group of four companies that includes Comfort Systems USA Inc., MYR Group Inc., Sterling Infrastructure, Inc. and Primoris (collectively, the “Peer Group”).
Item 5. Market for Registrant’s Common Equity; Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the N asdaq Global Market under the ticker symbol “IESC.” As of December 2, 2022, the closing market price of our common stock was $34.50 per share and there were approximately 321 holders of record.
Item 5. Market for Registrant’s Common Equity; Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the Nasdaq Global Market under the ticker symbol “IESC.” As of November 30, 2023, the closing market price of our common stock was $69.97 per share and there were approximately 339 holders of record.
During the year ended September 30, 2022, we repurchased 511,600 shares of common stock at an average price of $32.02 per share for a total aggregate purchase price of $16.4 million. The Company had 358,020 shares remaining under its stock repurchase authorization at September 30, 2022.
During the year ended September 30, 2023 , we repurchased 224,013 shares of common stock at an average price of $31.06 per share for a total aggregate purchase price of $7.0 million . The Company had $37.6 million remaining under its stock repurchase authorization at September 30, 2023.
S hare purchases are made for cash in open market transactions at prevailing market prices or in privately negotiated transactions or otherwise. The timing and amount of purchases under the program are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
The timing and amount of purchases under the program are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in the Russell 2000 index, and in the peer group on September 30, 2017, and its relative performance is tracked through September 30, 2022 . 22 Comparison of Five Year Cumulative Total Return* Among IES Holdings, Inc., the Russell 2000 Index, and a Peer Group *$100 invested on 9/30/17 in stock or index, including reinvestment of dividends.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in the Russell 2000 index, and in the peer group on September 30, 2018, and its relative performance is tracked through September 30, 2023.
In December 2022, our Board of Directors terminated our previous share repurchase program and authorized a new $40 million share repurchase program.
In December 2022, our Board of Directors terminated our previous stock repurchase program and authorized a new $40 million stock repurchase program. S hare purchases are made for cash in open market transactions at prevailing market prices or in privately negotiated transactions or otherwise.
Year Ended September 30, 2017 2018 2019 2020 2021 2022 IES Holdings, Inc. $ 100.00 112.72 119.02 183.64 264.10 159.65 Russell 2000 100.00 115.24 105.00 105.40 155.66 119.08 Peer Group 100.00 112.56 96.88 107.98 195.85 193.22
Year Ended September 30, 2018 2019 2020 2021 2022 2023 IES Holdings, Inc. $ 100.00 $ 105.59 $ 162.92 $ 234.31 $ 141.64 $ 337.79 Russell 2000 100.00 91.11 91.47 135.08 103.33 112.56 Peer Group 100.00 86.68 95.08 173.71 164.32 344.56 22
Added
Comparison of Five Year Cumulative Total Return* Among IES Holdings, Inc., the Russell 2000 Index, and a Peer Group *$100 invested on September 30, 2018 in stock or index, including reinvestment of dividends.

Item 7. Management's Discussion & Analysis

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

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Biggest changeYear Ended September 30, 2022 2021 2020 $ % $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 2,166,808 100.0 % $ 1,536,493 100.0 % $ 1,190,856 100.0 % Cost of services 1,847,878 85.3 % 1,248,495 81.3 % 962,897 80.9 % Gross profit 318,930 14.7 % 287,998 18.7 % 227,959 19.1 % Selling, general and administrative expenses 262,714 12.1 % 202,251 13.2 % 170,911 14.4 % Goodwill impairment expense — — % — — % 6,976 0.7 % Contingent consideration 277 — % 211 — % (11) — % Gain on sale of assets (69) — % (47) — % — — % Operating income 56,008 2.6 % 85,583 5.6 % 50,083 4.2 % Interest and other expense, net 3,007 0.1 % 676 — % 789 0.1 % Operating income before income taxes 53,001 2.4 % 84,907 5.5 % 49,294 4.1 % Provision for income taxes 12,815 0.6 % 16,231 1.1 % 8,740 0.7 % Net income 40,186 1.9 % 68,676 4.5 % 40,554 3.4 % Net (income) loss attributable to noncontrolling interest (5,424) (0.3) % (2,018) (0.1) % 1,045 0.1 % Net income attributable to IES Holdings, Inc. $ 34,762 1.6 % $ 66,658 4.3 % $ 41,599 3.5 % 2022 Compared to 2021 Consolidated revenues for the year ended September 30, 2022, were $630.3 million higher than for the year ended September 30, 2021, an increase of 41.0%, with increases at all four of our operating segments, driven by strong demand and the contribution of businesses acquired in fiscal 2021.
Biggest changeYear Ended September 30, 2023 2022 2021 $ % $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 2,377,227 100.0 % $ 2,166,808 100.0 % $ 1,536,493 100.0 % Cost of services 1,932,688 81.3 % 1,847,878 85.3 % 1,248,495 81.3 % Gross profit 444,539 18.7 % 318,930 14.7 % 287,998 18.7 % Selling, general and administrative expenses 298,625 12.6 % 262,714 12.1 % 202,251 13.2 % Contingent consideration 277 — % 277 — % 211 — % Gain on sale of assets (14,139) (0.6) % (69) — % (47) — % Operating income 159,776 6.7 % 56,008 2.6 % 85,583 5.6 % Interest and other expense, net 1,228 0.1 % 3,007 0.1 % 676 — % Operating income before income taxes 158,548 6.7 % 53,001 2.4 % 84,907 5.5 % Provision for income taxes 38,761 1.6 % 12,815 0.6 % 16,231 1.1 % Net income 119,787 5.0 % 40,186 1.9 % 68,676 4.5 % Net income attributable to noncontrolling interest (11,499) (0.5) % (5,424) (0.3) % (2,018) (0.1) % Net income attributable to IES Holdings, Inc. $ 108,288 4.6 % $ 34,762 1.6 % $ 66,658 4.3 % 2023 Compared to 2022 Consolidated revenues for the year ended September 30, 2023, were $210.4 million higher than for the year ended September 30, 2022, an increase of 9.7%, with increases at our Communications, Residential and Infrastructure Solutions operating segments, partially offset by a decrease at our Commercial & Industrial segment.
Net cash provided by financing activities for the year ended September 30, 2022 included net borrowing on our credit facility of $42.3 million, partly offset by $18.6 million used for repurchase of our common stock, including repurchases to satisfy statutory withholding requirements upon the vesting of employee stock compensation.
Net cash provided by financing activities for the year ended September 30, 2022 included net borrowing on our credit facility of $42.3 million, partly offset by $18.6 million used for the repurchase of our common stock, including repurchases to satisfy statutory withholding requirements upon the vesting of employee stock compensation.
Our Fixed Charge Coverage Ratio is calculated as follows (with capitalized terms as defined in the Amended Credit Agreement): (i) our trailing twelve month EBITDA, less Non-Financed Capital Expenditures (other than capital expenditures financed by means of an advance under the credit facility), cash taxes and all Restricted Junior Payments consisting of certain Pass-Through Tax Liabilities, divided by (ii) the sum of our cash interest (other than interest paid-in-kind, amortization of financing fees, and other non-cash interest expense) and principal debt payments (other than repayment of principal on advances under the credit facility and including cash payments with respect to capital leases), any management, consulting, monitoring, and advisory fees paid to an affiliate, and all Restricted Junior Payments (other than Pass-Through Tax Liabilities) and other cash distributions; provided, that if we make an acquisition consented to by our lenders, the components of the Fixed Charge Coverage Ratio will be calculated for such fiscal period after giving pro forma effect to the acquisition assuming that such transaction has occurred on the first day of such period (including pro forma adjustments arising out of events which are directly attributable to such acquisition, are factually supportable, and are expected to have a continuing impact, in each case to be reasonably agreed to by our lenders). 33 As defined in the Amended Credit Agreement, EBITDA is calculated as consolidated net income (or loss), less extraordinary gains, interest income, non-operating income and income tax benefits and decreases in any change in LIFO reserves, plus stock compensation expense, non-cash extraordinary losses (including, but not limited to, a non-cash impairment charge or write-down), Interest Expense, income taxes, depreciation and amortization, and increases in any change in LIFO reserves for such period, determined on a consolidated basis in accordance with GAAP.
Our Fixed Charge Coverage Ratio is calculated as follows (with capitalized terms as defined in the Amended Credit Agreement): (i) our trailing twelve month EBITDA, less Non-Financed Capital Expenditures (other than capital expenditures financed by means of an advance under the credit facility), cash taxes and all Restricted Junior Payments consisting of certain Pass-Through Tax Liabilities, divided by (ii) the sum of our cash interest (other than interest paid-in-kind, amortization of financing fees, and other non-cash interest expense) and principal debt payments (other than repayment of principal on advances under the credit facility and including cash payments with respect to capital leases), any management, consulting, monitoring, and advisory fees paid to an affiliate, and all Restricted Junior Payments (other than Pass-Through Tax Liabilities) and other cash distributions; provided, that if we make an acquisition consented to by our lenders, the components of the Fixed Charge Coverage Ratio will be calculated for such fiscal period after giving pro forma effect to the acquisition assuming that such transaction has occurred on the first day of such period (including pro forma adjustments arising out of events which are directly attributable to such acquisition, are factually supportable, and are expected to have a continuing impact, in each case to be reasonably agreed to by our lenders). 32 As defined in the Amended Credit Agreement, EBITDA is calculated as consolidated net income (or loss), less extraordinary gains, interest income, non-operating income and income tax benefits and decreases in any change in LIFO reserves, plus stock compensation expense, non-cash extraordinary losses (including, but not limited to, a non-cash impairment charge or write-down), Interest Expense, income taxes, depreciation and amortization, and increases in any change in LIFO reserves for such period, determined on a consolidated basis in accordance with GAAP.
In particular, the markets in which we operate are exposed to many regional and national trends such as the demand for single and multi-family housing, the need for mission 23 critical facilities as a result of technology-driven advancements, capital spending on data centers, distribution centers, and high-tech manufacturing facilities, demand for back-up power, output levels and equipment utilization at heavy industrial facilities, demand for our rail and infrastructure services and custom engineered products, and changes in commercial, institutional, public infrastructure and electric utility spending.
In particular, the markets in which we operate are exposed to many regional and national trends such as the demand for single and multi-family housing, the need for mission critical facilities as a result of technology-driven advancements, capital spending on data centers, distribution centers, and high-tech manufacturing facilities, demand for back-up power, output levels and equipment utilization at heavy industrial facilities, demand for our rail and infrastructure services and custom engineered products, and changes in commercial, institutional, public infrastructure and electric utility spending.
However, there can be no assurance that we will not experience a decrease in demand for our services due to economic, technological or other factors beyond our control, including interest rate changes, increases in the price of copper, aluminum, steel, fuel, electrical components, certain plastics, and other commodity prices and other economic factors, which may reduce the demand for housing in the regions where our Residential division operates, and may impact levels of construction.
However, there can be no assurance that we will not experience a decrease in demand for our services due to economic, technological or other factors beyond our control, including interest rate increases, increases in the price of copper, aluminum, steel, fuel, electrical components, certain plastics, and other commodity prices and other economic factors, which may reduce the demand for housing in the regions where our Residential division operates, and may impact levels of construction.
Our Infrastructure Solutions segment’s gross profit for the year ended September 30, 2022, decreased by $12.3 million, as compared to the year ended September 30, 2021, reflecting the impact of supply chain disruptions on our generator enclosure business, COVID-19 related labor inefficiencies, and operating inefficiencies in connection with the relocation of the Wedlake business to a new, larger facility that expands capacity while allowing for improved workflow and process efficiency.
Our Infrastructure Solutions segment’s gross profit for the year ended September 30, 2022, decreased by $12.3 million, as compared to the year ended September 30, 2021, reflecting the impact of supply chain disruptions on our generator enclosure 28 business, COVID-19 related labor inefficiencies, and operating inefficiencies in connection with the relocation of the Wedlake business to a new, larger facility that expands capacity while allowing for improved workflow and process efficiency.
When significant pre‑contract costs are incurred, they will be capitalized and amortized on a percentage of completion basis over the life of the contract. The current asset “Costs and estimated earnings in excess of billings” represents revenues recognized in excess of amounts billed that management believes will be billed and collected within the next twelve months.
When significant pre‑contract costs are incurred, they will be capitalized and amortized on a percentage of completion basis over the life of the contract. 35 The current asset “Costs and estimated earnings in excess of billings” represents revenues recognized in excess of amounts billed that management believes will be billed and collected within the next twelve months.
This reversal is predominantly due to the expiration of the statutes of limitation for unrecognized tax benefits. New Accounting Pronouncements. Recent accounting pronouncements are described in Note 2, “Summary of Significant Accounting Policies — New Accounting Pronouncements ” in the notes to our Consolidated Financial Statements and at relevant sections in this discussion and analysis. 37
This reversal is predominantly due to the expiration of the statutes of limitation for unrecognized tax benefits. New Accounting Pronouncements. Recent accounting pronouncements are described in Note 2, “Summary of Significant Accounting Policies — New Accounting Pronouncements ” in the notes to our Consolidated Financial Statements and at relevant sections in this discussion and analysis.
Inclusive of these acquired businesses, revenue in our single-family business increased by $371.1 million for the year ended September 30, 2022, compared to the year ended September 30, 2021, while multi-family and other revenue increased by $73.0 million. 27 Gross Profit.
Inclusive of these acquired businesses, revenue in our single-family business increased by $371.1 million for the year ended September 30, 2022, compared to the year ended September 30, 2021, while multi-family and other revenue increased by $73.0 million. Gross Profit.
Approximately 10% of our revenues are earned from contracts where we are paid on a time and materials basis. Our most significant cost drivers are the cost of labor and materials. These costs may vary from the costs we originally estimated.
Approximately 10.2% of our revenues are earned from contracts where we are paid on a time and materials basis. Our most significant cost drivers are the cost of labor and materials. These costs may vary from the costs we originally estimated.
As of September 30, 2022, we were in compliance with the financial covenants under the Amended Credit Agreement, requiring that we maintain: • a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement), measured quarterly on a trailing four-quarter basis at the end of each quarter, of at least 1.1 to 1.0; and • minimum Liquidity of at least 10% of the Maximum Revolver Amount, or $15.0 million; with, for purposes of this covenant, at least 50% of our Liquidity comprised of Excess Availability (as defined in the Amended Credit Agreement).
As of September 30, 2023, we were in compliance with the financial covenants under the Amended Credit Agreement, requiring that we maintain: • a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement), measured quarterly on a trailing four-quarter basis at the end of each quarter, of at least 1.1 to 1.0; and • minimum Liquidity of at least 10% of the Maximum Revolver Amount, or $15.0 million; with, for purposes of this covenant, at least 50% of our Liquidity comprised of Excess Availability (as defined in the Amended Credit Agreement).
Our Communications segment’s selling, general and administrative expenses increased $5.3 million, or 12.9% during the year ended September 30, 2022, as compared to the year ended September 30, 2021. The increase is a result of higher personnel cost in connection with the growth of our business, as well as higher wages in an increasingly competitive labor market.
Our Communications segment’s selling, general and administrative expenses increased $5.3 million, or 12.9% during the year ended September 30, 2022, as compared to the year ended September 30, 2021. The increase is a result of higher personnel costs in connection with the growth of our business, as well as higher wages in an increasingly competitive labor market.
Business Outlook While there are differences among the Company’s segments, on an overall basis, increased demand for the Company’s services and the Company’s previous investment in growth initiatives and other business-specific factors discussed below resulted in aggregate year-over-year revenue growth in fiscal 2022 as compared to fiscal 2021.
Business Outlook While there are differences among the Company’s segments, on an overall basis, increased demand for the Company’s services and the Company’s previous investment in growth initiatives and other business-specific factors discussed below resulted in aggregate year-over-year revenue growth in fiscal 2023 as compared to fiscal 2022.
If our sureties decline to issue bonds for our work, our alternatives would include posting other forms of collateral for project performance, such as letters of credit or cash, seeking bonding capacity from other sureties, or engaging in more projects that do not require surety bonds.
If our sureties decline to issue bonds for our work, our alternatives will include posting other forms of collateral for project performance, such as letters of credit or cash, seeking bonding capacity from other sureties, or engaging in more projects that do not require surety bonds.
In addition, any reduction in the federal statutory tax rate in the future could also cause a reduction in the economic benefit of the NOL available to us and a corresponding charge to reduce the book value of the deferred tax asset recorded on our Consolidated Balance Sheets. Income Taxes.
In addition, any reduction in the federal statutory tax rate in the future could also cause a reduction in the economic benefit of the deferred tax assets available to us and a corresponding charge to reduce the book value of the deferred tax asset recorded on our Consolidated Balance Sheets. Income Taxes.
Supply chain challenges and workforce disruptions related to COVID-19 have also continued to affect project efficiency. Finally, we continue to invest in hiring and training personnel, particularly in estimating and project management, to grow the business. Selling, General and Administrative Expenses.
Supply chain challenges and workforce disruptions related to COVID-19 also continued to affect project efficiency. Finally, we continued to invest in hiring and training personnel, particularly in estimating and project management, to grow the business. Selling, General and Administrative Expenses.
Although the terms of our contracts vary considerably, approximately 90% of our revenues are based on either a fixed price or unit price basis in which we agree to do the work for a fixed amount for the entire project (fixed price) or for units of work performed (unit price).
Although the terms of our contracts vary considerably, approximately 89.8% of our revenues are based on either a fixed price or unit price basis in which we agree to do the work for a fixed amount for the entire project (fixed price) or for units of work performed (unit price).
The remaining increase was driven by higher personnel cost in connection with business growth, including incentive profit sharing for division management.
The remaining increase was driven by higher personnel costs in connection with business growth, including incentive profit sharing for division management.
The tax years ended September 30, 2019 and forward are subject to federal audit as are prior tax years, to the extent of unutilized net operating losses generated in those years. We anticipate that approximately $0.2 million in liabilities for unrecognized tax benefits, including accrued interest, may be reversed in the next twelve months.
The tax years ended September 30, 2020 and forward are subject to federal audit as are prior tax years, to the extent of unutilized net operating losses generated in those years. We anticipate that approximately $6.6 million in liabilities for unrecognized tax benefits, including accrued interest, may be reversed in the next twelve months.
Residential 2022 Compared to 2021 Year Ended September 30, 2022 2021 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 1,131,414 100.0 % $ 687,347 100.0 % Cost of services 928,161 82.0 % 553,546 80.5 % Gross Profit 203,253 18.0 % 133,801 19.5 % Selling, general and administrative expenses 144,100 12.7 % 92,761 13.5 % Contingent consideration 277 — % 211 — % Loss on sale of assets 20 — % 86 — % Operating Income 58,856 5.2 % 40,743 5.9 % Revenue.
Selling, general and administrative expenses as a percentage of revenues in the Residential segment increased to 13.3% during the year ended September 30, 2023, from 12.7% during the year ended September 30, 2022. 2022 Compared to 2021 Year Ended September 30, 2022 2021 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 1,131,414 100.0 % $ 687,347 100.0 % Cost of services 928,161 82.0 % 553,546 80.5 % Gross Profit 203,253 18.0 % 133,801 19.5 % Selling, general and administrative expenses 144,100 12.7 % 92,761 13.5 % Contingent consideration 277 — % 211 — % Loss on sale of assets 20 — % 86 — % Operating Income 58,856 5.2 % 40,743 5.9 % Revenue.
Communications 2022 Compared to 2021 Year Ended September 30, 2022 2021 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 559,777 100.0 % $ 445,968 100.0 % Cost of services 490,959 87.7 % 361,197 81.0 % Gross Profit 68,818 12.3 % 84,771 19.0 % Selling, general and administrative expenses 46,717 8.3 % 41,373 9.3 % (Gain)/Loss on sale of assets 12 — % (4) — % Operating Income 22,089 3.9 % 43,402 9.7 % Revenue.
Selling, general and administrative expenses as a percentage of revenue in the Communications segment were 9.0% during the year ended September 30, 2023, compared to 8.3% for the year ended September 30, 2022. 25 2022 Compared to 2021 Year Ended September 30, 2022 2021 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 559,777 100.0 % $ 445,968 100.0 % Cost of services 490,959 87.7 % 361,197 81.0 % Gross Profit 68,818 12.3 % 84,771 19.0 % Selling, general and administrative expenses 46,717 8.3 % 41,373 9.3 % (Gain)/Loss on sale of assets 12 — % (4) — % Operating Income 22,089 3.9 % 43,402 9.7 % Revenue.
For the year ended September 30, 2021, we recorded income tax expense of $16.2 million, which reflects a $5.1 million benefit related to the recognition of previously unrecognized tax benefits.
For the year ended September 30, 2022, we recorded income tax expense of $12.8 million, which reflects a $0.8 million benefit related to the recognition of previously unrecognized tax benefits. For the year ended September 30, 2021, we recorded income tax expense of $16.2 million, which reflects a $5.1 million benefit related to the recognition of previously unrecognized tax benefits.
Revenues recognized on a percentage-of-completion basis, all of which are fixed price or cost plus arrangements, comprised approximately 49% of our total revenue for the year ended September 30, 2022.
Revenues recognized on a percentage-of-completion basis, all of which are fixed price or cost plus arrangements, comprised approximately 52% of our total revenue for the year ended September 30, 2023.
Operating activities provided net cash of $16.3 million during the year ended September 30, 2022, as compared to $37.9 million of net cash provided in the year ended September 30, 2021.
Operating activities provided net cash of $153.9 million during the year ended September 30, 2023, as compared to $16.3 million of net cash provided in the year ended September 30, 2022.
At September 30, 2022, $3.9 million of our outstanding letters of credit were to collateralize our insurance programs. 35 From time to time, we may enter into firm purchase commitments for materials such as copper wire and aluminum wire, which we expect to use in the ordinary course of business.
At September 30, 2023, $4.2 million of our outstanding letters of credit were to collateralize our insurance programs. 34 From time to time, we may enter into firm purchase commitments for materials such as copper wire and aluminum wire, which we expect to use in the ordinary course of business.
At September 30, 2022, we had $4.1 million in outstanding letters of credit and $82.7 million of outstanding borrowings under our revolving credit facility. Investments From time to time, the Company invests in non-controlling positions in the debt or equity securities of other businesses.
At September 30, 2023, we had $4.2 million in outstanding letters of credit and no outstanding borrowings under our revolving credit facility. Investments From time to time, the Company invests in non-controlling positions in the debt or equity securities of other businesses.
Selling, general and administrative expenses as a percentage of revenue decreased from 12.6% for the year ended September 30, 2020 to 11.0% for the year ended September 30, 2021.
Selling, general and administrative expenses as a percentage of revenue decreased from 11.0% for the year ended September 30, 2021 to 9.9% for the year ended September 30, 2022.
In assessing the realizability of deferred tax assets at September 30, 2022, we concluded, based upon the assessment of positive and negative evidence, that it is more likely than not that the Company will generate sufficient taxable income within the applicable NOL carryforward periods to realize its $20.5 million of deferred tax assets.
In assessing the realizability of deferred tax assets at September 30, 2023, we concluded, based upon the assessment of positive and negative evidence, that it is more likely than not that the Company will generate sufficient taxable income to realize its $20.4 million of deferred tax assets.
Those bonds guarantee the customer that we will perform under the terms of a contract and that we will pay subcontractors and vendors. In the event that we fail to perform under a contract or pay subcontractors and vendors, the customer may demand the surety to pay or perform under our bond.
In the event that we fail to perform under a contract or pay subcontractors and vendors, the customer may demand the surety to pay or perform under our bond.
Selling, general and administrative expenses as a percentage of revenues in the Communications segment decreased from 9.5% for the year ended September 30, 2020 to 9.3% of segment revenue during the year ended September 30, 2021, as we benefited from the increased scale of our operations.
Selling, general and administrative expenses as a percentage of revenue in the Communications segment were 8.3% during the year ended September 30, 2022, compared to 9.3% for the year ended September 30, 2021, as we benefited from the scale of our operations.
Changes in job performance, job conditions, estimated contract costs, profitability and final contract settlements may result in revisions to costs and income, and the effects of such revisions are recognized in the period in which the revisions are determined.
Changes in job performance, job conditions, estimated contract costs, profitability and final contract settlements may result in revisions to costs and income, and the effects of such revisions are recognized in the period in which the revisions are determined. Provisions for total estimated losses on uncompleted contracts are made in the period in which such losses are determined.
Surety Many customers, particularly in connection with new construction, require us to post performance and payment bonds issued by a surety. These bonds provide a guarantee to the customer that we will perform under the terms of our contract and that we will pay our subcontractors and vendors.
Many of our customers require us to post performance and payment bonds issued by a surety. Those bonds guarantee the customer that we will perform under the terms of a contract and that we will pay subcontractors and vendors.
While the rate of collections may vary, our typically secured position, resulting from our ability in general to secure liens against our customers’ overdue receivables, offers some protection that collection will occur eventually to the extent that our security retains value.
Days sales outstanding decreased to 51 at September 30, 2023 from 58 at September 30, 2022. While the rate of collections may vary, our typically secured position, resulting from our ability in general to secure liens against our customers’ overdue receivables, offers some protection that collection will occur eventually to the extent that our security retains value.
At September 30, 2022, our Liquidity was $88.1 million, our Excess Availability was $63.3 million (or greater than 50% of minimum Liquidity), and our Fixed Charge Coverage Ratio was 1.6:1.0.
At September 30, 2023, our Liquidity was $218.5 million, our Excess Availability was $142.8 million (or greater than 50% of minimum Liquidity), and our Fixed Charge Coverage Ratio was 6.3:1.0.
We identified our most critical accounting policies to be those related to revenue recognition, accounting for business combinations, the assessment of goodwill and asset impairment, our allowance for credit losses, the recording of our insurance liabilities and estimation of the valuation allowance for deferred tax assets, and unrecognized tax benefits.
We identified our most critical accounting policies to be those related to revenue recognition, accounting for business combinations, and estimation of the valuation allowance for deferred tax assets and unrecognized tax benefits.
Commercial & Industrial 2022 Compared to 2021 Year Ended September 30, 2022 2021 $ % $ % (Dollars in thousands, Percentage of revenues) Revenue $ 308,504 100.0 % $ 256,198 100.0 % Cost of services 290,314 94.1 % 227,704 88.9 % Gross Profit 18,190 5.9 % 28,494 11.1 % Selling, general and administrative expenses 30,557 9.9 % 28,172 11.0 % Gain on sale of assets (55) — % (92) — % Operating Income (12,312) (4.0) % 414 0.2 % Revenue.
As discussed above, our results for the year ended September 30, 2023 include a pretax gain on sale of $13.0 million from the sale of STR in October 2022. 29 2022 Compared to 2021 Year Ended September 30, 2022 2021 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 308,504 100.0 % $ 256,198 100.0 % Cost of services 290,314 94.1 % 227,704 88.9 % Gross Profit 18,190 5.9 % 28,494 11.1 % Selling, general and administrative expenses 30,557 9.9 % 28,172 11.0 % Gain on sale of assets (55) — % (92) — % Operating Income (Loss) (12,312) (4.0) % 414 0.2 % Revenue.
Selling, general and administrative expenses as a percentage of revenues in the Residential segment decreased from 15.5% during the year ended September 30, 2020 to 13.5% during the year ended September 30, 2021, as we benefited from the increased scale of our operations. 28 Infrastructure Solutions 2022 Compared to 2021 Year Ended September 30, 2022 2021 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 167,113 100.0 % $ 146,980 100.0 % Cost of services 138,444 82.8 % 106,048 72.2 % Gross Profit 28,669 17.2 % 40,932 27.8 % Selling, general and administrative expenses 25,129 15.0 % 23,966 16.3 % Gain on sale of assets (46) — % (10) — % Operating Income 3,586 2.1 % 16,976 11.5 % Revenue.
The sale of this excess land will have no impact on the operations of the facility. 2022 Compared to 2021 Year Ended September 30, 2022 2021 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 167,113 100.0 % $ 146,980 100.0 % Cost of services 138,444 82.8 % 106,048 72.2 % Gross Profit 28,669 17.2 % 40,932 27.8 % Selling, general and administrative expenses 25,129 15.0 % 23,966 16.3 % Gain on sale of assets (46) — % (10) — % Operating Income 3,586 2.1 % 16,976 11.5 % Revenue.
This compares to interest expense of $1.0 million for the year ended September 30, 2021 primarily comprised of interest expense from our revolving credit facility and fees on an average letter of credit balance of $5.7 million under our revolving credit facility and an average unused line of credit balance of $77.4 million.
During the year ended September 30, 2022, we incurred interest expense of $3.0 million primarily comprised of interest expense on an average outstanding balance of $82.3 million under our revolving credit facility, in addition to fees on an average letter of credit balance of $4.5 million under our revolving credit facility and an average unused line of credit balance of $49.2 million. 30 During the year ended September 30, 2021, we incurred interest expense of $1.0 million primarily comprised of interest expense from our revolving credit facility and fees on an average letter of credit balance of $5.7 million under our revolving credit facility and an average unused line of credit balance of $77.4 million.
Investing activities for the year ended September 30, 2021 include $7.4 million of capital expenditures and $92.5 million for the acquisition of businesses. In the year ended September 30, 2021, net cash used in investing activities was $99.6 million, as compared to $33.6 million of net cash used in investing activities in the year ended September 30, 2020.
Investing activities for the year ended September 30, 2021 include $7.4 million of capital expenditures and $92.5 million for the acquisition of businesses. Financing Activities Net cash used in financing activities was $105.8 million in the year ended September 30, 2023.
This increase in working capital was partly offset by higher earnings during the year ended September 30, 2021. Investing Activities Net cash used in investing activities was $29.5 million for the year ended September 30, 2022, compared to $99.6 million of net cash used in investing activities in the year ended September 30, 2021.
Net cash used in investing activities was $29.5 million for the year ended September 30, 2022, compared to $99.6 million of net cash used in investing activities in the year ended September 30, 2021.
Selling, general and administrative expenses include costs not directly associated with performing work for our customers. These costs consist primarily of compensation and benefits related to corporate, business segment and branch management (including incentive-based compensation), occupancy and utilities, training, professional services, information technology costs, consulting fees, travel and certain types of depreciation and amortization.
These costs consist primarily of compensation and benefits related to corporate, business segment and branch management (including incentive-based compensation), occupancy and utilities, training, professional services, information technology costs, consulting fees, travel and certain types of depreciation and amortization.
Additionally, we distributed $7.0 million to noncontrolling interests under operating agreements in connection with certain acquisitions. Net cash provided by financing activities was $31.2 million in the year ended September 30, 2021, compared to $8.5 million used in the year ended September 30, 2020.
Additionally, we distributed $7.0 million to noncontrolling interests under operating agreements in connection with certain acquisitions. Net cash provided by financing activities was $31.2 million in the year ended September 30, 2021. For the year ended September 30, 2021, we borrowed a net $40.0 million on our revolving credit facility.
For the year ended September 30, 2021, we borrowed a net $40.0 million on our revolving credit facility. In addition, we used $7.0 million to repurchase our shares under our stock repurchase program, as well as to satisfy statutory withholding requirements upon the vesting of employee stock compensation. CONTROLLING SHAREHOLDER Tontine Associates, L.L.C.
In addition, we used $7.0 million to repurchase our shares under our stock repurchase program, as well as to satisfy statutory withholding requirements upon the vesting of employee stock compensation. CONTROLLING SHAREHOLDER Tontine Associates, L.L.C.
To date, we have not been required to make any reimbursements to our sureties for bond-related costs. As is common in the surety industry, sureties issue bonds on a project-by-project basis and can decline to issue bonds at any time. We believe that our relationships with our sureties will allow us to provide surety bonds as they are required.
We must reimburse the sureties for any expenses or outlays they incur on our behalf. To date, we have not been required to make any reimbursements to our sureties for bond-related costs. As is common in the surety industry, sureties issue bonds on a project-by-project basis and can decline to issue bonds at any time.
As of September 30, 2022, the estimated cost to complete our bonded projects was approximately $107.6 million. 32 LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2022, we had cash and cash equivalents of $24.8 million and $63.3 million of availability under our revolving credit facility.
As of September 30, 2023, the estimated cost to complete our bonded projects was approximately $151.2 million. 31 LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2023, we had cash and cash equivalents of $75.8 million and $142.8 million of availability under our revolving credit facility.
These commitments are typically for terms of less than one year and require us to buy minimum quantities of materials at specified intervals at a fixed price over the term.
These commitments are typically for terms of less than one year and require us to buy minimum quantities of materials at specified intervals at a fixed price over the term. As of September 30, 2023, we did not have any such firm commitments to purchase materials outstanding.
WORKING CAPITAL During the year ended September 30, 2022, working capital exclusive of cash increased by $48.2 million from September 30, 2021, reflecting a $138.5 million increase in current assets excluding cash and a $90.3 million increase in current liabilities during the period.
WORKING CAPITAL During the year ended September 30, 2023, working capital exclusive of cash decreased by $2.8 million from September 30, 2022, reflecting a $4.1 million decrease in current assets excluding cash and a $1.3 million decrease in current liabilities during the period.
INTEREST AND OTHER EXPENSE, NET Year Ended September 30, 2022 2021 2020 (In thousands) Interest expense $ 2,771 $ 764 $ 625 Deferred financing charges 199 198 152 Total interest expense 2,970 962 777 Other (income) expense, net 37 (286) 12 Total interest and other expense, net 3,007 676 789 During the year ended September 30, 2022, we incurred interest expense of $3.0 million primarily comprised of interest expense from our revolving credit facility and fees on an average letter of credit balance of $4.5 million under our revolving credit facility and an average unused line of credit balance of $49.2 million.
INTEREST AND OTHER EXPENSE, NET Year Ended September 30, 2023 2022 2021 (In thousands) Interest expense $ 2,754 $ 2,771 $ 764 Deferred financing charges 268 199 198 Total interest expense 3,022 2,970 962 Other (income) expense, net (1,794) 37 (286) Total interest and other expense, net 1,228 3,007 676 During the year ended September 30, 2023, we incurred interest expense of $3.0 million primarily comprised of interest expense on an average outstanding balance of $26.9 million under our revolving credit facility and on our finance lease agreements, in addition to fees on an average letter of credit balance of $4.7 million under our revolving credit facility and an average unused line of credit balance of $117.8 million.
Expenses associated with our corporate office are classified separately. The following table presents selected historical results of operations of IES, as well as the results of acquired businesses from the dates acquired.
RESULTS OF OPERATIONS We report our operating results across our four operating segments: Communications, Residential, Infrastructure Solutions and Commercial & Industrial. Expenses associated with our corporate office are classified separately. The following table presents selected historical results of operations of IES, as well as the results of acquired businesses from the dates acquired.
However, current market conditions, as well as changes in our sureties' assessment of our operating and financial risk, could cause our sureties to decline to issue bonds for our work.
We believe that our relationships with our sureties will allow us to provide surety bonds as they are required. However, current market conditions, as well as changes in our sureties' assessment of our operating and financial risk, could cause our sureties to decline to issue bonds for our work.
An inability to procure materials in a timely manner, to complete work on schedule, and to reflect higher materials or labor costs in our pricing to customers has had, and could continue to have, a significant impact on our operating results. 24 RESULTS OF OPERATIONS We report our operating results across our four operating segments: Communications, Residential, Infrastructure Solutions and Commercial & Industrial.
An inability to procure materials in a timely manner, to complete work on schedule, and to reflect higher materials or labor costs in our pricing to customers has had, and could have in the future, a significant impact on our operating results.
During the year ended September 30, 2022, our total current liabilities increased by $90.3 million to $401.9 million, compared to $311.6 million as of September 30, 2021, driven by increased levels of business activity, offset in part by remittance of payroll taxes deferred under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act").
During the year ended September 30, 2023, our total current liabilities decreased by $1.3 million to $400.6 million, compared to $401.9 million as of September 30, 2022, driven by a decrease in business activity at our Commercial & Industrial business, the timing of payments by our Residential and Communications segments, and remittance of all remaining payroll taxes deferred under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act").
If we fail to perform under the terms of our contract or to pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. We must reimburse the sureties for any expenses or outlays they incur on our behalf.
These bonds provide a guarantee to the customer that we will perform under the terms of our contract and that we will pay our subcontractors and vendors. If we fail to perform under the terms of our contract or to pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond.
As a result, gross profit as a percent of revenues increased from 8.2% for the year ended September 30, 2020, to 11.1% for the year ended September 30, 2021. Selling, General and Administrative Expenses.
Gross profit as a percent of revenue increased to 25.1% for the year ended September 30, 2023 compared to 17.2% for the year ended September 30, 2022. Selling, General and Administrative Expenses.
On December 6, 2018, the Company entered into a Board Observer Letter Agreement (the "Observer Agreement") with Tontine Associates in order to assist Tontine in managing its investment in the Company.
The lease has terms at market rates, and payments by the Company are at a rate consistent with that paid by Tontine Associates to its landlord. On December 6, 2018, the Company entered into a Board Observer Letter Agreement (the "Observer Agreement") with Tontine Associates in order to assist Tontine in managing its investment in the Company.
The selling, general and administrative expenses as a percentage of revenue increased from 15.9% for the year ended September 30, 2020, to 16.3% for the year ended September 30, 2021, primarily as a result of the increase in expenses, including amortization expense, related to Wedlake.
Selling, general and administrative expenses as a percentage of revenue decreased from 16.3% for the year ended September 30, 2021, to 15.0% for the year ended September 30, 2022.
Provisions for total estimated losses on uncompleted contracts are made in the period in which such losses are determined. 36 We generally do not incur significant costs related to obtaining contracts, or initial set-up or mobilization costs, prior to the start of a project.
We generally do not incur significant costs related to obtaining contracts, or initial set-up or mobilization costs, prior to the start of a project.
Operating activities provided net cash of $37.9 million during the year ended September 30, 2021, as compared to $76.7 million of net cash provided in the year ended September 30, 2020. The decrease in operating cash flow resulted from an increase in working capital, particularly related to inventory.
The increase in operating cash flow resulted primarily from increased earnings and a reduction in cash used in working capital during the year ended September 30, 2023 compared to the year ended September 30, 2022 Operating activities provided net cash of $16.3 million during the year ended September 30, 2022, as compared to $37.9 million of net cash provided in the year ended September 30, 2021.
Our Infrastructure Solutions segment’s gross profit for the year ended September 30, 2021, increased by $5.9 million, as compared to the year ended September 30, 2020, reflecting improved overall operational efficiencies.
Our Infrastructure Solutions segment’s gross profit for the year ended September 30, 2023, increased by $25.8 million, or 89.9%, as compared to the year ended September 30, 2022.
("Tontine Associates"), together with its affiliates (collectively, "Tontine") is the Company's controlling stockholder, owning approximately 57 percent of the Company’s outstanding common stock based on the Form 4 filed by Tontine with the SEC on December 3, 2021 and the Company's shares outstanding as of December 2, 2022.
("Tontine Associates"), together with its affiliates (collectively, "Tontine") is the Company's controlling stockholder, owning approximately 58 percent of the Company’s outstanding common stock based on Amendment No. 27 to the Schedule 13D filed by Tontine with the SEC on September 8, 2023 and the Company's shares outstanding as of November 30, 2023.
To continue to grow our business, including through acquisitions and the funding of working capital, we may require a significant amount of cash.
Further, we believe our strong balance sheet and flexible operating model position us to navigate challenges we may encounter in a more uncertain economy. To continue to grow our business, including through acquisitions and the funding of working capital, we may require a significant amount of cash.
Selling, general and administrative expenses as a percentage of revenue decreased to 12.1% for the year ended September 30, 2022 from 13.2% for the year ended September 30, 2021, as we benefited from the increased scale of our operations. 2021 Compared to 2020 Consolidated revenues for the year ended September 30, 2021, were $345.6 million higher than for the year ended September 30, 2020, an increase of 29.0% with increases across all segments, driven by strong demand and the contribution of acquired businesses.
Selling, general and administrative expenses as a percentage of revenue decreased to 12.1% for the year ended September 30, 2022 from 13.2% for the year ended September 30, 2021, as we benefited from the increased scale of our operations.
Gross Profit. Our Communications segment’s gross profit during the year ended September 30, 2021, increased $6.6 million, or 8.5%, as compared to the year ended September 30, 2020.
Our Communications segment’s gross profit during the year ended September 30, 2023, increased $37.0 million, or 53.8%, as compared to the year ended September 30, 2022. Gross profit as a percentage of revenue increased from 12.3% for the year ended September 30, 2022 to 17.6% for the year ended September 30, 2023.
Nevertheless, we remain focused on monitoring costs, improving margins, and capitalizing on opportunities to expand our service lines and gain market share, as many of our markets continue to experience highly competitive margins and increasing costs. Further, we believe our strong balance sheet and flexible operating model position us to navigate challenges we may encounter in a more uncertain economy.
However, we have benefited from improved pricing in a strong non-residential construction market. We remain focused on monitoring costs, improving margins, and capitalizing on opportunities to expand our service lines and gain market share, as many of our markets continue to experience highly competitive margins.
Investing activities for the year ended September 30, 2020 include $4.7 million of capital expenditures and $29.0 million for the acquisition of businesses. 34 Financing Activities Net cash provided by financing activities was $15.0 million in the year ended September 30, 2022, compared to $31.2 million in the year ended September 30, 2021.
Investing Activities Net cash provided by investing activities was $2.8 million for the year ended September 30, 2023, compared to $29.5 million of net cash used in investing activities in the year ended September 30, 2022.
Our Residential segment’s revenues increased by $275.6 million, or 66.9%, during the year ended September 30, 2021, as compared to the year ended September 30, 2020, reflecting the revenue contribution of businesses acquired in fiscal 2021, strong demand for single-family and multi-family housing and the impact of price increases in connection with a higher cost of materials.
Our Residential segment’s revenues increased by $148.1 million, or 13.1%, during the year ended September 30, 2023, as compared to the year ended September 30, 2022. The increase was driven by the impact of price increases in connection with higher materials costs and continued strong demand, particularly in the Florida single-family market.
Businesses acquired in fiscal 2021 contributed $172.6 million of revenue for the year ended September 30, 2021. Inclusive of these acquired businesses, revenue in our single-family business increased by $215.3 million for the year ended September 30, 2021, compared to the year ended September 30, 2020, while multi-family and other revenue increased by $60.2 million.
Revenue in our single-family business 26 increased by $135.8 million for the year ended September 30, 2023, compared to the year ended September 30, 2022, while multi-family and other revenue increased by $12.3 million. Gross Profit.
Gross margin as a percentage of revenue decreased from 22.8% for the year ended September 30, 2020 to 19.5% during the year ended September 30, 2021, primarily as a result of higher commodity prices. Selling, General and Administrative Expenses.
Gross profit as a percentage of revenue increased from 5.9% for the year ended September 30, 2022, to 11.2% for the year ended September 30, 2023. Selling, General and Administrative Expenses.
Our Infrastructure Solutions segment’s selling, general and administrative expenses during the year ended September 30, 2021, increased $3.5 million compared to the year ended September 30, 2020. The increase in fiscal 2021 includes $1.6 million of expenses incurred, including amortization of intangible assets, at our acquired Wedlake business.
Our Infrastructure Solutions segment’s selling, general and administrative expenses during the year ended September 30, 2023, increased $1.1 million, or 4.5%, compared to the year ended September 30, 2022.
Selling, general and administrative expenses as a percentage of revenues in the Residential segment decreased to 12.7% during the year ended September 30, 2022, from 13.5% during the year ended September 30, 2021, as we benefited from the increased scale of our operations. 2021 Compared to 2020 Year Ended September 30, 2021 2020 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 687,347 100.0 % $ 411,790 100.0 % Cost of services 553,546 80.5 % 318,034 77.2 % Gross Profit 133,801 19.5 % 93,756 22.8 % Selling, general and administrative expenses 92,761 13.5 % 63,668 15.5 % Contingent consideration 211 — % — — % Loss on sale of assets 86 — % 2 — % Operating Income 40,743 5.9 % 30,086 7.3 % Revenue.
Selling, general and administrative expenses as a percentage of revenues in the Residential segment decreased to 12.7% during the year ended September 30, 2022, from 13.5% during the year ended September 30, 2021, as we benefited from the increased scale of our operations. 27 Infrastructure Solutions 2023 Compared to 2022 Year Ended September 30, 2023 2022 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 217,353 100.0 % $ 167,113 100.0 % Cost of services 162,905 74.9 % 138,444 82.8 % Gross Profit 54,448 25.1 % 28,669 17.2 % Selling, general and administrative expenses 26,260 12.1 % 25,129 15.0 % Gain on sale of assets (1,029) (0.5) % (46) — % Operating Income 29,217 13.4 % 3,586 2.1 % Revenue.
Our Communications segment’s revenues increased by $50.8 million, or 12.9%, during the year ended September 30, 2021, compared to the year ended September 30, 2020. This increase primarily resulted from increased demand from our data center and distribution center customers. Revenues in our Communications segment can vary from period to period based on the capital spending cycles of our customers.
Our Communications segment’s revenues increased by $41.0 million, or 7.3%, during the year ended September 30, 2023, compared to the year ended September 30, 2022. This increase primarily resulted from increased demand from our high-tech manufacturing and data center customers. Gross Profit.
Additionally, during the fourth fiscal quarter of 2020, we benefited from some larger than typical efficiency gains from strong project execution. Selling, General and Administrative Expenses. Our Communications segment’s selling, general and administrative expenses increased $3.7 million, or 9.8% during the year ended September 30, 2021, as compared to the year ended September 30, 2020.
Selling, General and Administrative Expenses. Our Communications segment’s selling, general and administrative expenses increased $7.6 million, or 16.3% during the year ended September 30, 2023, as compared to the year ended September 30, 2022.
Our Board of Directors has approved an investment policy that permits the Company to invest our cash in liquid and marketable securities that include equities and fixed income securities, subject to size limits on investments individually and in the aggregate.
Our Board of Directors has approved an investment policy that, after taking into consideration the liquidity required to support and invest in the Company's operations, permits the Company to invest in marketable securities, including equities and fixed income securities that can be easily bought and sold on a public market, and non-marketable securities, including equity and fixed income investments in private companies as well as private investments in public companies, subject to size limits and required approvals for certain investments.
Our Commercial & Industrial segment’s selling, general and administrative expenses during the year ended September 30, 2021 decreased $4.0 million, or 12.3%, compared to the year ended September 30, 2020. The higher expense in fiscal 2020 primarily reflected a write-off recorded in 2020 related to a commercial dispute, as well as costs incurred in 2020 to improve our procurement process.
Our Commercial & Industrial segment’s selling, general and administrative expenses during the year ended September 30, 2023 decreased $5.3 million, or 17.4%, compared to the year ended September 30, 2022.
Revenues in our Infrastructure Solutions segment increased by $18.6 million, or 14.5% during the year ended September 30, 2021 compared to the year ended September 30, 2020. Increased demand for our custom power solutions was partially offset by lower revenue from our industrial services business.
Revenues in our Infrastructure Solutions segment increased by $50.2 million, or 30.1% during the year ended September 30, 2023 compared to the year ended September 30, 2022. The increase in revenue was driven primarily by increased demand at our generator enclosure business. Gross Profit .
Selling, general and administrative expenses as a percentage of revenue decreased to 13.2% for the year ended September 30, 2021 from 14.4% for the year ended September 30, 2020. For the year ended September 30, 2020, we recognized a non-cash goodwill impairment charge of $7.0 million relating to our Commercial & Industrial segment.
Selling, general and administrative expenses as a percentage of revenue decreased from 9.9% for the year ended September 30, 2022 to 9.0% for the year ended September 30, 2023. Gain on Sale of Assets .
During the year ended September 30, 2022, our current assets exclusive of cash increased to $599.6 million, as compared to $461.1 million as of September 30, 2021. An increase in business activity drove an $84.0 million increase in trade accounts receivable. Days sales outstanding increased to 58 at September 30, 2022 from 57 at September 30, 2021.
During the year ended September 30, 2023, our current assets exclusive of cash decreased to $595.5 million, as compared to $599.6 million as of September 30, 2022.
Based on current trends in demand for housing heading into fiscal 2023, we expect that a revenue decline in our single-family housing business, where we typically do not enter into long-term contracts, will offset, or more than offset, revenue growth from our multi-family housing and other backlog-driven businesses during the year.
Heading into fiscal 2024, we are cautious about the impact of a decline in the affordability of housing on demand in our single-family housing business, where we typically do not enter into long-term contracts. In our multi-family housing business, limited availability and increased cost of project financing may have an impact on our backlog as the year progresses.
Gross profit as a percentage of revenue increased at our Infrastructure Solutions and Commercial & Industrial segments, but decreased at our Communications and Residential segments, as discussed in further detail with respect to each segment below. 25 During the year ended September 30, 2021, our selling, general and administrative expenses were $202.3 million, an increase of $31.3 million, or 18.3% over the year ended September 30, 2020, driven by increased personnel costs at our Communications and Residential operating segments in connection with their growth, increased incentive compensation in connection with improved results at those segments, and the impact of businesses acquired during fiscal 2021.
During the year ended September 30, 2023, our selling, general and administrative expenses were $298.6 million, an increase of $35.9 million, or 13.7% over the year ended September 30, 2022, driven by increased personnel costs, primarily at our Residential operating segment in connection with its growth, including higher incentive compensation at the division level as a result of higher earnings.
Selling, general and administrative expenses as a percentage of revenue decreased from 11.0% for the year ended September 30, 2021 to 9.9% for the year ended September 30, 2022. 30 2021 Compared to 2020 Year Ended September 30, 2021 2020 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 256,198 100.0 % $ 255,546 100.0 % Cost of services 227,704 88.9 % 234,492 91.8 % Gross Profit 28,494 11.1 % 21,054 8.2 % Selling, general and administrative expenses 28,172 11.0 % 32,128 12.6 % Goodwill impairment expense — — % 6,976 2.7 % Contingent consideration — — % (11) — % Gain on sale of assets (92) — % (45) — % Operating Income (Loss) 414 0.2 % (17,994) (7.0) % Revenue.
Commercial & Industrial 2023 Compared to 2022 Year Ended September 30, 2023 2022 $ % $ % (Dollars in thousands, Percentage of revenues) Revenues $ 279,594 100.0 % $ 308,504 100.0 % Cost of services 248,295 88.8 % 290,314 94.1 % Gross Profit 31,299 11.2 % 18,190 5.9 % Selling, general and administrative expenses 25,225 9.0 % 30,557 9.9 % Gain on sale of assets (13,198) (4.7) % (55) — % Operating Income (Loss) 19,272 6.9 % (12,312) (4.0) % Revenue.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOver the long-term, we expect to be able to pass along a portion of these costs to our customers, as market conditions in the construction industry will allow. Interest Rate Risk Floating rate debt, where the interest rate fluctuates periodically, exposes us to short-term changes in market interest rates.
Biggest changeCommodity price risks may have an impact on our results of operations due to the fixed nature of many of our contracts. Over the long-term, we expect to be able to pass along a portion of these costs to our customers, as market conditions in the construction industry will allow.
Commodity price risks may have an impact on our results of operations due to the fixed price nature of many of our contracts. We are also exposed to interest rate risk with respect to our outstanding debt obligations on our credit facility. For additional information see “Risk Factors” in Item 1A of this Annual Report on Form 10-K.
Commodity price risks may have an impact on our results of operations due to the fixed price nature of many of our contracts. We are also exposed to interest rate risk with respect to any debt obligations we may incur on our credit facility.
All of the long-term debt outstanding under our revolving credit facility is structured on floating rate terms. We currently do not maintain any hedging contracts that would limit our exposure to variable rates of interest when we have outstanding borrowings under our revolving credit facility.
We currently do not maintain any hedging contracts that would limit our exposure to variable rates of interest when we have outstanding borrowings under our revolving credit facility. The Amended Credit Agreement uses SOFR as the benchmark for establishing the interest rate charged on our borrowings.
The Amended Credit Agreement uses SOFR as the benchmark for establishing the interest rate charged on our borrowings. If SOFR were to increase, our interest payment obligations on any then-outstanding borrowings would increase, having a negative effect on our cash flow and financial condition.
If SOFR were to increase, our interest payment obligations on any then-outstanding borrowings would increase, having a negative effect on our cash flow and financial condition. We had no borrowings outstanding under our revolving credit facility as of September 30, 2023. 37
Commodity Risk Our exposure to significant market risks includes fluctuations in commodity prices including, but not limited to, copper, aluminum, steel, electrical components, fuel, and certain plastics. Commodity price risks may have an impact on our results of operations due to the fixed nature of many of our contracts.
For additional information see “Risk Factors” in Item 1A of this Annual Report on Form 10-K. 36 Commodity Risk Our exposure to significant market risks includes fluctuations in commodity prices including, but not limited to, copper, aluminum, steel, electrical components, fuel, and certain plastics.
Removed
A one percentage point increase in the interest rate on our long-term debt outstanding under the credit facility of $82.7 million as of September 30, 2022 would cause a $0.8 million pre-tax annual increase in interest expense. 38
Added
Interest Rate Risk Floating rate debt, where the interest rate fluctuates periodically, exposes us to short-term changes in market interest rates. All of the long-term debt outstanding under our revolving credit facility is structured on floating rate terms.

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