Item 1. Financial Statements

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Item 1. Financial Statements

COMFORT SYSTEMS USA, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Amounts)


	March 31,		December 31,
	2025		2024
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	204,758	$	549,939
Billed accounts receivable, less allowance for credit losses of $15,632 and $15,286, respectively		1,736,976		1,861,212
Unbilled accounts receivable, less allowance for credit losses of $1,539 and $1,475, respectively		110,496		95,786
Other receivables, less allowance for credit losses of $503 and $553, respectively		203,687		86,186
Inventories		63,045		59,224
Prepaid expenses and other		50,859		46,213
Costs and estimated earnings in excess of billings, less allowance for credit losses of $697 and $271, respectively		227,678		91,681
Total current assets		2,597,499		2,790,241
PROPERTY AND EQUIPMENT, NET		295,098		277,180
LEASE RIGHT-OF-USE ASSET		226,620		229,106
GOODWILL		905,843		875,270
IDENTIFIABLE INTANGIBLE ASSETS, NET		441,502		434,417
DEFERRED TAX ASSETS		83,409		85,441
OTHER NONCURRENT ASSETS		19,247		19,433
Total assets	$	4,569,218	$	4,711,088
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	4,066	$	6,042
Accounts payable		560,663		654,943
Accrued compensation and benefits		191,950		228,622
Billings in excess of costs and estimated earnings and deferred revenue		1,267,373		1,149,257
Accrued self-insurance		35,413		42,315
Other current liabilities		351,779		501,591
Total current liabilities		2,411,244		2,582,770
LONG-TERM DEBT		63,776		62,293
LEASE LIABILITIES		210,364		212,107
DEFERRED TAX LIABILITIES		2,225		2,225
OTHER LONG-TERM LIABILITIES		104,596		147,017
Total liabilities		2,792,205		3,006,412
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $.01 par, 5,000,000 shares authorized, none issued and outstanding		—		—
Common stock, $.01 par, 102,969,912 shares authorized, 41,123,365 and 41,123,365 shares issued, respectively		411		411
Treasury stock, at cost, 5,815,389 and 5,562,453 shares, respectively		(367,508)		(273,799)
Additional paid-in capital		361,653		350,734
Retained earnings		1,782,457		1,627,330
Total stockholders’ equity		1,777,013		1,704,676
Total liabilities and stockholders’ equity	$	4,569,218	$	4,711,088

The accompanying notes are an integral part of these consolidated financial statements.

COMFORT SYSTEMS USA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Data)

(Unaudited)


	Three Months Ended
	March 31,
	2025		2024
REVENUE	$	1,831,286	$	1,537,016
COST OF SERVICES		1,427,870		1,239,653
Gross profit		403,416		297,363
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		194,874		162,723
GAIN ON SALE OF ASSETS		(556)		(820)
Operating income		209,098		135,460
OTHER INCOME (EXPENSE):
Interest income		4,267		1,603
Interest expense		(1,619)		(1,633)
Changes in the fair value of contingent earn-out obligations		(3,758)		(12,491)
Other		24		117
Other income (expense)		(1,086)		(12,404)
INCOME BEFORE INCOME TAXES		208,012		123,056
PROVISION FOR INCOME TAXES		38,723		26,737
NET INCOME	$	169,289	$	96,319

INCOME PER SHARE:
Basic	$	4.77	$	2.70
Diluted	$	4.75	$	2.69

SHARES USED IN COMPUTING INCOME PER SHARE:
Basic		35,524		35,739
Diluted		35,605		35,828

The accompanying notes are an integral part of these consolidated financial statements.

COMFORT SYSTEMS USA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUIT****Y

(In Thousands, Except Share Amounts)

(Unaudited)


	Three Months Ended
	March 31, 2024
							Additional				Total
	Common Stock			Treasury Stock			Paid-In		Retained		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Earnings		Equity
BALANCE AT DECEMBER 31, 2023	41,123,365	$	411	(5,438,625)	$	(209,807)	$	339,562	$	1,147,663	$	1,277,829
Net income	—		—	—		—		—		96,319		96,319
Issuance of Stock:
Issuance of shares for options exercised	—		—	1,369		53		(26)		—		27
Issuance of restricted stock & performance stock	—		—	17,018		657		4,696		—		5,353
Shares received in lieu of tax withholding on vested stock	—		—	(6,763)		(2,126)		—		—		(2,126)
Stock-based compensation	—		—	—		—		4,350		—		4,350
Dividends ($0.25 per share)	—		—	—		—		—		(8,921)		(8,921)
Share repurchase	—		—	(1,500)		(295)		—		—		(295)
BALANCE AT MARCH 31, 2024	41,123,365	$	411	(5,428,501)	$	(211,518)	$	348,582	$	1,235,061	$	1,372,536


	Three Months Ended
	March 31, 2025
							Additional				Total
	Common Stock			Treasury Stock			Paid-In		Retained		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Earnings		Equity
BALANCE AT DECEMBER 31, 2024	41,123,365	$	411	(5,562,453)	$	(273,799)	$	350,734	$	1,627,330	$	1,704,676
Net income	—		—	—		—		—		169,289		169,289
Issuance of Stock:
Issuance of shares for options exercised	—		—	—		—		—		—		—
Issuance of restricted stock & performance stock	—		—	18,448		1,156		5,445		—		6,601
Shares received in lieu of tax withholding on vested stock	—		—	(7,330)		(2,622)		—		—		(2,622)
Stock-based compensation	—		—	—		—		5,474		—		5,474
Dividends ($0.40 per share)	—		—	—		—		—		(14,162)		(14,162)
Share repurchase	—		—	(264,054)		(92,243)		—		—		(92,243)
BALANCE AT MARCH 31, 2025	41,123,365	$	411	(5,815,389)	$	(367,508)	$	361,653	$	1,782,457	$	1,777,013

The accompanying notes are an integral part of these consolidated financial statements.

COMFORT SYSTEMS USA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	169,289	$	96,319
Adjustments to reconcile net income to net cash provided by operating activities—
Amortization of identifiable intangible assets		20,115		23,913
Depreciation expense		14,010		11,254
Change in right-of-use assets		7,658		7,981
Bad debt expense		1,380		356
Deferred tax provision (benefit)		2,032		(14,205)
Amortization of debt financing costs		169		171
Gain on sale of assets		(556)		(820)
Changes in the fair value of contingent earn-out obligations		3,758		12,491
Stock-based compensation		8,037		7,414
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures—
(Increase) decrease in—
Receivables, net		48,265		(125,582)
Inventories		(3,821)		(5,293)
Prepaid expenses and other current assets		(2,044)		(4,499)
Costs and estimated earnings in excess of billings and unbilled accounts receivable		(150,100)		(4,822)
Other noncurrent assets		24		(280)
Increase (decrease) in—
Accounts payable and other current liabilities		(312,499)		118,757
Billings in excess of costs and estimated earnings and deferred revenue		103,063		23,307
Other long-term liabilities		3,270		95
Net cash provided by (used in) operating activities		(87,950)		146,557
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(22,208)		(24,952)
Proceeds from sales of property and equipment		1,095		1,014
Cash paid for acquisitions, net of cash acquired		(68,412)		(196,670)
Payments for investments		(7,258)		(1,040)
Net cash used in investing activities		(96,783)		(221,648)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility		—		162,000
Payments on revolving credit facility		—		(162,000)
Proceeds from other debt		—		640
Payments on other debt		(5,993)		(22)
Payments of dividends to stockholders		(14,162)		(8,921)
Share repurchases		(91,369)		(295)
Shares received in lieu of tax withholding		(2,622)		(2,126)
Proceeds from exercise of options		—		27
Payments for contingent consideration arrangements		(46,302)		(18,570)
Net cash used in financing activities		(160,448)		(29,267)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(345,181)		(104,358)
CASH AND CASH EQUIVALENTS, beginning of period		549,939		205,150
CASH AND CASH EQUIVALENTS, end of period	$	204,758	$	100,792

The accompanying notes are an integral part of these consolidated financial statements.

COMFORT SYSTEMS USA, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

1. Business and Organization

Comfort Systems USA, Inc., a Delaware corporation, provides comprehensive mechanical and electrical contracting services, which principally includes heating, ventilation and air conditioning (“HVAC”), plumbing, electrical, piping and controls, as well as off-site construction, monitoring and fire protection. We build, install, maintain, repair and replace mechanical, electrical and plumbing (“MEP”) systems throughout the United States. The terms “Comfort Systems,” “we,” “us,” or the “Company,” refer to Comfort Systems USA, Inc. or Comfort Systems USA, Inc. and its consolidated subsidiaries, as appropriate in the context.

2. Summary of Significant Accounting Policies and Estimates

Basis of Presentation

These interim statements should be read in conjunction with the historical Consolidated Financial Statements and related notes of Comfort Systems included in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) for the year ended December 31, 2024 (the “Form 10-K”).

The accompanying unaudited consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X of the SEC. Accordingly, these financial statements do not include all the footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the Form 10-K. We believe all adjustments necessary for a fair presentation of these interim statements have been included and are of a normal and recurring nature. The results of operations for interim periods are not necessarily indicative of the results for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities, revenue and expenses and disclosures regarding contingent assets and liabilities. Actual results could differ from those estimates. The most significant estimates used in our financial statements affect revenue and cost recognition for construction contracts, self-insurance accruals, accounting for income taxes, fair value accounting for acquisitions and the quantification of fair value for reporting units in connection with our goodwill impairment testing.

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This standard requires entities to disclose more detailed information in the reconciliation of their statutory tax rate to their effective tax rate. The standard also requires entities to make additional disclosures on income taxes paid as well as on certain income statement-related disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. We expect to adopt this standard in our 2025 Form 10-K. Early adoption is permitted. This standard will not have an impact on our consolidated financial position, results of operations or cash flows, but will affect our financial statement disclosures as discussed above.

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The standard

requires entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items in the notes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact ASU 2024-03 will have on our disclosures; however, the standard will not have an impact on our consolidated financial position, results of operations or cash flows.

Revenue Recognition

We recognize revenue over time for all of our services as we perform them because (i) control continuously transfers to the customer as work progresses, and (ii) we have the right to bill the customer as costs are incurred. The customer typically controls the work in process, as evidenced either by contractual termination clauses or by our rights to payment for work performed to date, plus a reasonable profit, for delivery of products or services that do not have an alternative use to the Company.

For the reasons listed above, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We generally use a cost-to-cost input method to measure our progress towards satisfaction of the performance obligation for our contracts, as it best depicts the transfer of assets to the customer that occurs as we incur costs on our contracts. Under the cost-to-cost input method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue, including estimated fees or profits, is recorded proportionally as costs are incurred. Costs to fulfill include labor, materials, subcontractors’ costs, other direct costs and an allocation of indirect costs.

For a small portion of our business in which our services are delivered in the form of service maintenance agreements for existing systems to be repaired and maintained, as opposed to constructed, our performance obligation is to maintain the customer’s mechanical system for a specific period of time. As with construction jobs, we recognize revenue over time; however, for service maintenance agreements in which the full cost to provide services may not be known, we generally use an input method to recognize revenue, which is based on the amount of time we have provided our services out of the total time we have been contracted to perform those services. Our revenue recognition policy is further discussed in Note 3 “Revenue from Contracts with Customers.”

Accounts Receivable and Allowance for Credit Losses

We are required to estimate and record the expected credit losses over the contractual life of our financial assets measured at amortized cost, including billed and unbilled accounts receivable, other receivables and contract assets. Accounts receivable include amounts from work completed in which we have billed or have an unconditional right to bill our customers. Our trade receivables are contractually due in less than a year.

We estimate our credit losses using a loss-rate method for each of our identified portfolio segments. Our portfolio segments are construction, service and other. While our construction and service financial assets are often with the same subset of customers and industries, our construction financial assets will generally have a lower loss-rate than service financial assets due to lien rights, which we are more likely to have on construction jobs. These lien rights result in lower credit loss expenses on average compared to receivables that do not have lien rights. Financial assets classified as “other” include receivables that are not related to our core revenue producing activities, such as receivables related to our acquisition activity from former owners, our vendor rebate program or receivables for estimated losses in excess of our insurance deductible, which are accrued with a corresponding accrued insurance liability.

Loss rates for our portfolios are based on numerous factors, including our history of credit loss expense by portfolio, the financial strength of our customers and counterparties in each portfolio, the aging of our receivables, our expectation of likelihood of payment, macroeconomic trends in the U.S. and the current and forecasted nonresidential construction market trends in the U.S.

In addition to the loss-rate calculations discussed above, we also record allowance for credit losses for specific receivables that are deemed to have a higher risk profile than the rest of the respective pool of receivables (e.g., when we hold concerns about a specific customer going bankrupt and no longer being able to pay the receivables due to us).

Unbilled Accounts Receivable

Unbilled accounts receivable are amounts due to us that we have earned under a contract where our right to payment is unconditional. A right to consideration is unconditional if only the passage of time is required before payment of the consideration is due. These items are expected to be billed and collected in the normal course of business. Other unbilled receivables where payment is subject to factors beyond just the passage of time are included in contract assets.

Income Taxes

We conduct business throughout the United States in virtually all fifty states. Our effective tax rate changes based upon our relative profitability, or lack thereof, in the federal and various state jurisdictions with differing tax rates and rules. In addition, discrete items such as tax law changes, judgments and legal structures, can impact our effective tax rate. These items can also include the tax treatment for impairment of goodwill and other intangible assets, changes in fair value of acquisition-related assets and liabilities, uncertain tax positions, and accounting for losses associated with underperforming operations.

In early September 2023, the IRS issued interim guidance addressing, together with other topics, the treatment of research and experimental (“R&E”) expenditures for taxpayers using the percentage of completion method to account for taxable income from long-term contracts. We relied on such guidance for the 2022 tax year, and the resulting reduction in taxable revenue offsets the deferral of tax deductions for R&E expenditures pursuant to the Tax Cuts and Jobs Act (2017) for the 2022 tax year. We filed our 2022 federal tax return in October 2023 requesting a refund of our $107.1 million overpayment, which was received in April 2025. Along with the refund, we received $11.3 million of interest income (or $8.9 million, net of tax) that reduced our provision for income taxes in the first quarter of 2025.

Financial Instruments

Our financial instruments consist of cash and cash equivalents, U.S. Treasury bills, accounts receivable, other receivables and accounts payable, for which we deem the carrying values approximate their fair values due to the short-term nature of these instruments, as well as notes to former owners and a revolving credit facility.

Investments

We have a $6.8 million investment in a construction-focused technology fund with a fair value that is not readily determinable and is recorded at cost. This investment is included in “Other Noncurrent Assets” in our Consolidated Balance Sheet and is reviewed quarterly for impairment. We did not recognize any impairments in the current year related to this investment. As of March 31, 2025, we also have a $7.3 million investment in U.S. Treasury bills with maturities greater than ninety days but less than one year, which is recorded at amortized cost and is included in “Prepaid Expenses and Other” in our Consolidated Balance Sheet.

3. Revenue from Contracts with Customers

Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Sales-based taxes are excluded from revenue.

We provide mechanical and electrical contracting services. Our mechanical segment principally includes HVAC, plumbing, piping and controls, as well as off-site construction, monitoring and fire protection. Our electrical segment includes installation and servicing of electrical systems. We build, install, maintain, repair and replace products and systems throughout the United States. All of our revenue is recognized over time as we deliver goods and services to our customers. Revenue can be earned based on an agreed-upon fixed price or based on actual costs incurred, marked up at an agreed-upon percentage.

We account for a contract when: (i) it has approval and commitment from both parties, (ii) the rights of the parties are identified, (iii) payment terms are identified, (iv) the contract has commercial substance, and (v) collectability of consideration is probable. We consider the start of a project to be when the above criteria have been met and we either have written authorization from the customer to proceed or an executed contract.

We generally do not incur significant incremental costs related to obtaining or fulfilling a contract prior to the start of a project. On rare occasions, when significant pre-contract costs are incurred, they are capitalized and amortized over the life of the contract using a cost-to-cost input method to measure progress towards contract completion. We do not currently have any capitalized obtainment or fulfillment costs in our Consolidated Balance Sheet and have not incurred any impairment loss on such costs in the current year.

Due to the nature of the work required to be performed on many of our performance obligations, the estimation of total revenue and cost at completion (the process described below in more detail) is complex, subject to many variables and requires significant judgment. The consideration to which we are entitled on our long-term contracts may include both fixed and variable amounts. Variable amounts can either increase or decrease the transaction price. A common example of variable amounts that can either increase or decrease contract value are pending change orders that represent contract modifications for which a change in scope has been authorized or acknowledged by our customer, but the final adjustment to contract price is yet to be negotiated. Other examples of positive variable revenue include amounts awarded upon achievement of certain performance metrics, program milestones or cost of completion date targets and can be based upon customer discretion. Variable amounts can result in a deduction from contract revenue if we fail to meet stated performance requirements, such as complying with the construction schedule.

We include estimated amounts of variable consideration in the contract price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the contract price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. We reassess the amount of variable consideration each accounting period until the uncertainty associated with the variable consideration is resolved. Changes in the assessed amount of variable consideration are accounted for prospectively as a cumulative adjustment to revenue recognized in the current period.

Contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from the existing performance obligation(s). The effect of a contract modification on the transaction price, and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase or decrease) on a cumulative catch-up basis.

We have a Company-wide policy requiring periodic review of the Estimate at Completion in which management reviews the progress and execution of our performance obligations and estimated remaining obligations. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenue and costs. The risks and opportunities include management's judgment about the ability and cost to achieve the schedule (e.g., the number and type of milestone events), technical requirements (e.g., a newly developed product versus a mature product) and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation (e.g., to estimate increases in wages and prices for materials and related support cost allocations), execution by our subcontractors, the availability and timing of funding from our customer, and overhead cost rates, among other variables.

Based on this analysis, any adjustments to revenue, cost of services, and the related impact to operating income are recognized as necessary in the quarter when they become known. These adjustments may result from positive program performance if we determine we will be successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations or realizing related opportunities and may result in an increase in operating income during the performance of individual performance obligations. Likewise, if we determine we will not be

successful in mitigating these risks or realizing related opportunities, these adjustments may result in a decrease in operating income. Changes in estimates of revenue, cost of services and the related impact to operating income are recognized quarterly on a cumulative catch-up basis, meaning we recognize in the current period the cumulative effect of the changes on current and prior periods based on our progress towards complete satisfaction of a performance obligation. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. For projects in which estimates of total costs to be incurred on a performance obligation exceed total estimates of revenue to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined.

During the three months ended March 31, 2025 and 2024, net revenue recognized from our performance obligations partially satisfied in the previous period positively impacted revenue by 5.8% and 4.1%, respectively, as a result of changes in estimates associated with performance obligations on contracts.

Disaggregation of Revenue

Our consolidated 2025 revenue was derived from contracts to provide service activities in the mechanical and electrical segments we serve. Refer to Note 11 “Segment Information” for additional information on our reportable segments. We disaggregate our revenue from contracts with customers by service provided, customer type and activity type, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. See details in the following tables (dollars in thousands):


	Three Months Ended March 31,
Revenue by Service Provided	2025				2024
Mechanical Segment	$	1,402,215	76.6	%	$	1,185,009	77.1	%
Electrical Segment		429,071	23.4	%		352,007	22.9	%
Total	$	1,831,286	100.0	%	$	1,537,016	100.0	%

	Three Months Ended March 31,
Revenue by Type of Customer	2025				2024
Technology	$	677,553	37.0	%	$	464,814	30.2	%
Manufacturing		452,786	24.7	%		461,400	30.0	%
Healthcare		182,542	10.0	%		133,729	8.7	%
Education		161,242	8.8	%		133,983	8.7	%
Office Buildings		122,526	6.7	%		101,892	6.6	%
Government		96,281	5.3	%		87,801	5.7	%
Retail, Restaurants and Entertainment		77,009	4.2	%		80,585	5.2	%
Multi-Family and Residential		28,353	1.5	%		40,851	2.7	%
Other		32,994	1.8	%		31,961	2.2	%
Total	$	1,831,286	100.0	%	$	1,537,016	100.0	%

	Three Months Ended March 31,
Revenue by Activity Type	2025				2024
New Construction	$	1,065,084	58.2	%	$	898,976	58.5	%
Existing Building Construction		492,603	26.9	%		390,369	25.4	%
Service Projects		119,214	6.5	%		104,114	6.8	%
Service Calls, Maintenance and Monitoring		154,385	8.4	%		143,557	9.3	%
Total	$	1,831,286	100.0	%	$	1,537,016	100.0	%

Contract Assets and Liabilities

Contract assets include unbilled amounts typically resulting from sales under long term contracts when the cost-to-cost method of revenue recognition is used, revenue recognized exceeds the amount billed to the customer and right to payment is conditional or subject to completing a milestone, such as a phase of the project. Contract assets are not considered to have a significant financing component, as they are intended to protect the customer in the event that we do not perform our obligations under the contract.

Contract liabilities consist of advance payments and billings in excess of revenue recognized. Advanced payments from customers related to work not yet started are classified as deferred revenue. Contract liabilities are not considered to have a significant financing component, as they are used to meet working capital requirements that are generally higher in the early stages of a contract and are intended to protect us from the other party failing to meet its obligations under the contract. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period.

Contract assets and liabilities in the Consolidated Balance Sheet consisted of the following amounts as of March 31, 2025 and December 31, 2024 (in thousands):


	March 31, 2025		December 31, 2024
Contract assets:
Costs and estimated earnings in excess of billings, less allowance for credit losses	$	227,678	$	91,681
Contract liabilities:
Billings in excess of costs and estimated earnings and deferred revenue	$	1,267,373	$	1,149,257

In the first three months of 2025 and 2024, we recognized revenue of $655.7 million and $547.5 million related to our contract liabilities at January 1, 2025 and January 1, 2024, respectively.

We did not have any impairment losses recognized on our receivables or contract assets in the first three months of 2025 and 2024.

Remaining Performance Obligations

Remaining construction performance obligations represent the remaining transaction price of firm orders for which work has not been performed and exclude unexercised contract options. As of March 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $6.89 billion. The Company expects to recognize revenue on approximately 65-75% of the remaining performance obligations over the next 12 months, with the remaining recognized thereafter. Our service maintenance agreements are generally one-year renewable agreements. We have adopted the practical expedient that allows us to not include service maintenance contracts with a total term of one year or less; therefore, we do not report unfulfilled performance obligations for service maintenance agreements.

4. Fair Value Measurements

Interest Rate Risk Management and Derivative Instruments

At times, we use derivative instruments to manage exposure to market risk, including interest rate risk. Unsettled amounts under our interest rate swaps, if any, are recorded in the Consolidated Balance Sheet at fair value in “Other Receivables” or “Other Current Liabilities.” Gains and losses on our interest rate swaps are recorded in the Consolidated Statement of Operations in “Interest Expense.” We currently do not have any derivatives that are accounted for as hedges under ASC 815.

Fair Value Measurement

We classify and disclose assets and liabilities carried at fair value in one of the following three categories:

	●	Level 1—quoted prices in active markets for identical assets and liabilities;

	●	Level 2—observable market-based inputs or unobservable inputs that are corroborated by market data; and

	●	Level 3—significant unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following table summarizes the fair values, and levels within the fair value hierarchy in which the fair value measurements are included, for assets and liabilities measured on a recurring basis as of March 31, 2025 and December 31, 2024 (in thousands):


	Fair Value Measurements at March 31, 2025
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	204,758	$	—	$	—	$	204,758
U.S. Treasury bills	$	—	$	7,274	$	—	$	7,274
Contingent earn-out obligations	$	—	$	—	$	63,768	$	63,768

	Fair Value Measurements at December 31, 2024
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	549,939	$	—	$	—	$	549,939
Contingent earn-out obligations	$	—	$	—	$	140,156	$	140,156

Cash and cash equivalents consist primarily of deposit accounts and highly rated money market funds at a variety of well-known institutions with original maturities of three months or less. The original cost of these assets approximates fair value due to their short-term maturity. We believe the carrying value of our debt associated with our revolving credit facility approximates its fair value due to the variable rate on such debt. We believe the carrying values of our notes to former owners approximate their fair values due to the relatively short remaining terms on these notes.

We own U.S. Treasury bills with a 17-week maturity, which we classify as held-to-maturity in accordance with ASC 320 “Investments – Debt Securities,” given that the Company has the ability and intent to hold the investments until maturity. Due to their short-term maturity, the amortized cost of our U.S. Treasury bills approximates their fair value.

We value contingent earn-out obligations using a probability weighted discounted cash flow method. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreements (e.g., minimum and maximum payments, length of earn-out periods, manner of calculating any amounts due, etc.) and utilizes assumptions with regard to future cash flows and operating income, probabilities of achieving such future cash flows and operating income and a weighted average cost of capital. Significant changes in any of these assumptions could result in a significantly higher or lower potential liability. The contingent earn-out obligations are measured at fair value each reporting period, and changes in estimates of fair value are recognized in earnings. As of March 31, 2025, cash flows were discounted using a weighted average cost of capital of 19.5%.

The table below presents a reconciliation of the fair value of our contingent earn-out obligations that use significant unobservable inputs (Level 3) (in thousands):


	Three Months Ended		Year Ended
	March 31, 2025		December 31, 2024
Balance at beginning of period	$	140,156	$	44,222
Issuances		218		51,784
Settlements		(80,364)		(43,996)
Adjustments to fair value		3,758		88,146
Balance at end of period	$	63,768	$	140,156

5. Acquisitions

Summit Industrial Construction, LLC Acquisition

On February 1, 2024, we acquired Summit Industrial Construction, LLC (“Summit”). Summit is headquartered in Houston, Texas, and is a specialty industrial contractor offering engineering, design-assist and turnkey, direct hire construction services of systems serving the advanced technology, power, and industrial sectors. As a result of the acquisition, Summit is a wholly owned subsidiary of the Company reported in our mechanical segment.

The following summarizes the acquisition date fair value of consideration transferred and the acquisition date fair value of the identifiable assets acquired and liabilities assumed, including an amount for goodwill (in thousands):


Consideration transferred:
Cash paid at closing	$	267,500
Working capital adjustment		14,602
Notes issued to former owners		35,000
Estimated fair value of contingent earn-out payments		42,732
	$	359,834
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	171,027
Billed and unbilled accounts receivable		59,846
Prepaid expenses and other		1,476
Cost and estimated earnings in excess of billings		578
Property and equipment		2,528
Lease right-of-use asset		2,364
Goodwill		155,345
Identifiable intangible assets		170,100
Other noncurrent assets		136
Accounts payable		(15,130)
Billings in excess of costs and estimated earnings and deferred revenue		(179,895)
Current operating lease liabilities		(1,495)
Accrued expenses and other current liabilities		(6,293)
Long-term operating lease liabilities		(753)
	$	359,834

Goodwill represents the future economic benefits arising from other assets acquired that cannot be individually identified and separately recognized. The goodwill recognized as a result of the Summit acquisition is deductible for tax purposes.

In estimating the fair value of the acquired intangible assets, we utilized the valuation methodology determined to be the most appropriate for the individual intangible asset. In order to estimate the fair value of the backlog and customer relationships, we utilized an excess earnings methodology, which consisted of the projected cash flows attributable to these assets discounted to present value using a risk-adjusted discount rate that represented the required rate of return. The trade name value was determined based on the relief-from-royalty method, which applies a royalty rate to the revenue stream attributable to this asset, and the resulting royalty payment is tax effected and discounted to present value. Some of the more significant estimates and assumptions inherent in determining the fair value of the identifiable intangible assets are associated with forecasting cash flows and profitability, which represent Level 3 inputs. The primary assumptions used were generally based upon the present value of anticipated cash flows discounted at rates ranging from 18.5% to 20.5%. Estimated years of projected earnings generally follow the range of estimated remaining useful lives for each intangible asset class.

The acquired intangible assets include the following (dollars in thousands):


	Valuation Method	Estimated Useful Life		Estimated Fair Value
Backlog	Excess earnings	1.7 years	$	35,800
Trade Name	Relief-from-royalty	22.9 years		11,300
Customer Relationships	Excess earnings	10 years		123,000
Total			$	170,100

The contingent earn-out obligation is associated with the achievement of four earnings milestones over a 47-month period, and the range of each estimated milestone payment is $2.6 million to $20.5 million. We determined the initial fair value of the contingent earn-out obligation based on the Monte Carlo Simulation method, which represents a Level 3 measurement. Cash flows were discounted using discount rates ranging from 18.2% to 19.5%, which we believe

is appropriate and representative of a market participant assumption. Subsequent to the acquisition date, the contingent earn-out obligation is remeasured at fair value each reporting period. Changes in the estimated fair value of the contingent payments subsequent to the acquisition date are recognized immediately in earnings.

J & S Mechanical Contractors, Inc. Acquisition

On February 1, 2024, we acquired all of the issued and outstanding shares of capital stock of J & S Mechanical Contractors, Inc. (“J&S”). J&S is headquartered in West Jordan, Utah, and provides mechanical construction services to commercial and industrial sectors, specializing in data center HVAC systems and hospital medical gas systems. As a result of the acquisition, J&S is a wholly owned subsidiary of the Company reported in our mechanical segment.


Consideration transferred:
Cash paid at closing	$	100,000
Working capital adjustment		1,587
Notes issued to former owners		10,000
Estimated fair value of contingent earn-out payments		9,052
	$	120,639
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	14,802
Billed and unbilled accounts receivable		38,411
Inventory		230
Prepaid expenses and other		487
Costs and estimated earnings in excess of billings		728
Property and equipment		2,674
Lease right-of-use asset		4,552
Goodwill		40,693
Identifiable intangible assets		63,300
Other noncurrent assets		10
Accounts payable		(20,649)
Billings in excess of costs and estimated earnings and deferred revenue		(19,188)
Current operating lease liabilities		(133)
Accrued expenses and other current liabilities		(907)
Long-term debt		(59)
Long-term operating lease liabilities		(4,312)
	$	120,639

In estimating the fair value of the acquired intangible assets, we utilized the valuation methodology determined to be the most appropriate for the individual intangible asset. In order to estimate the fair value of the backlog and customer relationships, we utilized an excess earnings methodology, which consisted of the projected cash flows attributable to these assets discounted to present value using a risk-adjusted discount rate that represented the required rate of return. The trade name value was determined based on the relief-from-royalty method, which applies a royalty rate to the revenue stream attributable to this asset, and the resulting royalty payment is tax effected and discounted to present value. Some of the more significant estimates and assumptions inherent in determining the fair value of the identifiable intangible assets are associated with forecasting cash flows and profitability, which represent Level 3 inputs. The primary assumptions used were generally based upon the present value of anticipated cash flows discounted at rates ranging from 15.5% to 17.0%. Estimated years of projected earnings generally follow the range of estimated remaining useful lives for each intangible asset class.

The acquired intangible assets include the following (dollars in thousands):


		Estimated	Estimated
	Valuation Method	Useful Life	Fair Value
Backlog	Excess earnings	1.7 years	$	12,900
Trade Name	Relief-from-royalty	22 years		10,600
Customer Relationships	Excess earnings	9 years		39,800
Total			$	63,300

The contingent earn-out obligation is associated with the achievement of three earnings milestones over a 35-month period, and the range of each estimated milestone payment is $1.1 million to $4.7 million. We determined the initial fair value of the contingent earn-out obligation based on the Monte Carlo Simulation method, which represents a Level 3 measurement. Cash flows were discounted using discount rates ranging from 15.4% to 16.5%, which we believe is appropriate and representative of a market participant assumption. Subsequent to the acquisition date, the contingent earn-out obligation is remeasured at fair value each reporting period. Changes in the estimated fair value of the contingent payments subsequent to the acquisition date are recognized immediately in earnings.

Other Acquisitions

On January 1, 2025, we acquired all of the membership interests of Century Contractors, LLC (“Century”), headquartered in Matthews, North Carolina, for a total preliminary purchase price of $84.2 million, which included $73.1 million of cash paid on the closing date, $5.5 million in notes payable to the former owners, and earn-out that will be paid if certain financial targets are met after the acquisition date and a working capital adjustment. Century operates in the Southeastern United States and specializes in self-performing mechanical installation, pipe fabrication and installation, steel erection, equipment setting and concrete installations. As a result of the acquisition, Century is a wholly owned subsidiary of the Company reported in our mechanical segment.

On May 1, 2024, we acquired all of the issued and outstanding membership interests of a plumbing service provider in North Carolina for a total preliminary purchase price of $39.9 million, which is reported in our mechanical segment.

The results of operations of acquisitions are included in our consolidated financial statements from their respective acquisition dates. Our Consolidated Balance Sheet includes preliminary allocations of the purchase price to the assets acquired and liabilities assumed for the applicable acquisitions pending the completion of the final valuation of intangible assets and accrued liabilities. The acquisitions completed in the current and prior year were not material, individually or in the aggregate. Additional contingent purchase price (“earn-out”) has been or will be paid if certain acquisitions achieve predetermined profitability targets. Such earn-outs, when they are not subject to the continued employment of the sellers, are estimated as of the purchase date and included as part of the consideration paid for the acquisition. If we have an earn-out under which continued employment is a condition to receipt of payment, then the earn-out is recorded as compensation expense over the period earned.

6. Goodwill and Identifiable Intangible Assets, Net

Goodwill

The changes in the carrying amount of goodwill are as follows (in thousands):


	Mechanical Segment		Electrical Segment		Total
Balance at December 31, 2023	$	393,276	$	273,558	$	666,834
Acquisitions and purchase price adjustments (See Note 5)		208,236		200		208,436
Balance at December 31, 2024		601,512		273,758		875,270
Acquisitions and purchase price adjustments (See Note 5)		30,573		—		30,573
Balance at March 31, 2025	$	632,085	$	273,758	$	905,843

Identifiable Intangible Assets, Net

At March 31, 2025, future amortization expense of identifiable intangible assets is as follows (in thousands):


Year ending December 31—
2025 (remainder of the year)	$	51,221
2026		58,766
2027		56,282
2028		54,735
2029		48,468
Thereafter		172,030
Total	$	441,502

7. Debt Obligations

Debt obligations consist of the following (in thousands):


	March 31,		December 31,
	2025		2024
Revolving credit facility	$	—	$	—
Notes to former owners		67,125		67,593
Other debt		717		742
Total debt		67,842		68,335
Less—current portion		(4,066)		(6,042)
Total long-term portion of debt	$	63,776	$	62,293

Revolving Credit Facility

We have an $850.0 million senior credit facility (the “Facility”) provided by a syndicate of banks, which is composed of a revolving credit line guaranteed by certain of our subsidiaries. The Facility also provides for an accordion or increase option not to exceed the greater of (a) $250 million and (b) 1.0x Credit Facility Adjusted EBITDA (as defined below), as well as a sublimit of up to $175.0 million issuable in the form of letters of credit. The Facility expires in July 2027 and is secured by a first lien on substantially all of our personal property except for assets related to projects subject to surety bonds and the equity of, and assets held by, certain unrestricted subsidiaries and our wholly owned captive insurance company, and a second lien on our assets related to projects subject to surety bonds. As of March 31, 2025, we had no outstanding borrowings on the revolving credit facility, $83.2 million in letters of credit outstanding and $766.8 million of credit available.

There are two interest rate options for borrowings under the Facility, the Base Rate Loan (as defined in the Facility) option and the Secured Overnight Financing Rate (“SOFR”) Loan option. These rates are floating rates determined by the broad financial markets, meaning they can and do move up and down from time to time. Additional margins are then added to these two rates:


	Net Leverage Ratio
	Less than1.00		1.00 to less than 1.75		1.75 to less than 2.50		2.50 to less than 3.00		3.00 or greater
Additional Per Annum Interest Margin Added Under:
Base Rate Loan Option	0.00	%	0.25	%	0.50	%	0.75	%	1.00	%
SOFR Loan Option	1.00	%	1.25	%	1.50	%	1.75	%	2.00	%

There were no outstanding borrowings on the revolving credit facility as of March 31, 2025 and December 31, 2024.

Certain of our vendors require letters of credit to ensure reimbursement for amounts they are disbursing on our behalf, such as to beneficiaries under our self-funded insurance programs. We have also occasionally used letters of credit to guarantee performance under our contracts and to ensure payment to our subcontractors and vendors under those contracts. Our lenders issue such letters of credit through the Facility. A letter of credit commits the lenders to pay specified amounts to the holder of the letter of credit if the holder demonstrates that we have failed to perform specified actions. If this were to occur, we would be required to reimburse the lenders for amounts they fund to honor the letter of credit holder’s claim. Absent a claim, there is no payment or reserving of funds by us in connection with a letter of credit. However, because a claim on a letter of credit would require immediate reimbursement by us to our lenders, letters of credit are treated as a use of Facility capacity. The letter of credit fees range from 1.00% to 2.00% per annum, based on the Net Leverage Ratio.

Commitment fees are payable on the portion of the revolving loan capacity not in use for borrowings or letters of credit at any given time. These fees range from 0.15% to 0.25% per annum, based on the Net Leverage Ratio.

The Facility contains financial covenants defining various financial measures and the levels of these measures with which we must comply. Covenant compliance is assessed as of each quarter end. We were in compliance with all of our financial covenants as of March 31, 2025.

Notes to Former Owners

As part of the consideration used to acquire seven companies, we have outstanding notes to the former owners of the acquired companies. Together, these notes had an outstanding balance of $67.1 million as of March 31, 2025. At March 31, 2025, future principal payments of notes to former owners by maturity year are as follows (dollars in thousands):


	Balance at		Range of Stated
	March 31, 2025		Interest Rates
2026	$	30,625	2.5 - 5.5	%
2027		31,500	4.3 - 5.5	%
2028		5,000	5.5	%
Total	$	67,125

8. Leases

We lease certain facilities, vehicles and equipment primarily under noncancelable operating leases. The most significant portion of these noncancelable operating leases is for the facilities occupied by our corporate office and our operating locations. Leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheet. We do not separate lease components from their associated non-lease components pursuant to lease accounting guidance. We have certain leases with variable payments based on an index as well as short-term leases on equipment and facilities. Variable lease expense and short-term lease expense aggregated to $25.8 million and $17.9 million in the first three months of 2025 and 2024, respectively. These expenses were primarily related to short-term equipment rentals. Lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The weighted average discount rate for our operating leases as of both March 31, 2025 and December 31, 2024 was 6.1%. We recognize operating lease expense, including escalating lease payments and lease incentives, on a straight-line basis over the lease term. Operating lease expense for the three months ended March 31, 2025 and 2024 was $36.9 million and $28.2 million, respectively.

The lease terms generally range from three to ten years. Some leases include one or more options to renew, which may be exercised to extend the lease term. We include the exercise of lease renewal options in the lease term when it is reasonably certain that we will exercise the option and such exercise is at our sole discretion. In the third quarter of 2023, we commenced two large real estate leases to support our expected growth in off-site construction, with lease terms longer than our typical terms. The weighted average remaining lease term for our operating leases was 10.9 years at both March 31, 2025 and December 31, 2024.

A majority of the Company’s real property leases are with individuals or entities with whom we have no other business relationship. However, in certain instances the Company enters into real property leases with current or former employees. Rent paid to related parties for the three months ended March 31, 2025 and 2024 was approximately $2.5 million and $2.1 million, respectively.

If we decide to cancel or terminate a lease before the end of its term, we would typically owe the lessor the remaining lease payments under the term of the lease. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. On rare occasions, we rent or sublease certain real estate assets that we no longer use to third parties.

The following table summarizes the operating lease assets and liabilities included in the Consolidated Balance Sheet as follows (in thousands):



	March 31, 2025		December 31, 2024
Operating lease right-of-use assets	$	226,620	$	229,106
Operating lease liabilities:
Other current liabilities	$	27,968	$	28,158
Long-term operating lease liabilities		210,364		212,107
Total operating lease liabilities	$	238,332	$	240,265

The maturities of operating lease liabilities are as follows (in thousands):


Year ending December 31—
2025 (excluding the three months ended March 31, 2025)	$	31,275
2026		38,310
2027		33,611
2028		29,555
2029		25,821
Thereafter		177,767
Total lease payments		336,339
Less—present value discount		(98,007)
Present value of operating lease liabilities	$	238,332

Supplemental information related to operating leases was as follows (in thousands):


	Three Months Ended March 31,
	2025		2024
Cash paid for amounts included in the measurement of operating lease liabilities	$	10,703	$	9,466
Operating lease right-of-use assets obtained in exchange for lease liabilities	$	5,172	$	29,426

9. Commitments and Contingencies

Claims and Lawsuits

We are subject to certain legal and regulatory claims, including lawsuits arising in the normal course of business. We maintain various insurance coverages to minimize financial risk associated with these claims. We have estimated and provided accruals for probable losses and related legal fees associated with certain litigation in the accompanying consolidated financial statements. While we cannot predict the outcome of these proceedings, in management’s opinion and based on reports of counsel, any liability arising from these matters individually and in the aggregate will not have a material effect on our operating results, cash flows or financial condition, after giving effect to provisions already recorded.

As of March 31, 2025, we recorded an accrual for unresolved matters, which is not material to our financial statements, based on our analysis of likely outcomes related to the respective matters; however, it is possible that the ultimate outcome and associated costs will deviate from our estimates and that, in the event of an unexpectedly adverse outcome, we may experience additional costs and expenses in future periods.

Surety

Many customers, particularly in connection with new construction, require us to post performance and payment bonds issued by a financial institution known as a surety. If we fail to perform under the terms of a contract or to pay subcontractors and vendors who provided goods or services under a contract, the customer may demand that the surety make payments or provide services under the bond. We must reimburse the surety for any expenses or outlays it incurs.

Current market conditions for surety markets and bonding capacity are adequate, with acceptable terms and conditions. Historically, approximately 10% to 20% of our business has required bonds. While we currently have strong surety relationships to support our bonding needs, future market conditions or changes in the sureties’ assessments of our operating and financial risk could cause the sureties to decline to issue bonds for our work. If that were to occur, the alternatives include doing more business that does not require bonds, posting other forms of collateral for project performance, such as letters of credit or cash, and seeking bonding capacity from other sureties. We would likely also encounter concerns from customers, suppliers and other market participants as to our creditworthiness. While we believe our general operating and financial characteristics would enable us to ultimately respond effectively to an interruption in the availability of bonding capacity, such an interruption would likely cause our revenue and profits to decline in the near term.

Self-Insurance

We are substantially self-insured for workers’ compensation, employer’s liability, auto liability, general liability and employee group health claims, in view of the relatively high per-incident deductibles we absorb under our insurance arrangements for these risks. Losses are estimated and accrued based upon known facts, historical trends and industry averages. Estimated losses in excess of our deductible, which have not already been paid, are included in our accrual with a corresponding receivable from our insurance carrier. Loss estimates associated with the larger and longer-developing risks, such as workers’ compensation, auto liability and general liability, are reviewed by a third-party actuary quarterly.

10. Stockholders’ Equity

Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted EPS is computed considering the dilutive effect of stock options, restricted stock, restricted stock units and performance stock units. The vesting of unvested, contingently issuable performance stock units is based on the achievement of certain earnings per share targets and total shareholder return. These shares are considered contingently issuable shares for purposes of calculating diluted earnings per share. These shares are not included in the diluted earnings per share denominator until the performance criteria are met, if it is assumed that the end of the reporting period was the end of the contingency period.

Unvested restricted stock, restricted stock units and performance stock units are included in diluted earnings per share, weighted outstanding until the shares and units vest. Upon vesting, the vested restricted stock, restricted stock units and performance stock units are included in basic earnings per share weighted outstanding from the vesting date.

There were zero anti-dilutive stock options excluded from the calculation of diluted EPS for the three months ended March 31, 2025 and 2024.

The following table reconciles the number of shares outstanding with the number of shares used in computing basic and diluted earnings per share for each of the periods presented (in thousands):


	Three Months Ended
	March 31,
	2025	2024
Common shares outstanding, end of period	35,308	35,695
Effect of using weighted average common shares outstanding	216	44
Shares used in computing earnings per share—basic	35,524	35,739
Effect of shares issuable under stock option plans based on the treasury stock method	27	29
Effect of restricted and contingently issuable shares	54	60
Shares used in computing earnings per share—diluted	35,605	35,828

Share Repurchase Program

On March 29, 2007, our Board of Directors (the “Board”) approved a stock repurchase program to acquire up to 1.0 million shares of our outstanding common stock. Subsequently, the Board has from time to time increased the number of shares that may be acquired under the program and approved extensions of the program. On August 7, 2024, the Board approved an extension to the program by increasing the shares authorized for repurchase by 0.4 million shares. Since the inception of the repurchase program, the Board has approved 11.4 million shares to be repurchased. As of March 31, 2025, we have repurchased a cumulative total of 10.7 million shares at an average price of $39.26 per share under the repurchase program.

The share repurchases will be made from time to time at our discretion in the open market or privately negotiated transactions, as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. The Board may modify, suspend, extend or terminate the program at any time. During the three months ended March 31, 2025, we repurchased 0.3 million shares for approximately $92.2 million, inclusive of the applicable excise tax, at an average price of $349.34 per share.

11. Segment Information

Our activities are within the mechanical services industry and the electrical services industry, which represent our two reportable segments. We aggregate our operating segments into two reportable segments, as the operating segments meet all of the aggregation criteria. Segment information is prepared on the same basis that our Chief Operating Decision Maker (“CODM”) reviews financial information for operational decision-making purposes. Our CODM is the President and Chief Executive Officer. Our CODM allocates resources such as employees and capital resources primarily based on historical and potential future revenue, gross profit and operating income. Our CODM also uses segment gross profit and operating income when assessing pricing and performance by management teams in our operating segments. The following tables present information about our reportable segments (in thousands):


	Mechanical Segment		Electrical Segment		Corporate		Consolidated
Total assets at March 31, 2025	$	3,326,612	$	1,031,571	$	211,035	$	4,569,218
Total assets at December 31, 2024	$	3,162,677	$	985,006	$	563,405	$	4,711,088

	Three Months Ended March 31, 2025
	Mechanical Segment		Electrical Segment		Corporate		Consolidated
Revenue	$	1,402,215	$	429,071	$	—	$	1,831,286
Cost of services		1,097,696		330,174		—		1,427,870
Gross profit		304,519		98,897		—		403,416
Selling, general and administrative expenses		132,270		44,046		18,558		194,874
Gain on sale of assets		(352)		(204)		—		(556)
Operating income	$	172,601	$	55,055	$	(18,558)	$	209,098

Amortization of identifiable intangible assets	$	14,590	$	5,525	$	—	$	20,115
Depreciation expense	$	11,404	$	2,303	$	303	$	14,010
Capital expenditures	$	18,419	$	3,539	$	250	$	22,208


	Three Months Ended March 31, 2024
	Mechanical Segment		Electrical Segment		Corporate		Consolidated
Revenue	$	1,185,009	$	352,007	$	—	$	1,537,016
Cost of services		967,297		272,356		—		1,239,653
Gross profit		217,712		79,651		—		297,363
Selling, general and administrative expenses		110,982		33,880		17,861		162,723
Gain on sale of assets		(574)		(246)		—		(820)
Operating income	$	107,304	$	46,017	$	(17,861)	$	135,460

Amortization of identifiable intangible assets	$	18,094	$	5,819	$	—	$	23,913
Depreciation expense	$	9,228	$	1,720	$	306	$	11,254
Capital expenditures	$	19,942	$	4,379	$	631	$	24,952

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