Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Feb. 16, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | ||||
Document Type | 10-K | |||
Document Annual Report | true | |||
Document Period End Date | Dec. 31, 2022 | |||
Document Transition Report | false | |||
Entity File Number | 1-13011 | |||
Entity Registrant Name | Comfort Systems USA, Inc. | |||
Entity Incorporation, State or Country Code | DE | |||
Entity Tax Identification Number | 76-0526487 | |||
Entity Address, Address Line One | 675 Bering Drive | |||
Entity Address, Address Line Two | Suite 400 | |||
Entity Address, City or Town | Houston | |||
Entity Address, State or Province | TX | |||
Entity Address, Postal Zip Code | 77057 | |||
City Area Code | 713 | |||
Local Phone Number | 830-9600 | |||
Title of 12(b) Security | Common Stock, $.01 par value | |||
Trading Symbol | FIX | |||
Security Exchange Name | NYSE | |||
Entity Well-known Seasoned Issuer | Yes | |||
Entity Voluntary Filers | No | |||
Entity Current Reporting Status | Yes | |||
Entity Interactive Data Current | Yes | |||
Entity Filer Category | Large Accelerated Filer | |||
Entity Small Business | false | |||
Entity Emerging Growth Company | false | |||
Entity Shell Company | false | |||
Entity Public Float | $ 2,910 | |||
Entity Common Stock, Shares Outstanding | 35,738,041 | |||
Entity Central Index Key | 0001035983 | |||
Document Fiscal Year Focus | 2022 | |||
Document Fiscal Period Focus | FY | |||
Current Fiscal Year End Date | --12-31 | |||
Amendment Flag | false | |||
ICFR Auditor Attestation Flag | true | |||
Auditor Name | Deloitte & Touche LLP | Ernst & Young LLP | ||
Auditor Firm ID | 34 | 42 | ||
Auditor Location | Houston, Texas | Houston, Texas |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 57,214 | $ 58,776 |
Billed accounts receivable, less allowance for credit losses of $10,640 and $8,808, respectively | 1,024,082 | 773,716 |
Unbilled accounts receivable, less allowance for credit losses of $1,011 and $715, respectively | 77,030 | 61,881 |
Other receivables, less allowance for credit losses of $510 and $503, respectively | 38,369 | 57,491 |
Inventories | 35,309 | 21,853 |
Prepaid expenses and other | 48,456 | 23,704 |
Costs and estimated earnings in excess of billings, less allowance for credit losses of $80 and $84, respectively | 27,211 | 29,900 |
Total current assets | 1,307,671 | 1,027,321 |
PROPERTY AND EQUIPMENT, NET | 143,949 | 128,554 |
LEASE RIGHT-OF-USE ASSET | 130,666 | 124,756 |
GOODWILL | 611,789 | 592,114 |
IDENTIFIABLE INTANGIBLE ASSETS, NET | 273,901 | 304,781 |
DEFERRED TAX ASSETS | 115,665 | 22,905 |
OTHER NONCURRENT ASSETS | 13,837 | 8,683 |
Total assets | 2,597,478 | 2,209,114 |
CURRENT LIABILITIES: | ||
Current maturities of long-term debt | 9,000 | 2,788 |
Accounts payable | 337,385 | 254,788 |
Accrued compensation and benefits | 127,765 | 129,971 |
Billings in excess of costs and estimated earnings | 461,781 | 307,380 |
Accrued self-insurance | 27,644 | 22,227 |
Deferred revenue | 86,512 | 13,734 |
Other current liabilities | 120,715 | 105,666 |
Total current liabilities | 1,170,802 | 836,554 |
LONG-TERM DEBT, NET | 247,245 | 385,242 |
LEASE LIABILITIES | 111,744 | 107,701 |
DEFERRED TAX LIABILITIES | 1,745 | |
OTHER LONG-TERM LIABILITIES | 67,764 | 72,206 |
Total liabilities | 1,597,555 | 1,403,448 |
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, 5,362,224 and 5,032,311 shares, respectively | (187,212) | (150,580) |
Additional paid-in capital | 332,080 | 327,061 |
Retained earnings | 854,644 | 628,774 |
Total stockholders' equity | 999,923 | 805,666 |
Total liabilities and stockholders' equity | $ 2,597,478 | $ 2,209,114 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
CONSOLIDATED BALANCE SHEETS | ||
Billed accounts receivable, allowance for credit losses (in dollars) | $ 10,640 | $ 8,808 |
Unbilled accounts receivable, allowance for credit losses (in dollars) | 1,011 | 715 |
Other receivables, allowance for credit losses (in dollars) | 510 | 503 |
Costs and estimated earnings in excess of billings, allowance for credit losses (in dollars) | $ 80 | $ 84 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 102,969,912 | 102,969,912 |
Common stock, shares issued | 41,123,365 | 41,123,365 |
Treasury stock, shares | 5,362,224 | 5,032,311 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
REVENUE | $ 4,140,364 | $ 3,073,636 | $ 2,856,659 |
COST OF SERVICES | 3,398,756 | 2,510,429 | 2,309,676 |
Gross profit | 741,608 | 563,207 | 546,983 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 489,344 | 376,309 | 357,777 |
GAIN ON SALE OF ASSETS | (1,585) | (1,540) | (1,445) |
Operating income | 253,849 | 188,438 | 190,651 |
OTHER INCOME (EXPENSE): | |||
Interest income | 46 | 24 | 103 |
Interest expense | (13,352) | (6,196) | (8,385) |
Changes in the fair value of contingent earn-out obligations | (4,819) | 7,820 | 9,119 |
Other | 134 | 188 | 52 |
Other income (expense) | (17,991) | 1,836 | 889 |
INCOME BEFORE INCOME TAXES | 235,858 | 190,274 | 191,540 |
PROVISION (BENEFIT) FOR INCOME TAXES | (10,089) | 46,926 | 41,401 |
NET INCOME | $ 245,947 | $ 143,348 | $ 150,139 |
INCOME PER SHARE: | |||
Basic | $ 6.84 | $ 3.95 | $ 4.11 |
Diluted | $ 6.82 | $ 3.93 | $ 4.09 |
SHARES USED IN COMPUTING INCOME PER SHARE: | |||
Basic | 35,932 | 36,285 | 36,542 |
Diluted | 36,046 | 36,450 | 36,738 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Cumulative Effect, Period of Adoption, Adjustment [Member] Retained Earnings | Cumulative Effect, Period of Adoption, Adjustment [Member] | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Total |
BALANCE at Dec. 31, 2019 | $ 411 | $ (103,960) | $ 320,168 | $ 368,685 | $ 585,304 | ||
BALANCE (in shares) at Dec. 31, 2019 | 41,123,365 | ||||||
BALANCE (in shares) at Dec. 31, 2019 | (4,465,448) | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 150,139 | 150,139 | |||||
Issuance of Stock: | |||||||
Issuance of shares for options exercised | $ 2,811 | (667) | 2,144 | ||||
Issuance of shares for options exercised (in shares) | 113,731 | ||||||
Issuance of restricted stock & performance stock | $ 3,102 | (1,247) | 1,855 | ||||
Issuance of restricted stock & performance stock (in shares) | 128,889 | ||||||
Shares received in lieu of tax withholding payment on vested restricted stock | $ (1,076) | (1,076) | |||||
Shares received in lieu of tax withholding payment on vested restricted stock (in shares) | (27,724) | ||||||
Stock-based compensation | 4,197 | 4,197 | |||||
Dividends | (15,499) | (15,499) | |||||
Share repurchase | $ (30,120) | (30,120) | |||||
Share repurchase (in shares) | (684,634) | ||||||
BALANCE at Dec. 31, 2020 | $ (515) | $ (515) | $ 411 | $ (129,243) | 322,451 | 502,810 | 696,429 |
BALANCE (in shares) at Dec. 31, 2020 | 41,123,365 | ||||||
BALANCE (in shares) at Dec. 31, 2020 | (4,935,186) | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 143,348 | 143,348 | |||||
Issuance of Stock: | |||||||
Issuance of shares for options exercised | $ 5,399 | 235 | 5,634 | ||||
Issuance of shares for options exercised (in shares) | 195,724 | ||||||
Issuance of restricted stock & performance stock | $ 2,681 | (473) | 2,208 | ||||
Issuance of restricted stock & performance stock (in shares) | 101,360 | ||||||
Shares received in lieu of tax withholding payment on vested restricted stock | $ (2,363) | (2,363) | |||||
Shares received in lieu of tax withholding payment on vested restricted stock (in shares) | (31,413) | ||||||
Stock-based compensation | 4,848 | 4,848 | |||||
Dividends | (17,384) | (17,384) | |||||
Share repurchase | $ (27,054) | (27,054) | |||||
Share repurchase (in shares) | (362,796) | ||||||
BALANCE at Dec. 31, 2021 | $ 411 | $ (150,580) | 327,061 | 628,774 | $ 805,666 | ||
BALANCE (in shares) at Dec. 31, 2021 | 41,123,365 | 41,123,365 | |||||
BALANCE (in shares) at Dec. 31, 2021 | (5,032,311) | 5,032,311 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 245,947 | $ 245,947 | |||||
Issuance of Stock: | |||||||
Issuance of shares for options exercised | $ 1,174 | (88) | 1,086 | ||||
Issuance of shares for options exercised (in shares) | 34,187 | ||||||
Issuance of restricted stock & performance stock | $ 3,657 | (113) | 3,544 | ||||
Issuance of restricted stock & performance stock (in shares) | 113,955 | ||||||
Shares received in lieu of tax withholding payment on vested restricted stock | $ (3,247) | (3,247) | |||||
Shares received in lieu of tax withholding payment on vested restricted stock (in shares) | (36,006) | ||||||
Stock-based compensation | 5,220 | 5,220 | |||||
Dividends | (20,077) | (20,077) | |||||
Share repurchase | $ (38,216) | (38,216) | |||||
Share repurchase (in shares) | (442,049) | ||||||
BALANCE at Dec. 31, 2022 | $ 411 | $ (187,212) | $ 332,080 | $ 854,644 | $ 999,923 | ||
BALANCE (in shares) at Dec. 31, 2022 | 41,123,365 | 41,123,365 | |||||
BALANCE (in shares) at Dec. 31, 2022 | (5,362,224) | 5,362,224 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||
Dividends (per share) | $ 0.56 | $ 0.48 | $ 0.425 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 245,947 | $ 143,348 | $ 150,139 |
Adjustments to reconcile net income to net cash provided by operating activities- | |||
Amortization of identifiable intangible assets | 47,795 | 40,505 | 32,698 |
Depreciation expense | 33,552 | 28,439 | 27,931 |
Change in right-of-use assets | 21,557 | 17,592 | 16,692 |
Bad debt expense (benefit) | 2,670 | (1,452) | 5,253 |
Deferred tax provision (benefit) | (94,505) | 6,902 | (7,953) |
Amortization of debt financing costs | 786 | 538 | 544 |
Gain on sale of assets | (1,585) | (1,540) | (1,445) |
Changes in the fair value of contingent earn-out obligations | 4,819 | (7,820) | (9,119) |
Stock-based compensation | 10,532 | 10,593 | 6,934 |
(Increase) decrease in- | |||
Receivables, net | (223,178) | (58,046) | 38,486 |
Inventories | (13,495) | (5,651) | (1,457) |
Prepaid expenses and other current assets | (26,238) | (8,623) | (4,855) |
Costs and estimated earnings in excess of billings and unbilled accounts receivable | (9,643) | (17,271) | 2,706 |
Other noncurrent assets | (995) | (1,174) | (1,373) |
Increase (decrease) in- | |||
Accounts payable and accrued liabilities | 165,888 | 4,004 | 11,087 |
Billings in excess of costs and estimated earnings | 153,241 | 44,620 | 19,434 |
Other long-term liabilities | (15,617) | (14,813) | 808 |
Net cash provided by operating activities | 301,531 | 180,151 | 286,510 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property and equipment | (48,359) | (22,330) | (24,131) |
Proceeds from sales of property and equipment | 2,858 | 3,101 | 2,270 |
Cash paid for acquisitions, net of cash acquired | (49,217) | (227,493) | (185,941) |
Payments for investments | (2,460) | ||
Net cash used in investing activities | (97,178) | (246,722) | (207,802) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from revolving credit facility | 555,000 | 275,000 | 268,000 |
Payments on revolving credit facility | (560,000) | (125,000) | (226,000) |
Payments on term loan | (120,000) | (15,000) | (15,000) |
Payments on other debt | (12,256) | (15,696) | (46,534) |
Payments on finance lease liabilities | (899) | (3,805) | |
Debt financing costs | (2,297) | ||
Payments of dividends to stockholders | (20,077) | (17,384) | (15,499) |
Share repurchase | (38,216) | (27,054) | (30,120) |
Shares received in lieu of tax withholding | (3,247) | (2,363) | (1,076) |
Proceeds from exercise of options | 1,086 | 5,634 | 2,144 |
Deferred acquisition payments | (50) | (400) | (650) |
Payments for contingent consideration arrangements | (4,959) | (3,481) | (9,865) |
Net cash provided by (used in) financing activities | (205,915) | 70,451 | (74,600) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (1,562) | 3,880 | 4,108 |
CASH AND CASH EQUIVALENTS, beginning of period | 58,776 | 54,896 | 50,788 |
CASH AND CASH EQUIVALENTS, end of period | $ 57,214 | $ 58,776 | $ 54,896 |
Business and Organization
Business and Organization | 12 Months Ended |
Dec. 31, 2022 | |
Business and Organization | |
Business and Organization | 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. Approximately 48.6% of our consolidated 2022 revenue is attributable to installation of systems in newly constructed facilities, with the remaining 51.4% attributable to renovation, expansion, maintenance, repair and replacement services in existing buildings. 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Estimates | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies and Estimates | |
Summary of Significant Accounting Policies and Estimates | 2. Summary of Significant Accounting Policies and Estimates Principles of Consolidation These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements include our accounts and those of our subsidiaries in which we have a controlling interest. All intercompany accounts and transactions have been eliminated. Certain amounts in prior periods may have been reclassified to conform to the current period presentation. The effects of the reclassifications were not material to the consolidated financial statements. 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. Cash Flow Information We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash paid (in thousands) for: Year Ended December 31, 2022 2021 2020 Interest $ 12,915 $ 6,052 $ 7,684 Income taxes, net of refunds $ 44,296 $ 52,204 $ 51,286 Recent Accounting Pronouncements Recent Accounting Pronouncements Not Yet Adopted In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This standard requires an acquirer to apply Accounting Standards Codification Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and interim periods within that year. Early adoption is permitted. We do not expect our adoption of this standard on January 1, 2023 to have a material impact on our consolidated financial statements. Revenue Recognition We recognize revenue over time for all of our services as we perform them because (i) control continuously transfers to that 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. Similar to 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). Activity in our allowance for credit losses consisted of the following (in thousands): Year Ended December 31, Year Ended December 31, 2022 2021 Service Construction Other Total Service Construction Other Total Balance at beginning of year $ 3,294 $ 6,758 $ 58 $ 10,110 $ 4,637 $ 6,028 $ 44 $ 10,709 Bad debt expense (benefit) 2,431 232 7 2,670 (970) (496) 14 (1,452) Deductions for uncollectible receivables written off, net of recoveries (804) (402) — (1,206) (742) (244) — (986) Credit allowance of acquired receivables on the acquisition date 324 343 — 667 369 1,470 — 1,839 Balance at end of period $ 5,245 $ 6,931 $ 65 $ 12,241 $ 3,294 $ 6,758 $ 58 $ 10,110 Inventories Inventories consist of parts and supplies that we purchase and hold for use in the ordinary course of business and are stated at the lower of cost or net realizable value using the average-cost method. Property and Equipment Property and equipment are stated at cost, and depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are capitalized and amortized over the lesser of the expected life of the lease or the estimated useful life of the asset. Expenditures for repairs and maintenance are charged to expense when incurred. Expenditures for major renewals and betterments, which extend the useful lives of existing equipment, are capitalized and depreciated over the remaining useful life of the equipment. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in “Gain on Sale of Assets” in the Consolidated Statements of Operations. Recoverability of Goodwill and Identifiable Intangible Assets Goodwill is the excess of purchase price over the fair value of the net assets of acquired businesses. We assess goodwill for impairment each year, and more frequently if circumstances suggest an impairment may have occurred. When the carrying value of a given reporting unit exceeds its fair value, a goodwill impairment loss is recorded for this difference, not to exceed the carrying amount of goodwill. The requirements for assessing whether goodwill has been impaired involve market-based information. This information, and its use in assessing goodwill, entails some degree of subjective assessment. We perform our annual impairment testing as of October 1, and any impairment charges resulting from this process are reported in the fourth quarter. We segregate our operations into reporting units based on the degree of operating and financial independence of each unit and our related management of them. We perform our annual goodwill impairment testing at the reporting unit level. We perform a goodwill impairment review for each of our operating units, as we have determined that each of our operating units are reporting units. In the evaluation of goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of one of our reporting units is greater than its carrying value. If, after completing such assessment, we determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then there is no need to perform any further testing. If we conclude otherwise, or if we elect to perform a quantitative assessment, then we calculate the fair value of the reporting unit and compare the fair value with the carrying value of the reporting unit. We estimate the fair value of the reporting unit based on a market approach and an income approach, which utilizes discounted future cash flows. Assumptions critical to the fair value estimates under the discounted cash flow model include discount rates, cash flow projections, projected long-term growth rates and the determination of terminal values. The market approach utilizes market multiples of invested capital from comparable publicly traded companies (“public company approach”). The market multiples from invested capital include revenue, book equity plus debt and earnings before interest, provision for income taxes, depreciation and amortization (“EBITDA”). We amortize identifiable intangible assets with finite lives over their useful lives. Changes in strategy and/or market condition may result in adjustments to recorded intangible asset balances or their useful lives. Long-Lived Assets Long-lived assets are comprised principally of identifiable intangible assets, property and equipment, lease right-of-use assets and deferred tax assets. We periodically evaluate whether events and circumstances have occurred that indicate that the remaining balances of these assets may not be recoverable. We use estimates of future undiscounted cash flows, as well as other economic and business factors, to assess the recoverability of these assets. Acquisitions We recognize assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, based on fair value estimates as of the date of acquisition. Contingent Consideration Contingent Assets and Liabilities Self-Insurance Liabilities 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. Our self-insurance arrangements are further discussed in Note 13 “Commitments and Contingencies.” Warranty Costs We typically warrant labor for the first year after installation on new MEP systems that we build and install, and we pass through to the customer manufacturers’ warranties on equipment. We generally warrant labor for thirty days after servicing existing MEP systems. A reserve for warranty costs is estimated and recorded based upon the historical level of warranty claims and management’s estimate of future costs. 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. Income taxes are provided for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities based on the differences between the financial statement and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the provision for income taxes in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, taxable income in prior carryback years and tax planning strategies. Management’s judgment is required in considering the relative weight of negative and positive evidence. We record uncertain tax positions based on a two-step process in which (i) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the relevant taxing authority. To the extent interest and penalties may be assessed by taxing authorities on any underpayment of income taxes, such amounts are accrued and classified as a component in the provision for income taxes in our Consolidated Statements of Operations. Concentrations of Credit Risk We provide services in a broad range of geographic regions. Our credit risk primarily consists of receivables from a variety of customers including general contractors, property owners and developers, and commercial and industrial companies. We are subject to potential credit risk related to changes in business and economic factors throughout the United States within the nonresidential construction industry. However, we are entitled to payment for work performed and have certain lien rights related to that work. Further, we believe that our contract acceptance, billing and collection policies are adequate to manage potential credit risk. We regularly review our accounts receivable and estimate an allowance for credit losses. We have a diverse customer base, with our top customer representing 8% of consolidated 2022 revenue. Financial Instruments Our financial instruments consist of cash and cash equivalents, accounts receivable, other receivables, accounts payable and life insurance policies, for which we deem the carrying values approximate their fair value 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 $2.5 million investment 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. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contracts with Customers | |
Revenue from Contracts with Customers | 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. For fixed price agreements, we use the cost-to-cost input method of accounting under which contract revenue recognizable at any time during the life of a contract is determined by multiplying expected total contract revenue by the percentage of contract costs incurred at any time to total estimated contract costs. More specifically, as part of the negotiation and bidding process to obtain installation contracts, we estimate our contract costs, which include all direct materials, labor and subcontract costs and indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. These contract costs are included in our results of operations under the caption “Cost of Services.” Then, as we perform under those contracts, we measure costs incurred, compare them to total estimated costs to complete the contract and recognize a corresponding proportion of contract revenue. Labor costs are considered to be incurred as the work is performed. Subcontractor labor is recognized as the work is performed. Non‑labor project costs consist of purchased equipment, prefabricated materials and other materials. Purchased equipment on our projects is substantially produced to job specifications, normally installed shortly after receipt and is a value-added element to our work. Prefabricated materials, such as ductwork and piping, are generally performed at our shops and recognized as contract costs when fabricated for the unique specifications of the job. Other materials costs are generally recorded when delivered to the work site. This measurement and comparison process requires updates to the estimate of total costs to complete the contract, and these updates may include subjective assessments and judgments. 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. Selling, marketing and estimation costs incurred in relation to selling contracts are expensed as incurred. On rare occasions, we may incur significant expenses related to selling a contract that we only incurred because we sold that contract. If this occurs, we capitalize that cost and amortize it on a completion percentage basis over the life of the contract. We do not currently have any capitalized selling, marketing, or estimation costs in our Consolidated Balance Sheet and did not incur any impairment loss in the current year. 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. Project contracts typically provide for a schedule of billings or invoices to the customer based on our job-to-date completion percentage of specific tasks inherent in the fulfillment of our performance obligation(s). The schedules for such billings usually do not precisely match the schedule on which costs are incurred. As a result, contract revenue recognized in our Consolidated Statement of Operations can and usually does differ from amounts that can be billed or invoiced to the customer at any point during the contract. Amounts by which cumulative contract revenue recognized on a contract as of a given date exceed cumulative billings and unbilled receivables to the customer under the contract are reflected as a current asset in our Consolidated Balance Sheet under the caption “Costs and Estimated Earnings in Excess of Billings.” Amounts by which cumulative billings to the customer under a contract as of a given date exceed cumulative contract revenue recognized on the contract are reflected as a current liability in our Consolidated Balance Sheet under the caption “Billings in Excess of Costs and Estimated Earnings.” Contracts in progress are as follows (in thousands): December 31, 2022 2021 Costs incurred on contracts in progress $ 4,801,264 $ 3,723,715 Estimated earnings, net of losses 796,260 589,286 Less—Billings to date (5,953,973) (4,527,801) Less—Unbilled accounts receivable (77,030) (61,881) Less—Unbilled accounts receivable credit allowance (1,011) (715) $ (434,490) $ (277,396) Costs and estimated earnings in excess of billings $ 27,211 $ 29,900 Plus—Costs and estimated earnings in excess of billings credit allowance 80 84 Billings in excess of costs and estimated earnings (461,781) (307,380) $ (434,490) $ (277,396) Accounts receivable include amounts billed to customers under retention or retainage provisions in construction contracts. Such provisions are standard in our industry and usually allow for a small portion of progress billings or the contract price to be withheld by the customer until after we have completed work on the project, typically for a period of six months. Based on our experience with similar contracts in recent years, the majority of our billings for such retention balances at each Balance Sheet date are finalized and collected within the subsequent year. Retention balances at December 31, 2022 and 2021 were $193.6 million and $139.5 million, respectively, and are included in accounts receivable. Accounts payable at December 31, 2022 and 2021 included $29.8 million and $24.0 million of retainage under terms of contracts with subcontractors, respectively. The majority of the retention balances at each Balance Sheet date are finalized and paid within the subsequent year. The cost-to-cost input method of accounting is also affected by changes in job performance, job conditions, and final contract settlements. These factors may result in revisions to estimated costs and, therefore, revenue. Such revisions are frequently based on further estimates and subjective assessments. The effects of these revisions are recognized in the period in which revisions are determined. When such revisions lead to a conclusion that a loss will be recognized on a contract, the full amount of the estimated ultimate loss is recognized in the period such conclusion is reached, regardless of the completion percentage of the contract. Revisions to project costs and conditions can give rise to change orders under which there is an agreement between the customer and us that the customer pays an additional or reduced contract price. Revisions can also result in claims we might make against the customer to recover project variances that have not been satisfactorily addressed through change orders with the customer. The amount of revenue associated with unapproved change orders and claims was immaterial for the year ended December 31, 2022. Variations from estimated project costs could have a significant impact on our operating results, depending on project size, and the recoverability of the variation from change orders collected from customers. We typically invoice our customers with payment terms of net due in 30 days. It is common in the construction industry for a contract to specify more lenient payment terms allowing the customer 45 30 A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. To determine the proper revenue recognition method for contracts, we evaluate whether two or more contracts should be combined and accounted for as one performance obligation and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate the combined or single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. For most of our contracts, the customer contracts with us to provide a significant service of integrating a complex set of tasks and components into a single project or capability (even if that single project results in the delivery of multiple units). Hence, the entire contract is accounted for as one performance obligation. Less commonly, however, we may promise to provide distinct goods or services within a contract, in which case we separate the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. We infrequently sell standard products with observable standalone sales. In such cases, the observable standalone sales are used to determine the standalone selling price. More frequently, we sell a customized, customer-specific solution, and, in these cases, we typically use the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation. We recognize revenue over time for all of our services as we perform them because (i) control continuously transfers to that 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 to deliver products or services that do not have an alternative use to the Company. 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 determinatio 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. The Company typically does not incur any returns, refunds, or similar obligations after the completion of the performance obligation since any deficiencies are corrected during the course of the work or are included as a modification to revenue. The Company does offer an industry standard warranty on our work, which is most commonly for a one-year period. The vendors providing the equipment and materials are responsible for any failures in their product unless installed incorrectly. We include an estimated amount to cover estimated warranty expense in our Cost of Services and record a liability in our Consolidated Balance Sheet to cover our current estimated outstanding warranty obligations. During the years ended December 31, 2022 and December 31, 2021, net revenue recognized from our performance obligations satisfied in previous periods was not material. Disaggregation of Revenue Our consolidated 2022 revenue was derived from contracts to provide service activities in the mechanical and electrical services segments we serve. Refer to Note 16 “Segment Information” for additional information on our reportable segments. We disaggregate our revenue from contracts with customers by activity, customer type and service provided, 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): Year Ended December 31, Revenue by Service Provided 2022 2021 2020 Mechanical Services $ 3,178,475 76.8 % $ 2,542,623 82.7 % $ 2,430,632 85.1 % Electrical Services 961,889 23.2 % 531,013 17.3 % 426,027 14.9 % Total $ 4,140,364 100.0 % $ 3,073,636 100.0 % $ 2,856,659 100.0 % Year Ended December 31, Revenue by Type of Customer 2022 2021 2020 Industrial $ 1,973,252 47.7 % $ 1,356,688 44.1 % $ 1,112,075 38.9 % Healthcare 584,023 14.1 % 417,901 13.6 % 371,105 13.0 % Education 445,638 10.8 % 390,251 12.7 % 487,922 17.1 % Office Buildings 349,235 8.4 % 308,799 10.1 % 319,426 11.2 % Retail, Restaurants and Entertainment 311,697 7.5 % 213,386 6.9 % 239,541 8.4 % Government 255,314 6.2 % 174,813 5.7 % 163,717 5.7 % Multi-Family and Residential 126,339 3.0 % 112,779 3.7 % 86,799 3.0 % Other 94,866 2.3 % 99,019 3.2 % 76,074 2.7 % Total $ 4,140,364 100.0 % $ 3,073,636 100.0 % $ 2,856,659 100.0 % Year Ended December 31, Revenue by Activity Type 2022 2021 2020 New Construction $ 2,011,992 48.6 % $ 1,421,784 46.3 % $ 1,333,739 46.7 % Existing Building Construction 1,210,512 29.2 % 963,461 31.3 % 910,807 31.9 % Service Projects 382,155 9.2 % 278,582 9.1 % 241,402 8.4 % Service Calls, Maintenance and Monitoring 535,705 13.0 % 409,809 13.3 % 370,711 13.0 % Total $ 4,140,364 100.0 % $ 3,073,636 100.0 % $ 2,856,659 100.0 % 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 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 assets are generally classified as current, as it is very unusual for us to have contract assets with a term of greater than one year. Contract liabilities consist of advance payments and billings in excess of revenue recognized. It is very unusual for us to have advanced payments with a term of greater than one year; therefore, our contract liabilities are usually all current. Advanced payments from customers related to work not yet started are classified as “Deferred Revenue.” If we have advanced payments with a term greater than one year, the noncurrent portion of advanced payments would be included in “Other Long-term Liabilities” in our Consolidated Balance Sheets. 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. Year Ended December 31, Year Ended December 31, 2022 2021 Contract Contract Contract Contract Assets Liabilities Assets Liabilities Balance at beginning of period $ 29,900 $ 307,380 $ 18,622 $ 226,237 Change due to acquisitions / disposals 2,426 1,160 10,356 36,523 Change related to credit allowance 4 — (5) — Other changes in the period (5,119) 239,753 927 44,620 Balance at end of period $ 27,211 $ 548,293 $ 29,900 $ 307,380 During the years ended December 31, 2022 and 2021, we recognized revenue of $286.5 million and $207.6 million related to our contract liabilities at January 1, 2021 and January 1, 2020, respectively. We did not have any impairment losses recognized on our receivables or contract assets in 2022 and 2021. 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 December 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $4.06 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. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Measurements | |
Fair Value Measurements | 4. Fair Value Measurements Interest Rate Risk Management and Derivative Instruments In April 2020, we entered into interest rate swap agreements to reduce our exposure to variable interest rates on our revolving credit facility. The interest rate swap agreements terminated on September 30, 2022. 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 Income Statement in “Interest Expense.” For the years ended December 31, 2022, 2021 and 2020, we recognized a net gain of $0.3 million, a net loss of $0.5 million and a net loss of $0.3 million, respectively, related to our interest rate swaps. 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 December 31, 2022 and 2021 (in thousands): Fair Value Measurements at December 31, 2022 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 57,214 $ — $ — $ 57,214 Life insurance—cash surrender value $ — $ 9,315 $ — $ 9,315 Contingent earn-out obligations $ — $ — $ 32,317 $ 32,317 Fair Value Measurements at December 31, 2021 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 58,776 $ — $ — $ 58,776 Life insurance—cash surrender value $ — $ 6,643 $ — $ 6,643 Contingent earn-out obligations $ — $ — $ 34,114 $ 34,114 Cash and cash equivalents consist primarily of 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 have life insurance policies covering 120 employees with a combined face value of $82.1 million. The policies are invested in several investment vehicles, and the fair value measurement of the cash surrender balance associated with these policies is determined using Level 2 inputs within the fair value hierarchy and will vary with investment performance. The cash surrender value of these policies is included in “Other Noncurrent Assets” in our Consolidated Balance Sheets. 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 December 31, 2022, cash flows were discounted using a weighted average cost of capital ranging from 11.0% - 17.0%. 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): December 31, 2022 2021 Balance at beginning of year $ 34,114 $ 25,979 Issuances — 19,949 Settlements (6,616) (3,994) Adjustments to fair value 4,819 (7,820) Balance at end of year $ 32,317 $ 34,114 We measure certain assets at fair value on a nonrecurring basis. These assets are recognized at fair value when they are concluded to be other-than-temporarily impaired. No goodwill or other intangible asset impairments were recorded during the years ended December 31, 2022, 2021 and 2020. We did not recognize any other impairments on those assets required to be measured at fair value on a nonrecurring basis. See Note 6 “Goodwill and Identifiable Intangible Assets, Net” for further discussion. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2022 | |
Acquisitions | |
Acquisitions | 5. Acquisitions On April 1, 2022, we acquired Atlantic Electric, LLC and its related subsidiary (“Atlantic”), headquartered in Charleston, South Carolina, and with operations in South Carolina and Western North Carolina, for a total preliminary purchase price of $48.1 million, which included $34.1 million of cash paid on the closing date, $5.3 million in notes payable to former owners and a working capital adjustment. Atlantic performs electrical contracting for customers in various South Carolina markets, as well as installation of airport runway lighting in the Southeast. As a result of the acquisition, Atlantic is a wholly owned subsidiary of the Company reported in our electrical services segment. On December 31, 2021, we acquired MEP Holding Co., Inc., and its related subsidiaries (collectively, “MEP Holdings”) for a total purchase price of $57.3 million, which included $45.2 million funded on the closing date, $7.6 million in notes payable to former owners, an earn-out that will be paid if certain financial targets are met after the acquisition date and a working capital adjustment. As a result of the acquisition, MEP Holdings is a wholly owned subsidiary of the Company and reports as a separate operating location in our electrical services segment. Additionally, on December 31, 2021, we completed an acquisition of a service and controls business in Kentucky with a total purchase price of $20.5 million and a temporary staffing company based in Indiana with a total purchase price of $4.7 million, which are both reported in our mechanical services segment. On December 1, 2021, we acquired Ivey Mechanical Company, LLC (“Ivey”) headquartered in Kosciusko, Mississippi for a total purchase price of $79.1 million, which included $64.1 million of cash paid on the closing date, a $0.4 million short term payable which was settled in the third quarter of 2022, $8.0 million in notes payable to former owners, plus an earn-out that will be paid if certain financial targets are met after the acquisition date and a working capital adjustment. As a result of the acquisition, Ivey is a wholly owned subsidiary of the Company and reports as a separate operating location in our mechanical services segment. On August 1, 2021, we acquired all of the issued and outstanding equity interests of Amteck Holdco LLC and each of its wholly owned subsidiaries (collectively “Amteck”). The total purchase price was $138.9 million of which $113.1 million was allocated to goodwill and identifiable intangible assets. The total purchase price included $107.4 million in cash, $8.6 million in working capital adjustment, $10.0 million in notes payable to former owners and a $12.9 million contingent earn-out obligation. Amteck provides electrical contracting solutions and services, including design and build, pre-fabrication and installation for core electric and low-voltage systems, as well as services for planned maintenance, retrofit and emergency work. Amteck is headquartered in Kentucky and primarily serves the greater Southeastern United States, including Kentucky, Tennessee and the Carolinas. As a result of the acquisition, Amteck is a wholly owned subsidiary of the Company reported in our electrical services segment. In the first quarter of 2021, we completed an acquisition of a mechanical contractor in Utah with a total purchase price of $18.1 million, which is reported in our mechanical services 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. |
Goodwill and Identifiable Intan
Goodwill and Identifiable Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Identifiable Intangible Assets, Net | |
Goodwill and Identifiable Intangible Assets, Net | 6. Goodwill and Identifiable Intangible Assets, Net Goodwill The changes in the carrying amount of goodwill are as follows (in thousands): Mechanical Services Electrical Services Segment Segment Total Balance at December 31, 2020 $ 307,448 $ 156,944 $ 464,392 Acquisitions and purchase price adjustments (See Note 5) 52,771 74,951 127,722 Impact of segment reorganization 1,101 (1,101) — Balance at December 31, 2021 361,320 230,794 592,114 Acquisitions and purchase price adjustments (See Note 5) 2,609 17,066 19,675 Balance at December 31, 2022 $ 363,929 $ 247,860 $ 611,789 The aggregate goodwill balance as of December 31, 2022 and 2021 includes $116.6 million of accumulated impairment charges, all of which relate to the mechanical services segment. During our annual impairment testing on October 1, 2022, we performed a quantitative assessment where the fair value of each reporting unit was estimated using a discounted cash flow model combined with a market valuation approach. We assigned a weighting of 50% to the discounted cash flow analysis and 50% to the public company approach for the year ended December 31, 2022. Based on this assessment, we concluded that the fair value of each of the reporting units was greater than its carrying value. A 10% decline in the estimated fair value of each reporting unit due to a change in assumptions would not have resulted in us recording an impairment in 2022. For the years ended December 31, 2022, 2021 and 2020, no impairment of our goodwill was recorded. There are significant inherent uncertainties and management judgment involved in estimating the fair value of each reporting unit. While we believe we have made reasonable estimates and assumptions to estimate the fair value of our reporting units, it is possible that a material change could occur. If actual results are not consistent with our current estimates and assumptions, or the current economic outlook worsens, goodwill impairment charges may be recorded in future periods. Identifiable Intangible Assets, Net Identifiable intangible assets consist of the following (dollars in thousands): Weighted-Average December 31, 2022 December 31, 2021 Remaining Useful Lives Gross Book Accumulated Gross Book Accumulated in Years Value Amortization Value Amortization Customer Relationships 6.7 $ 340,721 $ (161,049) $ 330,572 $ (130,098) Backlog 0.8 3,200 (2,361) 32,300 (20,091) Trade Names 18.4 121,561 (28,171) 114,795 (22,697) Total $ 465,482 $ (191,581) $ 477,667 $ (172,886) The amounts attributable to customer relationships and tradenames are amortized to “Selling, General and Administrative Expenses” based upon the estimated consumption of their economic benefits, or a straight-line method over periods from one As of December 31, 2022, future amortization expense of identifiable intangible assets was as follows (in thousands): Year ending December 31— 2023 $ 36,252 2024 34,063 2025 31,876 2026 31,032 2027 29,050 Thereafter 111,628 Total $ 273,901 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment | |
Property and Equipment | 7. Property and Equipment Property and equipment consist of the following (dollars in thousands): Estimated Useful Lives December 31, in Years 2022 2021 Land — $ 6,792 $ 6,792 Transportation equipment 1 - 7 153,587 132,792 Machinery and equipment 1 - 20 56,357 48,000 Computer and telephone equipment 1 - 10 23,551 23,065 Buildings and leasehold improvements 1 - 40 80,275 74,981 Furniture and fixtures 1 - 17 6,270 6,081 Construction in progress — 6,717 1,668 333,549 293,379 Less—Accumulated depreciation (189,600) (164,825) Property and equipment, net $ 143,949 $ 128,554 Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $33.6 million, $28.4 million and $27.9 million, respectively. |
Detail of Other Current Liabili
Detail of Other Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Detail of Other Current Liabilities | |
Detail of Other Current Liabilities | 8. Detail of Other Current Liabilities Other current liabilities consist of the following (in thousands): December 31, 2022 2021 Accrued warranty costs $ 9,429 $ 8,969 Current lease liability 21,151 19,050 Accrued job losses 3,650 8,962 Accrued sales and use tax 5,335 3,861 Liabilities due to former owners 31,510 27,613 Other current liabilities 49,640 37,211 $ 120,715 $ 105,666 |
Debt Obligations
Debt Obligations | 12 Months Ended |
Dec. 31, 2022 | |
Debt Obligations | |
Debt Obligations | 9. Debt Obligations Debt obligations consist of the following (in thousands): December 31, 2022 2021 Revolving credit facility $ 215,000 $ 220,000 Term loan — 120,000 Notes to former owners 41,040 47,954 Finance lease liabilities — 266 Other debt 205 — Total principal amount 256,245 388,220 Less—unamortized debt issuance costs — (190) Total debt, net of unamortized debt issuance costs 256,245 388,030 Less—current portion (9,000) (2,788) Total long-term portion of debt, net $ 247,245 $ 385,242 At December 31, 2022, future principal payments of debt are as follows (in thousands): Year ending December 31— 2023 $ 9,000 2024 7,332 2025 22,269 2026 2,644 2027 215,000 $ 256,245 Year Ended December 31, 2022 2021 2020 Interest expense on notes to former owners $ 1,139 $ 1,052 $ 1,354 Interest expense on borrowings and unused commitment fees 10,955 3,371 5,319 Interest expense (income) on interest rate swaps (332) 499 338 Interest expense on finance leases 4 57 — Letter of credit fees 800 679 830 Amortization of debt financing costs 786 538 544 Total $ 13,352 $ 6,196 $ 8,385 Revolving Credit Facility On May 25, 2022, we amended our senior credit facility (as amended, the “Facility”) arranged by Wells Fargo Bank, National Association, as administrative agent, and provided by a syndicate of banks, increasing our borrowing capacity from $562.5 million (of which $450 million was a revolving credit facility) to $850 million. As amended, the Facility is composed of a revolving credit line guaranteed by certain of our subsidiaries, in the amount of $850.0 million. The amended Facility also provides for an accordion or increase option not to exceed the greater of (a) $250 million and (b) 1.0x Credit Facility Adjusted EBITDA (as defined below), as well as a sublimit of up to $175.0 million issuable in the form of letters of credit. The Facility 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. In 2022, we incurred approximately $2.3 million in financing and professional costs in connection with the amendment to the Facility, which, combined with previously unamortized costs of $1.2 million, are being amortized on a straight-line basis as a non-cash charge to interest expense over the remaining term of the Facility. As of December 31, 2022, we had $215.0 million of outstanding borrowings on the revolving credit facility, $54.2 million in letters of credit outstanding and $580.8 million of credit available. Collateral A common practice in our industry is the posting of payment and performance bonds with customers. These bonds are offered by financial institutions known as sureties and provide assurance to the customer that in the event we encounter significant financial or operational difficulties, the surety will arrange for the completion of our contractual obligations and for the payment of our vendors on the projects subject to the bonds. In cooperation with our lenders, we granted our sureties a first lien on assets such as receivables, costs and estimated earnings in excess of billings, and equipment specifically identifiable to projects for which bonds are outstanding, as collateral for potential obligations under bonds. As of December 31, 2022, the book value of these assets was approximately $120.3 million. Covenants and Restrictions 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. Credit Facility Adjusted EBITDA is defined under the Facility for financial covenant purposes as consolidated net income for the four fiscal quarters ending as of any given quarterly covenant compliance measurement date, plus the corresponding amounts for (a) interest expense; (b) provision for income taxes; (c) depreciation and amortization; (d) stock or equity compensation; (e) other non-cash charges; and (f) pre-acquisition results of acquired companies. The Facility’s principal financial covenants include: Net Leverage Ratio Interest Coverage Ratio Other Restrictions While the Facility’s financial covenants do not specifically govern capacity under the Facility, if our debt level under the Facility at a quarter-end covenant compliance measurement date were to cause us to violate the Facility’s Net Leverage Ratio covenant, our borrowing capacity under the Facility and the favorable terms that we currently have could be negatively impacted. We were in compliance with all of our financial covenants as of December 31, 2022. Interest Rates and Fees 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. Under the Base Rate Loan option, the interest rate is determined based on the highest of (a) the Federal Funds Rate (as defined in the Facility) plus 0.50%, (b) the prime lending rate established by Wells Fargo Bank, N.A., and (c) the one-month Adjusted Term SOFR (as defined in the Facility) plus 1.00%. Under the SOFR Loan option, the interest rate is determined based on Adjusted Term SOFR for a one, three, or six-month tenor at our election. Additional margins are then added to these two rates. The additional margins are determined based on our Net Leverage Ratio. The interest rates under the Facility are floating rates determined by the broad financial markets, meaning they can and do move up and down from time to time. For illustrative purposes, the following are the respective market rates as of December 31, 2022 relating to interest options under the Facility: Base Rate Loan Option: Federal Funds Rate plus 0.50% 4.83% Wells Fargo Bank, N.A. Prime Rate 7.50% One-month SOFR plus 1.00% 5.06% SOFR Loan Option: One-month SOFR 4.06% Three-month SOFR 3.62% Six-month SOFR 2.89% 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 just the same as actual borrowings. We have never had a claim made against a letter of credit that resulted in payments by a lender or by us and believe such a claim is unlikely in the foreseeable future. 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. Letter of credit fees and commitment fees are based on the Net Leverage Ratio. Net Leverage Ratio Less than 1.00 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 % Letter of credit fees 1.00 % 1.25 % 1.50 % 1.75 % 2.00 % Commitment fees on any portion of the Revolving Loan capacity not in use for borrowings or letters of credit at any given time 0.15 % 0.175 % 0.20 % 0.225 % 0.25 % The weighted average interest rate applicable to the borrowings under the revolving credit facility was approximately 5.7% as of December 31, 2022 and 1.4% as of December 31, 2021. Notes to Former Owners As part of the consideration used to acquire ten companies, we have outstanding notes to the former owners. Together, these notes had an outstanding balance of $41.0 million as of December 31, 2022. At December 31, 2022, future principal payments of notes to former owners by maturity year are as follows (dollars in thousands): Balance at Range of Stated December 31, 2022 Interest Rates 2023 $ 9,000 2.5 % 2024 7,200 2.5 - 3.0 % 2025 22,215 2.3 - 3.0 % 2026 2,625 2.5 % Total $ 41,040 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | 10. 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 some short-term leases on equipment and facilities. Variable lease expense and short-term lease expense were not material to our financial statements and aggregated to $19.1 million in 2022, $11.9 million in 2021 and $7.7 million in 2020. 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 December 31, 2022 and 2021 was 4.3% and 4.0%, respectively. 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 years ended December 31, 2022, 2021 and 2020 was $46.0 million, $34.2 million and $28.2 million, respectively. The lease terms generally range from three 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 years ended December 31, 2022, 2021 and 2020 was approximately $6.9 million, $4.9 million and $4.2 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): December 31, 2022 2021 Operating lease right-of-use assets $ 130,666 $ 124,756 Operating lease liabilities: Other current liabilities $ 21,151 $ 19,050 Long-term operating lease liabilities 111,744 107,701 Total operating lease liabilities $ 132,895 $ 126,751 The maturities of operating lease liabilities as of December 31, 2022 are as follows (in thousands): Year ending December 31— 2023 $ 26,275 2024 23,743 2025 22,471 2026 19,172 2027 14,914 Thereafter 51,638 Total Lease Payments 158,213 Less—Present Value Discount (25,318) Present Value of Operating Lease Liabilities $ 132,895 Supplemental information related to operating leases was as follows (in thousands): Year Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of operating lease liabilities $ 26,740 $ 22,232 Operating lease right-of-use assets obtained in exchange for lease liabilities $ 27,467 $ 47,621 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | 11. Income Taxes Provision (Benefit) for Income Taxes Our provision (benefit) for income taxes relating to continuing operations consists of the following (in thousands): December 31, 2022 2021 2020 Current tax provision— Federal $ 58,040 $ 31,283 $ 36,556 State 26,376 8,741 12,798 Total current 84,416 40,024 49,354 Deferred tax provision (benefit)— Federal (80,130) 6,197 (5,483) State (14,375) 705 (2,470) Total deferred (94,505) 6,902 (7,953) Provision (benefit) for income taxes $ (10,089) $ 46,926 $ 41,401 The provision (benefit) for income taxes for the years ended December 31, 2022, 2021 and 2020 resulted in effective tax rates on continuing operations of (4.3%), 24.7% and 21.6%, respectively. The reasons for the differences between these effective tax rates and the federal statutory rates are as follows (in thousands, except percentages): December 31, 2022 2021 2020 Federal statutory rate of— 21 % 21 % 21 % Income taxes at the federal statutory rate $ 49,530 $ 39,958 $ 40,223 Increases (decreases) resulting from— Net state income taxes 9,376 7,340 8,406 Valuation allowances (95) (39) (254) Net unrecognized tax benefits (17,922) 640 18,557 Nondeductible expenses 4,045 2,381 2,470 R&D tax credit (51,398) — (26,133) 179D deduction (964) (1,207) (1,062) Stock-based compensation deductions (872) (2,210) (426) Other (1,789) 63 (380) Provision (benefit) for income taxes $ (10,089) $ 46,926 $ 41,401 Deferred Tax Assets (Liabilities) Significant components of the deferred tax assets and deferred tax liabilities as reflected on the Consolidated Balance Sheets are as follows (in thousands): Year Ended December 31, 2022 2021 Deferred tax assets— Accounts receivable and allowance for credit losses $ 2,530 $ 1,878 Stock-based compensation 3,809 3,392 Accrued liabilities and expenses 34,179 36,255 Lease liabilities 32,048 27,944 Net operating loss carryforwards 5,361 10,379 Intangible assets 9,204 3,851 Research and experimental expenditures 106,002 — Other 539 758 Subtotal 193,672 84,457 Valuation allowances (379) (475) Total deferred tax assets 193,293 83,982 Deferred tax liabilities— Property and equipment (18,882) (15,534) Lease right-of-use asset (32,025) (27,905) Long-term contracts (1,870) (964) Goodwill (23,288) (17,321) Other (1,563) (1,098) Total deferred tax liabilities (77,628) (62,822) Net deferred tax assets $ 115,665 $ 21,160 The deferred tax assets and deferred tax liabilities reflected above are included in the Consolidated Balance Sheets as follows (in thousands): December 31, 2022 2021 Deferred tax assets $ 115,665 $ 22,905 Deferred tax liabilities $ — $ 1,745 As of December 31, 2022, our deferred tax assets were primarily attributable to research and experimental (“R&E”) expenditures, accrued liabilities and expenses, intangible assets and net operating loss (“NOL”) carryforwards. Beginning in 2022, R&E expenditures must be capitalized and amortized pursuant to the Tax Cuts and Jobs Act (2017). Of the $5.4 million deferred tax asset for NOL carryforwards, $4.8 million is related to $23.1 million of federal NOL carryforwards from the TAS Energy Inc. (“TAS”) acquisition. If not used, such carryforwards will begin to expire in 2032. Pursuant to Section 382 of the Internal Revenue Code, utilization of our federal NOL carryforwards is subject to annual limitations due to the ownership change in TAS. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. Our management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of the existing deferred tax assets. The most significant piece of objective evidence evaluated was three years of cumulative pretax income in the federal jurisdiction. Management determined there is sufficient positive evidence to conclude it is more likely than not our deferred tax assets are virtually all realizable. Liabilities for Uncertain Tax Positions A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties, is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Balance at beginning of year $ 29,452 $ 28,756 $ 10,199 Additions based on tax positions related to current year 3,420 207 — Additions based on tax positions related to prior years 7,427 489 26,858 Reductions for tax positions related to prior years (13) — — Reductions for settlements with taxing authorities (28,756) — (8,301) Balance at end of year $ 11,530 $ 29,452 $ 28,756 We are subject to taxation in the federal and various state jurisdictions. For the years ended December 31, 2022 and 2020, our unrecognized tax benefits were reduced by $28.8 million and $8.3 million, respectively, due to favorable settlements with the IRS for the 2014 through 2018 tax years. As of December 31, 2022, we remain open to IRS examination for the 2019 tax year forward. State income tax returns are generally subject to examination for a period of three to four years after filing the returns. However, the state impact of any federal audit adjustments and/or amendments remains subject to examination by various states for up to one year after formal notification to the states. As of December 31, 2022, we generally remain open to examination by various state taxing authorities for the 2018 tax year forward. We believe it is reasonably possible that a reduction of up to $5.3 million in unrecognized tax benefits could occur within the next twelve months. Any reductions in our unrecognized tax benefits, due to the future recognition of those tax benefits, would affect our effective tax rates. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2022 | |
Employee Benefit Plans | |
Employee Benefit Plans | 12. Employee Benefit Plans We and certain of our subsidiaries sponsor various retirement plans for most full-time and some part-time employees. These plans primarily consist of defined contribution plans. The defined contribution plans generally provide for contributions up to 2.5% of covered employees’ salaries or wages. These contributions totaled $19.8 million in 2022, $16.1 million in 2021 and $16.3 million in 2020. Of these amounts, approximately $0.5 million and $0.6 million were payable to the plans at December 31, 2022 and 2021, respectively. Certain of our subsidiaries also participate or have participated in various multi-employer pension plans for the benefit of employees who are union members. As of December 31, 2022 and 2021, we had 12 and 5 employees, respectively, who were union members. There were no contributions made to multi-employer pension plans in 2022, 2021 or 2020. The data available from administrators of other multi-employer pension plans is not sufficient to determine the accumulated benefit obligations, nor the net assets attributable to the multi-employer plans in which our employees participate or previously participated. Certain individuals at one of our operating units are entitled to receive fixed annual payments that reach a maximum amount, as specified in the related agreements, for a 15 year period following retirement or, in some cases, the attainment of 65 years of age. We recognize the unfunded status of the plan as a non-current liability in our Consolidated Balance Sheet. Benefits vest 50% after ten years of service, 75% after fifteen years of service and are fully vested after 20 years of service. We had an unfunded benefit liability of $3.7 million and $4.0 million recorded as of December 31, 2022 and 2021, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 13. 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. In 2022, we recorded a net gain of $5.1 million related to legal matters that merited changes to our assessments of the related accruals in the ordinary course of our business based on information received in 2022. The largest change resulted from favorable developments related to a dispute with a customer regarding the outcome of a completed project as well as the obligation to perform subcontract work under two executed letters of intent for subsequent projects that we believed were not enforceable. The net gain of $5.1 million was recorded primarily as an increase in gross profit in our Consolidated Statements of Operations. As of December 31, 2022, 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’ assessment 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. Our self-insurance arrangements as of December 31, 2022 were as follows: Workers’ Compensation— Employer’s Liability— General Liability— Auto Liability— Employee Medical— each plan Our $175.0 million of aggregate excess loss coverage above applicable per-incident deductibles represents one policy limit that applies to all lines of risk; we do not have a separate $175.0 million of excess loss coverage for each of general liability, employer’s liability and auto liability. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Stockholders' Equity | 14. Stockholders’ Equity Stock Incentive Plans In May 2017, our stockholders approved our 2017 Omnibus Incentive Plan (the “2017 Plan”), which provides for the granting of incentive or non-qualified stock options, stock appreciation rights, restricted or deferred stock, dividend equivalents or other incentive awards to directors, employees, or consultants. The number of shares authorized and reserved for issuance under the 2017 Plan is 2.9 million shares. As of December 31, 2022, there were 1.6 million shares available for issuance under this plan. The 2017 Plan will expire in May 2027. We have outstanding and exercisable stock options under our 2012 Equity Incentive Plan, which was superseded by the 2017 Plan. 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 May 17, 2022, the Board approved an extension to the program by increasing the shares authorized for repurchase by 0.7 million shares. Since the inception of the repurchase program, the Board has approved 10.9 million shares to be repurchased. As of December 31, 2022, we have repurchased a cumulative total of 10.1 million shares at an average price of $24.52 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 year ended December 31, 2022, we repurchased 0.4 million shares for approximately $38.2 million at an average price of $86.45 per share. 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 years ended December 31, 2022 and 2021 and less than 0.1 million anti-dilutive stock options excluded from the calculation of diluted EPS for the year ended December 31, 2020. 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): Year Ended December 31, 2022 2021 2020 Common shares outstanding, end of period 35,761 36,091 36,188 Effect of using weighted average common shares outstanding 171 194 354 Shares used in computing earnings per share—basic 35,932 36,285 36,542 Effect of shares issuable under stock option plans based on the treasury stock method 36 89 123 Effect of restricted and contingently issuable shares 78 76 73 Shares used in computing earnings per share—diluted 36,046 36,450 36,738 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Stock-Based Compensation | |
Stock-Based Compensation | 15. Stock-Based Compensation Grants of restricted stock and restricted stock units and performance share units have been determined and administered by the compensation committee of the Board of Directors. Total stock-based compensation expense was $10.5 million, $10.6 million and $6.9 million for the years ended December 31, 2022, 2021 and 2020, respectively. Stock-based compensation expense is recognized using the straight-line method over the vesting period and generally vests over a three-year vesting period. Certain awards provide for accelerated vesting when the sum of an employee's age and years of service is at least 75. We recognize forfeitures as they occur. Total income tax benefit recognized for stock-based compensation arrangements was $2.2 million, $2.2 million and $1.5 million for each of the years ended December 31, 2022, 2021 and 2020. We generally issue treasury shares for stock options and restricted stock, unless treasury shares are not available. Upon the vesting of restricted shares, we have allowed the holder to elect to surrender an amount of shares to meet their statutory tax withholding requirements. These shares are accounted for as treasury stock based upon the value of the stock on the date of vesting. Restricted Stock and Restricted Stock Units The following table summarizes activity under our restricted stock plans (shares in thousands): Year Ended December 31, 2022 Weighted Average Grant Restricted Stock and Restricted Stock Units Shares Date Fair Value Unvested at beginning of year 115 $ 57.74 Granted 69 $ 90.17 Vested (75) $ 61.68 Forfeited (5) $ 56.77 Unvested at end of year 104 $ 76.39 Approximately $2.1 million of compensation expense related to restricted stock and restricted stock units will be recognized over a weighted-average period of 2.3 years. The total fair value of shares vested during the year ended December 31, 2022 was $4.6 million. The weighted-average fair value per share of restricted stock shares and units awarded during 2022, 2021 and 2020 was $90.17, $76.73 and $39.03, respectively. The aggregate intrinsic value of restricted stock vested during the years ended December 31, 2022, 2021 and 2020 was $6.6 million, $5.5 million and $2.9 million, respectively. Performance Stock Units Under the 2017 Plan, we granted dollar-denominated performance vesting restricted stock units (“PSUs”), which cliff vest at the end of a three-year performance period. The PSUs are subject to two performance measures; 50% of the PSUs are based on the annual performance of our stock price relative to a group of our peers (total shareholder return) and 50% of the PSUs are measured based on meeting or exceeding a pre-determined annual earnings per share target as set by our Board of Directors (EPS). Depending on the Company’s performance in relation to the established performance measures, the awards may vest at zero to a maximum of 2.0 times the dollar-denominated award granted at target. Upon achievement of the necessary performance metrics, the award will be determined in dollars and may be settled in cash or stock based on the market price of the Company’s common stock at the end of the performance period, at our discretion. Compensation expense for dollar-denominated performance units will ultimately be equal to the final dollar value awarded to the grantee upon vesting, settled either in cash or stock. However, throughout the performance period we must record and accrue expense based on an estimate of that future payout. For units determined by EPS performance, the awards are evaluated quarterly against established targets in order to estimate the liability throughout the vesting period. For units determined by total shareholder return performance, a Monte Carlo simulation model was used to estimate accruals throughout the vesting period. The model simulates our total shareholder return and compares it against our peer group over the three-year performance period to produce a predicted distribution of relative share performance. This is applied to the reward criteria to give an expected value of the total shareholder return element. The calculated fair market value as of December 31, 2022 was $12.2 million. Of this amount, $4.5 million relates to the PSUs granted in 2020 whose performance period ended December 31, 2022. These awards will be settled within the upcoming year either in cash or stock. The expense related to performance stock units for the years ended December 31, 2022, 2021 and 2020 was $5.3 million, $5.7 million and $2.7 million, respectively. At the December 31, 2022 calculated fair market value, approximately $1.4 million of compensation expense related to performance stock units will be recognized over a weighted-average period of 1.4 years. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Information | |
Segment Information | 16. Segment Information information is prepared on the same basis that our management reviews financial information for operational decision-making purposes. Mechanical Services Electrical Services Corporate Consolidated Total Assets at December 31, 2022 $ 1,741,135 $ 790,040 $ 66,303 $ 2,597,478 Total Assets at December 31, 2021 $ 1,452,527 $ 690,364 $ 66,223 $ 2,209,114 Year Ended December 31, 2022 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 3,178,475 $ 961,889 $ — $ 4,140,364 Gross Profit $ 580,619 $ 160,989 $ — $ 741,608 Capital Expenditures $ 43,532 $ 4,101 $ 726 $ 48,359 Year Ended December 31, 2021 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 2,542,623 $ 531,013 $ — $ 3,073,636 Gross Profit $ 486,346 $ 76,861 $ — $ 563,207 Capital Expenditures $ 19,408 $ 2,413 $ 509 $ 22,330 Year Ended December 31, 2020 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 2,430,632 $ 426,027 $ — $ 2,856,659 Gross Profit $ 513,760 $ 33,223 $ — $ 546,983 Capital Expenditures $ 22,561 $ 944 $ 626 $ 24,131 |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events. | |
Subsequent Event | 17. Subsequent Event |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and Estimates (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies and Estimates | |
Principles of Consolidation | Principles of Consolidation These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements include our accounts and those of our subsidiaries in which we have a controlling interest. All intercompany accounts and transactions have been eliminated. Certain amounts in prior periods may have been reclassified to conform to the current period presentation. The effects of the reclassifications were not material to the consolidated financial statements. |
Use of Estimates | 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. |
Cash Flow Information | Cash Flow Information We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash paid (in thousands) for: Year Ended December 31, 2022 2021 2020 Interest $ 12,915 $ 6,052 $ 7,684 Income taxes, net of refunds $ 44,296 $ 52,204 $ 51,286 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recent Accounting Pronouncements Not Yet Adopted In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This standard requires an acquirer to apply Accounting Standards Codification Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and interim periods within that year. Early adoption is permitted. We do not expect our adoption of this standard on January 1, 2023 to have a material impact on our consolidated financial statements. |
Revenue Recognition | Revenue Recognition We recognize revenue over time for all of our services as we perform them because (i) control continuously transfers to that 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. Similar to 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 | 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). Activity in our allowance for credit losses consisted of the following (in thousands): Year Ended December 31, Year Ended December 31, 2022 2021 Service Construction Other Total Service Construction Other Total Balance at beginning of year $ 3,294 $ 6,758 $ 58 $ 10,110 $ 4,637 $ 6,028 $ 44 $ 10,709 Bad debt expense (benefit) 2,431 232 7 2,670 (970) (496) 14 (1,452) Deductions for uncollectible receivables written off, net of recoveries (804) (402) — (1,206) (742) (244) — (986) Credit allowance of acquired receivables on the acquisition date 324 343 — 667 369 1,470 — 1,839 Balance at end of period $ 5,245 $ 6,931 $ 65 $ 12,241 $ 3,294 $ 6,758 $ 58 $ 10,110 |
Inventories | Inventories Inventories consist of parts and supplies that we purchase and hold for use in the ordinary course of business and are stated at the lower of cost or net realizable value using the average-cost method. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, and depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are capitalized and amortized over the lesser of the expected life of the lease or the estimated useful life of the asset. Expenditures for repairs and maintenance are charged to expense when incurred. Expenditures for major renewals and betterments, which extend the useful lives of existing equipment, are capitalized and depreciated over the remaining useful life of the equipment. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in “Gain on Sale of Assets” in the Consolidated Statements of Operations. |
Recoverability of Goodwill and Identifiable Intangible Assets | Recoverability of Goodwill and Identifiable Intangible Assets Goodwill is the excess of purchase price over the fair value of the net assets of acquired businesses. We assess goodwill for impairment each year, and more frequently if circumstances suggest an impairment may have occurred. When the carrying value of a given reporting unit exceeds its fair value, a goodwill impairment loss is recorded for this difference, not to exceed the carrying amount of goodwill. The requirements for assessing whether goodwill has been impaired involve market-based information. This information, and its use in assessing goodwill, entails some degree of subjective assessment. We perform our annual impairment testing as of October 1, and any impairment charges resulting from this process are reported in the fourth quarter. We segregate our operations into reporting units based on the degree of operating and financial independence of each unit and our related management of them. We perform our annual goodwill impairment testing at the reporting unit level. We perform a goodwill impairment review for each of our operating units, as we have determined that each of our operating units are reporting units. In the evaluation of goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of one of our reporting units is greater than its carrying value. If, after completing such assessment, we determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then there is no need to perform any further testing. If we conclude otherwise, or if we elect to perform a quantitative assessment, then we calculate the fair value of the reporting unit and compare the fair value with the carrying value of the reporting unit. We estimate the fair value of the reporting unit based on a market approach and an income approach, which utilizes discounted future cash flows. Assumptions critical to the fair value estimates under the discounted cash flow model include discount rates, cash flow projections, projected long-term growth rates and the determination of terminal values. The market approach utilizes market multiples of invested capital from comparable publicly traded companies (“public company approach”). The market multiples from invested capital include revenue, book equity plus debt and earnings before interest, provision for income taxes, depreciation and amortization (“EBITDA”). We amortize identifiable intangible assets with finite lives over their useful lives. Changes in strategy and/or market condition may result in adjustments to recorded intangible asset balances or their useful lives. |
Long-Lived Assets | Long-Lived Assets Long-lived assets are comprised principally of identifiable intangible assets, property and equipment, lease right-of-use assets and deferred tax assets. We periodically evaluate whether events and circumstances have occurred that indicate that the remaining balances of these assets may not be recoverable. We use estimates of future undiscounted cash flows, as well as other economic and business factors, to assess the recoverability of these assets. |
Acquisitions | Acquisitions We recognize assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, based on fair value estimates as of the date of acquisition. Contingent Consideration Contingent Assets and Liabilities |
Self-Insurance Liabilities | Self-Insurance Liabilities 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. Our self-insurance arrangements are further discussed in Note 13 “Commitments and Contingencies.” |
Warranty Costs | Warranty Costs We typically warrant labor for the first year after installation on new MEP systems that we build and install, and we pass through to the customer manufacturers’ warranties on equipment. We generally warrant labor for thirty days after servicing existing MEP systems. A reserve for warranty costs is estimated and recorded based upon the historical level of warranty claims and management’s estimate of future costs. |
Income Taxes | 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. Income taxes are provided for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities based on the differences between the financial statement and tax basis of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the provision for income taxes in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, taxable income in prior carryback years and tax planning strategies. Management’s judgment is required in considering the relative weight of negative and positive evidence. We record uncertain tax positions based on a two-step process in which (i) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the relevant taxing authority. To the extent interest and penalties may be assessed by taxing authorities on any underpayment of income taxes, such amounts are accrued and classified as a component in the provision for income taxes in our Consolidated Statements of Operations. |
Concentrations of Credit Risk | Concentrations of Credit Risk We provide services in a broad range of geographic regions. Our credit risk primarily consists of receivables from a variety of customers including general contractors, property owners and developers, and commercial and industrial companies. We are subject to potential credit risk related to changes in business and economic factors throughout the United States within the nonresidential construction industry. However, we are entitled to payment for work performed and have certain lien rights related to that work. Further, we believe that our contract acceptance, billing and collection policies are adequate to manage potential credit risk. We regularly review our accounts receivable and estimate an allowance for credit losses. We have a diverse customer base, with our top customer representing 8% of consolidated 2022 revenue. |
Financial Instruments | Financial Instruments Our financial instruments consist of cash and cash equivalents, accounts receivable, other receivables, accounts payable and life insurance policies, for which we deem the carrying values approximate their fair value due to the short-term nature of these instruments, as well as notes to former owners and a revolving credit facility. |
Investments | Investments We have a $2.5 million investment 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. |
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 some short-term leases on equipment and facilities. Variable lease expense and short-term lease expense were not material to our financial statements and aggregated to $19.1 million in 2022, $11.9 million in 2021 and $7.7 million in 2020. 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 December 31, 2022 and 2021 was 4.3% and 4.0%, respectively. 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 years ended December 31, 2022, 2021 and 2020 was $46.0 million, $34.2 million and $28.2 million, respectively. The lease terms generally range from three 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 years ended December 31, 2022, 2021 and 2020 was approximately $6.9 million, $4.9 million and $4.2 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): December 31, 2022 2021 Operating lease right-of-use assets $ 130,666 $ 124,756 Operating lease liabilities: Other current liabilities $ 21,151 $ 19,050 Long-term operating lease liabilities 111,744 107,701 Total operating lease liabilities $ 132,895 $ 126,751 The maturities of operating lease liabilities as of December 31, 2022 are as follows (in thousands): Year ending December 31— 2023 $ 26,275 2024 23,743 2025 22,471 2026 19,172 2027 14,914 Thereafter 51,638 Total Lease Payments 158,213 Less—Present Value Discount (25,318) Present Value of Operating Lease Liabilities $ 132,895 Supplemental information related to operating leases was as follows (in thousands): Year Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of operating lease liabilities $ 26,740 $ 22,232 Operating lease right-of-use assets obtained in exchange for lease liabilities $ 27,467 $ 47,621 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and Estimates (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies and Estimates | |
Schedule of cash paid | Cash paid (in thousands) for: Year Ended December 31, 2022 2021 2020 Interest $ 12,915 $ 6,052 $ 7,684 Income taxes, net of refunds $ 44,296 $ 52,204 $ 51,286 |
Schedule of activity in allowance for credit losses | Activity in our allowance for credit losses consisted of the following (in thousands): Year Ended December 31, Year Ended December 31, 2022 2021 Service Construction Other Total Service Construction Other Total Balance at beginning of year $ 3,294 $ 6,758 $ 58 $ 10,110 $ 4,637 $ 6,028 $ 44 $ 10,709 Bad debt expense (benefit) 2,431 232 7 2,670 (970) (496) 14 (1,452) Deductions for uncollectible receivables written off, net of recoveries (804) (402) — (1,206) (742) (244) — (986) Credit allowance of acquired receivables on the acquisition date 324 343 — 667 369 1,470 — 1,839 Balance at end of period $ 5,245 $ 6,931 $ 65 $ 12,241 $ 3,294 $ 6,758 $ 58 $ 10,110 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contracts with Customers | |
Schedule of contracts in progress | Contracts in progress are as follows (in thousands): December 31, 2022 2021 Costs incurred on contracts in progress $ 4,801,264 $ 3,723,715 Estimated earnings, net of losses 796,260 589,286 Less—Billings to date (5,953,973) (4,527,801) Less—Unbilled accounts receivable (77,030) (61,881) Less—Unbilled accounts receivable credit allowance (1,011) (715) $ (434,490) $ (277,396) Costs and estimated earnings in excess of billings $ 27,211 $ 29,900 Plus—Costs and estimated earnings in excess of billings credit allowance 80 84 Billings in excess of costs and estimated earnings (461,781) (307,380) $ (434,490) $ (277,396) |
Schedule of disaggregation of revenue | Our consolidated 2022 revenue was derived from contracts to provide service activities in the mechanical and electrical services segments we serve. Refer to Note 16 “Segment Information” for additional information on our reportable segments. We disaggregate our revenue from contracts with customers by activity, customer type and service provided, 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): Year Ended December 31, Revenue by Service Provided 2022 2021 2020 Mechanical Services $ 3,178,475 76.8 % $ 2,542,623 82.7 % $ 2,430,632 85.1 % Electrical Services 961,889 23.2 % 531,013 17.3 % 426,027 14.9 % Total $ 4,140,364 100.0 % $ 3,073,636 100.0 % $ 2,856,659 100.0 % Year Ended December 31, Revenue by Type of Customer 2022 2021 2020 Industrial $ 1,973,252 47.7 % $ 1,356,688 44.1 % $ 1,112,075 38.9 % Healthcare 584,023 14.1 % 417,901 13.6 % 371,105 13.0 % Education 445,638 10.8 % 390,251 12.7 % 487,922 17.1 % Office Buildings 349,235 8.4 % 308,799 10.1 % 319,426 11.2 % Retail, Restaurants and Entertainment 311,697 7.5 % 213,386 6.9 % 239,541 8.4 % Government 255,314 6.2 % 174,813 5.7 % 163,717 5.7 % Multi-Family and Residential 126,339 3.0 % 112,779 3.7 % 86,799 3.0 % Other 94,866 2.3 % 99,019 3.2 % 76,074 2.7 % Total $ 4,140,364 100.0 % $ 3,073,636 100.0 % $ 2,856,659 100.0 % Year Ended December 31, Revenue by Activity Type 2022 2021 2020 New Construction $ 2,011,992 48.6 % $ 1,421,784 46.3 % $ 1,333,739 46.7 % Existing Building Construction 1,210,512 29.2 % 963,461 31.3 % 910,807 31.9 % Service Projects 382,155 9.2 % 278,582 9.1 % 241,402 8.4 % Service Calls, Maintenance and Monitoring 535,705 13.0 % 409,809 13.3 % 370,711 13.0 % Total $ 4,140,364 100.0 % $ 3,073,636 100.0 % $ 2,856,659 100.0 % |
Schedule of contract assets and liabilities | Year Ended December 31, Year Ended December 31, 2022 2021 Contract Contract Contract Contract Assets Liabilities Assets Liabilities Balance at beginning of period $ 29,900 $ 307,380 $ 18,622 $ 226,237 Change due to acquisitions / disposals 2,426 1,160 10,356 36,523 Change related to credit allowance 4 — (5) — Other changes in the period (5,119) 239,753 927 44,620 Balance at end of period $ 27,211 $ 548,293 $ 29,900 $ 307,380 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Measurements | |
Summary of fair values and levels within the fair value hierarchy in which the fair value measurements fall for assets and liabilities measured on a recurring basis | 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 December 31, 2022 and 2021 (in thousands): Fair Value Measurements at December 31, 2022 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 57,214 $ — $ — $ 57,214 Life insurance—cash surrender value $ — $ 9,315 $ — $ 9,315 Contingent earn-out obligations $ — $ — $ 32,317 $ 32,317 Fair Value Measurements at December 31, 2021 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 58,776 $ — $ — $ 58,776 Life insurance—cash surrender value $ — $ 6,643 $ — $ 6,643 Contingent earn-out obligations $ — $ — $ 34,114 $ 34,114 |
Schedule of reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3) | 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): December 31, 2022 2021 Balance at beginning of year $ 34,114 $ 25,979 Issuances — 19,949 Settlements (6,616) (3,994) Adjustments to fair value 4,819 (7,820) Balance at end of year $ 32,317 $ 34,114 |
Goodwill and Identifiable Int_2
Goodwill and Identifiable Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Identifiable Intangible Assets, Net | |
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill are as follows (in thousands): Mechanical Services Electrical Services Segment Segment Total Balance at December 31, 2020 $ 307,448 $ 156,944 $ 464,392 Acquisitions and purchase price adjustments (See Note 5) 52,771 74,951 127,722 Impact of segment reorganization 1,101 (1,101) — Balance at December 31, 2021 361,320 230,794 592,114 Acquisitions and purchase price adjustments (See Note 5) 2,609 17,066 19,675 Balance at December 31, 2022 $ 363,929 $ 247,860 $ 611,789 |
Schedule of components of identifiable intangible assets | Identifiable intangible assets consist of the following (dollars in thousands): Weighted-Average December 31, 2022 December 31, 2021 Remaining Useful Lives Gross Book Accumulated Gross Book Accumulated in Years Value Amortization Value Amortization Customer Relationships 6.7 $ 340,721 $ (161,049) $ 330,572 $ (130,098) Backlog 0.8 3,200 (2,361) 32,300 (20,091) Trade Names 18.4 121,561 (28,171) 114,795 (22,697) Total $ 465,482 $ (191,581) $ 477,667 $ (172,886) |
Schedule of future amortization expense of identifiable intangible assets | As of December 31, 2022, future amortization expense of identifiable intangible assets was as follows (in thousands): Year ending December 31— 2023 $ 36,252 2024 34,063 2025 31,876 2026 31,032 2027 29,050 Thereafter 111,628 Total $ 273,901 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment | |
Schedule of components of property and equipment | Property and equipment consist of the following (dollars in thousands): Estimated Useful Lives December 31, in Years 2022 2021 Land — $ 6,792 $ 6,792 Transportation equipment 1 - 7 153,587 132,792 Machinery and equipment 1 - 20 56,357 48,000 Computer and telephone equipment 1 - 10 23,551 23,065 Buildings and leasehold improvements 1 - 40 80,275 74,981 Furniture and fixtures 1 - 17 6,270 6,081 Construction in progress — 6,717 1,668 333,549 293,379 Less—Accumulated depreciation (189,600) (164,825) Property and equipment, net $ 143,949 $ 128,554 |
Detail of Other Current Liabi_2
Detail of Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Detail of Other Current Liabilities | |
Schedule of other current liabilities | Other current liabilities consist of the following (in thousands): December 31, 2022 2021 Accrued warranty costs $ 9,429 $ 8,969 Current lease liability 21,151 19,050 Accrued job losses 3,650 8,962 Accrued sales and use tax 5,335 3,861 Liabilities due to former owners 31,510 27,613 Other current liabilities 49,640 37,211 $ 120,715 $ 105,666 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Schedule of components of debt obligations | Debt obligations consist of the following (in thousands): December 31, 2022 2021 Revolving credit facility $ 215,000 $ 220,000 Term loan — 120,000 Notes to former owners 41,040 47,954 Finance lease liabilities — 266 Other debt 205 — Total principal amount 256,245 388,220 Less—unamortized debt issuance costs — (190) Total debt, net of unamortized debt issuance costs 256,245 388,030 Less—current portion (9,000) (2,788) Total long-term portion of debt, net $ 247,245 $ 385,242 |
Schedule of future principal payments of notes to former owners | At December 31, 2022, future principal payments of debt are as follows (in thousands): Year ending December 31— 2023 $ 9,000 2024 7,332 2025 22,269 2026 2,644 2027 215,000 $ 256,245 |
Schedule of interest expense | Year Ended December 31, 2022 2021 2020 Interest expense on notes to former owners $ 1,139 $ 1,052 $ 1,354 Interest expense on borrowings and unused commitment fees 10,955 3,371 5,319 Interest expense (income) on interest rate swaps (332) 499 338 Interest expense on finance leases 4 57 — Letter of credit fees 800 679 830 Amortization of debt financing costs 786 538 544 Total $ 13,352 $ 6,196 $ 8,385 |
Schedule of market rates relating to interest options under the Facility | Base Rate Loan Option: Federal Funds Rate plus 0.50% 4.83% Wells Fargo Bank, N.A. Prime Rate 7.50% One-month SOFR plus 1.00% 5.06% SOFR Loan Option: One-month SOFR 4.06% Three-month SOFR 3.62% Six-month SOFR 2.89% |
Summary of additional margins | Net Leverage Ratio Less than 1.00 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 % Letter of credit fees 1.00 % 1.25 % 1.50 % 1.75 % 2.00 % Commitment fees on any portion of the Revolving Loan capacity not in use for borrowings or letters of credit at any given time 0.15 % 0.175 % 0.20 % 0.225 % 0.25 % |
Notes to Former Owners | |
Schedule of future principal payments of notes to former owners | At December 31, 2022, future principal payments of notes to former owners by maturity year are as follows (dollars in thousands): Balance at Range of Stated December 31, 2022 Interest Rates 2023 $ 9,000 2.5 % 2024 7,200 2.5 - 3.0 % 2025 22,215 2.3 - 3.0 % 2026 2,625 2.5 % Total $ 41,040 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Schedule of operating lease assets and liabilities | The following table summarizes the operating lease assets and liabilities included in the Consolidated Balance Sheet as follows (in thousands): December 31, 2022 2021 Operating lease right-of-use assets $ 130,666 $ 124,756 Operating lease liabilities: Other current liabilities $ 21,151 $ 19,050 Long-term operating lease liabilities 111,744 107,701 Total operating lease liabilities $ 132,895 $ 126,751 |
Schedule of maturities of lease liabilities | The maturities of operating lease liabilities as of December 31, 2022 are as follows (in thousands): Year ending December 31— 2023 $ 26,275 2024 23,743 2025 22,471 2026 19,172 2027 14,914 Thereafter 51,638 Total Lease Payments 158,213 Less—Present Value Discount (25,318) Present Value of Operating Lease Liabilities $ 132,895 |
Schedule of supplemental information related to leases | Supplemental information related to operating leases was as follows (in thousands): Year Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of operating lease liabilities $ 26,740 $ 22,232 Operating lease right-of-use assets obtained in exchange for lease liabilities $ 27,467 $ 47,621 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of provision for income taxes relating to continuing operations | Our provision (benefit) for income taxes relating to continuing operations consists of the following (in thousands): December 31, 2022 2021 2020 Current tax provision— Federal $ 58,040 $ 31,283 $ 36,556 State 26,376 8,741 12,798 Total current 84,416 40,024 49,354 Deferred tax provision (benefit)— Federal (80,130) 6,197 (5,483) State (14,375) 705 (2,470) Total deferred (94,505) 6,902 (7,953) Provision (benefit) for income taxes $ (10,089) $ 46,926 $ 41,401 |
Schedule of difference in income taxes provided for and the amounts determined by applying the federal statutory tax rate to income before income taxes results | The provision (benefit) for income taxes for the years ended December 31, 2022, 2021 and 2020 resulted in effective tax rates on continuing operations of (4.3%), 24.7% and 21.6%, respectively. The reasons for the differences between these effective tax rates and the federal statutory rates are as follows (in thousands, except percentages): December 31, 2022 2021 2020 Federal statutory rate of— 21 % 21 % 21 % Income taxes at the federal statutory rate $ 49,530 $ 39,958 $ 40,223 Increases (decreases) resulting from— Net state income taxes 9,376 7,340 8,406 Valuation allowances (95) (39) (254) Net unrecognized tax benefits (17,922) 640 18,557 Nondeductible expenses 4,045 2,381 2,470 R&D tax credit (51,398) — (26,133) 179D deduction (964) (1,207) (1,062) Stock-based compensation deductions (872) (2,210) (426) Other (1,789) 63 (380) Provision (benefit) for income taxes $ (10,089) $ 46,926 $ 41,401 |
Schedule of significant components of the net deferred tax assets and net deferred tax liabilities as reflected on the Consolidated Balance Sheets | Significant components of the deferred tax assets and deferred tax liabilities as reflected on the Consolidated Balance Sheets are as follows (in thousands): Year Ended December 31, 2022 2021 Deferred tax assets— Accounts receivable and allowance for credit losses $ 2,530 $ 1,878 Stock-based compensation 3,809 3,392 Accrued liabilities and expenses 34,179 36,255 Lease liabilities 32,048 27,944 Net operating loss carryforwards 5,361 10,379 Intangible assets 9,204 3,851 Research and experimental expenditures 106,002 — Other 539 758 Subtotal 193,672 84,457 Valuation allowances (379) (475) Total deferred tax assets 193,293 83,982 Deferred tax liabilities— Property and equipment (18,882) (15,534) Lease right-of-use asset (32,025) (27,905) Long-term contracts (1,870) (964) Goodwill (23,288) (17,321) Other (1,563) (1,098) Total deferred tax liabilities (77,628) (62,822) Net deferred tax assets $ 115,665 $ 21,160 |
Schedule of deferred income tax assets and liabilities included in the consolidated balance sheets | The deferred tax assets and deferred tax liabilities reflected above are included in the Consolidated Balance Sheets as follows (in thousands): December 31, 2022 2021 Deferred tax assets $ 115,665 $ 22,905 Deferred tax liabilities $ — $ 1,745 |
Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties | A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties, is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Balance at beginning of year $ 29,452 $ 28,756 $ 10,199 Additions based on tax positions related to current year 3,420 207 — Additions based on tax positions related to prior years 7,427 489 26,858 Reductions for tax positions related to prior years (13) — — Reductions for settlements with taxing authorities (28,756) — (8,301) Balance at end of year $ 11,530 $ 29,452 $ 28,756 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Reconciliation of number of shares outstanding with the number of shares used in computing basic and diluted earnings per share | 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): Year Ended December 31, 2022 2021 2020 Common shares outstanding, end of period 35,761 36,091 36,188 Effect of using weighted average common shares outstanding 171 194 354 Shares used in computing earnings per share—basic 35,932 36,285 36,542 Effect of shares issuable under stock option plans based on the treasury stock method 36 89 123 Effect of restricted and contingently issuable shares 78 76 73 Shares used in computing earnings per share—diluted 36,046 36,450 36,738 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Restricted Stock | |
Summary of information about nonvested stock option awards and changes | The following table summarizes activity under our restricted stock plans (shares in thousands): Year Ended December 31, 2022 Weighted Average Grant Restricted Stock and Restricted Stock Units Shares Date Fair Value Unvested at beginning of year 115 $ 57.74 Granted 69 $ 90.17 Vested (75) $ 61.68 Forfeited (5) $ 56.77 Unvested at end of year 104 $ 76.39 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Information | |
Summary of information about reportable segments | The following tables present information about our reportable segments (in thousands): Mechanical Services Electrical Services Corporate Consolidated Total Assets at December 31, 2022 $ 1,741,135 $ 790,040 $ 66,303 $ 2,597,478 Total Assets at December 31, 2021 $ 1,452,527 $ 690,364 $ 66,223 $ 2,209,114 Year Ended December 31, 2022 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 3,178,475 $ 961,889 $ — $ 4,140,364 Gross Profit $ 580,619 $ 160,989 $ — $ 741,608 Capital Expenditures $ 43,532 $ 4,101 $ 726 $ 48,359 Year Ended December 31, 2021 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 2,542,623 $ 531,013 $ — $ 3,073,636 Gross Profit $ 486,346 $ 76,861 $ — $ 563,207 Capital Expenditures $ 19,408 $ 2,413 $ 509 $ 22,330 Year Ended December 31, 2020 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 2,430,632 $ 426,027 $ — $ 2,856,659 Gross Profit $ 513,760 $ 33,223 $ — $ 546,983 Capital Expenditures $ 22,561 $ 944 $ 626 $ 24,131 |
Business and Organization (Deta
Business and Organization (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Installation of systems in newly constructed facilities | |
Business and Organization | |
Percentage of revenue attributable to services | 48.60% |
Maintenance, repair and replacement services | |
Business and Organization | |
Percentage of revenue attributable to services | 51.40% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies and Estimates - Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash paid for: | |||
Interest | $ 12,915 | $ 6,052 | $ 7,684 |
Income taxes, net of refunds | $ 44,296 | $ 52,204 | $ 51,286 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies and Estimates - Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance at beginning of year | $ 10,110 | $ 10,709 | |
Bad debt expense (benefit) | 2,670 | (1,452) | $ 5,253 |
Deductions for uncollectible receivables written off, net of recoveries | (1,206) | (986) | |
Credit allowance of acquired receivables on the acquisition date | 667 | 1,839 | |
Balance at end of year | 12,241 | 10,110 | 10,709 |
Service | |||
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance at beginning of year | 3,294 | 4,637 | |
Bad debt expense (benefit) | 2,431 | (970) | |
Deductions for uncollectible receivables written off, net of recoveries | (804) | (742) | |
Credit allowance of acquired receivables on the acquisition date | 324 | 369 | |
Balance at end of year | 5,245 | 3,294 | 4,637 |
Construction | |||
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance at beginning of year | 6,758 | 6,028 | |
Bad debt expense (benefit) | 232 | (496) | |
Deductions for uncollectible receivables written off, net of recoveries | (402) | (244) | |
Credit allowance of acquired receivables on the acquisition date | 343 | 1,470 | |
Balance at end of year | 6,931 | 6,758 | 6,028 |
Other. | |||
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance at beginning of year | 58 | 44 | |
Bad debt expense (benefit) | 7 | 14 | |
Balance at end of year | $ 65 | $ 58 | $ 44 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies and Estimates - Risk (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Warranty Costs | |
Labor warranty period after servicing of existing MEP system | 30 days |
Revenue | Customer concentration | Minimum | |
Warranty Costs | |
Single customer, percentage of revenue | 8% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies and Estimates - Investments (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Summary of Significant Accounting Policies and Estimates | |
Investment fair value | $ 2.5 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Revenue Recognition (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Contracts in progress | ||
Costs incurred on contracts in progress | $ 4,801,264 | $ 3,723,715 |
Estimated earnings, net of losses | 796,260 | 589,286 |
Less-Billings to date | (5,953,973) | (4,527,801) |
Less-Unbilled accounts receivable | (77,030) | (61,881) |
Less-Unbilled accounts receivable credit allowance | (1,011) | (715) |
Contracts in progress | (434,490) | (277,396) |
Costs and estimated earnings in excess of billings | 27,211 | 29,900 |
Plus-Costs and estimated earnings in excess of billings credit allowance | 80 | 84 |
Billings in excess of costs and estimated earnings | $ (461,781) | (307,380) |
Period during which progress billings or contract price can be withheld until completion of work | 6 months | |
Retention receivable | $ 193,600 | 139,500 |
Retention payable | $ 29,800 | $ 24,000 |
Revenue, Performance Obligation, Description of Payment Terms | We typically invoice our customers with payment terms of net due in 30 days | |
Receivable payment terms (in days) | 30 days | |
Minimum | ||
Contracts in progress | ||
Receivable payment terms (in days) | 45 days | |
Payments received term (in days) | 30 days | |
Maximum | ||
Contracts in progress | ||
Receivable payment terms (in days) | 60 days | |
Payments received term (in days) | 90 days |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue | |||
Revenue | $ 4,140,364 | $ 3,073,636 | $ 2,856,659 |
Percentage of revenue from contract with customer (as a percent) | 100% | 100% | 100% |
Industrial | |||
Disaggregation of Revenue | |||
Revenue | $ 1,973,252 | $ 1,356,688 | $ 1,112,075 |
Percentage of revenue from contract with customer (as a percent) | 47.70% | 44.10% | 38.90% |
Healthcare | |||
Disaggregation of Revenue | |||
Revenue | $ 584,023 | $ 417,901 | $ 371,105 |
Percentage of revenue from contract with customer (as a percent) | 14.10% | 13.60% | 13% |
Education | |||
Disaggregation of Revenue | |||
Revenue | $ 445,638 | $ 390,251 | $ 487,922 |
Percentage of revenue from contract with customer (as a percent) | 10.80% | 12.70% | 17.10% |
Office Buildings | |||
Disaggregation of Revenue | |||
Revenue | $ 349,235 | $ 308,799 | $ 319,426 |
Percentage of revenue from contract with customer (as a percent) | 8.40% | 10.10% | 11.20% |
Retail, Restaurants and Entertainment | |||
Disaggregation of Revenue | |||
Revenue | $ 311,697 | $ 213,386 | $ 239,541 |
Percentage of revenue from contract with customer (as a percent) | 7.50% | 6.90% | 8.40% |
Government | |||
Disaggregation of Revenue | |||
Revenue | $ 255,314 | $ 174,813 | $ 163,717 |
Percentage of revenue from contract with customer (as a percent) | 6.20% | 5.70% | 5.70% |
Multi-Family and Residential | |||
Disaggregation of Revenue | |||
Revenue | $ 126,339 | $ 112,779 | $ 86,799 |
Percentage of revenue from contract with customer (as a percent) | 3% | 3.70% | 3% |
Other | |||
Disaggregation of Revenue | |||
Revenue | $ 94,866 | $ 99,019 | $ 76,074 |
Percentage of revenue from contract with customer (as a percent) | 2.30% | 3.20% | 2.70% |
New Construction | |||
Disaggregation of Revenue | |||
Revenue | $ 2,011,992 | $ 1,421,784 | $ 1,333,739 |
Percentage of revenue from contract with customer (as a percent) | 48.60% | 46.30% | 46.70% |
Existing Building Construction | |||
Disaggregation of Revenue | |||
Revenue | $ 1,210,512 | $ 963,461 | $ 910,807 |
Percentage of revenue from contract with customer (as a percent) | 29.20% | 31.30% | 31.90% |
Service Projects | |||
Disaggregation of Revenue | |||
Revenue | $ 382,155 | $ 278,582 | $ 241,402 |
Percentage of revenue from contract with customer (as a percent) | 9.20% | 9.10% | 8.40% |
Service Calls, Maintenance and Monitoring | |||
Disaggregation of Revenue | |||
Revenue | $ 535,705 | $ 409,809 | $ 370,711 |
Percentage of revenue from contract with customer (as a percent) | 13% | 13.30% | 13% |
Mechanical Services | |||
Disaggregation of Revenue | |||
Revenue | $ 3,178,475 | $ 2,542,623 | $ 2,430,632 |
Percentage of revenue from contract with customer (as a percent) | 76.80% | 82.70% | 85.10% |
Electrical Services | |||
Disaggregation of Revenue | |||
Revenue | $ 961,889 | $ 531,013 | $ 426,027 |
Percentage of revenue from contract with customer (as a percent) | 23.20% | 17.30% | 14.90% |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Contract Assets | ||
Balance at beginning of period | $ 29,900 | $ 18,622 |
Change due to acquisitions / disposals | 2,426 | 10,356 |
Change related to credit allowance | 4 | (5) |
Other changes in the period | (5,119) | 927 |
Balance at end of period | 27,211 | 29,900 |
Contract Liabilities | ||
Balance at beginning of period | 307,380 | 226,237 |
Change due to acquisitions / disposals | 1,160 | 36,523 |
Other changes in the period | 239,753 | 44,620 |
Balance at end of period | 548,293 | 307,380 |
Revenue related to our contract liabilities | $ 286,500 | $ 207,600 |
Revenue from Contracts with C_6
Revenue from Contracts with Customers - Remaining Performance Obligations (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Remaining Performance Obligations | |
The term of the renewable service maintenance agreements (in years) | 1 year |
Practical Expedient | true |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Remaining Performance Obligations | |
Remaining performance obligations | $ 4,060 |
Expected timing of performance obligations | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | Minimum | |
Remaining Performance Obligations | |
Expected percentage of remaining performance obligations | 65% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | Maximum | |
Remaining Performance Obligations | |
Expected percentage of remaining performance obligations | 75% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) employee | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Fair Value Measurements | |||
Number of employees covered under life insurance policies | employee | 120 | ||
Combined face value of life insurance policies | $ 82,100 | ||
Reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3) | |||
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | |
Impairment | |||
Impairment charges | $ 0 | $ 0 | $ 0 |
Minimum | |||
Fair Value Measurements | |||
Weighted average cost of capital | 11% | ||
Maximum | |||
Fair Value Measurements | |||
Weighted average cost of capital | 17% | ||
Contingent earn-out obligations | |||
Reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3) | |||
Balance at beginning of period | $ 34,114 | 25,979 | |
Issuances | 19,949 | ||
Settlements | (6,616) | (3,994) | |
Adjustments to fair value | (4,819) | 7,820 | |
Balance at end of period | 32,317 | 34,114 | 25,979 |
Recurring basis | Total | |||
Fair Value Measurements | |||
Cash and cash equivalents | 57,214 | 58,776 | |
Life insurance-cash surrender value | 9,315 | 6,643 | |
Contingent earn-out obligations | 32,317 | 34,114 | |
Recurring basis | Quoted Market Prices In Active Markets for Identical Assets (Level 1) | |||
Fair Value Measurements | |||
Cash and cash equivalents | 57,214 | 58,776 | |
Recurring basis | Significant Other Observable Inputs (Level 2) | |||
Fair Value Measurements | |||
Life insurance-cash surrender value | 9,315 | 6,643 | |
Recurring basis | Significant Unobservable Inputs (Level 3) | |||
Fair Value Measurements | |||
Contingent earn-out obligations | 32,317 | 34,114 | |
Non recurring basis | Significant Unobservable Inputs (Level 3) | |||
Impairment | |||
Impairment charges | 0 | 0 | 0 |
Interest Rate Swap | |||
Fair Value Measurements | |||
Net gain (loss) | $ 300 | $ (500) | $ (300) |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Millions | 3 Months Ended | ||||
Apr. 01, 2022 | Dec. 31, 2021 | Dec. 01, 2021 | Aug. 01, 2021 | Mar. 31, 2021 | |
Consideration transferred: | |||||
Notes issued to former owners | $ 8 | ||||
Atlantic | |||||
Consideration transferred: | |||||
Fair value of consideration transferred | $ 48.1 | ||||
Cash paid at closing | 34.1 | ||||
Notes issued to former owners | $ 5.3 | ||||
MEP Holdings | |||||
Consideration transferred: | |||||
Fair value of consideration transferred | $ 57.3 | ||||
Cash paid at closing | 45.2 | ||||
Notes issued to former owners | 7.6 | ||||
Mechanical Contractor Kentucky | |||||
Consideration transferred: | |||||
Fair value of consideration transferred | 20.5 | ||||
Mechanical Contractor Indiana | |||||
Consideration transferred: | |||||
Fair value of consideration transferred | $ 4.7 | ||||
Ivey | |||||
Consideration transferred: | |||||
Fair value of consideration transferred | 79.1 | ||||
Cash paid at closing | 64.1 | ||||
Other amount payable | $ 0.4 | ||||
Amteck | |||||
Consideration transferred: | |||||
Fair value of consideration transferred | $ 138.9 | ||||
Cash paid at closing | 107.4 | ||||
Notes issued to former owners | 10 | ||||
Working capital adjustment | 8.6 | ||||
Identifiable intangible assets | 113.1 | ||||
Amteck | Contingent earn-out obligations | |||||
Consideration transferred: | |||||
Estimated fair value of contingent earn-out payments | $ 12.9 | ||||
Mechanical Contractor Utah | |||||
Consideration transferred: | |||||
Fair value of consideration transferred | $ 18.1 |
Goodwill and Identifiable Int_3
Goodwill and Identifiable Intangible Assets, Net - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Changes in the carrying amount of goodwill | ||
Balance at beginning of year | $ 592,114 | $ 464,392 |
Acquisitions and purchase price adjustments (See Note 5) | 19,675 | 127,722 |
Balance at end of period | 611,789 | 592,114 |
Mechanical Services Segment | ||
Changes in the carrying amount of goodwill | ||
Balance at beginning of year | 361,320 | 307,448 |
Acquisitions and purchase price adjustments (See Note 5) | 2,609 | 52,771 |
Impact of segment reorganization | 1,101 | |
Balance at end of period | 363,929 | 361,320 |
Accumulated impairment charges | 116,600 | 116,600 |
Electrical Services Industry | ||
Changes in the carrying amount of goodwill | ||
Balance at beginning of year | 230,794 | 156,944 |
Acquisitions and purchase price adjustments (See Note 5) | 17,066 | 74,951 |
Impact of segment reorganization | (1,101) | |
Balance at end of period | $ 247,860 | $ 230,794 |
Goodwill and Identifiable Int_4
Goodwill and Identifiable Intangible Assets, Net - Identifiable Intangible Assets, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Identifiable Intangible Assets, Net | ||
Gross Book Value | $ 465,482 | $ 477,667 |
Accumulated Amortization | (191,581) | (172,886) |
Future amortization expense of identifiable intangible assets | ||
2023 | 36,252 | |
2024 | 34,063 | |
2025 | 31,876 | |
2026 | 31,032 | |
2027 | 29,050 | |
Thereafter | 111,628 | |
Total | $ 273,901 | |
Customer Relationships | ||
Identifiable Intangible Assets, Net | ||
Estimated Useful Lives in Years | 6 years 8 months 12 days | |
Gross Book Value | $ 340,721 | 330,572 |
Accumulated Amortization | $ (161,049) | (130,098) |
Customer Relationships | Minimum | ||
Identifiable Intangible Assets, Net | ||
Estimated Useful Lives in Years | 6 years 8 months 12 days | |
Backlog | ||
Identifiable Intangible Assets, Net | ||
Estimated Useful Lives in Years | 9 months 18 days | |
Gross Book Value | $ 3,200 | 32,300 |
Accumulated Amortization | $ (2,361) | (20,091) |
Backlog | Minimum | ||
Identifiable Intangible Assets, Net | ||
Estimated Useful Lives in Years | 9 months 18 days | |
Trade Name | ||
Identifiable Intangible Assets, Net | ||
Estimated Useful Lives in Years | 18 years 4 months 24 days | |
Gross Book Value | $ 121,561 | 114,795 |
Accumulated Amortization | $ (28,171) | $ (22,697) |
Trade Name | Minimum | ||
Identifiable Intangible Assets, Net | ||
Estimated Useful Lives in Years | 18 years 4 months 24 days | |
Customer Relationships Noncompete Agreements and Tradenames | Minimum | ||
Identifiable Intangible Assets, Net | ||
Estimated Useful Lives in Years | 1 year | |
Customer Relationships Noncompete Agreements and Tradenames | Maximum | ||
Identifiable Intangible Assets, Net | ||
Estimated Useful Lives in Years | 25 years |
Goodwill and Identifiable Int_5
Goodwill and Identifiable Intangible Assets, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Asset Impairment Charges [Abstract] | |||
Impairment testing, discounted cash flow analysis weightage assigned | 50% | ||
Impairment testing, public company approach weightage assigned | 50% | ||
Percentage of Decline in Estimated Fair Value of Reporting Unit, Not Resulting in Impairment | 10% | ||
Impairment charges | $ 0 | $ 0 | $ 0 |
Amortization of identifiable intangible assets | $ 47,795 | $ 40,505 | $ 32,698 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and equipment | |||
Property and equipment, gross | $ 333,549 | $ 293,379 | |
Less-Accumulated depreciation | (189,600) | (164,825) | |
Property and equipment, net | 143,949 | 128,554 | |
Depreciation expense | 33,600 | 28,400 | $ 27,900 |
Land | |||
Property and equipment | |||
Property and equipment, gross | 6,792 | 6,792 | |
Transportation equipment | |||
Property and equipment | |||
Property and equipment, gross | $ 153,587 | 132,792 | |
Transportation equipment | Minimum | |||
Property and equipment | |||
Estimated useful life | 1 year | ||
Transportation equipment | Maximum | |||
Property and equipment | |||
Estimated useful life | 7 years | ||
Machinery and equipment | |||
Property and equipment | |||
Property and equipment, gross | $ 56,357 | 48,000 | |
Machinery and equipment | Minimum | |||
Property and equipment | |||
Estimated useful life | 1 year | ||
Machinery and equipment | Maximum | |||
Property and equipment | |||
Estimated useful life | 20 years | ||
Computer and telephone equipment | |||
Property and equipment | |||
Property and equipment, gross | $ 23,551 | 23,065 | |
Computer and telephone equipment | Minimum | |||
Property and equipment | |||
Estimated useful life | 1 year | ||
Computer and telephone equipment | Maximum | |||
Property and equipment | |||
Estimated useful life | 10 years | ||
Buildings and leasehold improvements | |||
Property and equipment | |||
Property and equipment, gross | $ 80,275 | 74,981 | |
Buildings and leasehold improvements | Minimum | |||
Property and equipment | |||
Estimated useful life | 1 year | ||
Buildings and leasehold improvements | Maximum | |||
Property and equipment | |||
Estimated useful life | 40 years | ||
Furniture and fixtures | |||
Property and equipment | |||
Property and equipment, gross | $ 6,270 | 6,081 | |
Furniture and fixtures | Minimum | |||
Property and equipment | |||
Estimated useful life | 1 year | ||
Furniture and fixtures | Maximum | |||
Property and equipment | |||
Estimated useful life | 17 years | ||
Construction in progress | |||
Property and equipment | |||
Property and equipment, gross | $ 6,717 | $ 1,668 |
Detail of Other Current Liabi_3
Detail of Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Other current liabilities | ||
Accrued warranty costs | $ 9,429 | $ 8,969 |
Current lease liability | 21,151 | 19,050 |
Accrued job losses | 3,650 | 8,962 |
Accrued sales and use tax | 5,335 | 3,861 |
Liabilities due to former owners | 31,510 | 27,613 |
Other current liabilities | 49,640 | 37,211 |
Total other current liabilities | $ 120,715 | $ 105,666 |
Debt Obligations (Details)
Debt Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Obligations | ||
Finance lease liabilities | $ 266 | |
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Long-Term Debt, Current Maturities, Long-term Debt, Excluding Current Maturities | Long-Term Debt, Current Maturities, Long-term Debt, Excluding Current Maturities |
Other debt | $ 205 | |
Total principal amount | 256,245 | $ 388,220 |
Less-unamortized debt issuance costs | (190) | |
Total debt, net of unamortized debt issuance costs | 256,245 | 388,030 |
Less-current portion | 9,000 | 2,788 |
Total long-term portion of debt, net | 247,245 | 385,242 |
Revolving credit facility | ||
Debt Obligations | ||
Total principal amount | 215,000 | 220,000 |
Term loan | ||
Debt Obligations | ||
Total principal amount | 120,000 | |
Notes to Former Owners | ||
Debt Obligations | ||
Outstanding balance | $ 41,040 | $ 47,954 |
Debt Obligations - Future Payme
Debt Obligations - Future Payments and Interest Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Future principal payments of long-term debt | |||
2023 | $ 9,000 | ||
2024 | 7,332 | ||
2025 | 22,269 | ||
2026 | 2,644 | ||
2027 | 215,000 | ||
Total debt | 256,245 | ||
Interest expense | |||
Interest expense on notes to former owners | 1,139 | $ 1,052 | $ 1,354 |
Interest expense on borrowings and unused commitment fees | 10,955 | 3,371 | 5,319 |
Interest expense (income) on interest rate swaps | (332) | 499 | 338 |
Interest expense on finance leases | 4 | 57 | |
Letter of credit fees | 800 | 679 | 830 |
Amortization of debt financing costs | 786 | 538 | 544 |
Total | $ 13,352 | $ 6,196 | $ 8,385 |
Debt Obligations - Other (Detai
Debt Obligations - Other (Details) | 12 Months Ended | ||||
Dec. 31, 2022 USD ($) item | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | May 25, 2022 USD ($) | May 24, 2022 USD ($) | |
Debt Obligations | |||||
Payments on term loan | $ 120,000,000 | $ 15,000,000 | $ 15,000,000 | ||
Financing and professional cost | 2,297,000 | ||||
Asset pledged as collateral | |||||
Debt Obligations | |||||
Book value of assets | 120,300,000 | ||||
Revolving credit facility | |||||
Debt Obligations | |||||
Borrowing capacity | $ 850,000,000 | $ 450,000,000 | |||
Outstanding borrowings | 215,000,000 | ||||
Letters of credit amount outstanding | 54,200,000 | ||||
Credit available | $ 580,800,000 | ||||
Number of quarters of net earnings used for the calculation of the credit facility adjusted EBITDA | item | 4 | ||||
Principal financial covenants | |||||
Number of interest rate options | item | 2 | ||||
Number of quarters of Adjusted EBITDA and interest expense used for calculation of fixed charge coverage ratio | item | 4 | ||||
Other disclosures | |||||
Weighted average interest rate (as a percent) | 5.70% | 1.40% | |||
Revolving credit facility | Net Leverage Ratio, Less Than or Equal To 3.25 | |||||
Principal financial covenants | |||||
Net leverage ratio used as basis for other restrictions | 3.25 | ||||
Revolving credit facility | Net Leverage Ratio, Less Than or Equal To 2.75 | |||||
Principal financial covenants | |||||
Net leverage ratio used as basis for other restrictions | 2.75 | ||||
Revolving credit facility | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: Less than 1.00 | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Letter of credit fees (as a percent) | 1% | ||||
Commitment fees payable on unused portion of the facility (as a percent) | 0.15% | ||||
Revolving credit facility | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.00 to 1.75 | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Letter of credit fees (as a percent) | 1.25% | ||||
Commitment fees payable on unused portion of the facility (as a percent) | 0.175% | ||||
Revolving credit facility | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.75 to 2.50 | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Letter of credit fees (as a percent) | 1.50% | ||||
Commitment fees payable on unused portion of the facility (as a percent) | 0.20% | ||||
Revolving credit facility | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 2.50 to 3.00 | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Letter of credit fees (as a percent) | 1.75% | ||||
Commitment fees payable on unused portion of the facility (as a percent) | 0.225% | ||||
Revolving credit facility | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 3.00 or Greater | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Letter of credit fees (as a percent) | 2% | ||||
Commitment fees payable on unused portion of the facility (as a percent) | 0.25% | ||||
Revolving credit facility | Minimum | |||||
Principal financial covenants | |||||
Interest coverage ratio | 3 | ||||
Revolving credit facility | Maximum | |||||
Principal financial covenants | |||||
Maximum cash adjustment allowed in net leverage ratio calculation | $ 100,000,000 | ||||
Leverage ratio | 3.50 | ||||
Revolving credit facility | Base rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: Less than 1.00 | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 0% | ||||
Revolving credit facility | Base rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.00 to 1.75 | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 0.25% | ||||
Revolving credit facility | Base rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.75 to 2.50 | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 0.50% | ||||
Revolving credit facility | Base rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 2.50 to 3.00 | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 0.75% | ||||
Revolving credit facility | Base rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 3.00 or Greater | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 1% | ||||
Amended senior revolving credit facility | |||||
Debt Obligations | |||||
Borrowing capacity | 850,000,000 | 562,500,000 | |||
Financing and professional cost | $ 2,300,000 | ||||
Unamortized costs | $ 1,200,000 | ||||
Amended senior revolving credit facility | Maximum | |||||
Debt Obligations | |||||
Line of credit borrowing capacity accordion option | $ 250,000,000 | ||||
Notes to Former Owners | |||||
Other disclosures | |||||
Cumulative number of companies acquired | item | 10 | ||||
Outstanding balance | $ 41,040,000 | $ 47,954,000 | |||
Letter of Credit | |||||
Debt Obligations | |||||
Borrowing capacity | $ 175,000,000 | ||||
Federal Funds Rate | Revolving credit facility | Base rate | |||||
Market rates relating to interest options | |||||
Market rate (as a percent) | 4.83% | ||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 0.50% | ||||
SOFR | Revolving credit facility | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: Less than 1.00 | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 1% | ||||
SOFR | Revolving credit facility | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.00 to 1.75 | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 1.25% | ||||
SOFR | Revolving credit facility | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.75 to 2.50 | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 1.50% | ||||
SOFR | Revolving credit facility | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 2.50 to 3.00 | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 1.75% | ||||
SOFR | Revolving credit facility | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 3.00 or Greater | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 2% | ||||
SOFR | Revolving credit facility | Base rate | |||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 1% | ||||
Wells Fargo Bank, N.A. Prime Rate | Revolving credit facility | Base rate | |||||
Market rates relating to interest options | |||||
Market rate (as a percent) | 7.50% | ||||
One-month SOFR | Revolving credit facility | |||||
Market rates relating to interest options | |||||
Variable rate basis | One-month SOFR | ||||
Market rate (as a percent) | 4.06% | ||||
One-month SOFR | Revolving credit facility | Base rate | |||||
Market rates relating to interest options | |||||
Market rate (as a percent) | 5.06% | ||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||
Additional per annum interest margin (as a percent) | 1% | ||||
Three-month SOFR | Revolving credit facility | |||||
Market rates relating to interest options | |||||
Variable rate basis | Three-month SOFR | ||||
Market rate (as a percent) | 3.62% | ||||
Six-month SOFR | Revolving credit facility | |||||
Market rates relating to interest options | |||||
Variable rate basis | Six-month SOFR | ||||
Market rate (as a percent) | 2.89% |
Debt Obligations - Notes to For
Debt Obligations - Notes to Former Owners (Details) - Notes to Former Owners - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Future principal payments of long-term debt | ||
Notes issued to former owners | $ 41,040 | $ 47,954 |
2022 | ||
Future principal payments of long-term debt | ||
Notes issued to former owners | $ 9,000 | |
Stated interest rate (as a percent) | 2.50% | |
2023 | ||
Future principal payments of long-term debt | ||
Notes issued to former owners | $ 7,200 | |
2023 | Minimum | ||
Future principal payments of long-term debt | ||
Stated interest rate (as a percent) | 2.50% | |
2023 | Maximum | ||
Future principal payments of long-term debt | ||
Stated interest rate (as a percent) | 3% | |
2024 | ||
Future principal payments of long-term debt | ||
Notes issued to former owners | $ 22,215 | |
2024 | Minimum | ||
Future principal payments of long-term debt | ||
Stated interest rate (as a percent) | 2.30% | |
2024 | Maximum | ||
Future principal payments of long-term debt | ||
Stated interest rate (as a percent) | 3% | |
2025 | ||
Future principal payments of long-term debt | ||
Notes issued to former owners | $ 2,625 | |
Stated interest rate (as a percent) | 2.50% |
Leases (Details)
Leases (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) Option | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Lessee, Lease, Description [Line Items] | |||
Finance lease liability | $ 266 | ||
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Long-Term Debt, Current Maturities, Long-term Debt, Excluding Current Maturities | Long-Term Debt, Current Maturities, Long-term Debt, Excluding Current Maturities | |
Variable lease expense and short-term lease expenses | $ 19,100 | $ 11,900 | $ 7,700 |
Weighted average discount rate for operating leases | 4.30% | 4% | |
Operating lease expense | $ 46,000 | $ 34,200 | 28,200 |
Weighted average remaining lease term | 8 years 1 month 6 days | 8 years 8 months 12 days | |
Rent paid to related parties | $ 6,900 | $ 4,900 | $ 4,200 |
Existence of option to extend | true | ||
Operating leases not yet commenced, minimum lease payments | $ 64,000 | ||
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Lease term for operating lease | 3 years | ||
Number of options to renew | Option | 1 | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Lease term for operating lease | 10 years |
Leases - Summary of Operating L
Leases - Summary of Operating Lease Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Summary of lease asset and liabilities | ||
Operating lease right-of-use assets | $ 130,666 | $ 124,756 |
Operating lease liabilities: | ||
Other current liabilities | $ 21,151 | $ 19,050 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | Other Liabilities, Current |
Long-term operating lease liabilities | $ 111,744 | $ 107,701 |
Total operating lease liabilities | $ 132,895 | $ 126,751 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Maturities of lease liabilities: | ||
2023 | $ 26,275 | |
2024 | 23,743 | |
2025 | 22,471 | |
2026 | 19,172 | |
2027 | 14,914 | |
Thereafter | 51,638 | |
Total Lease Payments | 158,213 | |
Less-Present Value Discount | (25,318) | |
Present Value of Operating Lease Liabilities | 132,895 | $ 126,751 |
Supplemental information related to leases: | ||
Cash paid for amounts included in the measurement of operating lease liabilities | 26,740 | 22,232 |
Operating lease right-of-use assets obtained in exchange for lease liabilities | $ 27,467 | $ 47,621 |
Income Taxes - Provision (Detai
Income Taxes - Provision (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current tax provision- | |||
Federal | $ 58,040 | $ 31,283 | $ 36,556 |
State | 26,376 | 8,741 | 12,798 |
Total current | 84,416 | 40,024 | 49,354 |
Deferred tax provision (benefit)- | |||
Federal | (80,130) | 6,197 | (5,483) |
State | (14,375) | 705 | (2,470) |
Total deferred | (94,505) | 6,902 | (7,953) |
Provision (benefit) for income taxes | $ (10,089) | $ 46,926 | $ 41,401 |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||
Effective tax rates on continuing operations | (4.30%) | 24.70% | 21.60% |
Federal statutory income tax rate (as a percent) | 21% | 21% | 21% |
Income taxes at the federal statutory rate | $ 49,530 | $ 39,958 | $ 40,223 |
Increases (decreases) resulting from- | |||
Net state income taxes | 9,376 | 7,340 | 8,406 |
Valuation allowances | (95) | (39) | (254) |
Net unrecognized tax benefits | (17,922) | 640 | 18,557 |
Nondeductible expenses | 4,045 | 2,381 | 2,470 |
R&D tax credits | (51,398) | (26,133) | |
179D deduction | (964) | (1,207) | (1,062) |
Stock-based compensation deductions | (872) | (2,210) | (426) |
Other | (1,789) | 63 | (380) |
Provision (benefit) for income taxes | $ (10,089) | $ 46,926 | $ 41,401 |
Income Taxes - Provision Change
Income Taxes - Provision Changes, Examination (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Oct. 31, 2020 | Sep. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||||||
Additions based on tax positions related to prior years | $ 7,427 | $ 489 | $ 26,858 | ||||
Reduced provision for income taxes | $ 28,800 | $ 8,300 | 28,756 | 8,301 | |||
Net interest income on the tax refunds | 1,600 | ||||||
Provision for income taxes | $ (10,089) | $ 46,926 | $ 41,401 | ||||
Internal Revenue Service (IRS) | |||||||
Income Taxes | |||||||
Refund claims allowed in Income tax examination | $ 8,900 | ||||||
Total Tax Years 2016-2018 | |||||||
Income Taxes | |||||||
Additions based on tax positions related to prior years | $ 28,800 | ||||||
Total Tax Years 2019-2021 | |||||||
Income Taxes | |||||||
R&D tax credits | $ 1,700 | $ 26,800 | |||||
R&D Tax Credit and 179D Deduction | Tax Year 2016 | |||||||
Income Taxes | |||||||
Provision for income taxes | 9,800 | ||||||
R&D Tax Credit and 179D Deduction | Tax Year 2017 | |||||||
Income Taxes | |||||||
Provision for income taxes | 9,500 | ||||||
R&D Tax Credit and 179D Deduction | Tax Year 2018 | |||||||
Income Taxes | |||||||
Provision for income taxes | 11,900 | ||||||
R&D Tax Credit and 179D Deduction | Total Tax Years 2016-2018 | |||||||
Income Taxes | |||||||
Provision for income taxes | $ 31,200 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets- | ||
Accounts receivable and allowance for doubtful accounts | $ 2,530 | $ 1,878 |
Stock-based compensation | 3,809 | 3,392 |
Accrued liabilities and expenses | 34,179 | 36,255 |
Lease liabilities | 32,048 | 27,944 |
Net operating loss carryforwards | 5,361 | 10,379 |
Intangible assets | 9,204 | 3,851 |
Research and experimental expenditures | 106,002 | |
Other | 539 | 758 |
Subtotal | 193,672 | 84,457 |
Valuation allowances | (379) | (475) |
Total deferred tax assets | 193,293 | 83,982 |
Deferred tax liabilities- | ||
Property and equipment | (18,882) | (15,534) |
Lease right-of-use asset | (32,025) | (27,905) |
Long-term contracts | (1,870) | (964) |
Goodwill | (23,288) | (17,321) |
Other | (1,563) | (1,098) |
Total deferred tax liabilities | (77,628) | (62,822) |
Net deferred tax assets | 115,665 | 21,160 |
Deferred income tax assets | ||
Deferred tax assets | $ 115,665 | 22,905 |
Deferred tax liabilities | $ 1,745 |
Income Taxes - Loss Carryforwar
Income Taxes - Loss Carryforwards and Other (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2022 | Sep. 30, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2023 | |
Operating loss carryforwards | ||||||
Net operating loss carryforwards | $ 5,361 | $ 10,379 | ||||
Federal deferred tax assets net operating loss carryforwards | 4,800 | |||||
Net deferred tax assets | 193,293 | 83,982 | ||||
Reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties | ||||||
Balance at beginning of year | $ 29,452 | 29,452 | 28,756 | $ 10,199 | ||
Additions based on tax positions related to current year | 3,420 | 207 | ||||
Additions based on tax positions related to prior years | 7,427 | 489 | 26,858 | |||
Reductions for tax positions related to prior years | (13) | |||||
Reductions for settlements with taxing authorities | (28,800) | $ (8,300) | (28,756) | (8,301) | ||
Balance at end of year | 11,530 | 29,452 | 28,756 | |||
Interest and penalties accrued | 300 | |||||
Reduced provision for income taxes | $ 28,800 | $ 8,300 | 28,756 | $ 8,301 | ||
Federal | ||||||
Operating loss carryforwards | ||||||
Net operating loss carryforwards | $ 23,100 | |||||
Maximum | ||||||
Reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties | ||||||
Decrease in unrecognized tax benefits | $ 5,300 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 USD ($) employee | Dec. 31, 2021 USD ($) employee | Dec. 31, 2020 USD ($) | |
Employee Benefit Plans | |||
Percentage of contributions of covered employees' salaries or wages | 2.50% | ||
Contribution | $ 19.8 | $ 16.1 | $ 16.3 |
Amount payable to plan | $ 0.5 | $ 0.6 | |
Number of employees who are union members | employee | 12 | 5 | |
Contributions made to multi-employer pension plans | $ 0 | $ 0 | $ 0 |
Period in which certain individuals are entitled to fixed annual payments | 15 years | ||
Maximum age under which certain individuals are entitled to fixed annual payments | 65 years | ||
Portion of benefits vesting after ten years of completed service (as a percent) | 50% | ||
Period of completed service over which 50% of benefits are vested | 10 years | ||
Portion of benefits vesting after fifteen years of completed service (as a percent) | 75% | ||
Period of completed service over which 75% of benefits are vested | 15 years | ||
Period of service over which benefits are fully vested | 20 years | ||
Unfunded benefit liability | $ 3.7 | $ 4 |
Commitments and Contingencies -
Commitments and Contingencies - Other and Bonds (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Commitments and Contingencies | |
Gain related to settlement agreements | $ 5.1 |
Surety | Minimum | |
Surety | |
Percentage of business which has required bonds | 10% |
Surety | Maximum | |
Surety | |
Percentage of business which has required bonds | 20% |
Commitments and Contingencies_2
Commitments and Contingencies - Self-Insurance (Details) | Dec. 31, 2022 USD ($) item |
Self-Insurance | |
Amount of loss fully insured above per-incident deductible amount | $ 175,000,000 |
Amount of excess loss insurance covered | 175,000,000 |
Workers Compensation | |
Self-Insurance | |
Per incident deductible amount | 250,000 |
Amount of loss fully insured above per-incident deductible amount | 250,000 |
Employer's Liability | |
Self-Insurance | |
Per incident deductible amount | 250,000 |
Employer's Liability | Maximum | |
Self-Insurance | |
Amount of excess loss insurance covered | 175,000,000 |
General Liability | |
Self-Insurance | |
Per incident deductible amount | 250,000 |
Amount of loss fully insured above per-incident deductible amount | 10,000,000 |
General Liability | Maximum | |
Self-Insurance | |
Amount of excess loss insurance covered | 175,000,000 |
Auto Liability | |
Self-Insurance | |
Per incident deductible amount | 250,000 |
Amount of loss fully insured above per-incident deductible amount | 10,000,000 |
Auto Liability | Maximum | |
Self-Insurance | |
Amount of excess loss insurance covered | $ 175,000,000 |
Employee Medical | |
Self-Insurance | |
Number of medical plans | item | 3 |
Employee Medical - Plan One | |
Self-Insurance | |
Per person, per policy deductible amount | $ 350,000 |
Employee Medical - Plan Two | |
Self-Insurance | |
Per person, per policy deductible amount | 350,000 |
Employee Medical - Plan Three | |
Self-Insurance | |
Per incident deductible amount | $ 350,000 |
Stockholders' Equity - Incentiv
Stockholders' Equity - Incentive and Other (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 12 Months Ended | 189 Months Ended | |||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2022 | May 17, 2022 | May 31, 2017 | Mar. 29, 2007 | |
Share Repurchase Program | |||||||
Share repurchase | $ 38,216 | $ 27,054 | $ 30,120 | ||||
2017 Omnibus Incentive Plan | |||||||
Stockholders' Equity | |||||||
Number of shares authorized and reserved for issuance | 2.9 | ||||||
Number of shares available for issuance | 1.6 | 1.6 | |||||
Stock Repurchase Program 2007 | |||||||
Share Repurchase Program | |||||||
Number of shares of outstanding common stock authorized to be acquired under a stock repurchase program | 10.9 | 10.9 | 1 | ||||
Additional number of shares authorized for repurchase | 0.7 | ||||||
Share repurchase (in shares) | 0.4 | 10.1 | |||||
Average price (in dollars per share) | $ 86.45 | $ 24.52 | |||||
Share repurchase | $ 38,200 |
Stockholders' Equity - Anti-Dil
Stockholders' Equity - Anti-Dilutive Stock Options (Details) - shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share | |||
Anti-dilutive securities excluded from computation of earnings per share amount (in shares) | 0 | 0 | |
Maximum | |||
Earnings Per Share | |||
Anti-dilutive securities excluded from computation of earnings per share amount (in shares) | 0.1 |
Stockholders' Equity - Number o
Stockholders' Equity - Number of Shares (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of the number of shares outstanding with the number of shares used in computing basic and diluted earnings per share | |||
Common shares outstanding, end of period | 35,761 | 36,091 | 36,188 |
Effect of using weighted average common shares outstanding | 171 | 194 | 354 |
Shares used in computing earnings per share-basic | 35,932 | 36,285 | 36,542 |
Effect of shares issuable under stock option plans based on the treasury stock method | 36 | 89 | 123 |
Effect of restricted and contingently issuable shares | 78 | 76 | 73 |
Shares used in computing earnings per share-diluted | 36,046 | 36,450 | 36,738 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock-Based Compensation | |||
Stock-based compensation expense | $ 10.5 | $ 10.6 | $ 6.9 |
Income tax benefit | $ 2.2 | $ 2.2 | $ 1.5 |
Minimum | |||
Stock-Based Compensation | |||
Sum of age and years of service for accelerated vesting on retirement of certain stock options and restricted stock awards | 75 years | ||
Stock Options | |||
Stock-Based Compensation | |||
Vesting period | 3 years |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair Value Assumptions (Details) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 USD ($) item $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) $ / shares | |
Additional information | |||
Stock-based compensation expense | $ 10.5 | $ 10.6 | $ 6.9 |
Stock Options | |||
Additional information | |||
Vesting period | 3 years | ||
Restricted Stock and Restricted Stock Units | |||
Other information | |||
Compensation expense yet to be recognized | $ 2.1 | ||
Weighted-average period over which compensation cost will be recognized | 2 years 3 months 18 days | ||
Shares | |||
Unvested at beginning of year (in shares) | shares | 115 | ||
Granted (in shares) | shares | 69 | ||
Vested (in shares) | shares | (75) | ||
Forfeited (in shares) | shares | (5) | ||
Unvested at end of year (in shares) | shares | 104 | 115 | |
Weighted Average Grant Date Fair Value | |||
Unvested at beginning of year (in dollars per share) | $ / shares | $ 57.74 | ||
Granted (in dollars per share) | $ / shares | 90.17 | $ 76.73 | $ 39.03 |
Vested (in dollars per share) | $ / shares | 61.68 | ||
Forfeited (in dollars per share) | $ / shares | 56.77 | ||
Unvested at end of year (in dollars per share) | $ / shares | $ 76.39 | 57.74 | |
Additional information | |||
Fair value of shares vested | $ 4.6 | ||
Weighted-average fair value (in dollars per share) | $ / shares | $ 90.17 | $ 76.73 | $ 39.03 |
Aggregate intrinsic value of restricted stock vested | $ 6.6 | $ 5.5 | $ 2.9 |
Performance Stock Units | |||
Other information | |||
Compensation expense yet to be recognized | $ 1.4 | ||
Weighted-average period over which compensation cost will be recognized | 1 year 4 months 24 days | ||
Additional information | |||
Vesting period | 3 years | ||
Types of performance units | item | 2 | ||
Percentage of units measured on stock price relative to peer group | 50% | ||
Percentage of units measured on stock price based on pre determined EPS | 50% | ||
Period for which shareholder return is compared with peer group for units determined by EPS performance | 3 years | ||
Calculated fair market value | $ 12.2 | ||
Value of PSUs granted | 4.5 | ||
Stock-based compensation expense | $ 5.3 | $ 5.7 | $ 2.7 |
Performance Stock Units | Minimum | |||
Additional information | |||
Performance measures for dollar denominated award granted | 0 | ||
Performance Stock Units | Maximum | |||
Additional information | |||
Performance measures for dollar denominated award granted | 2 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Segment Information | |||
Number of reportable segments | segment | 2 | ||
Total Assets | $ 2,597,478 | $ 2,209,114 | |
Revenue | 4,140,364 | 3,073,636 | $ 2,856,659 |
Gross Profit | 741,608 | 563,207 | 546,983 |
Capital Expenditures | 48,359 | 22,330 | 24,131 |
Operating | Mechanical Services Segment | |||
Segment Information | |||
Total Assets | 1,741,135 | 1,452,527 | |
Revenue | 3,178,475 | 2,542,623 | 2,430,632 |
Gross Profit | 580,619 | 486,346 | 513,760 |
Capital Expenditures | 43,532 | 19,408 | 22,561 |
Operating | Electrical Services Industry | |||
Segment Information | |||
Total Assets | 790,040 | 690,364 | |
Revenue | 961,889 | 531,013 | 426,027 |
Gross Profit | 160,989 | 76,861 | 33,223 |
Capital Expenditures | 4,101 | 2,413 | 944 |
Corporate & Eliminations | |||
Segment Information | |||
Total Assets | 66,303 | 66,223 | |
Capital Expenditures | $ 726 | $ 509 | $ 626 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Feb. 01, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Subsequent Event [Line Items] | ||||
Revenues | $ 4,140,364 | $ 3,073,636 | $ 2,856,659 | |
Subsequent events | Industrial Contractor, South Carolina | Minimum | ||||
Subsequent Event [Line Items] | ||||
Revenues | $ 130,000 | |||
Subsequent events | Industrial Contractor, South Carolina | Maximum | ||||
Subsequent Event [Line Items] | ||||
Revenues | $ 140,000 |