Introduction

We are a leading provider of infrastructure services operating mainly in the United States and Canada. We provide a wide range of construction, maintenance, replacement, and engineering services to a diversified base of customers through our two segments: Utilities and Energy.

The Utilities segment operates throughout the United States and specializes in services such as the installation and maintenance of new and existing natural gas and electric utility distribution and transmission systems and communications systems.

The Energy segment operates throughout the United States and Canada and specializes in services that include engineering, procurement, construction, and maintenance for entities in the energy, renewable energy and energy storage, renewable fuels, data center services and petroleum and petrochemical industries, as well as state departments of transportation.

We have longstanding customer relationships and have completed major projects for large natural gas transmission, petrochemical, and utility companies. We generate revenue under various contracting types, including fixed-price, unit-price, time and material, and cost reimbursable plus fee contracts.

Material trends and uncertainties

We depend on spending by companies in the communications, gas and electric utilities, energy, chemical, and pipeline industries, as well as state departments of transportation. These industries are periodically affected by macroeconomic conditions and other challenging market factors, which can impact the amount and size of contracts we are awarded.

We actively monitor the impact of inflation, tariffs, and commodity market volatility on our business. We attempt to mitigate these impacts through price escalation provisions, adjusting our bidding, and back-to-back contracts with suppliers. However, there can be lags between cost increases and when billing rates are adjusted, which can negatively impact our profitability.

Fluctuations in oil, gas, and fuel prices have affected demand for our pipeline and energy services. Regulatory changes, such as environmental laws, have also impacted the timing and viability of certain projects. However, increased demand for electric power and renewable energy has created new opportunities for our Energy segment.

We are also exposed to interest rate risk on our variable rate debt, which we may seek to hedge from time to time.

Acquisitions

We continuously evaluate acquisition opportunities to further our strategic growth plans. On May 1, 2026, we completed the acquisition of PayneCrest Electric, Inc., a leading electrical construction and services provider, for approximately $404.7 million. This acquisition increases our exposure to the high-growth data center services market and expands opportunities for integrating our industrial and renewables businesses.

Seasonality, cyclicality and variability

Our results are subject to quarterly variations due to factors like weather, customer budget cycles, and the cyclical nature of the construction industry. Revenue and earnings are typically higher in the second, third, and fourth quarters compared to the first quarter.

Project values range from several hundred dollars to several hundred million dollars, with the bulk of our work comprising projects under $3 million. Our business may be affected by declines or delays in new projects, as well as fluctuations in customer timing and general economic conditions.

Critical Accounting Policies and Estimates

The preparation of our financial statements requires us to make estimates and assumptions that affect reported amounts, including revenue recognized over time, the allowance for credit losses, useful lives of assets, fair value assumptions, self-insured claims liabilities, and deferred taxes. Actual results could differ significantly from our estimates.

Results of Operations

Consolidated Results

Revenue for the three months ended June 30, 2026 was $1.7 billion, a decrease of 10.7% compared to the same period in 2025, due to lower revenue in the Energy segment.

Revenue for the six months ended June 30, 2026 was $3.2 billion, a decrease of 8.2% compared to the same period in 2025, due to lower revenue in the Energy segment partially offset by growth in the Utilities segment.

Gross profit for the three months ended June 30, 2026 was $82.4 million, a decrease of 64.4% compared to the same period in 2025, primarily due to lower revenue and margins in the Energy segment and lower margins in the Utilities segment. Gross profit as a percentage of revenue decreased to 4.9% from 12.3%.

Gross profit for the six months ended June 30, 2026 was $217.1 million, a decrease of 46.0% compared to the same period in 2025, primarily due to lower revenue and margins in the Energy segment. Gross profit as a percentage of revenue decreased to 6.7% from 11.4%.

SG&A expenses increased by 1.6% and 3.9% for the three and six month periods, respectively, primarily due to the PayneCrest acquisition, partially offset by lower incentive compensation costs. As a percentage of revenue, SG&A increased to 6.3% and 6.5% for the three and six month periods, respectively.

Transaction and related costs were $2.9 million and $7.4 million for the three and six month periods, respectively, primarily due to the PayneCrest acquisition.

Segment results

Utilities Segment: Revenue increased 2.8% for the three months ended June 30, 2026 due to higher activity in gas operations and power delivery, partially offset by lower communications work. Operating income decreased 16.8% due to lower gross margins, partially offset by revenue growth.

Energy Segment: Revenue decreased 19.2% for the three months ended June 30, 2026 primarily due to lower renewable energy activity. Operating income decreased $149.0 million due to the revenue decline and lower gross margins, which were impacted by cost overruns on six renewable energy projects.

Backlog

As of June 30, 2026, total backlog was $13.9 billion, including $6.1 billion in the next 12 months. The backlog includes both fixed backlog and estimated revenue from master service agreements (MSAs).

Liquidity and Capital Resources

As of June 30, 2026, we had $218.2 million in cash and cash equivalents and $740.7 million of available borrowing capacity under our Revolving Credit Facility. We also have access to our Accounts Receivable Securitization Facility, with $36.5 million of available capacity.

We expect our cash, investments, borrowing capacity, and future cash flows to provide sufficient liquidity to meet our operating needs, capital expenditures, and other commitments for the next 12 months and the foreseeable future. Capital expenditures for the remainder of 2026 are expected to be $70-$90 million, primarily for equipment.

Conclusion

While we have faced challenges in our Energy segment due to project execution issues and lower renewable energy activity, our Utilities segment continues to perform well. The acquisition of PayneCrest also provides opportunities to expand our capabilities, particularly in the high-growth data center market. Overall, we believe we have the financial resources and flexibility to navigate the current operating environment and continue executing on our strategic priorities.